Page:United States Statutes at Large Volume 100 Part 3.djvu/991

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2799

vised after July 18, 1984, shall be treated as a loan made after such date. "(D) DEFINITION OF TERM AND DEMAND LOANS.—For purposes of this paragraph, the terms 'demand loan' and 'term loan' have the respective meanings given such terms by paragraphs (5) and (6) of section 7872(f) of the Internal Revenue Code of 1954, except that the second sentence of such paragraph (5) shall not apply." (3) SPECIAL RULE FOR CERTAIN DISTRIBUTIONS BEFORE JANUARY

1, 1988.—Paragraph (3) of section 54 of the Tax Reform Act of 1984 (relating to exceptions for distributions before January 1, 1985, to 80-percent corporate shareholders) is amended by adding at the end thereof the following new subparagraph: "(D) SPECIAL RULE FOR CERTAIN DISTRIBUTIONS BEFORE JANUARY 1, 1988.—



"(i) IN GENERAL.—In the case of a transaction to which this subparagraph applies, subparagraph (A) shall be applied by substituting '1988' for '1985' and the amendments made by subtitle D of title VI shall not apply. "(ii) TRANSACTION TO WHICH SUBPARAGAPH APPLIES.—

This subparagraph apples to a transaction in which a Delaware corporation which was incorporated on May 31, 1927, and which was acquired by the transferee on December 9, 1968, transfers to the transferee stock in a corporation— "(I) with respect to which such Delaware corporation is a 100-percent corporate shareholder, and "(II) which is a Tennessee corporation which was incorporated on October 5, 1981, and which is a successor to an Indiana corporation which was incorporated on June 28, 1946, and acquired by the transferee on December 9, 1968." (c) AMENDMENTS RELATED TO SECTION 55 OF THE ACT.—

(1) Clause (ii) of section 852(b)(4)(B) (relating to losses attributable to exempt-interest dividend) is amended by striking out "for less than 31 days" and inserting in lieu thereof "for 6 months or less". (2) Subparagraph (C) of section 8520aX4) (relating to determination of holding periods) is amended to read as follows: "(C) DETERMINATION OF HOLDING PERIODS.—For purposes

of this paragraph, the rules of paragraphs (3) and (4) of IS I section 246(c) shall apply in determining the period for which the taxpayer has held any share of stock; except that r ' ^ '6 months' shall be substituted for each number of days specified in subparagraph (B) of section 246(c)(3)." •*'- (3) Subparagraph (D) of section 8520t))(4) (relating to losses incurred under a periodic liquidation plan) is amended by striking out "subparagraph (A)" and inserting in lieu thereof "subparagraphs (A) and (B)". (4) Paragraph (4) of section 852(b) is amended by adding at the end thereof the following new subparagraph: "(E) AUTHORITY TO SHORTEN REQUIRED HOLDING PERIOD.—

In the case of a regulated investment company which regularly distributes at least 90 percent of its net tax-exempt interest, the Secretary may by regulations prescribe that

�