Page:United States Statutes at Large Volume 98 Part 1.djvu/750

 98 STAT. 702

PUBLIC LAW 98-369—JULY 18, 1984 "(A) the amount of interest which would have been payable on the loan for the period if interest accrued on the loan at the applicable Federal rate and were payable annually on the day referred to in subsection (a)(2), over "(B) any interest payable on the loan properly allocable to such period. "(f) OTHER DEFINITIONS AND SPECIAL RULES.—For purposes of this section— "(1) PRESENT VALUE.—The present value of any payment shall be determined in the manner provided by regulations prescribed by the Secretary— "(A) as of the date of the loan, and "(B) by using a discount rate equal to the applicable Federal rate. "(2) APPLICABLE FEDERAL RATE.— "(A) TERM LOANS.—In the

Ante, p. 538.

case of any term loan, the applicable Federal rate shall be the applicable Federal rate in effect under section 1274(d) (as of the day on which the loan was made), compounded semiannually. "(B) DEMAND LOANS.—In the case of a demand loan, the applicable Federal rate shall be the Federal short-term rate in effect under section 1274(d) for the period for which the amount of foregone interest is being determined. "(3) GIFT LOAN.—The term 'gift loan' means any belowmarket loan where the foregoing of interest is in the nature of a gift. "(4) AMOUNT LOANED.—The term 'amount loaned' means the amount received by the borrower. "(5) DEMAND LOAN.—The term 'demand loan' means any loan which is payable in full at any time on the demand of the lender. Such term also includes (for purposes other than determining the applicable Federal rate under paragraph (2)) any loan which is not transferable and the benefits of the interest arrangements of which is conditioned on the future performance of substantial services by an individual. "(6) TERM LOAN.—The term 'term loan' means any loan which is not a demand loan. "(7) HUSBAND AND WIFE TREATED AS i PERSON.—A husband

and wife shall be treated as 1 person. "(8)

Ante, pp. 553, 538. 26 USC 3401 et «^9-

26 USC 2501 et seg.

LOANS TO WHICH SECTION 483

OR 1274

APPLIES.—This

section shall not apply to any loan to which section 483 or 1274 applies. "(9) No WITHHOLDING.—No amount shall be withheld under chapter 24 with respect to any amount treated as transferred or retransferred under subsection (a). "(10) SPECIAL RULE FOR TERM LOANS.—If this section applies to any term loan on any day, this section shall continue to apply to such loan notwithstanding paragraphs (2) and (3) of subsection (c). In the case of a gift loan, the preceding sentence shall only apply for purposes of chapter 12. "(g) REGULATIONS.—

"(1) IN GENERAL.—The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section, including— "(A) regulations providing that where, by reason of varying rates of interest, conditional interest payments, waivers of interest, disposition of the lender's or borrower's interest

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