854
PUBLIC LAW 88-570-SEPT. 2, 1964
[78 STAT.
Public Law 88-570 September 2, 1964
AN ACT
—[H- R. 4844]— Uelating to the release of liability under bonds filed under section 44(d) of the Internal Revenue Code of 1939 with respect to certain installment obligations transmitted at death, and to amend the Internal Revenue Code of 1954 with respect to certain reacquisitions of real property. Taxes. _^ ^ Installment ob-
iigatTJ"ns. °'" " 26^scr*69"^*
Be it enacted by the Senate and House of Representatives of the r/miec;? States of America in Congress assembled, That section 691 of the Internal Revenue Code of 1954 (relating to recipients of income ^^ respect of decedents) is amended by relettering subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection: "(e) INSTALLMENT OBLIGATIONS TRANSMITTED AT DEATH W H E N PRIOR L A W APPLIED TO TRANSMISSION.—
53 Stat. 24.
26 USC 1031-
1037
"(1) IN GENERAL.—Effective with respect to the first taxable year to which the election referred to in paragraph (2) applies and to each taxable year thereafter, subsection (a)(4) shall apply in the case of installment obligations in respect of which section 44(d) of the Internal Revenue Code of 1939 (or the corresponding provisions of prior law) did not apply by reason of the filing of the bond referred to in such section or provisions. Subsection (c) of this section shall not apply in respect of any amount included in gross income by reason of this paragraph. "(2) ELECTION.—Installment obligations referred to in paragraph (1) may, at the election of the taxpayer holding such obligations, be treated as obligations in respect of which subsection (a)(4) applies. An election under this subsection for any taxable year shall be made not later than the time prescribed by law (including extensions thereof) for filing the return for such taxable year. The election shall be made in such manner as the Secretary or his delegate may by regulations prescribe. "(3) RELEASE OF BOND.—The liability under any bond filed under section 44(d) of the Internal Revenue Code of 1939 (or the corresponding provisions of prior law) in respect of which an election under this subsection applies is hereby released with respect to taxable years to which such election applies." SEC. 2. (a) Part III of subchapter O of chapter 1 of the Internal Revenue Code of 1954 (relating to common nontaxable exchanges) is amended by adding at the end thereof the following new section: "SEC. 1038. CERTAIN REACQUISITIONS OF REAL PROPERTY. " (a) GENERAL RULE.—If—
"(1) a sale of real property gives rise to indebtedness to the seller which is secured by the real property sold, and " (2) the seller of such property reacquires such property in partial or full satisfaction of such indebtedness, then, except as provided in subsections (b) and (d), no gain or loss shall result to the seller from such reacquisition, and no debt shall become worthless or partially worthless as a result of such reacquisition. " (b) AMOUNT OF GAIN RESULTING.—
"(1) IN GENERAL.—In the case of a reacquisition of real property to which subsection (a) applies, gain shall result from such reacquisition to the extent that>-— " (A) the amount of money and the fair market value of other property (other than obligations of the purchaser) received, prior to such reacquisition, with respect to the sale of such property, exceeds
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