Page:United States Statutes at Large Volume 120.djvu/392

 PUBLIC LAW 109–222—MAY 17, 2006

120 STAT. 361

‘‘(4) TRANSACTION.—For purposes of this subsection, the term ‘transaction’ includes a series of transactions. ‘‘(5) REGULATIONS.—The Secretary shall prescribe such regulations as may be necessary to carry out, or prevent the avoidance of, the purposes of this subsection, including regulations— ‘‘(A) to carry out, or prevent the avoidance of, the purposes of this subsection in cases involving— ‘‘(i) the use of related persons, intermediaries, pass-thru entities, options, or other arrangements, and ‘‘(ii) the treatment of assets unrelated to the trade or business of a corporation as investment assets if, prior to the distribution, investment assets were used to acquire such unrelated assets, ‘‘(B) which in appropriate cases exclude from the application of this subsection a distribution which does not have the character of a redemption which would be treated as a sale or exchange under section 302, and ‘‘(C) which modify the application of the attribution rules applied for purposes of this subsection.’’. (b) EFFECTIVE DATES.— (1) IN GENERAL.—The amendments made by this section shall apply to distributions after the date of the enactment of this Act. (2) TRANSITION RULE.—The amendments made by this section shall not apply to any distribution pursuant to a transaction which is— (A) made pursuant to an agreement which was binding on such date of enactment and at all times thereafter, (B) described in a ruling request submitted to the Internal Revenue Service on or before such date, or (C) described on or before such date in a public announcement or in a filing with the Securities and Exchange Commission.

26 USC 355 note.

SEC. 508. LOAN AND REDEMPTION REQUIREMENTS ON POOLED FINANCING REQUIREMENTS.

(a) STRENGTHENED REASONABLE EXPECTATION REQUIREMENT.— Subparagraph (A) of section 149(f)(2) (relating to reasonable expectation requirement) is amended to read as follows: ‘‘(A) IN GENERAL.—The requirements of this paragraph are met with respect to an issue if the issuer reasonably expects that— ‘‘(i) as of the close of the 1-year period beginning on the date of issuance of the issue, at least 30 percent of the net proceeds of the issue (as of the close of such period) will have been used directly or indirectly to make or finance loans to ultimate borrowers, and ‘‘(ii) as of the close of the 3-year period beginning on such date of issuance, at least 95 percent of the net proceeds of the issue (as of the close of such period) will have been so used.’’. (b) WRITTEN LOAN COMMITMENT AND REDEMPTION REQUIREMENTS.—Section 149(f) (relating to treatment of certain pooled financing bonds) is amended by redesignating paragraphs (4) and (5) as paragraphs (6) and (7), respectively, and by inserting after paragraph (3) the following new paragraphs:

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26 USC 149.

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