Page:United States Statutes at Large Volume 96 Part 2.djvu/337

 PUBLIC LAW 97-354-OCT. 19, 1982

96 STAT. 1699

(D) SUBSTANTIAL SHAREHOLDER.—For purposes of subpara-

graph (B), the term "substantial shareholder" means any person who on July 1, 1982, owns more than 40 percent (in value) of the stock of the corporation. (4) CONTINUITY REQUIRED.—

(A) IN GENERAL.—This subsection shall cease to apply with respect to any corporation after— (i) any termination of the election of the corporation under subchapter S of chapter 1 of such Code, or Ante, p. 1669. (ii) the first day on which more than 50 percent of the stock of the corporation is newly owned stock within the meaning of section 1378(c)(2) of such Code (as Ante, p. 1685. amended by this Act). (B) SPECIAL RULES FOR PARAGRAPH (2).—

(i) Paragraph (2) shall also cease to apply with respect to any corporation after the corporation ceases to be described in section 831(a) of such Code. (ii) For purposes of determining under subparagraph (A)(ii) whether paragraph (2) ceases to apply to any corporation, section 1378(c)(2) of such Code (as amended by this Act) shall be applied by substituting "December 31, 1984" for "December 31, 1982" each place it appears therein, (d) TREATMENT OF EXISTING FRINGE BENEFIT PLANS.—

(1) IN GENERAL.—In the case of existing fringe benefits of a corporation which as of September 28, 1982, was an electing small business corporation, section 1372 of the Internal Revenue Code of 1954 (as added by this Act) shall apply only with respect Ante, p. 1682. to taxable years beginning after December 31, 1987. (2) REQUIREMENTS.—This subsection shall cease to apply with respect to any corporation after whichever of the following first occurs: (A) the first day of the first taxable year beginning after December 31, 1982, with respect to which the corporation does not meet the requirements of section 1372(e)(5) of such Code (as in effect on the day before the date of the enactment of this Act), (B) any termination after December 31, 1982, of the election of the corporation under subchapter S of chapter 1 of such Code, or (C) the first day on which more than 50 percent of the stock of the corporation is newly owned stock within the meaning of section 1378(c)(2) of such Code (as amended by this Act). (3) EXISTING FRINGE BENEFIT.—For purposes of this subsection, the term "existing fringe benefit" means any employee fringe benefit of a type which the corporation provided to its employees as of September 28, 1982.

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