94 STAT. 2248
PUBLIC LAW 96-471—OCT. 19, 1980 "(2) TIME AND MANNER FOR MAKING ELECTION.—Except as
otherwise provided by regulations, an election under paragraph (1) with respect to a disposition may be made only on or before the due date prescribed by law (including extensions) for filing the taxpayer's return of the tax imposed by this chapter for the taxable year in which the disposition occurs. Such an election shall be made in the manner prescribed by regulations. "(3) ELECTION REVOCABLE ONLY WITH CONSENT.—An election under paragraph (1) with respect to any disposition may be revoked only with the consent of the Secretary. "(e) SECOND DISPOSITIONS BY RELATED PERSONS.— "(1) IN GENERAL.—If—
"(A) any person disposes of property to a related person (hereinafter in this subsection referred to as the 'first disposition*), and "(B) before the person making the first disposition receives all payments with respect to such disposition, the related person disposes of the property (hereinafter in this subsection referred to as the 'second disposition'), then, for purposes of this section, the amount realized with respect to such second disposition shall be treated as received a t the time of the second disposition by the person making the first disposition, ' (2) 2-YEAR CUTOFF FOR PROPERTY OTHER THAN MARKETABLE SECURITIES.— "(A) IN GENERAL.—Except in the case of marketable securities, paragraph (1) shall apply only if the date of the second disposition is not more than 2 years after the date of the first disposition. '(B) SUBSTANTIAL DIMINISHING OP RISK OF OWNERSHIP.—
The running of the 2-year period set forth in subparagraph (A) shall be suspended with respect to any property for any period during which the related person's risk of loss with respect to the property is substantially diminished by— "(i) the holding of a put with respect to such property (or similar property), "(ii) the holding by another person of a right to acquire the property, or ' (iii) a short sale or any other transaction. "(3)
LIMITATION ON AMOUNT TREATED AS RECEIVED.—The
amount treated for any taxable year as received by the person making the first disposition by reason of paragraph (1) shall not exceed the excess of— "(A) the lesser of— "(i) the total amount realized with respect to any second disposition of the property occurring before the close of the taxable year, or "(ii) the total contract price for the first disposition, over "(B) the sum of— "(i) the aggregate amount of payments received with respect to the first disposition before the close of such year, plus "(ii) the aggregate amount treated as received with respect to the first disposition for prior taxable years by reason of this subsection. "(4) FAIR MARKET VALUE WHERE DISPOSITION IS NOT SALE OR
EXCHANGE.—For purposes of this subsection, if the second dispo-
�
