ELIMINATION OF OBSOLETE PROVISIONS IN SECTION 243(bl.

SEC. 11814. ELIMINATION OF OBSOLETE PROVISIONS IN SECTION 243(bl. (a) In General.— Subsection (b) of section 243 is amended to read as follows: “(b) Qualifying Dividends.— “(1) In general.— For purposes of this section, the term ‘qualifying dividend’ means any dividend received by a corporation— “(A) if at the close of the day on which such dividend is received, such corporation is a member of the same affiliated group as the corporation distributing such dividend, and “(B) if— “(i) such dividend is distributed out of the earnings and profits of a taxable year of the distributing corporation which ends after December 31, 1963, for which an election under section 1562 was not in effect, and on each day of which the distributing corporation and the corporation receiving the dividend were members of such affiliated group, or “(ii) such dividend is paid by a corporation with respect to which an election under section 936 is in effect for the taxable year in which such dividend is paid. “(2) Affiliated group.— For purposes of this subsection, the term ‘affiliated group’ has the meaning given such term by section 1504(a), except that for such purposes sections 1504(b)(2), 1504(b)(4), and 1504(c) shall not apply. “(3) Special rule for groups which include life insurance companies.— “(A) In general.— In the case an affiliated group which includes 1 or more insurance companies under section 801, no dividend by any member of such group shall be treated as a qualifying dividend unless an election under this paragraph is in effect for the taxable year in which the dividend is received. The preceding sentence shall not apply in the case of a dividend described in paragraph (I)(B)(ii). “(B) Effect of election.— If an election under this paragraph is in effect with respect to any affiliated group— “(i) part II of subchapter B of chapter 6 (relating to certain controlled corporations) shall be applied with respect to the members of such group without regard to sections 1563(a)(4) and 1563(b)(2)(D), and 104 STAT. 1388–557 “(ii) for purposes of this subsection, a distribution by any member of such group which is subject to tax under section 801 shall not be treated as a qualifying dividend if such distribution is out of earnings and profits for a taxable year for which an election under this paragraph is not effective and for which such distributing corporation was not a component member of a controlled group of corporations within the meaning of section 1563 solely by reason of section 1563(b)(2)(D). “(C) Election.— An election under this paragraph shall be made by the common parent of the affiliated group and at such time and in such manner as the Secretary shall by regulations prescribe. Any such election shall be binding on all members of such group and may be revoked only with the consent of the Secretary.” (b) Conforming Amendment.— Clause (i) of section 1504(c)(2)(B) is amended— (1) by striking “section 243(b)(6)” and inserting “section 243(b)(3)”, and (2) by striking “section 243(b)(5)” and inserting “243(b)(2)”. (c) Effective Date.— (1) In general.— The amendments made by this section shall apply to taxable years beginning after December 31, 1990. (2) Treatment of old elections.— For purposes of section 243(b)(3) of the Internal Revenue Code of 1986 (as amended by subsection (a)), any reference to an election under such section shall be treated as including a reference to an election under section 243(b) of such Code (as in effect on the day before the date of the enactment of this Act).