MODIFICATIONS OF DISCHARGE OF INDEBTEDNESS PROVISIONS.

SEC. 13226. MODIFICATIONS OF DISCHARGE OF INDEBTEDNESS PROVISIONS. (a) Repeal of Stock for Debt Exception in Determining Income From Discharge of Indebtedness.— (1) In general.— Subsection (e) of section 108 is amended— (A) by striking paragraph (10) and by redesignating paragraph (11) as paragraph (10), and (B) by amending paragraph (8) to read as follows: “(8) Indebtedness satisfied by corporation’s stock.— For purposes of determining income of a debtor from discharge of indebtedness, if a debtor corporation transfers stock to a creditor in satisfaction of its indebtedness, such corporation shall be treated as having satisfied the indebtedness with an amount of money equal to the fair market value of the stock.” (2) Conforming amendments.— (A) Subparagraph (C) of section 382(l)(5) is amended to read as follows: “(C) Coordination with section 108.— In applying section 108(e)(8) to any case to which subparagraph (A) applies, there shall not be taken into account any indebtedness for interest described in subparagraph (B).” (B) Section 108(e)(6) is amended by striking “For” and inserting “Except as provided in regulations, for”. (3) Effective date.— 107 STAT. 488 (A) In general.— Except as otherwise provided in this paragraph, the amendments made by this subsection shall apply to stock transferred after December 31, 1994, in satisfaction of any indebtedness. (B) Exception for title 11 cases.— The amendments made by this subsection shall not apply to stock transferred in satisfaction of any indebtedness if such transfer is in a title 11 or similar case (as defined in section 368(a)(3)(A) of the Internal Revenue Code of 1986) which was filed on or before December 31, 1993. (b) Tax Attributes Subject to Reduction.— (1) Minimum tax credit.— Section 108(b)(2) (relating to tax attributes affected; order of reduction) is amended by redesignating subparagraphs (C), (D), and (E) as subparagraphs (D), (E), and (F) and by adding after subparagraph (B) the following new subparagraph: “(C) Minimum tax credit.— The amount of the minimum tax credit available under section 53(b) as of the beginning of the taxable year immediately following the taxable year of the discharge.” (2) Passive activity losses and credits.— Section 108(b)(2), as amended by paragraph (1), is amended by redesignating subparagraph (F) as subparagraph (G) and by adding after subparagraph (E) the following new subparagraph: “(F) Passive activity loss and credit carryovers.— Any passive activity loss or credit carryover of the taxpayer under section 469(b) from the taxable year of the discharge.” (3) Conforming amendments.— (A) Subparagraph (B) of section 108(b)(3) is amended to read as follows: “(B) Credit carryover reduction.— The reductions described in subparagraphs (B), (C), and (G) shall be 33¥s cents for each dollar excluded by subsection (a). The reduction described in subparagraph (F) in any passive activity credit carryover shall be 33)4 cents for each dollar excluded by subsection (a).” (B) Subparagraph (B) of section 108(b)(4) is amended by striking “(C)” in the text and heading thereof and inserting “(D)”. (C) Subparagraph (C) of section 108(b)(4) is amended by striking “(E)” in the text and heading thereof and inserting “(G)”. (D) Subparagraph (B) of section 108(g)(3) is amended— (i) by striking “subparagraphs (A), (B), (C), and (E)” and inserting “subparagraphs (A), (B), (C), (D), (F), and (G)”, (ii) by striking “subparagraphs (B) and (E)” and inserting “subparagraphs (B), (C), and (G)”, and (iii) by inserting before the period at the end the following: “and the attribute described in subparagraph (F) of subsection (b)(2) to the extent attributable to any passive activity credit carryover”. (4) Effective date.— The amendments made by this subsection shall apply to discharges of indebtedness in taxable years beginning after December 31, 1993.