Page:United States Statutes at Large Volume 85.djvu/44

 14

PUBLIC LAW 92-9-APR. 1, 1971

[85 STAT.

SEC. 3. OTHER AMENDMENTS. (a) ELECTION TO TREAT CERTAIN DEBT OBLIGATIONS AS SUBJECT TO TAX.—

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(1) Section 4912 is amended by adding at the end thereof the p 11

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lollowing new subsection: " (c) ELECTION TO SUBJECT CERTAIN DEBT OBLIGATIONS TO T A X. —

81 Stat. 145; 8 3 Stat. 262.

"(1) IN GENERAL.—A domestic corporation or domestic partnership may elect to have its debt obligations— " (A) which are part of a new or original issue, or " (B) which are part of an issue outstanding on the date of the enactment of the Interest Equalization Tax Extension Act of 1971 and are treated under subsection (b)(3) as debt obligations of a foreign obligor, treated as debt obligations of a foreign obligor the acquisition of which by a United States person (other than the issuer) will, notwithstanding any other provision of this chapter, be subject to the tax imposed by section 4911 at the rate applicable on acquisitions of stock under section 4911(b). " (2) ASSUMPTION or OBLIGATIONS.—For purposes of paragraph

83 Stat. 6 0 3.

(1), the assumption by a domestic corporation of debt obligations of an affiliated corporation shall be treated as the issuance of a new or original issue of debt obligations by such domestic corporation. For purposes of this paragraph, a domestic corporation shall be treated as affiliated with another corporation if both corporations are members, or would be members if they were both domestic corporations) of the same controlled group (within the meaning of section 48(c)(3)(C)). " (3) ELECTION.—An election under paragraph (1) with respect to any issue of debt obligations shall be made at such time and in such manner as the Secretary or his delegate may prescribe by regulations, and such election may not be revoked. I n the case of a new or original issue, such election shall be made prior to the issuance (or, in the case of an issue treated as a new or original issue under paragraph (2), prior to the assumption) of any debt obligations of such issue. "(4) INDICATION OR ENDORSEMENT OF TAXABILITY.—In the case of a debt obligation which is part of a new or original issue (other than an issue treated as a new or original issue under paragraph (2)), an election under paragraph (1) shall apply to such debt obligation only if the document evidencing such debt obligation indicates that its acquisition by a United States person is subject to the tax imposed by section 4911 as provided in paragraph (1). In the case of any other debt obligation, an election under paragraph (1) shall apply to such debt obligation only if the document evidencing such debt obligation is marked or endorsed, subject to such regulations as the Secretary or his delegate may prescribe, so as to indicate that its acquisition by a United States person is subject to such tax."

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