Page:United States Statutes at Large Volume 96 Part 1.djvu/457

 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 415

"(ii) is secured by property which, a t the t i m e such indebtedness was incurred, was— "(I) the principal residence (within the m e a n i n g of section 1034) of the taxpayer, or 26 USC 1034. "(ID a qualified dwelling used by the tax p a y e r (or any m e m b e r of his family (within the m e a n i n g of section 267(c)(4))). "(5) QUALIFIED NET INVESTMENT I N C O M E. — For purposes of t h i s

subsection— "(A) IN GENERAL.—The term 'qualified n e t investment income' means the excess of— "(i) qualified investment income, over "(ii) qualified investment expenses. "(B) QUALIFIED INVESTMENT I N C O M E. — The term 'qualified

investment income' means the sum of— "(i) investment income (within the m e a n i n g of section 163(d)(3)(B) other than clause (ii) thereof), "(ii) any n e t capital gain a t t r i b u t a b l e to the disposition of property held for investment, and "(iii) the a m o u n t of items of tax preference described in paragraph (1) of section 57(a). "(C) QUALIFIED INVESTMENT E X P E N S E S. — The term 'quali-

fied investment expenses' means the deductions directly connected with the production of qualified investment income to the e x t e n t that— "(i) such deductions a r e allowable in computing adjusted gross income, and "(ii) such deductions a r e not items of tax preference. "(6) SPECIAL RULES FOR ESTATES AND TRUSTS.—

"(A) IN GENERAL.—In the case of a n estate or t r u s t, the a l t e r n a t i v e tax itemized deductions for any taxable year includes the deductions allowable under sections 642(c), 651(a), and 661(a). "(B) DETERMINATION OF ADJUSTED GROSS I N C O M E. — The

adjusted gross income of a n estate or t r u s t shall be computed in the s a m e m a n n e r as in the case of a n individual, except that the deductions for costs paid or incurred in connection with the administration of the estate or t r u s t shall be t r e a t e d as allowable in arriving a t adjusted gross income. "(7) LIMITATION ON MEDICAL DEDUCTION.—In a p p l y i n g s u b p a r -

a g r a p h (C) of paragraph (1), the a m o u n t allowable a s a deduction under section 213 shall be determined by substituting '10 percent' for '5 percent' in section 213(a). Post, p. 421. "(8) T R E A T M E N T OF INTERESTS I N LIMITED PARTNERSHIPS A N D SUBCHAPTER S CORPORATIONS.— "(A) CERTAIN INTEREST TREATED AS N O T ALLOWABLE I N

COMPUTING ADJUSTED GROSS INCOME.—Any a m o u n t allowable as a deduction for interest on indebtedness incurred or continued to purchase or c a r r y a limited business interest shall be t r e a t e d as not allowable in computing adjusted gross income. "(B) INCOME TREATED AS QUALIFIED INVESTMENT I N C O M E. —

Any income derived from a limited business interest shall be t r e a t e d as qualified investment income. "(C) LIMITED BUSINESS INTEREST.—The term 'limited busi-

ness interest' means a n interest—

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