Page:United States Statutes at Large Volume 68A.djvu/624

 584

INTERNAL REVENUE CODE OF 1954

section (a)(6), for the delivery of cotton on the contract, established by the sale of spot cotton in the spot markets of not less than five places designated for the purpose from time to time by the Secretary of Agricultm-e, as such values were established by the sales of spot cotton, in such designated five or more markets: Provided, That for the purpose of this subsection such values in the said spot markets be based upon the standards for grades of cotton established by the Secretary of Agriculture: And provided further, That whenever the value of one grade is to be determined from the sale or sales of spot cotton of another grade or grades, such value shall be fixed in accordance with rules and regulations which shall be prescribed for the purpose by the Secretary of Agriculture. SEC. 4864. TENDERED GRADE CONTRACTS.

(a) CONDITIONS.—No tax shall be imposed under this subchapter on any contract of sale mentioned in section 4851(a) if the contract— (1) COMPLIANCE WITH SECTION 4863.—Comply with all the terms and conditions of section 4863 not inconsistent with this section; and (2) PROVISION FOR CONTINGENT SPECIFIC PERFORMANCE.—Pro-

vide that, in case cotton of grade or grades other than the basis grade specified in the contract shall be tendered in performance of the contract, the parties to such contract may agree, at the time of the tender, as to the price of the grade or grades so tendered, and that if they shall not then agree as to such price, then, and in that event, the buyer of said contract shall have the right to demand the specific fulfillment of such contract by the actual delivery of cotton of the basis grade named therein and at the price specified for such basis grade in said contract. (b) INCORPORATION OF CONDITIONS IN CONTRACT.—Contracts made in compliance with this section shall be known as "Section 4864 Contracts." The provisions of this section shall be deemed fully incorporated into any such contract if there be written or printed thereon, or on the memorandum evidencing the same, at or prior to the time the same is signed, the phrase "Subject to Internal Revenue Code, section 4864." (c) APPLICATION OF SECTION.—Nothing in this section shall be so construed as to relieve from the tax imposed by section 4851(a) any contract in which, or in the settlement of or in respect to which, any device or arrangement whatever is resorted to, or any agreement is made, for the determination or adjustment of the price of the grade or grades tendered other than the basis grade specified in the contract by any "fixed difference" system, or by arbitration, or by any other method not provided for by this subchapter. SEC. 4865. SPECIFIC GRADE CONTRACTS.

(a) CONDITIONS.—No tax shall be imposed under this subchapter on any contract of sale mentioned in section 4851(a) if the contract comply with each of the following conditions: (1) CONFORMITY WITH RULES AND REGULATIONS.—Conform

to

the rules and regulations made pursuant to this subchapter. (2) SPECIFICATION OF GRADE, PRICE, DATES OF SALE AND DE-

LIVERY.—Specify the grade, type, sample, or description of the cotton involved in the contract, the price per pound at which such § 4863(c)

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