Page:United States Statutes at Large Volume 110 Part 3.djvu/122

 110 STAT. 1852 PUBLIC LAW 104-188—AUG. 20, 1996 "(D) SENIOR STOCK.—For purposes of this paragraph, the term 'senior stock' means stock— "(i) which participates pro rata and fully in the equity value of the corporation with all other common stock of the corporation but which has the right to payment of liquidation proceeds prior to payment of liquidation proceeds in respect of other common stock of the corporation; "(ii) which has a fixed right upon liquidation and upon redemption to an amount equal to the greater of— "(I) the fair market value of such stock on the date of liquidation or redemption (whichever is applicable); or "(II) the fair market value of all assets transferred in exchange for such stock and reduced by the amount of all liabilities of the corporation which has made an election under this paragraph assumed by the transferee corporation in such transfer; "(iii) the holder of which has the right to require the transferee corporation to redeem on a date that is not later than 10 years after the date on which an election under this paragraph was made and pursuant to such election such stock was issued; and "(iv) in respect of which, during the time such stock is outstanding, there is not outstanding any equity interest in the corporation having any liquidation, redemption or dividend rights in the corporation which are superior to those of such stock. "(E) INDEPENDENT MEMBER.— The term 'independent member' means a member of the board of directors of the issuer who (except for services as a member of such board) receives no compensation directly or indirectly— "(i) for services performed in connection with such transferee corporation, or "(ii) for services as a member of the board of directors or as an officer of such transferee corporation. For purposes of clause (ii), the term 'officer' includes any individual having powers or responsibilities similar to those of officers. " (F) COORDINATION WITH CERTAIN PRIVATE FOUNDATION TAXES.— For purposes of sections 4942 (relating to the excise tax on a failure to distribute income) and 4943 (relating to the excise tax on excess business holdings), the transferee corporation referred to in subparagraph (B) shall be treated as a functionally related business (within the meaning of section 4942(j)(4)) with respect to the issuer during the period commencing with the date on which an election is made under this paragraph and ending on the date that is the earlier of— "(i) the last day of the last taxable year for which more than 50 percent of the gross income of such transferee corporation is derived from, or more than 50 percent of the assets (by value) of such transferee corporation consists of, student loan notes incurred under the Higher Education Act of 1965; or

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