Page:United States Statutes at Large Volume 102 Part 4.djvu/414

 102 STAT. 3384

PUBLIC LAW 100-647—NOV. 10, 1988 tion (a), (b), (c), (d), or (e) of section 1 (whichever applies), or "(II) in the case of a corporation, the highest rate of tax specified in section 11(b). "(iii) ALTERNATIVE TAX RATE.—For purposes of clause (i), the term 'alternative tax rate' means— "(I) in the case of a taxpayer other than a corporation, the alternative rate of tax determined under section l(j), or "(II) in the case of a corporation, the alternative rate of tax under section 1201(a)." (3) Effective for taxable years beginning after December 31, 1987, paragraph (1) of section 1445(e) of the 1986 Code is amended by striking out "34 percent" and inserting in lieu thereof "34 percent (or, to the extent provided in regulations, 28 percent)". (c) AMENDMENTS RELATED TO SECTION 311 OF THE REFORM ACT.—

26 USC 1201 note.

(1) Subsection (a) of section 1201 of the 1986 Code is amended by striking out "831(a)" and inserting in lieu thereof "831 (a) or (b)". (2) Subsection (c) of section 311 of the Reform Act is amended by inserting before the period at the end thereof the following: "; except that the amendment made by subsection (b)(4) shall apply to payments made after December 31, 1986". (3) Subparagraph (D) of section 593(b)(2) of the 1986 Code is amended by striking out "and" at the end of clause (iii), by striking out the period at the end of clause (iv) and inserting in lieu thereof ", and", and by adding at the end thereof the following new clause: "(v) if there is a capital gain rate differential (as defined in section 904(b)(3)(D)) for the taxable year, by excluding from gross income the rate differential portion (within the meaning of section 904(b)(3)(E)) of the lesser of— "(I) the net long-term capital gain for the taxable year, or "(II) the net long-term capital gain for the taxable year from the sale or exchange of property other than property described in clause (iii)." (d) AMENDMENT RELATED TO SECTION 321 OF THE REFORM ACT.—

26 USC 422A note.

(1)(A) Subsection O?) of section 422A of the 1986 Code is amended by adding at the end thereof the following new sentence: "Such term shall not include any option if (as of the time the option is granted) the terms of such option provide that it will not be treated as an incentive stock option." (B) In the case of an option granted after December 31, 1986, and on or before the date of the enactment of this Act, such option shall not be treated as an incentive stock option if the terms of such option are amended before the date 90 days after such date of enactment to provide that such option will not be treated as an incentive stock option. (2)(A) Section 422A of the 1986 Code is amended by adding at the end thereof the following new subsection: "(d) $100,000 PER YEAR LIMITATION.—

"(1) IN GENERAL.—To the extent that the aggregate fair market value of stock with respect to which incentive stock

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