Page:United States Statutes at Large Volume 90 Part 2.djvu/454

 90 STAT. 1922

26 USC 1239.

PUBLIC LAW 94-455—OCT. 4, 1976 SEC. 2129. TREATMENT OF GAIN FROM SALES OR EXCHANGES BETWEEN RELATED PARTIES. (a) I x GEXERAL.—Section 1239 (relating to gain from sale of certain property between spouses or between an individual and a controlled corporation) is amended to read as follows: "SEC. 1239. GAIN FROM SALE OF DEPRECIABLE PROPERTY BETWEEN CERTAIN RELATED TAXPAYERS. "(a)

TREATMKXT OF G A IX AS ORDINARY IX C O M E, — I n the case of a

sale or exchange of property, directly or indirectly, between related persons, any gain recognized to the transferor shall be treated as ordinary income if such property is, in the hands of the transferee, subject to the allowance l o r depreciation provided in section 167. " (b) RELATED PERSOXS.—For purposes of subsection (a), the term 'related persons' means— " (1) a husband and wife, " (2) an individual and a corporation 80 percent or more in value of the outstanding stock of which is owned, directly or indirectly, by or for such individual, or " (3) t w o or more corporations 80 percent or more in value of the outstanding stock of each of which is owned, directly or indirectly, by or for the same individual.

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" (c) CONSTRUCTIVE O W N E R S H I P OF STOCK.—Section 318 shall a p p l y

26 USC 1239 note.

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26 USC 117 note ^

26 USC 368.

in determining the ownership of stock for purposes of this section, except that sections 318(a)(2)(C) and 318(a)(3)(C) shall be applied without regard to the 50-percent limitation contained therein." (b) EFFECTIVE D A T E. — The amendment made by this section shall apply to sales or exchanges after the date of the enactment of this Act. For purposes of the preceding sentence, a sale or exchange is considered to have occurred on or before such date of enactment if such sale or exchange is made pursuant to a binding contract entered into on or before that date. SEC. 2130. APPLICATION OF SECTION 117 TO CERTAIN EDUCATION PROGRAMS FOR MEMBERS OF THE UNIFORMED SERVICES. Subsection (c) of section 4 of the Act entitled an Act to suspend until the close of June 30. 1975, the duty on certain carboxymethyl cellulose salts, and for other purposes, approved October 26, 1974 (88 Stat. 1457; Public Law 93-483). is amended by striking out " and 1975'' and inserting in lieu thereof the following: " and 1975, and, in the case of a member of a uniformed service receiving t r a i n i n g in programs described in subsection (a) during calendar year 1976, with respect to amounts received during calendar years 1976, 1977, 1978, and 1979." SEC. 2131. EXCHANGE FUNDS. (a) CORPORATE REORGANIZATIONS.—Paragraph (2) of section 368(a) (special rules relating to definition of reorganization) is amended by adding at the end thereof the following new subparagraph: " (F) CERTAIN TR^VNSACTIONS IXVOLVIXG 2 OR MORE IX\I-:STM E X T COMPAXIES.

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" (i) I f immediately before a transaction described in paragraph (1) (other than subparagraph (E) thereof), 2 or more parties to the transaction were investment companics, then the transaction shall not be considered to be a reorganization with respect to any such investment company ( and its shareholders and security holders)

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