MODIFICATIONS TO REGULATIONS ISSUED UNDER SECTION 305(c).

SEC. 11322. MODIFICATIONS TO REGULATIONS ISSUED UNDER SECTION 305(c). (a) General Rule.— Subsection (c) of section 305 (relating to certain transactions treated as distributions) is amended by adding at the end thereof the following new sentence: “Regulations prescribed under the preceding sentence shall provide that— “(1) where the issuer of stock is required to redeem the stock at a specified time or the holder of stock has the option to require the issuer to redeem the stock, a redemption premium resulting from such requirement or option shall be treated as reasonable only if the amount of such premium does not exceed the amount determined under the principles of section 1273(a)(3), “(2) a redemption premium shall not fail to be treated as a distribution (or series of distributions) merely because the stock is callable, and “(3) in any case in which a redemption premium is treated as a distribution (or series of distributions), such premium shall be 104 STAT. 1388–464taken into account under principles similar to the principles of section 1272(a).” (b) Effective Date.— (1) In general.— Except as provided in paragraph (2), the amendment made by subsection (a) shall apply to stock issued after October 9, 1990. (2) Exception.— The amendment made by subsection (a) shall not apply to any stock issued after October 9, 1990, if— (A) such stock is issued pursuant to a written binding contract in effect on October 9, 1990, and at all times thereafter before such issuance, (B) such stock is issued pursuant to a registration or offering statement filed on or before October 9, 1990, with a Federal or State agency regulating the offering or sale of securities and such stock is issued before the date 90 days after the date of such filing, or (C) such stock is issued pursuant to a plan filed on or before October 9, 1990, in a title 11 or similar case (as defined in section 368(a)(3)(A) of the Internal Revenue Code of 1986).