Page:United States Statutes at Large Volume 116 Part 3.djvu/636

 116 STAT. 2228 PUBLIC LAW 107-296—NOV. 25, 2002 (1) the entity completes after the date of enactment of this Act, the direct or indirect acquisition of substantially all of the properties held directly or indirectly by a domestic corporation or substantially all of the properties constituting a trade or business of a domestic partnership; (2) after the acquisition at least 80 percent of the stock (by vote or value) of the entity is held— (A) in the case of an acquisition with respect to a domestic corporation, by former shareholders of the domestic corporation by reason of holding stock in the domestic corporation; or (B) in the case of an acquisition with respect to a domestic partnership, by former partners of the domestic partnership by reason of holding a capital or profits interest in the domestic partnership; and (3) the expanded affiliated group which after the acquisition includes the entity does not have substantial business activities in the foreign country in which or under the law of which the entity is created or organized when compared to the total business activities of such expanded affiliated group. (c) DEFINITIONS AND SPECIAL RULES. — (1) RULES FOR APPLICATION OF SUBSECTION (b). — In applying subsection (b) for purposes of subsection (a), the following rules shall apply: (A) CERTAIN STOCK DISREGARDED.—T here shall not be taken into account in determining ownership for purposes of subsection (b)(2)— (i) stock held by members of the expanded affiliated group which includes the foreign incorporated entity; or (ii) stock of such entity which is sold in a public offering related to the acquisition described in subsection (b)(1). (B) PLAN DEEMED IN CERTAIN CASES. —If a foreign incorporated entity acquires directly or indirectly substantially all of the properties of a domestic corporation or partnership during the 4-year period beginning on the date which is after the date of enactment of this Act and which is 2 years before the ownership requirements of subsection (b)(2) are met, such actions shall be treated as pursuant to a plan. (C) CERTAIN TRANSFERS DISREGARDED. —The transfer of properties or liabilities (including by contribution or distribution) shall be disregarded if such transfers are part of a plan a principal purpose of which is to avoid the purposes of this section. (D) SPECIAL RULE FOR RELATED PARTNERSHIPS.—For purposes of applying subsection (b) to the acquisition of a domestic partnership, except as provided in regulations, all domestic partnerships which are under common control (within the meaning of section 482 of the Internal Revenue Code of 1986) shall be treated as I partnership. (E) TREATMENT OF CERTAIN RIGHTS.— The Secretary shall prescribe such regulations as may be necessary to— (i) treat warrants, options, contracts to acquire stock, convertible debt instruments, and other similar interests as stock; and

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