Page:United States Statutes at Large Volume 98 Part 1.djvu/757

 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 709

SEC. 176. RECAPTURE OF NET ORDINARY LOSSES UNDER SECTION 1231. (a) GENERAL RULE.—Section 1231 (relating to property used in the 26 USC 1231.

trade or business and involuntary conversions) is amended by adding at the end thereof the following new subsection: "(c) RECAPTURE OF NET ORDINARY LOSSES.—

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"(1) IN GENERAL.—The net section 1231 gain for any taxable year shall be treated as ordinary income to the extent such gain does not exceed the non-recaptured net section 1231 losses. "(2) NON-RECAPTURED NET SECTION 1231 LOSSES.—For purpOSes

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of this subsection, the term 'non-recaptured net section 1231 losses' means the excess of— "(A) the aggregate amount of the net section 1231 losses for the 5 most recent preceding taxable years beginning after December 31, 1981, over "(B) the portion of such losses t a k e n into account under

paragraph (1) for such preceding taxable years. ' "(3) NET SECTION 1231 GAIN.—For purposes of this subsection, t the term 'net section 1231 gain' means the excess of— "(A) the section 1231 gains, over J^ • < "(B) the section 1231 losses. "(4) NET SECTION 1231 LOSS.—For purposes of this subsection, the term 'net section 1231 loss' means the excess of^ "(A) the section 1231 losses, over "(B) the section 1231 gains. "(5) SPECIAL RULES.—For purposes of determining the amount 1 of the net section 1231 gain or loss for any taxable year, the Post, p. 944. • rules of paragraph (4) of subsection (a) shall apply." (b) EFFECTIVE DATE.—The amendment made by subsection (a) 26 USC I23i shall apply to net section 1231 gains for taxable years beginning note. after December 31, 1984. SEC. 177. REPEAL OF EXEMPTION FROM FEDERAL TAX OF THE FEDERAL HOME LOAN MORTGAGE CORPORATION.

(a) REPEAL OF EXEMPTION.—Subsection (d) of section 303 of the

Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1452(d)) is amended— (1) by striking out "by the United States,", (2) by striking out "possession thereof," and inserting in lieu thereof "possession of the United States", and (3) by striking out the last sentence.

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(b) TREATMENT OF DIVIDENDS PAID BY FEDERAL HOME LOAN BANK WHICH ARE ALLOCABLE TO DIVIDENDS FROM THE FEDERAL HOME LOAN MORTGAGE CORPORATION.—Subsection (a) of section 246 (relat-

26 USC 246.

ing to denial of dividends received deduction for dividends from certain corporations) is amended to read as follows: "(a) DEDUCTION NOT ALLOWED FOR DIVIDENDS FROM CERTAIN CORPORATIONS.—

"(1) IN GENERAL.—The deductions allowed by sections 243, 244, and 245 shall not apply to any dividend from a corporation which, for the taxable year of the corporation in which the distribution is made, or for the next preceding taxable year of the corporation, is a corporation exempt from tax under section 501 (relating to certain charitable, etc., organizations) or section 521 (relating to farmers' cooperative associations). "(2) SUBSECTION NOT TO APPLY TO CERTAIN DIVIDENDS OF FEDERAL HOME LOAN BANKS.—

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