Page:United States Statutes at Large Volume 98 Part 3.djvu/811

 PUBLIC LAW 98-612—OCT. 31, 1984

98 STAT. 3183

"(ii) all debt instruments arising from the same transaction (or a series of related transactions) shall be treated as one debt instrument. "(F) CASH METHOD OF ACCOUNTING.—In the case of any sale or exchange before July 1, 1985, of property (other than new section 38 property) used in the active business of farming and in which the borrowed amount does not exceed $2,000,000— "(i) section 1274 of the Internal Revenue Code of 1954 shall not apply, and "(ii) interest on the obligation issued in connection with such sale or exchange shall be taken into account by both buyer and seller on the cash receipts and disbursements method of accounting. The Secretary of the Treasury or his delegate may by regulation prescribe rules to prevent the mismatching of interest income and interest deductions in connection with obligations on which interest is computed on the cash receipts and disbursements method of accounting. "(5) GENERAL RULE FOR ASSUMPTIONS OF LOANS.—Except as

provided in paragraphs (6) and (7), if any person— "(A) assumes, in connection with the sale or exchange of property, any debt obligation, or "(B) acquires any property subject to any debt obligation, sections 1274 and 483 of the Internal Revenue Code of 1954 shall apply to such debt obligation by reason of such assumption (or such acquisition). "(6) EXCEPTION FOR ASSUMPTIONS OF LOANS MADE ON OR BEFORE

OCTOBER 15, 1984.— "(A) IN GENERAL.—If any person— "(i) assumes, in connection with the sale or exchange of property, any debt obligation described in subparagraph (B) and issued on or before October 15, 1984, or "(ii) acquires any property subject to any such debt obligation issued on or before October 15, 1984, sections 1274 and 483 of the Internal Revenue Code of 1954 shall not be applied to such debt obligation by reason of such assumption (or such acquisition) unless the terms and conditions of such debt obligation are modified in connection with the assumption (or acquisition). "(B) OBLIGATIONS DESCRIBED IN THIS SUBPARAGRAPH.—A

debt obligation is described in this subparagraph if such obligation— "(i) was issued on or before October 15, 1984, and "(ii) was assumed (or property was taken subject to such obligation) in connection with the sale or exchange of property (including a deemed sale under section 338(a)) the sales price of which is greater than $100,000,000. "(C) REGULATIONS.—The Secretary shall prescribe such regulations as may be appropriate to effect the purpose of this paragraph and paragraph (5), including regulations relating to tax-exempt obligations, government subsidized loans, or other instruments. "(D)

CERTAIN

EXEMPT TRANSACTIONS.—The

Secretary

shall prescribe regulations under which any transaction shall be exempt from the application of this paragraph if

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