Page:United States Statutes at Large Volume 94 Part 3.djvu/752

 94 STAT. 3396

PUBLIC LAW 96-589—DEC. 24, 1980 "(1) REDUCTION NOT TO BE MADE IN EXEMPT PROPERTY.—In the

Ante, p. 3389.

case of an amount excluded from gross income under section 108(a)(1)(A), no reduction in basis shall be made under this section in the basis of property which the debtor treats as exempt property under section 522 of title 11 of the United States Code. "(2) REDUCTIONS IN BASIS NOT TREATED AS DISPOSITIONS.—For

purposes of this title, a reduction in basis under this section shall not be treated as a disposition. "(d) RECAPTURE OF REDUCTIONS.—

"(1) IN GENERAL.—For purposes of sections 1245 and 1250— "(A) any property the basis of which is reduced under this section and which is neither section 1245 property nor section 1250 property shall be treated as section 1245 property, and "(B) any reduction under this section shall be treated as a deduction allowed for depreciation. "(2) SPECIAL RULE FOR SECTION 1250.—For purposes of section

26 USC 111.

1250(b), the determination of what would have been the depreciation adjustments under the straight line method shall be made as if there had been no reduction under this section." (c) AMENDMENT OF SECTION HI.—Section 111 (relating to recovery of bad debts, prior taxes, and delinquency amounts) is amended by adding at the end thereof the following new subsection: "(d) INCREASE IN CARRYOVER TREATED AS YIELDING TAX BENEFIT.—

26 USC 382. 90 Stat. 1598. 11 USC 101

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For purposes of paragraph (4) of subsection (b), an increase in a carryover which has not expired shall be treated as a reduction in tax." (jj) AMENDMENT OF SECTION 3820t)).—Subsection (b) of section 382 (relating to special limitations on net operating loss carryover), as in effect before its amendment by section 806 of the Tax Reform Act of 1976, is amended by adding at the end thereof the following new paragraph: (7) SPECIAL RULE FOR REORGANIZATIONS IN TITLE i i OR SIMILAR

CASES.—For purposes of this subsection, a creditor who receives stock in a reorganization in a title 11 or similar case (within the meaning of section 368(a)(3)(A)) shall be treated as a stockholder immediately before the reorganization." (e) TECHNICAL AMENDMENTS.—

26 USC 703.

Ante, p. 3389.

26 USC 118.

(1) Subsection (b) of section 703 (relating to elections of the partnership) is amended to read as follows: "(b) ELECTIONS OF THE PARTNERSHIP.—Any election affecting the computation of taxable income derived from a partnership shall be made by the partnership, except that any election under— "(1) section 57(c) (defining net lease). "(2) subsection (b)(5) or (d)(4) of section 108 (relating to income from discharge of indebtedness), "(3) section 163(d) (relating to limitation of interest on investment indebtedness), "(4) section 617 (relating to deduction and recapture of certain mining exploration expenditures), or "(5) section 901 (relating to taxes of foreign countries and possessions of the United States), shall be made by each partner separately." (2) Subsection (c) of section 118 (relating to cross reference) is amended to read as follows: "(c) CROSS REFERENCES.—

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