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Page:United States Statutes at Large Volume 98 Part 1.djvu/1003

 PUBLIC LAW 98-369—JULY 18, 1984 g^.. i" J

n p (.^ H,-

98 STAT. 955

BHC (as defined in section 304(b)(3)(D)(ii) of the Internal Revenue Code of 1954) filed with the Federal Reserve Board before June 18, 1984, if— (i) such BHC was formed not later than the 9th day after the date of the last required approval of any regulatory authority to form such BHC, and (ii) such BHC did not elect (at such time and in such manner as the Secretary of the Treasury or his delegate shall prescribe) not to have the provisions of this subparagraph apply. (D)

AMENDMENTS TO APPLY TO CERTAIN LIABILITIES IN-

CURRED BEFORE OCTOBER 20, 1983.—The amendment made by paragraph (3)(A) shall apply to the acquisition of any ,.j^ •. stock to the extent the liability assumed, or to which such X stock is subject, was incurred by the transferor after Octo' her 20, 1983. (m) AMENDMENT RELATED TO SECTION 229.—Subsection (c) of section 229 of the Tax Equity and Fiscal Responsibility Act of 1982 (relating to modification of regulations on the completed contract method of accounting) is amended by adding at the end thereof the following new paragraph: "(4) UNDERPAYMENTS OF ESTIMATED TAX FOR 1982.—To the extent provided in regulations, no addition to tax shall be made under section 6654 or 6655 of the Internal Revenue Code of 1954 for the taxpayer's first taxable year ending after December 31, 1982, by reason of a long-term contract, but only with respect to installments required to be paid before April 13, 1983." (n) AMENDMENT RELATED TO SECTION 233.—Paragraph (11) of section 51(d) (defining members of economically disadvantaged families) is amended by adding at the end thereof the following new sentence: "Any such determination with respect to an individual who is a qualified summer youth employee or youth participating in a qualified cooperative education program with respect to any employer shall also apply for purposes of determining whether such individual is a member of another targeted group with respect to such employer."

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2;

26 USC 451 note, -,, j ^ t^f^a H >

Ante, p. 788. .i i '^,. 26 USC 51.

,.

i.y; j:-,-.

SEC. 713. TECHNICAL CORRECTIONS OF PENSION PROVISIONS.

(a) AMENDMENTS '

„, ^ C 5 ^,r,o < I

RELATED TO SECTION 235.— (1) ACTUARIAL ADJUSTMENTS MADE TO BENEFIT LIMIT RATHER THAN TO BENEFIT.—

(A) Subparagraph (C) of section 415(b)(2) (relating to ad- 26 USC 415. justment to $90,000 limit where benefit begins before age 62) is amended by striking out the first sentence and inserting in lieu thereof the following: "If the retirement income )8': benefit under the plan begins before age 62, the determination as to whether the $90,000 limitation set forth in paragraph (1)(A) has been satisfied shall be made, in accordance with regulations prescribed by the Secretary, by reducing the limitation of paragraph (1)( A) so that such limitation as so reduced) equals an annual benefit (beginning when such retirement income benefit begins) which is equivalent to a $90,000 annual benefit beginning at age 62." (B) Subparagraph (D) of section 415(b)(2) (relating to adjustment to $90,000 limitation where benefit begins after age 65) is amended to read as follows:

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1004

 98 STAT. 956

PUBLIC LAW 98-369—JULY 18, 1984 "(D) ADJUSTMENT TO $90,000 LIMIT WHERE BENEFIT BEGINS

26 USC 415.

• 26 USC 415 note.

AFTER AGE 65.—If the retirement income benefit under the plan begins after age 65, the determination as to whether the $90,000 limitation set forth in paragraph (1)(A) has been satisfied shall be made, in accordance with regulations prescribed by the Secretary, by increasing the limitation of paragraph (1)(A) so that such limitation (as so increased) equals an annual benefit (beginning when such retirement income benefit begins) which is equivalent to a $90,000 annual benefit beginning at age 65." (C)(i) Clauses (i) and (iii) of section 415(b)(2)(E) are each amended by striking out "any benefit" and inserting in lieu thereof "any benefit or limitation". (ii) Clause (ii) of section 415(b)(2)(E) is amended by striking out "any benefit" and inserting in lieu thereof "any limitation". (2) DEFINITION OF CURRENT ACCRUED BENEFIT IN THE CASE OF COLLECTIVELY BARGAINED PLANS.—Clause (i) of section

235(g)(4)(B) of the Tax Equity and Fiscal Responsibility Act of 1982 (defining current accrued benefit) is amended by adding at the end thereof the following new sentence: "In the case of any plan described in the first sentence of paragraph (5), the preceding sentence shall be applied by substituting for 'January 1, 1983' the applicable date determined under paragraph (5)." (3) TRANSITION FRACTION ONLY APPLIES TO PLANS IN EXISTENCE

26 USC 415.

BEFORE JULY 1, 1982.—Paragraph (6) of section 415(e) (relating to special transition rule for defined contribution fraction for years ending after December 31, 1982) is amended by adding at the end thereof the following new subparagraph: "(C) PLAN MUST HAVE BEEN IN EXISTENCE ON OR BEFORE

JULY 1, 1982.—This paragraph shall apply only to plans which were in existence on or before July 1, 1982." (4) TREATMENT OF CERTAIN COLLECTIVE BARGAINING AGREEMENTS ENTERED INTO BEFORE JULY 1, 1982.—Clausc (ii) of section

26 USC 415 note.

235(g)(4)(B) of the Tax Equity and Fiscal Responsibility Act of 1982 (defining current accrued benefit) is amended by adding at the end thereof the following new sentence: "For purposes of subclause (I), any change in the terms and conditions of the plan pursuant to a collective bargaining agreement entered into before July 1, 1982, and ratified before September 3, 1982, shall be treated as a change made before July 1, 1982." 0)) AMENDMENTS RELATED TO SECTION 236.— (1) EXCEPTION FOR CERTAIN LOANS NOT TO APPLY TO LOANS FROM DEDUCTIBLE EMPLOYEE CONTRIBUTIONS.—

26 USC 72.

(A) Subparagraph (A) of section 72(o)(3) (relating to amounts constructively received) is amended by striking out "subsection (p)" and inserting in lieu thereof "subsection (p) (other than the exception contained in paragraph (2) thereof)". (B) Subparagraph (A) of section 72(p)(2) (relating to exception for certain loans) is amended by adding at the end thereof the following new sentence: "For purposes of clause (ii), the present value of the nonforfeitable accrued benefit shall be determined without regard to any accumulated deductible employee contributions (as defined in subsection (o)(5)(B))."

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


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Page:United States Statutes at Large Volume 98 Part 1.djvu/1005

 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 957

(2) DEFINITION OF REQUIRED PRINCIPAL PAYMENT.—Subpara-

graph (C) of section 236(c)(2) of the Tax Equity and Fiscal Responsibility Act of 1982 is amended by inserting before the 26 USC 72 note. period at the end thereof the following: "or if such loan was payable on demand". (3) REPEAL OF PROVISION TREATING CERTAIN LOAN REPAYMENTS

AS CONTRIBUTIONS.—Subsection (f) of section 404 (relating to 26 USC 404. certain loan repayments considered as contributions) is hereby repealed. (4) CLARIFICATION OF EXCEPTION FOR SMALL LOANS.—Clause (ii)

of section 72(p)(2)(A) (relating to exception for certain loans) is amended to read as follows: "(ii) the greater of (I) one-half of the present value of the nonforfeitable accrued benefit of the employee under the plan, or (II) $10,000." (c) AMENDMENTS RELATED TO SECTION 237.—

26 USC 72.

(1) AMENDMENTS CONFORMING TO LIMITING TO KEY EMPLOYEES THE PENALTY FOR PREMATURE DISTRIBUTIONS.—

.

(A) Clause (i) of section 72(m)(5)(A) is amended by striking out "as an owner-employee" and inserting in lieu thereof "as a key employee". (B) The paragraph heading of section 72(m)(5) is amended by striking out "OWNER-EMPLOYEES" and inserting in lieu

I

thereof "KEY EMPLOYEES".

g-.

(C) Sections 46(a)(4), 53(a), and 901(a) are each amended Ante, p. 834, 838. by striking out "tax on premature distributions to owner- 26 USC 901. employees" and inserting in lieu thereof "tax on premature distributions to key employees".

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11 ' ^ ^

./ ^.^

-.%.nj

(2) CORRECTION OF CROSS REFERENCE TO DEFINITION OF BANK.—

(A) Subsection (f) of section 401 is amended by striking out "(as defined in subsection (d)(D)" and inserting in lieu thereof "(as defined in section 408(n))". (B) Subsection (h) of section 408 is amended by striking out "(as defined in section 401(d)(1))" and inserting in lieu thereof "(as defined in subsection (n))".

26 USC 401. 26 USC 408.

(3) LIMITATION ON ROLLOVERS TO APPLY ONLY TO KEY EMPLOY-

EES.—Clause (ii) of section 402(a)(5)(E) (relating to self-employed Ante, p. 869. i individuals and owner-employees) is amended to read as follows: "(ii) KEY EMPLOYEES.—An eligible retirement plan described in subclause (IV) or (V) of subparagraph (D)(iv) shall not be treated as an eligible retirement Oi > (/. i ,*t plan for the transfer of a distribution if any part of the distribution is attributable to contributions made on behalf of the employee while he was a key employee in a top-heavy plan. For purposes of the preceding sent* •)8'i; i y., tence, the terms 'key employee' and 'top-heavy plan' have the same respective meanings as when used in section 416." (d) AMENDMENTS RELATED TO SECTION 238.— (1) REPEAL OF SECTION 72 (m)(9).—Paragraph (9) of section

72(m) (relating to return of excess contributions before due date of return) is hereby repealed. <

(2) INCREASE IN AMOUNT OF DEDUCTION FOR SIMPLIFIED EMPLOYEE PENSIONS.—Clause (ii) of section 219(b)(2)(A) (relating to

special rules for employer contributions under simplified employee pensions) is amended by striking out "but not in excess of

26 USC 72. 26 USC 219. '

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1006

 98 STAT. 958

26 USC 401.

PUBLIC LAW 98-369—JULY 18, 1984 $15,000" and inserting in lieu thereof "but not in excess of the limitation in effect under section 415(c)(1)(A)". (3) REPEAL OF SECTION 4 0 1 (e).—Subsection (e) of section 401 (relating to contributions for premiums on annuity, etc., contracts) is hereby repealed. (4) REPEAL OF SECTION 404 (a)(9).—

26 USC 404. 26 USC 415.

(A) Subsection (a) of section 404 is amended by striking out paragraph (9) and by redesignating paragraph (10) as paragraph (9). (B) Subparagraph (C) of section 415(c)(6) is amended— (i) by striking out "paragraph (10) of section 404(a)" and inserting in lieu thereof "paragraph (9) of section 404(a)", (ii) by striking out "section 404(a)(10)(A)" and inserting in lieu thereof "section 404(a)(9)(A)", and (iii) by striking out "section 404(a)(10)(B)" and inserting in lieu thereof "section 404(a)(9)(B)". (5) REPEAL OF SECTION 404 (h)(4).—Paragraph (4) of section

26 USC 404.

404(h) (relating to effect on self-employed individuals or shareholder employees) is hereby repealed. (6) DETERMINATION OF EARNED INCOME OF SELF-EMPLOYED FOR

Ante, p. 848.

PURPOSES OP SECTION 404(a)(8)(D).—Subparagraph (D) of section 404(a)(8) is amended by striking out "the earned income of such individual" and inserting in lieu thereof "the earned income of such individual (determined without regard to the deductions allowed by this section and section 405(c))". (7) REPEAL OF SECTION 4 1 5 (C)(7).—

26 USC 415.

26 USC 404 note.

26 USC 1 note.

26 USC 404.

26 USC 101.

(A) Subsection (c) of section 415 is amended by striking out paragraph (7) and by redesignating paragraph (8) as paragraph (7). (B) Subclause (II) of section 415(e)(3)(B)(ii) is amended by striking out "subsection (c)(7) or (8)" and inserting in lieu thereof "subsection (c)(7)". (8) COORDINATION OF REPEALS OF CERTAIN SECTIONS.—Sections

404(e) and 1379(b) of the Internal Revenue Code of 1954 (as in effect on the day before the date of the enactment of the Tax Equity and Fiscal Responsibility Act of 1982) shall not apply to any plan to which section 401(j) of such Code applies (or would apply but for its repeal). (9) AMENDMENT OF SECTION 404 (e).—Subsection (e) of section 404 is amended by striking out "under this section" and inserting in lieu thereof "under paragraph (1), (2), or (3) of subsection (a)". (e) AMENDMENT RELATED TO SECTION 239.—Subparagraph (B) of section 101(b)(3) (relating to treatment of self-employed individuals for exclusion of employees' death benefits) is amended to read as follows: "(B) SPECIAL RULE FOR CERTAIN DISTRIBUTIONS.—In the

T '

case of any amount paid or distributed— "(i) by a trust described in section 401(a) which is exempt from tax under section 501(a), or "(ii) under a plan described in section 403(a), the term 'employee' includes a self-employed individual described in section 401(c)(1)." (f) AMENDMENTS RELATED TO SECTION 240.— (1) DEFINITION OF KEY EMPLOYEE.—

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1007

 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 959

(A) Subparagraph (A) of section 416(i)(l) (defining key 26 USC 416. employee) is amended by striking out "any participant in an employer plan" and inserting in lieu thereof "an employee". "fj.:)3y.>g (B) Clause (ii) of section 416(i)(l)(A) is amended to read as follows: "(ii) 1 of the 10 employees having annual compensation from the employer of more than the limitation in effect under section 415(c)(1)(A) and owning (or considered as owning within the meaning of section 318) the largest interests in the employer,". (C) Subparagraph (A) of section 416(i)(l) (defining key . K ^ ' r ^ U -£ employee) is amended by adding at the end thereof the following new sentence: "For purposes of clause (ii), if 2 employees have the same interest in the employer, the employee having greater annual compensation from the employer shall be treated as having a larger interest." (D) Subparagraph (C) of section 416(i)(l) is amended by B0| CKSU:S striking out "DETERMINING 5-PERCENT OR I-PERCENT OWNERS" in the subparagraph heading and inserting in lieu thereof "DETERMINING OWNERSHIP IN THE EMPLOYER". (2) TREATMENT OF SIMPLIFIED EMPLOYEE PENSIONS.—Paragraph
 * P I ^ '*' '^^"-^ "^

(1) of section 408(k) (defining simplified employee pension) is amended to read as follows: "(1) IN GENERAL.—For purposes of this title, the term 'simplified employee pension' means an individual retirement account or individual retirement annuity— "(A) with respect to which the requirements of paragraphs (2), (3), (4), and (5) of this subsection are met, and "(B) if such account or annuity is part of a top-heavy plan (as defined in section 416), with respect to which the requirements of section 416(c)(2) are met."

26 USC 408.

 * ^;j

 * iO{ OBU

(3) CLARIFICATION OF TRANSITIONAL RULE.—Paragraph (3) of

section 235(g) of the Tax Equity and Fiscal Responsibility Act of 1982 is amended by adding at the end thereof the following new 26 USC 415 note. sentence: "A similar rule shall apply with respect to the last plan year beginning before January 1, 1984, for purposes of applying section 416(h) of the Internal Revenue Code of 1954." (4) TREATMENT OF DISTRIBUTIONS FROM TERMINATED PLANS.—

Paragraph (3) of section 416(g) (relating to distributions during 26 USC 416. last 5 years taken into account) is amended by adding at the end thereof the following new sentence: "The preceding sentence ')& shall also apply to distributions under a terminated plan which if it had not been terminated would have been required to be included in an aggregation group." (5) CLARIFICATION OF COST-OF-LIVING ADJUSTMENTS.—

(A) IN GENERAL.—Paragraph (2) of section 416(d) (relating to cost-of-living adjustments) is amended by striking out "in the same manner" and inserting in lieu thereof "at the same time and in the same manner". (B) SIMPLIFIED EMPLOYEE PENSIONS.—Subparagraph (C) of

section 408(k)(3) (relating to contributions must bear uni- 26 USC 408. form relationship to total compensation) is amended by adding at the end thereof the following new sentence: "The Secretary shall annually adjust the $200,000 amount contained in the preceding sentence at the same time and in jj;.,.,,

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1008

 98 STAT. 960

PUBLIC LAW 98-369—JULY 18, 1984 the same manner as he adjusts the dollar amount contained in section 415(c)(1)(A)." (6) CLERICAL AMENDMENTS.—

26 USC 416.

(A) Subsection (0 of section 416 is amended by striking out "require" and inserting in lieu thereof "required". (B) Clause (iii) of section 416(i)(l)(B) is amended by striking out "subparagraph (A)(ii)(II)" and inserting in lieu thereof "subparagraph (A)(ii)". (g) AMENDMENTS RELATED TO SECTION 243.— (1) EFFECTIVE DATE FOR PROVISIONS RELATED TO INHERITED

INDIVIDUAL RETIREMENT PLANS.—Subsection (c) of section 243 of 26 USC 408 note. the Tax Equity and Fiscal Responsibility Act of 1982 is amended to read as follows: "(c) EFFECTIVE DATE.—The amendments made by this section shall apply with respect to individuals dying after December 31, 1983." (2) CLERICAL AMENDMENT.—The subparagraph (C) of section 408(d)(3) which was added by section 335(a)(1) of the Tax Equity 26 USC 408. and Fiscal Responsibility Act of 1982 is redesignated as subparagraph (D). (h) AMENDMENT RELATED TO SECTION 247.—Subsection (a) of sec26 USC 333 note, tion 247 of the Tax Equity and Fiscal Responsibility Act of 1982 (relating to existing personal service corporations may liquidate under section 333 during 1983 and 1984) is amended by inserting "which is in existence on September 3, 1982," after "section 535(c)(2)(B) of the Internal Revenue Code of 1954)". (i) AMENDMENT RELATED TO SECTION 248.—Paragraph (2) of section 26 USC 414. 414(n) (defining leased employee) is amended by striking out "any person" in the material preceding subparagraph (A) and inserting in lieu thereof "any person who is not an employee of the recipient and", (j) AMENDMENT RELATED TO SECTION 249.—Subparagraph (D) of 26 USC 408. section 408(k)(3) (relating to treatment of certain contributions and taxes) is amended by striking out the second and third sentences and inserting in lieu thereof the following: "If the employer does not maintain an integrated plan at any time during the taxable year, OASDI contributions (as defined in section 401(1)(2)) may, for purposes of this paragraph, be taken into account as contributions by the employer to the employee's simplified employee pension, but only if such contributions are so taken into account with respect to each employee maintaining a simplified employee pension." (k) AMENDMENTS RELATED TO SECTION 253.— (1) LIMITATION OF PROFIT-SHARING AND STOCK BONUS PLANS.—

26 USC 415.

Subparagraph (C) of section 415(c)(3) is amended by striking out "In the case of a participant" and inserting in lieu thereof "In the case of a participant in a profit-sharing or stock bonus plan". (2)

Ante, p. 740.

CLARIFICATION

OF

RULE

THAT

CONTRIBUTIONS

BE

NONFORFEITABLE.—Subparagraph (C) of section 415(c)(3) (relating to special rules for permanent and total disability) is amended by striking out the last sentence and inserting in lieu thereof the following: "This subparagraph shall apply only if contributions made with respect to amounts treated as compensation under this subparagraph are nonforfeitable when made." SEC. 714. MISCELLANEOUS PROVISIONS. (a) AMENDMENT RELATED TO SECTION 255.—Subsection (c) of section 811 (relating to special rule for dividends to policyholders under

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1009

 PUBLIC LAW 98-369—JULY 18, 1984 reinsurance contracts) is amended by striking out "conventional coinsurance contract" and inserting in lieu thereof "reinsurance contract". (h) AMENDMENT RELATED TO SECTION 281A.—Paragraph (2) of section 281AG3) of the Tax Equity and Fiscal Responsibility Act of 1982 is amended by striking out "subsection (a)" and inserting in lieu thereof "paragraph (1)". (c) AMENDMENT RELATED TO SECTION 292.—Paragraph (2) of section 7430(a) (relating to awarding of court costs and certain fees) is amended by striking out "including the Tax Court" and inserting in lieu thereof "including the Tax Court and the United States Claims Court". (d) AMENDMENT RELATED TO SECTION 309.—Paragraph (2) of section 6042(b) (relating to exceptions from dividend reporting requirements) is amended to read as follows: "(2) EXCEPTIONS.—For purposes of this section, the term 'dividend' does not include any distribution or payment— "(A) to the extent provided in regulations prescribed by the Secretary— "(i) by a foreign corporation, or "(ii) to a foreign corporation, a nonresident alien, or a , partnership not engaged in a trade or business in the bii£ ^u United States and composed in whole or in part of, ^^, nonresident aliens, or Diifc u^g^ except to the extent otherwise provided in regulations prescribed by the Secretary, to any person described in section 6049(b)(4)." (e) AMENDMENTS RELATED TO SECTION 311.— (1) IN GENERAL.—Section 6045(c) (relating to returns of brokers) is amended by adding at the end thereof the following new paragraph: "(4) PERSON.—The term 'person' includes any governmental unit and any agency or instrumentality thereof." (2) N o PENALTY FOR PAYMENTS BEFORE JANUARY 1, 1985.—No

penalty shall be imposed under the Internal Revenue Code of 1954 with respect to any peison required (by reason of the amendment made by paragraph (1)) to file a return under section 6045 of such Code with respect to any payment before January 1, 1985, (f) AMENDMENT RELATED TO SECTION 314.—Subparagraph (E) of section 6678(a)(3) is amended by striking out "section 6053(c)" and inserting in lieu thereof "section 6053". (g) AMENDMENTS RELATED TO SECTION 320.— (1) PERMITTING THE JOINDER OF REFUND AND INJUNCTIVE ACTIONS WITH RESPECT TO CERTAIN PENALTIES.—Section 7422 (relat-

98 STAT. 961

A,

26 USC 7275 "ote. 26 USC 7430.

26 USC 6042. -( Hi

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^..^,, '"""' ^ ^'

., 97 Stat. 370. 26 USC 6049. 26 USC 6045. K

-, a

26 USC 6045

"°*® 26 USC l et seq.

97 Stat. 381. 26 USC 6678. 26 USC 7422.

ing to civil actions for refund) is amended by redesignating subsection (i) as subsection (j) and by inserting after subsection (h) the following new subsection: "(i) SPECIAL RULE FOR ACTIONS WITH RESPECT TO TAX SHELTER PROMOTER AND UNDERSTATEMENT PENALTIES.—No action or proceed-

ing may be brought in the United States Claims Court for any refund or credit of a penalty imposed by section 6700 (relating to penalty for promoting abusive tax shelters, etc.) or section 6701 (relating to penalties for aiding and abetting understatement of tax liability)."

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1010

 98 STAT. 962

PUBLIC LAW 98-369—JULY 18, 1984 f , (2) AMENDMENT TO TITLE 28.—Chapter 91 of title 28, United I States Code, is amended by adding at the end thereof the following new section:

28 USC 1509.

.OPiTCBv

^

28 USC 1509 note. 26 USC 5684.

26 USC 5761. ' 26 USC 6661. 26 USC 7609.

"§ 1509. No jurisdiction in cases involving refunds of tax shelter promoter and understatement penalties "The United States Claims Court shall not have jurisdiction to hear any action or proceeding for any refund or credit of any penalty imposed under section 6700 of the Internal Revenue Code of 1954 (relating to penalty for promoting abusive tax shelters, etc.) or section 6701 of such Code (relating to penalties for aiding and abetting understatement of tax liability)." (3) CONFORMING AMENDMENT.—The table of sections for chapter 91 of title 28, United States Code, is amended by adding at the end thereof the following new item: "1509. No jurisdiction in cases involving refunds of tax shelter promoter and understatement penalties." (4) EFFECTIVE DATE.—The amendments made by this subsec-

tion shall apply to any claim for refund or credit filed after the date of the enactment of this Act. (h) AMENDMENTS RELATED TO SECTION 323.— (1) Subsection (b) of section 5684 is amended— (A) by striking out "SECTION 6660" in the heading and inserting in lieu thereof "SECTION 6662", and (B) by striking out "section 6660(a)" in the text and inserting in lieu thereof "section 6662(a)". (2) Subsection (c) of section 5761 is amended— (A) by striking out "SECTION 6660" in the heading and inserting in lieu thereof "SECTION 6662", and (B) by striking out "section 6660(a)" in the text and " inserting in lieu thereof "section 6662(a)". (3) Clause (ii) of section 6661(b)(2)(A) (defining understatement) is amended by inserting ", reduced by any rebate (within the meaning of section 6211(b)(2))" after "return^'. (i) AMENDMENT RELATED TO SECTION 333.—Section 7609(c)(l) (relating to summons to which section applies) is amended by striking out "section 7602" and inserting in lieu thereof "section 7602(a)". (j) AMENDMENTS RELATED TO SECTION 334.— (1) CLARIFICATION THAT DEATH BENEFIT EXCLUSION APPLIES TO

DISTRIBUTIONS UNDER SECTION 403 (b).—Subparagraph (C) of section 3405(b)(2) (relating to special rule for distributions by reason of death) is amended to read as follows:

26 USC 3405. _,,

,j„ _

"(C)

jj.-r

SPECIAL RULE FOR DISTRIBUTIONS BY REASON OF

DEATH.—In the case of any nonperiodic distribution from or under any plan or contract described in section 401(a), 403(a), or 403(b)— "(i) which is made by reason of a participant's death, and "(ii) with respect to which the requirements of clauses (ii) and (iv) of subsection (d)(4)(A) are met, subparagraph (A) or (B) (as the case may be) shall be applied by taking into account the exclusion from gross income provided by section 101(b) (whether or not allowable)." (2) CLARIFICATION OF CREDIT FOR WITHHELD AMOUNTS.—Para-

Ante, p. 826. 26 USC 31.

graph (1) of section 31(a) is amended by striking out "under

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1011

 PUBLIC LAW 98-369—JULY 18, 1984 section 3402 as tax on the wages of any individual" and inserting in lieu thereof "as tax under chapter 24". (3) PENALTY FOR FAILURE TO GIVE NOTICE.—Section 6652 (relating to penalty for failure to file certain information returns, registration statements, etc.) is amended by redesignating subsection (i) as subsection (j) and by inserting after subsection (h) the following new subsection:

98 STAT. 963 ' '' 26 USC 6652.

"(i) FAILURE TO GIVE NOTICE TO RECIPIENTS OF CERTAIN PENSION,

ETC., DISTRIBUTIONS.—In the case of each failure to provide notice as required by section 3405(d)(10)(B), at the time prescribed therefor, unless it is shown that such failure is due to reasonable cause and not to willful neglect, there shall be paid, on notice and demand of the Secretary and in the same manner as tax, by the person failing to provide such notice, an amount equal to $10 for each such failure, but the total amount imposed on such person for all such failures during any calendar year shall not exceed $5,000."

-i ^ = * K »«

(4) EXCEPTION FOR AMOUNTS PAID TO NONRESIDENT ALIENS.—

Subparagraph (B) of section 3405(d)(1) (relating to exceptions) is amended by striking out "and" at the end of clause (i), by striking out the period at the end of clause (ii) and inserting in lieu thereof ", and", and by adding at the end thereof the following new clause: "(iii) any amount which is subject to withholding under subchapter A of chapter 3 (relating to withholding of tax on nonresident aliens and foreign corporations) by the person paying such amount or which „, would be so subject but for a tax treaty." (5) CLARIFICATION OF AMOUNT WITHHELD WHERE EMPLOYER SECURITY DISTRIBUTED.—Paragraph (8) of section 3405(d) (relat-

26 USC 3405. ^"^^' P- ^^lK

26 USC 1441. ^

,^,^.

' i '.JC.M -

ing to maximum amount withheld) is amended by adding at the end thereof the following new sentence: "No amount shall be required to be withheld under this section in the case of any designated distribution which consists only of employer securities of the employer corporation (within the meaning of section 402(a)(3)) and cash (not in excess of $200) in lieu of fractional shares." (k) AMENDMENT RELATED TO SECTION 337.—Subsection (d) of section 982 (relating to admissibility of documentation maintained in 26 USC 982. foreign countries) is amended by striking out paragraph (3) and by redesignating paragraph (4) as paragraph (3). (1) AMENDMENT RELATED TO SECTION 339.—Paragraph (1) of section 6038A(c) (defining control) is amended by striking out "section 26 USC 6038A. 6038(d)(1)" and inserting in lieu thereof "section 6038(e)(1)". (m) AMENDMENT RELATED TO SECTION 345.—Subsection (b) of sec; tion 345 of the Tax Equity and Fiscal Responsibility Act of 1982 26 USC 6621 (relating to effective date) is amended by striking out "taking effect note. on" and inserting in lieu thereof "taking effect on or after".
 * as

(n) AMENDMENTS RELATED TO SECTION 346.— (1) CLERICAL AMENDMENT.—Subparagraph (B) of section 346(c)(2) of the Tax Equity and Fiscal Responsibility Act of 1982 26 USC 6601. is amended to read as follows: "(B) Subparagraph (A) of section 6601(d)(2) is amended by striking out 'the last day of each place it appears and ., inserting in lieu thereof 'the filing date for'." (2) INTEREST ON REFUNDS CAUSED BY CARRYBACKS.—

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1012

 98 STAT. 964

PUBLIC LAW 98-369—JULY 18, 1984

26 USC 6611.

(A) Paragraph (3) of section 6611(f) (relating to refund of tax caused by carryback, etc.) is amended by adding at the end thereof the following new subparagraph: "(C) APPLICATION OF SUBPARAGRAPH (B) WHERE SECTION

Ante, p. 846.

26 USC 6331.

6411 (a) CLAIM PILED.—For purposes of subparagraph V (B)(i)(II), if a taxpayer— "(i) files a claim for refund of any overpayment described in paragraph (1) or (2) with respect to the taxable year to which a loss or credit is carried back, and "(ii) subsequently files an application under section 6411(a) with respect to such overpayment, then the claim for overpayment shall be treated as having been filed on the date the application under section 6411(a) was filed." (B) The last sentence of section 6411(a) is amended by striking out "An" and inserting in lieu thereof "Except for purposes of applying section 6611(f)(3)(B), an", (o) AMENDMENT RELATED TO SECTION 349.—Subsection (b) of section 6331 is amended by striking out "subsection (d)(3)" and inserting in lieu thereof "subsection (e)". (p) AMENDMENTS RELATED TO TITLE IV.— (1) EXTENSION OF PARTNERSHIP AUDIT PROVISIONS TO ENTITIES

ij ^ u^;

26 USC 6233.

FILING PARTNERSHIP RETURNS, ETC.—Subchapter C of chapter 63 (relating to tax treatment of partnership items) is amended by adding at the end thereof the following new section: "SEC. 6233. EXTENSION TO ENTITIES FILING PARTNERSHIP RETURNS, ETC. "(a) GENERAL RULE.—If a partnership return is filed by an entity for a taxable year but it is determined that the entity is not a partnership for such year, then, to the extent provided in regulations, the provisions of this subchapter are hereby extended in respect of such year to such entity and its items and to persons holding an interest in such entity. "(b) SIMILAR RULES IN CERTAIN CASES.—If for any taxable year— "(1) an entity files a return as an S corporation but it is determined that the entity was not an S corporation for such year, or "(2) a partnership return or S corporation return is filed but it is determined that there is no entity for such taxable year, then, to the extent provided in regulations, rules similar to the rules of subsection (a) shall apply." (2) TECHNICAL AND CLERICAL AMENDMENTS.—

26 USC 6230. 26 USC 6231. inc v'T,',

r^-

(A) Subparagraph (B) of section 6230(c)(1) is amended by striking out "(or erroneously computed the amount of any such credit or refund)". (B) Paragraph (9) of section 6231(a) is amended by striking out "electing small business corporation" and inserting in lieu thereof "S corporation". (C) Subparagraph (A) of section 6231(d)(1) is amended to read as follows: "(A) in the case of a partner whose entire interest in the partnership is disposed of during such partnership taxable year, as of the moment immediately before such disposition, or".

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1013

 PUBLIC LAW 98-369—JULY 18, 1984 (D) Subsection (f) of section 6231 is amended by striking out "such deduction or credit" and inserting in lieu thereof "such loss or credit". (E) The table of sections for subpart C of chapter 63 is amended by adding at the end thereof the following new ^'•'^'^

item:

98 STAT. 965 26 USC 6231. ^

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J '^i^^

"Sec. 6233. Extension to entities filing partnership returns, etc."

(F) Paragraph (3) of section 6501(q) is amended to read as follows:

26 USC 6501.

"(3) CROSS REFERENCE.— "For extension of period for windfall profit tax items of partnerships, see section 6229 as made applicable by section 6232."

(G) Paragraph (3) of section 6511(h) is amended to read as follows: "(3) CROSS REFERENCE.—

,,.,.

,,

26 USC 6511. < ^ ^ >^ ^ ^^ " =

"For period of limitation for windfall proflt tax items of partnerships, see section 6227(a) and subsections (c) and (d) of section 6230 as made applicable by section 6232."

.^

(H) Subsection (h) of section 7422 is amended by striking 26 USC 7422. out "section 6131(a)(3)" and inserting in lieu thereof "section 6231(a)(3)". (I) Subparagraph (B) of section 6231(b)(2) (relating to 26 USC 6231. items cease to be partnership items in certain cases) is amended by striking out "section 6227(b)" and inserting in - lieu thereof "section 6227(c)". (q) ESTATES AND TRUSTS AND S CORPORATIONS REQUIRED TO PROVIDE INFORMATION TO CERTAIN BENEFICIARIES AND SHAREHOLDERS.— (1) ESTATES AND TRUSTS.—Subpart A of part III of subchapter

A of chapter 61 (relating to information concerning persons subject to special provisions) is amended by adding after section 6034 the following new section: "SEC. 6034A. INFORMATION TO BENEFICIARIES OF ESTATES AND TRUSTS.

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26 USC 6034A.

"The fiduciary of any estate or trust making the return required to be filed under section 6012(a) for any taxable year shall, on or before the date on which such return was filed, furnish to each beneficiary— "(1) who receives a distribution from such estate or trust with respect to such taxable year, or "(2) to whom any item with respect to such taxable year is allocated, a statement containing such information shown on such return as the Secretary may prescribe." (2) S CORPORATIONS.—Section 6037 (relating to return of S 26 USC 6037. corporation) is amended— (A) by striking out "Every" and inserting in lieu thereof "(a) In General.—Every", and subsection: "(b) COPIES TO SHAREHOLDERS.—Each S corporation required to file a return under subsection (a) for any taxable year shall (on or before the day on which the return for such taxable year was filed) furnish to each person who is a shareholder at any time during such taxable year a copy of such information shown on such return as may be required by regulations."
 * ' ^' ''(B) by adding at the end thereof the following new

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1014

 98 STAT. 966

PUBLIC LAW 98-369—JULY 18, 1984 (3) PENALTY FOR FAILURE TO PROVIDE INFORMATION.—Section

97 Stat. 381. 26 USC 6678. Ante, p. 965.

6678(a)(3) (relating to failure to furnish certain statements) is amended by striking out "or" at the end of subparagraph (D), by inserting ' or" at the end of subparagraph (E), and by adding after subparagraph (E) the following new subparagraph: "(F) section 6031(b), 6034A, or 6037(b) (relating to statements furnished by certain pass-thru entities),". (4) CONFORMING AMENDMENT.—The table of sections for subpart A of III of subchapter A of chapter 61 is amended by adding after the item relating to section 6034 the following new item:

26 USC 6034A note.

(5) EFFECTIVE DATE.—The amendments made by this subsection shall apply to taxable years beginning after December 31, 1984.

"Sec. 6034A. Information to beneficiaries of estates and trusts."

26 USC 31 note.

SEC. 715. EFFECTIVE DATE.

- -v

,,.i,^,.

26 USC 1 note.

Any amendment made by this subtitle shall take effect as if included in the provision of the Tax Equity and Fiscal Responsibility Act of 1982 to which such amendment relates.

Subtitle B—Amendments Related to Subchapter S Revision Act of 1982; Etc. SEC. 721. TECHNICAL CORRECTIONS OF SUBCHAPTER S REVISION ACT OF 1982. (a) LIMITATION ON RECOGNITION OF GAIN IN THE CASE OF CERTAIN DISTRIBUTIONS.—

26 USC 1363.

(1) Section 1363 (relating to effect of election on corporation) is amended by adding at the end thereof the following new subsection: "(e) SUBSECTION (d) NOT TO APPLY TO COMPLETE LIQUIDATIONS AND

Ah):< -

REORGANIZATIONS.—Subsection (d) shall not apply to any distribution— "(1) of property in complete liquidation of the corporation, or "(2) to the extent it consists of property permitted by section 354, 355, or 356 to be received without the recognition of gain." (2) Subsection (d) of section 1363 is amended by striking out "If" and inserting in lieu thereof "Except as provided in subsection (e), i f. (b) COORDINATION WITH RULES RELATING TO INCOME FROM DISCHARGE OF INDEBTEDNESS.—

26 USC 108.

(1) Paragraph (2) of section 1363(c) (relating to elections of the S corporation) is amended by striking out subparagraph (A) and by redesignating subparagraphs (B), (C), and (D) as subparagraphs (A), (B), and (C), respectively. (2) Subsection (d) of section 108 (relating to income from discharge of indebtedness) is amended by redesignating paragraphs (7), (8), and (9) as paragraphs (8), (9), and (10), respectively, by striking out paragraph (6), and by inserting after paragraph (5) the following new paragraphs: "(6) SUBSECTIONS (a), (b), AND ( O TO BE APPLIED AT PARTNER

LEVEL.—In the case of a partnership, subsections (a), (b), and (c) shall be applied at the partner level. "(7) SPECIAL RULES FOR S CORPORATION.—

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1015

 PUBLIC LAW 98-369—JULY 18, 1984 "(A) SUBSECTIONS (a),

98 STAT. 967

(b), AND ( O TO BE APPLIED AT

CORPORATE LEVEL.—In the case of an S corporation, subsections (a), (b), and (c) shall be applied at the corporate level. "(B) REDUCTION IN CARRYOVER OF DISALLOWED LOSSES AND

DEDUCTIONS.—In the case of an S corporation, for purposes of subparagraph (A) of subsection (b)(2), any loss or deduction which is disallowed for the taxable year of the discharge under section 1366(d)(1) shall be treated as a net operating loss for such taxable year. The preceding sentence shall not apply to any discharge to the extent that subsection (a)(1)(C) applies to such discharge. " '

"(C) COORDINATION WITH BASIS ADJUSTMENTS UNDER SEC-

TION 1367 (b)(2).—For purposes of subsection (e)(6), a shareholder's adjusted basis in indebtedness of an S corporation shall be determined without regard to any adjustments made under section 1367(b)(2)." (c) TREATMENT OF INACTIVE SUBSIDIARIES.—Paragraph (6) of section 1361(c) (relating to ownership of stock in certain inactive corporations) is amended to read as follows:

26 USC 1361.

"(6) OWNERSHIP OF STOCK IN CERTAIN INACTIVE CORPORA-

TIONS.—For purposes of subsection (b)(2)(A), a corporation shall not be treated as a member of an affiliated group during any period within a taxable year by reason of the ownership of stock in another corporation if such other corporation— "(A) has not begun business at any time on or before the close of such period, and "(B) does not have gross income for such period." (d) TREATMENT OF WORTHLESS DEBT.—Paragraph (3) of section 1367(b) (relating to coordination with section 165(g)) is amended to read as follows: "(3) COORDINATION WITH SECTIONS 165(g) AND 166(d).—This section and section 1366 shall be applied before the application of sections 165(g) and 166(d) to any taxable year of the shareholder or the corporation in which the security or debt becomes worthless."

26 USC 1367.

^

(e) ADJUSTMENT TO EARNINGS AND PROFITS FOR RECAPTURE UNDER SECTION 47.—

(1) Subsection (d) of section 1371 (relating to coordination with investment credit recapture) is amended by adding at the end thereof the following new paragraph:

26 USC 1371,

"(3) ADJUSTMENT TO EARNINGS AND PROFITS FOR AMOUNT OF

RECAPTURE.—Paragraph (1) of subsection (c) shall not apply to any increase in tax under section 47 for which the S corporation is liable." (2) Paragraph (1) of section 1371(c) is amended by striking out "paragraphs (2) and (3)" and inserting in lieu thereof "paragraphs (2) and (3) and subsection (d)(3)". (f) QUALIFIED SUBCHAPTER S TRUSTS.—

(1) GRACE PERIOD.—Subparagraph (D) ef section 1361(d)(2) (relating to grade period) is amended by striking out "60 days" and inserting in lieu thereof "15 days and 2 months". (2) DEFINITION OF QUALIFIED SUBCHAPTER S TRUST.—Subsection

(d) of section 1361 (relating to special rule for qualified subchapter S trust) is amended by striking out paragraphs (3) and (4) and inserting in lieu thereof the following:

26 USC 1361.

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1016

 98 STAT. 968

PUBLIC LAW 98-369—JULY 18, 1984

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"(3) QUALIFIED SUBCHAPTER S TRUST.—For purposes of this subsection, the term 'qualified subchapter S trust' means a trust— "(A) the terms of which require that— "(i) during the life of the current income beneficiary, there shall be only 1 income beneficiary of the trust, "(ii) any corpus distributed during the life of the current income beneficiary may be distributed only to such beneficiary, "(iii) the income interest of the current income beneficiary in the trust shall terminate on the earlier of such beneficiary's death or the termination of the trust, and "(iv) upon the termination of the trust during the life of the current income beneficiary, the trust shall distribute all of its assets to such beneficiary, and "(B) all of the income (within the meaning of section 643(b)) of which is distributed (or required to be distributed) currently to 1 individual who is a citizen or resident of the United States. "(4) TRUST CEASING TO BE QUALIFIED.— "(A) FAILURE TO MEET REQUIREMENTS OF PARAGRAPH

(3)(A).—If a qualified subchapter S trust ceases to meet any requirement of paragraph (3)(A), the provisions of this subsection shall not apply to such trust as of the date it ceases to meet such requirement. "(B)

26 USC 1361.

26 USC 1362.

FAILURE TO MEET REQUIREMENTS OF PARAGRAPH

(3)(B).—If any qualified subchapter S trust ceases to meet any requirement of paragraph (3)(B) but continues to meet the requirements of paragraph (3)(A), the provisions of this subsection shall not apply to such trust as of the first day of the first taxable year beginning after the first taxable year for which it failed to meet the requirements of paragraph (3)(B)." (3) TECHNICAL AMENDMENT.—Clause (i) of section 1361(d)(2)(B) (relating to separate election with respect to each S corporation) is amended by striking out "S corporation" each place it appears and inserting in lieu thereof "corporation", (g) COORDINATION WITH SECTION 338.— (1) Paragraph (6) of section 1362(e) (relating to treatment of S termination year) is amended by adding at the end thereof the following new subparagraph: "(C) PARAGRAPH (2) NOT TO APPLY TO ITEMS RESULTING

FROM SECTION 338.—Paragraph (2) shall not apply with respect to any item resulting from the application of section 338." (2) Paragraph (2) of section 1362(e) is amended by striking out "as provided in paragraph (3)" and inserting in lieu thereof "as provided in paragraph (3) and subparagraphs (C) and (D) of paragraph (6)." '

(h) ELECTION TO HAVE ITEMS ASSIGNED TO SHORT TAXABLE YEAR UNDER NORMAL ACCOUNTING RULES.—Subparagraph (B) of section

1362(e)(3) (relating to election to have items assigned to each short taxable year under normal accounting rules) is amended to read as follows: "(B) SHAREHOLDERS MUST CONSENT TO ELECTION.—An election under this subsection shall be valid only if all persons

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 PUBLIC LAW 98-369—JULY 18, 1984 ,,

98 STAT. 969

who are shareholders in the corporation at any time during the S short year and all persons who are shareholders in the corporation on the first day of the C short year consent to such election."

. - ; '•,-•:

(i) ELECTION TO HAVE N E W PASSIVE INCOME RULES NOT APPLY DURING 1982.—Paragraph (3) of section 6(b) of the Subchapter S

Revision Act of 1982 (relating to new passive income rules apply to taxable years beginning during 1982) is amended by adding at the end thereof the following new sentences: "The preceding sentence shall not apply in the case of any corporation which elects (at such time and in such manner as the Secretary of the Treasury or his delegate shall prescribe) to have such sentence not apply. Subsection (e) shall not apply to any termination resulting from an election under the preceding sentence." 0) S CORPORATION TREATED AS PARTNERSHIP FOR PURPOSES OF SECTION 318.—Paragraph (5) of section 318(a) (relating to construe-

tive ownership of stock) is amended by adding at the end thereof the following new subparagraphs: "(E) S CORPORATION TREATED AS PARTNERSHIP.—For purposes of this subsection— fc "(i) an S corporation shall be treated as a partnerJ ship, and (ii) any shareholder of the S corporation shall be treated as a partner of such partnership. The preceding sentence shall not apply for purposes of i determining whether stock in the S corporation is constructively owned by any person."

26 USC 1361 note.

26 USC 318.

..i*rt -.^.;

(k) CLARIFICATION OF TREATMENT OF CERTAIN ELECTIONS UNDER

PRIOR LAW.—Subsection (e) of section 6 of the Subchapter S Revision Act of 1982 (relating to treatment of certain elections under prior law) is amended by striking out "any termination" and inserting in lieu thereof "any termination or revocation".

26 USC 1361 note.

(1) ELECTION FOR CERTAIN SHORT TAXABLE YEARS.—

(1) Subsection (b) of section 1362 (relating to when subchapter 26 USC 1362. S election made) is amended by adding at the end thereof the following new paragraph: "(4) TAXABLE YEARS OF 2V2 MONTHS OR LESS.—For purposes of

this subsection, an election for a taxable year made not later than 2 months and 15 days after the first day of the taxable year shall be treated as timely made during such year." (2) Paragraph (3) of section 1362(b) is amended by striking out "on or before the last day of such taxable year" and inserting in lieu thereof "on or before the 15th day of the 3rd month of the following taxable year".

^

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(m) TAXABLE YEAR OF EXISTING S CORPORATIONS.—Paragraph (1)

of section 1378(c) (relating to existing S corporations required to use 26 USC 1378. permitted year after 50-percent shift in ownership) is amended by striking out "which includes December 31, 1982" and inserting in lieu thereof "which includes December 31, 1982 (or which is an S corporation for a taxable year beginning during 1983 by reason of an election made on or before October 19, 1982)". (n) REFERENCES TO PRIOR LAW.—Subsection (b) of section 1379

(relating to references to prior law included) is amended to read as follows: "(b) REFERENCES TO PRIOR LAW INCLUDED.—Any references in this title to a provision of this subchapter shall, to the extent not inconsistent with the purposes of this subchapter, include a refer-

26 USC 1379.

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1018

 98 STAT. 970 26 USC 1 note.

PUBLIC LAW 98-369—JULY 18, 1984 ence to the corresponding provision as in effect before the enactment of the Subchapter S Revision Act of 1982." (o) ELECTION TO TREAT DISTRIBUTIONS AS DIVIDENDS DURING CERTAIN POST-TERMINATION TRANSITION PERIODS.—Subsection (e) of sec-

26 USC 1371.

tion 1371 (relating to coordination with subchapter C) is amended to read as follows: "(e) CASH DISTRIBUTIONS DURING POST-TERMINATION TRANSITION PERIOD.—

"(1) IN GENERAL.—Any distribution of money by a corporation with respect to its stock during a post-termination transition period shall be applied against and reduce the adjusted basis of the stock, to the extent that the amount of the distribution does not exceed the accumulated adjustments account. "(2) ELECTION TO DISTRIBUTE EARNINGS FIRST.—An S corpora-

'

 * j;

tion may elect to have paragraph (1) not apply to all distributions made during a post-termination transition period described in section 1377(b)(1)(A). Such election shall not be effective unless all shareholders of the S corporation to whom distributions are made by the S corporation during such posttermination transition period consent to such election." (p) CORPORATE PREFERENCE RULES APPLIED TO S CORPORATIONS WHICH WERE RECENT CORPORATIONS.—Subsection (b) of section

26 USC 1363.

26 USC 1378.

1363 (relating to computation of corporation's taxable income) is amended by striking out "and" at the end of paragraph (2), by striking out the period at the end of paragraph (3) and inserting in lieu thereof ", and", and by adding at the end thereof the following new paragraph: "(4) section 291 shall apply if the S corporation (or any predecessor) was a C corporation for any of the 3 immediately preceding taxable years." (q) TREATMENT OF STOCK HELD BY ESTATE OF QUALIFIED TRANS-

FEROR.—Clause (i) of section 1378(c)(3)(B) (relating to existing S corporations required to use permitted year after 50-percent shift in ownership) is amended by striking out "who held" and inserting in lieu thereof "who (or whose estate) held". (r) AMENDMENTS ACCOUNT.—

26 USC 1368.

.iTi^i '^h r

RELATED

TO ACCUMULATED

ADJUSTMENTS

(1) Subparagraph (A) of section 1368(e)(1) (defining accumulated adjustments account) is amended by striking out "(except that" and all that follows through the end thereof and inserting in lieu thereof the following: "(except that no adjustment shall be made for income (and related expenses) which is exempt from tax under this title and the phrase '(but not below zero)' shall be disregarded in section 1367(b)(2)(A))". (2) Subsection (c) of section 1368 (relating to S corporation having earnings and profits) is amended by adding at the end thereof the following new sentence: "Except to the extent provided in regulations, if the distributions during the taxable year exceed the amount in the accumulated adjustments account at the close of the taxable year, for purposes of this subsection, the balance of such account shall be allocated among such distributions in proportion to their respective sizes." (s) SPECIAL RULES FOR CERTAIN EXPENSES OF S CORPORATIONS.—

26 USC 267.

Paragraph (1) of section 267(f) (as in effect on the day before the date of the enactment of this Act) is amended by striking out all that follows subparagraph (B) and inserting in lieu thereof the following: "then any deduction allowable under such sections in respect of

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1019

 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 971

such amount shall be allowable as of the day as of which such amount is includible in the gross income of the person to whom the payment is made (or, if later, as of the day on which it would be so allowable but for this paragraph)." (t) PRO RATA ALLOCATION FOR S TERMINATION YEAR NOT To APPLY

^L*

s

IF 50-PERCENT CHANGE IN OWNERSHIP.—Paragraph (6) of section

1362(e) (relating to special rules) is amended by adding at the end Ante, p. 968. thereof the following new subparagraph: .:.. J.. "(D) PRO RATA ALLOCATION FOR S TERMINATION YEAR NOT TO APPLY IF 50-PERCENT CHANGE IN O W N E R S H I P. — Paragraph

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(2) shall not apply to an S termination year if there is a sale or exchange of 50 percent or more of the stock in such corporation during such year." (u) TREATMENT OF PREDECESSOR CORPORATION UNDER SECTION

1374.—Paragraph (2) of section 1374(c) (relating to exception for new 26 USC. 1374. corporations) is amended— (1) by striking out "(and any predecessor corporation)" in subparagraph (A), and (2) by adding at the end thereof the following new sentence: "To the extent provided in regulations, an S corporation and any predecessor corporation shall be treated as 1 corporation for purposes of this paragraph and paragraph (1)." (v) AUTHORITY TO WAIVE TAX ON PASSIVE INVESTMENT INCOME.—

Section 1375 (relating to tax imposed when passive investment 26 USC 1375. income of corporation having subchapter C earnings and profits exceeds 25 percent of gross receipts) is amended by adding at the end thereof the following new subsection: "(d) WAIVER OF TAX IN CERTAIN CASES.—If the S corporation establishes to the satisfaction of the Secretary that— "(1) it determined in good faith that it had no subchapter C earnings and profits at the close of a taxable year, and "(2) during a reasonable period of time after it was determined that it did have subchapter C earnings and profits at the close of such taxable year such earnings and profits were distributed, the Secretary may waive the tax imposed by subsection (a) for such taxable year." (w) APPLICATION OF DEBT RESTORATION RULES.—Subparagraph (B)

of section 1367(b)(2) (relating to adjustments in basis of indebtedness) is amended by striking out "for any taxable year there is" and inserting in lieu thereof "for any taxable year beginning after December 31, 1982, there is",

26 USC 1367.

(x) CLERICAL AMENDMENTS.—

t '

-

^.

(1) Clause (i) of section 48(k)(5)(D) is amended by striking out "electing small business corporation" and inserting in lieu thereof "S corporation". (2) Subparagraph (B) of section 465(a)(1) (relating to limitation to amount at risk) is amended by striking out "a corporation" and inserting in lieu thereof "a C corporation". (3) Subsection (e) of section 1371 (relating to cash distributions during post-termination transition period) is amended by inserting before the period at the end thereof the following: "(within the meaning of section 1368(e))". (4) Paragraph (2) of section 6659(f) is amended by striking out "section 465(a)(1)(C)" and inserting in lieu thereof "section 465(a)(1)(B)".

26 USC 48. ,^ 26 USC 465. Ante, p. 970.

Ante, p. 694.

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1020

 98 STAT. 972

PUBLIC LAW 98-369—JULY 18, 1984

26 USC 6362.

26 USC 1361

(5) Subparagraph (C) of section 6362(d)(2) is amended by striking out "electing small business corporation (within the meaning of section 1371(a))" and inserting in lieu thereof "an S corporation". (y) EFFECTIVE D A T E S. —

"0^-

(1) IN GENERAL.—Except as otherwise provided in this subsection, any amendment made by this section shall take effect as if 26 USC 1 note. included in the Subchapter S Revision Act of 1982. (2) AMENDMENT MADE BY SUBSECTION (b)(2).—Subparagraph Ante, p. 966. (C) of section 108(d)(7) of the Internal Revenue Code of 1954 (as amended by subsection (b)(2)) shall apply to contributions to capital after December 31, 1980, in taxable years ending after such date. (3) AMENDMENT MADE BY SUBSECTION (g)(1).—If— '^'•-•> ''.-. j,. (A) any portion of a qualified stock purchase is pursuant to a binding contract entered into on or after October 19, ^'1982, and before the date of the enactment of this Act, and (B) the purchasing corporation establishes by clear and convincing evidence that such contract was negotiated on the contemplation that, with respect to the deemed sale under section 338 of the Internal Revenue Code of 1954, paragraph (2) of section 1362(e) of such Code would apply, then the amendment made by paragraph (1) of subsection (g) shall not apply to such qualified stock purchase. (4) AMENDMENTS MADE BY SUBSECTION (1).—The amendments made by subsection (1) shall apply to any election under section 1362 of the Internal Revenue Code of 1954 (or any corresponding provision of prior law) made after October 19, 1982. (5) AMENDMENT MADE BY SUBSECTION (t).—If— (A) on or before the date of the enactment of this Act 50 percent or more of the stock of an S corporation has been sold or exchanged in 1 or more transactions, and (B) the person (or persons) acquiring such stock establish by clear and convincing evidence that such acquisitions were negotiated on the contemplation that paragraph (2) of section 1362(e) of the Internal Revenue Code of 1954 would apply to the S termination year in which such sales or exchanges occur, .Tf;5,i 'j8y r = then the amendment made by subsection (t) shall not apply to such S termination year. SEC. 722. MISCELLANEOUS PROVISIONS. (a)

26 USC 57.

f *; « * ' Ante, p. 620.

AMENDMENTS RELATED TO TECHNICAL CORRECTIONS ACT OF

1982.— (1) Paragraph (12) of section 57(a) (relating to accelerated cost recovery deduction) is amended— (A) by striking out "(or, in the case of property described in section 167(k), under section 167)" in subparagraph (A), and (B) by inserting "(or, in the case of property described in section 167(k), under section 167)" after "section 168(a)" in subparagraph (B). (2) Subparagraph (A) of section 1256(g)(l) (defining foreign currency contract) is amended by inserting after "delivery o f the following: ", or the settlement of which depends on the value of,".

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1021

 PUBLIC LAW 98-369—JULY 18, 1984 (3) Subclause (I) of section 306(a)(8)(A)(ii) of the Technical Corrections Act of 1982 is amended by striking out "the date of the enactment of the Tax Equity and Fiscal Responsibility Act of 1982" and inserting in lieu thereof "September 1, 1982". (4)(A) Subparagraph (A) of section 172(b)(2) (relating to amount of carrybacks and carryovers) is amended by striking out "and (6)" and inserting in lieu thereof "and (5)". (B) Subsection (d) of section 172 (relating to modifications) is amended by redesignating paragraphs (7) and (8) as paragraphs (6) and (7), respectively. (5) Subsection (b) of section 5684 is amended by striking out "subsections (a) and (b)" and inserting in lieu thereof "subsection (a)". (6) Any amendment made by this subsection shall take effect as if included in the provisions of the Technical Corrections Act of 1982 to which such amendment relates. (7)(A) I f (i) there is an overpayment of tax imposed by section 4986 of the Internal Revenue Code of 1954 for any period before January 1, 1983, by reason of section 201(h)(1)(E) of the Technical Corrections Act of 1982, (ii) refund of such overpayment is payable to the partners of a partnership, and ^ (iii) such partners are obligated to pay over any such refund to 1 or more organizations referred to in such section 201(h)(1)(E), such partnership shall be treated as authorized to act for each person who was a partner at any time in such partnership in claiming and paying over such refund. (B) Notwithstanding section 6511 of the Internal Revenue Code of 1954, the time for filing a claim for credit or refund of the overpayment referred to in subparagraph (A)(i) shall not expire before the date 1 year after the date of the enactment of this Act. (b) COORDINATION OF CERTAIN AMENDMENTS MADE BY HIGHWAY REVENUE ACT OF 1982 AND P U B U C LAW 97-473.—For purposes of applying the amendments made by section 547 of the Highway Revenue Act of 1982 and the amendment made by section 202(b)(2) of Public Law 97-473, Public Law 97-473 shall be deemed to have been enacted immediately before the Highway Revenue Act of 1982.

98 STAT. 973 26 USC 338 note, 26 USC 172.

26 USC 5684. 26 USC 57 note, 26 USC i note.

26 USC 4996 "o*^ j?'^* -^ '^^^ <s 26 USC
 * ^ -^'i- G

IO3

note.

96 Stat. 2199. 96 Stat. 2608. 26 USC i note.

(c) No DESIGNATION OF PRINCIPAL CAMPAIGN COMMITTEE REQUIRED WHERE ONLY O N E POUTICAL COMMITTEE.—Effective for taxable

years beginning after December 31, 1981, subparagraph (B) of section 527(h)(2) (relating to special rule for principal campaign committees) is amended by adding at the end thereof the following new sentence: "Nothing in this subsection shall be construed to require any designation where there is only one political committee with respect to a candidate."

26 USC 527.

(d) AMOUNT OF CREDIT FOR PRODUCING FUEL FROM A NONCONVENTIONAL SOURCE IN CASE OF FISCAL YEAR TAXPAYER.—

(1) Subparagraph (A) of section 44D(b)(l) (relating to credit for producing fuel from a nonconventional source) is amended by striking out "in which the taxable year begins" and inserting in lieu thereof "in which the sale occurs". (2) Paragraph (2) of section 44D(b) is amended by striking out "in which a taxable year begins" and inserting in lieu thereof "in which the sale occurs".

Ante, p. 826. 26 USC 44D. ^

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 98 STAT. 974 26 USC 440 note.

PUBLIC LAW 98-369—JULY 18, 1984 (3) The amendments made by this subsection shall apply to taxable years ending after December 31, 1979. (e) BASIS ADJUSTMENTS IN PARTNERSHIP INTERESTS AND SUBCHAPTER S STOCK FOR PERCENTAGE DEPLETION.—

26 USC 705.

(1) PARTNERSHIP INTERESTS.—Paragraph (3) of section 705(a)

(relating to determination of basis of partner's interest) is amended to read as follows: "(3) decreased (but not below zero) by the amount of the partner's deduction for depletion for any partnership oil and gas property to the extent such deduction does not exceed the proportionate share of the adjusted basis of such property allocated to such partner under section 613A(c)(7)(D)." (2) SUBCHAPTER

26 USC 1367.

S STOCK.—Subparagraph

(E) of

section

1367(a)(2) (relating to adjustments to basis of stock of shareholders, etc.) is amended to read as follows: "(E) the amount of the shareholder's deduction for depletion for any oil and gas property held by the S corporation to the extent such deduction does not exceed the proportionate share of the adjusted basis of such property allocated to such shareholder under section 613A(c)(13)(B).' (3) EFFECTIVE DATE.—

26 USC 705 note. 26 USC 1367 note.

(A) The amendment made by paragraph (1) shall take effect on January 1, 1975. (B) The amendment made by paragraph (2) shall apply to taxable years beginning after December 31, 1982. (f) CLARIFICATION OF INCREASE IN BASIS FOR GAIN RECOGNIZED ON TRANSFER TO PARTNERSHIP.—

26 USC 722, 723. 26 USC 722 note. 90 Stat. 1922.

(1) IN GENERAL.—Sections 722 and 723 are each amended by striking out "gain recognized" and inserting in lieu thereof "gain recognized under section 721(b)". (2) EFFECTIVE DATE.—The amendments made by paragraph (1) shall take effect as if included in the amendments made by section 2131 of the Tax Reform Act of 1976. (g) AMENDMENTS RELATED TO INCOME TAXES OF CERTAIN MILITARY AND CIVILIAN EMPLOYEES OF THE UNITED STATES DYING AS A RESULT OF INJURIES SUSTAINED OVERSEAS.—

^>,

26 USC 692 note.

(1) EFFECTIVE DATE.—Paragraph (1) of section 1(b) of Public Law 98-259 is amended by striking out "December 31, 1979" and inserting in lieu thereof "November 17, 1978".

26 USC 692. Ante, p. 142. , ^3_.,:.

TIME OF INJURY.—Paragraph (1) of section 692 (relating to certain military and civilian employees of the United States dying as a result of injuries sustained overseas) is amended by striking «3ut "as a result of wounds or injury incurred" and inserting in lieu thereof "as a result of wounds or injury which was incurred while the individual was a military or civilian employee of the United States and which was incurred".

r,v.^.^,. iili- VT;,^

AGAINST THE UNITED STATES.—Subparagraph (A) of section 692(c)(2) (defining terroristic or military action) is amended to read as follows: "(A) any terroristic activity which a preponderance of the evidence indicates was directed against the United States or any of its allies, and".

(2) REQUIREMENT THAT EMPLOYMENT RELATIONSHIP EXIST AT

(3) CLARIFICATION OF DEFINITION OF TERRORISTIC ACTIVITY

26 USC 692 note.

(4) TREATMENT OF DIRECTOR GENERAL OF MULTINATIONAL FORCE

IN SINAI.—For purposes of section 692(c) of the Internal Revenue Code of 1954, the Director General of the Multinational Force

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 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 975

and Observers in the Sinai who died on February 15, 1984, shall be treated as if he were a civilian employee of the United States while he served as such Director General. (5) EFFECTIVE DATE.— 26 USC 692 note. (A) IN GENERAL.—The amendments made by this subsection shall take effect as if they were included in the amendments made by section 1 of Public Law 98-259. Ante, p. 142.

tj -J,

(B) STATUTE OF LIMITATIONS WAIVED.—Notwithstanding

section 6511 of the Internal Revenue Code of 1954, the time for filing a claim for credit or refund of any overpayment of tax resulting from the amendments made by this subsection shall not expire before the date 1 year after the date of the enactment of this Act.

if; MI) m

(h) AMENDMENTS TO THE INTEREST AND DIVIDEND TAX COMPLIANCE

ACT OF 1983.— (1) BROKER NOTIFICATION OF PAYOR.—

I,,.,

j^

(A) Subparagraph (A) of section 3406(d)(2) (relating to 97 Stat. 371. special rules for readily tradable instruments) is amended— 26 USC 3406. (i) by inserting "the payor was notified by a broker under subparagraph (B) or" after "if (and only if)", and (ii) by striking out clause (i) and redesignating clauses (ii) and (iii) as clauses (i) and (ii). i ^0o Ofrj m (B) Subparagraph (B) of section 3406(d)(2) is amended to read as follows: ,J^M. t<; j^aiJ i. "(B) BROKER NOTIFIES PAYOR.—If—

r, I

"(i) a payee acquires any readily tradable instrument through a broker, and "(ii) with respect to such acquisition— ..;ois;;8U:£ "(I) the payee fails to furnish his TIN to the broker in the manner required under subsection (a)(1)(A), "(II) the Secretary notifies such broker before such acquisition that the TIN furnished by the payee is incorrect, i^ "(III) the Secretary notifies such broker before such acquisition that such payee is subject to withholding under subsection (a)(1)(C), or "(IV) the payee does not provide a certification to '^^**^ such broker under subparagraph (C), such broker shall, within such period as the Secretary itc\-*:,i.' may prescribe by regulations (but not later than 15 .?iC' >'-•]:fc <i.i days after such acquisition), notify the payor that such payee is subject to withholding under subparagraph (A), (B), (C), or (D) of subsection (a)(1), respectively." n (2) NOTIFIED PAYEE UNDERREPORTING.—Paragraph (1) of section 3406(c) (relating to notified payee underreporting) is, amended by striking out "(but not the reasons therefor)" and inserting in lieu thereof "(but not the reasons for the withholding under subsection (a)(1)(C))". ^

(3) APPLICATION WITH TRUSTS.—Section 643 (relating to defini- Ante, p. 597.

tions applicable to trusts) is amended by adding at the end thereof the following new subsection: "(d) COORDINATION WITH BACK-UP WITHHOLDING.—Except to the

extent otherwise provided in regulations, this subchapter shall be applied with respect to payments subject to withholding under section 3406—

Supra.

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1024

 98 STAT. 976 Ante, p. 826. 97 Stat. 379.

PUBLIC LAW 98-369—JULY 18, 1984 "(1) by allocating between the estate or trust and its beneficiaries any credit allowable under section 31(c) (on the basis of their respective shares of any such payment taken into account under this subchapter), "(2) by treating each beneficiary to whom such credit is allocated as if an amount equal to such credit has been paid to him by the estate or trust, and "(3) by allowing the estate or trust a deduction in an amount equal to the credit so allocated to beneficiaries." (4) COORDINATION OF PENSION AND BACK-UP WITHHOLDING.—

26 USC 3405.

(A) Section 3405(d) (relating to definitions and special rules) is amended by adding at the end thereof the following new paragraph: "(12) FAILURE TO PROVIDE CORRECT TIN.—If—

26 USC 6041.

26 USC 643 note.

26 USC 1 note.

"(A) a payee fails to furnish his TIN to the payor in the manner required by the Secretary, or "(B) the Secretary notifies the payor before any payment or distribution that the TIN furnished by the payee is incorrect, no election under subsection (a)(2) or (b)(3) shall be treated as in effect and subsection (a)(4) shall not apply to such payee." (B) Section 6041(a) (relating to information at source) is amended by inserting "6047(e)," after "6044(a)(l),". (5) EFFECTIVE DATES.—

(A) Except as provided in this paragraph, the amendments made by this subsection shall apply as if included in the amendments made by the Interest and Dividend TEIX Compliance Act of 1983. (B) The amendments made by paragraph (4) shall apply to payments or distributions after December 31, 1984, unless the payor elects to have such amendments apply to payments or distributions before January 1, 1985.

Subtitle C—Amendments Relating to Highway Revenue Act of 1982 26 USC 4052.

-f.

SEC. 731. VALUE OF USED COMPONENTS FURNISHED BY FIRST USER NOT TAKEN INTO ACCOUNT IN DETERMINING PRICE. Subparagraph (B) of section 4052(b)(1) (relating to determination of price) is amended by striking out "and" at the end of clause (ii) and by inserting after clause (iii) the following new clause: "(iv) the value of any component of such article if— "(I) such component is furnished by the first user of such article, and "(II) such component has been used before such furnishing, and". SEC. 732. CLARIFICATION OF APPLICATION OF GASOLINE EXCISE TAX TO GASOHOL.ETC. (a) GASOLINE EXCISE TAX TO APPLY TO GALLON OF GASOHOL.—

26 USC 4081. »

(1) IN GENERAL.—Paragraph (1) of section 4081(c) (relating to gasoline mixed with alcohol) is amended to read as follows: "(1) IN GENERAL.—Under regulations prescribed by the Secretary, subsection (a) shall be applied—

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 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 977

"(A) by substituting '4 cents' for '9 cents' in the case of the sale of any gasohol (the gasoline in which was not taxed under subparagraph (B)), and "(B) by substituting '4% cents' for '9 cents' in the case of the sale of any gasoline for use in producing gasohol. For purposes of this paragraph, the term 'gasohol' means any mixture of gasoline if at least 10 percent of such mixture is alcohol."

f ^

(2) LATER SEPARATION OF GASOLINE.—Paragraph (2) of section

4081(c) is amended— (A) by striking out "at the rate of 4 cents a gallon" and inserting in lieu thereof "at a rate equivalent to 4 cents a gallon", and (B) by striking out "5 cents a gallon" and inserting in lieu thereof "4% cents a gallon". (3) CREDIT OR REFUND.—Paragraph (1) of section 6427(f) (relating to gasoline used to produce certain alcohol fuels) is amended by striking out "5 cents" and inserting in lieu thereof "4% cents",

26 USC 4081.

26 USC 6427.

(b) LOWER FLOOR STOCKS TAX ON GASOHOL.—Subsection (a) of

section 521 of the Highway Revenue Act of 1982 is amended by 26 USC 4061 inserting "(4 cents a gallon in the case of a gallon of gasohol, as "o^. defined in section 4081(c))" after "5 cents a gallon".

"

SEC. 733. CERTAIN CHAIN OPERATORS OF RETAIL GASOLINE STATIONS 3 TREATED AS PRODUCERS. (a) IN GENERAL.—Subsection (d) of section 4082 (defining whole- 26 USC 4082. sale distributor) is amended to read as follows: "(d) WHOLESALE DISTRIBUTOR.—As used in subsection (a), the term 'wholesale distributor' includes— "(1) any person who— "(A) sells gasoline to producers, retailers, or to users who purchase in bulk quantities and deliver into bulk storage tanks, or "(B) purchases gasoline from a producer and distributes such gasoline to 10 or more retail gasoline stations under common management with such person, "(2) but only if such person elects to register with respect to the tax imposed by section 4081. Such term does not include any person who (excluding the term 'wholesale distributor' from subsection (a)) is a producer or importer." (b) EFFECTIVE DATE.—The amendment made by subsection (a) 26 USC 4082 shall take effect on the first day of the first calendar quarter note. beginning after the date of the enactment of this Act. SEC. 734. OTHER TECHNICAL AMENDMENTS. (a) FLOOR STOCKS REFUNDS FOR TIRES TAXED AT LOWER RATE AFTER JANUARY 1, 1984.—

(1) IN GENERAL.—Paragraph (1) of section 523(b) of the Highway Revenue Act of 1982 (relating to floor stocks refunds for 26 USC 4061 tires) is amended by inserting "(or will be subject to a lower rate note. of tax under such section)" after "and which will not be subject to tax under such section". (2) AMOUNT OF REFUND LIMITED TO REDUCTION IN TAX, ETC.—

(A) IN GENERAL.—Subsection (b) of section 523 of the Highway Revenue Act of 1982 (relating to floor stocks

31-194 0 - 86 - 33: QL. 3 Part 1

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1026

 98 STAT. 978

PUBLIC LAW 98-369—JULY 18, 1984 refunds for tires) is amended by adding at the end thereof the following new paragraph: "(3) SPECIAL RULES FOR TIRES TAXED AT LOWER RATE AFTER

Ante, p. 977.

26 USC 4061 note,

JANUARY 1, 1984.—In the case of any tire which is a tax-repealed article solely by reason of the amendment made by subsection (a)(1) or (d) of section 734 of the Tax Reform Act of 1984— "(A) the amount of the credit or refund under subsection (a) shall not exceed the excess of— "(i) the tax imposed with respect to such tire by section 4071(a) as in effect on December 31, 1983, over "(ii) the tax which would have been imposed with respect to such tire by section 4071(a) on January 1, 1984, and "(B) paragraph (1) of section 522(a) shall be a p p l i e d "(i) by substituting 'January 1, 1985' for 'July 1, 1983', and "(ii) by substituting 'April 1, 1985' for 'October 1, 1983' each place it appears." (B) CONFORMING AMENDMENT.—Paragraph (2) of section

26 USC 4061 note.

523(b) of such Act is amended by striking out "In the case o f and inserting in lieu thereof "Except as provided in paragraph (3), in the case o f. (b) OVERPAYMENTS OF TAX ON TRUCKS, ETC., AND TIRES.— (1) TRUCKS, ETC.—

26 USC 6416.

(A) IN GENERAL.—Subsection (b) of section 6416 (relating to special cases in which tax payments considered overpayments) is amended by inserting after paragraph (5) the following new paragraph: "(6) T R U C K CHASSIS, BODIES, A N D SEMITRAILERS USED FOR FUR-

THER MANUFACTURE.—If^

"(A) the tax imposed by section 4051 has been paid with respect to the sale of any article, and "(B) before any other use, such article is by any person used as a component part of another article taxable under section 4051 manufactured or produced by him, such tax shall be deemed to be an overpayment by such person. For purposes of the preceding sentence, an article shall be treated as having been used as a component part of another article if, had it not been broken or rendered useless in the manufacture or production of such other article, it would have been so used." (B) TECHNICAL AMENDMENT.—Subparagraph (B) of section 6416(a)(2) is amended by striking out "or (5)" and inserting in lieu thereof "(5), or (6)". (2) TIRES.—

(A) IN GENERAL.—Paragraph (4) of section 6416(b) (relating to tires) is amended to read as follows: "(4) TIRES.—If—

"(A) the tax imposed by section 4071 has been paid with respect to the sale of any tire by the manufacturer, producer, or importer thereof, and "(B) such tire is sold by any person on or in connection with, or with the sale of, any other article, such tax shall be deemed to be an overpayment by such person if such other article is— "(i) an automobile bus chassis or an automobile bus body, or

I itsiH I.A\i: It

S8 -.. 0 A^l'-lt

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 PUBLIC LAW 98-369—JULY 18, 1984 '^

98 STAT. 979

"(ii) by such person exported, sold to a State or local government for the exclusive use of a State or local government, sold to a nonprofit educational organization for its exclusive use, or used or sold for use as supplies for vessels or aircraft." (B) TECHNICAL AMENDMENTS.—

f

(i) Paragraph (2) of section 6416(b) is amended by 26 USC 6416. striking out subparagraph (E). ^o*^' P- ^^'^• (ii) Paragraph (3) of section 6416(b) (relating to taxpaid articles used for further manufacture, etc.) is amended by striking out subparagraph (C). •• (iii) Subparagraph (C) of section 6416(a)(1) is amended by striking out ", (b)(3)(C) or (D), or (b)(4)". (iv) Subparagraph (B) of section 6416(a)(2), as Ante, p. 978. amended by paragraph (1)(B), is amended by inserting "(4)," before "(5)". i .:': S (v) Paragraph (3) of section 6416(a) is amended to read as follows: '- ' "(3) SPECIAL RULE.—For purposes of this subsection, in any case in which the Secretary determines that an article is not ^ni Mtaxable, the term 'ultimate purchaser' (when used in paragraph (1)(B) of this subsection) includes a wholesaler, jobber, distributor, or retailer who, on the 15th day after the date of such determination, holds such article for sale; but only if claim for credit or refund by reason of this paragraph is filed on or before the date for filing the return with respect to the taxes imposed under chapter 32 for the first period which begins more than 60 Post, p. 980. days after the date on such determination."

(c) ALLOWANCE OF TAX-FREE SALES OF GASOLINE FOR USE IN NONCOMMERCIAL AviATION.—

(1) IN GENERAL.—Section 4082 (relating to definitions with respect to the tax on gasoline) is amended by adding at the end thereof the following new subsection:

.

,.

26 USC 4082.

"(e) CERTAIN SELLERS OF GASOLINE FOR USE IN NONCOMMERCIAL AVIATION TREATED AS PRODUCERS.—For purposes of this subpart, the

term 'producer' includes any person who regularly sells gasoline to owners, lessees, or operators of aircraft for use as fuel in such aircraft in noncommercial aviation (as defined in section 4041(c)(4))." (2) REFUNDS.—Section 6427 (relating to fuels not used for 26 USC 6427. taxable purposes) is amended by redesignating subsections (j), Post, p. 1005. (k), and (1) as subsections (k), (1), and (m), respectively, and by inserting after subsection (i) the following new subsection: "(j) SPECIAL RULES WITH RESPECT TO NONCOMMERCIAL AVIATION.—

For purposes of subsection (a), in the case of gasoline— "(1) on which tax was imposed under section 4041(c)(2), "(2) on which tax was not imposed under section 4081, and "(3) which was not used as an off-highway business use (within the meaning of section 6421(d)(2)), the amount of the payment under subsection (a) shall be an amount equal to the amount of gasoline used as described in subsection (a) or resold multiplied by the rate equal to the excess of the rate of tax imposed by section 4041(c)(2) over the rate of tax imposed by section 4081." (3) EFFECTIVE DATE.—The amendments made by this subsection shall take effect on the first day of the first calendar quarter beginning after the date of the enactment of this Act.

26 USC 4082 "ote.

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1028

 98 STAT. 980

PUBLIC LAW 98-369—JULY 18, 1984 (d) FLOOR STOCKS REFUNDS FOR TREAD RUBBER.—Paragraph (1) of

26 USC 4061 note.

26 USC 4061 "°t^

section 523(b) of the Highway Revenue Act of 1982 (relating to floor stocks refunds for tires) is amended by adding at the end thereof the following new sentence: "Any tread rubber which was subject to tax under section 4071(a)(4) as in effect on December 31, 1983, and which on January 1, 1984, is part of a retread tire which is held by a dealer and has not been used and is intended for sale shall be treated as a tax-repealed article for purposes of subsection (a) of section 522." (e) PENALTIES, ETC., TO APPLY TO FLOOR STOCKS TAXES.—Subsec-

26 USC 4061 note.

tion (c) of section 521 of the Highway Revenue Act of 1982 is amended by adding at the end thereof the following: "All other provisions of law, including penalties, applicable with respect to the taxes imposed by section 4081 or 4071(a) (whichever is appropriate) shall apply to the floor stocks taxes imposed by this section."

26 USC 4481.

Subsection (a) of section 4481 (relating to tax on use of certain vehicles), as in effect before the amendments made by the Highway Revenue Act of 1982, is amended by striking out the last sentence.

(f) No

26 USC 1 note.

1984

SHORT TAXABLE PERIOD FOR OWNER-OPERATORS.—

(g) CLARIFICATION OF SECONDARY LIABILITY OF INSTALLERS OF PARTS

26 USC 4051.

AND ACCESSORIES PURCHASED SEPARATELY.—The text of section 4051(b)(3) is amended to read as follows: "The owners of the trade or business installing the parts or accessories shall be secondarily liable for the tax imposed by paragraph (1)." (h) No INFERENCE FOR PAST PERIODS TO B E DRAWN FROM AMENDMENT RELATING TO CUSTOMARY U S E OF TRAILERS.—The subsection

96 Stat. 2177.

heading of subsection (c) of section 513 of the Highway Revenue Act of 1982 is amended by striking out "Clarification o f. (i) WIRE TRANSFER TO FEDERAL RESERVE BANK REQUIRED WHERE EXTENSION OF PAYMENT DUE DATE FOR CERTAIN FUEL TAXES.—

26 USC 4081 note.

Subsection (a) of section 518 of the Highway Revenue Act of 1982 (relating to extension of payment due date for certain fuel taxes) is amended by striking out "any government depository authorized under section 6302 of such Code" and inserting in lieu thereof ", except as provided in regulations prescribed by the Secretary of the Treasury or his delegate, any Federal Reserve Bank". (j) CREDIT OR REFUND OF RETAIL TAX ON TRUCKS AND TRAILERS WHERE PRICE READJUSTMENTS.—Subparagraph (A) of section

26 USC 6416.

6416(b)(1) (relating to price readjustments) is amended by inserting "or by section 4051" after "by chapter 32". SEC. 735. REPEAL OF CERTAIN PROVISIONS MADE OBSOLETE BY HIGHWAY REVENUE ACT OF 1982. (a) DELETION OF TERMINATED MANUFACTURERS EXCISE TAX ON MOTOR VEHICLES.—

26 USC 4061-4063. ^LV^^ ^^^^'

(1) Part I of subchapter A of chapter 32 is amended by striking out sections 4061, 4062, and 4063. (2) The part heading and the table of sections for such part I are amended to read as follows:

4064.

"PART I—GAS GUZZLERS "Sec. 4064. Gas guzzlers tax."

(3) The table of parts for subchapter A of chapter 32 is amended by striking out the item relating to part I and inserting in lieu thereof the following: "Part I. Gas guzzlers."

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1029

.

PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 981

(b) CROSS-REFERENCES TO TERMINATED MANUFACTURERS EXCISE TAX ON MOTOR VEHICLES STATED AS PART OF RETAIL TAX.—

(1) EXEMPTIONS.—Section 4053 (relating to exemptions from retail tax on heavy trucks, etc.) is amended to read as follows: "SEC. 4053. EXEMPTIONS.

26 USC 4053.

"No tax shall be imposed by section 4051 on any of the following articles: "(1) CAMPER COACHES BODIES FOR SELF-PROPELLED MOBILE

! '

HOMES.—Any article designed— "(A) to be mounted or placed on automobile trucks, automobile truck chassis, or automobile chassis, and "(B) to be used primarily as living quarters or camping accommodations. "(2) FEED, SEED, AND FERTILIZER EQUIPMENT.—Any body primarily designed— "(A) to process or prepare seed, feed, or fertilizer for use on farms, "(B) to haul feed, seed, or fertilizer to and on farms, "(C) to spread feed, seed, or fertilizer on farms, "(D) to load or unload feed, seed, or fertilizer on farms, or "(E) for any combination of the foregoing.

'?

"(3) HOUSE TRAILERS.—Any house trailer. "(4) AMBULANCES, HEARSES, ETC.—Any ambulance,

hearse, or combination ambulance-hearse. "(5) CONCRETE MIXERS.—Any article designed— "(A) to be placed or mounted on an automobile truck chassis or truck trailer or semitrailer chassis, and "(B) to be used to process or prepare concrete. "(6) TRASH CONTAINERS, ETC.—Any box, container, receptacle, bin or other similar article— "(A) which is designed to be used as a trash container and is not designed for the transportation of freight other than trash, and "(B) which is not designed to be permanently mounted on or permanently affixed to an automobile truck chassis or body. "(7) RAIL TRAILERS AND RAIL VANS.—Any chassis or body of a trailer or semitrailer which is designed for use both as a highway vehicle and a railroad car. For purposes of the preceding sentence, piggy-back trailer or semitrailer shall not be treated as designed for use as a railroad car."

• -'

'' '

(2) CERTAIN COMBINATIONS NOT TREATED AS MANUFACTURE.—

Subsection (c) of section 4052 (relating to definitions and special rules) is amended to read as follows: "(c) CERTAIN COMBINATIONS NOT TREATED AS MANUFACTURE.—

"(1) IN GENERAL,—For purposes of this subchapter (other than subsection (a)(3)(B)), a person shall not be treated as engaged in the manufacture of any article by reason of merely combining such article with any item listed in paragraph (2). "(2) ITEMS.—The items listed in this paragraph are any coupling device (including any fifth wheel), wrecker crane, loading and unloading equipment (including any crane, hoist, winch, or power liftgate), aerial ladder or tower, snow and ice control equipment, earthmoving, excavation and construction equipment, spreader, sleeper cab, cab shield, or wood or metal floor." (c) OTHER TECHNICAL AND CONFORMING AMENDMENTS.—

26 USC 4052.

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 98 STAT. 982 26 USC 48.

26 USC 4071.

26 USC 4072. 26 USC 4073.

PUBLIC LAW 98-369—JULY 18, 1984 (1) Clause (i) of section 48(1)(16)(B) (defining qualified intercity bus) is amended to read as follows: "(i) the chassis of which is an automobile bus chassis and the body of which is an automobile bus body,". (2)(A) The first sentence of section 4071(b) is amended by striking out "or inner tube" and by striking out "or tube" each place it appears. (B) The first sentence of section 4071(c) is amended by striking out "on total weight," and all that follows and inserting in lieu thereof "on total weight exclusive of metal rims or rim bases." (C) Subsection (e) of section 4071 is amended— (i) by striking out "or inner tubes (other than bicycle tires and inner tubes)", (ii) by striking out "and inner tubes" in paragraphs (1) and (2), and (iii) by striking out the last sentence and inserting in lieu thereof the following: "This subsection shall not apply with respect to the sale of an automobile bus chassis or an automobile bus body." (D) Subsection (f) of section 4071 (relating to imported recapped or retreaded United States tires) is hereby repealed. (3) Section 4072 (relating to definitions) is amended by striking out subsection (b) and by redesignating subsection (c) as subsection (b). (4) Section 4073 (relating to exemptions) is amended to read as follows: "SEC. 4073. EXEMPTION FOR TIRES WITH INTERNAL WIRE FASTENING.

26 USC prec. 4071.

"The tax imposed by section 4071 shall not apply to tires of extruded tiring with an internal wire fastening agent." (5)(A) The heading for part II of subchapter A of chapter 32 is amended by striking out ^'AND TUBES". (B) The table of parts for subchapter A of chapter 32 is amended by striking out "and tubes' in the item relating to part II. (C) The item relating to section 4073 in the table of sections for part II of subchapter A of chapter 32 is amended to read as follows: "Sec. 4073. Exemption for tires with internal wire fastening."

26 USC 4216. •_>e'

(6)(A) Paragraph (1) of section 4216(b) (defining constructive sale price) is amended— (i) by striking out "(other than an article the sale of which is taxable under section 4061(a))" in the second sentence, and (ii) by striking out the third sentence. (B) Paragraph (2) of section 4216(b) is amended by striking out subparagraph (C), by adding "and" at the end of subparagraph (B), and by redesignating subparagraph (D) as subparagraph (C). (C) Subsection (h) of section 4216 is amended by striking out paragraph (5). (D) Paragraph (3) of section 4216(b) is amended by striking out "paragraphs (4) and (5)" and inserting in lieu thereof "paragraph (4)*^. (E) Paragraph (6) of section 4216(b) is redesignated as paragraph (5) and is amended by striking out "(1), (3), and (5)' and inserting in lieu thereof "(1) and (3)".

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1031

 PUBLIC LAW 98-369—JULY 18, 1984

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98 STAT. 983

(F) Subsection (f) of section 4216 (relating to certain trucks 26 USC 4216. incorporating used components) is hereby repealed. (7)(A) Subsection (b) of section 4218 (relating to use by manu- 26 USC 4218. facturer or importer considered as sale) is amended— (i) by striking out "or inner tube", and (ii) by striking out "Except as provided in subsection (d), ,,•,,,r, j,;* i f and inserting in lieu thereof "If. (B) The heading for subsection (b) of section 4218 is amended by striking out "and Tubes". (C) Section 4218 is amended by striking out subsections (c) and (d) and by redesignating subsection (e) as subsection (c). (D) Subsection (a) of section 4218 is amended by striking out "(other than an article specified in subsection (b), (c), or (d))" and inserting in lieu thereof "(other than a tire taxable under section 4071)". -^r'-'-ll^S (8)(A) Subsection (a) of section 4221 (relating to tax-free sales) 26 USC 4221. is amended by inserting "(or under section 4051 on the first retail sale)" after "manufacturer". (B) Subsection (c) of section 4221 is amended by striking out e?*>,q,j*«k "section 4063(a)(6) or (7), 4063(b), 4063(e)," and inserting in lieu thereof' 'section 4053(a)(6)''. (C) Paragraph (1) of section 4221(d) (defining manufacturer) is amended by inserting before the period ", and, in the case of the if ^,,.^ tax imposed by section 4051, includes the retailer with respect to the first retail sale". (D) Paragraph (6) of section 4221(d) (relating to use in further manufacture) is amended— (i) by striking out subparagraph (B) and the last sentence, ui) by striking out "(other than an article referred to in subparagraph (B))" in subparagraph (A), (iii) by redesignating subparagraph (C) as subparagraph (B), and (iv) by adding "or" at the end of subparagraph (A). (E) Paragraph (2) of section 4221(e) is amended— (i) by striking out "or inner tube" each place it appears; and (ii) by striking out "or tube" each place it appears. (F) The heading for paragraph (2) of section 4221(e) is, v. amended by striking out "AND TUBES". -r ' '..: (G) Subsection (e) of section 4221 is amended by striking out paragraphs (4), (5), and (6) and inserting in lieu thereof the following: "(3) TIRES USED ON INTERCITY, LOCAL, AND SCHOOL BUSES.—

Under regulations prescribed by the Secretary, the tax imposed by section 4071 shall not apply in the case of tires sold for use by the purchaser on or in connection with a qualified bus." (9) Subsection (d) of section 4222 is amended by striking out "4063(a)(7), 4063(b), 4063(e)," and inserting in lieu thereof "4053(a)(6),". (10) Paragraph (1) of section 4223(b) is amended by striking out "section 4218(e)" and inserting in lieu thereof "4218(c)". (11) Paragraph (2) of section '4227 is amended by striking out "and tubes". (12)(A) So much of paragraph (1) of section 6412(a) (relating to floor stock refunds) as precedes "there shall be credited or refunded" is amended to read as follows:

26 USC 4222. 26 USC 4223. 26 USC 4227. 26 USC 6412. SS

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1032

 98 STAT. 984

26 USC 6412.

26 USC 6416.

Ante, p. 979.

Ante, p. 983.

26 USC 4061 et seq. Ante, p. 980. '

26 USC 6511. 26 USC 9502.

PUBLIC LAW 98-369—JULY 18, 1984 "(1) TIRES AND GASOLINE.—Where before October 1, 1988, any article subject to the tax imposed by section 4071 or 4081 has been sold by the manufacturer, producer, or importer and on such date is held by a dealer and has not been used and is intended for sale,". (B) Paragraph (1) of section 6412(a) is amended by striking out the last sentence. (C) Subparagraph (A) of section 6412(a)(2) is amended to read as follows: "(A) The term 'dealer' includes a wholesaler, jobber, distributor, or retailer." (D) Subsection (c) of section 6412 is amended by striking out , "4061, 4071," and inserting in lieu thereof "4071". (13)(A) Subparagraph (C) of section 6416(b)(1) (relating to adjustment of tire price) is amended by striking out "section 4071(a)(1) or (2) or section 4071(b)" and inserting in lieu thereof "subsection (a) or (b) of section 4071". (B) Paragraph (2) of section 6416(b) is amended by striking out subparagraph (F) and all that follows to the end thereof and inserting in lieu thereof the following: "(E) in the case of any tire taxable under section 4071(a), sold to any person for use as described in section 4221(e)(3); or "(F) in the case of gasoline, used or sold for use in the production of special fuels referred to in section 4041. Subparagraphs (C) and (D) shall not apply in the case of any tax paid under section 4064." (C) Paragraph (3) of section 6416(b) is amended by striking out all subparagraphs and the last sentence thereof and inserting in lieu thereof the following: "(A) in the case of any article other than gasoline taxable under section 4081, such article is used by the subsequent manufacturer or producer as material in the manufacture or production of, or as a component part of— "(i) another article taxable under chapter 32, or "(ii) an automobile bus chassis or an automobile bus body,

manufactured or produced by him; or "(B) in the case of gasoline taxable under section 4081, such gasoline is used by the subsequent manufacturer or producer, for nonfuel purposes, as a material in the manufacture or production of any other article manufactured or produced by him." (D) Subparagraph (B) of section 6416(a)(2) is amended by striking out "or (B)". (E) Section 6416 is amended by striking out subsections (c) and (g) and by redesignating subsections (e), (f), (h), and (i) as subsections (c), (d), (e), and (f), respectively. (F) Subparagraph (A) of section 6416(b)(2) is amended by striking out "(except in any case to which subsection (g) applies)". (14) Section 6511 is amended by striking out subsection (i) and by redesignating subsection (j) as subsection (i). (15) Paragraph (3) of section 9502(b) is amended by striking out "under paragraphs (2) and (3) of section 4071(a), with respect to tires and tubes of types used on aircraft" and inserting in lieu

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Page:United States Statutes at Large Volume 98 Part 1.djvu/1033

 PUBLIC LAW 98-369—JULY 18, 1984 thereof "under section 4071 with respect to tires of the types used on aircraft". (16) Sections 1366(f)(1) and 6401(b) are each amended by striking out ", special fuels, and lubricating oil" and inserting in lieu thereof "and special fuels". SEC. 736. EFFECTIVE DATE.

Except as otherwise provided in this subtitle, any amendment made by this subtitle shall take effect as if included in the provisions of the Highway Revenue Act of 1982 to which such amendment relates.

98 STAT. 985

26 USC 1366. ^"^«. P- 846. 26 USC 4051

26 USC i note,

TITLE VIII—FOREIGN SALES CORPORATIONS SEC. 801. FOREIGN SALES CORPORATIONS.

(a) IN GENERAL.—Part III of subchapter N of chapter 1 (relating to income from sources outside the United States) is amended by inserting after subpart B the following new subpart: "Subpart C—Taxation of Foreign Sales Corporations '

"Sec. 921. Exempt foreign trade income excluded from gross income. "Sec. 922. FSe defined. "Sec. 923. Exempt foreign trade income. "Sec. 924. Foreign trading gross receipts. "Sec. 925. Transfer pricing rules. "Sec. 926. Distributions to shareholders. "Sec. 927. Other definitions and special rules. "SEC. 921. EXEMPT FOREIGN TRADE INCOME EXCLUDED FROM GROSS INCOME.

26 USC 921.

"(a) EXCLUSION.—Exempt foreign trade income of a FSC shall be treated as foreign source income which is not effectively connected with the conduct of a trade or business within the United States. "(b) PROPORTIONATE ALLOCATION OF DEDUCTIONS TO EXEMPT FOREIGN TRADE INCOME.—Any deductions of the FSC properly appor-

tioned and allocated to the foreign trade income derived by a FSC from any transaction shall be allocated between— "(1) the exempt foreign trade income derived from such transaction, and "(2) the foreign trade income (other than exempt foreign trade income) derived from such transaction, on a proportionate basis. "(c) DENIAL OF CREDITS.—Notwithstanding any other provision of this chapter, no credit (other than a credit allowable under section 27(a), 33, or 34) shall be allowed under this chapter to any FSC. Ante, pp. 826, "(d) FOREIGN TRADE INCOME, INVESTMENT INCOME, AND CARRYING CHARGES TREATED AS EFFECTIVELY CONNECTED WITH UNITED STATES

BUSINESS.—For purposes of this chapter— "(1) all foreign trade income of a FSC other than— "(A) exempt foreign trade income, and "(B) section 923(a)(2) non-exempt income, "(2) all interest, dividends, royalties, and other investment income received or accrued by a FSC, and "(3) all carrying charges received or accrued by a FSC, shall be treated as income effectively connected with a trade or business conducted through a permanent establishment of such

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Post, p. 986.

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