102 STAT. 3604
26 USC 1503 note.
PUBLIC LAW 100-647—NOV. 10, 1988 (I)(A) Paragraph (1) of section 1503(e) of the 1986 Code is amended by striking out so much of such paragraph as precedes subparagraph (A) thereof and inserting in lieu thereof the following: "(1) IN GENERAL.—Solely for purposes of determining gain or loss on the disposition of intragroup stock and the amount of any inclusion by reason of an excess loss account, in determining the adjustments to the basis of such intragroup stock on account of the earnings and profits of any member of an affiliated group for any consolidated year (and in determining the amount in such account)—" (B) Paragraph (2) of section 10222(a) of sthe Revenue Act of 1987 is amended by adding at the end thereof the following new subparagraph: "(C) TREATMENT OF CERTAIN EXCESS LOSS ACCOUNTS.— "(i) IN GENERAL.—If—
"(I) any disposition on or before December 15, 1987, of stock resulted in an inclusion of an excess loss account (or would have so resulted if the amendments made by paragraph (1) had applied to such disposition), and "(II) there is an unrecaptured amount with respect to such disposition, the portion of such unrecaptured amount allocable to stock disposed of in a disposition to which the amendment made by paragraph (1) applies shall be taken into account as negative basis. To the extent permitted by the Secretary of the Treasury or his delegate, the preceding sentence shall not apply to the extent the taxpayer elects to reduce its basis in indebtedness of the corporation with respect to which there would have been an excess loss account. "(ii) SPECIAL RULES.—For purposes of this subparagraph— "(I) UNRECAPTURED AMOUNT.—The term 'unrecaptured amount' means the amount by which the inclusion referred to in clause (i)(I) would have been increased if the amendment made by paragraph (1) and applied to the disposition. "(II)
COORDINATION WITH
BINDING CONTRACT
EXCEPTION.—A disposition shall be treated as occurring on or before December 15, 1987, if the amendment made by paragraph (1) does not apply to such disposition by reason of subparagraph (B)." (2) Subsection (e) of section 1503 of the 1986 Code is amended by adding at the end thereof the following new paragraph: "(3) ADJUSTMENTS.—Under regulations prescribed by the Secretary, proper adjustments shall be made in the application of paragraph (1)— "(A) in the case of any property acquired by the corporation before consolidation, for the difference between the adjusted basis of such property for purposes of computing taxable income and its adjusted bsisis for purposes of computing earnings and profits, and "(B) in the case of any property, for any basis adjustment under section 48(q)."
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