Page:United States Statutes at Large Volume 98 Part 1.djvu/614

 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 566 jiiorf; AH H

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"(A) 5 percent in the case of stock which is preferred as to dividends, and "(B) 10 percent in the case of any other stock. "(3) AGGREGATION OF DIVIDENDS.— "(A) AGGREGATION WITHIN 85-DAY PERIOD.—All

dividends— "(i) which are received by the taxpayer (or a person described in subparagraph (O) with respect to any ic;3! i share of stock, and "(ii) which have ex-dividend dates within the same T '' O period of 85 consecutive days, ^, shall be treated as 1 dividend. aionit^'Fii Bi i: "(B) AGGREGATION WITHIN i YEAR WHERE DIVIDENDS EXCEED 20 PERCENT OF ADJUSTED BASIS.—All dividends— "(i) which are received by the taxpayer (or a person described in subparagraph (O) with respect to any share of stock, and "(ii) which have ex-dividend dates during the same •my period of 365 consecutive days, shall be treated as extraordinary dividends if the aggregate of such dividends exceeds 20 percent of the taxpayer's adjusted basis in such stock (determined without regard to this section). "(C) SUBSTITUTED BASIS TRANSACTIONS.—In the case of any ^, stock, a person is described in this subparagraph if— .eaoi:)BL' m "(i) the basis of such stock in the hands of such person is determined in whole or in part by reference to the basis of such stock in the hands of Ihe taxpayer, or '^^-" ^ ' "(ii) the basis of such stock in the hands of the taxpayer is determined in whole or in part by reference to the basis of such stock in the hands of such person. "(d) SPECIAL RULES.—For purposes of this section— "(1) TIME FOR REDUCTION.—Any reduction in basis under subsection (a) by reason of any distribution which is an extraordinary dividend shall occur at the beginning of the ex-dividend date for such distribution. "(2) DISTRIBUTIONS IN KIND.—To the extent any dividend consists of property other than cash, the amount of such dividend shall be treated as the fair market value of such property (as of the date of the distribution) reduced as provided in section 301(b)(2). "(3)

DETERMINATION OF HOLDING PERIOD.—For purposes of

determining the holding period of stock under subsection (a)(2), rules similar to the rules of paragraphs (3) and (4) of section 246(c) shall apply; except that '1 year' shall be substituted for the number of days specified in subparagraph (B) of section 246(c)(3). "(4) EX-DIVIDEND DATE.—The term 'ex-dividend date' means the date on which the share of stock becomes ex-dividend. "(5) EXTENSION TO CERTAIN PROPERTY DISTRIBUTIONS.—In the

case of any distribution of property (other than cash) to which section 301 applies— "(A) such distribution shall be treated as a dividend J J.. without regard to whether the corporation has earnings and profits, and

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