Page:United States Statutes at Large Volume 78.djvu/168

 126

^6 USC*u^' 26^sc^*535^°*

Anfe, pp. 120,

PUBLIC LAW 88-272-FEB. 26, 1964

[78 STAT.

"(2) any corporation transfers, directly or indirectly, after June 12, 1963, all or part of its property (other than money) to a transferee corporation, or "(3) five or fewer individuals who are in control of a corporation transfer, directly or indirectly, after June 12, 1963, property (other than money) to a transferee corporation, and the transferee corporation was created for the purpose of acc^uirin^ such property or was not actively engaged in business at the tmie of such acquisition, and if after such transfer the transferor or transferors are in control of such transferee corporation during any part of the taxable year of such transferee corporation, then for such taxable year of such traii;3feree corporation the Secretary or his delegate may (except as may be otherwise determined under subsection (d)) disiillow the surtax exemption (as defined in section 1 1 (d)), or the $100,000 accumulated earnings credit provided in paragraph (2) or ^'^^ °^ section 535(c), unless such transferee corporation shall establish by the clear preponderance of the evidence that the securing of such exemption or credit was not a major purpose of such transfer. "(b) CONTROL.—For purposes of subsection (a), the term 'control' means— " (1) With respect to a transferee corporation described in subsection (a)(1) or (2), the ownership by the transferor corporation, its shareholders, or both, of stock possessing at least 80 percent of the total combined voting power of all classes of stock entitled to vote or at least 80 percent of the total value of shares of all classes of the stock; or "(2) With respect to each corporation described in subsection (a)(3), the ownership by the five or fewer individuals described in such subsection of stock possessing— " (A) at least 80 percent of the total combined voting power of all classes of stock entitled to vote or at least 80 percent of the total value of shares of all classes of the stock of each corporation, and " (B) more than 50 percent of the total combined voting power of all classes of stock entitled to vote or more than 50 percent of the total value of shares of all classes of stock of each corporation, taking into account the stock ownership of each such individual only to the extent such stock ownersliip is identical with respect to each such corjioration. jp^yj. purposes of this subsection, section 1563(e) shall apply in determining the ownership of stock. " (c) AUTHORITY OF THE SECRETARY TENDER T H I S SECTKJN.—The

26 USC 269.

provisions of section 269(b), and the authority of the Secretary under such section, shall, to the extent not inconsistent with the provisions of this section, be applicable to this section." (c) TECHNICAL AMENDJIENTS.— (1) AMENDMENT OF SECTION

26 USC 80^^"

802.—The second sentence of section 802(a)(1) (relating to tax on life insurance companies) is amended to read as follows: "Such tax shall consisi of a normal tax and surtax computed as provided in section 11 as though the life insurance company taxable income were Ihe taxable income referred to in section 11." (2) AMENDMENT OF SECTION 2«».—Section 260(a) (relating to acquisitions made to evade or avoid income tax) is amended by striking out "then such deduction, credit, or other allowance shall not be allowed" at the end of the first sentence and inserting in lieu thereof "then the Secretary or his delegate may «lisallow sijch deduction, credit, or oilier allowance".

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