Page:United States Statutes at Large Volume 92 Part 3.djvu/228

 92 STAT. 2860

26 USC 172 note.

PUBLIC LAW 95-600—NOV. 6, 1978 mined under regulations prescribed by the Secretary, shall be treated as accumulated for the reasonably anticipated needs of the business." (d) EFFECTIVE DATE.—The amendments made by this section shall apply with respect to taxable years beginning after September 30, 1979. SEC. 372. EXCLUSION FROM GROSS INCOME WITH RESPECT TO MAGAZINES, PAPERBACKS, AND RECORDS RETURNED AFTER THE CLOSE OF THE TAXABLE YEAR.

(a) IN GENERAL.—Subpart B of part II of subchapter E of chapter 1 (relating to taxable year for which items of gross income included) is amended by adding at the end thereof the following new section: 26 USC 458.

"SEC. 458. MAGAZINES, PAPERBACKS, AND RECORDS RETURNED AFTER THE CLOSE OF THE TAXABLE YEAR.

"(a) EXCLUSION FROM GROSS INCOME.—A taxpayer who is on an accrual method of accounting may elect not to include in the gross income for the taxable year the income attributable to the qualified sale of any magazine, paperback, or record which is returned to the taxpayer before the close of the merchandise return period. "(b) DEFINITIONS AND SPECIAL RULES.—For purposes of this section— "(1) MAGAZINE.—The term 'magazine' includes any other periodical. "(2) PAPERBACK.—The term 'paperback' means any book which has a flexible outer cover and the pages of which are affixed directly to such outer cover. Such term does not include a magazine. "(3) RECORD.—The term 'record' means a disc, tape, or similar object on which musical, spoken, or other sounds are recorded. "(4) SEPARATE APPLICATION WITH RESPECT TO MAGAZINES, PAPERBACKS, AND RECORDS.—If a taxpayer makes qualified sales of

more than one category of merchandise in connection with the same trade or business, this section shall be applied as if the qualified sales of each such category were made in connection with a separate trade or business. For purposes of the preceding sentence, magazines, paperbacks, and records shall each be treated as a separate category of merchandise. "(5) QuAUFiED SALE.—A Sale of a magazine, paperback, or record is a qualified sale if^ "(A) at the time of sale, the taxpayer has a legal obligation to adjust the sales price of such magazine, paperback, or record if it is not resold, and "(B) the sales price of such magazine, paperback, or record is adjusted by the taxpayer because of a failure to resell it. "(6) AMOUNT EXCLUDED.—The amount excluded under this section with respect to any qualified sale shall be the lesser of— "(A) the amount covered by the legal obligation described in paragraph (5)(A), or "(B) the amount of the adjustment agreed to by the taxpayer before the close of the merchandise return period. "(7) MERCHANDISE RETURN PERIOD.—

"(A) Except as provided in subparagraph (B), the term 'merchandise return period' means, with respect to any taxable year—

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