Page:United States Statutes at Large Volume 98 Part 3.djvu/810

 98 STAT. 3182

PUBLIC LAW 98-612—OCT. 31, 1984

SEC. 2. TRANSITIONAL RULE FOR PURPOSES OF IMPUTED INTEREST RULES.

Ante, p. 559.

Subsection (b) of section 44 of the Tax Reform Act of 1984 (relating to effective date for treatment of debt instruments received in exchange for property) is amended by adding at the end thereof the following new paragraphs: "(4) SPECIAL RULES FOR SALES BEFORE JULY i, 1985.— "(A) IN GENERAL.—In the case of any sale or exchange before July 1, 1985, of property other than new section 38 property— "(i) sections 483(c)(1)(B) and 1274(c)(3) of the Internal Revenue Code of 1954 shall be applied by substituting the testing rate determined under subparagraph (B) for 110 percent of the applicable Federal rate determined under section 1274(d) of such Code, and "(ii) sections 483(b) and 1274(b) of such Code shall be applied by substituting the imputation rate determined under subparagraph (C) for 120 percent of the applicable Federal rate determined under section 1274(d) of such Code. "(B) TESTING RATE.—For purposes of this paragraph— "(i) IN GENERAL.—The testing rate determined under this subparagraph is the sum of— (I) 9 Dercent DIUS

"(II) if the borrowed amount exceeds $2,000,000, the excess determined under clause (ii) multiplied by a fraction the numerator of which is the borrowed amount to the extent it exceeds $2,000,000, and the denominator of which is the borrowed amount, "(ii) EXCESS.—For purposes of clause (i), the excess determined under this clause is the excess of 110 percent of the applicable Federal rate determined under section 1274(d) of such Code over 9 percent. "(C) IMPUTATION RATE.—For purposes of this paragraph— "(i) IN GENERAL.—The imputation rate determined under this subparagraph is the sum of—"(I) 10 percent, plus "(II) if the borrowed amount exceeds $2,000,000, the excess determined under clause (ii) multiplied by a fraction the numerator of which is the borrowed amount to the extent it exceeds $2,000,000, and the denominator of which is the borrowed amount. "(ii) EXCESS.—For purposes of clause (i), the excess determined under this clause is the excess of 120 percent of the applicable Federal rate determined under section 1274(d) of such Code over 10 percent. "(D) BORROWED AMOUNT.—For purposes of this paragraph, the term 'borrowed amount' means the stated principal amount. "(E) AGGREGATION RULES.—For purposes of this paragraph— "(i) all sales or exchanges which are part of the same transaction (or a series of related transactions) shall be treated as one sale or exchange, and

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