Page:United States Statutes at Large Volume 102 Part 4.djvu/608

 102 STAT. 3578

PUBLIC LAW 100-647—NOV. 10, 1988 tion is held by 1 or more tax-exempt entities (other than a foreign person or entity). "(II) ONLY 5-PERCENT SHAREHOLDERS TAKEN INTO ACCOUNT IN C A S E OF PUBLICLY TRADED STOCK.—For

purposes of subclause (I), in the case of a corporation the stock of which is publicly traded on an established securities market, stock held by a taxexempt entity shall not be taken into account unless such entity holds at least 5 percent (in value) of the stock in such corporation. For purposes of this subclause, related entities (within the meaning of paragraph (7)) shall be treated as 1 entity. "(Ill) SECTION 3 1 8 TO APPLY.—For purposes of this clause, a tax-exempt entity shall be treated as holding stock which it holds through application of section 318 (determined without regard to the 50-percent limitation contained in subsection (a)(2)(C) thereof)." (c) AMENDMENT RELATED TO SECTION 1803 OF THE REFORM ACT.—

26 USC 1281 note.

(1) Subparagraph (A) of section 1803(a)(8) of the Reform Act is amended by striking out "September 27, 1985" and inserting in lieu thereof "December 31, 1985". (2) Subsection (c) of section 1278 of the 1986 Code is amended by inserting before the period ", including regulations providing proper adjustments in the case of a bond the principal of which may be paid in 2 or more paynients". (3) Section 1278(b) of the 1986 Code is amended by adding at the end thereof the following new paragraph: "(4) BASIS ADJUSTMENT.—The basis of any bond in the hands of the taxpayer shall be increased by the amount included in gross income pursuant to this subsection." (d) AMENDMENTS RELATED TO SECTION 1804 OF THE REFORM ACT.—

26 USC 311 note.

26 USC 311 note.

(1) Paragraph (3) of section 1804(b) of the Reform Act is amended by striking out "Paragraph (3) of section 54" and inserting "Paragraph (3) of section 54(d)". (2) Clause (i) of section 54(d)(3)(D) of the Tax Reform Act of 1984 is amended by striking out "subtitle D of title VI" and inserting "subtitle D of title VI of the Tax Reform Act of 1986". (3) Clause (ii) of section 54(d)(3)(D) of the Tax Reform Act of 1984 (as added by section 180406X3) of the Tax Reform Act of 1986) is amended— (A) by striking out "December 9, 1968," each place it appears and inserting in lieu thereof "December 10, 1968,", and (B) by striking out "October 5, 1981" and inserting in lieu thereof "March 2, 1978,". (4) Subsection (b) of section 312 of the 1986 Code is amended by striking out "of any property" and inserting in lieu thereof "of any property (other than an obligation of such corporation)". (5)(A) Section 361 of the 1986 Code is amended to read as follows: "SEC. 361. NONRECOGNITION OF GAIN OR LOSS TO CORPORATIONS; TREATMENT OF DISTRIBUTIONS.

"(a) GENERAL RULE.—No gain or loss shall be recognized to a corporation if such corporation is a party to a reorganization and

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