An Act to provide transitional provisions for the income tax treatment of dealer reserve income
PL 86-459 (H.R.8684), enacted 05/13/1960

124 
PUBLIC LAW 86-459-MAY 13, 1960 
[74 STAT. 
Public Law 86-459 
AN ACT 
R. S684] 
To provide transitional provisions for the income tax treatment of dealer 
May_13tJ_96.0 
reserve income. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled^ 
SECTION 1. SHORT TITLE. 
Dealer Reserve 
This Act mav be cited O
S the "Dealer Reserve Income Adiustment 
Incoine Adjustment 
. 
, 
<
• < n/^rv?? 
Act 6
f I960. 
Act of 1960". 
SEC. 2. PERSONS TO WHOM THIS ACT APPLIES. 
This Act shall apply to any person who, for his most recent taxable 
year ending on or before June 22,1959— 
(1) computed, or was required to compute, taxable income 
under an accrual method of accounting, 
(2) treated any dealer reserve income, which should have been 
taken into account (under the accrual method of accounting) for 
such taxable year, as accruable for a subsequent taxable year, and 
(3) before September 1, 1960, makes an election under section 
3(a) or 4(a) of this Act. 
SEC. 3. ELECTION TO HAVE SECTION 481 APPLY. 
(a) GENERAL RULE.—If— 
(1) for the year of the change (determined under subsection 
(b)), the treatment of dealer reserve income by any person to 
whom this Act applies is changed to a method proper under the 
accrual method of accounting (whether or not such person 
initiated the change), 
(2) such person makes an election under this subsection, and 
(3) such person does not make the election provided by section 
4(a), 
68A 
jtaft.^160. 
then, for purposes of section 481 of the Internal Revenue Code of 1954, 
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r
. 4a 
^^^ change described in paragraph (1) shall be treated as a change 
in method of accounting not initiated by the taxpayer. 
(b) YEAR OF CHANGE, ETC.—In applying section 481 of tha Internal 
Revenue Code of 1954 for purposes of this section, the "year of the 
change" in the case of any person is— 
(1) except as provided in paragraph (2), the first taxable year 
ending after June 22, 1959, or 
(2) the earliest taxable year (whether the Internal Revenue 
Code of 1954 or the Internal Revenue Code of 1939 applies to such 
year) for which— 
(A) on or before June 22,1959— 
(i) the Secretary of the Treasury or his delegate issued 
a notice of deficiency, or a written notice of a proposed 
deficiency, with respect to dealer reserve income, or 
(ii) such person filed with the Secretary or his dele-
gate a claim for refund or credit with respect to dealer 
reserve income, and 
(B) the assessment of any deficiency, or the refund or credit 
of any overpayment, whichever is applicable, was not, on 
June 21, 1959, prevented by the operation of any law or rule 
of law. 
• For purposes of this section, section 481 of such Code shall be treated 
as applying to any year of the change to which the Internal Revenue 
Code of 1939 applies. 
26 use 481. 
26 use 481. 
74 S T A T . ] 
PUBLIC LAW 86-459-MAY 13, 1960 
125 
SEC. 4. ELECTION TO HAVE SECTION 481 NOT APPLY; PAYMENT IN 
INSTALLMENTS. 
(a) GENERAL EULE.—If a person to whom this Act applies makes 
fl^icfV ei seq. 
an election under this subsection, then for purposes of chapter 1 of the 
Internal Kevenue Code of 1954 (and the corresponding provisions of 
prior law) a change in the treatment of dealer reserve income to a 
method proper under the accrual method of accounting shall be 
treated as not a change in method of accounting in respect of which 
section 481 of the Internal Revenue Code of 1954 applies. Any elec-
tion under this subsection shall apply to all taxable years ending on 
or before June 22, 1959 (whether the provisions of the Internal Reve-
nue Code of 1954 or the corresponding provisions of prior law apply), 
for which the assessment of any deficiency, or for which refund or 
credit of any overpayment, whichever is applicable, was not, on June 
21,1959, prevented by the operation of any law or rule of law. 
(b) ELECTION To PAY TAX IN INSTALLMENTS.— 
(1) ELIGIBILITY.—If the net increase in tax (as defined in para-
graph (2)) which results solely from the effect of the election pro-
vided by subsection (a) exceeds $2,500, then the taxpayer may 
elect (at the time the election is made under subsection (a)) to 
pay in two or more (but not to exceed 10) equal annual install-
ments any portion of such net increase which (on the date of such 
election) is unpaid. 
(2) NET INCREASE IN TAX DEFINED.—For purposes of this section, 
the term "net increase in tax" means the amount (if any) by 
which— 
(A) the sum of the increases in tax (including interest) 
for all taxable years to which the election applies and which 
is attributable to the election, exceeds 
(B) the sum of the decreases in tax (including interest) 
for all taxable years to which the election applies and which 
is attributable to the election. 
For purposes of this paragraph, interest for the period before 
the date of the election shall be computed as provided in chapter 
67 of the Internal Revenue Code of 1954 (or the corresponding 
provisions of prior revenue laws). 
(c) DUE DATE FOR INSTALLMENTS.—If an election is made under 
subsection (b), the first installment shall be paid on or before the 
date prescribed by section 6151(a) of the Internal Revenue Code of 
1954 for payment of the tax for the taxable year in which the election 
was made, and each succeeding installment shall be paid on or before 
the date which is one year after the date prescribed by this subsection 
for payment of the preceding installment. 
(d) EFFECT OF SUBSEQUENT REDETERMINATION OF TAX.— 
(1) 
REDETERMINATION.—If— 
(A) the taxpayer makes an election under subsection (b), 
and 
(B) there is a redetermination of the taxpayer's tax for 
any taxable year to which the election provided by subsection 
(a) applies, 
then the net increase in tax (as defined in subsection (b)(2)) 
shall be redetermined. 
(2) EFFECT OF INCREASE.—If the redetermination described in 
paragraph (1) (B) results in an increase in the net increase in 
tax (as defined in subsection (b) (2)), the resulting increase shall 
be prorated to all the installments. The part of such resulting 
increase so prorated to any installment the date for payment of 
which has not arrived shall be collected at the same time as, and 
as a part of, such installment. The part of such resulting increase 
26 u s e 660 1, 
6602. 
26 use 6151. 
126 
PUBLIC LAW 86-459-MAY 13, 1960 
[74 ST A T . 
26 use 6403. 
26 use 6151. 
26 use 6601. 
26 use 6502. 
S
O prorated to any installment the date for payment of which 
has arrived shall be paid upon notice and demand from the Se-c-
retary of the Treasury or his delegate. 
(3) 
EFFECT or DECREASE.— 
For treatment of a decrease in the net increase in tax as the 
result of a redetermination described in paragraph (1)(B), see 
section 6403 of the Internal Revenue Code of 1954 (relating to 
overpayment of installment). 
(e) SUSPENSION OF INTEREST.— 
(1) I N GENERAL.—If an election under subsection (a) applies 
and there is a net increase in tax (as defined in subsection (b) (2)), 
no interest shall be imposed on any underpayment (and no interest 
shall be paid on any overpayment) attributable to such election 
for the period beginning on the date of such election and ending 
on the date prescribed by section 6151 (a) of the Internal Kevenue 
Code of 1954 for payment of the tax for the taxable year in which 
the election was made. 
(2) 
N o INTEREST DURING INSTALLMENT PERIOD.—If a n election 
under subsection (b) applies, no interest shall be imposed for 
the period on or after the date fixed for payment of the first 
installment unless payment of unpaid installments is accelerated 
under subsection (f) or (g). 
(3) INTEREST WHERE PAYMENT IS ACCELERATED.—If payment 
is accelerated under subsection (f) or (g), interest determined in 
accordance with the provisions of section 6601 of the Internal 
Revenue Code of 1954 on the entire unpaid tax shall be payable— 
(A) if payment is accelerated under subsection (f), from 
the date of notice and demand provided by such subsection 
to the date such tax is paid, or 
(B) if payment is accelerated under subsection (g), from 
the date fixed for paying the unpaid installment to the date 
such tax is paid. 
(f) 
TERMINATION or INSTALLMENT PAYMENT PRIVILEGE.—The ex-
tension of time provided by this section for payment of tax shall cease 
to apply, and any unpaid installments shall be paid upon notice and 
demand from the Secretary of the Treasury or his delegate, if— 
(1) in the case of a taxpayer who is an individual, he dies or 
ceases to engage in a trade or business, 
(2) in the case of a taxpayer who is a partner, the entire interest 
of such partner is transferred or liquidated or the partnership 
terminates, or 
(3) in the case of a taxpayer which is a corporation, the tax-
payer ceases to engage in a trade or business, unless the unpaid 
portion of the tax payable in installments is required to be taken 
into account by the acquiring corporation under section 5(d). 
(g) FAILURE TO PAY INSTALLMENT.—If any installment under this 
section is not paid on or before the date fixed for its payment by this 
section (including any extension of time for payment of such install-
ment) , the unpaid installments shall be paid upon notice and demand 
from the Secretary of the Treasury or his delegate. 
(h) 
SUSPENSION OF RUNNING OF PERIODS OF LIMITATION.—The 
running of the periods of limitation provided by section 6502 of the 
Internal Revenue Code of 1954 (or corresponding provision of prior 
law) for the collection of any amount of tax payable in installments 
under this section shall be suspended for the period of any extension 
of time for payment granted under this section. 
74 S T A T . ] 
PUBLIC LAW 86-459-MAY 13, 1960 
127 
SEC. 5. DEFINITIONS; SPECIAL RULES. 
(a) DEALER RESERVE INCOME.—For purposes of this Act, the term 
"dealer reserve income" means— 
(1) that part of the consideration derived by any person from 
the sale or other disposition of customers' sales contracts, notes, 
and other evidences of indebtedness (or derived from customers' 
iinance charges connected with such sales or other dispositions) 
which is— 
(A) attributable to the sale by such person to such cus-
tomers, in the ordinary course of his trade or business, of real 
property or tangible personal property, and 
(B) held in a reserve account, by the financial institution 
to which such person disposed of such evidences of indebted-
ness, for the purpose of securing obligations of such person 
or of such customers, or both; and 
(2) that part of the consideration— 
(A) derived by any person from a sale described in para-
graph (1) (A) in respect of which part or all of the purchase 
price of the property sold is provided by a financial institution 
to or for the customer to whom such property is sold, or 
(B) derived by such person from finance charges con-
nected with the financing of such sale, 
which is held in a reserve account by such financial institution for 
the purpose of securing obligations of such person or of such 
customer, or both. 
(b) FINANCIAL INSTITUTION.—For purposes of this Act, the term 
"financial institution" means any person regularly engaged in the 
business of acquiring evidences of indebtedness of the kind described 
in subsection (a)(1), or of financing sales of the kind described in 
subsection (a) (2), or both. 
(c) OTHER TERMS; APPLICATION or OTHER LAWS.—Except where 
otherwise distinctly expressed or manifestly intended, terms used in 
this Act shall have the same meaning as when used in the Internal 
Revenue Code of 1954 and all provisions of law shall apply with 
^^ "^^ ^ ®
' ^^'^' 
respect to this Act as if this Act were a part of such Code. 
(d) ACQUIRING CORPORATION.—In the case of the acquisition of 
assets of a corporation by another corporation in a distribution or 
transfer described in section 381(a) of the Internal Revenue Code of 
^6 use 3si. 
1954, the acquiring corporation shall, for purposes of this Act, be 
ti'eated as if it were the distributor or transferor corporation. 
(e) STATUTES OP LIMITATIONS.— 
(1) 
EXTENSION OF PERIOD FOR ASSESSMENT AND REFUND OR 
CREDIT.—For purposes of applying sections 8 and 4 of this Act, if 
the assessment of any deficiency, or the refund or credit of any 
overpayment, for any taxable year was not prevented on June 2i, 
1959, by the operation of any law or rule of law, but would be so 
prevented prior to September 1, 1961, the period within which 
such assessment, or such refund or credit, may be made shall not 
expire prior to September 1, 1961. An election by a taxpayer 
under section 3 or 4 of this Act shall be considered as a consent 
to the application of the provisions of this subsection. 
(2) 
YEARS CLOSED BY CLOSING AGREEMENT OR COMPROMISE.—For 
purposes of this Act, if the assessment of any deficiency, or the 
refund or credit of any overpayment, for any taxable year is pre-
vented on the date of an election under section 3 or 4 of this Act 
by the operation of the provisions of chapter 74 of the Internal 
Revenue Code of 1954 (relating to closing agreements and com- 
^6 use 7121-
128 
PUBLIC LAW 86-460-MAY 13, 1960 
[74 ST A T . 
Regulations. 
promises) or by the corresponding provisions of the Internal 
Kevenue Code of 1939, such assessment, or such refund or credit, 
shall be considered as having been prevented on June 21,1959. 
(f) EBGULATIONS.—The Secretary of the Treasury or his delegate 
shall prescribe such regulations as may be necessary to carry out the 
purposes of this Act, including regulations relating to— 
(1) the application of the provisions of this Act in the case of 
partnerships, and 
(2) the manner in which the elections provided by this Act are 
to be made. 
Approved May 13, 1960. 
May 13. 196Q 
[H. R. 114 15] 
Public Law 86-460 
AN ACT 
To provide for the designation of a portion of the District of Columbia as the 
"Plaza of the Americas". 
"P 1 a z a of the 
Americas." 
Be it enacted hy the Senmte and House of Bepr-esentatives of the 
United States of America in Congress assembled, That the portion of 
the District of Columbia located between Constitution Avenue and 
C Street, Northwest, and between Nineteenth and Seventeenth Streets, 
Northwest, is hereby designated as "Plaza of the Americas". 
Approved May 13, 1960. 
May 13, 1960 
[S. 2778] 
Public Law 86-461 
AN ACT 
To amend the Act relating to the Commission of Fine Arts. 
36 Stat. 371. 
Be it enacted by the Senate and Hotise of Representatives of the 
United States of America in Congress assembhd, That section 2 of the 
Act entitled "An Act Establishing a Commission of Fine Arts," as 
amended (40 U.S.C. 106), is amended to read as follows: 
"SEC. 2. There are hereby authorized to be aj)propriated such 
amounts as may be necessary to carry out the provisions of this Act." 
Approved May 13, 1960. 
May 13. 1960 
[H. R. 10164] 
Public Law 86-462 
AN ACT 
To change the name of the locks and dam numbered 41 on the Ohio River at 
Louisville, Kentucky. 
Ohio River. 
McAlpine 
locks 
and dam. 
Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, That the locks and 
dam numbered 41 at Louisville, Kentucky, on the Ohio River shall 
hereafter be known as McAlpine locks and dam, and any law, regula-
tion, document, or record of the United States in which such locks and 
dam are designated or referred to shall be held to refer to such locks 
and dam under and by the name of McAlpine locks and dam. 
Approved May 13, 1960.