Page:United States Statutes at Large Volume 92 Part 3.djvu/230

 92 STAT. 2862

26 USC 481.

PUBLIC LAW 95-600—NOV. 6, 1978 "(1) IN GENERAL.—In the case of any election under this section which applies to paperbacks or records, in lieu of applying section 481, the taxpayer shall establish a suspense account for the trade or business for the taxable year for which the election is made. "(2) INITIAL OPENING BALANCE.—The opening balance of the

account described in paragraph (1) for the first taxable year to which the election applies shall be the largest dollar amount of returned merchandise which would have been taken into account under this section for any of the 3 immediately preceding taxable years if this section had applied to such preceding 3 taxable years. This paragraph and paragraph (3) shall be applied by taking into account only amounts attributable to the trade or business for which such account is established. "(3) ADJUSTMENTS IN SUSPENSE ACCOUNT.—At the close of each taxable year the suspense account shall be— "(A) reduced the excess (if any) of— "(i) the opening balance of the suspense account for the taxable year, over "(ii) the amount excluded from gross income for the ' taxable year under subsection (a), or "(B) increased (but not in excess of the initial opening balance) by the excess (if any) of— "(i) the amount excluded from gross income for the taxable year under subsection (a), over "(ii) the opening balance of the account for the taxable year. "(4) GROSS INCOME ADJUSTMENTS.— "(A) REDUCTIONS EXCLUDED FROM GROSS INCOME.—In the

case of any reduction under paragraph (3)(A) in the account for the taxable year, an amount equal to such reduction shall .^ be excluded from gross income for such taxable year. "(B) INCREASES ADDED TO GROSS INCOME.—In the case of any increase under paragraph (3)(B) in the account for the taxable year, an amount equal to such increase shall be included in gross income for such taxable year. If the initial opening balance exceeds the dollar amount of returned merchandise which would have been taken into account under subsection (a) for the taxable year preceding the first taxable year for which the election is effective if this section had applied to such preceding taxable year, then an amount equal to the amount of such excess shall be included in gross income for such first taxable year. "(5) SUBCHAPTER C TRANSACTIONS.—The application of this subsection with respect to a taxpayer which is a party to any transaction with respect to which there is nonrecognition of gain or loss to any party to the transaction by reason of subchapter C shall be determined under regulations prescribed by the Secretary." (b) CLERICAL AMENDMENTS.—The table of sections for such subpart B is amended by adding at the end thereof the following: "Sec. 458. Magazines, paperbacks, and records returned after the close of the taxable year."

26 USC 458 °°*®-

(c) EFFECTIVE DATE.—The amendments made by this section shall apply to taxable years beginning after September 30, 1979.

�