Page:United States Statutes at Large Volume 72 Part 1.djvu/1657

 72 S T A T. ]

PUBLIC LAW 85-866-SEPT. 2, 1958

" (B) there shall not be taken into account any day which is more than 15 days (or 90 days in the case of stock to which paragraph (2) applies) after the date on which such share becomes ex-dividend, and " (C) paragraph (4) of section 1223 shall not apply. The holding periods determined under the preceding provisions of this paragraph shall be appropriately reduced (in the manner provided in regulations prescribed by the Secretary or his delegate) for any period (during such holding periods) in which the taxpayer has an option to sell, is under a contractual obligation to sell, or has made (and not closed) a short sale of, substantially identical stock or securities." (b) EFFECTIVE DATE.—The amendment made by subsection (a) shall apply with respect to taxable years ending after December 31, 1957, but only with respect to shares of stock acquired or short sales made after December 31, 1957. SEC. 19. GAIN OR LOSS ON SALES OR EXCHANGES IN CONNECTION WITH CERTAIN LIQUIDATIONS. Section 337 (relating to gain or loss on sales or exchanges in connection with certain liquidations) is amended by adding at the end thereof the following new subsection: "(d)

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26 USC 1223.

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SPECIAL RULE FOR CERTAIN MINORITY SHAREHOLDERS.—If a

corporation adopts a plan of complete liquidation on or after January 1, 1958, and if subsection (a) does not apply to sales or exchanges of property by such corporation, solely by reason of the application of subsection (c)(2)(A), then for the first taxable year of any shareholder (other than a corporation which meets the 80 percent stock ownership requirement specified in section 332(b)(1)) in which he receives a distribution in complete liquidation— "(1) the amount realized by such shareholder on the distribution shall be increased by his proportionate share of the amount by which the tax imposed by this subtitle on such corporation would have been reduced if subsection (c)(2)(A) had not been applicable, and "(2) for purposes of this title, such shareholder shall be deemed to have paid, on the last day prescribed by law for the payment of the tax imposed by this subtitle on such shareholder for such taxable year, an amount of tax equal to the amount of the increase described in paragraph (1)."

26 USC 332.

SEC. 20. COLLAPSIBLE CORPORATIONS.

(a)ExCEFnoNS TO TREATMENT OF CORPORATIONS AS COLLAPSIBLE CORPORATIONS.—Section 341 (relating to collapsible corporations) is amended by adding at the end thereof the following new subsection: " (e) EXCEPTIONS TO APPLICATION OF SECTION.— " (1) SALES OR EXCHANGES OF STOCK.—For purposes

of subsection (a)(1), a corporation shall not be considered to be a collapsible corporation with respect to any sale or exchange of stock of the corporation by a shareholder, if, at the time of such sale or exchange, the sum of— (A) the net unrealized appreciation in subsection (e) assets of the corporation (as defined in paragraph (5) (A)), plus " (B) if the shareholder owns more than 5 percent m value of the outstanding stock of the corporation, the net unrealized appreciation in assets of the corporation (other than assets described in subparagraph (A)) which would be subsection (e) assets under clauses (i) and (iii) of paragraph (5)(A) if the shareholder owned more than 20 percent in value of such stock, plus 98395-59-PT. 1-102

^6 USC 341.

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