Page:United States Statutes at Large Volume 102 Part 4.djvu/611

 PUBLIC LAW 100-647—NOV. 10, 1988

102 STAT. 3581

subsection (f) as subsection (g) and by inserting after subsection (e) the following new subsection: " ( 0 TREATBdENT OF CONTROLLED CORPORATION.—If—

"(1) property is transferred to a corporation (hereinafter in this subsection referred to as the 'controlled corporation') in an exchange with respect to which gain or loss is not reo^nized (in whole or in part) to the transferor under this section, and "(2) such exchange is not in pursuance of a plan of reorganization, section 311 shall apply to any transfer in such exchange by the controlled corporation in the same manner as if such transfer were a distribution to which subpart A of part I applies." (6) Subparagraph (A) of section 280G(b)(5) of the 1986 Code is amended— (A) in clause (i) by striking out "section 1361(b))" and inserting in lieu thereof "section 1361(b) but without r^ard to paragraph (I)(C) thereof)", and (B) by adding at the end thereof the following: "Stock described in section 1504(a)(4) shall not be taken into account under clause (ii)(1) if the payment does not adversely affect the shareholder's redemption and liquidation rights.' (7) Subparagraph (B) of section 280G(b)(5) of the 1986 Code (relatii^ to shareholder approval requirements) is amended by adding at the end thereof the followii^ new sentence: "The r^ulations prescribed under subsection (e) shall include r^ulations providing for the application of this subparagraph in the case of shareholders which are not individimls (including the treatment of nonvoting interests in an entity which is a shareholder) and where an entity holds a de minimis amount of stock in the corporation.' (8) Paragraph (5) of section 280G(d) of the 1986 Code is amended by striking out "officer or any member" and inserting in lieu thereof "officer of any member". (9) Paragraph (3) of section 338(e) of the 1986 Code is amended by striking out "which meet the 80 percent requirements of subparagraphs (A) and (B) of subsection (d)(3)" and inserting in lieu thereof "which meet the requirements of section 1504(a)(2)". (lOXA) Paragraph (7) of section 1504(b) of the 1986 Code is amended to read as follows: "(7) A DISC (as defined in section 992(a)(l))." (B) Section 1504 of the 1986 Code is amended by adding at the end thereof the following new subsection: "(f) SPECIAL RULE FOR C ^ T A I N AMOUNTS DERIVED FROM A CORPORATION PREVIOUSLY TREATED AS A DISC.—In determining the

consolidated taxable income of an affiliated group for any taxable year beginnii^ after December 31, 1984, a corporation which had been a DISC and which would otherwise be a member of such group shall not be treated as such a member with respect to— "(1) any distribution (or deemed distribution) of accumulated DISC income which was not treated as previously taxed income under section 805(b)(2)(A) of the Tax Reform Act of 1984, and "(2) any amount treated as received under section 805(b)(3) of such Act." (e) PROVISION RELATED TO SECTION 1806 OF THE REFORM ACT.—If— (1) on a return for the 1st taxable year of the trusts involved beginning after March 1, 1984, 2 or more trusts were treated as

26 USC 643 note.

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