Page:United States Statutes at Large Volume 94 Part 2.djvu/975

 PUBLIC LAW 96-471—OCT. 19, 1980

94 STAT. 2253

corporation had sold or exchanged such installment obligation on the day of such distribution, then no gain or loss shall be recognized to such corporation by reason of such distribution. The preceding sentence shall not apply to the extent that under paragraph (1) gain to the distributing corporation would be considered as gain to which section 341(a 617(d)(1), 1245(a), 1250(a), 1251(c), 1252(a), or 1254(a) 26 USC 341,617, applies. J^^^' 1250-1252, "(e) LIFE INSURANCE COMPANIES.—

"(1) IN GENERAL.—In the case of a disposition of an installment obligation by any person other than a life insurance company (as defined in section 801(a)) to such an insurance company or to a 26 USC 801. partnership of which such an insurance company is a partner, no provision of this subtitle providing for the nonrecognition of gain shall apply with respect to any gain resulting under subsection (a). If a corporation which is a life insurance company for the taxable year was (for the preceding taxable year) a corporation which was not a life insurance company, such corporation shall, for purposes of this subsection and subsection (a), be treated as having transferred to a life insurance company, on the last day of the preceding taxable year, all installment obligations which it held on such last day. A partnership of which a life insurance company becomes a partner shall, for purposes of this subsection and subsection (a), be treated as having transferred to a life insurance company, on the last day of the preceding taxable year of such partnership, all installment obligations which it holds at the time such insurance company becomes a partner. "(2) SPECIAL RULE WHERE U F E INSURANCE COMPANY ELECTS TO TREAT INCOME AS INVESTMENT INCOME.—Paragraph (1) shall not

apply to any transfer or deemed transfer of an installment obligation if the life insurance company elects (at such time and in such manner as the Secretary may by regulations prescribe) to determine its life insurance company taxable income— "(A) by returning the income on such installment obligation under the installment method prescribed in section 453, Ante, p. 2247. and "(B) if such income would not otherwise be returnable as an item referred to in section 804(b) or as long-term capital 26 USC 804. gain, as if the income on such obligations were income specified in section 804(b). "(f) OBLIGATION BECOMES UNENFORCEABLE.—For purposes of this section, if any installment obligation is canceled or otherwise becomes unenforceable— "(1) the obligation shall be treated as if it were disposed of in a transaction other than a sale or exchange, and "(2) if the obligor and obligee are related persons (within the meaning of section 453(f)(1)), the fair market value of the obliga- Ante, p. 2247. tion shall be treated as not less than its face amount.". (b) TECHNICAL AMENDMENTS.—

(1) Section 311(a) and section 336 (as in effect on the day before the date of the enactment of the Crude Oil Windfall Profit Tax Act of 1980) are each amended by striking out "section 453(d)" and inserting in lieu thereof "section 453B. (2) Paragraph (8) of section 381(c) is amended— (A) by striking out "has elected, under section 453, to report on the installment basis" and inserting in lieu thereof "reports on the installment basis under section 453 or 453A", and

26 USC 3ii, 336. Ante, p. 2252. 26 USC 381 Ant^, pp. 2247, 2251.

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