Page:United States Statutes at Large Volume 100 Part 3.djvu/464

 100 STAT. 2272

PUBLIC LAW 99-514—OCT. 22, 1986

If;

"(1) regulations to ensure that such purposes may not be circumvented through the use of any provision of law or regulations (including the consolidated return regulations and part III of this subchapter), and "(2) regulations providing for appropriate coordination of the provisions of this section with the provisions of this title relating to taxation of foreign corporations and their shareholders." (b) AMENDMENTS TO SECTION 338.— (1) Subsection (a) of section 338 (relating to certain stock purchases treated as asset acquisitions) is amended by striking out "to which section 337 applies". (2) Subsection (c) of section 338 is hereby repealed. (3) Subparagraph (B) of section 338(h)(10) is amended by adding at the end thereof the following new sentence: "To the extent provided in regulations, such term also j^ y includes any affiliated group of corporations which includes the target corporation (whether or not such group files a consolidated return)." (c) TREATMENT OF DISTRIBUTIONS OF APPRECIATED PROPERTY.—

Section 311 is amended to read as follows: "SEC. 311. TAXABILITY OF CORPORATION ON DISTRIBUTION. "(a) GENERAL RULE.—Except as provided in subsection (b), no gain

or loss shall be recognized to a corporation on the distribution, with respect to its stock, of— "(1) its stock (or rights to acquire its stock), or "(2) property. "(b) DISTRIBUTIONS OF APPRECIATED PROPERTY.—

"(1) IN GENERAL.—If^

"(A) a corporation distributes property (other than an IK obligation of such corporation) to a shareholder in a distribution to which subpart A applies, and "(B) the fair market value of such property exceeds its adjusted basis (in the hands of the distributing corporation), then gain shall be recognized to the distributing corporation as if such property were sold to the distributee at its fair market value. "(2) TREATMENT OF LIABILITIES IN EXCESS OF BASIS.—Rules

similar to the rules of section 336(b) shall apply for purposes of this subsection." (d) TREATMENT OF FOREIGN DISTRIBUTEES.—

(1) AMENDMENTS TO SECTION 367.—Subsection (e) of section 367

is amended to read as follows: "(e) TREATMENT OF DISTRIBUTIONS DESCRIBED IN SECTION 355 OR LIQUIDATIONS UNDER SECTION 332.— "(1) DISTRIBUTIONS DESCRIBED IN SECTION 355.—In the case of

any distribution described in section 355 (or so much of section 356 as relates to section 355) by a domestic corporation to a person who is not a United States person, to the extent provided in regulations, gain shall be recognized under principles similar to the principles of this section. "(2) LIQUIDATIONS UNDER SECTION 332.—In the case of any liquidation to which section 332 applies, except as provided in regulations, subsections (a) and (b)(1) of section 337 shall not apply where the 80-percent distributee (as defined in section 337(c)) is a foreign corporation." (2) AMENDMENTS TO SECTION 1248.—

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