Page:United States Statutes at Large Volume 84 Part 1.djvu/1086

 1028

26 USC 1 et seq.

26 USC^ 316^* ^^A Stat. 179.

ll^sc24i. 26 USC 103.

PUBLIC LAW 91-469-OCT. 21, 1970

[84 STAT.

currently fully listed and registered on an exchange registered with the Securities and Exchange Commission as a national securities exchange, and must be stock which would be acquired by prudent men of discretion and intelligence in such matters who are seeking a reasonable income and the preservation of their capital. If at any time the fair market value of the stock in the fund is more than the agreed percentage of the assets in the fund, any subsequent investment of amounts deposited in the fund, and any subsequent withdrawal from the fund, shall be made in such a way as to tend to restore the fund to a situation in which the fair market value of the stock does not exceed such agreed percentage. For purposes of this subsection, if the common stock of a corporation meets the requirements of this subsection and if the preferred stock of such corporation would meet such requirements but for the fact that it cannot be listed and registered as required because it is nonvoting stock, such preferred stock shall be treated as meeting the requirements of this subsection. " (d) Nontaxability for Deposits. "(1) For purposes of the Internal Revenue Code of 1954— " (A) taxable income (determined without regard to this section) for the taxable year shall be reduced by an amount equal to the amount deposited for the taxable year out of amounts referred to in subsection (b)(1)(A), " (B) gain from a transaction referred to in subsection (b)(1) (C) shall not be taken into account if an amount equal to the net proceeds (as defined in joint regulations) from such transaction is deposited in the fund, " (C) the earnings (including gains and losses) from the investment and reinvestment of amounts held in the fund shall not be taken into account, " (D) the earnings and profits of any corporation (within the meaning of section 316 of such Code) shall be determined without regard to this section, and (E) in applying the tax imposed by section 531 of such Code (relating to the accumulated earnings tax), amounts while held in the fund shall not be taken into account. "(2) Paragraph (1) shall apply with respect to any amount only if such amount is deposited in the fund pursuant to the agreement and not later than the time provided in joint regulations. "(e) Establishment of Accounts. "For purposes of this section— "(1) Within the fund established pursuant to this section three accounts shall be maintained: " (A) the capital account, " (B) the capital gain account, and " (C) the ordinary income account. " (2) The capital account shall consist of— " (A) amounts referred to in subsection (b)(1)(B), " (B) amounts referred to in subsection (b)(1)(C) other than that portion thereof which represents gain not taken into account by reason of subsection (d)(1)(B), " (C) 85 percent of any dividend received by the fund with ri.f. respect to which theperson maintaining the fund would (but for subsection (d)(1)(C)) be allowed a deduction under section 243 of the Internal Revenue Code of 1954, and " (D) interest income exempt from taxation under section 103 of such Code. "(3) The capital gain account shall consist of—

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