Page:United States Statutes at Large Volume 98 Part 1.djvu/608

 98 STAT. 560

Ante, p. 545.

PUBLIC LAW 98-369—JULY 18, 1984 obligations issued after the date of the enactment of this Act in taxable years ending after such date. (2) INTEREST DEFERRAL RULES.—Section 1277 of such Code (as added by section 41) shall apply to obligations acquired after the date of the enactment of this Act in taxable years ending after such date. (d) RULES RELATING TO DISCOUNT ON SHORT-TERM OBLIGATIONS.—

Ante, p. 548.

Subpart C of part V of subchapter P of chapter 1 of such Code (as added by section 41) shall apply to obligations acquired after the date of the enactment of this Act. (e) 5-YEAR SPREAD OF ADJUSTMENTS REQUIRED BY REASON OF ACCRUAL OF DISCOUNT ON CERTAIN SHORT-TERM OBLIGATIONS.— (1) ELECTION TO HAVE SECTION 1281 APPLY TO ALL OBLIGATIONS HELD DURING TAXABLE YEAR.—A taxpayer may elect for his first

Ante, p. 548.

taxable year ending after the date of the enactment of this Act to have section 1281 of the Internal Revenue Code of 1954 apply to all short-term obligations described in subsection (b) of such section which were held by the taxpayer at any time during such first taxable year. (2) 5-YEAR SPREAD.—

(A) IN GENERAL.—In the case of any taxpayer who makes an election under paragraph (1)— (i) the provisions of section 1281 of the Internal Revenue Code of 1954 (as added by section 41) shall be treated as a change in the method of accounting of the taxpayer, (ii) such change shall be treated as having been made with the consent of the Secretary, and (iii) the net amount of the adjustments required by section 481(a) of such Code to be taken into account by the taxpayer in computing taxable income (hereinafter in this paragraph referred to as the "net adjustments") shall be taken into account during the spread period with the amount taken into account in each taxable year in such period determined under subparagraph (B). (B) AMOUNT TAKEN INTO ACCOUNT DURING EACH YEAR OF SPREAD PERIOD.— (i) FIRST YEAR.—The amount taken into account for

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the first taxable year in the spread period shall be the sum of^ (I) one-fifth of the net adjustments, and (II) the excess (if any) of— (a) the cash basis income over the accrual basis income, over (b) one-fifth of the net adjustments. (ii) FOR SUBSEQUENT YEARS IN SPREAD PERIOD.—The

amount taken into account in the second or any succeeding taxable year in the spread period shall be the sum of^ (I) the portion of the net adjustments not taken into account in the preceding taxable year of the spread period divided by the number of remaining taxable years in the spread period (including the year for which the determination is being made),

(II) the excess (if any) of—

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