LETTERS, MEMORANDUMS, ETC.

SEC. 514. LETTERS, MEMORANDUMS, ETC. (a) Treatment as Property Which Is Not a Capital Asset.—Section 1221(3) (relating to definition of capital asset) is amended to read as follows: “(3) a copyright, a literary, musical, or artistic composition, a letter or memorandum, or similar property, held by— “(A) a taxpayer whose personal efforts created such property, “(B) in the case of a letter, memorandum, or similar property, a taxpayer for whom such property was prepared or produced, or “(C) a taxpayer in whose hands the basis of such property is determined, for purposes of determining gain from a sale or exchange, in whole or part by reference to the basis of such property in the hands of a taxpayer described in subparagraph (A) or (B);”. (b) Conforming Amendments.— (1) Section 341(e)(5)(A)(iv) (relating to definition of subsection (e) asset in the case of collapsible corporations) is amended to read as follows: “(iv) property (unless included under clause (i), (ii), or (iii)) which consists of a copyright, a literary, musical, or artistic composition, a letter or memorandum, or similar property, or any interest in any such property, if the property was created in whole or in part by the personal efforts of, or (in the case of a letter, memorandum, or similar property) was prepared, or produced in whole or in part for, any individual who owns more than 5 percent in value of the stock of the corporation.” (2) Section 1231(b)(1)(C) (relating to definition of property used in the trade or business) is amended by inserting “, a letter or memorandum” before “, or similar property”. (c) Effective Date.—The amendments made by this section shall apply to sales and other dispositions occurring after July 25, 1969.