Page:United States Statutes at Large Volume 99 Part 1.djvu/527

 PUBLIC LAW 99-121—OCT. 11, 1985

99 STAT. 505

Public Law 99-121 99th Congress An Act To amend the Internal Revenue Code of 1954 to simplify the imputed interest rules of sections 1274 and 483, and for other purposes.

Oct. 11, 1985 [H.R. 2475]

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, TITLE I—AMENDMENTS TO IMPUTED INTEREST RULES

Real property.

SECTION 101. SIMPLIFICATION OF GENERAL IMPUTED INTEREST RULES. (a) REDUCTION OF IMPUTATION RATE FROM 120 TO 100 PERCENT; ELIMINATION OF SEPARATE TESTING RATE.— (1) AMENDMENTS OF SECTION 1274.—

(A) Subparagraph (B) of section 1274(b)(2) of the Internal Revenue Code of 1954 (defining imputed principal amount) is amended by striking out "120 percent of". (B) Clause (ii) of section 1274(c)(l)(A) of such Code is amended to read as follows: "(ii) in any other case, the imputed principal amount of such debt instrument determined under subsection (b), and". (C) Paragraph (2) of section 1274(c) of such Code is amended by striking out "the testing amount" and inserting in lieu thereof "the imputed principal amount of such debt instrument determined under subsection (b)". (D) Subsection (c) of section 1274 of such Code is amended by striking out paragraph (3) and by redesignating paragraph (4) as paragraph (3).

98 Stat. 538.

26 USC 1274.

(2) AMENDMENTS OF SECTION 483.—

98 Stat. 553.

(A) The last sentence of section 483(b) of such Code (defining total unstated interest) is amended by striking out "120 percent o f. (B) Subparagraph (B) of section 483(c)(l) of such Code is amended to read as follows: "(B) under which there is total unstated interest."

26 USC 483.

(b) INTEREST RATES REDETERMINED EACH MONTH.—

(1) IN GENERAL.—Paragraph (1) of section 1274(d) of such Code (defining applicable Federal rate) is amended by striking out subparagraphs (B), (C), and (D) and inserting in lieu thereof the following: "(B) DETERMINATION OF RATES.—During each calendar month, the Secretary shall determine the Federal shortterm rate, mid-term rate, and long-term rate which shall apply during the following calendar month. "(C) FEDERAL RATE FOR ANY CALENDAR MONTH.—For purposes of this paragraph— "(i) FEDERAL SHORT-TERM RATE.—The Federal shortterm rate shall be the rate determined by the Secretary based on the average market yield (during any 1-month

98 Stat. 538. 26 USC 1274.

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