Free Response to Motion [Dispositive] - District Court of Federal Claims - federal

Case 1:05-cv-00231-EJD
"

Document 167-6

Filed 04/21/2008

Page 1 of 3

October 29, 1999

highllghts a general lack of understanding about the actual education
funding levels in this appropriations

CONGRESSIONAI_ RECORD-SENATE 27547 consideration of Calendar No. 346, S. Mr. LOTT. Mr. President, I ask con 1792, the so-called Finance Committee sent that follOWing the conclusion or
for debate, with no amendments or motiuns in order.

extenders bill, and there be 10 minut.es

bilL.

My votes on these Sense of the Sen-

yielding back of time, the hil be advanced to third reading and passed and the motion to reconsider be laid upon
the bill remain at t,he desk, and oiiee

ate amendments simply express my
preference for spending reductions
versus raising taxes or spending the
Social Security surplus. In that there

clerk wil report the bil by title.

The PRESIDING OFFICER. The the table. 1 further ask consent that
The IcgislaÙve clerk read as follows: the Senate receives the House com-

are many specific areas of federal enue Code of 1986 to extend expiring provi- immediate consideration and all after spending that in my view can and sions, to fully allow tIie nonrefundable per- the enacting elause be stricken, the should be cut back, I would prefer to sonal credits againsL regular Lax liabili ty i text of the Senate bill be inserted, the and fur other i:urpo~es.
see us balance the budget with reduc-

A bil (S. 1792) tu amend the Internal Rev-

panion bil, the Senate proceed to its

tions of that type. Unfortunately, gain-

Mr. BAUCUS. Mr. President, I exprcss for this type of approach. .L'ailing press my support for this bil.
that, some type of across-thc-board reductions may be the last resort.
This bil is not perfect. There are

ing consensus on such reductions wiil be difficult, although I will continue to

'I'here being no objection, the Senate
proceeded to consider the bil.

bil be advanced to third reading and

passed. I further ask consent that the
Senate insist on its amendment, request a conferenee with the House, and the Chair be authorized to appoint conferees on the part of the Senate, and

funding in this bill exceeds the levels

passage vitiated As I mentioned earlier, the education hoped we could have lIone more. I have and it beof the Senate bil becalendar. placed back on the
many of us in the Senate who have
argued that the Research and Develop-

requested by the Administration on

many fronts. While it is impossible at
this point to know exactly what the

nent for many years. Companies plan
their research many years in advance,

ment tax credit should be made perma- objection? Without objection, it is so ordered.

The PRESIDING OFFICER. Is there
The bil (S. 1792) was read the third

final spending level wil be at the end and we don't get the full benefit of the time and passed, as follows: of the day, even after including ail of R&D credit by allowing it to expire so S. 1792
thc President's emergeney spending

and a possible Dalanced Budget Act of
1997 (REA) pay-lJack bil, an across-the-

frequently. I also support making the AMT ex-

Be it enacted hy the Senate and House or Representatives of the United State~' or America in
Congress assembled,

board reduction, designed to protect payers should be assured they will reSocial Security, would result in ap- ceive the full benefits of the personal proximately a 1.4 percent decrease. cretliLs that we enacted with such fanMr. President, even with a 1.1 percent fare just last sessi on.
relluction in discretionary funding-, I

clusion in the hill permanent. Tax-

SECTION 1. SHORT TITE; ETC.
(0.) SHORT TITLEl.-This Act may be cited as the "Tax Relief Extension Act of 1YY9".

would further note that spedal edu-

have funding levels $521 milion and to Work tax credits. Thm,e credits help peal of, a section or other provision. the rererence shall be considered to be mad~ to a $143 millon above the President's re
r¡.i est. 1 ?v"ls, respect;i vely. In addit.ion.
the Department of Education would be funded $10.6 millon over t.hat which

cation and education impact aid would as the Work Opportunities and Welfare

this Act that should be made permanent, such pressed inan amendment or repeal is exterms of an amenùment to, or recompensate companies for hiring those section or other provision of the Internal
employees that are the hardest to emRevenue Code of lYB6.

'l'here are other credits in this bill

otherwise expressly provided, whenever In

(b) AMENDMENT OF 1986 CODK-Except ~s

We have almost completed our appro- it appears as though enacting legisla- Sec. 101. Extension of minimum tax relief for individuals. tion that priations work this year, and I applaud manent would make these credits per- Sec. 102. Extension of exclusion for emthe effort and dedication demonstrated They areis simply not in the eards. ployer-provided educational asexpensive, and it is not posby my colleagues on the Senate Approsistance. priations Committee and in the Senate sible to enact major tax legislation Sec. 103. Extension of research and experiin rates for a.lternative increstages of this process, we will continue surplus unless it is in the context of a menta.l research credit. to abide by the ideals of responsibility, comprehensive bilL. Above all, we must be fiscally accountabilty and flexibility by up- sible, and protect the surplus respon- Sec. 101. Extension of exceptions under subpart F for active financing infor our holding our promise to protect SocÜl.i come. children and grandchildren. Security and by producing a final packThis bill has been reviewed by all Sec. 105. Extension of suspenSion of net in. age which will serve Americans well. come limitation on percentage

ploy and train~those corning off the (c) TABLE OF CONTENTS.-'lhe t~b)e of con. tents for this Act is as follows: welfare rolls. the President requested. Far from Sec. 1. Short. title: etc. But we cannot under-funding education. this bill con- the enemy of theallow the perfect to be TITL~: )-F,XTENSION OF EXPIRED AND good. We stand here tinues to provide strong support for our in the waning days of this session, and ¡¡XPffTNG PROVISIONS schools and our students.

a8 whole. I hope, as we go into the final

that uses a substantial portion of the

mentation credit and increase

I yield the floor.

Senators and has received unanimous

consent to proceed. I hope the Con-

TAX RELIEF EXTENSlON ACT OF
1999

ferees on the bill will work out the dif- Sec. 106. Extension of work opportunity tax ferences between the House and Senate credit and welfare-to-work t.ax
quickly. and send us back a bil the

depletion from marg-inal oil and gas wells.

Mr. LOTT. Mr. President, we have some very important extenders in the Tax Code that need to be acted on before the end of this year or they wll expire. The Finance Committee, in a broad bipartisan way, reported out the bill We have now cleared it on both sides. So this is very important to get.
it into conference with the House

President can sign into law. Doing othcredits lapsed to g-row. This would fur-

credit. Sec. 107. Extension and modification of tax
credit for electricity produced

erwise risks getting nothing at all, and allowing the gap sincc these important

sources.

from certain renewable rp.-

ther undermine their effectiveness, and mental remediation. leave thousands of businesses and indi- See. 109. 'remporary increase in amount of
viduals with tremendous uncertainty

Sec. LOB. Expansion of brownftelds environ-

about their tax liabilities for this year.

rnm excÜ:¡e tax covnreå over to

Puerto Rico and VirgIn Islands.

quickly so we can get this legislation important work undone. We should recomplet,ed before the year's legislative store these credits as soon as possible,
end.

We cannot and should not leave this

Sec. J 10 Delay req'Jirement that regisL;ereù

mot.or ruelfì termina.l:: offer

dyed fuel as a condition uf reg--

scn t that the Senate now turn to the

Mr. President, I ask unanimous con- about permanence for Lliese credits for
another day.

even if that means leaving the debate

istratton.
Sec. IlL. Extension uf production crediL ¡or fuel preduced by certain ¡;a"ifi cation facilit.ies. -;

z GOVERNMENT
EXHIBIT Appendix AS

I
015

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Document 167-6

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Page 2 of 3

October 29, 1999

CONGRESS

ION AL RECORD-SENATE

27553

.. A payment shall be treated as directly secured hy an interest in an installment obligation to the extent an arrangement allows

organii.ation described in subsection (c) shall be treat.ed a~ a reference to such tr\lst.
"(D) EXCEPTION FOR eERTAll ANNUITY CON-

from insurance regulation by such State,
that ea.ch beneficiary undcr the Chari table

the taxpayer to ~atisfy all or a portion of the
indebtedness with the Installment obliga-

'1H.ACTS.-If, iii connection with a transfer to

gift annuity be named as a beneficiary under

tion."

or fur the us~ of an organization described in
obllgat.on to pay a charitable gift annuity

company authorized to transact business in
such State, the rcquirements of clauscs (i) and (ii) of subparagraph CD) shall be treated
as met iffect on February 8, 1999,

an a.nnuity contract issued by an insurance

subsecl,ioii (C), such org-aniza.tion incurs an
(as defined in section fiOl(m)) and such orga.-

made by this section shall apply to sales or
other dispositions occurring on or after the

(c) EFFECTIV DATF.-The amendments

date of the enactment of this Act.
SEC, 211. LIITATION ON USE OF NONACCRUAL EXERIENCE METHOD O~' ACCOUNT.
ING.

nlzatlon pun.:ha.'::H:ls any a.nnuity contract to
fund such obligation, persons receiving pa.y-

"(i) such State law requirement was in ef"(ii) each SUCh boncficiary undor the charitable gift annuity is a bona fide resident of

ments under i'he charitable gift annuity shall iiot be treateà for purposes of subparagraph (B) as inùirect beneficiaries under
siich cont.rRct if-

such State at t.hc time the obligation to pay
a charitable gift annuity is entered into, and

to special rule for serviceR) 18 amended-

(a) IN GENERAL.~Section 448(d)(5) (relating
(1) by inserting 'in fieldR described in para-

incidents uf ownership under such contract,
payrneuts under such contract, a.nd

"(i) such oixanization possesses all of the

graph (2)(A)" after "services by such per-

"Oi) such organiz.a.tion L8 entitled to all the

son", and
(2) by Inserting "CERTAIN PF.RSONAj," before "SERVICES" in the heading.

ing after the date of the enactment of this
Act.
(2) CHANGE il METHOD O? ACCOUNTING..-In the case of any taxpayer required by the

(b) EFFECTIVE DATE.(1) IN GENERAL.-The amendments manp. hy this section shall apply to taxa hie years end-

same as the timing- and amount of payment3 Lo each ::uch pen:on under such obligation
(a~ ~uch olJllgal,ion is in effect at the time of

"(ili) the timing and amount of payments unùer l:uch contract are substantially the

ments undcr such contract are persons entitled to payments as beneficIaries under such obligation on the date such obligation is entered into.
"(H) MEMBER OF FAMILY.~For purposes of
this paragraph, a.n individual's family consists of the individua.l's grandparents, the

"(ili) thc only persons entitled to pay-

öucli transfer).
"(E) EXCEPTION FOR CERTA¡¡ CONTRACTS HELD BY CHARITABLE REMAINDER TRUSTS.-A
person shall not be treated for purposes of

grandparcnts of such individual's spouse. the lincal descendants of such grandparents, and
any spouse of such a linea.l descendant.

amendments made by this section to change its method of accounting for its first taxable year ending after the date of the enactment

subparagraph (B) as an indirect beneficiary
unùer any life insurance, annuity, or endow-

"(1 REGULATIONs.-The Secretary shall prescribe such rcgulations as may be necessary or appropriate to carry out the purposes of this para.graph, inclUding regulations to prevent the a.voidance of such pur-

menL cuut,ract held by a charitable remainder annuity ~rust or a charit.able rema.inder unitrust (as defined in section 664(d)) solely

of this Actr (A) such Change shall be treat.ed as initiated by the taxpayer,

(E) such change shall be treated as made referred to in paragraph (1)(A) or (2)(A) of vided in this section, the amendment made
section 664(d~ if--

by reason of being entitled to any paymont

poses," (b) E.-FECTlVE DATE.(1) IN GENERAL.~Except as otherwise pro.
by this section shall apply to translers m'~de after Fcbruary 8, 1999.

with the consent of thA Secretary of the

Treasury, and
(C) the net amoant of tl1C adjustments rp-

quired to be taken into account by the tax"(ii) such trust is entitled to all the pay- pa.ragraph (3) of this subsection, section 170(f)(lO)(F) of the Internal Revcnue Code of payer under section 48\ of t.he Internal Rev. inCl1ts under such contract.
enue Code of 19B6 shall be taken into account

"0) such trust pmmesscs all of the inciùents of ownership under such contract, end
"(F) ExcrSE TAX ON PREMIUMS rAID.--'

(2) EXCISE TAX.-Except as provided In

1986 (as added by this seetlon) shall apply to

over a period (not greater than 4 taxahle

years) beginning with such first taxable oil any organization described in subsection ment of this Act.
year.
TION DEDUCTION FOR TRANS~'F.RS

"0) IN GENERAL.~There is hereby imposod

premiums paid after the date of the enact.
(3) REPORTING.-Clause (iii) of such section 170(f)(lO)(F) shall apply to premiums paid
tax imposed by such section applies to preTHROUGH AS8VMPTION OF l.ABII,
ITIES GIVING RISE TO A DEDUCTION.

SEC. 212, DENIA OF CHAITABLE CONTRIBU.

ASSOCIATED WITH SPLIT.DOLLA INSURACE ARRAGEMENTS.

by .:uch orga.nization on any life insurance, annuity, or endowment contract if the payment of premiums on such contract is in
connect.ion with a transfer for which a de

(c:) an excise tax equal to the premiums pa.id

after February 8, 1999 (determined as il the
miums paid after such date)
SEC. 213. PREVNTION OF DUPLICATION OF LOSS

170 (relating t.o di:salJowance of deduction in
certain cases and special rules) is ""mended

(al IN G¡'¡ßKAL.~SUo"ecLion (f) uf öecl,ion

by adding at the end Uie follow jug Ilew para-

duct-ion is not allowable under subparagraph (A), determined win.out rcgard to whon such tra.nsfer Is made.
purposes of clause (i), paymcnts madc by any
"(ii) PAYMENTS BY OTHER PERSONS.- -For
other person pursuant to an understanding or expectation referreù to in subpa.ragraph

graph:
"(10) SPLI'-UOLLAR LIFE INSURANCE, ANNr..

(a) IN GENERAL.-l;ection 35~ (relating to basis to distributees) is amended by ~ddíng
at the end the following new subsection:

ITY, AND ~NDOWMENT CONTRACTS.-

"(h) SPECIAL RULES FOR ASSUMPTION OF LI-

"(11) IN G¡'NERAL.-NoUiing in chis section
or in seccion 545(0)(2), 556(b)(2), 042(c), 2055, 2106(a)(2), or 2522 shall be construed to allow

a deduction, and no deduction shall be allowed, for any transfer to or for the use of an organization described in subsectloii (c) if iu
connection wit.h 8uch t.ransfer-

(A) sha!l be created as made by tho organization. "(iii) REPORTING.-Any organization on
spect to any premium shall file a.n annua.l return which includes"(I) the amount of such prcmiums paid

AElLll1ES TO WilCH SOBSECTlON (d) DOES NOT

which tax is imposed by clausc (i) with re-

ApPLY."(1) IN GENERAL.-lt, after applicat.ion of
the other provisions of this section to an ex-

property to which subsection (a)(l) applles

change or series of exchanges, the basif; of

"(i) the organizatioii directl.y or iiidirectly pays, or has previously paiù, any premium on any personal benefit. Gunt.nl.L:t. with respect to the transferor, UI'

during the year and the namc and TIN of each beneficiary under the contra.ct to which not below such falr market value) by the amount (determined as of the date of the exthe premium relates, and
"(II) such other information as the Secchange) of any Iiabllity-

exceeds the fair market value of such property, then such basis shall be reduced (but

II(A) which is assumed in exch::ng~ for ¡:;eh retary may require. tion that aiiy person will directly or indiThe penal ties applicable to returns required property, and rectly pay aiiy premium on any personal under section 6033 shall apply to returns re"(B) with respect to which snhseet.ion (d)(I) benefit. cunl,rac:t. with respect to the trans- Quired under this clause. Returns required does not apply to the assumption. ft:i.ur under this ci!1use shall be furnished at such "(2) EXeEPTlON.--Pame-raph (1) sball not. "(B) PERSONAL BENEFIT CONTRACT.~For time and in such manner a.s t.he Secretary apply to any liabilit.y if the trade or husinesE\ purpU::es of subparagraph (A), the term Ipershall by forms or regulations require. giVing rise to the Iiabllity i3 transferred t.o Buiial benefit, contract' means, with respect "(iv) CERTAIN RULES TO APPLY.~The tax the person assuming the liability as p~tlt of to the tra.nsferor, aiiy life insurance, annu- imposed by this subparagraph shall be trcat- the exchange. it.y, or ellùowiiient contract if any direct or ed as impo3ed by chapter 12 for purposes of "(3) LIABILlT.~For purposes of t.his suhinlÌireuL ueiieficiary under such contract is this title other than subchaptcr B of chapter section, the term 'llabillty' shall incliirle ?_ny

"(ii) t.llere is an unùersLanding or expecta-

the Lransfelor, any member of the transferur's family. or any other person (other
"(C) ApPi"!CATlON TO CHARITABLE REMAIN-

than an organi;¿aLioii described in subsection
(e)) ùesig-naLeù u.v the transferor.

42. "(0) SPECIAL RULE WlilRE S'rATE REQOIRES

SPECIFICATION OF CIIARllADLE GIFT ANNUITANT
IN CONTRACT.-In tho casc of an obligation to

DER TRUSTS.-In the case of a transfer to a

pay a charitable gift annuity refcrred to in
SUbparagraph (Dj which ìs entered into under

gent or otherwise taken IntD account for purposes of this title. "(4) REGULATlONs.-'lhe Secretary she.1l
prescribe such regulaLons as m~:ty be nec-

obligation to make payment, withou t r8garrl to whether the oblìgation is fixed or contin-

t.ru::t referreù t.ü in subparagraph (E), ref-

erences in subparagraphs (A) and (F) to an

for the charitable gift annuity to be cxempt

the laws of a State which rcquircs, in order

essary to carry out the provisions of this
subsection. "

016

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27554

CONGRESS

ION AL RECORD.,SENA TE

October 29, 1999
(1) IN GENERAL.-Except as provided in

(b) ApPLICATION OF COMPARABLE RULES TO
P AR'rNERSHIPS.-The Secretary of the T,'easury or his delegate sha.ll prescribe rules

after in this subsection referrcd to as tho

ble counting and to prevent the abuse of

'distributed corporatIon'),
"(B) the corporate partner has control of

such purposes!' (b) EFFECTIV DATE.-

under subchflpter K of chapter 1 of the Inter- after the distribution or at any time therenfll Revenue Code of 1986 to prevent the ac- after, and
celeration or duplicatiun of losses through

which provide appropriate adjustlIleiits

the distributed corporation immediately

paragraph (2), the amendment made by this
section shall apply to distributions made
after July 14, 1999.

the assumption of (or triinsfer of asset. sub- sucli stock immediately before the distribu-

"(C) the partnership's a.djusted basis in

ject. to) l1abil1ties described in section

35B(h)(3) of such Code (as added by subsection (a)) in t,ransactions 1nvolving part,nership~. (c) EFFECTIVE DATES.(1) IN GENERAL.-Tbe amendments madc by
abil ty after October ia, 1999.

justed bas1s In such stock immodlatoly aftor
the distribution,

tion exceeded the corporate partner's ad-

1999.-In the ease of a corporatIon which is a
partner 1n a partnership.as uf July 14, 1999,

(2) PARTNERSIfS IN EX'n;KCE ON JULY 14,

the amendment made by this section shall
enactment of this Act.

then an amount equal to such oxcess shall be
applied to reduce (In accordance with sub-

from sucli partnersliip after the date of the
SEC. 216. PROUIITD ALOCATIONS OF STOCK
IN S CORPORATION ESOP.

apply to distributions made to such partner

this section shall apply to ß::sumptions of li- section (c)) the balis of property held by the

distributed corporation at such timo (or, if
the corporate partncr doos not control the distributed corporatlon at suoh time, at the time the corporate partnor first has such

section (b) shall apply to assumptions of iiabili ty after October iS, 1999, or such later
date as may be prescribed in such rules. SEC. 214. CONSISTENT TRATMENT AN BASIS

(2) RULEs.-The rules prescribed under sub-

quallfications for tax oredit employee stock
lowing new subsection:

(a) IN GENERAL.-Section 109 (relating to

control).
"(2) EXCEPTON FOR CERTAIN DISTRmUTIONS

ownership plans) is amended by redesig~
nating subsoction (p) &s subsection (q) and

ALLOCATION RULE FOR TRS.
FERS OF INTANGIBLES IN CERTAIN NONK¡';COGNlTION TRASACTIOI'S.

BEFORE CONTOL ACQUffED.-Paragraph (I) shall not apply to any distribution of stock

by insertiug after subsection (0) the fol"(p) PROHITTF.D ALLOCATIONS Or- SECURI-

351 (relating to transfer to corporation con- control of such corporation trolled by transferor) is amended by redes1g- after such distributIon, and
nating subsection (h) lt subsection (í) and by

(a) 'lRANSFERS TO CORPORATIONs.-Sectlon

in the diatribu ted corporation if-

TIES IN AN S CORPORATION.-

"(A) the corporate partner does not have

immediately

"(1) IN GENERAL_-An employee stock owuership plan holding employer securl~leti consistIng of stock in an S corporation shall

inserting a.fter subsection (g) the folloWing
new subsection: "(h) TRl:NI'Ml:NT OF TRANSFERS OF INTANGml.F. PROPJ::H.'lY."(1) TRANSF"RS OF LESS THAN ALL SUBSTAN'TIAI. HIGH'l'S.

"(n) the corporate partnor ostabtishes to provide that no portiun of the assets of the the satisfaction of tho Sccretary that such pla.n attributable to (or alloca.ble in lieu of) distribution was Dot part of a plan or ar- such employer securities ma.y, during a nonrangement to acquiro control of the distrib- allocation year, accrue (or be allocated diuted corporation. rectly ur indirectly under any plan of thc "(3) LIMATIONS ON DASIS REDUCTON.employer meeting the requirements of sec-

"(A) IN G':N':RAL.-A transfer of an interest
in intangIble property (as defined In section

9:l6(h)(3)(B)) shall be treated under this sectIon a.s a tran::fer of lJlupelty even if the

rights or t.he transferor in t.he property.

t.ransfer is of less than a.ll of t.lie siiustantial

"eR) AI,LOeATION OF BASIS.-In ~he case of a transfer of less than all uf ~he tiubs!;antial

duction under paramph (1) shalJ not exceed person. the amount by which the sum of the aggre"(2) FAILURE TO MEET REQUIREMENTS.ga te adjusted bases of the property and the "(A) IN GEKERAL.-lf a plan fails to meet amount of money of the distributed corpora- the requirements of paragraph (1). tho plan tion exceeds the oorporate partner's adjusted shall be treated as having distributed t.o any basis in the stock of tho distributed corpora- disqualified person tho amount allocated to tion. the account of such porson in violation of
paragraph (1) in the basis of any propsrty
duction).
BASIS OF PROPERTY.-No reduction under
"(n) REDUCTON NOT TO EXCEED ADJUSTED

"(A) IN GENERAL.-The amount of the re-

tion 401(a)) for the benefit of any disqual1fiod

riglit.s or the transfelur in the intangible
righ ts transferred on ¡,ie basis of their re5pect1ve fair market. values.

paragraph (1) at the t.ime of such allocation.
"(B) CRO REFERENCE.-

pr.-)r,'~r.t.v, thp. transferor's ba:sis imrnediately I)l~:"l' l.l~L' ,rá.Hsfer sho.il be allocated among

HFor excise tux relating to violations of
"(3) NONALLOCATION YEAR.-For purposos of

tbe rigbts retaIned by !;he tran.feror and the erty (determined without regard to such re- paragraph (1) and ownership of synthetic equity. see section 4979A.
shall exceed the adjusted basis of such prop-

"(2) NONRJ;COGNITION NOT TO APPLY TO IN-

'lANGIHLl! PROPERTY DEVELOPED FOR TRANS-

LIMlIED.-If tho amount of any reduction
plication of paragraph (3)(A)) exceeds the ag-

"(1) GArN RECOGNITION WHRE REDUCTION

this subsectionBuch plan year-

,'J;R¡'¡'.-Thiti tiec"ion shall not apply to a transfer uf intangible property developed by
the t.ran::fel'oI' or any related person if such

undcr paragraph (1) (determined after the ap-

develupiuent was pur.suant t.o an arrangement wnli !;he transferee."

section (d) of section 721 is amended to read
a:: fullows:
"(d) TRANSFERS OF INTANGIBLE PROP-

(b) TRANSFERS TO PARTNEIlIIPS.-- Sub-

corporate partner as long-term capital gain, and

grogate adjustod ba.ses of the property of the diEtributod corporatfon"(A) such excess shalJ be recognized by the
"(B) the corporate partner's adjusted basis in the stock of the distributed corporation

year' means any plan j,rcar of an employee atock ownership pla.n if, at any time during

"(A) IN GENERAL.-Thc term 'nonailocation

percent of the number of shares of stock in
the S corporation.

"(i) such plan holds omployer securi ties consIsting of stock in an S corporaticn, and "(ii) disqualified persons own at ieast 50
"(E) ATTRffUTlON RULES.-For purposes 01

ERTY.-

shall be incrcasod by such excess.

rules of section 351(h) shall apply for p'irposes of this section.

"(1) IN GENERAL.-Rules simllar to the

section, the term lcontrol' means ownership

"(5) CONTROL.-..For purposes of this sub-

subparagraph (Al"(i) IN GENERAL.-The rules of sectIon
ownership, except that-

of stock meeting the requirements of section
1501(a)(2). "(6) INDIRECT DISTRffOTIONS.-For purposes
of paragraph (1). if a corporation acquires (other than in a distribution from a partner-

31S(a) shall apply for purposes of determinIng

SHI3.-For regulat.ory authority to treat in~ tangibles t.ransfcrrod to a partnership as
sold, see soction 367(d)(3)."

"(2) TRANSI"EIl TO FOREIGN PARTNER-

"(1) in applyIng paragraph (1) t.hereof. tbe members of an individual's family shall inparagraph (4)(D). and

clude members of tbe family rlegcribed in

mado by this sect.ion shall apply to transfers in whole or in part by reference to subon or after the date of the enactment of this sectIon (a)(2) or (b), the corporation shall be treated as receiving a distribution of such Act. SEC. 216. DISTRBUTIONS BY A PARTNERSHIP TO stock from a partnership.
A CORPORATE PARTNER OF STOCK
IN ANOTHER CORPORATION.
(al IN G¡'NERAL.-Sec~ion 732 (relating to

(c) EFFECTIVE DATE.-'lhe amendments

ship) stock the basis of which Is determined

"(II) paragraph (4) thereof shall not apply.
standing the employee trust exception in
gection 318(a)(2)(R)(1). indIvidual shail be

"(ii) DEEMED-OWNRn SHAR':S.-NotwiLh-

"(7) SPECL'\L RULE FOR STOCK IN CON-

treated as owning deemed-owneù sharei. of the individuaL
Solely for purposes of applyln!: para!:n"ph (5),

TROLLED CORPORATION.-If the property held

basis of distributed pruperty other than
mOnf~Y) Is amenùed by adding- at the end the

by a distributed corporatIon is stock in a corporation which the distributed corporation controls, this subsection shall be ap-

this subparagraph shall be applied after the
attrIbution rules of paragraph (5) have been

following new sub::ect.ìon:
'(0 CORRESPONDING ADJUSTMEl"T TO BAGIS

plicd to reduce the basis of the property of
such controlled corporation. This sub3ection

applied.
thiR Rnbsect.ion"(4) DrSQUALrF'TRD P~H.SON.-F'or pur.lJose:: uf

OF ASSETS OF A DISTHISUTED CORrORATlON CONTROLLED BY A CORPORATE PARTNER.-

shall be reapplied to any property of any
controlled corporation which is stock in a

"(A) TN GENFRAr..-The term 'di,qualifieù
person' mp-stns any person if-

"(I) IN GENERAL.-If-

corporation which it controls.

"(1) t.he Rggregate number of deemed-

"(A) a corporation (hereafter in this sub~ection referred to as the 'corporate part-

UtI") receives a distribution from a partnership of stock in another corporation (hcrc-

"(8) REouLATroNs.-The Secretary shall prescribe such regulations as may be necessa.ry to carry out the purposes of this sub~ section, inCluding regulations to avoid don-

owned sha.re5 of such person a.Ild the Ilienibel'S of such person's famlly is at leatit 20 per-

cent of the number of deemed-owned ~liale::
Of st,or:k in the R corporation, ur

017