Page:United States Statutes at Large Volume 118.djvu/1678

 118 STAT. 1648 PUBLIC LAW 108–357—OCT. 22, 2004 shall apply to any gain recognized on any such disposi tion. ‘‘(iii) EXCEPTION FOR CERTAIN EXCHANGES WHERE OWNERSHIP PERCENTAGE RETAINED.—A disposition shall not be treated as an applicable disposition under clause (ii) if it is part of a transaction or series of transactions— ‘‘(I) to which section 351 or 721 applies, or under which the transferor receives stock in a foreign corporation in exchange for the stock in the controlled foreign corporation and the stock received is exchanged basis property (as defined in section 7701(a)(44)), and ‘‘(II) immediately after which, the transferor owns (by vote or value) at least the same percent age of stock in the controlled foreign corporation (or, if the controlled foreign corporation is not in existence after such transaction or series of trans actions, in another foreign corporation stock in which was received by the transferor in exchange for stock in the controlled foreign corporation) as the percentage of stock in the controlled foreign corporation which the taxpayer owned immediately before such transaction or series of transactions. ‘‘(iv) EXCEPTION FOR CERTAIN ASSET ACQUISI TIONS.—A disposition shall not be treated as an applicable disposition under clause (ii) if it is part of a transaction or series of transactions in which the taxpayer (or any member of a controlled group of corporations filing a consolidated return under sec tion 1501 which includes the taxpayer) acquires the assets of a controlled foreign corporation in exchange for the shares of the controlled foreign corporation in a liquidation described in section 332 or a reorga nization described in section 368(a)(1). ‘‘(v) CONTROLLED FOREIGN CORPORATION.—For pur poses of this subparagraph, the term ‘controlled foreign corporation’ has the meaning given such term by sec tion 957. ‘‘(vi) STOCK OWNERSHIP.—For purposes of this subparagraph, ownership of stock shall be determined under the rules of subsections (a) and (b) of section 958.’’. (b) EFFECTIVE DATE.—The amendment made by this section shall apply to dispositions after the date of the enactment of this Act. SEC. 896. RECOGNITION OF CANCELLATION OF INDEBTEDNESS INCOME REALIZED ON SATISFACTION OF DEBT WITH PARTNERSHIP INTEREST. (a) IN GENERAL.—Paragraph (8) of section 108(e) (relating to general rules for discharge of indebtedness (including discharges not in title 11 cases or insolvency)) is amended to read as follows: ‘‘(8) INDEBTEDNESS SATISFIED BY CORPORATE STOCK OR PARTNERSHIP INTEREST.—For purposes of determining income of a debtor from discharge of indebtedness, if— ‘‘(A) a debtor corporation transfers stock, or 26 USC 904 note.

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