Page:United States Statutes at Large Volume 113 Part 3.djvu/413

 PUBLIC LAW 106-170—DEC. 17, 1999 113 STAT. 1931 26 USC 864. 26 USC 954. 26 USC 995. 26 USC 1017. 26 USC 1362. 26 USC 4662. 26 USC 7704. 26 USC 818. 26 USC 1397B note. 26 USC 170 note. 26 USC 6050P. (N) Section 864(c)(4)(B)(iii). (O) Section 864(d)(3)(A). (P) Section 864(d)(6)(A). (Q) Section 954(c)(l)(B)(iii). (R) Section 995(b)(1)(C). (S) Section 1017(b)(3)(E)(i). (T) Section 1362(d)(3)(C)(ii). (U) Section 4662(c)(2)(C). (V) Section 7704(c)(3). (W) Section 7704(d)(1)(D). (X) Section 7704(d)(1)(G). (Y) Section 7704(d)(5). (3) Section 818(b)(2) of such Code is amended by striking "section 1221(2)" and inserting "section 1221(a)(2)". (4) Section 1397B(e)(2) of such Code is amended by striking "section 1221(4)" and inserting "section 1221(a)(4)". (d) EFFECTIVE DATE.—The amendments made by this section shall apply to any instrument held, acquired, or entered into, any transaction entered into, and supplies held or acquired on or after the date of the enactment of this Act. SEC. 533. EXPANSION OF REPORTING OF CANCELLATION OF INDEBT- EDNESS INCOME. (a) IN GENERAL. — Paragraph (2) of section 6050P(c) of the Internal Revenue Code of 1986 (relating to definitions and special rules) is amended by striking "and" at the end of subparagraph (B), by striking the period at the end of subparagraph (C) and inserting ", and", and by inserting after subparagraph (C) the following new subparagraph: "(D) any organization a significant trade or business of which is the lending of money.". (b) EFFECTIVE DATE.— The amendment made by subsection (a) shall apply to discharges of indebtedness after December 31, 1999. SEC. 534. LIMITATION ON CONVERSION OF CJHARACTER OF INCOME FROM CONSTRUCTIVE OWNERSHIP TRANSACTIONS. (a) IN GENERAL. — Part IV of subchapter P of chapter 1 of the Internal Revenue Code of 1986 (relating to special rules for determining capital gains and losses) is amended by inserting after section 1259 the following new section: " SEC. 1260. GAINS FROM CONSTRUCTIVE OWNERSHIP TRANSACTIONS. 26 USC 1260. "(a) IN GENERAL.— If the taxpayer has gain from a constructive ownership transaction with respect to any financial asset and such gain would (without "regard to this section) be treated as a longterm capital gain— "(1) such gain shall be treated as ordinary income to the extent that such gain exceeds the net underlying long-term capital gain, and "(2) to the extent such gain is treated as a long-term capital gain after the application of paragraph (1), the determination of the capital gain rate (or rates) applicable to such gain under section 1(h) shall be determined on the basis of the respective rate (or rates) that would have been applicable to the net underlying long-term capital gain. "(b) INTEREST CHARGE ON DEFERRAL OF GAIN RECOGNITION.— "(1) IN GENERAL.—If any gain is treated as ordinary income for any taxable year by reason of subsection (a)(1), the tax 26 USC 6050P note.

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