Page:United States Statutes at Large Volume 78.djvu/119

 78 STAT. ]

PUBLIC LAW 88-272-FEB. 26, 1964

77

(B) may not be revoked after the expiration of such oneyear period, and (C) shall apply to all transfers described in the first sentence of this paragraph (other than transfers deserilied in paragraph (2)). I n the case of any transfer to which this paragraph applies, the deduction shall be allowed only for the taxable year in which the contest with respect to such transfer is settled. (2) Paragraph (1) shall not apply to any transfer if the assessment of any deficiency which would result from the application of the election in respect of such transfer is, on the date of the election under paragraph (1), prevented by the operation of any law or rule of law. (3) If the taxpayer makes an election under paragraph (1), and if, on the date of such election, the assessment of any deficiency which results from the application of the election in respect of any transfer is not prevented by the operation of any law or rule of law, the period within which assessment of such deficiency may be made shall not expire earlier than 2 years after the date of the enactment of this Act. (d) CERTAIN OTHER TRANSFERS I N TAXABLE YEARS BEGINNING BEFORE JANUARY 1, 1964.—The amendments made by subsection (a)

shall not apply to any transfer of money or other property described in subsection (a) made in a taxable year beginning before Januarv 1, 1964, if— (1) no deduction has been allowed in respect of such transfer for any taxable year before the taxable year in which the contest with respect to such transfer is settled, and (2) refund or credit of any overpayment which would result from the application of such amendments to such transfer is prevented by the operation of any law or rule of law. In the case of any transfer to which this subsection applies, the deduction shall be allowed for the taxable year in which the contest with respect to such transfer is settled. SEC. 224. INTEREST ON CERTAIN DEFERRED PAYMENTS.

(a) IN GENERAL.—Part III of subchapter E of chapter 1 (relating lo accounting periods and methods of accounting) is amended by adding at the end thereof the following new section: "SEC. 483. INTEREST ON CERTAIN DEFERRED PAYMENTS. " (a) AMOUNT CONSTITUTING INTEREST.—For purposes of this title,

in the case of any contract for the sale or exchange of property there shall be treated as interest that part of a payment to M'hich this section applies which bears the same ratio to the amount of such payment as the total unstated interest under such contract bears to the total of the payments to which this section applies which are due under such contract. " (b) TOTAL UNSTATED INTEREST.—For purposes of this section, the term 'total unstated interest' means, with respect to a contract for the sale or exchange of property, an amount equal to the excess of— "(1) tile sum of the payments to which this section applies which are due under the contract, over "(2) the sum of the present values of such payments and the present values of any interest payments due under the contract. For purposes of paragraph (2), the present value of a payment shall be determined, as of the date of the sale or exchange, by discounting such payment at the rate, and in the manner, provided in regulations prescril>ed by the Secretary or his delegate. Such regulations shall provide for discounting on the basis of 6-mnth brackets and shall provide that the present value of any interest payment due not more

68A Stat. 160. 26 USC 481, 482.

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