Page:United States Statutes at Large Volume 94 Part 3.djvu/936

 94 STAT. 3580 26 USC 374 note.

26 USC 374.

?^1SS.^Q i.i&uz ly.

PUBLIC LAW 96-613—DEC. 28, 1980

SEC. 4. RESTORATION OF CERTAIN NET OPERATING LOSS CARRYOVERS TO RAILROADS IN CONRAIL PROCEEDINGS WHERE OTHER MEM BERS OF CONSOLIDATED GROUP HAD INCOME BECAUSE OF STOCK DISPOSITION.

(a) IN GENERAL.—For purposes of subsection (e) of section 374 of the Internal Revenue Code of 1954 (relating to use of expired net operating loss carryovers to offset income arising from certain railroad reorganization proceedings), if— (1) subparagraphs (A) and (B) of paragraph (1) of such subsection are satisfied with respect to a corporation, (2) such corporation had a net operating loss for a taxable year which would have satisfied the requirements of clause (i) of subparagraph (C) of such paragraph (1) but for the fact that such net operating loss was used to reduce the income of an affiliated group of corporations which filed a consolidated return, and (3) any portion of the amount so used was included in an excess loss account which was required to be restored to the income of a member or members of the affiliated group (or would be required to be so restored but for an election under Regulation §1.1502-19(a)(6)), then an amount equal to the restoration amount shall be treated as meeting the requirements of subparagraph (C) of such paragraph (1). (b) RESTORATION AMOUNT DEFINED.—

26 USC 1201. 26 USC 11.

(1) IN GENERAL.—For purposes of subsection (a), the term "restoration amount" means, with respect to the net operating loss for any taxable year, an amount equal to the sum of— (A) so much of the portion referred to in subsection (a)(3) as was required to be treated as ordinary income, and (B) an amount equal to so much of such portion as was required to be treated as long-term capital gain, multiplied by the capital gain conversion fraction. (2) CAPITAL GAIN CONVERSION FRACTION.—For purposes of paragraph (1), the capital gain conversion fraction is a fraction— (A) the numerator of which is the rate of tax set forth in section 1201(a)(2) of such Code for the taxable year the portion was required to be included in income, and (B) the denominator of which is the highest rate of tax set forth in section 110)) of such Code for such taxable year. (3) FIFO RULE FOR ADDITIONS TO EXCESS LOSS ACCOUNT.—For purposes of this subsection, the amount in any excess loss account at the time of restoration (and the ordinary income portion of the restoration) shall be treated as attributable to net operating losses in the order of the years in which the respective net operating losses arose. (4) CAPITAL GAIN TREATMENT.—For purposes of paragraph (1),

26eFR 1.1502-19.

26 USC 414.

any amount to which an election under Regulation § 1.1502-19(a)(6) applies shall be treated as long-term capital gain. (c) EFFECTIVE DATE.—This

section shall apply to restorations occur-

ring after March 31, 1976. SEC. 5. PREVENTION OF ABUSE OF CERTAIN PENSION PLAN PROVISIONS THROUGH THE USE OF SEPARATE CORPORATIONS OR OTHER ORGANIZATIONS. (a) IN GENERAL.—Section 414 (relating to definitions and special rules relating to pension plan, etc.) is amended by adding at the end thereof the following new subsection: "(m) EMPLOYEES OF AN AFFIUATED SERVICE GROUP.—

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