Page:United States Statutes at Large Volume 100 Part 3.djvu/411

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2219

ber 25, 1985, by a limited partnership formed on March 1, 1977, which on October 30, 1979, assigned leases and which assignment was amended on April 27, 1981, shall not exceed 20 percent.

Subtitle B—Repeal of Corporate Capital Gains Treatment SEC. 311. REPEAL OF CORPORATE CAPITAL GAINS TREATMENT.

(a) GENERAL RULE.—Section 1201 (relating to alternative tax for corporations) is amended to read as follows: "SEC. 1201. ALTERNATIVE TAX FOR CORPORATIONS.

"(a) GENERAL RULE.—If for any taxable year a corporation has a net capital gain and any rate of tax imposed by section 11, 511, or 831(a) (whichever is applicable) exceeds 34 percent (determined without regard to the last sentence of section 110))), then, in lieu of any such tax, there is hereby imposed a tax (if such tax is less than the tax imposed by such sections) which shall consist of the sum of— "(1) a tax computed on the taxable income reduced by the amount of the net capital gain, at the rates and in the manner as if this subsection had not been enacted, plus "(2) a tax of 34 percent of the net capital gain. "(b) CROSS REFERENCES.— "For computation of the alternative tax— !• "(1) in the case of life insurance companies, see section 801(a)(2), thi' "(2) in the case of regulated investment companies and their shareholders, see section 852(b)(3)(A) and (D), and "(3) in the case of real estate investment trusts, see section 857(b)(3)(A)." (b) TECHNICAL AMENDMENTS.—

(1) Clause (iii) of section 8520b)(3)(D) is amended by striking out "72 percent" and inserting in lieu thereof "66 percent'. (2) Subparagraph (E) of section 593(b)(2), as in effect before the amendments made by title IX, is amended by adding "and" at the end of clause (iii), by striking out clause (iv), and by redesignating clause (v) as clause (iv). (3) The second sentence of section 631(c) is amended by strik; ing out "Such owner" and inserting in lieu thereof "If for the taxable year of such gain or loss the maximum rate of tax imposed by this chapter on any net capital gain is less than such maximum rate for ordinary income, such owner". (4) Paragraphs (1) and (2) of section 1445(e) (as amended by title XVIII) are each amended by striking out "28 percent" and inserting in lieu thereof "34 percent". (c) EFFECTIVE DATE.—The amendments made by subsections (a) and (b) shall apply to taxable years beginning after December 31, 1986. (d) T R A N S I T I O N A L RULES. — (1) T A X A B L E Y E A R S W H I C H B E G I N I N 1986

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A N D E N D I N 1987.—In

the case of any taxable year which begins before January 1, 1987, and ends on or after such date, paragraph (2) of section 1201(a) of the Internal Revenue Code of 1954, as in effect on the date before the date of enactment of this Act, shall be applied as if it read as follows: "(2) the sum of— "(A) 28 percent of the lesser of—

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