Page:United States Statutes at Large Volume 98 Part 1.djvu/629

 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 581

in gross income for any taxable year if section 311(d)(2) did not apply. "(5) LIFO INVENTORY ADJUSTMENTS.—Earnings and profits shall be increased or decreased by the amount of any increase or decrease in the LIFO recapture amount (determined under section 336(b)(3)) as of the close of each taxable year; except that any decrease below the LIFO recapture amount as of the close of the taxable year preceding the first taxable year to which this paragraph applies to the taxpayer shall be taken into account only to the extent provided in regulations prescribed by the Secretary. "(6) INSTALLMENT SALES.—In the case of any installment sale, earnings and profits shall be computed as if the corporation did not use the installment method. "(7) COMPLETED CONTRACT METHOD OF ACCOUNTING.—In

Ante, p. 568.


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the

case of a taxpayer who uses the completed contract method of accounting, earnings and profits shall be computed as if such taxpayer used the percentage of completion method of accounting. "(8) REDEMPTIONS.—If a corporation distributes amounts in a redemption to which section 302(a) or 303 applies, the part of such distribution which is properly chargeable to earnings and profits shall be an amount which is not in excess of the ratable share of the earnings and profits of such corporation accumulated after February 28, 1913, attributable to the stock so redeemed.

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"(9) SPECIAL RULE FOR CERTAIN FOREIGN CORPORATIONS.—In

the case of a foreign corporation described in subsection (k)(4), paragraphs (5), (6), and (7) shall apply only in the case of taxable years beginning after December 31, 1985." (2) CONFORMING AMENDMENTS.—

(A) Section 312(j) (relating to earnings and profits of 26 USC 312. foreign investment companies) is amended by striking out paragraph (3). (B) Subsection (e) of section 312 is hereby repealed. (b) ADJUSTMENT TO EFFECT OF DEPRECIATION ON EARNINGS AND

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PROFITS.—The table contained in section 312(k)(3)(A) (relating to recovery property), as amended by this Act, is amended by striking out "35 years" in the item relating to 15-year real property and 20year real property and inserting in lieu thereof "40 years".

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(c) DISTRIBUTIONS OF OBLIGATIONS HAVING DISCOUNT.— (1) EFFECT ON EARNINGS AND PROFITS.—

ORIGINAL

ISSUE

(A) Paragraph (2) of section 312(a) (relating to effect of earnings and profits) is amended to read as follows: "(2) the principal amount of the obligations of such corporation (or, in the case of obligations having original issue discount, ^-'^ • >sti the aggregate issue price of such obligations), and". (B) Section 312, as amended by subsection (a), is amended Ante, p. 580. by adding at the end thereof the following new subsection: "(o) DEFINITION OF ORIGINAL ISSUE DISCOUNT AND ISSUE PRICE FOR PURPOSES OF SUBSECTION (a)(2).—For purposes of subsection (a)(2),

the terms 'original issue discount' and 'issue price' have the same respective meanings as when used in subpart A of part V of subchapter P of this chapter." Ante, p. 531. (2) TREATMENT UNDER ORIGINAL ISSUE DISCOUNT RULES.—Sub-

section (a) of section 1275 (relating to other definitions and

Ante, p. 540.

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