Page:United States Statutes at Large Volume 112 Part 1.djvu/831

 PUBLIC LAW 105-206-^JULY 22, 1998 112 STAT. 805 "(D) 25 percent of the amount of taxable excess in excess of the sum of the amounts on which tax is determined under the preceding subparagraphs of this paragraph. In the case of taxable years beginning after December 31, Applicability. 2000, rules similar to the rules of section 1(h)(2) shall apply for purposes of subparagraphs (B) and (C). Terms used in this paragraph which are also used in section 1(h) shall have the respective meanings given such terms by section 1(h) but computed with the adjustments under this part.". (3) Section 57(a)(7) of the 1986 Code is amended by adding Applicability, at the end the following new sentence: "In the case of stock the holding period of which begins after December 31, 2000 (determined with the application of the last sentence of section 1(h)(2)(B)), the preceding sentence shall be applied by substituting *28 percent' for '42 percent'.". (4) Paragraphs (11) and (12) of section 1223, and section 1235(a), of the 1986 Code are each amended by striking "1 year" each place it appears and inserting "18 months". (e) AMENDMENTS RELATED TO SECTION 312 OF 1997 ACT. — (1) Paragraph (2) of section 121(b) of the 1986 Code is amended to read as follows: "(2) SPECIAL RULES FOR JOINT RETURNS. —In the case of a husband and wife who make a joint return for the taxable year of the sale or exchange of the property— "(A) $500,000 LIMITATION FOR CERTAIN JOINT Applicability. RETURNS.—Paragraph (1) shall be applied by substituting ' $500,000 ' for '$250,000 ' if— "(i) either spouse meets the ownership requirements of subsection (a) with respect to such property; "(ii) both spouses meet the use requirements of subsection (a) with respect to such property; and "(iii) neither spouse is ineligible for the benefits of subsection (a) with respect to such property by reason of paragraph (3). "(B) OTHER JOINT RETURNS.—If such spouses do not meet the requirements of subparagraph (A), the limitation under paragraph (1) shall be the sum of the limitations under paragraph (1) to which each spouse would be entitled if such spouses had not been married. For purposes of the preceding sentence, each spouse shall be treated as owning the property during the period that either spouse owned the property.". (2) Section 121(c)(1) of the 1986 Code is amended to read as follows: "(1) IN GENERAL.—In the case of a sale or exchange to which this subsection applies, the ownership and use requirements of subsection (a), and subsection (b)(3), shall not apply; but the dollar limitation under paragraph (1) or (2) of subsection (b), whichever is applicable, shall be equal to— "(A) the amount which bears the same ratio to such limitation (determined without regard to this paragraph) as "(B)(i) the shorter of— "(I) the aggregate periods, during the 5-year period ending on the date of such sale or exchange, such

�