Page:United States Statutes at Large Volume 102 Part 4.djvu/423

 PUBLIC LAW 100-647—NOV. 10, 1988

102 STAT. 3393

spouse's or former spouse's interest in the qualified residence as of the time of the transfer, over (ii) the basis of the spouse or former spouse in such interest in such residence (adjusted only by the cost of any improvements to such residence). (15) Clause (i) of section 7872(d)(l)(E) of the 1986 Code is amended by striking out "section 163(d)(3)" and inserting in lieu thereof "section 163(d)(4)". SEC. 1006. AMENDMENTS RELATED TO TITLE VI OF THE REFORM ACT. (a) AMENDMENT RELATED TO SECTION 601 OF THE REFORM ACT.—

Section 15 of the 1986 Code is amended by adding at the end thereof the following new subsection: "(e) REFERENCES TO HIGHEST RATE.—If the change referred to in subsection (a) involves a change in the highest rate of tax imposed by section 1 or llOt)), any reference in this chapter to such highest rate (other than in a provision imposing a tax by reference to such rate) shall be treated as a reference to the weighted average of the highest rates before and after the change determined on the basis of the respective portions of the taxable year before the date of the change and on or after the date of the change." (b) AMENDMENTS RELATED TO SECTIONS 611 AND 612 OF THE 26 USC 245 note. REFORM ACT.—

(1) In the case of dividends received or accrued during 1987— (A) subparagraph (B) of section 245(c)(l) of the 1986 Code shall be applied by substituting "80 percent" for the percentage specified therein, and (B) subparagraph (B) of section 861(a)(2) of the 1986 Code shall be applied by substituting "^""/soths" for the fraction (2) Paragraph (3) of section 8540)) of the 1986 Code is amended to read as follows: "(3) AGGREGATE DIVIDENDS.—For purposes of this subsection— "(A) IN GENERAL.—In computing the amount of aggregate dividends received, there shall only be taken into account dividends received from domestic corporations. "(B) DIVIDENDS.—For purposes of subparagraph (A), the term 'dividend' shall not include any distribution from— "(i) a corporation which, for the taxable year of the corporation in which the distribution is made, or for the next preceding taxable year of the corporation, is a corporation exempt from tax under section 501 (relating to certain charitable, etc., organizations) or section 521 (relating to farmers' cooperative associations), or "(ii) a real estate investment trust which, for the taxable year of the trust in which the dividend is paid, qualifies under part II of subchapter M (section 856 and following). "(C) LIMITATIONS ON DIVIDENDS FROM REGULATED INVEST-

MENT COMPANIES.—In determining the amount of any dividend for purposes of this paragraph, a dividend received from a regulated investment company shall be subject to the limitations prescribed in this section." (c) AMENDMENTS RELATED TO SECTION 614 OF THE REFORM ACT.—

(1) Section 1059(d) of the 1986 Code (relating to extension to certain property distributions) is amended by striking out para-

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