Page:United States Statutes at Large Volume 72 Part 1.djvu/1668

 PUBLIC LAW 86-866-SEPT. 2, 1968

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26 USC 451.

[72 S T A T.

which it is first made and for all subsequent taxable years, unless the taxpayer secures the consent of the Secretary or his delegate to the revocation of such election. For purposes of this title, the computation of taxable income under an election made under this section shall be treated as a method of accounting. " (d) DEFINITIONS.—For purposes of this section— "(1) PREPAID SUBSCRIPTION INCOME.—The term 'prepaid subscription income' means any amount (includible in gross income) which is received in connection with, and is directly attributable to, a liability which extends beyond the close of the taxable year in which such amount is received, and which is income from a subscription to a newspaper, magazine, or other periodical. "(2) LIABILITY.—The term 'liability' means a liability to furnish or deliver a newspaper, magazine, or other periodical. "(3) RECEIPT OF PREPAID SUBSCRIPTION INCOME.—Prepaid subscription income shall be treated as received during the taxable year for which it is includible in gross income under section 451 (without regard to this section). "(e)

DEFERRAL OF INCOME UNDER ESTABLISHED ACCOUNTING PRO-

CEDURES.—Notwithstanding the provisions of this section, any taxpayer who has, for taxable years prior to the first taxable year to which this section applies, reported his income under an established and consistent method or practice of accounting for prepaid subscription income (to which this section would apply if an election were made) may continue to report his income for taxable years to which this title applies in accordance with such method or practice." (b) TECHNICAL AMENDMENT.—The table of sections for such subpart is amended by adding at the end thereof the following: "Sec. 455. Prepaid subscription income." (c) EFFECTIVE DATE.—The amendments made by subsections (a)

and (b) shall apply with respect to taxable years beginning after December 31, 1957. SEC. 29. ADJUSTMENTS REQUIRED BY CHANGES IN METHOD OF ACCOUNTING. (a)

26 USC 481.

ADJUSTMENTS FOR 1939 CODE YEARS.— (1) ADJUSTMENTS TAKEN INTO ACCOUNT.—Paragraph (2)

of

section 481(a) (relating to adjustments required by changes in method of accounting) is amended to read as follows: "(2) there shall be taken into account those adjustments which are determined to be necessary solely by reason of the change in order to prevent amounts from being duplicated or omitted, except there shall not be taken into account any adjustment in respect of any taxable year to which this section does not apply unless the adjustment is attributable to a change in the method of accounting initiated by the taxpayer." (2)

SPECIAL RULE WHERE ADJUSTMENTS ARE SUBSTANTIAL.—

Section 481(b) (relating to limitation on tax where adjustments are substantial) is amended by adding at the end thereof the following new paragraphs: "(4)

SPECIAL RULE FOR PRE-1954 ADJUSTMENTS GENERALLY.—

Except as provided in paragraphs (5) and (6) — "(A)

AMOUNT OF ADJUSTMENTS TO WHICH PARAGRAPH AP-

PLIES.—The net amount of the adjustments required by subsection (a), to the extent that such amount does not exceed the net amount of adjustments which would have been required if the change in method of accounting had been made in the first taxable year beginning after December 31, 1953, and ending after August 16, 1954, shall be taken into ac-

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