Page:United States Statutes at Large Volume 85.djvu/554

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PUBLIC LAW 92-178-DEC. 10, 1971 (d)

[85 STAT.

ELECTING SMALL BUSINESS CORPORATIONS.—Section 57(b)

(2)

^^83 Stat. 581, ((]) (relating to items of tax preference) and section 163(d)(3)(C) 26 USC 57, 163. (relating to interest on investment indebtedness) are each amended by striking out "sections 164:(a)(l) or (2) " and inserting in lieu thereof "sections 162,164(a)(1) or (2)". (e) EFFECTIVE DATES.—The amendments made by this section to section 57 of the Internal Revenue Code of 1954 shall apply to taxable years beginning after December 31, 1969. The amendments made by this section to section 163 of such Code shall apply to taxable years beginning after December 31, 1971. SEC. 305. FARM LOSSES OF ELECTING SMALL BUSINESS CORPORATIONS. (a)

83 Stat. 566.

8 3 Stat, 592.

]^251 (b)(2)(B) is amended by striking out the last sentence and inserting in lieu thereof the following new sentences: "This subparagraph shall not apply to an electing small business corporation for a taxable year if on any day of such year a shareholder of such corporation is an individual who, for his taxable year with which or within which the taxable year of the corporation ends, has a farm net loss or is a shareholder of another electing small business corporation which has a farm net loss for its taxable year ending within such taxable year of the individual. For purposes of clause (i), in the case of an electing small business corporation the nonfarm adjusted gross income of the corporation shall be increased by the amount of the nonfarm adjusted gross income of that shareholder (on any day of the corporation's taxable year) who has the highest amount of all such shareholders of nonfarm adjusted gross income for his taxable year with which or within which the taxable year of the corporation ends."' (b) EFFECTIVE DATE.—The amendment made by this section shall apply to taxable years ending after the date of the enactment of this Act. SEC. 306. CAPITAL GAIN DISTRIBUTIONS OF CERTAIN TRUSTS. (^^^ AMENDMENT TO SECTION 665 (g).—Effective with respect to taxable years beginning after December 31, 1968, subsection (g) of section 665 (relating to definition of capital gain distribution) is amended by striking out "for such taxable year" the first place it appears therein, (b)

83 Stat. 599. note.

26^80*92^1^°'

83 Stat. 583.

COMPUTATION or NONFARM ADJUSTED GROSS INCOME.—Section

APPLICATION TO TRUSTS IN EXISTENCE ON DECEMBER 31, 1969.—

Section 331(d)(2)(C) of the Tax Reform Act of 1969 is amended by striking out "January 1, 1972" each place it appears therein and inserting in lieu thereof "January 1, 1973". SEC. 307. APPLICATION OF WESTERN HEMISPHERE TRADE CORPORATION PROVISION UNDER THE VIRGIN ISLANDS TAX LAWS. For purposes of applying the income tax laws of the United States with respect to the Virgin Islands under the Act of July 12, 1921 (42 Stat. 123; 48 U.S.C. 1397), subpart C of part III of subchapter ^ ^^ chapter 1 of the Internal Revenue Code of 1954 (relating to Western Hemisphere Trade Corporations) shall be treated as having been repealed effective with respect to taxable years beginning after the date of the enactment of this Act. SEC. 308. CAPITAL GAINS AND STOCK OPTIONS. ^j^) j ^ GENERAL.—Section 58(g)(2) (relating to tax preferences attributable to foreign sources) is amended by adding at the end thereof the following new sentence: "For purposes of this paragraph, preferential treatment is accorded such items which are attributable to a foreign country or possession of the United States if such country or possession

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