Page:United States Statutes at Large Volume 98 Part 1.djvu/616

 98 STAT. 568

PUBLIC LAW 98-369—JULY 18, 1984 (1) The table of sections for part IV of subchapter O of chapter 1 is amended by striking out the item relating to section 1059 and inserting in lieu thereof the following new items: "Sec. 1059. Corporate shareholder's basis in stock reduced by nontaxed portion of extraordinary dividends. "Sec. 1060. Cross references."

26 USC 246.

(2) Paragraph (1) of section 246(b) (relating to limitation on aggregate amount of deduction) is amended by striking out "and without regard" and inserting in lieu thereof "without regard to any adjustment under section 1059, and without regard". (3) Section 1016(a) (relating to adjustments to basis) is amended by striking out "and" at the end of paragraph (24), by striking out the period at the end of paragraph (25) and inserting in lieu thereof ", and" and by adding at the end thereof the following new paragraph: "(26) to the extent provided in section 1059 (relating to reduction in basis for extraordinary dividends)."

26 USC 1016.

Ante, p. 565. 26 USC 1059

note.

(e) EFFECTIVE DATE.—

(1) IN GENERAL.—Except as provided in this subsection, the amendments made by this section shall apply to distributions after March 1, 1984, in taxable years ending after such date. (2) SUBSECTION (b).—The amendments made by subsection (b) shall apply to stock acquired after the date of the enactment of this Act in taxable years ending after such date. (3) RELATED PERSON PROVISIONS.—The amendment made by subsection (c) shall take effect on the date of the enactment of this Act. SEC. 54. DISTRIBUTIONS OF APPRECIATED PROPERTY BY CORPORATIONS. (a) GAIN PROPERTY.—

26 USC 311. ^, -d . -.

RECOGNIZED

ON

DISTRIBUTIONS

OF

APPRECIATED

(1) IN GENERAL.—Paragraph (1) of section 311(d) (relating to appreciated property used to redeem stock) is amended to read as follows: -- •

"(1) IN GENERAL.—If—

"(A) a corporation distributes property (other than an obligation of such corporation) to a shareholder in a distribution to which subpart A applies, and "(B) the fair market value of such property exceeds its adjusted bsisis (in the hands of the distributing corporation), then gain shall be recognized to the distributing corporation in an amount equal to such excess as if the property distributed had been sold at the time of the distribution. This subsection shall be applied after the application of subsections (b) and (c)." (2) EXCEPTIONS.—

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T'jiito /

(A) Paragraph (2) of section 311(d) is amended by striking out subparagraphs (A) and (B) and inserting in lieu thereof the following: "(A) a distribution which is made with respect to qualified stock if— "(i) section 302(b)(4) applies to such distribution, or "(ii) such distribution is a qualified dividend;". (B) Paragraph (2) of section 311(d) is amended by redesignating subparagraphs (C), (D), (E), and (F) as subparagraphs (B), (C), (D), and (E), respectively. (C) Subsection (e) of section 311 is amended by adding at the end thereof the following new paragraph:

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