PERSONAL HOLDING COMPANY INCOME AMENDMENTS,

SEC. 2106. PERSONAL HOLDING COMPANY INCOME AMENDMENTS, (a) In General.— Section 543(a)(6) (relating to definition of personal holding company income) is amended to read as follows: “(6) Use of corporate property by shareholder.— 90 STAT. 1903 “(A) Amounts received as compensation (however designated and from whomever received) for the use of, or the right to use, tangible property of the corporation in any case where, at any time during the taxable year, 25 percent or more in value of the outstanding stock of the corporation is owned, directly or indirectly, by or for an individual entitled to the use of the property (whether such right is obtained directly from the corporation or by means of a sublease or other arrangement). “(B) Subparagraph (A) shall apply only to a corporation which has personal holding company income in excess of 10 percent of its ordinary gross income. “(C) For purposes of the limitation in subparagraph (B), personal holding company income shall be computed— “(i) without regard to subparagraph (A) or paragraph (2), “(ii) by excluding amounts received as compensation for t he use of (or right to use) intangible property (other than mineral, oil. or gas royalties or copyright royalties) if a substantial part, of the tangible property used in connection with such intangible property is owned by the corporation and all such tangible and intangible property is used in the active conduct of a trade or business by an individual or individuals described in subparagraph (A), and “(iii) by including copyright royalties and adjusted income from mineral, oil, and gas royalties.” (b) Effective Date.— The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 1976.