Page:United States Statutes at Large Volume 98 Part 1.djvu/754

 98 STAT. 706

PUBLIC LAW 98-369—JULY 18, 1984 an interest of 5 percent or less in the aggregate capital and profits interests of the partnership but only if^ "(i) such partner owned the low-income housing at all times during the 2-year period ending on the date such housing was transferred to the partnership, or "(ii) such partnership acquired the low-income housing pursuant to a purchase, assignment, or other transfer from the Department of Housing and Urban Development or any State or local housing authority. For purposes of the preceding sentence, a partner shall be treated as holding any interest in the partnership which is held (directly or indirectly) by any person related (within the meaning of subsection (b) of this section or section 707(b)(1)) to such partner. "(C) QUALIFIED EXPENSES AND INTEREST.—For purpOSe of

this paragraph, the term 'qualified expenses and interest' means any expense or interest incurred by the partnership with respect to low-income housing held by the partnership but— "(i) only if the amount of such expense or interest (as the case may be) is unconditionally required to be paid by the partnership not later than 10 years after the date such amount was incurred, and "(ii) in the case of such interest, only if such interest is incurred at an annual rate not in excess of 12 percent. "(D) LOW-INCOME HOUSING.—For purposes of this paragraph, the term 'low-income housing' means— "(i) any interest in low-income housing (as defined in paragraph (5) of section 189(e)), and "(ii) any interest in a partnership owning low-income housing (as so defined)." (2) CERTAIN CONTROLLED GROUPS.—

26 USC 267.

(A) Paragraph (3) of section 267(b) is amended to read as follows: "(3) Two corporations which are members of the same controlled group (as defined in subsection (f));". (B) Section 267 is amended by adding at the end thereof the following new subsection: "(f) CONTROLLED GROUP DEFINED; SPECIAL RULES APPLICABLE TO CONTROLLED GROUPS.— "(1) CONTROLLED GROUP DEFINED.—For purposes of this sec-

tion, the term 'controlled group' has the meaning given to such term by section 1563(a), except that— (A) 'more than 50 percent' shall be substituted for 'at least 80 percent' each place it appears in section 1563(a), and "(B) the determination shall be made without regard to subsections (a)(4) and (e)(3)(C) of section 1563. "(2) DEFERRAL (RATHER THAN DENIAL) OF LOSS FROM SALE OR EXCHANGE BETWEEN MEMBERS.—In the case of any loss from the

sale or exchange of property which is between members of the same controlled group and to which subsection (a)(1) applies (determined without regard to this paragraph but with regard to paragraph (3))— "(A) subsections (a)(1) and (d) shall not apply to such loss, but

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