MODIFICATION OF HOLDING PERIOD APPLICABLE TO DIVIDENDS RECEIVED DEDUCTION.

SEC. 1015. MODIFICATION OF HOLDING PERIOD APPLICABLE TO DIVIDENDS RECEIVED DEDUCTION. (a) In General.—Subparagraph (A) of section 246(c)(1) is amended to read as follows: “(A) which is held by the taxpayer for 45 days or less during the 90-day period beginning on the date which is 45 days before the date on which such share becomes ex-dividend with respect to such dividend, or”.111 STAT. 922 (b) Conforming Amendments.— (1) Paragraph (2) of section 246(c) is amended to read as follows: “(2) 90-day rule in the case of certain preference dividends.—In the case of stock having preference in dividends, if the taxpayer receives dividends with respect to such stock which are attributable to a period or periods aggregating in excess of 366 days, paragraph (1)(A) shall be applied— “(A) by substituting ‘90 days’ for ‘45 days’ each place it appears, and “(B) by substituting ‘180-day period’ for ‘90-day period’.”. (2) Paragraph (3) of section 246(c) is amended by adding “and” at the end of subparagraph (A), by striking subparagraph (B), and by redesignating subparagraph (C) as subparagraph (B). (c) Effective Date.— (1) In general.—The amendments made by this section shall apply to dividends received or accrued after the 30th day after the date of the enactment of this Act. (2) Transitional rule.—The amendments made by this section shall not apply to dividends received or accrued during the 2-year period beginning on the date of the enactment of this Act if— (A) the dividend is paid with respect to stock held by the taxpayer on June 8, 1997, and all times thereafter until the dividend is received, (B) such stock is continuously subject to a position described in section 246(c)(4) of the Internal Revenue Code of 1986 on June 8, 1997, and all times thereafter until the dividend is received, and (C) such stock and position are clearly identified in the taxpayer’s records within 30 days after the date of the enactment of this Act. Stock shall not be treated as meeting the requirement of subparagraph (B) if the position is sold, closed, or otherwise terminated and reestablished.