AMENDMENTS RELATED TO TITLE X OF 1997 ACT.

SEC. 6010. AMENDMENTS RELATED TO TITLE X OF 1997 ACT. (a) Amendments Related to Section 1001 of 1997 Act.— (1) Paragraph (2) of section 1259(b) of the 1986 Code is amended— (A) by striking “debt” each place it appears in clauses (i), (ii), and (iii) of subparagraph (A) and inserting “position”; (B) by striking “and” at the end of subparagraph (A); and (C) by redesignating subparagraph (B) as subparagraph (C) and by inserting after subparagraph (A) the following new subparagraph:112 STAT. 813 “(B) any hedge with respect to a position described in subparagraph (A), and”. (2) Section 1259(d)(1) of the 1986 Code is amended by inserting “(including cash)” after “property”. (3) Subparagraph (D) of section 475(f)(1) of the 1986 Code is amended by adding at the end the following new sentence: “Subsection (d)(3) shall not apply under the preceding sentence for purposes of applying sections 1402 and 7704.”. (4) Subparagraph (C) of section 1001(d)(3) of the 1997 Act is amended by striking “within the 30-day period beginning on” and inserting “before the close of the 30th day after”. (b) Amendment Related to Section 1011 of 1997 Act.— Paragraph (1) of section 1059(g) of the 1986 Code is amended by striking “and in the case of stock held by pass-thru entities” and inserting “, in the case of stock held by pass-thru entities, and in the case of consolidated groups”. (c) Amendments Related to Section 1012 of 1997 Act.— (1) Paragraph (1) of section 1012(d) of the 1997 Act is amended by striking “1997, pursuant” and inserting “1997; except that the amendment made by subsection (a) shall apply to such distributions only if pursuant”. (2) Subparagraph (A) of section 355(e)(3) of the 1986 Code is amended— (A) by striking “shall not be treated as described in” and inserting “shall not be taken into account in applying”; and (B) by striking clause (iv) and inserting the following new clause: “(iv) The acquisition of stock in the distributing corporation or any controlled corporation to the extent that the percentage of stock owned directly or indirectly in such corporation by each person owning stock in such corporation immediately before the acquisition does not decrease.”. (3) (A) Subsection (c) of section 351 of the 1986 Code is amended to read as follows: “(c) Special Rules Where Distribution to Shareholders.— “(1) In general.— In determining control for purposes of this section, the fact that any corporate transferor distributes part or all of the stock in the corporation which it receives in the exchange to its shareholders shall not be taken into account. “(2) Special rule for section 355.— If the requirements of section 355 (or so much of section 356 as relates to section 355) are met with respect to a distribution described in paragraph (1), then, solely for purposes of determining the tax treatment of the transfers of property to the controlled corporation by the distributing corporation, the fact that the shareholders of the distributing corporation dispose of part or all of the distributed stock shall not be taken into account in determining control for purposes of this section.”. (B) Clause (ii) of section 368(a)(2)(H) of the 1986 Code is amended to read as follows: “(ii) in the case of a transaction with respect to which the requirements of section 355 (or so much of section 356 as relates to section 355) are met, the 112 STAT. 814fact that the shareholders of the distributing corporation dispose of part or all of the distributed stock shall not be taken into account.”. (d) Amendments Related to Section 1013 of 1997 Act.— (1) Paragraph (5) of section 304(b) of the 1986 Code is amended by striking subparagraph (B) and by redesignating subparagraph (C) as subparagraph (B). (2) Subsection (b) of section 304 of the 1986 Code is amended by adding at the end the following new paragraph: “(6) Avoidance of multiple inclusions, etc.— In the case of any acquisition to which subsection (a) applies in which the acquiring corporation or the issuing corporation is a foreign corporation, the Secretary shall prescribe such regulations as are appropriate in order to eliminate a multiple inclusion of any item in income by reason of this subpart and to provide appropriate basis adjustments (including modifications to the application of sections 959 and 961).”. (e) Amendments Related to Section 1014 of 1997 Act.— (1) Paragraph (1) of section 351(g) of the 1986 Code is amended by adding “and” at the end of subparagraph (A) and by striking subparagraphs (B) and (C) and inserting the following new subparagraph: “(B) if (and only if) the transferor receives stock other than nonqualified preferred stock— “(i) subsection (b) shall apply to such transferor; and “(ii) such nonqualified preferred stock shall be treated as other property for purposes of applying subsection (b).”. (2) Clause (ii) of section 354(a)(2)(C) of 1986 Code is amended by adding at the end the following new subclause: “(III) Extension of statute of limitations.— The statutory period for the assessment of any deficiency attributable to a corporation failing to be a family-owned corporation shall not expire before the expiration of 3 years after the date the Secretary is notified by the corporation (in such manner as the Secretary may prescribe) of such failure, and such deficiency may be assessed before the expiration of such 3-year period notwithstanding the provisions of any other law or rule of law which would otherwise prevent such assessment.”. (f) Amendment Related to Section 1024 of 1997 Act.— Section 6331(h)(1) of the 1986 Code is amended by striking “The effect of a levy” and inserting “If the Secretary approves a levy under this subsection, the effect of such levy”. (g) Amendments Related to Section 1031 of 1997 Act.— (1) Subsection (1) of section 4041 of the 1986 Code is amended by striking “subsection (e) or (f)” and inserting “subsection (f) or (g)”. (2) Subsection (b) of section 9502 of the 1986 Code is amended by moving the sentence added at the end of paragraph (1) to the end of such subsection. (3) Subsection (c) of section 6421 of the 1986 Code is amended— (A) by striking “(2)(A)” and inserting “(2)”; and112 STAT. 815 (B) by adding at the end the following sentence: “Subsection (a) shall not apply to gasoline to which this subsection applies.”. (h) Amendments Related to Section 1032 of 1997 Act.— (1) Section 1032(a) of the 1997 Act is amended by striking “Subsection (a) of section 4083” and inserting “Paragraph (1) of section 4083(a)”. (2) Section 1032(e)(12)(A) of the 1997 Act shall be applied as if “gasoline, diesel fuel,” were the material proposed to be stricken. (3) Paragraph (1) of section 4082(d) of the 1986 Code is amended to read as follows: “(1) Aviation-grade kerosene.— Subsection (a)(2) shall not apply to aviation-grade kerosene (as determined under regulations prescribed by the Secretary) which the Secretary determines is destined for use as a fuel in an aircraft.”. (4) Paragraph (3) of section 4082(d) of the 1986 Code is amended by striking “a removal, entry, or sale of kerosene to” and inserting “kerosene received by”. (5) Paragraph (1) of section 4101(e) of the 1986 Code is amended by striking “dyed diesel fuel and kerosene” and inserting “such fuel in a dyed form”. (i) Amendment Related to Section 1034 of 1997 Act.— Paragraph (3) of section 4251(d) of the 1986 Code is amended by striking “other similar arrangement” and inserting “any other similar arrangement”. (j) Amendments Related to Section 1041 of 1997 Act.— (1) Subparagraph (A) of section 512(b)(13) of the 1986 Code is amended by inserting “or accrues” after “receives”. (2) Subclause (I) of section 512(b)(13)(B)(i) of the 1986 Code is amended by striking “(as defined in section 513A(a)(5)(A))”. (3) Paragraph (2) of section 1041(b) of the 1997 Act is amended to read as follows: (2) Binding contracts.— The amendments made by this section shall not apply to any amount received or accrued during the first 2 taxable years beginning on or after the date of the enactment of this Act if such amount is received or accrued pursuant to a written binding contract in effect on June 8, 1997, and at all times thereafter before such amount is received or accrued. The preceding sentence shall not apply to any amount which would (but for the exercise of an option to accelerate payment of such amount) be received or accrued after such 2 taxable years.”. (k) Amendments Related to Section 1053 of 1997 Act.— (1) Section 853 of the 1986 Code is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection: “(e) Treatment of Taxes Not Allowed as a Credit Under Section 901(k).— This section shall not apply to any tax with respect to which the regulated investment company is not allowed a credit under section 901 by reason of section 901(k).”. (2) Subsection (c) of section 853 of the 1986 Code is amended by striking the last sentence. (3) Subparagraph (A) of section 901(k)(4) of the 1986 Code is amended by striking “securities business” and inserting “business as a securities dealer”.112 STAT. 816 (l) Amendment Related to Section 1055 of 1997 Act.— Section 6611(g)(1) of the 1986 Code is amended by striking “(e), and (h)” and inserting “and (e)”. (m) Amendment Related to Section 1061 of 1997 Act.— Subsection (c) of section 751 of the 1986 Code is amended by striking “731” each place it appears and inserting “731, 732,”. (n) Amendment Related to Section 1083 of 1997 Act.— Section 1083(a)(2) of the 1997 Act is amended— (1) by striking “21” and inserting “20”; and (2) by striking “22” and inserting “21”. (o) Amendments Related to Section 1084 of 1997 Act.— (1) Paragraph (3) of section 264(a) of the 1986 Code is amended by striking “subsection (c)” and inserting “subsection (d)”. (2) Paragraph (4) of section 264(a) of the 1986 Code is amended by striking “subsection (d)” and inserting “subsection (e)”. (3) (A) Paragraph (4) of section 264(f) of the 1986 Code is amended by adding at the end the following new subparagraph: “(E) Master contracts.— If coverage for each insured under a master contract is treated as a separate contract for purposes of sections 817(h), 7702, and 7702A, coverage for each such insured shall be treated as a separate contract for purposes of subparagraph (A). For purposes of the preceding sentence, the term ‘master contract’ shall not include any group life insurance contract (as defined in section 848(e)(2)).”. (B) The second sentence of section 1084(d) of the 1997 Act is amended by striking “but” and all that follows and inserting “except that, in the case of a master contract (within the meaning of section 264(f)(4)(E) of the Internal Revenue Code of 1986), the addition of covered lives shall be treated as a new contract only with respect to such additional covered lives.”. (4) (A) Clause (iv) of section 264(f)(5)(A) of the 1986 Code is amended by striking the second sentence. (B) Subparagraph (B) of section 6724(d)(1) of the 1986 Code is amended by striking “or” at the end of clause (xv), by striking the period at the end of clause (xvi) and inserting “; or”, and by adding at the end the following new clause: “(xvii) section 264(f)(5)(A)(iv) (relating to reporting with respect to certain life insurance and annuity con- tracts).”. (C) Paragraph (2) of section 6724(d) of the 1986 Code is amended by striking “or” at the end of subparagraph (Y), by striking the period at the end of subparagraph (Z) and inserting “or”, and by adding at the end the following new subparagraph: “(AA) section 264(f)(5)(A)(iv) (relating to reporting with respect to certain life insurance and annuity contracts).”. (5) Subparagraph (A) of section 264(f)(8) of the 1986 Code is amended by striking “subsection (d)(5)(B)” and inserting “subsection (e)(5)(B)”. (p) Amendments Related to Section 1085 of 1997 Act.— (1) Paragraph (5) of section 32(c) of the 1986 Code is amended—112 STAT. 817 (A) by inserting before the period at the end of subparagraph (A) “and increased by the amounts described in subparagraph (C)”; (B) by adding “or” at the end of clause (iii) of subparagraph (B); and (C) by striking all that follows subclause (II) of subparagraph (B)(iv) and inserting the following: “(III) other trades or businesses. For purposes of clause (iv), there shall not be taken into account items which are attributable to a trade or business which consists of the performance of services by the taxpayer as an employee. “(C) Certain amounts included.— An amount is described in this subparagraph if it is— “(i) interest received or accrued during the taxable year which is exempt from tax imposed by this chapter; or “(ii) amounts received as a pension or annuity, and any distributions or payments received from an individual retirement plan, by the taxpayer during the taxable year to the extent not included in gross income. Clause (ii) shall not include any amount which is not includible in gross income by reason of a trustee-to-trustee transfer or a rollover distribution.”. (2) Clause (v) of section 32(c)(2)(B) of the 1986 Code is amended by inserting “shall be taken into account” before but only”. (3) The text of paragraph (3) of section 1085(a) of the 1997 Act is amended to read as follows: “Paragraph (2) of section 6213(g) (relating to the definition of mathematical or clerical errors) is amended by striking “and” at the end of subparagraph (I), by striking the period at the end of subparagraph (J) and inserting “, and”, and by inserting after subparagraph (J) the following new subparagraph: “(K) an omission of information required by section 32(k)(2) (relating to taxpayers making improper prior claims of earned income credit).”. (q) Amendment Related to Section 1088 of 1997 Act.— Section 1088(b)(2)(C) of the 1997 Act is amended by inserting “more than 1 year” before “after”. (r) Amendment Related to Section 1089 of 1997 Act.— Paragraphs (1)(C) and (2)(C) of section 664(d) of the 1986 Code are each amended by adding “, and” at the end.