Page:United States Statutes at Large Volume 102 Part 4.djvu/454

 102 STAT. 3424

PUBLIC LAW 100-647—NOV. 10, 1988 transfer is through an agent for a disqualified organization, such tax shall be paid by such agent. "(4) TRANSFEREE FURNISHES AFFIDAVIT.—The person (otherwise liable for any tax imposed by paragraph (1)) shall be relieved of liability for the tax imposed by paragraph (1) with respect to any transfer if— "(A) the transferee furnishes to such person an affidavit that the transferee is not a disqualified organization, and "(B) as of the time of the transfer, such person does not have actual knowledge that such affidavit is false. "(5) DiSQUAUFiED ORGANIZATION.—For purposes of this section, the term 'disqualified organization' means— "(A) the United States, any State or political subdivision thereof, any foreign government, any international organization, or any agency or instrumentality of any of the foregoing, "(B) any organization (other than a cooperative described in section 521) which is exempt from tax imposed by this chapter unless such organization is subject to the tax imposed by section 511, and "(C) any organization described in section 1381(a)(2)(C). For purposes of subparagraph (A), the rules of section 168(h)(2)(D) (relating to treatment of certain taxable instrumentalities) shall apply; except that, in the case of the Federal Home Loan Mortgage Corporation, clause (ii) of such section shall not apply. "(6) TREATMENT OF PASS-THRU ENTITIES.— "(A) IMPOSITION OF TAX.—If, at any

time during any taxable year of a pass-thru entity, a disqualified organization is the record holder of an interest in such entity, there is hereby imposed on such entity for such taxable year a tax equal to the product of— "(i) the amount of excess inclusions for such taxable year allocable to the interest held by such disqualified organization, multiplied by (ii) the highest rate of tax specified in section ll(b)(l). "(B) PASS-THRU ENTITY.—For purposes of this paragraph, the term 'pass-thru entity' means— "(i) any regulated investment company, real estate investment trust, or common trust fund, "(ii) any partnership, trust, or estate, and "(iii) any organization to which part I of subchapter T applies. Except as provided in regulations, a person holding an interest in a pass-thru entity as a nominee for another person shall, with respect to such interest, be treated as a pass-thru entity. "(C) TAX TO BE DEDUCTIBLE.—Any tax imposed by this paragraph with respect to any excess inclusion of any passthru entity for any taxable year shall, for purposes of this title (other than this subsection), be applied against (and operate to reduce) the amount included in gross income with respect to the residual interest involved. "(D) EXCEPTION WHERE HOLDER FURNISHES AFFIDAVIT.—No

tax shall be imposed by subparagraph (A) with respect to any interest in a pass-thru entity for any period if—

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