Page:United States Statutes at Large Volume 92 Part 3.djvu/213

 PUBLIC LAW 95-600—NOV. 6, 1978

92 STAT. 2845

shall be the amount equal to the adjusted basis to the corporation of such property for determining gain, reduced by any liability to which the property was subject or which was assumed by the corporation. The determination under the preceding sentence shall be made as of the time the property was received by the corporation." (b) INCREASE IN MAXIMUM AMOUNT TREATED AS ORDINARY Loss FOR ANY TAXABLE YEAR.—Subsection (b) of section 1244 is amended— 26 USC 1244.. (1) by striking out "$25,000" in paragraph (1) and inserting in lieu thereof "$50,000", and (2) by striking out "$50,000" in paragraph (2) and inserting in lieu thereof "$100,000". (c) REMOVAL OP REQUIREMENT THAT STOCK ISSUANCE BE PURSUANT

TO PLAN.—Subsection (c) of section 1244 (defining section 1244 stock) is amended by striking out paragraph (1) and inserting in lieu thereof the following new paragraphs: "(1) IN GENERAL.—For purposes of this section, the term 'section 1244 stock' means common stock in a domestic corporation if— "(A) at the time such stock is issued, such corporation was a small business corporation, "(B) such stock was issued by such corporation for money or other property (other than stock and securities), and "(C) such corporation, during the period of its 5 most recent taxable years ending before the date the loss on such stock was sustained, derived more than 50 percent of its aggregate gross receipts from sources other than royalties, rents, dividends, interests, annuities, and sales or exchanges of stocks or securities. "(2) RULES FOR APPLICATION OF PARAGRAPH (i)(c).— "(A) PERIOD TAKEN INTO ACCOUNT WITH RESPECT TO NEW

CORPORATIONS.—For purposes of paragraph (1)(C), if the corporation has not been in existence for 5 taxable years ending before the date the loss on the stock was sustained, there shall be substituted for such 5-year period— "(i) the period of the corporation's taxable years ending before such date, or "(ii) if the corporation has not been in existence for 1 taxable year ending before such date, the period such corporation has been in existence before such date. "(B) GROSS RECEIPTS FROM SALES OF SECURITIES.—For purposes of paragraph (1)(C), gross receipts from the sales or exchanges of stock or securities shall be taken into account only to the extent of gains therefrom. "(C) NONAPPLICATION WHERE DEDUCTIONS EXCEED GROSS

INCOME.—Paragraph (1)(C) shall not apply with respect to any corporation if, for the period taken into account for purposes of paragraph (1)(C), the amount of the deductions allowed by this chapter (other than by sections 172,243,244, and 245) exceeds the amount of gross income." (d) TECHNICAL AMENDMENTS.—Paragraph (2) of section 1244(d) (relating to special rules) is amended— (1) by striking out "subparagraph (E)" and inserting in lieu thereof "subparagraph (C)', and (2) by striking out "paragraphs (1)(E) and (2)(A)" and inserting in lieu thereof "paragraphs (1)(C) and (3)(A)". (e) EFFECTIVE DATE.—The amendments made by this section shall apply to stock issued after the date of the enactment of this Act.

26 USC 172, 55^/,!^'o^"*^' 2" ^^^ ^•^^•

26 USC 1244 "ote.

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