Page:United States Statutes at Large Volume 98 Part 1.djvu/611

 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 563

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holding company having a value equal to at least 80 percent of the total value of the stock of such bank or bank holding company, for purposes of paragraph (2)(A)(i), the taxpayer shall be treated as owning any stock of such bank or bank holding company which the taxpayer has an option to acquire. ^ "(B) DEFINITIONS.—For purposes of subparagraph (A)— "(i) BANK.—The term 'bank' has the meaning given If, \:T>r such term by section 581. .,' "(ii) BANK HOLDING COMPANY.—The term 'bank holding company' means a bank holding company (within the meaning of section 2(a) of the Bank Holding Compa•Ai / >

ny Ac|. Qf 1956).

12 USC 1841.

"(4) TREATMENT OF CERTAIN PREFERRED STOCK.—For purposes of determining whether the requirements of subparagraph (A) or (B) of paragraph (2) or of subparagraph (A) of paragraph (3) are met, stock described in section 1504(a)(4) shall not be taken into account. "(d) AVERAGE INDEBTEDNESS PERCENTAGE.—For purposes of this section— "(1) IN GENERAL.—Except as provided in paragraph (2), the ' term 'average indebtedness percentage' means the percentage obtained by dividing— "(A) the average amount (determined under regulations prescribed by the Secretary) of the portfolio indebtedness ol s with respect to the stock during the base period, by "(B) the average amount (determined under regulations prescribed by the Secretary) of the adjusted basis of the ^ stock during the base period. "(2) SPECIAL RULE WHERE STOCK NOT HELD THROUGHOUT BASE

PERIOD.—In the case of any stock which was not held by the taxpayer throughout the base period, paragraph (1) shall be applied as if the base period consisted only of that portion of the base period during which the stock was held by the taxpayer. "(3) PORTFOUO INDEBTEDNESS.—

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"(A) IN GENERAL.—The term 'portfolio indebtedness' means any indebtedness directly attributable to investment in the portfolio stock. "(B) CERTAIN AMOUNTS RECEIVED FROM TREATED AS INDEBTEDNESS.—For purposes of


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SHORT SALE

subparagraph (A), any amount received from a short sale shall be treated as indebtedness for the period beginning on the day on which such amount is received and ending on the day the short sale is closed. "(4) BASE PERIOD.—The term 'base period' means, with respect to any dividend, the shorter of— "(A) the period beginning on the ex-dividend date for the most recent previous dividend on the stock and ending on the day before the ex-dividend date for the dividend involved, or "(B) the 1-year period ending on the day before the exdividend date for the dividend involved.

"(e) REDUCTION IN DIVIDENDS RECEIVED DEDUCTION NOT TO EXCEED ALLOCABLE INTEREST.—Under regulations prescribed by the

Secretary, any reduction under this section in the amount allowable as a deduction under section 243, 244, or 245 with respect to any dividend shall not exceed the amount of any interest deduction



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Post, p. 577.

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