Page:United States Statutes at Large Volume 98 Part 1.djvu/648

 98 STAT. 600

PUBLIC LAW 98-369—JULY 18, 1984 "(C) PARAGRAPH NOT TO APPLY TO WORKERS COMPENSATION

AND TORT LIABILITIES.—This paragraph shall not apply to any item described in subparagraph (C) of paragraph (2). "(4) ALL EVENTS TEST.—For purposes of this subsection, the all events test is met with respect to any item if all events have occurred which determine the fact of liability and the amount of such liability can be determined with reasonable accuracy. "(5) SUBSECTION NOT TO APPLY TO CERTAIN CASES TO WHICH OTHER PROVISIONS OF THIS TITLE SPECIFICALLY APPLY.—This Sub-

section shall not apply to any item to which any of the following provisions apply: "(A) Subsection (c) or (0 of section 166 (relating to reserves for bad debts). "(B) Section 463 (relating to vacation pay). "(C) Section 466 (relating to discount coupons). "(D) Any other provisions of this title which specifically provides for a deduction for a reserve for estimated expenses, "(i) TAX SHELTERS MAY NOT DEDUCT ITEMS EARLIER THAN WHEN ECONOMIC PERFORMANCE OCCURS.—

"(1) IN GENERAL.—In the case of a tax shelter computing taxable income under the cash receipts and disbursements method of accounting, such tax shelter shall not be allowed a deduction under this chapter with respect to any item any earlier than the time when such item would be treated as incurred under subsection (h) (determined without regard to paragraph (3) thereof). "(2) EXCEPTION (TO EXTENT OF CASH BASIS) WHEN ECONOMIC PERFORMANCE OCCURS WITHIN 90 DAYS AFTER THE CLOSE OF THE TAXABLE YEAR.—

"(A) IN GENERAL.—Paragraph (1) shall not apply to any item if economic performance with respect to such item occurs within 90 days after the close of the taxable year. "(B) DEDUCTION LIMITED TO CASH BASIS.— "(i) TAX SHELTER PARTNERSHIPS.—In

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the case of a tax shelter which is a partnership, in applying section 704(d) to a deduction or loss for any taxable year attributable to an item which is deductible by reason of subparagraph (A), the term 'cash basis' shall be substituted for the term 'adjusted basis'. "(ii) OTHER TAX SHELTERS.—Under regulations prescribed by the Secretary, in the case of a tax shelter other than a partnership, the aggregate amount of the deductions allowable by reason of subparagraph (A) for any taxable year shall be limited in a manner similar to the limitation under clause (i).

"(C) CASH BASIS DEFINED.—For purposes of subparagraph

(B), a partner's cash basis in a partnership shall be equal to the adjusted basis of such partner's interest in the partnership, determined without regard to— "(i) any liability of the partnership, and "(ii) any amount borrowed by the partner with respect to such partnership which— "(I) was arranged by the partnership or by any person who participated in the organization, sale, or management of the partnership (or any person

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