Page:United States Statutes at Large Volume 68A.djvu/149

 CH. 1—NORMAL TAXES AND SURTAXES (4) UNREALIZED

RECEIVABLES.—For

purposes

109 of

paragraph

(3)(C), the term "unreaHzed receivables or fees" means, to the extent not previously includible in income under the method of accounting used by the corporation, any rights (contractual or otherwise) to payment for— (A) goods delivered, or to be delivered, to the extent the proceeds therefrom would be treated as amounts received from the sale or exchange of property other than a capital asset, or (B) services rendered or to be rendered. (c) PRESUMPTION IN CERTAIN C A S E S. —

(1) IN GENERAL.—For purposes of this section, a corporation shall, unless shown to the contrary, be deemed to be a collapsible corporation if (at the time of the sale or exchange, or the distribution, described in subsection (a)) the fair market value of its section 341 assets (as defined in subsection (b)(3)) is— (A) 50 percent or more of the fair market value of its total assets, and (B) 120 percent or more of the adjusted basis of such section 341 assets. Absence of the conditions described in subparagraphs (A) and (B) shall not give rise to a presumption that the corporation was not a collapsible corporation. (2) DETERMINATION OF TOTAL ASSETS.—In determining the fair market value of the total assets of a corporation for purposes of paragraph (1)(A), there shall not be taken into account— (A) cash, (B) obligations which are capital assets in the hands of the corporation (and governmental obligations described in section 1221 (5)), and (C) stock in any other corporation. (d) LIMITATIONS ON APPLICATION OF SECTION.—In the case of gain realized by a shareholder with respect to his stock in a collapsible corporation, this section shall not apply— (1) unless, at any time after the commencement of the manufacture, construction, or production of the property, or at the time of the purchase of the property described in subsection (b)(3) or at any time thereafter, such shareholder (A) owned (or was considered as owning) more than 5 percent in value of the outstanding stock of the corporation, or (B) owned stock which was considered as owned a t such time by another shareholder who then owned (or was considered as owning) more than 5 percent in value of the outstanding stock of the corporation; (2) to the gain recognized during a taxable year, unless more than 70 percent of such gain is attributable to the property so manufactured, constructed, produced, or purchased; and (3) to gain realized after the expiration of 3 years following the completion of such manufacture, construction, production, or purchase. For purposes of paragraph (1), the ownership of stock shall be determined in accordance with the rules prescribed in paragraphs (1), (2), (3), (5), and (6) of section 544(a) (relating to personal holding companies); except that, in addition to the persons prescribed by paragraph (2) of that section, the family of an individual shall include the spouses § 341(d)

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