Page:United States Statutes at Large Volume 98 Part 1.djvu/938

 98 STAT. 890

PUBLIC LAW 98-369—JULY 18, 1984 law or rule of law which would otherwise prevent such assessment." (b) CONFORMING AMENDMENTS.—

Ante, p. 569. 26 USC 1223.

Ante, p. 887.

Ante, p. 568.

Ante, p. 887.

(1) Section 1223 (relating to holding period of property) is amended by redesignating paragraph (13) as paragraph (14) and by inserting after paragraph (12) the following: "(13) In determining the period for which the taxpayer has held qualified replacement property (within the meaning of section 1042(b)) the acquisition of which resulted under section 1042 in the nonrecognition of any part of the gain realized on the sale of qualified securities (within the meaning of section 1042(b)), there shall be included the period for which such qualified securities had been held by the taxpayer." (2) Subsection (a) of section 1016 (relating to adjustments to basis), as amended by this Act, is amended— (A) by striking out "and" at the end of paragraph (25), (B) by striking out the period at the end of paragraph (26) and inserting in lieu thereof ", and", and (C) by adding at the end thereof the following new paragraph: "(27) in the case of qualified replacement property, the acquisition of which resulted under section 1042 in the nonrecognition of any part of the gain realized on the sale or exchange of any property, to the extent provided in section 1042(c)." (3) The table of sections for part III of subchapter O of chapter 1 is amended by adding at the end thereof the following new item: "Sec. 1042. Sales of stock to employees."

26 USC 1042 note.

26 USC 404.

Ante, p. 852.

(c) EFFECTIVE DATE.—The amendments made by this section shall apply to sales of securities in taxable years beginning after the date of enactment of this Act. SEC. 542. DEDUCTIBILITY OF CERTAIN DIVIDEND DISTRIBUTIONS FROM EMPLOYEE STOCK OWNERSHIP PLANS. (a) DEDUCTION.—Section 404 (relating to deductions for employer contributions to an employees' trust) is amended by adding at the end thereof the following new subsection: "(k) DIVIDENDS PAID DEDUCTIONS.—In addition to the deductions provided under subsection (a), there shall be allowed as a deduction to a corporation the amount of any dividend paid in cash by such corporation during the taxable year with respect to the stock of such corporation if— "(1) such stock is held on the record date for the dividend by a tax credit employee stock ownership plan (as defined in section 409) or an employee stock ownership plan (as defined in section 4975(e)(7)) which is maintained by such corporation or by any other corporation that is a member of a controlled group of corporations (within the meaning of section 409(1)(4)) that includes such corporation, and "(2) in accordance with the plan provisions— "(A) the dividend is paid in cash to the participants in the plan, or "(B) the dividend is paid to the plan and is distributed in cash to participants in the plan not later than 90 days after the close of the plan year in which paid."

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