PUBLIC LAW 100-647—NOV. 10, 1988
102 STAT. 3395
(6) Subparagraph (A) of section 1059(e)(3) of the 1986 Code (relating to qualified preferred dividends) is amended to read as follows: "(A) IN GENERAL.—In the case of 1 or more qualified preferred dividends with respect to any share of stock— "(i) this section shall not apply to such dividends if the taxpayer holds such stock for more than 5 years, and "(ii) if the taxpayer disposes of such stock before it has been held for more than 5 years, the aggregate reduction under subsection (a)(1) with respect to such dividends shall not be greater than the excess (if any) of— "(I) the qualified preferred dividends paid with respect to such stock during the period the taxpaver held such stock, over (II) the qualified preferred dividends which would have been paid during such period on the basis of the stated rate of return." (7) Clause (i) of section 1059(e)(3)(C) of the 1986 Code is amended— (A) by striking out "any dividend payable" and inserting in lieu thereof "any fixed dividend payable", and (B) by adding at the end thereof the following new sentence: "Such term shall not include any dividend payable with respect to any share of stock if the actual rate of return on such stock exceeds 15 percent." (8) Subparagraph (B) of section 1059(e)(3) of the 1986 Code is amended— (A) by striking out "subparagraph (A)" and the material preceding clause (i) and inserting in lieu thereof "this paragraph", and (B) by striking out "subparagraph (B)(i)(II)" in clause (ii) and inserting in lieu thereof "clause (i)(II)". (9) Subsection (f) of section 1059 of the 1986 Code is amended by inserting before the period at the end thereof the following: "and in the case of stock held by pass-thru entities". (d) AMENDMENTS RELATED TO SECTION 621 OF THE REFORM ACT.—
(I)(A) Section 382(e)(2) of the 1986 Code is amended— (i) by inserting "or other corporate contraction" after "redemption" each place it appears, and (ii) by inserting "OR OTHER CORPORATE CONTRACTION" after "REDEMPTION" in the heading thereof. (B) Clause (ii) of section 382(h)(3)(A) of the 1986 Code is amended— (i) by inserting "or other corporate contraction" after "redemption" each place it appears, and (ii) by inserting "OR OTHER CORPORATE CONTRACTIONS" after "REDEMPTIONS" in the heading thereof.
(C) Section 382(m) of the 1986 Code is amended by inserting "and" at the end of paragraph (3), by striking out paragraph (4), and by redesignating paragraph (5) as paragraph (4). (D) The amendments made by this paragraph shall apply with 26 USC 382 note. respect to ownership changes after June 10, 1987. (2) Section 382(g)(4)(C) of the 1986 Code is amended by inserting "rules similar to" before "the rules".
�
