Page:United States Statutes at Large Volume 98 Part 1.djvu/640

 98 STAT. 592 26 USC 707 note.

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PUBLIC LAW 98-369—JULY 18, 1984 (b) EFFECTIVE D A T E. — '"^'"---' ^^ -'••'•* ->irir>vayi.m

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(1) IN GENERAL.—The amendment made by subsection (a) shall apply— (A) in the case of arrangements described in section 707(a)(2)(A) of the Internal Revenue Code of 1954 (as amended by subsection (a)), to services performed or property transferred after February 29, 1984, and (B) in the case of transfers described in section 707(a)(2)(B) of such Code (as so amended), to property transferred after March 31, 1984. (2) BINDING CONTRACT EXCEPTION.—The amendment made by subsection (a) shall not apply to a transfer of property described in section 707(a)(2)(B)(i) if such transfer is pursuant to a binding contract in effect on March 31, 1984, and at all times thereafter before the transfer. EXCEPTION FOR CERTAIN TRANSFERS.—The

amendment

made by subsection (a) shall not apply to a transfer of property described in section 707(a)(2)(B)(i) that is made before December 31, 1984, if— (A) such transfer was proposed in a written private offering memorandum circulated before February 28, 1984; (B) the out-of-pocket costs incurred with respect to such offering exceeded $250,000 as of February 28, 1984; (C) the encumbrances placed on such property in anticipation of such transfer all constitute obligations for which neither the partnership nor any partner is liable; and (D) the transferor of such property is the sole general partner of the partnership. SEC. 74. CONTRIBUTIONS TO A PARTNERSHIP OF UNREALIZED RECEIVABLES, INVENTORY ITEMS, OR CAPITAL LOSS PROPERTY.

(a) GENERAL RULE.—Subpart A of part II of subchapter K of chapter 1 (relating to contributions to a partnership) is amended by adding at the end thereof the following new section: 26 USC 724.

"SEC. 724. CHARACTER OF GAIN OR LOSS ON CONTRIBUTED UNREALIZED RECEIVABLES, INVENTORY ITEMS, AND CAPITAL LOSS PROPERTY.

"(a) CONTRIBUTIONS OF UNREALIZED RECEIVABLES.—In the case of any property which— "(1) was contributed to the partnership by a partner, and "(2) was an unrealized receivable in the hands of such partner immediately before such contribution, any gain or loss recognized by the partnership on the disposition of such property shall be treated as ordinary income or ordinary loss, as the case may be. "(b) CONTRIBUTIONS OF INVENTORY ITEMS.—In the case of any property which— "(1) was contributed to the partnership by a partner, and "(2) was an inventory item in the hands of such partner immediately before such contribution, any gain or loss recognized by the partnership on the disposition of such property during the 5-year period beginning on the date of such contribution shall be treated as ordinary income or ordinary loss, as the case may be. "(c) CONTRIBUTIONS OF CAPITAL Loss PROPERTY.—In the case of any property which—.

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