[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 2354 Introduced in Senate (IS)]







106th CONGRESS
  2d Session
                                S. 2354

 To amend the Internal Revenue Code of 1986 to prevent the duplication 
   of losses through the assumption of liabilities giving rise to a 
                               deduction.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 4, 2000

Mr. Roth (for himself and Mr. Moynihan) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to prevent the duplication 
   of losses through the assumption of liabilities giving rise to a 
                               deduction.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. PREVENTION OF DUPLICATION OF LOSS THROUGH ASSUMPTION OF 
              LIABILITIES GIVING RISE TO A DEDUCTION.

    (a) In General.--Section 358 of the Internal Revenue Code of 1986 
(relating to basis to distributees) is amended by adding at the end the 
following new subsection:
    ``(h) Special Rules for Assumption of Liabilities To Which 
Subsection (d) Does Not Apply.--
            ``(1) In general.--If, after application of the other 
        provisions of this section to an exchange or series of 
        exchanges, the basis of property to which subsection (a)(1) 
        applies exceeds the fair market value of such property, then 
        such basis shall be reduced (but not below such fair market 
        value) by the amount (determined as of the date of the 
        exchange) of any liability--
                    ``(A) which is assumed in exchange for such 
                property, and
                    ``(B) with respect to which subsection (d)(1) does 
                not apply to the assumption.
            ``(2) Exceptions.--Except as provided by the Secretary, 
        paragraph (1) shall not apply to any liability if--
                    ``(A) the trade or business with which the 
                liability is associated is transferred to the person 
                assuming the liability as part of the exchange, or
                    ``(B) substantially all of the assets with which 
                the liability is associated are transferred to the 
                person assuming the liability as part of the exchange.
            ``(3) Liability.--For purposes of this subsection, the term 
        `liability' shall include any fixed or contingent obligation to 
        make payment, without regard to whether the obligation is 
        otherwise taken into account for purposes of this title.''
    (b) Determination of Amount of Liability Assumed.--Section 
357(d)(1) of the Internal Revenue Code of 1986 is amended by inserting 
``section 358(h),'' after ``section 358(d),''.
    (c) Application of Comparable Rules to Partnerships and S 
Corporations.--The Secretary of the Treasury or his delegate--
            (1) shall prescribe rules which provide appropriate 
        adjustments under subchapter K of chapter 1 of the Internal 
        Revenue Code of 1986 to prevent the acceleration or duplication 
        of losses through the assumption of (or transfer of assets 
        subject to) liabilities described in section 358(h)(3) of such 
        Code (as added by subsection (a)) in transactions involving 
        partnerships, and
            (2) may prescribe rules which provide appropriate 
        adjustments under subchapter S of chapter 1 of such Code in 
        transactions described in paragraph (1) involving S 
        corporations rather than partnerships.
    (d) Effective Dates.--
            (1) In general.--The amendments made by this section shall 
        apply to assumptions of liability after October 18, 1999.
            (2) Rules.--The rules prescribed under subsection (c) shall 
        apply to assumptions of liability after October 18, 1999, or 
        such later date as may be prescribed in such rules.
                                 <all>