Page:United States Statutes at Large Volume 111 Part 1.djvu/935

 PUBLIC LAW 105-34—AUG. 5, 1997 111 STAT. 911 " (2) TERMINATION. —Paragraph (1) shall not apply to any obligation purchased (within the meaning of section 1272(d)(1)) after June 8, 1997.". (2) EFFECTIVE DATE.— The amendment made by paragraph 26 USC 1271 (1) shall apply to sales, exchanges, and retirements after the note. date of enactment of this Act. SEC. 1004. DETERMINATION OF ORIGINAL ISSUE DISCOUNT WHERE POOLED DEBT OBLIGATIONS SUBJECT TO ACCELERA- TION. (a) IN GENERAL. —Subparagraph (C) of section 1272(a)(6) (relating to debt instruments to which the paragraph applies) is amended by striking "or" at the end of clause (i), by striking the period at the end of clause (ii) and inserting ", or", and by inserting after clause (ii) the following: "(iii) any pool of debt instruments the yield on which may be affected by reason of prepa3mients (or to the extent provided in regulations, by reason of other events). To the extent provided in regulations prescribed by the Secretary, in the case of a small business engaged in the trade or business of selling tangible personal property at retail, clause (iii) shall not apply to debt instruments incurred in the ordinary course of such trade or business while held by such business.". (b) EFFECTIVE DATES. — 26 USC 1272 (1) IN GENERAL.— The amendment made by this section note, shall apply to taxable years beginning after the date of the enactment of this Act. (2) CHANGE IN METHOD OF ACCOUNTING.— In the case of any taxpayer required by this section to change its method of accounting for its first taxable year beginning after the date of the enactment of this Act— (A) such change shall be treated as initiated by the taxpayer, (B) such cheinge shall be treated as made with the consent of the Secretary of the Treasury, and (C) the net amount of the adjustments required to be taken into account by the taxpayer under section 481 of the Internal Revenue Code of 1986 shall be taken into account ratably over the 4-taxable year period beginning with such first taxable year. SEC. 1005. DENIAL OF INTEREST DEDUCTIONS ON CERTAIN DEBT INSTRUMENTS. (a) IN GENERAL. —Section 163 (relating to deduction for interest), as amended by title V, is amended by redesignating subsection (1) as subsection (m) and by inserting after subsection (k) the following new subsection: "(1) DISALLOWANCE OF DEDUCTION ON CERTAIN DEBT INSTRUMENTS OF CORPORATIONS. — "(1) IN GENERAL.—No deduction shall be allowed under this chapter for any interest paid or accrued on a disqualified debt instrument. "(2) DISQUALIFIED DEBT INSTRUMENT. —For purposes of this subsection, the term 'disqualified debt instrument' means any indebtedness of a corporation which is payable in equity of the issuer or a related party.

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