90 STAT. 1532
PUBLIC LAW 94-455—OCT. 4, 1976 " (4) EXCEPTION.—Notwithstanding any other provision of this section, a taxpayer shall not be considered, a t risk with respect to amounts protected against loss through nonrecourse financing, guarantees, stop loss agreements, or other similar arrangements. " (5) A M O U N T S AT RISK I N SUBSEQUENT YEARS.—If in any tax a b l e
year the taxpayer has a loss from an activity to which this section applies, the amount with respect to which a taxpayer is considered to be a t risk (within the meaning of subsection (b)) i n subsequent taxable years with respect to that activity shall be reduced by that portion of the loss which (after the application of subsection (a)) is allowable as a deduction. " (c) ACTIVITIES TO W H I C H SECTION A P P L I E S. — " (1) T Y P E S o r ACTIVITIES.—This section applies to any tax p a y e r
Post, p. 1536. 26 USC 1245
engaged in the activity of— " (A) holding, producing, or distributing motion picture films or video tapes. " (B) farming (as defined in section 4 6 4 (e)), " (C) leasing any section 1245 property (as defined in section 1245(a)(3)), or " (D) exploring for, or exploiting, oil and gas resources as a trade or business or for the production of income. " (2) SEPARATE ACTIVITIES.—For purposes of this section, a taxpayer's activity with respect to each— " (A) film or video tape, " (B) section 1245 property which is leased or held for leasing, " (C) farm, or " (D) oil and gas property (as defined under section 614), shall be treated as a separate activity. A partner's interest in a partnership or a shareholder's interest in an electing small business corporation shall be treated as a single activity to the extent that the partnership or an electing small business corporation is engaged in activities described in any subparagraph of this paragraph. " (d) DEFINITION OF I.K)SS.—For purposes of this section, the term 'loss' means the excess of the deductions allowable under this chapter for the taxable year (determined without regard to this section) and allocable to an activity to which this section applies over the income received or accrued by the tax p a y e r during the taxable year from such activity." (b) CLERICAL AMENDMENT. — The table of sections for subpart C of
part II of subchapter E of chapter 1 is amended by a d d i n g a t the end thereof the following new item: "Sec. 465. Deductions limited to amount at risk in case of certain activities." 26 USC 465
note.
(c) EFFECTIVE D A T E S. —
(1) IN GENERAL.—Except as provided in paragraph s (2) and (3), the amendments made by this section shall apply to losses attributable to amounts paid or incurred in taxable years beginn i n g after December 31, 1975. For purposes of this subsection, any amount allowed or allowable for depreciation or amortization for any period shall be treated as an amount paid or incurred in such period. (2) SPECIAL TRANSITIONAL RULES FOR MOVIES AND VIDEO TAPES.—
(A) IN GENERAL.—In the case of any activity described in section 4 6 5 (c)(1)(A) of the I n t e r n a l Revenue Code of
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