Page:United States Statutes at Large Volume 78.djvu/134

 92

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PUBLIC LAW 88-272-FEB. 26, 1964

[78 STAT.

" (A) the amount, if any, by which— " (i) the deductions allowed for the taxable year and all preceding taxable years beginning after December 31, 1963, for exhaustion, wear and tear, obsolescence, amortization, or depletion (other than such deductions which are disallowed in computing undistributed personal holding company income under subsection (b)(8)), exceed "(ii) any reduction, by reason of this subparagraph, of the deductions otherwise allowed by this subsection for such preceding taxable years, and " (B) the amount, if any, by which— " (i) the deductions allowed under subsection (b)(5) in computing undistributed personal holding company income for the taxable year and all preceding taxable years beginning after December 31, 1963, exceed "(ii) any reduction, by reason of this subparagraph, of the deductions otherwise allowed by this subsection for such preceding taxable years. "(6) PRO-RATA REDUCTION I N CERTAIN CASES.—For purposes of paragraph (3)(A), if property (of a character which is subject to an allowance for exhaustion, wear and tear, obsolescence, amortization, or depletion) is disposed of after December 31, 1963, the total {unounts of qualified indebtedness of the taxpayer shall be reduced pro-rata in the taxable year of such disposition by the amount, if any, by which— " (A) the adjusted basis of such property at the time of such disposition, exceeds " (B) the amount of qualified indebte<less which ceased to be qualified indebtedness with respect to the taxpayer by reason of the assumption of the indebtedness by the transferee." (3) Paragraph (15) of section 381(c) (relating to carryovers in certain corporate acquisitions) is amended to read as follows: "(15) INDEBTEDNESS OF CERTAIN PERSONAL HOLDINCJ COMPANIES.—

^usc'5^45

JQ26 USC 1011-

26 USC 1014.

The acquiring corporation shall be considered to be the distributor or transferor corporation for the purpose of detennining the applicability of subsections (b)(7) and (c) of section 545, relating to deduction with respect to payment of certain indebtedness." (j) INCREASE I N BASIS W I T H RESPECT TO CERTAIN FOREKIX PERSONAL HOLDING COMPANY STOCK OR SECURITIES.— (1) IN GENERAL.—Part II of subchapter O of chapter 1 (relat-

ing to basis rules of general application) is amended by redesignating section 1022 as section 1023 and by inserting after section 1021 the following new section: "SEC. 1022. INCREASE IN BASIS WITH RESPECT TO CERTAIN FOREIGN PERSONAL HOLDING COMPANY STOCK OR SECURITIES. " (a) GENERAL RULE.—The basis (determined under section 1014(1)) ^5)^ relating to basis of stock or securities in a foreign personal holding company') of a share of stock or a security, acquired from a decedent dying after December 31, 1963, of a corporation which was a foreign personal holding company for its most recent taxable year ending before the date of the decedent's death shall be increased by its proportionate share of any Federal estate tax attributable to the net appi"eciation in value of all of such shares and securities determined as provided in this section. "(b) PROPORTIONATE SHARE.—For purposes of subsection (a), the proportionate share of a share of stock or of a security is that amount which bears the same ratio to the aggregate increase determined under

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