PUBLIC LAW 98-369—JULY 18, 1984

STAT. 595

(c) CLARIFICATION OF FAIR MARKET VALUE IN THE CASE OF NONRE-
COURSE INDEBTEDNESS.—Section 7701 (relating to definitions), as 26 use 7701.
amended by this Act, is amended by redesignating subsection (g) as Ante> P 567-
subsection (h) and by inserting after subsection (f) the following new
subsection:

"(g) CLARIFICATION OF FAIR MARKET VALUE IN THE CASE OF NONRE-
COURSE INDEBTEDNESS.—For purposes of subtitle A, in determining
the amount of gain or loss (or deemed gain or loss) with respect to
any property, the fair market value of such property shall be treated
as being not less than the amount of any nonrecourse indebtedness
to which such property is subject."

(d) CLERICAL AMENDMENT.—The table of parts for subchapter C of
chapter 1 is amended by adding at the end thereof the following new
item:

"Part VII. Miscellaneous corporate provisions."

(e) EFFECTIVE DATE.—The amendments made by this section shall 26 use 386 note.
apply to distributions, sales, and exchanges made after March 31,

1984, in taxable years ending after such date.

SEC. 76, APPLICATION OF SECTION 751 IN THE CASE OF TIERED PARTNER-
SHIPS.

(a) GENERAL RULE.—Section 751 (relating to unrealized receiv- 26USC751.
ables and inventory items) is amended by adding at the end thereof

the following new subsection:

"(f) SPECIAL RULES IN THE CASE OF TIERED PARTNERSHIPS, ETC.—In
determining whether property of a partnership is—

"(1) an unrealized receivable, or

"(2) an inventory item,

such partnership shall be treated as owning its proportionate share
of the property of any other partnership in which it is a partner.
Under regulations, rules similar to the rules of the preceding sen-
tence shall also apply in the case of interests in trusts.

(b) EFFECTIVE DATE.—The amendment made by subsection (a) 26 use 751 note.
shall apply to distributions, sales, and exchanges made after March

31, 1984, in taxable years ending after such date.

SEC. 77. SECTION 1031 NOT APPLICABLE TO PARTNERSHIP INTERESTS;
LIMITATION ON THE PERIOD DURING WHICH LIKE KIND EX-

CHANGES MAY BE MADE.

(a) IN GENERAL.—Subsection (a) of section 1031 (relating to nonrec- 26 use 1031.
ognition of gain or loss from exchanges solely in kind) is amended to
read as follows:

"(a) NONRECOGNITION OF GAIN OR LOSS FROM EXCHANGES SOLELY
IN KIND.—

"(1) IN GENERAL.—No gain or loss shall be recognized on the
exchange of property held for productive use in a trade or
business or for investment if such property is exchanged solely
for property of like kind which is to be held either for produc-
tive use in a trade or business or for investment.

"(2) EXCEPTION.—This subsection shall not apply to any ex-
change of—

"(A) stock in trade or other property held primarily for
sale,

"(B) stocks, bonds, or notes,

"(C) other securities or evidences of indebtedness or inter-
est,

"(D) interests in a partnership,