Page:United States Statutes at Large Volume 103 Part 3.djvu/269

 PUBLIC LAW 101-239—DEC. 19, 1989 . 103 STAT. 2337 "(g) REGULATIONS.—The Secretary shall prescribe such r^ula- tions as may be appropriate to carry out the purposes of this section, including regulations— "(1) providing for the application of this section in the case of stock dividends, stock splits, reorganizations, and other similar transactions and in the case of stock held by pass-thru entities, and "(2) providing that the rules of subsection (f) shall apply in the case of stock which is not preferred as to dividends in cases where stock is structured to avoid the purposes of this section." (b) EFFECTIVE DATE. — 26 USC 1059 (1) IN GENERAL. —Except as provided in paragraph (2), the ^°^ amendment made by subsection (a) shall apply to stock issued after July 10, 1989, in taxable years ending after such date. (2) BINDING CONTRACT. —The amendment made by subsection (a) shall not apply to any stock issued pursuant to a written binding contract in effect on July 10, 1989, and at all times thereafter before the stock is issued. SEC. 7207. REPEAL OF ELECTION TO REDUCE EXCESS LOSS ACCOUNT RECAPTURE BY REDUCING BASIS OF INDEBTEDNESS. (a) GENERAL RULE.— Subsection (e) of section 1503 (relating to special rule for determining adjustment to basis) is amended by adding at the end thereof the following new paragraph: "(4) ELIMINATION OF ELECTION TO REDUCE BASIS OF INDEBTED- NESS.— Nothing in the regulations prescribed under section 1502 shall permit any reduction in the amount otherwise included in gross income by reason of an excess loss account if such reduc- tion is on account of a reduction in the basis of indebtedness." (b) EFFECTIVE DATE.— 26 USC 1503 (1) IN GENERAL.— Except as provided in paragraph (2), the "°^ amendment made by subsection (a) shall apply to dispositions after July 10, 1989, in taxable years ending after such date. (2) BINDING CONTRACT.— The amendment made by subsection (a) shall not apply to any disposition pursuant to a written binding contract in effect on July 10, 1989, and at all times thereafter before such disposition. SEC. 7208. OTHER PROVISIONS RELATING TO TREATMENT OF STOCK AND DEBT; ETC. (a) CLARIFICATION OF REGULATORY AUTHORITY UNDER SECTION 385. — (1) IN GENERAL. —Subsection (a) of section 385 (relating to treatment of certain interests in corporations as stock or indebt- edness) is amended by inserting "(or as in part stock and in part indebtedness)" before the period at the end thereof. (2) REGULATIONS NOT TO BE APPLIED RETROACTFVELY. — Any 26 USC 385 note. regulations issued pursuant to the authority granted by the amendment made by paragraph (1) shall only apply with re- spect to instruments issued after the date on which the Sec- retary of the Treasury or his delegate provides public guidance as to the characterization of such instruments whether by regulation, ruling, or otherwise. (b) REPORTING OF CERTAIN AcQUisrnoNS OR RECAPFTALIZATIONS. — (1) IN GENERAL. —Section 6043 is amended by striking subsec- tion (c) and inserting the following new subsections: "(c) CHANGES IN CONTROL AND RscAPrrAuzATiONS. — I f—

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