[Federal Register Volume 64, Number 14 (Friday, January 22, 1999)]
[Proposed Rules]
[Pages 3457-3461]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-1148]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG-110524-98]
RIN 1545-AW85
Capital Gains, Installment Sales, Unrecaptured Section 1250 Gain
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: This document contains proposed amendments to the regulations
relating to the taxation of capital gains on installment sales of
depreciable real property. The proposed regulations interpret changes
made by the Taxpayer Relief Act of 1997, as amended by the Internal
Revenue Service Restructuring and Reform Act of 1998 and the Omnibus
Consolidated and Emergency Supplemental Appropriations Act of 1999. The
proposed regulations affect persons required to report capital gain
from an installment sale where a portion of the capital gain is
unrecaptured section 1250 gain and a portion is adjusted net capital
gain.
DATES: Written comments or requests for a public hearing must be
received by April 22, 1999.
ADDRESSES: Send submissions to CC:DOM:CORP:R (REG-110524-98), room
5226, Internal Revenue Service, POB 7604, Ben Franklin Station,
Washington, DC 20044. In the alternative, submissions may be hand
delivered Monday through Friday between the hours of 8 a.m. and 5 p.m.
to: CC:DOM:CORP:R (REG-110524-98), Courier's Desk, Internal Revenue
Service, 1111 Constitution Avenue, NW, Washington, DC. Alternatively,
taxpayers may submit comments electronically via the Internet by
selecting the ``Tax Regs'' option on the IRS Home Page, or by
submitting comments directly to the IRS Internet site at http://
www.irs.ustreas.gov/prod/tax__regs/comments.html.
FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Susan
Kassell, (202) 622-4930; concerning submissions, LaNita VanDyke, (202)
622-7190 (not toll-free numbers).
SUPPLEMENTARY INFORMATION:
Background
This document contains proposed amendments to the Income Tax
Regulations (26 CFR Part 1) relating to the taxation of capital gains
on installment sales of depreciable real property.
Prior to 1997, the maximum rate on net capital gain for individuals
was 28 percent. In the Taxpayer Relief Act of 1997, Public Law 105-34
(111 Stat. 788, 831) (1997 Act), Congress amended section 1(h)
generally to reduce the maximum capital gain tax rates for individuals.
Certain substantive changes and technical corrections to section 1(h)
were enacted as part of the Internal Revenue Service Restructuring and
Reform Act of 1998, Public Law 105-206 (112 Stat. 685), including the
repeal of an 18-month holding period requirement for amounts properly
taken into account after December 31, 1997, and by the Omnibus
Consolidated and Emergency Supplemental Appropriations Act, 1999,
Public Law 105-277 (112 Stat. 2681).
As amended, section 1(h) generally divides net capital gain into
three rate groups based on the nature of the property, the nature of
the gain, and the holding period of the property.
A maximum marginal rate of 28 percent applies to 28-percent rate
gain (28-percent gain), the combination of (1) capital gains and losses
from the sale or exchange of collectibles held for more than one year;
(2) an amount equal to gain excluded from income on the sale or
exchange of certain small business stock under section 1202; (3)
capital gains and losses determined under special transition rules in
section 1(h)(13) for certain amounts taken into account in 1997; (4)
net short-term capital loss for the tax year; and (5) any long-term
capital loss carryover to the tax year under section 1212.
A maximum marginal rate of 25 percent applies to unrecaptured
section 1250 gain (25-percent gain), which is defined in section
1(h)(7)(A) as the amount of long-term capital gain (not otherwise
treated as ordinary income) that would be treated as ordinary income if
section 1250(b)(1) included all depreciation and the applicable
percentage under section 1250(a) were 100 percent, reduced by any net
loss in the 28-percent rate category. Effectively, the amount of gain
taxed at 25 percent is the amount of straight-line depreciation allowed
for the property. Thus, the 25-percent rate category partially
recaptures such depreciation, but the recapture is limited, inter alia,
in that the recapture rate may be less than the marginal rates that
applied to the depreciation deductions. Section 1(h)(7)(B) limits the
unrecaptured section 1250 gain from section 1231 assets for any tax
year to the net section 1231 gain for that year.
A maximum marginal rate of 20 percent generally applies to adjusted
net capital gain (20/10-percent gain), defined in section 1(h)(4) as
the portion of net capital gain that is not taxed at the 28-percent or
25-percent rates. Under section 1(h)(1)(B), a 10-percent rate applies
to any portion of adjusted net capital gain that would otherwise be
taxed at a 15-percent rate if capital gains were taxed as ordinary
income.
For amounts properly taken into account after July 28, 1997, and
before January 1, 1998, an 18-month holding period is required to
obtain the maximum 25-percent, 20-percent, or 10-percent rates.
Section 453 provides that, unless taxpayers elect out, gain from an
installment sale is recognized as payments on the installment
obligation are received. Before the 1997 Act, reporting capital gain
under the installment method was relatively straightforward: the
capital gain portion of each payment was taxed at the maximum capital
gain rate of 28 percent. Section 1(h) provides for multiple rates, but
does not address how to treat an installment sale of depreciable real
property when the gain to be reported consists of both 25-percent gain
and 20/10-percent gain.
Explanation of Provisions
Front-Loaded Allocation of Unrecaptured Section 1250 Gain
Under the proposed regulations, if a portion of the capital gain
from an
[[Page 3458]]
installment sale is 25-percent gain and a portion is 20/10-percent
gain, the taxpayer is required to take the 25-percent gain into account
before the 20/10-percent gain, as payments are received. (Because sales
that result in 28-percent gain cannot also yield 25-percent gain or 20/
10-percent gain, an allocation rule for 28-percent gain is
unnecessary.)
A front-loaded allocation method for 25-percent gain is generally
consistent with the statute, under which 20/10-percent gain (that is,
adjusted net capital gain) is defined as the residual category of
capital gain not taxed at maximum rates of 28 percent or 25 percent.
The front-loaded method precludes taxpayers from recognizing some 20/
10-percent gain from an installment sale even when the amount
ultimately recognized proves to be less than the amount subject to
recapture at the 25-percent rate. Absent a front-loaded allocation
method this inappropriate result could arise, for example, when a
taxpayer later disposes of an installment obligation at a discounted
price or when the amount to be received is contingent.
The IRS and Treasury Department have previously adopted analogous
front-loaded allocation methods with respect to installment sales. For
example, before 1984--when Congress enacted section 453(i), which
requires immediate recognition of recapture gain at ordinary rates
under sections 1245 and 1250-- taxpayers were permitted to defer
recognition of this ordinary-rate recapture gain under the installment
method. Thus, an installment payment could contain both capital gain
and gain taxed at ordinary rates. By regulation, a front-loaded
allocation of the ordinary-rate recapture gain was required.
Secs. 1.1245-6(d); 1.1250-1(c)(6). See Dunn Construction v. United
States, 323 F. Supp. 440 (N.D. Ala. 1971) (upholding Sec. 1.1245-6(d)
as ``reasonable and consistent with the underlying statute'' and a
valid exercise of the regulatory authority under section 453). See also
Secs. 1.1251-1(e)(6), 1.1252-1(d)(3), 1.1254-1(d), and 16A.1255-
1(c)(3).
Interaction With Section 1231
Section 1(h) also does not address the interaction of the capital
gain rates, the installment method, and the rules in section 1231.
Section 1231(a) generally provides that, when gains from the sale or
exchange of property used in a trade or business exceed losses from
such property, the gains and losses are treated as long-term capital
gains and losses. Conversely, when section 1231 losses exceed section
1231 gains, the gains and losses are treated as ordinary. The capital
nature of net section 1231 gain is subject to an exception: under
section 1231(c), net section 1231 gain is treated as ordinary income to
the extent of the taxpayer's non-recaptured net section 1231 losses for
the preceding five years.
With respect to the interaction of section 1231(c) and the capital
gain rates, the IRS and Treasury Department have already provided that
section 1231 gain that is recharacterized as ordinary gain under
section 1231(c) is deemed to consist first of 28-percent gain, then 25-
percent gain, and finally 20/10-percent gain. See Notice 97-59 (1997-45
IRB 7, 8). An example in the proposed regulations illustrates the
application of this principle in the installment sale context.
Consistent with this treatment and with the general rule that 25-
percent gain is front-loaded, another example in the proposed
regulations illustrates that--in a year in which installment gain is
characterized as ordinary gain under section 1231(a) because there is a
net section 1231 loss for the year--the gain is treated as consisting
of 25-percent gain first, before 20/10-percent gain, for purposes of
determining how much 25-percent gain remains to be taken into account
in later payments.
The examples in the proposed regulations--regarding the interaction
of sections 1(h), 453, and 1231--are specific applications of the
general rule that, for any given installment payment, gain from all
previous payments is treated as consisting first of 25-percent gain,
rather than 20/10-percent gain, in determining how much of each
category of gain remains to be reported with respect to current and
subsequent payments. Under the regulations, in making this
determination it is generally irrelevant how such prior gain was
actually reported and taxed. For example, an installment payment that
is taxed at 15 percent because the taxpayer is in a low tax bracket may
be treated as consisting of 25-percent gain (that is, unrecaptured
section 1250 gain) for allocation purposes, even though the gain is not
actually taxed at 25 percent. The proposed regulations focus on
examples involving section 1231 since they are the most common.
Treatment of Installment Payments From Sales Prior to the Effective
Date of the 1997 Act
The capital gains provisions of the 1997 Act were effective for
taxable years ending after May 6, 1997. However, the maximum rate of 28
percent was not reduced for gains properly taken into account before
May 7, 1997. Under settled authority, originating in Snell v.
Commissioner, 97 F.2d 891 (5th Cir. 1938), the law in effect when an
installment payment is received controls the tax treatment of the
payment. Unless otherwise provided, installment payments received after
a change in the law are taxed under the new law, whether favorable or
unfavorable, looking back to the original transaction for the facts
necessary to apply the changed law. In Snell, for example, installment
payments from what was a capital asset in the sale year were taxed as
ordinary income after Congress changed the definition of a capital
asset. See also Estate of Kearns v. Commissioner, 73 T.C. 1223 (1980);
Klein v. Commissioner, 42 T.C. 1000 (1964); Rev. Rul. 79-22 (1979-1 CB
275). Congress also implicitly has recognized the Snell principle by
enacting grandfather exceptions when the application of Snell would be
unfavorable. For example, when Congress extended the holding period
requirement for capital gain in 1976, the legislation specifically
excepted from the new, harsher requirements post-1976 installment gain
from pre-1976 sales.
The legislative history of the 1997 Act reflects the Snell
principle, providing that section 1(h) ``generally applies to sales and
exchanges (and installment payments received) after May 6, 1997.''
Conf. Rep. 105-220, 105th Cong., 1st Sess. 382, 383 (1997). Thus, under
these settled principles, gain on installment payments received after
May 6, 1997, from sales on or before that date, is taxed at the new,
lower maximum rates of 25 percent, 20 percent, or 10 percent if it
qualifies as unrecaptured section 1250 gain or adjusted net capital
gain. However, as in the case of gain from post-effective-date sales,
section 1(h) does not specify how to allocate the two categories of
gain.
The proposed regulations provide that the capital gain rates
applicable to installment payments that are received on or after the
effective date of the 1997 Act from sales prior to the effective date
are determined as if, for all payments received after the date of sale
but before the effective date, 25-percent gain had been taken into
account before 20/10-percent gain. This approach is consistent with the
Snell principle in that it provides for the same method of allocation,
whether the sale occurred before or after the effective date of the
1997 Act. For taxpayers who sold property and received installment
payments before the effective date of the 1997 Act, this provision is
favorable, since it generally reduces or eliminates the amount of 25-
percent gain to be reported on installment payments
[[Page 3459]]
received after the effective date. The approach is also simple--because
it is generally irrelevant how the prior gain was actually reported and
taxed, in most cases taxpayers will simply calculate the total amount
of 25-percent gain on the sale and subtract from that all gain
previously reported, in order to arrive at the amount of 25-percent
gain remaining to be reported.
Treatment of Installment Payments Received Between the Effective Date
of the Statute and the Effective Date of the Final Regulations
The proposed regulations also address the treatment of gain in
installment payments that are received during the period between the
effective date of section 1(h) and the effective date of the final
regulations. The proposed regulations provide that, in the event the
cumulative amount of 25-percent gain actually reported in installment
payments received during this period was less than the amount that
would have been reported using the front-loaded allocation method of
the regulations, the amount of 25-percent gain actually reported,
rather than an amount determined under a front-loaded allocation
method, must be used in determining the amount of 25-percent gain that
remains to be reported. This provision ensures that taxpayers cannot
underreport the total amount of 25-percent gain by taking inconsistent
positions with respect to payments received before and after the
effective date of the regulations. By providing for this rule, no
inference is intended that any allocation method other than the method
provided for by the regulations was a reasonable interpretation of
section 1(h) in this context. However, the IRS will not challenge the
use of a pro rata allocation method--that is, a method under which the
amounts of 25-percent gain and 20/10-percent gain in each installment
payment bear the same relationship as the total amounts of 25-percent
and 20/10-percent gain to be reported on the sale--for installment
payments received before the effective date of the final regulations,
if the taxpayer used the same pro rata method for all installment
payments during such period.
Proposed Effective Date
The regulations are proposed to be effective for payments properly
taken into account after the date the regulations are published as
final regulations in the Federal Register.
Special Analyses
It has been determined that this notice of proposed rulemaking is
not a significant regulatory action as defined in EO 12866. Therefore,
a regulatory assessment is not required. It also has been determined
that section 553(b) of the Administrative Procedure Act (5 U.S.C.
chapter 5) does not apply to these regulations, and, because the
regulations do not impose a requirement for the collection of
information on small entities, the Regulatory Flexibility Act (5 U.S.C.
chapter 6) does not apply. Pursuant to section 7805(f) of the Internal
Revenue Code, this notice of proposed rulemaking will be submitted to
the Chief Counsel for Advocacy of the Small Business Administration for
comment on its impact on small business.
Comments and Requests for a Public Hearing
Before these proposed regulations are adopted as final regulations,
consideration will be given to any written comments (a signed original
and eight (8) copies) that are submitted timely to the IRS. The IRS and
Treasury Department request comments on the clarity of the proposed
rules and how they can be made easier to understand. All comments will
be available for public inspection and copying. A public hearing may be
scheduled if requested in writing by a person that timely submits
written comments. If a public hearing is scheduled, notice of the date,
time, and place for the hearing will be published in the Federal
Register.
Drafting Information
The principal authors of these regulations are Susan Kassell and
Rob Laudeman, Office of the Assistant Chief Counsel (Income Tax &
Accounting). However, other personnel from the IRS and Treasury
Department participated in their development.
List of Subjects in Part 1
Income taxes, Reporting and recordkeeping requirements.
Proposed Amendment to the Regulations
Accordingly, the IRS proposes to amend 26 CFR part 1 as follows:
PART 1--INCOME TAXES
Paragraph 1. The authority citation for part 1 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.453-12 is added to read as follows:
Sec. 1.453-12 Allocation of unrecaptured section 1250 gain reported on
the installment method.
(a) General rule. Unrecaptured section 1250 gain, as defined in
section 1(h)(7), is reported on the installment method if that method
otherwise applies under section 453 or 453A and the corresponding
regulations. If gain from an installment sale includes unrecaptured
section 1250 gain and adjusted net capital gain (as defined in section
1(h)(4)), the unrecaptured section 1250 gain is taken into account
before the adjusted net capital gain.
(b) Installment payments from sales before May 7, 1997. The amount
of unrecaptured section 1250 gain in an installment payment that is
properly taken into account after May 6, 1997, from a sale before May
7, 1997, is determined as if, for all payments properly taken into
account after the date of sale but before May 7, 1997, unrecaptured
section 1250 gain had been taken into account before adjusted net
capital gain.
(c) Installment payments received after May 6, 1997, and before the
effective date of the final regulations. If the amount of unrecaptured
section 1250 gain in an installment payment that is properly taken into
account after May 6, 1997, and before the effective date of the final
regulations, is less than the amount that would have been taken into
account under this section, the lesser amount is used to determine the
amount of unrecaptured section 1250 gain that remains to be taken into
account.
(d) Examples. In each example, the taxpayer, an individual whose
taxable year is the calendar year, does not elect out of the
installment method. The installment obligation bears adequate stated
interest, and the property sold is real property held in a trade or
business that qualifies as both section 1231 property and section 1250
property. In all taxable years, the taxpayer's marginal tax rate on
ordinary income is 28 percent. The following examples illustrate the
rules of this section:
Example 1. General rule. This example illustrates the rule of
paragraph (a) of this section.
(i) In 1998, A sells property for $10,000, to be paid in ten
equal annual installments beginning on December 1, 1998. A
originally purchased the property for $5,000, held the property for
several years, and took straight-line depreciation deductions in the
amount of $3,000. In each of the years 1998-2007, A has no other
capital or section 1231 gains or losses.
(ii) A's adjusted basis at the time of the sale is $2,000. Of
A's $8,000 of section 1231 gain on the sale of the property, $3,000
is attributable to prior straight-line depreciation
[[Page 3460]]
deductions and is unrecaptured section 1250 gain. The gain on each
installment payment is $800.
(iii) As illustrated in the following table, A takes into
account the unrecaptured section 1250 gain first. Therefore, the
gain on A's first three payments, received in 1998, 1999, and 2000,
is taxed at 25 percent. Of the $800 of gain on the fourth payment,
received in 2001, $600 is taxed at 25 percent and the remaining $200
is taxed at 20 percent. The gain on A's remaining six installment
payments is taxed at 20 percent. The table is as follows:
--------------------------------------------------------------------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002 2003-2007 Total gain
--------------------------------------------------------------------------------------------------------------------------------------------------------
Installment gain............................................. 800 800 800 800 800 4000 8000
Taxed at 25%................................................. 800 800 800 600 ........... ........... 3000
Taxed at 20%................................................. ........... ........... ........... 200 800 4000 5000
Remaining to be taxed at 25%................................. 2200 1400 600 ........... ........... ........... ...........
--------------------------------------------------------------------------------------------------------------------------------------------------------
Example 2. Installment payments from sales prior to May 7, 1997.
This example illustrates the rule of paragraph (b) of this section.
(i) The facts are the same as in Example 1 except that A sold
the property in 1994, received the first of the ten annual
installment payments on December 1, 1994, and had no other capital
or section 1231 gains or losses in the years 1994-2003.
(ii) As in Example 1, of A's $8000 of gain on the sale of the
property, $3000 was attributable to prior straight-line depreciation
deductions and is unrecaptured section 1250 gain.
(iii) As illustrated in the following table, A's first three
payments, in 1994, 1995, and 1996, were received before May 7, 1997,
and taxed at 28 percent. Under the rule described in paragraph (b)
of this section, A determines the allocation of unrecaptured section
1250 gain for each installment payment after May 6, 1997, by taking
unrecaptured section 1250 gain into account first, treating the
general rule of paragraph (a) of this section as having applied
since the time the property was sold, in 1994. Consequently, of the
$800 of gain on the fourth payment, received in 1997, $600 is taxed
at 25 percent and the remaining $200 is taxed at 20 percent. The
gain on A's remaining six installment payments is taxed at 20
percent. The table is as follows:
--------------------------------------------------------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999-2003 Total gain
--------------------------------------------------------------------------------------------------------------------------------------------------------
Installment gain............................................. 800 800 800 800 800 4000 8000
Taxed at 28%................................................. 800 800 800 ........... ........... ........... 2400
Taxed at 25%................................................. ........... ........... ........... 600 ........... ........... 600
Taxed at 20%................................................. ........... ........... ........... 200 800 4000 5000
Remaining to be taxed at 25%................................. 2200 1400 600 ........... ........... ........... ...........
--------------------------------------------------------------------------------------------------------------------------------------------------------
Example 3. Effect of section 1231(c) recapture. This example
illustrates the rule of paragraph (a) of this section when there are
non-recaptured net section 1231 losses, as defined in section
1231(c)(2), from prior years.
(i) The facts are the same as in Example 1, except that in 1998
A has non-recaptured net section 1231 losses from the previous four
years of $1000.
(ii) As illustrated in the table at the end of this example, in
1998, all of A's $800 installment gain is recaptured as ordinary
income under section 1231(c). Under the rule described in paragraph
(a) of this section, for purposes of determining the amount of
unrecaptured section 1250 gain remaining to be taken into account,
the $800 recaptured as ordinary income under section 1231(c) is
treated as reducing unrecaptured section 1250 gain, rather than
adjusted net capital gain. Therefore, A has $2200 of unrecaptured
section 1250 gain remaining to be taken into account.
(iii) In 1999, A's installment gain is taxed at two rates.
First, $200 is recaptured as ordinary income under section 1231(c).
Second, the remaining $600 of gain on A's 1999 installment payment
is taxed at 25 percent. Because the full $800 of gain reduces
unrecaptured section 1250 gain, A has $1400 of unrecaptured section
1250 gain remaining to be taken into account.
(iv) The gain on A's installment payment received in 2000 is
taxed at 25 percent. Of the $800 of gain on the fourth payment,
received in 2001, $600 is taxed at 25 percent and the remaining $200
is taxed at 20 percent. The gain on A's remaining six installment
payments is taxed at 20 percent. The table is as follows:
--------------------------------------------------------------------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002 2003-2007 Total gain
--------------------------------------------------------------------------------------------------------------------------------------------------------
Installment gain............................................. 800 800 800 800 800 4000 8000
Taxed at ordinary rates under section 1231(c)................ 800 200 ........... ........... ........... ........... 1000
Taxed at 25%................................................. ........... 600 800 600 ........... ........... 2000
Taxed at 20%................................................. ........... ........... ........... 200 800 4000 5000
Remaining non-recaptured net section 1231 losses............. 200 ........... ........... ........... ........... ........... ...........
Remaining to be taxed at 25%................................. 2200 1400 600 ........... ........... ........... ...........
--------------------------------------------------------------------------------------------------------------------------------------------------------
Example 4. Effect of a net section 1231 loss. This example
illustrates the application of paragraph (a) of this section when
there is a net section 1231 loss.
(i) The facts are the same as in Example 1 except that A has
section 1231 losses of $1000 in 1998.
(ii) In 1998, A's section 1231 installment gain of $800 does not
exceed A's section 1231 losses of $1000. Therefore, A has a net
section 1231 loss of $200. As a result, under section 1231(a) all of
A's section 1231 gains and losses are treated as ordinary gains and
losses. As illustrated in the table at the end of this example, A's
entire $800 of installment gain is ordinary gain. Under the rule
described in paragraph (a) of this section, for purposes of
determining the amount of unrecaptured section 1250 gain remaining
to be taken into account, A's $800 of ordinary section 1231
installment gain in 1998 is treated as reducing unrecaptured section
1250 gain. Therefore, A has $2200 of unrecaptured section 1250 gain
remaining to be taken into account.
(iii) In 1999, A has $800 of section 1231 installment gain,
resulting in a net section 1231 gain of $800. A also has $200 of
non-recaptured net section 1231 losses. The $800 gain is taxed at
two rates. First, $200 is taxed at ordinary rates under section
1231(c), recapturing the $200 net section 1231 loss sustained in
1998. Second, the remaining $600 of gain on A's 1999 installment
payment is taxed at 25 percent. As in
[[Page 3461]]
Example 3, the $200 of section 1231(c) gain is treated as reducing
unrecaptured section 1250 gain, rather than adjusted net capital
gain. Therefore, A has $1400 of unrecaptured section 1250 gain
remaining to be taken into account.
(iv) The gain on A's installment payment received in 2000 is
taxed at 25 percent, reducing the remaining unrecaptured section
1250 gain to $600. Of the $800 of gain on the fourth payment,
received in 2001, $600 is taxed at 25 percent and the remaining $200
is taxed at 20 percent. The gain on A's remaining six installment
payments is taxed at 20 percent. The table is as follows:
--------------------------------------------------------------------------------------------------------------------------------------------------------
1998 1999 2000 2001 2002 2003-2007 Total gain
--------------------------------------------------------------------------------------------------------------------------------------------------------
Installment gain............................................. 800 800 800 800 800 4000 8000
Ordinary gain under section 1231(a).......................... 800 ........... ........... ........... ........... ........... 800
Taxed at ordinary rates under section 1231(c)................ ........... 200 ........... ........... ........... ........... 200
Taxed at 25%................................................. ........... 600 800 600 ........... ........... 2000
Taxed at 20%................................................. ........... ........... ........... 200 800 4000 5000
Net section 1231 loss........................................ 200 ........... ........... ........... ........... ........... ...........
Remaining to be taxed at 25%................................. 2200 1400 600 ........... ........... ........... ...........
--------------------------------------------------------------------------------------------------------------------------------------------------------
(e) Effective date. This section applies to installment payments
properly taken into account after the date these regulations are
published as final regulations in the Federal Register.
Robert E. Wenzel,
Deputy Commissioner of Internal Revenue.
[FR Doc. 99-1148 Filed 1-21-99; 8:45 am]
BILLING CODE 4830-01-U
