MODIFICATIONS TO SECTION 1060.

SEC. 11323. MODIFICATIONS TO SECTION 1060. (a) Effect of Allocation Agreements.— Subsection (a) of section 1060 (relating to special allocation rules for certain asset allocations) is amended by adding at the end thereof the following new sentence: “If in connection with an applicable asset acquisition, the transferee and transferor agree in writing as to the allocation of any consideration, or as to the fair market value of any of the assets, such agreement shall be binding on both the transferee and transferor unless the Secretary determines that such allocation (or fair market value) is not appropriate.” (b) Information Required in Case of Certain Transfers of Interest in Entities.— (1) In General.— Section 1060 is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection: “(e) Information Required in Case of Certain Transfers of Interests in Entities.— “(1) In general.— If— “(A) a person who is a 10-percent owner with respect to any entity transfers an interest in such entity, and “(B) in connection with such transfer, such owner (or a related person) enters into an employment contract, covenant not to compete, royalty or lease agreement, or other agreement with the transferee, such owner and the transferee shall, at such time and in such manner as the Secretary may prescribe, furnish such information as the Secretary may require. “(2) 10-percent owner.— For purposes of this subsection— “(A) In general.— The term ‘10-percent owner’ means, with respect to any entity, any person who holds 10 percent or more (by value) of the interests in such entity immediately before the transfer. “(B) Constructive ownership.— Section 318 shall apply in determining ownership of stock in a corporation. Similar principles shall apply in determining the ownership of interests in any other entity. 104 STAT. 1388–465 “(3) Related person.— For purposes of this subsection, the term ‘related person’ means any person who is related (within the meaning of section 267(b) or 707(b)(D) to the 10-percent owner.” (2) Technical amendment.— Clause (x) of section 6724(d)(D(B) is amended by striking “section 1060(b)”, and inserting “subsection (b) or (e) of section 1060”. (c) Information Required in Section 338(h)(10) Transactions.— (1) In general.— Paragraph (10) of section 338(h) is amended by adding at the end thereof the following new subparagraph: “(C) Information required to be furnished to the secretary.— Under regulations, where an election is made under subparagraph (A), the purchasing corporation and the common parent of the selling consolidated group shall, at such times and in such manner as may be provided in regulations, furnish to the Secretary the following information: “(i) The amount allocated under subsection (b)(5) to goodwill or going concern value. “(ii) Any modification of the amount described in clause (i). “(iii) Any other information as the Secretary deems necessary to carry out the provisions of this paragraph.” (2) Conforming amendment.— Subparagraph (B) of section 6724(d)(1) is amended by striking “or” at the end of clause (x), by striking the period at the end of clause (xi) and inserting “, or,” and by inserting after clause (xi) the following new clause: “(xii) subparagraph (C) of section 338(h)(10) (relating to information required to be furnished to the Secretary in case of elective recognition of gain or loss).” (d) Effective Date.— (1) In general.— Except as provided in paragraph (2), the amendments made by this section shall apply to acquisitions after October 9, 1990. (2) Binding contract exception.— The amendments made by this section shall not apply to any acquisition pursuant to a written binding contract in effect on October 9, 1990, and at all times thereafter before such acquisition.