Page:United States Statutes at Large Volume 121.djvu/220

 PUBLIC LAW 110–28—MAY 25, 2007

121 STAT. 199

assumption by such corporation of all of its liabilities) in a transaction to which section 351 applies.’’. (b) EFFECTIVE DATE.—The amendments made by this section shall apply to taxable years beginning after December 31, 2006. SEC. 8235. ELIMINATION OF ALL EARNINGS AND PROFITS ATTRIBUTABLE TO PRE-1983 YEARS FOR CERTAIN CORPORATIONS.

26 USC 1361 note. 26 USC 1361 note.

In the case of a corporation which is— (1) described in section 1311(a)(1) of the Small Business Job Protection Act of 1996, and (2) not described in section 1311(a)(2) of such Act, the amount of such corporation’s accumulated earnings and profits (for the first taxable year beginning after the date of the enactment of this Act) shall be reduced by an amount equal to the portion (if any) of such accumulated earnings and profits which were accumulated in any taxable year beginning before January 1, 1983, for which such corporation was an electing small business corporation under subchapter S of the Internal Revenue Code of 1986. SEC. 8236. DEDUCTIBILITY OF INTEREST EXPENSE ON INDEBTEDNESS INCURRED BY AN ELECTING SMALL BUSINESS TRUST TO ACQUIRE S CORPORATION STOCK.

(a) IN GENERAL.—Subparagraph (C) of section 641(c)(2) (relating to modifications) is amended by inserting after clause (iii) the following new clause: ‘‘(iv) Any interest expense paid or accrued on indebtedness incurred to acquire stock in an S corporation.’’. (b) EFFECTIVE DATE.—The amendment made by this section shall apply to taxable years beginning after December 31, 2006.

26 USC 641.

26 USC 641 note.

PART 2—REVENUE PROVISIONS SEC. 8241. INCREASE IN AGE OF CHILDREN WHOSE UNEARNED INCOME IS TAXED AS IF PARENT’S INCOME.

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(a) IN GENERAL.—Subparagraph (A) of section 1(g)(2) (relating to child to whom subsection applies) is amended to read as follows: ‘‘(A) such child— ‘‘(i) has not attained age 18 before the close of the taxable year, or ‘‘(ii)(I) has attained age 18 before the close of the taxable year and meets the age requirements of section 152(c)(3) (determined without regard to subparagraph (B) thereof), and ‘‘(II) whose earned income (as defined in section 911(d)(2)) for such taxable year does not exceed onehalf of the amount of the individual’s support (within the meaning of section 152(c)(1)(D) after the application of section 152(f)(5) (without regard to subparagraph (A) thereof)) for such taxable year,’’. (b) CONFORMING AMENDMENT.—Subsection (g) of section 1 is amended by striking ‘‘MINOR’’ in the heading thereof. (c) EFFECTIVE DATE.—The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

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