EMPLOYEES

SEC. 335. EMPLOYEES (a) Amendment of Section 165 (b).—Section 165 (b) (relating to taxability of beneficiary on distributions from an employees’ trust) is hereby amended by adding at the end thereof the following new sentence: “Where such total distributions include securities of the employer corporation, there shall be excluded from such excess the net unrealized appreciation attributable to that part of the total distributions which consists of the securities of the employer corporation so distributed. The amount of such net unrealized appreciation and the resulting adjustments to basis of the securities of the employer corporation so distributed shall be determined in accordance with regulations which shall be prescribed by the Secretary. For purposes of this subsection, the term ‘securities’ means only snares of stock and bonds or debentures issued by a corporation with interest coupons or in registered form, and the term ‘securities of the employer corporation’ includes securities of a parent or subsidiary corporation (as defined in section 130A (d) (2) and (3)) of the employer corporation.” (b) Effective Date.—The amendment made by this section shall be applicable with respect to distributions made after December 31, 1950.