Page:United States Statutes at Large Volume 94 Part 3.djvu/868

 94 STAT. 3512

PUBLIC LAW 96-603—DEC. 28, 1980 from such property, multiplied by a fraction the numerator of which is the fair market value of the transferor's stock in the corporation, and the denominator of which is the fair market value of all stock in the corporation. "(iii) DEPLETABLE QUANTITY.—For purposes of this paragraph, a corporation's depletable quantity for any period in the lesser of— "(I) such corporation's tentative quantity for such period (determined under paragraphs (3) and (8)), or "(II) such corporation's average daily production for such period. "(D) QUALIFIED TRANSFEREE CORPORATION DEFINED.—For

purposes of this paragraph, the term 'qualified transferee corporation' means a corporation all of the outstanding stock of which has been issued to individuals solely in exchange for qualified property held by such individuals. "(E) QUALIFIED PROPERTY DEFINED.—For purposes of this paragraph, the term 'qualified property' means oil or gas property with respect to which— "(i) there has been no prior transfer to which paragraph (9)(A) applied, and "(ii) the transferor has made an election to have this paragraph apply. The term also includes cash (not to exceed $1,000 in the aggregate) which one or more individuals transfer to the corporation. "(F) TRANSFEROR MUST RETAIN STOCK DURING LIFETIME.—If

at any time during his lifetime any transferor disposes of stock in the corporation (other than to a member of his family), then the depletable quantity of the corporation (determined without regard to this subparagraph) shall be reduced (for all periods on or after the date of the disposition) by an amount which bears the same ratio to such quantity as the fair market value of the stock so disposed of bears to the aggregate fair market value of all stock of the corporation on such date of disposition. "(G) SPECIAL RULES RELATING TO FAMILY OF TRANSFEROR.—

"(i) IN GENERAL.—For purposes of this paragraph— "(I) the issuance of stock to a member of the family of the transferor shall be treated as issuance of stock to the transferor, and "(II) during the lifetime of the transferor, stock transferred to a member of the family of the transferor shall be treated as held by the transferor. If stock described in the preceding sentence ceases to be held by a member of the family of the transferor, the transferor shall be treated as having disposed of such stock at the time of such cessation. "(ii) FAMILY DEFINED.—For purposes of this paragraph, the members of the family of an individual include only his spouse and minor children. "(H) PROPERTY SUBJECT TO LIABILITIES.—For purposes of

26 USC 357. 26 USC 351.

this paragraph, section 357 shall be applied as if^ "(i) references to section 351 include references to subparagraph (A) of this paragraph, and

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