Page:United States Statutes at Large Volume 96 Part 1.djvu/525

 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 483

SEC. 223. DISTRIBUTION OF APPRECIATED PROPERTY IN REDEMPTION OF STOCK. (a) AMENDMENTS GAIN.—

TO CERTAIN

EXCEPTIONS

TO RECOGNITION O F

(1) IN GENERAL.—Subparagraphs (A), (B), and (C) of section 311(d)(2) (relating to appreciated property used to redeem stock) 26 USC 311. a r e amended to read as follows: "(A) a distribution to a corporate s h a r e h o l d e r if the basis of the property distributed is determined under section 301(d)(2); "(B) a distribution to which section 302(b)(4) applies and Ante, p. 478. which is made with respect to qualified stock; "(C) a distribution of stock or a n obligation of a corporation if the requirements of paragraph (2) of subsection (e) a r e m e t with respect to the distribution;". (2) DEFINITIONS AND SPECIAL RULES.—Section 311 is amended

by adding a t the e n d thereof the following new subsection: "(e) DEFINITIONS AND SPECIAL RULES FOR SUBSECTION (d)(2).—For

purposes of subsection (d)(2) and this subsection— "(1) QUALIFIED STOCK.—

"(A) IN GENERAL.—The term 'qualified stock' means stock held by a person (other than a corporation) who a t all times during the lesser of— "(i) the 5-year period ending on the date of distribution, or "(ii) the period during which the distributing corporation (or a predecessor corporation) was in existence, held a t least 10 percent in value of the o u t s t and i n g stock of the distributing corporation (or predecessor corporation). "(B) DETERMINATION OF STOCK HELD.—Section 318 shall

apply in determining ownership of stock under subparagraph (A); except that, in applying section 318(a)(1), the term 'family' includes any individual described in section 267(c)(4) and any spouse of any such individual. "(2) DISTRIBUTIONS OF STOCK OR OBLIGATIONS OF CONTROLLED CORPORATIONS.—

"(A) REQUIREMENTS.—A distribution of stock or a n obligation of a corporation (hereinafter in this paragraph referred to as the 'controlled corporation') meets the requirements of this paragraph if— "(i) such distribution is made with respect to qualified stock, "(ii) substantially all of the assets of the controlled corporation consists of the assets of 1 or more qualified businesses, "(iii) no substantial part of the controlled corporation's nonbusiness assets were acquired from the dist r i b u t i n g corporation, in a transaction to which section 351 applied or as a contribution to capital, within the 5-year period ending on the date of the distribution, and "(iv) more than 50 percent in value of the outstanding stock of the controlled corporation is distributed by the distributing corporation with respect to qualified stock. "(B) DEFINITIONS.—For purposes of subparagraph (A)—

26 USC 311.

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