Page:United States Statutes at Large Volume 103 Part 3.djvu/276

 103 STAT. 2344 PUBLIC LAW 101-239—DEC. 19, 1989 being allocated to the corporate equity reduction trans-

action, and "(ii) the amount determined under subparagraph " (C)(i) shall be reduced by the amount of interest on indebtedness described in clause (i). t*' "(F) TRANSITION RULE. —I f any of the 3 taxable years described in subparagraph (C)(ii) end on or before August 2, 1989, the taxpayer may sul^titute for the amount deter- mined under such subparagraph an amount equal to the interest paid or accrued (determined on an annualized basis) during the taxpayer's taxable year which includes August 3, 1989, on indebtedness of the taxpayer outstand- ing on August 2, 1989. "(3) CORPORATE EQUITY REDUCTION TRANSACTION. — "(A) IN GENERAL. —The term 'corporate equity reduction transaction'means— "(i) a major stock acquisition, or "(ii) an excess distribution. . "(B) MAJOR STOCK ACQUISITION.— "(i) IN GENERAL.— The term 'major stock acquisition' means the acquisition by a corporation pursuant to a plan of such corporation (or any group of persons acting in concert with such corporation) of stock in another corporation representing 50 percent or more (by vote or value) of the stock in such other corporation, "(ii) EXCEPTIONS.—The term 'major stock acquisition' shall not include— "(I) a qualified stock purchase (within the meaning of section 338) to which an election under section 338 applies, or "(II) except as provided in regulations, an ac- quisition in which a corporation acquires stock of another corporation which, immediately before the acquisition, was a member of an affiliated group (within the meaning of section 1504(a)) other than the common parent of such group. "(C) EXCESS DISTRIBUTION. — The term 'excess distribution' means the excess (if any) of— "(i) the aggregate distributions (including redemp- •'•''' tions) made during a taxable year by a corporation with respect to its stock, over "(I) 150 percent of the average of such distribu- tions during the 3 taxable years immediately preceding such taxable year, or "(II) 10 percent of the fair market value of the stock of such corporation as of the beginning of such taxable year. " (D) RULES FOR APPLYING SUBPARAGRAPH (B). —For pur- '" . poses of subparagraph (B)— "(i) PLANS TO ACQUIRE STOCK. — All plans referred to, in subparagraph (B) by any corporation (or group of persons acting in concert with such corporation) with respect to another corporation shall be treated as 1 plan.
 * * "(ii) the greater of—
 * * "(ii) the greater of—

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