Page:United States Statutes at Large Volume 94 Part 2.djvu/974

 94 STAT. 2252

PUBLIC LAW 96-471—OCT. 19, 1980 therefrom in any taxable year that proportion of the installment payments actually received in that year which the gross profit, realized or to be realized when payment is completed, bears to the total contract price. "(2) TOTAL CONTRACT PRICE.—For purposes of paragraph (1), the

total contract price of all sales of personal property on the installment plan includes the amount of carrying charges or interest which is determined with respect to such sales and is added on the books of account of the seller to the established cash selling price of such property. This paragraph shall not apply with respect to sales of personal property under a revolving credit type plan. "(b) CARRYING CHARGES NOT INCLUDED IN TOTAL CONTRACT

PRICE.—If the carrying charges or interest with respect to sales of personal property, the income from which is returned under subsection (a)(1), is not included in the total contract price, payments received with respect to such sales shall be treated as applying first against such carrying charges or interest, 26 USC 453B.

SEC.

453B. GAIN OR LOSS OBLIGATIONS.

DISPOSITION

OF

INSTALLMENT

"(a) GENERAL RULE.—If an installment obligation is satisfied at other than its face value or distributed, transmitted, sold, or otherwise disposed of, gain or loss shall result to the extent of the difference between the basis of the obligation and— "(1) the amount realized, in the case of satisfaction at other than face value or a sale or exchange, or "(2) the fair market value of the obligation at the time of distribution, transmission, or disposition, in the case of the distribution, transmission, or disposition otherwise than by sale or exchange. any gain or loss so resulting shall be considered as resulting from the sale or exchange of the property in respect of which the installment obligation was received, "(b) BASIS OF OBLIGATION.—The basis of an installment obligation

shall be the excess of the face value of the obligation over an amount equal to the income which would be returnable were the obligation satisfied in full. "(c) SPECIAL RULE FOR TRANSMISSION AT DEATH.—Except as pro-

26 USC 691.

26 USC 332.

26 USC 334. 26 USC 337.

vided in section 691 (relating to recipients of income in respect of decedents), this section shall not apply to the transmission of installment obligations at death. "(d) EFFECT OF DISTRIBUTION IN CERTAIN LIQUIDATIONS.— "(1) LIQUIDATIONS TO WHICH SECTION 332 APPLIES.—If—

"(A) an installment obligation is distributed in a liquidation to which section 332 (relating to complete liquidations of subsidiaries) applies, and "(B) the basis of such obligation in the hands of the distributee is determined under section 334(b)(1), then no gain or loss with respect to the distribution of such obligation shall be recognized by the distributing corporation. "(2) LIQUIDATIONS TO WHICH SECTION 337 APPLIES.—If—

"(A) an installment obligation is distributed by a corporation in the course of a liquidation, and "(B) under section 337 (relating to gain or loss on sales or exchanges in connection with certain liquidations) no gain or loss would have been recognized to the corporation if the

�