PUBLIC LAW 95-600—NOV. 6, 1978
92 STAT. 2847
(3) is not required by section 447 of the Internal Revenue Code of 1954 to capitalize preproductive period expenses. 26 USC 447. (b) TAXPAYER MAY NOT B E REQUIRED TO INVENTORY GROWING
CROPS.—A taxpayer to whom this section applies may not be required to inventory growing crops for any taxable year beginning after December 31, 1977. (c) TAXPAYER MAY ELECT TO CHANGE TO CASH METHOD.—A taxpayer to whom this section applies may, for any taxable year beginning after December 31, 1977 and before January 1, 1981, change to the cash receipts and disbursements method of accounting with respect to any trade or business in which the principal activity is growing crops. (d) SECTION 481 OF CODE TO APPLY.—Any change in the way in 26 USC 481. which a taxpayer accounts for the costs of growing crops resulting from the application of subsection (b) or (c)— (1) shall not require the consent of the Secretary of the Treasury or his delegate, and (2) shall be treated, for purposes of section 481 of the Internal "^ ': Revenue Code of 1954, as a change in the method of accounting initiated by the taxpayer. (e) GROWING CROPS.—For purposes of this section, the term "growing crops" does not include trees grown for lumber, pulp, or other nonlife purposes. SEC. 353. TREATMENT OF CERTAIN FARMS FOR PURPOSES OF RULE REQUIRING ACCRUAL ACCOUNTING.
(a) GENERAL RULE.—Section 447 (relating to method of accounting 26 USC 447. for corporations engaged in farming) is amended by striking out "nursery" in subsection (a) thereof and adding in lieu thereof "nursery or sod farm". (b) EFFECTIVE DATE.—The amendment made by subsection (a) shall 26 USC 447 apply to taxable years beginning after December 31, 1976. "* ^ f *-
Subtitle G—Other Business Provisions SEC 361. DISALLOWANCE OF CERTAIN DEDUCTIONS FOR YACHTS, HUNTING LODGES, ETC. (a) EXTENSION OF RULE DISALLOWING DEDUCTIONS FOR FACILITIES.—
So much of paragraph (1) of section 274(a) (relating to disallowance of 26 USC 274. certain entertainment, etc., expenses) as follows subparagraph (A) is amended to read as follows: "(B) FACILITY.—With respect to a facility used in connection with an activity referred to in subparagraph (A). In the case of an item described in subparagraph (A), the deduction shall in no event exceed the portion of such item which meets the requirements of subparagraph (A).". (b) COUNTRY CLUBS.—Paragraph (2) of section 274(2) (relating to special rules) is amended by adding at the end thereof the following new subparagraph: "(C) In the case of a country club, paragraph (1)(B) shall apply unless the taxpayer establishes that the facility was used primarily for the furtherance of the taxpayer's trade or business and that the item was directly related to the active conduct of such trade or business." (c) EFFECTIVE DATE.—The amendments made by this section shall 26 USC 274 apply to items paid or incurred after December 31, 1978, in taxable "o^^years ending after such date.
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