PUBLIC LAW 100-647—NOV. 10, 1988
102 STAT. 3437
"(I) was arranged by the partnership or by any person who participated in the organization, sale, or management of the partnership (or any person related to such person within the meaning of section 465(b)(3)(C)), or "(II) was secured by any asset of the partnership." (4) Section 464 of the 1986 Code (relating to limitations on deductions for certain farming expenses) is amended by adding at the end thereof the following new subsection: "(g) TERMINATION.—Except as provided in subsection (f), subsections (a) and (b) shall not apply to any taxable year beginning after December 31, 1986." (5) Paragraph (4) of section 801(d) of the Reform Act is amend- 26 USC 448 note. ed by striking out "the completed contract method" and inserting in lieu thereof "a method of accounting for long-term contracts". (6) Section 801(d) of the Reform Act is amended by adding at the end thereof the following new paragraph: "(5) SPECIAL RULE FOR PARAGRAPHS (2) AND (3).—If any loan, lease, contract, or evidence of any transaction to which paragraph (2) or (3) applies is transferred after June 10, 1987, to a person other than a related party (within the meaning of paragraph (2)), paragraph (2) or (3) shall cease to apply on and after the date of such transfer. (7) Paragraph (3) of section 448(d) of the 1986 Code is amended by adding at the end thereof the following new sentence: "An S corporation shall not be treated as a tax shelter for purposes of this section merely by reason of being required to file a notice of exemption from registration with a State agency described in section 461(i)(3)(A), but only if there is a requirement applicable to all corporations offering securities for sale in the State that to be exempt from such registration the corporation must file sucii 3. notice (8) Subparagraph (C) of section 448(d)(4) of the 1986 Code is amended by striking out "substantially all o f and inserting in lieu thereof "90 percent or more of. (9) Paragraph (3) of section 448(c) of the 1986 Code is amended by adding at the end thereof the following new subparagraph: "(D) TREATMENT OF PREDECESSORS.—Any reference in this subsection to an entity shall include a reference to any predecessor of such entity." (b) AMENDMENTS RELATED TO SECTION 803 OF THE REFORM ACT.—
(1) Paragraph (2) of section 263A(a) of the 1986 Code is amended by adding at the end thereof the following new sentence: "Any cost which (but for this subsection) could not be taken into account in computing taxable income for any taxable year shall not be treated as a cost described in this paragraph." (2) Section 263A(c) of the 1986 Code (relating to general exceptions) is amended— (A) by striking out "263(c), 616(a), or 617(a)" and inserting in lieu thereof "263(c), 263(i), 291(b)(2), 616, or 617", and (B) by adding at the end thereof the following new paragraph: "(6) COORDINATION WITH SECTION 59(e).—Paragraphs (2) and (3) shall apply to any amount allowable as a deduction under
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