
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC1248]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
                 Subchapter P--Capital Gains and Losses
 
     PART IV--SPECIAL RULES FOR DETERMINING CAPITAL GAINS AND LOSSES
 
Sec. 1248. Gain from certain sales or exchanges of stock in 
        certain foreign corporations
        

(a) General rule

    If--
        (1) a United States person sells or exchanges stock in a foreign 
    corporation, and
        (2) such person owns, within the meaning of section 958(a), or 
    is considered as owning by applying the rules of ownership of 
    section 958(b), 10 percent or more of the total combined voting 
    power of all classes of stock entitled to vote of such foreign 
    corporation at any time during the 5-year period ending on the date 
    of the sale or exchange when such foreign corporation was a 
    controlled foreign corporation (as defined in section 957),

then the gain recognized on the sale or exchange of such stock shall be 
included in the gross income of such person as a dividend, to the extent 
of the earnings and profits of the foreign corporation attributable 
(under regulations prescribed by the Secretary) to such stock which were 
accumulated in taxable years of such foreign corporation beginning after 
December 31, 1962, and during the period or periods the stock sold or 
exchanged was held by such person while such foreign corporation was a 
controlled foreign corporation. For purposes of this section, a United 
States person shall be treated as having sold or exchanged any stock if, 
under any provision of this subtitle, such person is treated as 
realizing gain from the sale or exchange of such stock.

(b) Limitation on tax applicable to individuals

    In the case of an individual, if the stock sold or exchanged is a 
capital asset (within the meaning of section 1221) and has been held for 
more than 1 year, the tax attributable to an amount included in gross 
income as a dividend under subsection (a) shall not be greater than a 
tax equal to the sum of--
        (1) a pro rata share of the excess of--
            (A) the taxes that would have been paid by the foreign 
        corporation with respect to its income had it been taxed under 
        this chapter as a domestic corporation (but without allowance 
        for deduction of, or credit for, taxes described in subparagraph 
        (B)), for the period or periods the stock sold or exchanged was 
        held by the United States person in taxable years beginning 
        after December 31, 1962, while the foreign corporation was a 
        controlled foreign corporation, adjusted for distributions and 
        amounts previously included in gross income of a United States 
        shareholder under section 951, over
            (B) the income, war profits, or excess profits taxes paid by 
        the foreign corporation with respect to such income; and

        (2) an amount equal to the tax that would result by including in 
    gross income, as gain from the sale or exchange of a capital asset 
    held for more than 1 year, an amount equal to the excess of (A) the 
    amount included in gross income as a dividend under subsection (a), 
    over (B) the amount determined under paragraph (1).

(c) Determination of earnings and profits

                           (1) In general

        Except as provided in section 312(k)(4), for purposes of this 
    section, the earnings and profits of any foreign corporation for any 
    taxable year shall be determined according to rules substantially 
    similar to those applicable to domestic corporations, under 
    regulations prescribed by the Secretary.

        (2) Earnings and profits of subsidiaries of foreign 
                                corporations

        If--
            (A) subsection (a) or (f) applies to a sale, exchange, or 
        distribution by a United States person of stock of a foreign 
        corporation and, by reason of the ownership of the stock sold or 
        exchanged, such person owned within the meaning of section 
        958(a)(2) stock of any other foreign corporation; and
            (B) such person owned, within the meaning of section 958(a), 
        or was considered as owning by applying the rules of ownership 
        of section 958(b), 10 percent or more of the total combined 
        voting power of all classes of stock entitled to vote of such 
        other foreign corporation at any time during the 5-year period 
        ending on the date of the sale or exchange when such other 
        foreign corporation was a controlled foreign corporation (as 
        defined in section 957),

    then, for purposes of this section, the earnings and profits of the 
    foreign corporation the stock of which is sold or exchanged which 
    are attributable to the stock sold or exchanged shall be deemed to 
    include the earnings and profits of such other foreign corporation 
    which--
            (C) are attributable (under regulations prescribed by the 
        Secretary) to the stock of such other foreign corporation which 
        such person owned within the meaning of section 958(a)(2) (by 
        reason of his ownership within the meaning of section 
        958(a)(1)(A) of the stock sold or exchanged) on the date of such 
        sale or exchange (or on the date of any sale or exchange of the 
        stock of such other foreign corporation occurring during the 5-
        year period ending on the date of the sale or exchange of the 
        stock of such foreign corporation, to the extent not otherwise 
        taken into account under this section but not in excess of the 
        fair market value of the stock of such other foreign corporation 
        sold or exchanged over the basis of such stock (for determining 
        gain) in the hands of the transferor); and
            (D) were accumulated in taxable years of such other 
        corporation beginning after December 31, 1962, and during the 
        period or periods--
                (i) such other corporation was a controlled foreign 
            corporation, and
                (ii) such person owned within the meaning of section 
            958(a) the stock of such other foreign corporation.

(d) Exclusions from earnings and profits

    For purposes of this section, the following amounts shall be 
excluded, with respect to any United States person, from the earnings 
and profits of a foreign corporation:

       (1) Amounts included in gross income under section 951

        Earnings and profits of the foreign corporation attributable to 
    any amount previously included in the gross income of such person 
    under section 951, with respect to the stock sold or exchanged, but 
    only to the extent the inclusion of such amount did not result in an 
    exclusion of an amount from gross income under section 959.

              [(2) Repealed. Pub. L. 100-647, title I, 
             Sec. 1006(e)(14)(A), Nov. 10, 1988, 102 Stat. 3402]

       (3) Less developed country corporations under prior law

        Earnings and profits of a foreign corporation which were 
    accumulated during any taxable year beginning before January 1, 
    1976, while such corporation was a less developed country 
    corporation under section 902(d) as in effect before the enactment 
    of the Tax Reduction Act of 1975.

                      (4) United States income

        Any item includible in gross income of the foreign corporation 
    under this chapter--
            (A) for any taxable year beginning before January 1, 1967, 
        as income derived from sources within the United States of a 
        foreign corporation engaged in trade or business within the 
        United States, or
            (B) for any taxable year beginning after December 31, 1966, 
        as income effectively connected with the conduct by such 
        corporation of a trade or business within the United States.

    This paragraph shall not apply with respect to any item which is 
    exempt from taxation (or is subject to a reduced rate of tax) 
    pursuant to a treaty obligation of the United States.

       (5) Amounts included in gross income under section 1247

        If the United States person whose stock is sold or exchanged was 
    a qualified shareholder (as defined in section 1247(c)) of a foreign 
    corporation which was a foreign investment company (as described in 
    section 1246(b)(1)), the earnings and profits of the foreign 
    corporation for taxable years in which such person was a qualified 
    shareholder.

                      (6) Foreign trade income

        Earnings and profits of the foreign corporation attributable to 
    foreign trade income of a FSC other than foreign trade income 
    which--
            (A) is section 923(a)(2) \1\ non-exempt income (within the 
        meaning of section 927(d)(6)),\1\ or
---------------------------------------------------------------------------
    \1\ See References in Text note below.
---------------------------------------------------------------------------
            (B) would not (but for section 923(a)(4)) \1\ be treated as 
        exempt foreign trade income.

    For purposes of the preceding sentence, the terms ``foreign trade 
    income'' and ``exempt foreign trade income'' have the respective 
    meanings given such terms by section 923.\1\

       (7) Amounts included in gross income under section 1293

        Earnings and profits of the foreign corporation attributable to 
    any amount previously included in the gross income of such person 
    under section 1293 with respect to the stock sold or exchanged, but 
    only to the extent the inclusion of such amount did not result in an 
    exclusion of an amount under section 1293(c).

(e) Sales or exchanges of stock in certain domestic corporations

    Except as provided in regulations prescribed by the Secretary, if--
        (1) a United States person sells or exchanges stock of a 
    domestic corporation, and
        (2) such domestic corporation was formed or availed of 
    principally for the holding, directly or indirectly, of stock of one 
    or more foreign corporations,

such sale or exchange shall, for purposes of this section, be treated as 
a sale or exchange of the stock of the foreign corporation or 
corporations held by the domestic corporation.

(f) Certain nonrecognition transactions

    Except as provided in regulations prescribed by the Secretary--

                           (1) In general

        If--
            (A) a domestic corporation satisfies the stock ownership 
        requirements of subsection (a)(2) with respect to a foreign 
        corporation, and
            (B) such domestic corporation distributes stock of such 
        foreign corporation in a distribution to which section 311(a), 
        337, 355(c)(1), or 361(c)(1) applies,

    then, notwithstanding any other provision of this subtitle, an 
    amount equal to the excess of the fair market value of such stock 
    over its adjusted basis in the hands of the domestic corporation 
    shall be included in the gross income of the domestic corporation as 
    a dividend to the extent of the earnings and profits of the foreign 
    corporation attributable (under regulations prescribed by the 
    Secretary) to such stock which were accumulated in taxable years of 
    such foreign corporation beginning after December 31, 1962, and 
    during the period or periods the stock was held by such domestic 
    corporation while such foreign corporation was a controlled foreign 
    corporation. For purposes of subsections (c)(2), (d), and (h), a 
    distribution of stock to which this subsection applies shall be 
    treated as a sale of stock to which subsection (a) applies.

               (2) Exception for certain distributions

        In the case of any distribution of stock of a foreign 
    corporation, paragraph (1) shall not apply if such distribution is 
    to a domestic corporation--
            (A) which is treated under this section as holding such 
        stock for the period for which the stock was held by the 
        distributing corporation, and
            (B) which, immediately after the distribution, satisfies the 
        stock ownership requirements of subsection (a)(2) with respect 
        to such foreign corporation.

        (3) Application to cases described in subsection (e)

        To the extent that earnings and profits are taken into account 
    under this subsection, they shall be excluded and not taken into 
    account for purposes of subsection (e).

(g) Exceptions

    This section shall not apply to--
        (1) distributions to which section 303 (relating to 
    distributions in redemption of stock to pay death taxes) applies; or
        (2) any amount to the extent that such amount is, under any 
    other provision of this title, treated as--
            (A) a dividend (other than an amount treated as a dividend 
        under subsection (f)),
            (B) ordinary income, or
            (C) gain from the sale of an asset held for not more than 1 
        year.

(h) Taxpayer to establish earnings and profits

    Unless the taxpayer establishes the amount of the earnings and 
profits of the foreign corporation to be taken into account under 
subsection (a) or (f), all gain from the sale or exchange shall be 
considered a dividend under subsection (a) or (f), and unless the 
taxpayer establishes the amount of foreign taxes to be taken into 
account under subsection (b), the limitation of such subsection shall 
not apply.

(i) Treatment of certain indirect transfers

                           (1) In general

        If any shareholder of a 10-percent corporate shareholder of a 
    foreign corporation exchanges stock of the 10-percent corporate 
    shareholder for stock of the foreign corporation, such 10-percent 
    corporate shareholder shall recognize gain in the same manner as if 
    the stock of the foreign corporation received in such exchange had 
    been--
            (A) issued to the 10-percent corporate shareholder, and
            (B) then distributed by the 10-percent corporate shareholder 
        to such shareholder in redemption or liquidation (whichever is 
        appropriate).

    The amount of gain recognized by such 10-percent corporate 
    shareholder under the preceding sentence shall not exceed the amount 
    treated as a dividend under this section.

            (2) 10-percent corporate shareholder defined

        For purposes of this subsection, the term ``10-percent corporate 
    shareholder'' means any domestic corporation which, as of the day 
    before the exchange referred to in paragraph (1), satisfies the 
    stock ownership requirements of subsection (a)(2) with respect to 
    the foreign corporation.

(j) Cross reference

            For provision excluding amounts previously taxed under this 
        section from gross income when subsequently distributed, see 
        section 959(e).

(Added Pub. L. 87-834, Sec. 15(a), Oct. 16, 1962, 76 Stat. 1041; amended 
Pub. L. 89-809, title I, Sec. 104(k), Nov. 13, 1966, 80 Stat. 1562; Pub. 
L. 91-172, title IV, Sec. 442(b)(2), Dec. 30, 1969, 83 Stat. 628; Pub. 
L. 94-455, title X, Secs. 1022(a), 1042(b), (c)(1), (3), title XIV, 
Sec. 1402(b)(1)(Y), (2), title XIX, Secs. 1901(b)(3)(H), (32)(B)(iii), 
1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1619, 1636, 1637, 1732, 1793, 
1800, 1834; Pub. L. 97-448, title I, Sec. 102(c)(1), Jan. 12, 1983, 96 
Stat. 2370; Pub. L. 98-369, div. A, title I, Sec. 133(a), (b)(2), (c), 
title VIII, Sec. 801(d)(6), title X, Sec. 1001(b)(22), (e), July 18, 
1984, 98 Stat. 667, 668, 996, 1012; Pub. L. 99-514, title VI, 
Sec. 631(d)(2), title XVIII, Secs. 1810(i)(1), 1875(g)(1), 1876(a)(2), 
Oct. 22, 1986, 100 Stat. 2272, 2829, 2897; Pub. L. 100-647, title I, 
Secs. 1006(e)(14), 1012(p)(19), Nov. 10, 1988, 102 Stat. 3402, 3518; 
Pub. L. 104-188, title I, Sec. 1702(g)(1), Aug. 20, 1996, 110 Stat. 
1872.)

                       References in Text

    The Tax Reduction Act of 1975, referred to in subsec. (d)(3), is 
Pub. L. 94-12, Mar. 29, 1975, 89 Stat. 26, as amended. For complete 
classification of this Act to the Code, see Short Title of 1975 
Amendment note set out under section 1 of this title and Tables.
    Sections 923 and 927, referred to in subsec. (d)(6), were repealed 
by Pub. L. 106-519, Sec. 2, Nov. 15, 2000, 114 Stat. 2423.


                               Amendments

    1996--Subsec. (a). Pub. L. 104-188, Sec. 1702(g)(1)(A)(ii), in 
closing provisions inserted at end ``For purposes of this section, a 
United States person shall be treated as having sold or exchanged any 
stock if, under any provision of this subtitle, such person is treated 
as realizing gain from the sale or exchange of such stock.''
    Subsec. (a)(1). Pub. L. 104-188, Sec. 1702(g)(1)(A)(i), struck out 
``, or if a United States person receives a distribution from a foreign 
corporation which, under section 302 or 331, is treated as an exchange 
of stock'' after ``in a foreign corporation''.
    Subsec. (e)(1). Pub. L. 104-188, Sec. 1702(g)(1)(B), struck out ``, 
or receives a distribution from a domestic corporation which, under 
section 302 or 331, is treated as an exchange of stock'' after ``of a 
domestic corporation''.
    Subsec. (f)(1)(B). Pub. L. 104-188, Sec. 1702(g)(1)(C), substituted 
``355(c)(1), or 361(c)(1)'' for ``or 361(c)(1)''.
    Subsec. (i)(1). Pub. L. 104-188, Sec. 1702(g)(1)(D), reenacted 
heading without change and amended text generally. Prior to amendment, 
text read as follows: ``If any shareholder of a 10-percent corporate 
shareholder of a foreign corporation exchanges stock of the 10-percent 
corporate shareholder for stock of the foreign corporation, for purposes 
of this section, the stock of the foreign corporation received in such 
exchange shall be treated as if it had been--
        ``(A) issued to the 10-percent corporate shareholder, and
        ``(B) then distributed by the 10-percent corporate shareholder 
    to such shareholder in redemption or liquidation (whichever is 
    appropriate).''
    1988--Subsec. (d)(2). Pub. L. 100-647, Sec. 1006(e)(14)(A), struck 
out par. (2) which related to gain realized from sale or exchange of 
property in pursuance of plan of complete liquidation.
    Subsec. (d)(7). Pub. L. 100-647, Sec. 1012(p)(19), added par. (7).
    Subsec. (f). Pub. L. 100-647, Sec. 1006(e)(14)(E), substituted 
``nonrecognition'' for ``section 311, 336, or 337'' in heading.
    Subsec. (f)(1). Pub. L. 100-647, Sec. 1006(e)(14)(C), struck out ``, 
sale, or exchange'' after ``(h), a distribution'' in last sentence.
    Subsec. (f)(1)(B). Pub. L. 100-647, Sec. 1006(e)(14)(B), amended 
subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: 
``such domestic corporation distributes, sells, or exchanges stock of 
such foreign corporation in a transaction to which section 311, 336, or 
337 applies,''.
    Subsec. (f)(3), (4). Pub. L. 100-647, Sec. 1006(e)(14)(D), 
redesignated par. (4) as (3) and struck out former par. (3) which 
related to nonapplication of paragraph (1) in certain cases.
    1986--Subsec. (d)(6). Pub. L. 99-514, Sec. 1876(a)(2), amended par. 
(6) generally. Prior to amendment, par. (6) read as follows: ``Earnings 
and profits of the foreign corporation attributable to foreign trade 
income (within the meaning of section 923(b)) of a FSC.''
    Subsec. (e). Pub. L. 99-514, Sec. 631(d)(2)(A), substituted ``Except 
as provided in regulations'' for ``Under regulations''.
    Subsec. (f). Pub. L. 99-514, Sec. 631(d)(2)(B), inserted ``Except as 
provided in regulations prescribed by the Secretary--'' after heading.
    Subsec. (g). Pub. L. 99-514, Sec. 1875(g)(1), inserted ``or'' at end 
of par. (1), redesignated par. (3) as (2), and struck out former par. 
(2) which read as follows: ``gain realized on exchanges to which section 
356 (relating to receipt of additional consideration in certain 
reorganizations) applies; or''.
    Subsec. (i)(1)(B). Pub. L. 99-514, Sec. 1810(i)(1), substituted ``in 
redemption or liquidation (whichever is appropriate)'' for ``in 
redemption of his stock''.
    1984--Subsec. (b). Pub. L. 98-369, Sec. 1001(b)(22), (e), 
substituted ``6 months'' for ``1 year'', applicable to property acquired 
after June 22, 1984, and before Jan. 1, 1988. See Effective Date of 1984 
Amendment note below.
    Subsec. (c)(2)(D). Pub. L. 98-369, Sec. 133(c), substituted 
``section 958(a)'' for ``section 958(a)(2)''.
    Subsec. (d)(6). Pub. L. 98-369, Sec. 801(d)(6), added par. (6).
    Subsec. (g)(3)(C). Pub. L. 98-369, Sec. 1001(b)(22), (e), 
substituted ``6 months'' for ``1 year'', applicable to property acquired 
after June 22, 1984, and before Jan. 1, 1988. See Effective Date of 1984 
Amendment note below.
    Subsec. (i). Pub. L. 98-369, Sec. 133(a), added subsec. (i).
    Subsec. (j). Pub. L. 98-369, Sec. 133(b)(2), added subsec. (j).
    1983--Subsec. (c)(1). Pub. L. 97-448 substituted ``section 
312(k)(4)'' for ``section 312(k)(3)''.
    1976--Subsec. (a). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out 
``or his delegate'' after ``Secretary''.
    Subsec. (b). Pub. L. 94-455, Sec. 1402(b)(2), provided that ``9 
months'' would be changed to ``1 year''.
    Pub. L. 94-455, Sec. 1402(b)(1)(Y), provided that ``6 months'' would 
be changed to ``9 months'' for taxable years beginning in 1977.
    Subsec. (c)(1). Pub. L. 94-455, Secs. 1901(b)(32)(B)(iii), 
1906(b)(13(A), substituted ``section 312(k)'' for ``section 312(m)(3)'', 
and struck out ``or his delegate'' after ``Secretary''.
    Subsec. (c)(2)(A). Pub. L. 94-455, Sec. 1042(c)(3)(A), substituted 
``subsection (a) or (f) applies to a sale, exchange, or distribution'' 
for ``subsection (a) applies to a sale or exchange''.
    Subsec. (c)(2)(C). Pub. L. 94-455, Sec. 1042(b), inserted ``(or on 
the date of any sale or exchange of the stock of such other foreign 
corporation occurring during the 5-year period ending on the date of the 
sale or exchange of the stock of such foreign corporation, to the extent 
not otherwise taken into account under this section but not in excess of 
the fair market value of the stock of such other foreign corporation 
sold or exchanged over the basis of such stock (for determining gain) in 
the hands of the transferor)''. Sec. 1906(b)(13)(A), struck out ``or his 
delegate'' after ``Secretary''.
    Subsec. (d)(2). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out ``or 
his delegate'' after ``Secretary''.
    Subsec. (d)(3). Pub. L. 94-455, Sec. 1022(a), substituted provisions 
of par. (3) relating to ``Less developed country corporations under 
prior law'' and reading ``Earnings and profits of a foreign corporation 
which were accumulated during any taxable year beginning before January 
1, 1976, while such corporation was a less developed country corporation 
under section 902(d) as in effect before the enactment of the Tax 
Reduction Act of 1975'' for prior par. (3) relating to ``Less developed 
country corporations'' and reading ``Earnings and profits accumulated by 
a foreign corporation while it was a less developed country corporation 
(as defined in section 902(d)), if the stock sold or exchanged was owned 
for a continuous period of at least 10 years, ending with the date of 
the sale or exchange, by the United States person who sold or exchanged 
such stock. In the case of stock sold or exchanged by a corporation, if 
United States persons who are individuals, estates, or trusts (each of 
whom owned within the meaning of section 958(a), or were considered as 
owning by applying the rules of ownership of section 958(b), 10 percent 
or more of the total combined voting power of all classes of stock 
entitled to vote of such corporation) owned, or were considered as 
owning, at any time during the 10-year period ending on the date of the 
sale or exchange more than 50 percent of the total combined voting power 
of all classes of stock entitled to vote such corporation, this 
paragraph shall apply only if such United States persons owned, or were 
considered as owning, at all times during the remainder of such 10-year 
period more than 50 percent of the total combined voting power of all 
classes of stock entitled to vote of such corporation. For purposes of 
this paragraph, stock owned by a United States person who is an 
individual, estate, or trust which was acquired by reason of the death 
of the predecessor in interest of such United States person shall be 
considered as owned by such United States person during the period such 
stock was owned by such predecessor in interest, and during the period 
such stock was owned by any other predecessor in interest if between 
such United States person and such other predecessor in interest there 
was no transfer other than by reason of the death of an individual.''
    Subsec. (e). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out ``or 
his delegate'' after ``Secretary''.
    Subsec. (f). Pub. L. 94-455, Sec. 1042(c)(1), added subsec. (f). 
Former subsec. (f) redesignated (g).
    Subsec. (g). Pub. L. 94-455, Secs. 1042(c)(1), (3)(B), 
1901(b)(3)(H), redesignated former subsec. (f) as (g); inserted ``(other 
than an amount treated as a dividend under subsection (f))'' in par. 
(3)(A); and substituted in par. (3)(B) ``ordinary income'' for ``gain 
from the sale of an asset which is not a capital asset'', respectively. 
Former subsec. (g) redesignated (h).
    Subsec. (g)(3)(C). Pub. L. 94-455, Sec. 1402(b)(2), provided that 
``9 months'' would be changed to ``1 year''.
    Pub. L. 94-455, Sec. 1402(b)(1)(Y), provided that ``6 months'' would 
be changed to ``9 months'' for taxable years beginning in 1977.
    Subsec. (h). Pub. L. 94-455, Sec. 1042(c)(1), (3)(C), redesignated 
former subsec. (g) as (h) and inserted reference to subsec. (f) in two 
places.
    1969--Subsec. (c)(1). Pub. L. 91-172 inserted reference to the 
exception provided for in section 312(m)(3).
    1966--Subsec. (d)(4). Pub. L. 89-809 provided that for taxable years 
beginning after December 31, 1966, the earnings and profits of the 
foreign corporation, for purposes of this section, is not to include 
income effectively connected with the conduct of a trade or business 
within the United States, and inserted provision that the exclusion does 
not apply to income which is exempt from tax or subject to a reduced 
rate of tax pursuant to a treaty.


                    Effective Date of 1996 Amendment

    Amendment by Pub. L. 104-188 effective, except as otherwise 
expressly provided, as if included in the provision of the Revenue 
Reconciliation Act of 1990, Pub. L. 101-508, title XI, to which such 
amendment relates, see section 1702(i) of Pub. L. 104-188, set out as a 
note under section 38 of this title.


                    Effective Date of 1988 Amendment

    Amendment by Pub. L. 100-647 effective, except as otherwise 
provided, as if included in the provision of the Tax Reform Act of 1986, 
Pub. L. 99-514, to which such amendment relates, see section 1019(a) of 
Pub. L. 100-647, set out as a note under section 1 of this title.


                    Effective Date of 1986 Amendment

    Amendment by section 631(d)(2) of Pub. L. 99-514 applicable to any 
distribution in complete liquidation, and any sale or exchange, made by 
a corporation after July 31, 1986, unless such corporation is completely 
liquidated before Jan. 1, 1987, any transaction described in section 338 
of this title for which the acquisition date occurs after Dec. 31, 1986, 
and any distribution, not in complete liquidation, made after Dec. 31, 
1986, with exceptions and special and transitional rules, see section 
633 of Pub. L. 99-514, set out as an Effective Date note under section 
336 of this title.
    Section 1875(g)(2) of Pub. L. 99-514 provided that: ``The amendment 
made by paragraph (1) [amending this section] shall apply to exchanges 
after March 1, 1986.''
    Amendment by sections 1810(i)(1) and 1876(a)(2) of Pub. L. 99-514 
effective, except as otherwise provided, as if included in the 
provisions of the Tax Reform Act of 1984, Pub. L. 98-369, div. A, to 
which such amendment relates, see section 1881 of Pub. L. 99-514, set 
out as a note under section 48 of this title.


                    Effective Date of 1984 Amendment

    Section 133(d)(1) of Pub. L. 98-369 provided that: ``The amendment 
made by subsection (a) [amending this section] shall apply to exchanges 
after the date of the enactment of this Act [July 18, 1984] in taxable 
years ending after such date.''
    Amendment by section 133(b)(2), (c) of Pub. L. 98-369 applicable 
with respect to transactions to which subsec. (a) or (f) of this section 
applies occurring after July 18, 1984, with election of earlier date for 
certain transactions, see section 133(d)(2), (3) of Pub. L. 98-369, set 
out as a note under section 959 of this title.
    Amendment by section 801(d)(6) of Pub. L. 98-369 applicable to 
transactions after Dec. 31, 1984, in taxable years ending after such 
date, see section 805(a)(1) of Pub. L. 98-369, as amended, set out as a 
note under section 245 of this title.
    Amendment by section 1001(b)(22) of Pub. L. 98-369 applicable to 
property acquired after June 22, 1984, and before Jan. 1, 1988, see 
section 1001(e) of Pub. L. 98-369, set out as a note under section 166 
of this title.


                    Effective Date of 1983 Amendment

    Amendment by Pub. L. 97-448 effective, except as otherwise provided, 
as if it had been included in the provision of the Economic Recovery Tax 
Act of 1981, Pub. L. 97-34, to which such amendment relates, see section 
109 of Pub. L. 97-448, set out as a note under section 1 of this title.


                    Effective Date of 1976 Amendment

    Section 1022(b) of Pub. L. 94-455 provided that: ``The amendment 
made by subsection (a) [amending this section] shall apply to taxable 
years beginning after December 31, 1975.''
    For effective date of amendment by section 1042 of Pub. L. 94-455, 
see section 1042(e) of Pub. L. 94-455, set out as a note under section 
367 of this title.
    Section 1402(b)(1) of Pub. L. 94-455 provided that the amendment 
made by that section is effective with respect to taxable years 
beginning in 1977.
    Section 1402(b)(2) of Pub. L. 94-455 provided that the amendment 
made by that section is effective with respect to taxable years 
beginning after Dec. 31, 1977.
    Amendment by section 1901(b)(3)(H), (32)(B)(iii) of Pub. L. 94-455 
effective for taxable years beginning after Dec. 31, 1976, see section 
1901(d) of Pub. L. 94-455, set out as a note under section 2 of this 
title.


                    Effective Date of 1966 Amendment

    Amendment by Pub. L. 89-809 applicable with respect to sales or 
exchanges occurring after Dec. 31, 1966, see section 104(n) of Pub. L. 
89-809, set out as a note under section 11 of this title.


                             Effective Date

    Section 15(c) of Pub. L. 87-834 provided that: ``The amendments made 
by this section [enacting this section] shall apply with respect to 
sales or exchanges occurring after December 31, 1962.''


           Plan Amendments Not Required Until January 1, 1989

    For provisions directing that if any amendments made by subtitle A 
or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or title XVIII 
[Secs. 1800-1899A] of Pub. L. 99-514 require an amendment to any plan, 
such plan amendment shall not be required to be made before the first 
plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. 
L. 99-514, as amended, set out as a note under section 401 of this 
title.


                            Transitional Rule

    Section 1875(g)(3) of Pub. L. 99-514 provided that: ``An exchange 
shall be treated as occurring on or before March 1, 1986, if--
        ``(A) on or before such date, the taxpayer adopts a plan of 
    reorganization to which section 356 [of the Internal Revenue Code of 
    1986] applies, and
        ``(B) such plan or reorganization is implemented and 
    distributions pursuant to such plan are completed on or before the 
    date of enactment of this Act [Oct. 22, 1986].''

                  Section Referred to in Other Sections

    This section is referred to in sections 245, 338, 751, 865, 951, 
953, 959, 964, 989, 1246, 1291, 4916 of this title.
