Page:United States Statutes at Large Volume 96 Part 1.djvu/527

 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 485

the n such distributions of timberland having a n aggregate fair m a r k e t value on August 31, 1982, not in excess of $10,000,000 shall be treated as distributions to which section 311(d)(2)(A) of such Code (as in effect before the date of the e n a c t m e n t of this Act) applies. Subpart B—Certain Stock Purchase s Treated as Asset Purchase s SEC. 224. CERTAIN STOCK PURCHASES TREATED AS ASSET PURCHASES. (a) GENERAL RULE. — Subpart B of part

II of subchapter

C of

chapter 1 (relating to effects on corporation) is amended by adding at the end thereof the following new section: "SEC. 338. CERTAIN STOCK PURCHASES TREATED AS ASSET ACQUISITIONS.

"(a) GENERAL RULE. — For purposes of this subtitle, if a purchasing corporation m a k e s a n election under this section (or is t r e a t e d under subsection (e) as having m a d e such a n election), then, in the case of any qualified stock purchase, the t a r g e t corporation— "(1) shall be t r e a t e d a s h a v i n g sold all of its assets a t the close of the acquisition date in a single transaction to which section 337 applies, and "(2) shall be t r e a t e d a s a new corporation which purchased all of the assets referred to in paragraph (1) as of the beginning of the day after the acquisition date. "(b) P R I C E AT W H I C H D E E M E D SALE M A D E. —

"(1) IN GENERAL.—For purposes of subsection (a), the assets of the target corporation shall be t r e a t e d as sold (and purchased) at a n a m o u n t equal to— "(A) the grossed-up basis of the purchasing corporation's stock in the target corporation on the acquisition date, "(B) properly adjusted under regulations prescribed by the Secretary for liabilities of the t a r g e t corporation and other relevant items. "(2) GROSSED-UP BASIS.—For purposes of paragraph (1), the

grossed-up basis shall be an a m o u n t equal to the basis of the purchasing corporation's stock in the target corporation on the acquisition date multiplied by a fraction— "(A) the n u m e r a to r of which is 100 percent, and "(B) the denominator of which is the percentage of stock (by value) of the t a r g e t corporation held by the purchasing corporation on the acquisition date. "(3) ALLOCATION

AMONG

ASSETS.—The

amount

determined

under paragraph (1) shall be allocated among the assets of the target corporation under regulations prescribed by the Secretary "(c) SPECIAL RULES. — "(1) C O O R D I N A T I O N W I T H S E C T I O N 337 W H E R E PURCHASING CORPORATION HOLDS LESS THAN 100 PERCENT OF STOCK.—If during the

1-year period beginning on the acquisition date the maximum percentage (by value) of stock in the target corporation held by the purchasing corporation is less than 100 percent, the n in applying section 337 for purposes of subsection (a)(1), the nonrecognition of gain or loss shall be limited to a n a m o u n t determined by applying such maximum percentage to such gain or loss. The preceding sentence shall not apply if the target corporation is liquidated during such 1-year period.

26 USC 338.

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