102 STAT. 3674
PUBLIC LAW 100-647—NOV. 10, 1988 entered into) are reasonably expected to be attributable to the building, construction, reconstruction, or rehabilitation of— "(i) dwelling units contained in buildings containing 4 or fewer dwelling units, and "(ii) improvements to real property directly related to such dwelling units and located on the site of such dwelling units. For purposes of clause (i), each townhouse or rowhouse shall be treated as a separate building. "(B) RESIDENTIAL CONSTRUCTION CONTRACT.—The term 'residential construction contract' means any contract which would be described in subparagraph (A) if clause (i) of such subparagraph reads as follows: " '(i) dwelling units (as defined in section 167(k)), and'." (4) CERTAIN HOME CONSTRUCTION CONTRACTS NOT SUBJECT TO MINIMUM TAX.—Paragraph (3) of section 56(a) of the 1986 Code
is amended by adding at the end thereof the following new sentence: "The preceding sentence shall not apply to any home construction contract (as defined in section 460(e)(6)) with respect to which the requirements of clauses (i) and (ii) of section 460(e)(l)(B) are met." (c) REGULATORY AUTHORITY.—Section 460 of the 1986 Code is amended by adding at the end thereof the following new subsection: "(h) REGULATIONS.—The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section, including regulations to prevent the use of related parties, pass-thru entities, intermediaries, options, or other similar arrangements to avoid the application of this section." (d) SIMPUFIED LOOK-BACK METHOD FOR PASS-THRU ENTITIES.—
Subsection (b) of section 460 of the 1986 (Dode is amended by adding at the end thereof the following new paragraph: "(5) SIMPUFIED LOOK-BACK METHOD FOR PASS-THRU ENTITIES.—
"(A) IN GENERAL.—In the case of a pass-thru entity— "(i) the look-back method of paragraph (3) shall be applied at the entity level, "(ii) in determining overpayments and underpayments for purposes of applying paragraph (3)(B)— "(I) any increase in the income under the contract for any taxable year by reason of the allocation under paragraph (3)(A) shall be treated as giving rise to an underpayment determined by applying the highest rate for such year to such increase, and "(II) any decrease in such income for any taxable year by reason of such allocation shall be treated as giving rise to an overpayment determined by applying the highest rate for such year to such decrease, and "(iii) any interest required to be paid by the taxpayer under paragraph (3) shall be paid by such entity (and any interest entitled to be received by the taxpayer under paragraph (3) shall be paid to such entity). "(B) EXCEPTIONS.—
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