Page:United States Statutes at Large Volume 113 Part 3.djvu/418
113 STAT. 1936 PUBLIC LAW 106-170—DEC. 17, 1999 SEC. 536. MODIFICATION OF INSTALLMENT METHOD AND REPEAL OF INSTALLMENT METHOD FOR ACCRUAL METHOD TAX- PAYERS. (a) REPEAL OF INSTALLMENT METHOD FOR ACCRUAL BASIS TAX- PAYERS. — (1) IN GENERAL. —Subsection (a) of section 453 of the 26 USC 453. Internal Revenue Code of 1986 (relating to installment method) is amended to read as follows: "(a) USE OF INSTALLMENT METHOD.— "(1) IN GENERAL. — Except as otherwise provided in this section, income from an installment sale shall be taken into account for purposes of this title under the installment method. "(2) ACCRUAL METHOD TAXPAYER. —The installment method shall not apply to income from an installment sale if such income would be reported under an accrual method of accounting without regard to this section. The preceding sentence shall not apply to a disposition described in subparagraph (A) or (B) of subsection (1)(2).". (2) CONFORMING AMENDMENTS. —Sections 453(d)(1), 453(i)(l), and 453(k) of such Code are each amended by striking "(a)" each place it appears and inserting "(a)(1)". (b) MODIFICATION OF PLEDGE RULES.—Paragraph (4) of section 26 USC 453A. 453A(d) of such Code (relating to pledges, etc., of installment obligations) is amended by adding at the end the following: "A payment shall be treated as directly secured by an interest in an installment obligation to the extent an arrangement allows the taxpayer to satisfy all or a portion of the indebtedness with the installment obligation. ". 26 USC 453 note. (c) EFFECTIVE DATE.— The amendments made by this section shall apply to sales or other dispositions occurring on or after the date of the enactment of this Act. SEC. 537. DENIAL OF CHARITABLE CONTRIBUTION DEDUCTION FOR TRANSFERS ASSOCIATED WITH SPLIT-DOLLAR INSUR- ANCE ARRANGEMENTS. (a) IN GENERAL. —Subsection (f) of section 170 of the Internal 26 USC 170. Revenue Code of 1986 (relating to disallowance of deduction in certain cases and special rules) is amended by adding at the end the following new paragraph: "(10) SPLIT-DOLLAR LIFE INSURANCE, ANNUITY, AND ENDOW- MENT CONTRACTS.— "(A) IN GENERAL.—Nothing in this section or in section 545(b)(2), 556(b)(2), 642(c), 2055, 2106(a)(2), or 2522 shall be construed to allow a deduction, and no deduction shall be allowed, for any transfer to or for the use of an organization described in subsection (c) if in connection with such transfer— "(i) the organization directly or indirectly pays, or has previously paid, any premium on any personal benefit contract with respect to the transferor, or "(ii) there is an understanding or expectation that any person will directly or indirectly pay any premium on any personal benefit contract with respect to the transferor. "(B) PERSONAL BENEFIT CONTRACT. —For purposes of subparagraph (A), the term 'personal benefit contract' means, with respect to the transferor, any life insurance.