Page:United States Statutes at Large Volume 96 Part 1.djvu/468

 96 STAT. 426

PUBLIC LAW 97-248—SEPT. 3, 1982 "(B) INTEREST ON DEBT TO CARRY TAX-EXEMPT OBLIGATIONS ACQUIRED AFTER DECEMBER 31, 1982.—

"(i) IN GENERAL.—In the case of a financial institution to which section 585 or 593 applies, the amount of interest on indebtedness incurred or continued to purchase or carry obligations acquired after December 31, 1982, the interest on which is exempt from taxes for the taxable year, to the extent that a deduction would (but for this paragraph) be allowable with respect to such interest for such taxable year. "(ii) DETERMINATION OF INTEREST ALLOCABLE TO INDEBTEDNESS ON TAX-EXEMPT OBLIGATIONS.—UnleSS the

95 Stat. 222. 9 TT^r ^7^^' R

26 UbC 57.

taxpayer (under regulations prescribed by the Secretary) establishes otherwise, the amount determined under clause (i) shall be an amount which bears the same ratio to the aggregate amount allowable (determined without regard to this section) to the taxpayer as a deduction for interest for the taxable year as— "(I) the taxpayer's average adjusted basis (within the meaning of section 1016) of obligations described in clause (i), bears to "(II) such average adjusted basis for all assets of the taxpayer. "(2) APPLICABLE CORPORATION.—For purposes of this section, the term 'applicable corporation' means any corporation other than an electing small business corporation (as defined in section 1371(b)). "(3) SECTION 1245 AND 1250 PROPERTY.—The terms 'section 1245 property', 'section 1245 recovery property', and 'section 1250 property' have the meanings given such terms by sections 1245(a)(3), 1245(a)(5), and 1250(c), respectively." ^^^ COORDINATION WITH MINIMUM TAX.—Section 57(b) (relating to

adjusted itemized deductions) is amended to read as follows: "(b) APPLICATION WITH SECTION 291.—

Ante, p. 423.

"(1) IN GENERAL.—In the case of any item of tax preference of an applicable corporation described in— "(A) paragraph (4) or (7) of subsection (a), or "(B) paragraph (8) of subsection (a) (but only to the extent such item is allocable to a deduction for depletion for iron ore and coal (including lignite)), only 71.6 percent of the amount of such item of tax preference (determined without regard to this subsection) shall be taken into account as an item of tax preference. "(2) CERTAIN CAPITAL GAINS.—In determining the net capital gain of any applicable corporation for purposes of paragraph (9)(B) of subsection (a), there shall be taken into account only 71.6 percent of any gain from the sale or exchange of section 1250 property which is equal to 85 percent of the excess determined under section 291(a)(1) with respect to such property. "(3) APPLICABLE CORPORATION DEFINED.—For purposes of this subsection, the term 'applicable corporation' has the meaning given such term by section 291(e)(2)." (c) CONFORMING AMENDMENTS.—

26 USC 263.

(1) Subsection (c) of section 263 (relating to intangible drilling and development costs) is amended by adding at the end thereof the following new sentence: "This subsection shall not apply

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