Page:United States Statutes at Large Volume 112 Part 1.djvu/839

 PUBLIC LAW 105-206-JULY 22, 1998 112 STAT. 813 "(B) any hedge with respect to a position described in subparagraph (A), and". (2) Section 1259(d)(1) of the 1986 Code is amended by inserting "(including cash)" after "property". (3) Subparagraph (D) of section 475(f)(1) of the 1986 Code is amended by adding at the end the following new sentence: "Subsection (d)(3) shall not apply under the preceding sentence for purposes of applying sections 1402 and 7704.". (4) Subparagraph (C) of section 1001(d)(3) of the 1997 Act is amended by striking "within the 30-day period beginning 26 USC 475 note, on" and inserting "before the close of the 30th day after". (b) AMENDMENT RELATED TO SECTION 1011 OF 1997 ACT. — Paragraph (1) of section 1059(g) of the 1986 Code is amended by striking "and in the case of stock held by pass-thru entities" and inserting ", in the case of stock held by pass-thru entities, and in the case of consolidated groups". (c) AMENDMENTS RELATED TO SECTION 1012 OF 1997 ACT. — (1) Paragraph (1) of section 1012(d) of the 1997 Act is 26 USC 351 note. amended by striking "1997, pursuant" and inserting "1997; except that the amendment made by subsection (a) shall apply to such distributions only if pursuant". (2) Subparagraph (A) of section 355(e)(3) of the 1986 Code is amended— (A) by striking "shall not be treated as described in" and inserting "shall not be taken into account in applying"; and (B) by striking clause (iv) and inserting the following new clause: "(iv) The acquisition of stock in the distributing corporation or any controlled corporation to the extent that the percentage of stock owned directly or indirectly in such corporation by each person owning stock in such corporation immediately before the acquisition does not decrease.". (3)(A) Subsection (c) of section 351 of the 1986 Code is amended to read as follows: "(c) SPECIAL RULES WHERE DISTRIBUTION TO SHAREHOLDERS.— "(1) IN GENERAL.—In determining control for purposes of this section, the fact that any corporate transferor distributes part or all of the stock in the corporation which it receives in the exchange to its shareholders shall not be taken into account. "(2) SPECIAL RULE FOR SECTION 355.—If the requirements of section 355 (or so much of section 356 as relates to section 355) are met with respect to a distribution described in paragraph (1), then, solely for purposes of determining the tax treatment of the transfers of property to the controlled corporation by the distributing corporation, the fact that the shareholders of the distributing corporation dispose of part or all of the distributed stock shall not be taken into account in determining control for purposes of this section.". (B) Clause (ii) of section 368(a)(2)(H) of the 1986 Code is amended to read as follows: "(ii) in the case of a transaction with respect to which the requirements of section 355 (or so much of section 356 as relates to section 355) are met, the

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