Page:United States Statutes at Large Volume 92 Part 3.djvu/293

 PUBLIC LAW 95-600—NOV. 6, 1978 B i

92 STAT. 2925

(B) Section 4222(d) (relating to registration in the case of 26 USC 4222. tax-free sales) is amended by inserting "4063(e)," after 26 USC 4063.

"4063(b),". (3) EFFECTIVE DATE.—The amendments made by this subsection 26 USC 4063 shall t a k e effect on the first day of the first calendar month note. beginning more than 20 days after the date of the enactment of this Act. SEC. 702. TECHNICAL, CLERICAL, AND CONFORMING AMENDMENTS TO ESTATE AND GIFT TAX PROVISIONS. (a) AMENDMENTS RELATING TO TREATMENT OF SECTION 306 STOCK.— (1) APPLICATION OF " F R E S H START" TO SECTION 306 STOCK.—

Subsection (a) of section 306 (relating to disposition of certain stock) is amended by adding a t the end thereof the following new paragraph:

26 USC 306.

"(3) ORDINARY INCOME FROM SALE OR REDEMPTION OF SECTION 306 STOCK W H I C H IS CARRYOVER BASIS PROPERTY ADJUSTED FOR 1976 VALUE.—

"(A) IN GENERAL.—If any section 306 stock was distributed before January 1, 1977, and if the adjusted basis of such stock in the hands of the person disposing of it is determined under section 1023 (relating to carryover basis), the n the amount treated as ordinary income under paragraph (1)(A) of this subsection (or the amount treated as a dividend under section 301(c)(1)) shall not exceed the excess of the a m o u n t realized over the sum of— "(i) the adjusted basis of such stock on December 31, 1976, and "(ii) any increase in basis under section 1023(h).

26 USC 1023. 26 USC 301.

26 USC 1023.

"(B) REDEMPTION MUST BE DESCRIBED I N SECTION 302(b).—

Subparagraph (A) shall apply to a redemption only if such redemption is described in paragraph (1), (2), or (4) of section 302(b).^'

26 USC 302.

(2) CLARIFICATION THAT SECTION 303 OVERRIDES SECTION 306.—

Subsection (b) of section 306 (relating to exceptions) is amended by adding a t the end thereof the following new paragraph: "(5) SECTION 303 REDEMPTIONS.—To the e x t e n t that section 303

applies to a distribution in redemption of section 306 stock.". (3) EFFECTIVE DATE.—The amendments made by this subsection shall apply to the estates of decedents dying after December 31, 1979.

26 USC 306 note.

(b) COORDINATION OF DEDUCTION FOR ESTATE TAXES ATTRIBUTABLE TO INCOME I N RESPECT OF A DECEDENT W I T H THE CAPITAL G A I N DEDUCTION, E T C. —

(1) IN GENERAL.—Subsection (c) of section 691 (relating to deduction for estate taxes in the case of income in respect of decedents) is amended by adding a t the end thereof the following new paragraph:

26 USC 691.

"(4) COORDINATION WITH CAPITAL GAIN DEDUCTION, ETC.—For

purposes of sections 1201, 1202, and 1211, and for purposes of section 57(a)(9), the amount of any gain taken into account with respect to any item described in subsection (a)(1) shall be reduced (but not below zero) by the amount of the deduction allowable under paragraph (1) of this subsection with respect to such item." (2) EFFECTIVE DATE.—The amendment m a d e by paragraph (1)

shall apply with respect to decedents dying after the date of the enactment of this Act. (c) AMENDMENTS RELATING TO CARRYOVER BASIS.—

26 USC 1201, 1202, 1211. 26 USC 57. 26 USC 691

note.

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