100 STAT. 2484
PUBLIC LAW 99-514—OCT. 22, 1986 (b) LEVEL AMORTIZATION OF LOAN REQUIRED.—Paragraph (2) of
section 72(p) is amended by redesignating subparagraph (C) as subparagraph (D) and inserting after subparagraph (B) the following new subparagraph: "(C) REQUIREMENT OF LEVEL AMORTIZATION.—Except as
provided in regulations, this paragraph shall not apply to any loan unless substantially level amortization of such loan (with payments not less frequently than quarterly) is required over the term of the loan." (c) DENIAL OF INTEREST DEDUCTION IN CERTAIN CASES.—Subsection
(p) of section 72 is amended by redesignating paragraphs (3) and (4) as paragraphs (4) and (5), respectively and by inserting after paragraph (2) the following new paragraph: "(3) DENIAL OF INTEREST DEDUCTIONS IN CERTAIN CASES.—
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"(A) IN GENERAL.—No deduction otherwise allowable under this chapter shall be allowed under this chapter for any interest paid or accrued on any loan described in subparagraph (B). "(B) LOANS TO WHICH SUBPARAGRAPH (A) APPLIES.—
For purposes of subparagraph (A), a loan is described in this subparagraph— • - i >.i;.n "^^^ ^^ paragraph (1) does not apply to such loan by reason of paragraph (2), and "(ii) if— "(I) such loan is made to a key employee (as ^5 defined in section 416(i)), or 1 ,; "(II) such loan is secured by amounts attributable to elective 401(k) or 403(b) deferrals (as defined in section 402(g)(3))." (d) EXCEPTION FOR HOME LOANS LIMITED TO ACQUISITION OF PRIN-
CIPAL RESIDENCE.—Clause (ii) of section 72(p)(2)(B) is amended to read as follows: "(ii) EXCEPTION FOR HOME LOANS.—Clause (i) shall not apply to any loan used to acquire any dwelling unit '•'"•' ^^' which within a reasonable time is to be used (determined at the time the loan is made) as the principal residence of the participant." (e) EFFECTIVE DATE.—The amendments made by this section shall apply to loans made, renewed, renegotiated, modified, or extended after December 31, 1986. SEC. 1135. DEFERRED ANNUITIES PERSONS.
AVAILABLE
ONLY
TO
NATURAL
(a) GENERAL RULE.—Section 72, as amended by section 1223, is amended by redesignating subsection (u) as subsection (v) and by inserting after subsection (t) the following new subsection: "(u) TREATMENT OF ANNUITY CONTRACTS NOT HELD BY NATURAL PERSONS.—
"(1) IN GENERAL.—If any annuity contract is held by a person
- , V who is not a natural person—
J "(A) such contract shall not be treated as an annuity 6ii*!> » contract for purposes of this subtitle, and "(B) the income on the contract for any taxable year of ••lit 05 the policyholder shall be treated as ordinary income re"71, --:' ceived or accrued by the owner during such taxable year.
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