TREATMENT OF STRIPPED INTERESTS IN BOND AND PREFERRED STOCK FUNDS, ETC.

SEC. 831. TREATMENT OF STRIPPED INTERESTS IN BOND AND PREFERRED STOCK FUNDS, ETC.(a) In General.—Section 1286 (relating to tax treatment of stripped bonds) is amended by redesignating subsection (f) as subsection (g) and by inserting after subsection (e) the following new subsection:“(f) Treatment of Stripped Interests in Bond and Preferred Stock Funds, Etc.—In the case of an account or entity substantially all of the assets of which consist of bonds, preferred stock, or a combination thereof, the Secretary may by regulations provide that rules similar to the rules of this section and 305(e), as appropriate, shall apply to interests in such account or entity to which (but for this subsection) this section or section 305(e), as the case may be, would not apply.”.(b) Cross Reference.—Subsection (e) of section 305 is amended by adding at the end the following new paragraph:“(7) Cross reference.— “For treatment of stripped interests in certain accounts or entities holding preferred stock, see section 1286(f).”.(c) Effective Date.—The amendments made by this section shall apply to purchases and dispositions after the date of the enactment of this Act.