text:
Page:United States Statutes at Large Volume 98 Part 1.djvu/840

 98 STAT. 792

26 USC 6015. 26 USC 6073. 26 USC 6153.

PUBLIC LAW 98-369—JULY 18, 1984 "(2) SHORT TAXABLE YEAR.—This section shall be applied to taxable years of less than 12 months in accordance with regulations prescribed by the Secretary, "(k) ESTATES AND TRUSTS.—This section shall not apply to any estate or trust. "(1) REGULATIONS.—The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section." SEC. 412. REPEAL OF REQUIREMENT OF DECLARATIONS, ETC. (a) GENERAL RULE.—The following provisions are hereby repealed: (1) Section 6015 (relating to declaration of estimated income tax by individuals). (2) Section 6073 (relating to time for filing declarations of estimated income tax by individuals). (3) Section 6153 (relating to installment payments of estimated income tax by individuals). (b) TECHNICAL AND CONFORMING AMENDMENTS.—

26 USC 871. 26 USC 1403. 26 USC 6012. 26 USC 6020. 26 USC 6201. Ante, p. 788. 26 USC 6362.

26 USC 6601.

Ante, p. 788. 26 USC 6651. Ante, p. 788. 26 USC 7203. 26 USC 7216.

26 USC 7701.

(1) Subsection (g) of section 871 is amended by striking out paragraph (6) and by redesignating paragraphs (7) and (8) as paragraphs (6) and (7), respectively. (2) Subsection (b) of section 1403 is amended by striking out paragraph (3). (3) Paragraph (2) of section 6012(b) is amended by striking out "or section 6015(a)". (4) Paragraph (1) of section 6020(b) is amended by striking out "(other than a declaration of estimated tax required under section 6015)". (5) Paragraph (1) of section 6201(b) is amended to read as follows: "(1) ESTIMATED INCOME TAX.—No unpaid amount of estimated income tax required to be paid under section 6154 or 6654 shall be assessed." (6) Paragraph (5) of section 6362(e) is amended by striking out "and section 6015 and other provisions relating to declarations of estimated income" and inserting in lieu thereof "and provisions relating to estimated income tax". (7) Subsection (h) of section 6601 is amended to read as follows: "(h) EXCEPTION AS TO ESTIMATED TAX.—This section shall not apply to any failure to pay any estimated tax required to be paid by section 6154 or 6654." (8) Subsection (d) of section 6651 is amended to read as follows: "(d) EXCEPTION FOR ESTIMATED TAX.—This section shall not apply to any failure to pay any estimated tax required to be paid by section 6154 or 6654." (9) Section 7203 is amended by striking out "(other than a return required under the authority of section 6015)". (10) Subsection (a) of section 7216 is amended— (A) by striking out "or declarations or amended declarations of estimated tax under section 6015,", and (B) by striking out "return or declaration" each place it appears and inserting in lieu thereof "return". (11) Paragraph (34) of section 7701(a) is hereby repealed. (c) CLERICAL AMENDMENTS.—

(1) The table of sections for subpart B of part II of subchapter A of chapter 61 is amended by striking out the item relating to section 6015.

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text:
Page:United States Statutes at Large Volume 98 Part 1.djvu/841

 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 793

(2) The table of sections for part V of subchapter A of chapter 61 is amended by striking out the item relating to section 6073. (3) The table of sections for subchapter A of chapter 62 is amended by striking out the item relating to section 6153. SEC. 413. CREDITING OF INCOME TAX OVERPAYMENT AGAINST ESTIMATED TAX LIABILITY. V

The application of the Internal Revenue Code of 1954 with respect to the crediting of a prior year overpayment of income tax against the estimated tax shall be determined— (1) without regard to Revenue Ruling 83-111 (and without regard to any other regulation, ruling, or decision reaching the same result as, or a result similar to, the result set forth in such Revenue Ruling); and r (2) with full regard to the rules (including Revenue Ruling 77475) before Revenue Ruling 83-111. SEC. 414. EFFECTIVE DATES. (a) SECTIONS 411 AND 412.— (1) IN GENERAL.—The amendments made by sections 411 and 412 shall apply with respect to taxable years beginning after December 31, 1984. (2) WAIVER AUTHORITY.—The provisions of paragraph (3) of section 6654(e) of the Internal Revenue Code of 1954 (as amended by section 411) shall also apply with respect to underpayments for taxable years beginning in 1984. (b) SECTION 413.—The provisions of section 413 shall take effect on January 1, 1984.

Subtitle B—Domestic Relations

26 USC i et seq. ' ^

8«v. > sn is 26 USC 6654 "ote. ^«/«' PP- '''88, ^^2. Ante, p. 788. Supra.

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SEC. 421. TREATMENT OF TRANSFERS OF PROPERTY BETWEEN SPOUSES OR INCIDENT TO DIVORCE.

(a) GENERAL RULE.—Part III of subchapter 0 of chapter 1 (relating to common nontaxable exchanges) is amended by adding at the end thereof the following new section: "SEC. 1041. TRANSFERS OF PROPERTY BETWEEN SPOUSES OR INCIDENT TO DIVORCE.

26 USC 1041.

"(a) GENERAL RULE.—No gain or loss shall be recognized on a transfer of property from an individual to (or in trust for the benefit ofl"(1) a spouse, or "(2) a former spouse, but only if the transfer is incident to the divorce. "(b) TRANSFER TREATED AS GIFT; TRANSFEREE HAS TRANSFEROR'S

BASIS.—In the case of any transfer of property described in subsection (a)— "(1) for purposes of this subtitle, the property shall be treated as acquired by the transferee by gift, and "(2) the basis of the transferee in the property shall be the adjusted basis of the transferor. "(c) INCIDENT TO DIVORCE.—For purposes of subsection (a)(2), a transfer of property is incident to the divorce if such transfer— "(1) occurs within 1 year after the date on which the marriage ceases, or

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license: Creative Commons - Attribution Share-Alike - https://creativecommons.org/licenses/by-sa/4.0/


text: Author:James Johonnot

title: Author:James Johonnot


text:
Page:United States Statutes at Large Volume 98 Part 1.djvu/842

 98 STAT. 794

PUBLIC LAW 98-369—JULY 18, 1984 "(2) is related to the cessation of the marriage. "(d) SPECIAL RULE WHERE SPOUSE IS NONRESIDENT AUEN.—Para-

graph (1) of subsection (a) shall not apply if the spouse of the individual making the transfer is a nonresident alien." (b) TECHNICAL AMENDMENTS.—

26 USC 72.

26 USC 101. 26 USC 453B.

(1) REPEAL OF SECTION 72 (k).—Subsection (k) of section 72

(relating to payments in discharge of alimony) is hereby repealed. (2) REPEAL OF SECTION lOi (e).—Subsection (e) of section 101 (relating to alimony, etc., payments) is hereby repealed. (3) COORDINATION WITH SECTION 453B.—Section 453B (relating to gain or loss on disposition of installment obligations) is amended by adding at the end thereof the following new subsection: "(g) TRANSFERS BETWEEN SPOUSES OR INCIDENT TO DIVORCE.—In

Ante, p. 793.

26 USC 1001.

26 USC 1015.

Ante, p. 793.

Ante, p. 708.

26 USC 453.

the case of any transfer described in subsection (a) of section 1041— "(1) subsection (a) of this section shall not apply, and "(2) the same tax treatment with respect to the transferred installment obligation shall apply to the transferee as would have applied to the transferor.' (4) TERM INTERESTS.—Paragraph (1) of section 1001(e) (relating to certain term interest) is amended by striking out "section 1014 or 1015" and inserting in lieu thereof "section 1014, 1015, or 1041". (5) COORDINATION WITH SECTION IOI5.—Section 1015 (relating

to basis of property acquired by gifts and transfers in trust) is amended by adding at the end thereof the following new subsection: "(e) GIFTS BETWEEN SPOUSES.—In the case of any property acquired by gift in a transfer described in section 1041(a), the basis of such property in the hands of the transferee shall be determined under section 1041(b)(2) and not this section." (6) COORDINATION WITH SECTION 1239.— (A) Subsection (b) of section 1239, as amended by this Act, is amended by striking out paragraph (1) and by redesignating paragraphs (2) and (3) as paragraphs (1) and (2), respectively. (B) Subparagraph (C) of section 453(h)(l) (relating to special rule where obligor and shareholder are related persons) is amended by striking out "the obligor of any installment obligation and the shareholder are related persons" and inserting in lieu thereof "the obligor of any installment obligation and the shareholder are married to each other or are related persons". (C) The subsection heading for section 453(g) is amended by striking out "SPOUSE OR".

26 USC 47.

(7) COORDINATION WITH SECTION 47.—Section 47 (relating to certain dispositions, etc., of section 38 property) is amended by adding at the end thereof the following new subsection: "(e) TRANSFERS BETWEEN SPOUSES OR INCIDENT TO DIVORCE.—In

Ante, p. 793.

the case of any transfer described in subsection (a) of section 1041— "(1) subsection (a) of this section shall not apply, and "(2) the same tax treatment under this section with respect to the transferred property shall apply to the transferee as would have applied to the transferor." (c) CLERICAL AMENDMENT.—The table of sections for such part III is amended by adding at the end thereof the following:

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text:
Page:United States Statutes at Large Volume 98 Part 1.djvu/843

 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 795

"Sec. 1041. Transfers of property between spouses or incident to divorce." (d) EFFECTIVE DATES.—

(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to transfers after the date of the enactment of this Act in taxable years ending after such date.

26 USC I04i

"ot«

(2) ELECTION TO HAVE AMENDMENTS APPLY TO TRANSFERS AFTER

1983.—If both spouses or former spouses make an election under this paragraph, the amendments made by this section shall apply to all transfers made by such spouses (or former spouses) after December 31, 1983. (3) EXCEPTION FOR TRANSFERS PURSUANT TO EXISTING DE-

CREES.—Except in the case of an election under paragraph (2), the amendments made by this section shall not apply to transfers under any instrument in effect on or before the date of the enactment of this Act unless both spouses (or former spouses) elect to have such amendments apply to transfers under such instrument. (4) ELECTION.—Any election under paragraph (2) or (3) shall be made in such manner, at such time, and subject to such conditions, as the Secretary of the Treasury or his delegate may by regulations prescribe. SEC. 422. TAX TREATMENT OF ALIMONY AND SEPARATE MAINTENANCE PAYMENTS. (a) GENERAL RULE.—Section 71 (relating to alimony and separate

maintenance payments) is amended to read as follows: "SEC. 71. ALIMONY AND SEPARATE MAINTENANCE PAYMENTS. "(a) GENERAL RULE.—Gross income includes amounts received as alimony or separate maintenance payments.

26 USC 71.

"•

'

,^ ''

"(b) ALIMONY OR SEPARATE MAINTENANCE PAYMENTS DEFINED.—

For purposes of this section— "(1) IN GENERAL.—The term 'alimony or separate maintenance payment' means any payment in cash if— spouse under a divorce or separation instrument, "(B) the divorce or separation instrument does not designate such payment as a payment which is not includible in gross income under this section and not allowable as a deduction under section 215, "(C) in the case of an individual legally separated from his spouse under a decree of divorce or of separate mainte^ ^ nance, the payee spouse and the payor spouse are not members of the same household at the time such payment is made, and "(D) there is no liability to make any such payment for any period after the death of the payee spouse and there is no liability to make any payment (in cash or property) as a ' substitute for such payments after the death of the payee spouse (and the divorce or separation instrument states that there is no such liability). "(2) DIVORCE OR SEPARATION INSTRUMENT.—The term 'divorce or separation instrument' means— "(A) a decree of divorce or separate maintenance or a written instrument incident to such a decree, "(B) a written separation agreement, or
 * (A) such payment is received by (or on behalf of) a

Post, p. 797.

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text:
Page:United States Statutes at Large Volume 98 Part 1.djvu/844

 98 STAT. 796 <

PUBLIC LAW 98-369—JULY 18, 1984 "(C) a decree (not described in subparagraph (A)) requiring a spouse to make payments for the support or maintenance of the other spouse. "(c) PAYMENTS TO SUPPORT CHILDREN.—

"(1) IN GENERAL.—Subsection (a) shall not apply to that part of any payment which the terms of the divorce or separation instrument fix (in terms of an amount of money or a part of the payment) as a sum which is payable for the support of children, of the payor spouse. ^ "(2) TREATMENT OF CERTAIN REDUCTIONS RELATED TO CONTINGENCIES INVOLVING CHILD.—For purposes of paragraph (1), if

any amount specified in the instrument will be reduced— "(A) on the happening of a contingency specified in the instrument relating to a child (such as attaining a specified age, marrying, dying, leaving school, or a similar contingency), or "(B) at a time which can clearly be associated with a contingency of a kind specified in paragraph (1), an amount equal to the amount of such reduction will be treated as an amount fixed as payable for the support of children of the payor spouse, "(3) SPECIAL RULE WHERE PAYMENT IS LESS THAN AMOUNT SPECIFIED IN INSTRUMENT.—For purposes of this subsection, if

Post, p. 797.

any payment is less than the amount specified in the instrument, then so much of such payment as does not exceed the sum payable for support shall be considered a payment for such support. "(d) SPOUSE.—For purposes of this section, the term 'spouse' includes a former spouse. "(e) EXCEPTION FOR JOINT RETURNS.—This section and section 215 shall not apply if the spouses make a joint return with each other. "(f) SPECIAL RULES TO PREVENT EXCESS FRONT-LOADING OF A U MONY PAYMENTS.— "(1) REQUIREMENT THAT PAYMENTS BE FOR MORE THAN 6

YEARS.—Alimony or separate maintenance payments (in excess of $10,000 during any calendar year) paid by the payor spouse to the payee spouse shall not be treated as alimony or separate maintenance payments unless such payments are to be made by the payor spouse to the payee spouse in each of the 6 postseparation years (not taking into account any termination contingent on the death of either spouse or the remarriage of the payee spouse). "(2)

RECOMPUTATION WHERE PAYMENTS DECREASE BY MORE

THAN $10,000.—If there is an excess amount determined under paragraph (3) for any computation year— "(A) the payor spouse shall include such excess amount in gross income for the payor spouse's taxable year beginning in the computation year, and "(B) the payee spouse shall be allowed a deduction in computing adjusted gross income for such excess amount for the payee spouse's taxable year beginning in the computation year. "(3) DETERMINATION OF EXCESS AMOUNT.—The excess amount determined under this paragraph for any computation year is the sum of— "(A) the excess (if any) of—

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text:
Page:United States Statutes at Large Volume 98 Part 1.djvu/845

 PUBLIC LAW 98-369—JULY 18, 1984 "(i) the amount of alimony or separate maintenance payments paid by the payor spouse during the immediately preceding post-separation year, over "(ii) the amount of the alimony or separate maintenance payments paid by the payor spouse during the computation year increased by $10,000, plus "(B) a like excess for each of the other preceding postseparation years. In determining the amount of the alimony or separate maintenance payments paid by the payor spouse during any preceding post-separation year, the amount paid during such year shall be reduced by any excess previously determined in respect of such year under this paragraph. "(4) DEFINITIONS.—For purposes of this subsection— "(A) POST-SEPARATION YEAR.—The term 'post-separation year' means any calendar year in the 6 calendar year t: period beginning with the first calendar year in which the payor spouse paid to the payee spouse alimony or separate maintenance payments to which this section applies. ^3. "(B) COMPUTATION YEAR,—The term 'computation year' means the post-separation year for which the excess under J.JJ, J 4 paragraph (3) is being determined.

98 STAT. 797

•'•:>,•: v, &;

• ^ ^ •i i

"(5) EXCEPTIONS.— "(A) WHERE PAYMENTS CEASE BY REASON OF DEATH OR

REMARRIAGE.—Paragraph (2) shall not apply to any postseparation year (and subsequent post-separation years) if^ "(i) either spouse dies before the close of such postseparation year or the payee spouse remarries before the close of such post-separation year, and "(ii) the alimony or separate maintenance payments cease by reason of such death or remarriage. "(B) SUPPORT PAYMENTS.—For purposes of this subsection, the term 'alimony or separate maintenance payment' shall not include any payment received under a decree described in subsection 0^)(2)(C). "(C)

FLUCTUATING PAYMENTS NOT WITHIN CONTROL OF

PAYOR SPOUSE.—For purposes of this subsection, the term 'alimony or separate maintenance payment' shall not include any payment to the extent it is made pursuant to a continuing liability (over a period of not less than 6 years) to pay a fixed portion of the income from a business or property or from compensation for employment or selfemployment." (b) AMENDMENT OF SECTION 215.—Section 215 (relating to deduction for alimony, etc., payments) is amended to read as follows: "SEC. 215. ALIMONY, ETC., PAYMENTS. "(a) GENERAL RULE.—In the case of an individual, there shall be allowed as a deduction an amount equal to the alimony or separate maintenance payments paid during such individual's taxable year.

%i:: lay i K

V ^ QR- .,J W^

/^ 26 USC 215.

'

>i.

"(b) ALIMONY OR SEPARATE MAINTENANCE PAYMENTS DEFINED.—

For purposes of this section, the term 'alimony or separate maintenance payment' means any alimony or separate maintenance payment (as defined in section 71(b)) which is includible in the gross income of the recipient under section 71. "(c)

REQUIREMENT OF IDENTIFICATION NUMBER.—The Secretary

may prescribe regulations under which—

Ante, p. 795.

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text:
Page:United States Statutes at Large Volume 98 Part 1.djvu/846

 98 STAT. 798

PUBLIC LAW 98-369—JULY 18, 1984 "(1) any individual receiving alimony or separate maintenance payments is required to furnish such individual's taxpayer identification number to the individual making such payments, and "(2) the individual making such payments is required to include such taxpayer identification number on such individual's return for the taxable year in which such payments are made. "(d) COORDINATION WITH SECTION 682.—No deduction shall be allowed under this section with respect to any payment if, by reason of section 682 (relating to income of alimony trusts), the amount thereof is not includible in such individual's gross income." (c) PENALTY FOR FAILURE TO SUPPLY IDENTIFYING NUMBER.—Sec-

26 USC 6676.

tion 6676 (relating to failure to supply identifying number) is amended by redesignating subsection (c) as subsection (d) and by inserting after subsection (b) the following new subsection:

Ante, p. 797.

SECTION 215.—If any person who is required by regulations prescribed under section 215— "(1) to furnish his taxpayer identification number to another person, or "(2) to include on his return the taxpayer identification number of another person, fails to comply with such requirement at the time prescribed by such regulations, such person shall, unless it is shown that such failure is due to reasonable cause and not to willful neglect, pay a penalty of $50 for each such failure."

"(c) PENALTY FOR FAILURE TO SUPPLY IDENTIFYING NUMBER UNDER

(d) TECHNICAL AMENDMENTS.—

26 USC 219.

(1) Subparagraph (B) of section 219(b)(4) (relating to certain divorced individuals) is amended by striking out all that follows "gross income" and inserting in lieu thereof "under section 71 (relating to alimony and separate maintenance payments) by reason of a payment under a decree of divorce or separate maintenance or a written instrument incident to such a decree." (2) Subsection (b) of section 682 (relating to income of an estate or trust in case of divorce, etc.) is amended— (A) by striking out "or section 71", and (B) by striking out the last sentence. (3) Paragraph (17) of section 7701(a) (defining husband and wife) is amended by striking out "71,152(b)(4), 215, and 682" and inserting in lieu thereof "152(b)(4) and 682".

26 USC 682.

26 USC 7701. 26 USC 71 note.

(e) EFFECTIVE D A T E. —

(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section shall apply with respect to divorce or separation instruments (as defined in section 71(b)(2) of the Internal Revenue Code of 1954, as amended by this section) executed after December 31, 1984.

Ante, p. 795.

(2) MODIFICATIONS OF INSTRUMENTS EXECUTED BEFORE JANUARY

• j^^.. Ante, p. 797.

,,

1, 1985.—The amendments made by this section shall also apply to any divorce or separation instrument (as so defined) executed before January 1, 1985, but modified on or after such date if the modification expressly provides that the amendments made by this section shall apply to such modification. (3) REQUIREMENT OF IDENTIFICATION NUMBER.—Section 215(c) of the Internal Revenue Code of 1954 (as amended by subsection

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text:
Page:United States Statutes at Large Volume 98 Part 1.djvu/847

 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 799

(b)) and the amendments made by subsection (c) shall apply to payments made after December 31, 1984. SEC. 423. DEPENDENCY EXEMPTION IN THE CASE OF CHILD OF DIVORCED PARENTS. ETC. (a) GENERAL RULE.—Subsection (e) of section 152 (relating to 26 USC 152. support test in case of child of divorced parents, etc.) is amended to read as follows: "(e) SUPPORT TEST IN CASE OF CHILD OF DIVORCED PARENTS, ETC.— "(1) CUSTODIAL PARENT GETS EXEMPTION.—Except as otherwise

jj, .^

provided in this subsection, if— "(A) a child (as defined in section 151(e)(3)) receives over half of his support during the calendar year from his parents— "(i) who are divorced or legally separated under a decree of divorce or separate maintenance, "(ii) who are separated under a written separation agreement, or "(iii) who live apart at all times during the last 6 months of the calendar year, and "(B) such child is in the custody of one or both of his pt^rents for more than one-half of the calendar year, such child shall be treated, for purposes of subsection (a), as receiving over half of his support during the calendar year from the parent having custody for a greater portion of the calendar year (hereinafter in this subsection referred to as the 'custodial parent'). "(2) EXCEPTION WHERE CUSTODIAL PARENT RELEASES CLAIM TO EXEMPTION FOR THE YEAR.—A child of parents described in

paragraph (1) shall be treated as having received over half of his support during a calendar year from the noncustodial parent if— "(A) the custodial parent signs a written declaration (in such manner and form as the Secretary may by regulations prescribe) that such custodial parent will not claim such child as a dependent for any taxable year beginning in such calendar year, and "(B) the noncustodial parent attaches such written declaration to the noncustodial parent's return for the taxable year beginning during such calendar year. For purposes of this subsection, the term 'noncustodial parent' means the parent who is not the custodial parent. "(3) EXCEPTION FOR MULTIPLE-SUPPORT AGREEMENT.—This sub-

••" -^ '~'-^' ' i.«K,

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section shall not apply in any case where over half of the support of the child is treated as having been received from a taxpayer under the provisions of subsection (c). "(4) EXCEPTION FOR CERTAIN PRE-1985 INSTRUMENTS.—

!i

"(A) IN GENERAL.—A child of parents described in paragraph (1) shall be treated as having received over half his support during a calendar year from the noncustodial parent if— "(i) a qualified pre-1985 instrument between the parents applicable to the taxable year beginning in such calendar year provides that the noncustodial parent shall be entitled to any deduction allowable under section 151 for such child, and

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text:
Page:United States Statutes at Large Volume 98 Part 1.djvu/848

 98 STAT. 800

f -' • '-

PUBLIC LAW 98-369—JULY 18, 1984 "(ii) the noncustodial parent provides at least $600 for the support of such child during such calendar year. For purposes of this subparagraph, amounts expended for the support of a child or children shall be treated as received from the noncustodial parent to the extent that such parent provided amounts for such support. "(B) QUALIFIED PRE-1985 INSTRUMENT.—For purposes of this paragraph, the term 'qualified pre-1985 instrument' means any decree of divorce or separate maintenance or written agreement— "(i) which is executed before January 1, 1985, "(ii) which on such date contains the provision described in subparagraph (A)(i), and "(iii) which is not modified on or after such date in a modification which expressly provides that this paragraph shall not apply to such decree or agreement. "(5) SPECIAL RULE FOR SUPPORT RECEIVED FROM NEW SPOUSE OF

PARENT.—For purposes of this subsection, in the case of the remarriage of a parent, support of a child received from the parent's spouse shall be treated as received from the parent. "(6) CROSS REFERENCE.—

"For provision treating child as dependent of both parents for purposes of medical expense deduction, see section 213(d)(4)." (b) TREATMENT AS DEPENDENT OF BOTH PARENTS FOR MEDICAL EXPENSE DEDUCTION.—

26 USC 213. Post, p. 847.

(1) Subsection (d) of section 213 (relating to definitions) is amended by redesignating paragraphs (4), (5), and (6) as paragraphs (5), (6), and (7), respectively, and by inserting after paragraph (3) the following new paragraph:

Ante, p. 799.

ETC.—Any child to whom section 152(e) applies shall be treated as a dependent of both parents for purposes of this section." (2) Subsection (b) of section 105 is amended by adding at the end thereof the following new sentence: "Any child to whom section 152(e) applies shall be treated as a dependent of both parents for purposes of this subsection." (3) Paragraph (6) of section 213(d) (as redesignated by paragraph (D) is amended by striking out "the limitations of paragraph (4)" and inserting in lieu thereof "the limitations of paragraph (5)".

"(4) SPECIAL RULE IN THE CASE OF CHILD OF DIVORCED PARENTS,

26 USC 105.

(c) TREATMENT OF CERTAIN MARRIED INDIVIDUALS LIVING APART.—

26 USC 143.

(1) Subsection (b) of section 143 (relating to certain married individuals living apart) is amended to read as follows: "(b) CERTAIN MARRIED INDIVIDUALS LIVING APART.—For purposes

Ante, p. 799.

of those provisions of this title which refer to this subsection, if— "(1) an individual who is married (within the meaning of subsection (a)) and who files a separate return maintains as his home a household which constitutes for more than one-half of the taxable year the principal place of abode of a child (within the meaning of section 151(e)(3)) with respect to whom such individual is entitled to a deduction for the taxable year under section 151 (or would be so entitled but for paragraph (2) or (4) of section 152(e)), "(2) such individual furnishes over one-half of the cost of maintaining such household during the taxable year, and

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text: Author:Friedrich Richard Adelbert Johow

title: Author:Friedrich Richard Adelbert Johow


text:
Page:United States Statutes at Large Volume 98 Part 1.djvu/849

 PUBLIC LAW 98-369—JULY 18, 1984 "(3) during the last 6 months of the taxable year, such individual's spouse is not a member of such household, such individual shall not be considered as married." (2) Subparagraph (A) of section 2(b)(1) (defining head of household) is amended— (A) by striking out "which constitutes for such taxable year" and inserting in lieu thereof "which constitutes for ,,:more than one-half of such taxable year", and (B) by striking out "under section 151" in clause (i) and inserting in lieu thereof "under section 151 (or would be so entitled but for paragraph (2) or (4) of section 152(e))". (3) Paragraph (1) of section 43(c) (defining eligible individual) (A) by inserting after "section 151(e)(3))" in subparagraph (A)(i) the following: "or would be so entitled but for paragraph (2) or (4) of section 152(e)", and ^vi (B) by striking out "the child has the same principal place of abode as the individual" in subparagraph (B) and insert's ing in lieu thereof "the child has the same principal place of abode as the individual for more than one-half of the c taxable year". (4) Paragraph (5) of section 44A(f) (relating to special dependency test in case of divorced parents, etc.) is amended to read as follows:
 * is amended—

98 STAT. 801

•i

26 USC 2.

26 USC 43. Post, p. 826.

26 USC 44A. Post, p. 826.

"(5) SPECIAL DEPENDENCY TEST IN CASE OF DIVORCED PARENTS,

ETC.—If^ "(A) paragraph (2) or (4) of section 152(e) applies to any Ante, p. 799. child with respect to any calendar year, and "(B) such child is under the age of 15 or is physically or mentally incapable of caring for himself, in the case of any taxable year beginning in such calendar year, such child shall be treated as a qualifying individual described in subparagraph (A) or (B) of subsection (c)(1) (whichever is appropriate) with respect to the custodial parent (within the meaning of section 152(e)(l)), and shall not be treated as a qualifying individual with respect to the noncustodial parent." (d) EFFECTIVE DATE.—The amendments made by this section shall 26 USC 2 note. apply to taxable years beginning after December 31, 1984. SEC. 424. INNOCENT SPOUSE RELIEVED OF LIABILITY IN CERTAIN CASES. (a) GENERAL RULE.—Subsection (e) of section 6013 (relating to 26 USC 6013. spouse relieved of liability in certain cases) is amended to read as follows: "(e) SPOUSE REUEVED OF LIABILITY IN CERTAIN CASES.—

"(1) IN GENERAL.—Under regulations prescribed by the Secretary, if— "(A) a joint return has been made under this section for a taxable year, "(B) on such return there is a substantial understatement of tax attributable to grossly erroneous items of one spouse, "(C) the other spouse establishes that in signing the return he or she did not know, and had no reason to know, that there was such substantial understatement, and "(D) taking into account all the facts and circumstances, it is inequitable to hold the other spouse liable for the -udeficiency in tax for such taxable year attributable to such substantial understatement,

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text:
Page:United States Statutes at Large Volume 98 Part 1.djvu/850

 98 STAT. 802

PUBLIC LAW 98-369—JULY 18, 1984 then the other spouse shall be relieved of liability for tax (including interest, penalties, and other amounts) for such taxable year to the extent such liability is attributable to such substantial understatement. "(2) GROSSLY ERRONEOUS ITEMS.—For purposes of this subsection, the term 'grossly erroneous items' means, with respect to any spouse— "(A) any item of gross income attributable to such spouse which is omitted from gross income, and "(B) any claim of a deduction, credit, or basis by such spouse in an amount for which there is no basis in fact or law. "(3) SUBSTANTIAL UNDERSTATEMENT.—For purposes of this subsection, the term 'substantial understatement' means any understatement (as defined in section 6661(b)(2)(A)) which exceeds $500. "(4) UNDERSTATEMENT MUST EXCEED SPECIFIED PERCENTAGE OF SPOUSE'S INCOME.— "(A) ADJUSTED GROSS INCOME OF $20,000 OR LESS.—If the

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spouse's adjusted gross income for the preadjustment year is $20,000 or less, this subsection shall apply only if the liability described in paragraph (1) is greater than 10 percent of such adjusted gross income. "(B) ADJUSTED GROSS INCOME OF. MORE THAN $20,000.—If the spouse's adjusted gross income for the preadjustment year is more than $20,000, subparagraph (A) shall be applied by substituting '25 percent for '10 percent'. "(C) PREADJUSTMENT YEAR.—For purposes of this paragraph, the term 'preadjustment year means the most recent taxable year of the spouse ending before the date the deficiency notice is mailed. "(D) COMPUTATION OF SPOUSE'S ADJUSTED GROSS INCOME.—

If the spouse is married to another spouse at the close of the preadjustment year, the spouse's adjusted gross income shall include the income of the new spouse (whether or not they file a joint return). "(E) EXCEPTION FOR OMISSIONS FROM GROSS INCOME.—This

paragraph shall not apply to any liability attributable to the omission of an item from gross income. "(5)

SPECIAL RULE FOR COMMUNITY PROPERTY INCOME.—For

purposes of this subsection, the determination of the spouse to whom items of gross income (other than gross income from property) ai^e attributable shall be made without regard to community property laws." (b) TREATMENT OF COMMUNITY INCOME.—

26 USC 66.

(1) IN GENERAL.—Section 66 (relating to treatment of community income where spouses live apart) is amended by redesignating subsection (b) as subsection (d) and by inserting after subsection (a) the following new subsections: "(b) SECRETARY MAY DISREGARD COMMUNITY PROPERTY LAWS WHERE SPOUSE NOT NOTIFIED OF COMMUNITY INCOME.— The Secre-

tary may disallow the benefits of any community property law to any taxpayer with respect to any income if such taxpayer acted as if solely entitled to such income and failed to notify the taxpayer's spouse before the due date (including extensions) for filing the return for the taxable year in which the income was derived of the nature and amount of such income.

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98 STAT. 803

"(c) SPOUSE REUEVED OF LIABILITY IN CERTAIN OTHER CASES.—

Under regulations prescribed by the Secretary, if— "(1) an individual does not file a joint return for any taxable year, "(2) such individual does not include in gross income for such taxable year an item of community income properly includible therein which, in accordance with the rules contained in section 879(a), would be treated as the income of the other spouse, "(3) the individual establishes that he or she did not know of, and had no reason to know of, such item of community income, and "(4) taking into account all facts and circumstances, it is inequitable to include such item of community income in such individual's gross income, then, for purposes of this title, such item of community income shall be included in the gross income of the other spouse (and not in the gross income of the individual)."

••"•

''

(2) CLERICAL AMENDMENTS.—

(&' •

(A) The section heading of section 66 is amended by 26 USC 66. striking out "WHERE SPOUSES LIVE APART". (B) The subsection heading of subsection (a) of section 66 is amended by striking out "GENERAL RULE" and inserting ^ '' in lieu thereof "TREATMENT OF COMMUNITY INCOME WHERE SPOUSES LIVE APART".

'

(C) The table of sections for part I of subchapter B of chapter 1 is amended by striking out "where spouses live apart" in the item relating to section 66. (c) EFFECTIVE DATES.—

^

26 USC 6013

(1) IN GENERAL.—Except as provided in paragraph (2), the note. amendments made by subsections (a) and (b) shall apply to all taxable years to which the Internal Revenue Code of 1954 26 USC i et seq. applies. Corresponding provisions shall be deemed to be included in the Internal Revenue Code of 1939 and shall apply to all 53 Stat. i. taxable years to which such Code applies. (2) AUTHORITY TO DISREGARD COMMUNITY PROPERTY LAWS.—

Subsection (b) of section 66 of the Internal Revenue Code of Ante, p. 802. 1954, as added by subsection (b), shall apply to taxable years beginning after December 31, 1984. SEC. 425. TREATMENT OF CERTAIN PROPERTY SETTLEMENTS FOR PURPOSES OF ESTATE AND GIFT TAXES. (a) DEDUCTION ALLOWED AGAINST ESTATE TAX FOR TRANSFERS SATISFYING SECTION 2516.—

'

(1) IN GENERAL.—Subsection (b) of section 2043 (relating to 26 USC 2043. transfers for insufficient consideration) is amended to read as follows: "(b) MARITAL RIGHTS NOT TREATED AS CONSIDERATION.—

"(1) IN GENERAL.—For purposes of this chapter, a relinquishment or promised relinquishment of dower or curtesy, or of a statutory estate created in lieu of dower or curtesy, or of other marital rights in the decedent's property or estate, shall not be considered to any extent a consideration 'in money or money's worth'. "(2) EXCEPTION.—For purposes of section 2053 (relating to expenses, indebtedness, and taxes), a transfer of property which satisfies the requirements of paragraph (1) of section 2516 (relating to certain property settlements) shall be considered to be

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Page:United States Statutes at Large Volume 98 Part 1.djvu/852

 98 STAT. 804

PUBLIC LAW 98-369—JULY 18, 1984

26 USC 2053.

™. made for an adequate and full consideration in money or money's worth." (2) CROSS REFERENCE.—Subsection (e) of section 2053 (relating to deduction for expenses, indebtedness, and taxes) is amended to read as follows:

Ante, p. 803.

"(e) MARITAL RIGHTS.— "For provisions treating certain relinquishments of marital rights as consideration in money or money's worth, see section 2043(b)(2)." (b) SECTION 2516 EXTENDED TO AGREEMENTS ENTERED INTO WITHIN 1 YEAR AFTER DIVORCE.—Section 2516 (relating to certain property

settlements) is amended by striking out so much of such section as precedes paragraph (1) thereof and inserting in lieu thereof the following: "Where a husband and wife enter into a written agreement relative to their marital and property rights and divorce occurs within the 3-year period beginning on the date 1 year before such agreement is entered into (whether or not such agreement is approved by the divorce decree), any transfers of property or interests in property made pursuant to such agreement—". 26 USC 2043 note. 26 USC 2516 note.

26 USC 151.

. -..^^ i jtiiit K

(c) EFFECTIVE DATES.— (1) SUBSECTION (a).—The amendments made by subsection (a)

shall apply to estates of decedents dying after the date of the enactment of this Act. (2) SUBSECTION (b).—The amendment made by subsection (b) shall apply to transfers after the date of the enactment of this Act. SEC. 426. INCOME FROM SHELTERED WORKSHOPS NOT TAKEN INTO ACCOUNT IN DETERMINING DEPENDENCY EXEMPTION. (a) IN GENERAL.—Subsection (e) of section 151 (relating to additional personal exemption for dependents) is amended by adding at the end thereof the following new paragraph: i«H

"(5) CERTAIN INCOME O F HANDICAPPED DEPENDENTS NOT TAKEN INTO ACCOUNT.—

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"(A) IN GENERAL.—For purposes of paragraph (I)(A), the gross income of an individual who is permanently and totally disabled shall not include income attributable to services performed by the individual at a sheltered workshop if— "(i) the availability of medical care at such workshop is the principal reason for his presence there, and "(ii) the income arises solely from activities at such workshop which are incident to such medical care. "(B) SHELTERED WORKSHOP DEFINED.—For purposes of subparagraph (A), the term 'sheltered workshop' means a school— "(i) which provides special instruction or training designed to alleviate the disability of the individual, and "(ii) which is operated by— "(I) an organization described in section 501(c)(3) and exempt from tax under section 501(a), or "(II) a State, a possession of the United States, any political subdivision of any of the foregoing, the United States, or the District of Columbia. "(C) PERMANENT AND TOTAL DISABILITY DEFINED.—An individual shall be treated as permanently and totally disabled

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for purposes of this paragraph if such individual would be so treated under paragraph (3) of section 37(e)." 97 Stat. 85. (b) EFFECTIVE DATE.—The amendment made by subsection (a) Post, p. 826. shall apply to taxable years beginning after December 31, 1984. 26 USC 151 note.

Subtitle C—Revision of At-Risk Rules SEC. 431. REVISION OF INVESTMENT CREDIT AT-RISK RULES. (a) IN GENERAL.—So much of paragraph (8) of section 46(c) (relat- 26 USC 46. ing to limitation to amount at risk) as precedes subparagraph (F) thereof is amended to read as follows: "(8) CERTAIN NONRECOURSE FINANCING EXCLUDED FROM CREDIT

BASE.— "(A) LIMITATION.—The credit base of any property to •; i. which this paragraph applies shall be reduced by the nonqualified nonrecourse financing with respect to such property (as of the close of the taxable year in which placed in service). "(B) PROPERTY TO WHICH PARAGRAPH APPLIES.—This para• graph applies to any property which— & "(i) is placed in service during the taxable year by a taxpayer described in section 465(a)(1), and "(ii) is used in connection with an activity with respect to which any loss is subject to limitation under section 465. "(C) CREDIT BASE DEFINED.—For purposes of this paragraph, the term 'credit base' means— "(i) in the case of new section 38 property, the basis of Post, p. 827. the property, or ~ ^'ri^ "(ii) in the case of used section 38 property, the cost of such property. "(D) NONQUAUFIED NONRECOURSE FINANCING.— "(i) IN GENERAL.—For purposes of this paragraph and paragraph (9), the term 'nonqualified nonrecourse financing means any nonrecourse financing which is not » ,,;,«;,. qualified commercial financing. "(ii) QUALIFIED COMMERCIAL FINANCING.—For plirposes of this paragraph, the term 'qualified commercial financing' means any financing with respect to any property if^ "(I) such property is acquired by the taxpayer from a person who is not a related person, isteb' J t "(II) the amount of the nonrecourse financing with respect to such property does not exceed 80 percent of the credit base of such property, and "(III) such financing is borrowed from a qualified person or represents a loan from any Federal, State, or local government or instrumentality thereof, or is guaranteed by any Federal, State, or ' local government. Such term shall not include any convertible debt. ^' "(iii) NONRECOURSE FINANCING.—For purposes of this subparagraph, the term 'nonrecourse financing' includes— "(I) any amount with respect to which the taxpayer is protected against loss through guarantees.

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Page:United States Statutes at Large Volume 98 Part 1.djvu/854

 98 STAT. 806

PUBLIC LAW 98-369—JULY 18, 1984 wi hhi'^^ li

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stop-loss agreements, or other similar arrangements, and "(ID except to the extent provided in regulations, any amount borrowed from a person who has an interest (other than as a creditor) in the activity in which the property is used or from a related person to a person (other than the taxpayer) having such an interest. In the case of amounts borrowed by a corporation from a shareholder, subclause (II) shall not apply to an interest as a shareholder. "(iv) QuAUFiED PERSON.—For purposes of this paragraph, the term 'qualified person' means any person which is actively and regularly engaged in the business of lending money and which is not— "(I) a related person with respect to the taxpayer, "(II) a person from which the taxpayer acquired the property (or a related person to such person), or

"(III) a person who receives a fee with respect to the taxpayer's investment in the property (or a related person to such person). "(v) RELATED PERSON.—For purposes of clause (i), the term 'related person' has the meaning given such term by section 168(e)(4). Except as otherwise provided in >! regulations prescribed by the Secretary, the determination of whether a person is a related person shall be ?I8.c,!f«A * 'jv;' ^ made as of the close of the taxable year in which the property is placed in service. ^€:«> ft "(E) APPLICATION TO PARTNERSHIPS AND S CORPORATIONS.— For purposes of this paragraph and paragraph (9)— "(i) IN GENERAL.—Except as otherwise provided in this subparagraph, in the case of any partnership or S corporation, the determination of whether a partner's « or shareholder's allocable share of any financing is nonqualified nonrecourse financing shall be made at the partner or shareholder level.

"(ii) SPECIAL RULE FOR CERTAIN RECOURSE FINANCING

Post, p. 811.

OF s CORPORATION.—A shareholder of an S corporation shall be treated as liable for his allocable share of any ji_. financing provided by a qualified person to such corporation if^ "(I) such financing is recourse financing (determined at the corporate level), and "(II) such financing is provided with respect to qualified business property of such corporation. "(iii) QuAUFiED BUSINESS PROPERTY.—For purposes of clause (ii), the term 'qualified business property means J,. ^ any property if— "(I) such property is used by the corporation in the active conduct of a trade or business, J.;,; "(II) during the entire 12-month period ending on ^ ^ the last day of the taxable year, such corporation -til. had at least 3 full-time employees who were not owner-employees (EIS defined in section 465(c)(7)(E)(i)) and substantially all the services of

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 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 807

whom were services directly related to such trade or business, and "(HI) during the entire 12-month period ending on the last day of such taxable year, such corporation had at least 1 full-time employee substamtially all of the services of whom were in the active management of the trade or business. Such term shall not include any master sound recording or other tangible or intangible asset associated with literary, artistic, or musical properties. "(iv) DETERMINATION OF ALLOCABLE SHARE.—The de-

termination of any partner's or shareholder's allocable share of any financing shall be made in the same manner as the credit allowable by section 38 with Post, p. 827. respect to such property." (b) TREATMENT OF SUBSEQUENT INCREASES AND DECREASES IN NONQUALIFIED NONRECOURSE FINANCING.— (1) SUBSEQUENT DECREASES.—Paragraph (9) of section 46(c)

(relating to subsequent increases in the taxpayer's amount at risk with respect to the property) is amended to read as follows:

26 USC 46.

.;,

"(9) SUBSEQUENT DECREASES IN NONQUAUFIED NONRECOURSE FINANCING WITH RESPECT TO THE PROPERTY.—

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"(A) IN GENERAL.—If, at the close of a taxable year following the taxable year in which the property was placed in service, there is a net decrease in the amount of nonqualifled nonrecourse financing with respect to such property, such net decrease shall be taken into account as additional qualified investment in such property in accordance with subparagraph (C). "(B) CERTAIN TRANSACTIONS NOT TAKEN INTO ACCOUNT.—

For purposes of this paragraph, nonqualified nonrecourse financing shall not be treated as decreased through the surrender or other use of property financed by nonqualified nonrecourse financing. "(C) MANNER IN WHICH TAKEN INTO ACCOUNT.— "(i) CREDIT DETERMINED BY REFERENCE TO TAXABLE YEAR PROPERTY PLACED IN SERVICE.—For purposes of

determining the amount of credit allowable under section 38 and the amount of credit subject to the early disposition or cessation rules under section 47, any increase in a taxpayer's qualified investment in property by reason of this paragraph shall be deemed to be additional qualified investment made by the taxpayer in the year in which the property referred to in subparagraph (A) was first placed in service. "(ii) CREDIT ALLOWED FOR YEAR OF DECREASE IN NONQUAUFIED NONRECOURSE FINANCING.—Any credit allow-

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able under this subpart for any increase in qualified investment by reason of this paragraph shall be treated as earned during the taxable year of the decrease in the amount of nonqualified nonrecourse financing." (2) SUBSEQUENT INCREASES.—So much of subsection (d) of section 47 (relating to property ceasing to be at risk) as precedes 26 USC 47. paragraph (3) thereof is amended to read as follows: "(d) INCREASES IN NONQUAUFIED NONRECOURSE FINANCING.—

"(1) IN GENERAL.—If, as of the close of the taxable year, there is a net increase with respect to the taxpayer in the amount of

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Page:United States Statutes at Large Volume 98 Part 1.djvu/856

 98 STAT. 808

PUBLIC LAW 98-369—JULY 18, 1984 nonqualified nonrecourse financing (within the meaning of section 46(c)(8)) with respect to any property to which section 46(c)(8) applied, then the tax under this chapter for such taxable year shall be increased by an amount equal to the aggregate decrease in credits allowed under section 38 for all prior taxable years which would have resulted from reducing the qualified investment taken into account with respect to such property by the amount of such net increase. "(2) TRANSFERS OF DEBT MORE THAN i YEAR AFTER INITIAL

BORROWING NOT TREATED AS INCREASING NONQUALIFIED NONRECOURSE FINANCING.—For purposes of paragraph (1), the amount of nonqualified nonrecourse financing (within the meaning of section 46(c)(8)(D)) with respect to the taxpayer shall not be treated as increased by reason of a transfer of (or agreement to transfer) any evidence of an indebtedness if such transfer occurs (or such agreement is entered into) more than 1 year after the date such indebtedness was incurred."

Ante, p. 805.

(c) CLARIFICATION OF COORDINATION OF SECTION 48(d)

26 USC 48.

WITH AT-

RISK RULES.—Subsection (d) of section 48 (relating to certain leased property) is amended by adding at the end thereof the following new paragraph: "(6) COORDINATION WITH AT-RISK RULES.— "(A) EXTENSION OF AT-RISK RULES TO CERTAIN LESSORS.— "(i) IN GENERAL.—If^

"(I) a lessor makes an election under this subsection with respect to any at-risk property leased to an at-risk lessee, and "(II) but for this clause, section 46(c)(8) would not apply to such property in the hands of the lessor, section 46(c)(8) shall apply to the lessor with respect to such property, "(ii) EXCEPTIONS.—Clause (i) shall not apply— "(I) if the lessor manufactured or produced the property, "(II) if the property has a readily ascertainable fair market value, or "(III) in circumstances which the Secretary determines by regulations to be circumstances where the application of clause (i) is not necessary to carry out the purposes of section 46(c)(8). "(B) REQUIREMENT THAT LESSOR BE AT RISK.—In the case of any property which, in the hands of the lessor, is property to which section 46(c)(8) applies, the amount of the credit allowable to the lessee under section 38 with respect to such property by reason of an election under this subsection shall at no time exceed the credit which would have been allowable to the lessor with respect to such property (determined without regard to section 46(e)(3)) if— "(i) the lessor's basis in such property were equal to the lessee acquisition amount, and "(ii) no election had been made under this subsection.

Post, p. 827.

"(C) LESSEE SUBJECT TO AT-RISK LIMITATIONS.—

.7|i:).r: I (iS. ,^"

"(i) IN GENERAL.—In the case of any lease where— "(I) the lessee is an at-risk lessee, "(II) the property is at-risk property, and "(III) the at-risk percentage is less than the required percentage,

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98 STAT. 809

any credit allowable under section 38 to the lessee by Post, p. 827. reason of an election under this subsection (hereinafter in this paragraph referred to as the 'total credit') shall be allowable only as provided in subparagraph (D). "(ii) AT-RISK PERCENTAGE.—For purposes of this paragraph, the term 'at-risk percentage' means the percentage obtained by dividing— "(I) the present value (as of the time the lease is entered into) of the aggregate lease at-risk payments, by "(II) the lessee acquisition amount. For purposes of subclause (I), the present value shall be determined by using a discount rate equal to the rate in "^ • ! ^ -' " effect under section 6621 as of the time the lease is entered into. "(iii) REQUIRED PERCENTAGE.—For purposes of clause (i)(III), the term 'required percentage' means the sum of— "(I) 2 times the sum of the percentages applicable to the property under section 46(a), plus Post, p. 834. "(II) 10 percent. In the case of 3-year property, such term means 60 percent of the required percentage determined under the preceding sentence. "(iv) LESSEE ACQUISITION AMOUNT.—For purposes of

this paragraph, the term 'lessee acquisition amount' means the amount for which the lessee is treated as having acquired the property by reason of an election under this subsection. "(v) LEASE AT-RISK PAYMENT.—For purposes of this paragraph, the term 'lease at-risk payment' means any rental payment— '(I) which the lessee is required to vaake under the lease in all events, and "(II) with respect to which the lessee is not protected against loss through nonrecourse financing, guarantees, stop-loss agreements, or other similar arrangements. '(D) YEAR FOR WHICH CREDIT ALLOWABLE.—

"(i) IN GENERAL.—Except as provided in clause (ii), in any case to which subparagraph (C)(i) applies, the portion of the total credit eillowable for any taxable year shall be an amount which bears the same ratio to such total credit as— "(I) the aggregate rental payments made by the lessee under the lease during such taxable year, bears to "(II) the lessee acquisition amount, "(ii) REMAINING AMOUNT ALLOWABLE FOR YEAR IN WHICH AGGREGATE RENTAL PAYMENTS EXCEED REQUIRED PERCENTAGE OF ACQUISITION AMOUNT.—The total credit

(to the extent not allowable for a preceding taxable year) shall be allowable for the first taxable year as of the close of which the aggregate rental payments made by the lessee under the lease equal or exceed the required percentage (as defined in subparagraph (C)(iii)) of the lessee acquisition amount.

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Page:United States Statutes at Large Volume 98 Part 1.djvu/858

 98 STAT. 810

PUBLIC LAW 98-369—JULY 18, 1984

Tife q SBC\

"(E) DEFINITION OF AT-RISK LESSEE AND AT-RISK PROPERTY.—For purposes of this paragraph— "(i) AT-RISK LESSEE.—The term 'at-risk lessee' means any lessee who is a taxpayer described in section 465(a)(1). "(ii) AT-RISK PROPERTY.—The term 'at-risk property' means any property used by an at-risk lessee in connection with an activity with respect to which any loss is suWect to limitation under section 465. "(F) SPECIAL RULES FOR SUBPARAGRAPHS (C) AND (D).— "(i) SUBPARAGRAPHS (C) AND (D) APPLY IN UEU OF OTHER AT-RISK RULES.—In the case of any election under

Ante, p. 807. «i

this subsection, paragraphs (8) and (9) of section 46(c) and subsection (d) of section 47 shall only apply with respect to the lessor. ' (ii) APPLICATION TO PARTNERSHIPS AND S CORPORA-

Ante, p. 805.

TIONS.—For purposes of subparagraphs (C) and (D), rules similar to the rules of subparagraph (E) of section .i^:^iiq: 46(c)(8) shall apply. "(iii) SUBSEQUENT REDUCTIONS IN AT-RISK AMOUNT.— Under regulations prescribed by the Secretary, the principles of subsection (d) of section 47 shall apply for purposes of subparagraphs (C) and (D). "(G) REGULATIONS.—The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this paragraph, including regulations— "(i) providing for such adjustments as may be appropriate where expenses connected with the lease are borne by the lessor, and "(ii) providing the extent to which contingencies in the lease will be disregarded." (d) TECHNICAL AMENDMENTS.—

26 USC 46.

26 USC 47. «

26 USC 46 note.

(1) Clause (i) of section 46(c)(8)(F) (relating to special rule for certain energy property) is amended to read as follows: "(i) IN GENERAL.—Subparagraph (A) shall not apply with respect to qualified energy property." (2) Subclause (III) of section 46(c)(8)(F)(ii) (defining qualified energy property) is amended to read as follows: "(III) as of the close of the taxable year in which the property is placed in service, not more than 75 percent of the basis of such property is attributable to nonqualified nonrecourse financing, and". (3) Subclause (IV) of section 46(c)(8)(F)(ii) is amended by striking out "nonrecourse financing (other than financing described in section 46(c)(8)(B)(ii))" and inserting in lieu thereof "nonqualified nonrecourse financing". (4) Subparagraph (A) of section 47(d)(3) is amended by striking out "ceasing to be at risk" and inserting in lieu thereof "increasing the amount of nonqualified nonrecourse financing (within the meaning of section 46(c)(8))". (5) Clause (i) of section 47(d)(3)(B) is amended by striking out "other than a loan described in section 46(c)(8)(B)(ii)"(e) EFFECTIVE D A T E S. —

(1) IN GENERAL.—The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act in taxable years ending after such date; except that such amendments shall not apply to any property to which

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 PUBLIC LAW 98-369—JULY 18, 1984 fi

98 STAT. 811

the amendments made by section 211(f) of the Economic Recovery Tax Act of 1981 do not apply. 26 USC 46, 47. (2) AMENDMENTS MAY BE ELECTED RETROACTIVELY.—At the

I

election of the taxpayer, the amendments made by this section shall apply as if included in the amendments made by section 211(f) of the Economic Recovery Tax Act of 1981. Any election made under the preceding sentence shall apply to all property of the taxpayer to which the amendments made by such section 211(f) apply and shall be made at such time and in such manner as the Secretary of the Treasury or his delegate may by regulations prescribe.

SEC. 432. EXCLUSION OF ACTIVE BUSINESSES OF QUALIFIED CORPORATIONS FROM AT-RISK RULES, ETC. (a) EXCLUSION OF ACTIVE BUSINESSES OF QUALIFIED CORPORATIONS FROM AT-RISK RULES.—Subsection (c) of section 465 (relating

to deductions limited to amount at risk) is amended by adding at the end thereof the following new paragraph: "(7) EXCLUSION OF ACTIVE BUSINESSES OF QUALIFIED CORPORATIONS.—

"(A) IN GENERAL.—In the case of a taxpayer which is a qualified C corporation— ''^^ *"^ "(i) each qualifying business carried on by such tax^ •. payer shall be treated as a separate activity, and '|f "(ii) subsection (a) shall not apply to losses from such '' business. "(B) QUALIFIED CORPORATION.—For purposes of subpara'^. graph (A), the term 'qualified C corporation' means any ^'; corporation described in subparagraph (B) of subsection (a)(1) which is not— ^"(i) a personal holding company (as defined in section 542(a)), "(ii) a foreign personal holding company (as defined in section 552(a)), or "(iii) a personal service corporation (as defined in section 269A(b) but determined by substituting '5 percent' for '10 percent' in section 269A(b)(2)). "(C) QuAUFYiNG BUSINESS.—For purposes of this paragraph, the term 'qualifying business' means any active business if— "(i) during the entire 12-month period ending on the 2f last day of the taxable year, such corporation had at Kir least 1 full-time employee substantially all the services Qof whom were in the active management of such business, "(ii) during the entire 12-month period ending on the ga,, last day of the taxable year, such corporation had at least 3 full-time, nonowner employees substantially all ^ of the services of whom were services directly related to such business, "(iii) the amount of the deductions attributable to such business which are allowable to the taxpayer solely by reason of sections 162 and 404 for the taxable year exceeds 15 percent of the gross income from such business for such year, and - <i "(iv) such business is not an excluded business.

26 USC 465.

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 98 STAT. 812

PUBLIC LAW 98-369—JULY 18, 1984
 * on>}^

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"(D) SPECIAL RULES FOR APPLICATION OF SUBPARAGRAPH <C).— "(i) PARTNERSHIPS IN WHICH TAXPAYER IS A QUALIFIED

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CORPORATE PARTNER.—In the case of an active business of a partnership, if— "(I) the taxpayer is a qualified corporate partner in the partnership, and "(II) during the entire 12-month period ending on the last day of the partnership s taxable year, ,,.,.,.^., there was at least 1 full-time employee of the partnership (or of a qualified corporate partner) substantially all the services of whom were in the ••^active management of such business, then the taxpayer's proportionate share (determined on, the basis of its profits interest) of the activities of the partnership in such business shall be treated as activities of the taxpayer (and clause (i) of subparagraph (C) shall not apply in determining whether such business ~s <ii-M v. ( is a qualifying business of the taxpayer). "(ii) QUALIFIED CORPORATE PARTNER.—For purposes of •,. clause (i), the term 'qualified corporate partner means any corporation if^ _,^^, "(I) such corporation is a general partner in the partnership, „',..^ "(II) such corporation has an interest of 10 percent or more in the profits and losses of the partnership, and "(III) such corporation has contributed property to the partnership in an amount not less than the lesser of $500,000 or 10 percent of the net worth of the corporation. For purposes of subclause (III), any contribution of property other than money shall be taken into account at its fair market value. "(iii) DEDUCTION FOR OWNER EMPLOYEE COMPENSATION NOT TAKEN INTO ACCOUNT.—For purposes of clause (iii) ' f-G Qf subparagraph (C), there shall not be taken into account any deduction in respect of compensation for personal services rendered by any employee (other than a non-owner employee) of the taxpayer or any member of such employee s family (within the meaning of section 318(a)(1)). "(iv)

>-

SPECIAL RULE FOR BANKS.—For purposes of

clause (iii) of subparagraph (C), in the case of a bank (as defined in section 581) or a financial institution to which section 591 applies— "(I) gross income shall be determined without regard to the exclusion of interest from gross income under section 103, and "(II) in addition to the deductions described in such clause, there shall also be taken into account the amount of the deductions which are allowable for amounts paid or credited to the accounts of depositors or holders of accounts as dividends or interest on their deposits or withdrawable accounts under section 163 or 591. "(v) SPECIAL RULE FOR U F E INSURANCE COMPANIES.—

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text:
Page:United States Statutes at Large Volume 98 Part 1.djvu/861

 PUBLIC LAW 98-369—JULY 18, 1984 ai K ml''

98 STAT. 813

"(I) IN GENERAL.—Clause (iii) of subparagraph (C) shall not apply to any insurance business of a qualified life insurance company. "(II) INSURANCE BUSINESS.—For purposes of subclause (I), the term 'insurance business' means any business which is not a noninsurance business (within the meaning of section 806(c)(3)). Ante, p. 724.

n

"(Ill) QUALIFIED LIFE INSURANCE COMPANY.—For

purposes of subclause (I), the term 'qualified life insurance company' means any company which would be a life insurance company as defined in section 816 if unearned premiums were not taken Ante, p. 748. into account under subsections (a)(2) and (c)(2) of section 816. ' i '.^ "(E) DEFINITIONS.—For purposes of this paragraph— "(i) NON-OWNER EMPLOYEE.—The term 'non-owner employee' means any employee who does not own, at "any time during the taxable year, more than 5 percent in value of the outstanding stock of the taxpayer. For purposes of the preceding sentence, section 318 shall .i«|iji::iK apply, except that '5 percent' shall be substituted for '50 percent' in section 318(a)(2)(C). "(ii) EXCLUDED BUSINESS.—The term 'excluded busi'': - •.. ness' means— "(I) equipment leasing (as defined in paragraph (6)), and i'->',-«•:• "(II) any business involving the use, exploitation, sale, lease, or other disposition of master sound I- f ^.j ' recordings, motion picture films, video tapes, or tangible or intangible assets associated with literary, artistic, musical, or similar properties, "(iii) SPECIAL RULES RELATING TO COMMUNICATIONS INDUSTRY, ETC.— "(I) BUSINESS NOT EXCLUDED WHERE TAXPAYER

?'r

iijr.v tt;;;-

t' i

•-.

NOT COMPLETELY AT RISK.—A business involving the use, exploitation, sale, lease, or other disposition of property described in subclause (II) of clause (ii) shall not constitute an excluded business by reason of such subclause if the taxpayer is at risk with respect to all amounts paid or incurred (or chargeable to capital account) in such business. "(II)

CERTAIN

UCENSED

BUSINESSES NOT EX-

CLUDED.—For purposes of subclause (II) of clause (ii), the provision of radio, television, cable television, or similar services pursuant to a license or r. J i;. franchise granted by the Federal Communications Commission or any other Federal, State, or local authority shall not constitute an excluded business f s! s« ftr h.:. by reason of such subclause. "(F) AFFIUATED GROUP TREATED AS 1 TAXPAYER.—For purposes of this paragraph— "(i) IN GENERAL.—Except as provided in subparagraph (G), the component members of an affiliated .3«. group of corporations shall be treated as a single taxpayer. '(ii) AFFILIATED GROUP OF CORPORATIONS.—The term 'affiliated group of corporations' means an affiliated

�


text:
Page:United States Statutes at Large Volume 98 Part 1.djvu/862

 98 STAT. 814 Ante, p. 577.

PUBLIC LAW 98-369—JULY 18, 1984 ,'); ft k

gToup (as defined in section 1504(a)) which files or is required to file consolidated income tax returns. "(iii) COMPONENT MEMBER.—The term 'component member' means an includible corporation (as defined in section 1504) which is a member of the affiliated group.

^>;

"(G) L o s s OF 1 MEMBER OF AFFIUATED GROUP MAY NOT OFFSET INCOME OF PERSONAL HOLDING COMPANY OR PERSONAL

ST q a-.'.

SERVICE CORPORATION.—Nothing in this paragraph shall permit any loss of a member of an affiliated group to be used as an offset against the income of any other member of such group which is a personal holding company (as defined in section 542(a)) or a personal service corporation (as defined in section 269A(b) but determined by substituting '5 percent' for '10 percent' in section 269A(b)(2))."

.8*T.q,^&is

(b) ACTIVITIES TREATED AS SEPARATE ACTIVITIES BY STATUTE MAY BE AGGREGATED WHERE TAXPAYER ACTIVELY PARTICIPATES IN THE

26 USC 465.

MANAGEMENT OF EACH ACTIVITY.—Paragraph (2) of section 465(c)

(relating to activities to which risk applies) is amended to read as follows: "(2) SEPARATE ACTIVITIES.—For purposes of this section— "(A) IN GENERAL.—Except as provided in subparagraph (B), a taxpayer's activity with respect to each— fa*ju.. "(i) film or video tape, "(ii) section 1245 property which is leased or held for dcifiT^iHi^'-:: leasing, .,„..,:...,. ^ "(iii) farm, "(iv) oil and gas property (as defined under section 614), or "(v) geothermal property (as defined under section 614), shall be treated as a separate activity. Ri^o *

"(B) AGGREGATION RULES.— "(i) SPECIAL RULE FOR LEASES OF SECTION 1245 PROPERTY BY PARTNERSHIPS OR s CORPORATIONS.—In the case

of any partnership or S corporation, all activities with respect to section 1245 properties which— "(I) are leased or held for lease, and "(II) are placed in service in any taxable year of the partnership or S corporation, shall be treated as a single activity. "(ii) OTHER AGGREGATION RULES.—Rules similar to

the rules of subparagraphs (B) and (C) of paragraph (3) shall apply for purposes of this paragraph.' (c) CORPORATIONS CONSIDERED AT RISK WITH RESPECT TO AMOUNTS BORROWED FROM SHAREHOLDERS, ETC.—Paragraph (3) of section

465(b) (relating to certain borrowed amounts excluded) is amended to read as follows: j^ p

"(3) CERTAIN BORROWED AMOUNTS EXCLUDED.—

"(A) IN GENERAL.—Except to the extent provided in regu..^y;^. latfons, for purposes of paragraph (1)(B), amounts borrowed shall not be considered to be at risk with respect to an activity if such amounts are borrowed from any person who has an interest in such activity or from a related person to . ^, a person (other than the taxpayer) having such an interest. ,-.. fc&s....

"(B) EXCEPTIONS.— "(i) INTEREST AS CREDITOR.—Subparagraph (A) shall

not apply to an interest as a creditor in the activity.

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text:
Page:United States Statutes at Large Volume 98 Part 1.djvu/863

 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT.

"(ii) INTEREST AS SHAREHOLDER WITH RESPECT TO

AMOUNTS BORROWED BY CORPORATION.—In the case of amounts borrowed by a corporation from a shareholder, subparagraph (A) shall not apply to an interest as a shareholder. "(C) RELATED PERSON DEFINED.—For purposes of subpara-

' "

graph (A), the term 'related person' has the meaning given such term by section 168(e)(4)." (d) EFFECTIVE DATE.—The amendments made by this section shall 26 USC 465 note. apply to taxable years beginning after December 31, 1983; except that any loss from an activity described in section 465(c)(7)(A) of the Internal Revenue Code of 1954 (as amended by this section) which Ante, p. 811. (but for the amendments made by this section) would have been treated as a deduction for the taxpayer's first taxable year beginning after December 31, 1983, under section 465(a)(2) of such Code shall be allowed as a deduction for such first taxable year notwithstanding such amendments.

Subtitle D—Miscellaneous Treasury Administrative Provisions

'HM'-

J

PART I—PROVISIONS NOT RELATING TO DISTILLED SPIRITS TAX

SEC. 441. SIMPLIFICATION OF CERTAIN REPORTING REQUIREMENTS.

26 USC 936 note.

(a) REPORT ON POSSESSIONS CORPORATIONS.—The Secretary of the

Treasury shall, for the calendar year 1981 and each second calendar year thereafter, submit a report to the Congress within 24 months following the close of such calendar year setting forth an analysis of the operation and effect of sections 936 and 934(b) of the Internal Revenue Code of 1954.

, ^_,,,, " "'^

(b) HIGH INCOME TAXPAYER REPORT.—

(1) Section 2123 of the Tax Reform Act of 1976 is amended to 26 USC 56 note. read as follows: "SEC. 2123. HIGH INCOME TAXPAYER REPORT. "The Secretary of the Treasury shall publish annually information on the amount of tax paid by individual taxpayers with high total incomes. Total income for this purpose is to be calculated and set forth by adding to adjusted gross income any items of tax preference excluded from, or deducted in arriving at, adjusted gross income, and by subtracting any investment expenses incurred in the production of such income to the extent of the investment income. These data are to include the number of such individuals with total income over $200,000 who owe no Federal income tax (after credits) and the deductions, exclusions, or credits used by them to avoid tax." (2) The amendment made by paragraph (1) shall apply to 26 USC 56 note. information published after the date of the enactment of this Act. (c) INTERNATIONAL BOYCOTT REPORTS.—

(1) Section 1067 of the Tax Reform Act of 1976 is amended to 26 USC 999 note. read as follows:

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text:
Page:United States Statutes at Large Volume 98 Part 1.djvu/864

 98 STAT. 816

PUBLIC LAW 98-369—JULY 18, 1984

"SEC. 1067. REPORTS BY THE SECRETARY, f j^d:«/ "(a) GENERAL RULE.—As soon after the close of each 4-year period as the data become available, the Secretary shall transmit a report to the Committee on Ways and Means of the House of Representatives and to the Committee on Finance of the Senate setting forth for such 4-year period— "(1) the number of reports filed under section 999(a) of the Internal Revenue Code of 1954 for taxable years ending with or .-iu. 5h' "Z'' o? within each calendar year in such 4-year period, "(2) the number of such reports with respect to each such calendar year on which the taxpayer indicated international i ' - .,. boycott participation or cooperation (within the meaning of section 999(b)(3) of such Code), and "(3) a detailed description of the manner in which the provisions of such Code relating to international boycott activity have been administered during such 4-year period. "(b) 4-YEAR PERIOD.—For purposes of subsection (a), the term '4-year period' means the period consisting of 4 calendar years beginning with calendar year 1982 and each subsequent fourth calendar year." 26 USC 999 note. (2) The amendment made by paragraph (1) shall apply to reports for periods after December 31, 1981. SEC. 442. REMOVAL OF $1,000,000 LIMITATION ON WORKING CAPITAL FUND. The last sentence of section 322(a) of title 31, United States Code "* *' ^ (placing a $1,000,000 limitation on the working capital fund for the Department of the Treasury), is hereby repealed. SEC. 443. INCREASE IN LIMITATION ON REVOLVING FUND FOR REDEMPTION OF REAL PROPERTY. 26 USC 7810. Subsection (a) of section 7810 (relating to revolving fund for redemption of real property) is amended by striking out "$1,000,000" and inserting in lieu thereof "$10,000,000". 5 on -hi:MJ < SEC. 444. REMOVAL OF $1,000,000 LIMITATION ON SPECIAL AUTHORITY TO DISPOSE OF OBLIGATIONS. Subsection (b) of section 324 of title 31, United States Code (relating to disposing and extending the maturity of obligations), is amended by striking out the last sentence. SEC. 445. SECRETARY OF THE TREASURY AUTHORIZED TO ACCEPT GIFTS AND BEQUESTS. Section 321 of title 31, United States Code, is amended by adding at the end thereof the following new subsection: "(d)(1) The Secretary of the Treasury may accept, hold, administer, and use gifts and bequests of property, both real and personal, for the purpose of aiding or facilitating the work of the Department of the Treasury. Gifts and bequests of money and the proceeds from sales of other property received as gifts or bequests shall be deposit'- n;,.,.. ed in the Treasury in a separate fund and shall be disbursed on order of the Secretary of the Treasury. Property accepted under this paragraph, and the proceeds thereof, shall be used as nearly as possible in accordance with the terms of the gift or bequest. ,9to£ «»; f)**.a'K "(2) For purposes of the Federal income, estate, and gift taxes, property accepted under paragraph (1) shall be considered as a gift or bequest to or for the use of the United States.

�


text: Author:August Kappler

title: Author:August Kappler


text:
Page:United States Statutes at Large Volume 98 Part 1.djvu/865

 PUBLIC LAW 98-369—JULY 18, 1984 "(3) The Secretary of the Treasury may invest and reinvest the fund in public debt securities with maturities suitable for the needs of the fund and bearing interest at rates determined by the Secretary of the Treasury, taking into consideration the current average market yield on outstanding marketable obligations of the United States of comparable maturities. Income accruing from the securities, and from any other property accepted under paragraph (1), shall be deposited to the credit of the fund, and shall be disbursed on order of the Secretary of the Treasury for purposes as nearly as possible in accordance with the terms of the gifts or bequests. "(4) The Secretary of the Treasury shall, not less frequently than annually, make a public disclosure of the amount (and sources) of the gifts and bequests received under this subsection, and the purposes for which amounts in the separate fund established under this subsection are expended." SEC. 446. EXTENSION OF PERIOD FOR COURT REVIEW OF JEOPARDY ASSESSMENT WHERE PROMPT SERVICE NOT MADE ON THE UNITED STATES. (a) GENERAL RULE.—Paragraph (2) of section 7429(b) (relating to judicial review) is amended by adding at the end thereof the following new sentence: "If the court determines that proper service was not made on the United States within 5 days after the date of the commencement of the action, the running of the 20-day period set forth in the preceding sentence shall not begin before the day on which proper service was made on the United States." (b) EFFECTIVE DATE.—The amendment made by subsection (a) shall apply to actions commenced after the date of the enactment of this Act. SEC. 447. EXTENSION OF PERIOD DURING WHICH ADDITIONAL TAX SHOWN ON AMENDED RETURN MAY BE ASSESSED. (a) GENERAL RULE.—Subsection (c) of section 6501 (relating to exceptions) is amended by adding at the end thereof the following new paragraph:

98 STAT. 817

• •-. ';

., ,,.

. . r,"

26 USC 7429.

26 USC 7429 "ote.

Ante, p. 757.

"(7) SPECIAL RULE FOR CERTAIN AMENDED RETURNS.—Where,

within the 60-day period ending on the day on which the time prescribed in this section for the assessment of any tax imposed by subtitle A for any taxable year would otherwise expire, the Secretary receives a written document signed by the taxpayer showing that the taxpayer owes an additional amount of such '--^3 "XJJ &% tax for such taxable year, the period for the assessment of such additional amount shall not expire before the day 60 days after the day on which the Secretary receives such document." (b) EFFECTIVE DATE.—The amendment made by subsection (a) 26 USC 6501 shall apply wiuh respect to documents received by the Secretary of note. the Treasury (or his delegate) after the date of the enactment of this Act. SEC. 448. TREATMENT OF CERTAIN GUARANTEED DRAFTS ISSUED BY FINANCIAL INSTITUTIONS. (a) GENERAL RULE.—Paragraph (2) of section 63110)) (relating to 26 USC 6311. liability of banks and others) is amended— (1) by striking out "or cashier's check" and inserting in lieu thereof "or cashier's check (or other guaranteed draft)",

31-194 0 - 86 - 28: QL. 3 Part 1

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text:
Page:United States Statutes at Large Volume 98 Part 1.djvu/866

 98 STAT. 818

PUBLIC LAW 98-369—JULY 18, 1984 (2) by striking out "the amount of such check" and inserting in lieu thereof "the amount of such check (or draft)", (3) by striking out "the bank or trust company" and inserting in lieu thereof "the financial institution", and

26 USC 6311 note.

26 USC 6103. 26 USC 6103 "°^® 26 USC 38 note.

26 USC 38 note. 26 USC 1 note.

(4) by striking o u t "such b a n k " each place it a p p e a r s and inserting in lieu thereof "such financial institution". (b) EFFECTIVE D A T E. — The amendments m a d e by subsection (a) shall t a k e effect on the date of the e n a c t m e n t of t h i s Act. SEC. 449. DISCLOSURE OF WINDFALL PROFIT TAX INFORMATION TO STATE TAX OFFICIALS. (a) GENERAL RULE. — Paragraph (1) of section 6103(d) (relating to disclosure to State tax officials) is amended by striking o u t "44, 5 1 " and inserting in lieu thereof "44, 45, 5 1 ". (b) EFFECTIVE D A T E. — The amendment m a d e by subsection (a) shall t a k e effect on the date of the e n a c t m e n t of this Act. SEC. 450. FINANCIAL REPORTING OF INVESTMENT TAX CREDITS. (a) IN GENERAL—Paragraph (1) of section 101(c) of the Revenue Act of 1971 (85 Stat. 499) (relating to accounting for investment

credit in certain financial reports and reports to Federal agencies) is amended— (1) by inserting "and" at the end of subparagraph (A), (2) by striking out ", and" at the end of subparagraph (B) and inserting in lieu thereof a period, and (3) by striking out subparagraph (C). (b) EFFECTIVE DATE.—The amendments made by this section shall take effect as if included in the Revenue Act of 1971.

PART II—PROVISIONS RELATING TO DISTILLED SPIRITS SEC. 451. REPEAL OF OCCUPATIONAL TAX ON MANUFACTURERS OF STILLS AND CONDENSERS; NOTICES OF MANUFACTURE AND SET UP OF STILLS. (a) IN GENERAL.—Subpart C of part II of subchapter A of chapter 51 (relating to manufacturers of stills) is amended to read as follows: "Subpart C—Manufacturers of Stills "Sec. 5101. Notice of manufacture of still; notice of set up of still. "Sec. 5102. Definition of manufacturer of stills. 26 USC 5101.

"SEC. 5101. NOTICE OF MANUFACTURE OF STILL; NOTICE OF SET UP OF STILL. "(a) NOTICE REQUIREMENTS.— "(1) NOTICE OF MANUFACTURE OF STILL.—The Secretary may,

tOoc) Do. r 9i e;<>a

pursuant to regulations, require any person who manufactures gjjjy g^iii^ boiler, or other vessel to be used for the purpose of distilling, to give written notice, before the still, boiler, or other vessel is removed from the place of manufacture, setting forth by whom it is to be used, its capacity, and the time of removal from the place of manufacture.

?^ 'i J >

to regulations, require that no still, boiler, or other vessel be set up without the manufacturer of the still, boiler, or other vessel first giving written notice to the Secretary of that purpose.

"(2) NOTICE OF SET UP OF STILL.—The Secretary may, pursuant

"(b) PENALTIES, ETC.—

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text:
Page:United States Statutes at Large Volume 98 Part 1.djvu/867

 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 819

"(1) For penalty and forfeiture for failure to give notice of manufacture, or for setting up a still without first giving notice, when required by the Secretary, see sections 5615(2) and 5687. Infra. "(2) For penalty and forfeiture for failure to register still or distilling apparatus when set up, see section 5601(a)(1) and 5615(1).

5

"SEC. 5102. DEFINITION OF MANUFACTURER OF STILLS.

26 USC 5102.

"Any person who manufactures any still or condenser to be used in distilling shall be deemed a manufacturer of stills." (b) TECHNICAL AMENDMENTS.—

(1) Paragraph (2) of section 5179(b) (relating to registration of 26 USC 5179. stills) is amended to read as follows: ^;

^

"(2) For provisions requiring notification to set up a still, boiler, or other vessel for distilling, see section 5101(a)(2)."

Ante, p. 818.

(2) Paragraph (2) of section 5615 (relating to property subject 26 USC 5615. to forfeiture) is amended to read as follows: "(2) DISTILLING APPARATUS REMOVED WITHOUT NOTICE OR SET

' UP WITHOUT NOTICE.—Any still, boiler, or other vessel to be used "^ for the purpose of distilling— "(A) which is removed without notice having been given when required by section 5101(a)(l), or Ante, p. 818. mruxr "(B) which is set up without notice having been given to -c when required by section 5101(a)(2); and". (3) Subsection (a) of section 5691 (relating to penalties for 26 USC 5691. ^ striking out "limited retail dealer, or manufacturer of stills" and inserting in lieu thereof "or limited retail dealer". SEC. 452. ALLOWANCE OF DRAWBACK CLAIMS EVEN WHERE CERTAIN REQUIREMENTS NOT MET. Section 5134 (relating to drawback) is amended by adding at the 26 USC 5134. end thereof the following new subsection: "(c) ALLOWANCE OF DRAWBACK EVEN WHERE CERTAIN REQUIREK jafici: » MENTS NOT MET.—
 * nonpayment of special taxes relating to liquors) is amended by

"(1) IN GENERAL.—No claim for drawback under this section shall be denied in the case of a failure to comply with any requirement imposed under this subpart or any rule or regulation issued thereunder upon the claimant's establishing to the satisfaction of the Secretary that distilled spirits on which the V tax has been paid or determined were in fact used in the manufacture or production of medicines, medicinal preparaf- tions, food products, flavors, or flavoring extracts, which were ^ unfit for beverage purposes. '^

•'

"

iWuDHU'iS

"(2) PENALTY.—

6

"(A) IN GENERAL.—In the case of a failure to comply with any requirement imposed under this subpart or any rule or regulation issued thereunder, the claimant shall be liable for a penalty of $1,000 for each failure to comply unless it is shown that the failure to comply was due to reasonable cause. "(B) PENALTY MAY NOT EXCEED AMOUNT OF CLAIM.—The

vn ' •.

aggregate amount of the penalties imposed under subparagraph (A) for failures described in paragraph (1) in respect of any claim shall not exceed the amount of such claim (determined without regard to subparagraph (A)).

•' • ^'-i;:i

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text:
Page:United States Statutes at Large Volume 98 Part 1.djvu/868

 98 STAT. 820

PUBLIC LAW 98-369—JULY 18, 1984 "(3) PENALTY TREATED AS TAX.—The penalty imposed by paragraph (2) shall be assessed, collected, and paid in the same manner as taxes, as provided in section 6662(a)." SEC. 453. DISCLOSURE OF ALCOHOL FUEL PRODUCERS TO ADMINISTRATORS OF STATE ALCOHOL LAWS.

26 USC 6103.

(a) IN GENERAL.—Subsection (1) of section 6103 (relating to confidentiality and disclosure of returns and return information) is amended by adding at the end thereof the following new paragraph: "(9) DISCLOSURE OF ALCOHOL FUEL PRODUCERS TO ADMINISTRATORS OF STATE ALCOHOL LAWS.—Notwithstanding any other pro-

'-'i'. ,,.

s

.,

jPjvr; ->;- •:

26 USC 7213. 26 USC 6103. 26 USC 6103. 94 Stat. 468.

vision of this section, the Secretary may disclose— "(A) the name and address of any person who is qualified to produce alcohol for fuel use under section 5181, and "(B) the location of any premises to be used by such person in producing alcohol for fuel, to any State agency, body, or commission, or its legal representative, which is charged under the laws of such State with responsibility for administration of State alcohol laws solely for use in the administration of such laws." (b) TECHNICAL AMENDMENTS.—

(1) Subparagraph (A) of section 6103(p)(3) (relating to records of inspection and disclosure) is amended by striking out "(5), or (7)" and inserting in lieu thereof "(5), (7), (8), or (9)". (2) The material preceding subparagraph (A) of paragraph (4) of section 6103(p) is amended by striking out "or (7)" and inserting in lieu thereof "(7), (8), or (9)". (3) Clause (i) of section 6103(p)(4)(F) is amended by striking out "(1)(6) or (7)" and inserting in lieu thereof "(1)(6), (7), (8), or (9)". (4) Paragraph (2) of section 7213(a) (relating to unauthorized disclosure of information) is amended by striking out "or (8)" and inserting in lieu thereof "(8), or (9)". (5) Section 127(a)(1) of Public Law 96-249 is amended by striking out "Subsection (i)" and inserting in lieu thereof "Subsection (1)". (6) The paragraph (7) of section 6103(1) added by Public Law 96-265 is hereby redesignated as paragraph (8). SEC. 454. REPEAL OF STAMP REQUIREMENT FOR DISTILLED SPIRITS.

26 USC 5205.

(a) IN GENERAL.—Section 5205 (relating to stamps) is hereby repealed.

26 USC 5301.

5301 is amended by redesignating subsection (d) as subsection (e) and by inserting after subsection (c) the following new subsection: "(d) CLOSURES.—The immediate container of distilled spirits withdrawn from bonded premises, or from customs custody, on determination of tax shall bear a closure or other device which is designed so as to require breaking in order to gain access to the contents of such container. The preceding sentence shall not apply to containers of bulk distilled spirits.''

(b) BOTTLES MUST HAVE OTHER ANTITAMPERING CLOSURE.—Section

(c) TECHNICAL AND CONFORMING AMENDMENTS.—

26 USC 5062. 26 USC 5066.

(1) The second sentence of section 50620t)) (relating to drawback in case of exportation) is amended by striking out "stamped or restamped, and". (2) Paragraph (2) of section 5066(a) (relating to bottled distilled spirits eligible for export with benefit of drawback) is amended

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text:
Page:United States Statutes at Large Volume 98 Part 1.djvu/869

 PUBLIC LAW 98-369—JULY 18, 1984 by striking out "stamped or restamped, and marked," and inserting in lieu thereof "marked". (3) Subsection (b) of section 5116 (relating to cross references) is amended to read as follows:

98 STAT. 821

26 USC 5116.

"(b) CROSS REFERENCE.— "For provisions relating to containers of distilled spirits, see section 5206."

(4) Subsection (c) of section 5204 (relating to gauging) is 26 USC 5204. amended— (A) by striking out "STAMPING," in the heading, and (B) by striking out "stamping," in the text. (5)(A) Section 5206 (relating to containers) is amended by 26 USC 5206. redesignating subsections (d) and (e) as subsections (e) and (f), respectively, and by inserting after subsection (c) the following new subsection: "(d) EFFACEMENT OF MARKS AND BRANDS ON EMPTIED CONTAIN-

ERS.—Every person who empties, or causes to be emptied, any container of distilled spirits bearing any mark or brand required by law (or regulations pursuant thereto) shall at the time of emptying such container efface and obliterate such mark or brand; except that the Secretary may, by regulations, waive any requirement of this subsection where he determines that no jeopardy to the revenue will be involved." (B) Subsection (f) of section 5206, as redesignated by subparagraph (A), is amended by adding at the end thereof the following new paragraphs: "(3) For provisions relating to the marking and branding of containers of distilled spirits by proprietors, see section 5204(c). "(4) For penalties and forfeitures relating to marks and brands, see sections 5604 and 5613."

<

(6) Paragraph (4) of section 5207(a) (relating to records and reports) is amended by striking out subparagraph (D), by adding "and" at the end of subparagraph (B), and by striking out ", and" at the end of subparagraph (C) and inserting in lieu thereof a period. (7) Subsection (c) of section 5215 (relating to return of tax determined distilled spirits to bonded premises) is amended— (A) by striking out "RESTAMPING" in the heading and inserting in lieu thereof "RECLOSING", and (B) by striking out "restamping" in the text and inserting in lieu thereof "reclosing". (8) Section 5235 (relating to bottling of alcohol for industrial purposes) is amended by striking out "stamped," in the first sentence and by striking out the second sentence. (9) Subsection (c) of section 5301 (relating to regulation of traffic in containers of distilled spirits) is amended— (A) by striking out "stamping" in paragraphs (1) and (3) and inserting in lieu thereof "tax determination", and (B) by striking out ", if the liquor bottles are to be again stamped under the provisions of this chapter". (10) Subsection (a) of section 5555 (relating to records, statements, and returns) is amended by striking out "or for the affixing of any stamp required to be affixed by this chapter,". (11)(A) Section 5604 (relating to penalties relating to stamps, marks, brands, and containers) is amended to read as follows:

Infra.

26 USC 5207.

26 USC 5215.

26 USC 5235. 26 USC 5301.

26 USC 5555. 26 USC 5604.

�


text: Author:Benjamin Karr

title: Author:Benjamin Karr


text:
Page:United States Statutes at Large Volume 98 Part 1.djvu/870

 98 STAT. 822

PUBLIC LAW 98-369—JULY 18, 1984 "SEC, 5604. PENALTIES RELATING TO MARKS, BRANDS, AND CONTAINERS.

"(a) IN GENERAL.—Any person who shall— "(1) transport, possess, buy, sell, or transfer any distilled spirits unless the immediate container bears the type of closure Ante, p. 820. or Other device required by section 5301(d), ^, "(2) with intent to defraud the United States, empty a container bearing the closure or other device required by section hi' • V- c s, 5301(d) without breaking such closure or other device, ' •" ' ' '" ' "(3) empty, or cause to be emptied, any distilled spirits from t^., an immediate container bearing any mark or brand required by Ante, p. 821. required by section 5206(d), "(4) place any distilled spirits in any bottle, or reuse any bottle for the purpose of containing distilled spirits, which has once been filled and fitted with a closure or other device under ,^. the provisions of this chapter, without removing and destroying such closure or other device, "(5) willfully and unlawfully remove, change, or deface any mark, brand, label, or seal affixed to any case of distilled spirits, or to any bottle contained therein, "(6) with intent to defraud the United States, purchase, sell, receive with intent to transport, or transport any empty cask or package having thereon any mark or brand required by law to be affixed to any cask or package containing distilled spirits, or "(7) change or alter any mark or brand on any cask or package containing distilled spirits, or put into any cask or package spirits of greater strength than is indicated by the •' inspection mark thereon, or fraudulently use any cask or package having any inspection mark thereon, for the purpose of selling other spirits, or spirits of quantity or quality different ..MfSr^ilii"
 * """" law without effacing and obliterating such mark or brand as

V v- \

from the spirits previously inspected, shall be fined not more than $10,000 or imprisoned not more than 5 years, or both, for each such offense. "(b) CROSS REFERENCES.— "For provisions relating to the authority of internal revenue officers to enforce provisions of this section, see sections 5203, 5557, and 7608."

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(B) The table of sections for part I of subchapter J of chapter 51 is amended by striking out the item relating to section 5604 and inserting in lieu thereof the following: "Sec. 5604. Penalties relating to marks, brands, and containers."

26 USC 5613.

(12)(A) Subsection (b) of section 5613 (relating to forfeiture of distilled spirits not stamped, marked, or branded as required by
 * .i;. -.loO oi,

law) is amended to read as follows: "(b) CONTAINERS WITHOUT CLOSURES.—All distilled spirits found in any container which is required by this chapter to bear a closure or '.)BIJ ftli other device and which does not bear a closure or other device in compliance with this chapter shall be forfeited to the United States." (B) The section heading of section 5613 is amended by striking out "STAMPED" and inserting in lieu thereof "CLOSED". (C) The item relating to section 5613 in the table of sections .G6PS XU m for part I of subchapter J of chapter 51 is amended by striking out "stamped" and inserting in lieu thereof "closed". 26 USC 6801. (13) Subsection (b) of section 6801 (relating to authority for establishment, alteration, and distribution) is amended by strik-

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Page:United States Statutes at Large Volume 98 Part 1.djvu/871

 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 823

ing out "several stamp taxes;" and all that follows and inserting in lieu thereof "several stamp taxes." (14) The table of sections for part I of subchapter C of chapter 51 is amended by striking out the item relating to section 5205. SEC. 455. COOKING WINE MAY BE FORTIFIED USING DISTILLED SPIRITS.

(a) IN GENERAL.—Subsection (a) of section 5214 (relating to with- 26 USC 5214. drawal of distilled spirits from bonded premises free of tax or without payment of tax) is amended by striking out the period at the end of paragraph (12) and inserting in lieu thereof "; or", and by adding at the end thereof the following new paragraph: -A-T ••:... "(13) without payment of tax for use on bonded wine cellar premises in the production of wine or wine products which will be rendered unfit for beverage use and removed pursuant to section 5362(d)." (b) LIABILITY FOR TAX.—

(1) Paragraph (1) of section 5005(e) (relating to withdrawals 26 USC 5005. without payment of tax) is amended by striking out "or (10)" and inserting in lieu thereof "(10), or (13)". (2) Paragraph (2) of section 5005(e) is amended by inserting "used in the production of nonbeverage wine or wine products," after "used in the production of wine,". (c) TECHNICAL AMENDMENT.—Section 5354 (relating to bonds for 26 USC 5354. bonded wine cellars) is amended by striking out "wine spirits" each place it appears and inserting in lieu thereof "distilled spirits". SEC. 456. EFFECTIVE DATES.

26 USC 5101 note.

(a) IN GENERAL.—Except as otherwise provided in this section the amendments made by this part shall take effect on the first day of the first calendar month which begins more than 90 days after the date of the enactment of this Act. (b) REPEAL OF STAMP REQUIREMENT.—The amendments made by section 454 shall take effect on July 1, 1985. Ante, p. 820. (c) FORTIFICATION OF COOKING WINE.—The amendments made by section 455 shall take effect on the date of the enactment of this Act. Supm.

Subtitle E—Tax Court Provisions

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SEC. 461. INCREASE IN JURISDICTIONAL LIMIT FOR SMALL CASES. (a) INCREASE IN JURISDICTIONAL LIMIT FOR SMALL TAX CASES.—

(1) IN GENERAL.—Subsection (a) of section 7463 (relating to 26 USC 7463 disputes involving $5,000 or less) is amended by striking out "$5,000" each place it appears and inserting in lieu thereof "$10,000". (2) CLERICAL AMENDMENTS.—

(A) The section heading for section 7463 is amended by striking out "$5,000" and inserting in lieu thereof "$10,000". !iiiVJ<^> (B) The table of sections for part II of subchapter C of chapter 76 is amended by striking out "$5,000" in the item relating to section 7463 and inserting in lieu thereof "$10,000". (b) EFFECTIVE DATE.—The amendments made by this section shall 26 USC 7463 take effect on the date of the enactment of this Act. note.

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Page:United States Statutes at Large Volume 98 Part 1.djvu/872

 98 STAT. 824 26 USC 7448.

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26 USC 7448 note.

26 USC 7456.

PUBLIC LAW 98-369—JULY 18, 1984 SEC. 462. ANNUITIES TO SURVIVORS OF TAX COURT JUDGES. (a) ENTITLEMENT TO ANNUITY.—Subsection (h) of section 7448 (relating to entitlement to annuity) is amended— (1) by striking out "$900 per year divided by the number of such children or $360 per year," in paragraph (2) and inserting in lieu thereof "$4,644 per year divided by the number of such children or $1,548 per year,'; and (2) by striking out "$480 per year" in paragraph (3) and inserting in lieu thereof "$5,580 per year divided by the number of such children or $1,860 per year, whichever is lesser". (b) EFFECTIVE DATE.—The amendments made by this subsection (a) shall apply to annuities payable with respect to months beginning after the date of the enactment of this Act. SEC. 463. PROCEEDINGS WHICH MAY BE ASSIGNED TO COMMISSIONERS. (a) IN GENERAL.—Subsection (d) of section 7456 (relating to proceedings which may be assigned to commissioners) is amended to read as follows: "(d) PROCEEDINGS WHICH MAY B E ASSIGNED TO COMMISSIONERS.—

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26 USC 7456 note. 26 USC 1 note. 26 USC 7456.

The chief judge may assign— "(1) any declaratory judgment proceeding, "(2) any proceeding under section 7463, "(3) any proceeding where neither the amount of the deficiency placed in dispute (within the meaning of section 7463) nor the amount of any claimed overpayment exceeds $10,000; and "(4) any other proceeding which the chief judge may designate, to be heard by the commissioners of the court, and the court may authorize a commissioner to make the decision of the court with respect to any proceeding described in paragraph (1), (2), or (3), subject to such conditions and review as the court may provide." (b) EFFECTIVE DATE.—The amendment made by subsection (a) shall take effect as if enacted as part of the Miscellaneous Revenue Act of 1982. SEC. 464. SPECIAL TRIAL JUDGES. (a) IN GENERAL.—Subsection (a) of section 7456 (relating to administration of oaths and procurement of testimony) is amended by striking out "commissioner" each place it appears and inserting in lieu thereof "special trial judge". (b) APPOINTMENT AND COMPENSATION.—Subsection (c) of section

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 * .3 j,.,j,.

7456 (relating to commissioners) is amended— (1) by striking out "COMMISSIONERS" in the heading and inserting in lieu thereof "SPECIAL TRIAL JUDGES"; (2) by striking out "commissioners" and inserting in lieu thereof "special trial judges"; and (3) by striking out commissioner" and inserting in lieu thereof "special trial judge". (c) PROCEEDINGS WHICH MAY B E ASSIGNED TO SPECIAL TRIAL

Supra.

S&ir >; J r ^"'

JUDGES.—Subsection (d) of section 7456 (relating to proceedings which may be assigned to commissioners), as amended by section 463, is amended— (1) by striking out "COMMISSIONERS" in the heading and inserting in lieu thereof "SPECIAL TRIAL JUDGES"; (2) by striking out "commissioners" and inserting in lieu thereof "special trial judges"; and

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