Page:United States Statutes at Large Volume 92 Part 3.djvu/183

 PUBLIC LAW 95-600—NOV. 6, 1978

92 STAT. 2815

NESS.—Except as provided in subparagraph (C), for purposes of this section, activities described in subparagraph (A) which constitute a trade or business shall be treated as one activity if— "(i) the taxpayer actively participates in the management of such trade or business, or "(ii) such trade or business is carried on by a partnership or electing small business corporation (as defined in section 1371(b)) and 65 percent or more of the losses for 26 USC 1371. the taxable year is allocable to persons who actively participate in the management of the trade or business. "(C) AGGREGATION OR SEPARATION OF ACTIVITIES UNDER-

REGULATiONS.—The Secretary shall prescribe regulations Regulations, under which activities described in subparagraph (A) shall be aggregated or treated as separate activities. "(D) EXCLUSIONS.— "(i) REAL PROPERTY.—In

the case of activities described in subparagraph (A), the holding of real property (other than mineral property) shall be treated as a separate activity, and subsection (a) shall not apply to losses from such activity. For purposes of the preceding sentence, personal property and services which are incidental to making real property available as living accommodations shall be treated as part of the activity of holding such real property.

"(ii) EQUIPMENT LEASING BY CLOSELY-HELD CORPORATIONS.—

"(I) In the case of a corporation described in subsection (a)(1)(C) actively engaged in leasing equipment which is section 1245 property, the activ- 26 USC 1245. ity of leasing such equipment shall be treated, for purposes of subsection (a), as a separate activity and subsection (a) shall not apply to losses from such activity. "(II) A corporation described in subsection (a)(1) (C) shall not be considered to be actively engaged in leasing such equipment unless 50 percent or more of the gross receipts of the corporation for the taxable year are attributable, under regulations prescribed by the Secretary, to leasing and selling such equipment. "(Ill) For purposes of this paragraph, the leasing of master sound recordings, and other similar contractual arrangements with respect to tangible or intangible assets associated with literary, artistic, or musical properties shall not be treated as leasing equipment which is section 1245 property. "(IV) In the case of a controlled group of corporations (within the meaning of section 1563(a)), this 26 USC 1563. paragraph shall be applied by treating the controlled group as a single corporation. "(E) APPLICATION OF SUBSECTION 0D)(3).—In the case of an activity described in subparagraph (A), subsection (b)(3) shall apply only to the extent provided in regulations prescribed by the Secretary."

(b) REPEAL OF SECTION 704(d) AT RISK RULES.—

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