98 STAT. 704
PUBLIC LAW 98-369—JULY 18, 1984 tions) is amended by striking out "4 taxable years" and inserting in lieu thereof "3 taxable years". (b) INCREASE IN PERCENTAGE OF AVERAGE BASE INCOME TAKEN
26 USC 1301.
INTO ACCOUNT.—Section 1301 (relating to limitation on tax) is amended by striking out "120 percent" and inserting in lieu thereof "140 percent". (c) TECHNICAL AND CONFORMING AMENDMENTS,—
26 USC 1302.
26 USC 1302 note.
(1) Section 1301 (relating to limitation on tax) is amended— (A) by striking out "5 times" and inserting in lieu thereof "4 times", and (B) by striking out "20 percent" and inserting in lieu thereof "25 percent". (2) Paragraph (1) of section 1302(a) (defining averagable income) is amended by striking out "120 percent" and inserting in lieu thereof "140 percent". (3) Paragraph (1) of section 1302(b) (defining average base period income) is amended by striking out "one-fourth" and inserting in lieu thereof "Va". (4) Paragraph (3) of section 1302(c) is amended by striking out "4 taxable years" and inserting in lieu thereof "3 taxable years". (d) EFFECTIVE DATE.—The amendments made by this section shall apply to computation years beginning after December 31, 1983, and to base period years applicable to such computation years. SEC. 174. AMENDMENTS TO SECTION 267. (a) ALLOWANCE OF DEDUCTION WHERE EXPENSES AND INTEREST ARE PAID TO RELATED CASH-BASIS TAXPAYERS AFTER 2y2-MoNTH PERIOD.—
26 USC 267.
(1) IN GENERAL.—Subsection (a) of section 267 (relating to losses, expenses, and interest with respect to transactions between related taxpayers) is amended to read as follows: "(a) IN GENERAL.— "(1) DEDUCTION FOR LOSSES DISALLOWED.—No deduction shall
be allowed in respect of any loss from the sale or exchange of property (other than a loss in case of a distribution in corporate liquidation), directly or indirectly, between persons specified in any of the paragraphs of subsection (b). "(2) MATCHING OF DEDUCTION AND PAYEE INCOME ITEM IN THE CASE OF EXPENSES AND INTEREST.—If—
"(A) by reason of the method of accounting of the person to whom the payment is to be made, the amount thereof is not (unless paid) includible in the gross income of such person, and "(B) at the close of the taxable year of the taxpayer for which (but for this paragraph) the amount would be deductible under this chapter, both the taxpayer and the person to whom the payment is to be made are persons specified in any of the paragraphs of subsection (b), then any deduction allowable under this chapter in respect of 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)." (2) CONFORMING AMENDMENT.—Subsection (e) of section 267
(relating to rule where last day of 2y2-month period falls on Sunday, etc.) is hereby repealed.
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