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PUBLIC LAW 91-683-JAN. 12, 1971

2067 Consultation

SEC. 4. No loan may be made or extended under this Act unless the Secretary of Defense, after consultation with the Joint Chiefs of Staff, determines that such loan or extension is in the best interest of the United States. The Secretary of Defense shall keep the Congress „o";°nca^;r""' currently advised of all loans made or extended under this Act. Rules and SEC. 5. The President may promulgate such rules and regulations as regulations* he deems necessary to carry out the provisions of this Act. Approved January 12, 1971.

Public Law 91-683 AN ACT To amend section 1372 of the I n t e r n a l Revenue Code of 1954, relating to passive investment income.

January 12, 1971 [H. R. 19627]

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That (a) subpara- T a x e s. Corporations, graph (C) of section 1372(e)(5) of the Internal Revenue Code of 1954 p a s s i v e investincome. (relating to passive investment mcome of small business corporations) ment Stat. 114. 80 is amended by inserting at the end thereof the following new sentence: 26 us^c i372. "Gross receipts derived from sales or exchanges of stock or securities for purposes of this paragraph shall not include amounts received by an electing small business corporation which are treated under section 331 (relating to corporate liquidations) as payments in exchange for stock where the electing small business corporation owned more than 50 percent of each class of the stock of the liquidating corporation." (b) The amendment made by subsection (a) shall apply to taxable Effective date. years of electing small business corporations ending after the date of the enactment of this Act. Such amendment shall also apply with respect to any taxable year ending before October 7, 1970, but only if— C o n d i t i o n s. (1) on such date the making of a refund or the allowance of a credit to the electing small business corporation is not prevented by any law or rule of law, and (2) within one year after the date of enactment of this Act and in such manner as the Secretary of the Treasury or his delegate prescribes by regulations— (A) the corporation elects to have such amendment so apply, and (B) all persons (or their personal representatives) who were shareholders of such corporation at any time during any taxable year beginning with the first taxable year to which this amendment applies and ending on or before the date of the enactment of this Act consent to such election and to the application of the amendment made by subsection (a). (c) If the assessment of any deficiency in income tax resulting from deficiency the filing of such election for a taxable year ending before the date of ^^^^^^""^^ • such filing is prevented before the expiration of one year after the date of such filing by any law or rule of law, such deficiency (to the extent attributable to such election) may be assessed at any time prior to the expiration of such one-year period notwithstanding any law or rule of law which would otherwise prevent such assessment. (d) If the election of a corporation under subsection (a) of section 1372 of the Internal Revenue Code of 1954 would have been terminated ^^ ^*^*- ^^^° because of the application of subsection (e)(5) of such section (before the amendment made by subsection (a) of this section) but for the election by such corporation under paragraph (2) of subsection (b) (and the consent of shareholders under such paragraph), such election under section 1372(a) of such code shall not be treated as terminated 47-348 O - 72 - 47 (pt. 2)

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