Page:United States Statutes at Large Volume 98 Part 1.djvu/1017

 PUBLIC LAW 98-369—JULY 18, 1984 ,,

98 STAT. 969

who are shareholders in the corporation at any time during the S short year and all persons who are shareholders in the corporation on the first day of the C short year consent to such election."

. - ; '•,-•:

(i) ELECTION TO HAVE N E W PASSIVE INCOME RULES NOT APPLY DURING 1982.—Paragraph (3) of section 6(b) of the Subchapter S

Revision Act of 1982 (relating to new passive income rules apply to taxable years beginning during 1982) is amended by adding at the end thereof the following new sentences: "The preceding sentence shall not apply in the case of any corporation which elects (at such time and in such manner as the Secretary of the Treasury or his delegate shall prescribe) to have such sentence not apply. Subsection (e) shall not apply to any termination resulting from an election under the preceding sentence." 0) S CORPORATION TREATED AS PARTNERSHIP FOR PURPOSES OF SECTION 318.—Paragraph (5) of section 318(a) (relating to construe-

tive ownership of stock) is amended by adding at the end thereof the following new subparagraphs: "(E) S CORPORATION TREATED AS PARTNERSHIP.—For purposes of this subsection— fc "(i) an S corporation shall be treated as a partnerJ ship, and (ii) any shareholder of the S corporation shall be treated as a partner of such partnership. The preceding sentence shall not apply for purposes of i determining whether stock in the S corporation is constructively owned by any person."

26 USC 1361 note.

26 USC 318.

..i*rt -.^.;

(k) CLARIFICATION OF TREATMENT OF CERTAIN ELECTIONS UNDER

PRIOR LAW.—Subsection (e) of section 6 of the Subchapter S Revision Act of 1982 (relating to treatment of certain elections under prior law) is amended by striking out "any termination" and inserting in lieu thereof "any termination or revocation".

26 USC 1361 note.

(1) ELECTION FOR CERTAIN SHORT TAXABLE YEARS.—

(1) Subsection (b) of section 1362 (relating to when subchapter 26 USC 1362. S election made) is amended by adding at the end thereof the following new paragraph: "(4) TAXABLE YEARS OF 2V2 MONTHS OR LESS.—For purposes of

this subsection, an election for a taxable year made not later than 2 months and 15 days after the first day of the taxable year shall be treated as timely made during such year." (2) Paragraph (3) of section 1362(b) is amended by striking out "on or before the last day of such taxable year" and inserting in lieu thereof "on or before the 15th day of the 3rd month of the following taxable year".

^

B u <: >

(m) TAXABLE YEAR OF EXISTING S CORPORATIONS.—Paragraph (1)

of section 1378(c) (relating to existing S corporations required to use 26 USC 1378. permitted year after 50-percent shift in ownership) is amended by striking out "which includes December 31, 1982" and inserting in lieu thereof "which includes December 31, 1982 (or which is an S corporation for a taxable year beginning during 1983 by reason of an election made on or before October 19, 1982)". (n) REFERENCES TO PRIOR LAW.—Subsection (b) of section 1379

(relating to references to prior law included) is amended to read as follows: "(b) REFERENCES TO PRIOR LAW INCLUDED.—Any references in this title to a provision of this subchapter shall, to the extent not inconsistent with the purposes of this subchapter, include a refer-

26 USC 1379.

�