DEDUCTIONS BY CORPORATIONS FOR DIVIDENDS RECEIVED.

SEC. 18. DEDUCTIONS BY CORPORATIONS FOR DIVIDENDS RECEIVED. (a) Exclusion of Certain Dividends.—Section 246 (relating to rules applying to deductions by corporations for dividends received) is amended by adding at the end thereof the following new subsection: “(c) Exclusion of Certain Dividends.— “(1) In general.— No deduction shall be allowed under section 243, 244, or 245. in respect of any dividend on any share of stock— “(A) which is sold or otherwise disposed of in any case in which the taxpayer has held such share for 15 days or less, or “(B) to the extent that the taxpayer is under an obligation (whether pursuant to a short sale or otherwise) to make corresponding payments with respect to substantially identical stock or securities. “(2) 90-DAY RULE IN THE CASE OF CERTAIN PREFERENCE DIVIDENDS.—In the case of any stock having preference in dividends, the holding period specified in paragraph (1) (A) shall be 90 days in lieu of 15 days if the taxpayer receives dividends with respect to such stock which are attributable to a period or periods aggregating in excess of 366 days. “(3) Determination of holding periods.— For purposes of this subsection, in determining the period for which the taxpayer has held any share of stock— “(A) the day of disposition, but not the day of acquisition, shall be taken into account, 72 Stat. 1615 “(B) there shall not be taken into account any day which is more than 15 days (or 90 days in the case of stock to which paragraph (2) applies) after the date on which such share becomes ex-dividend, and “(C) paragraph (4) of section 1223 shall not apply. The holding periods determined under the preceding provisions of this paragraph shall be appropriately reduced (in the manner provided in regulations prescribed by the Secretary or his delegate) for any period (during such holding periods) in which the taxpayer has an option to sell, is under a contractual obligation to sell, or has made (and not closed) a short sale of, substantially identical stock or securities.” (e) Effective Date.—The amendment made by subsection (a) shall apply with respect to taxable years ending after December 31, 1957, but only with respect to shares of stock acquired or short sales made after December 31, 1957.