118 STAT. 1566 PUBLIC LAW 108–357—OCT. 22, 2004 as are necessary to prevent the avoidance of the purposes of this section, including the avoidance of such purposes through— ‘‘(1) the use of related persons, pass through or other non corporate entities, or other intermediaries, or ‘‘(2) transactions designed to have persons cease to be (or not become) members of expanded affiliated groups or related persons.’’. (b) CONFORMING AMENDMENT.—The table of sections for sub chapter C of chapter 80 is amended by adding at the end the following new item: ‘‘Sec. 7874. Rules relating to expatriated entities and their foreign par ents.’’. (c) EFFECTIVE DATE.—The amendments made by this section shall apply to taxable years ending after March 4, 2003. SEC. 802. EXCISE TAX ON STOCK COMPENSATION OF INSIDERS IN EXPATRIATED CORPORATIONS. (a) IN GENERAL.—Subtitle D is amended by inserting after chapter 44 end the following new chapter: ‘‘CHAPTER 45—PROVISIONS RELATING TO EXPATRIATED ENTITIES ‘‘Sec. 4985. Stock compensation of insiders in expatriated corporations. ‘‘SEC. 4985. STOCK COMPENSATION OF INSIDERS IN EXPATRIATED CORPORATIONS. ‘‘(a) IMPOSITION OF TAX.—In the case of an individual who is a disqualified individual with respect to any expatriated corpora tion, there is hereby imposed on such person a tax equal to— ‘‘(1) the rate of tax specified in section 1(h)(1)(C), multiplied by ‘‘(2) the value (determined under subsection (b)) of the specified stock compensation held (directly or indirectly) by or for the benefit of such individual or a member of such individual’s family (as defined in section 267) at any time during the 12 month period beginning on the date which is 6 months before the expatriation date. ‘‘(b) VALUE.—For purposes of subsection (a)— ‘‘(1) IN GENERAL.—The value of specified stock compensa tion shall be— ‘‘(A) in the case of a stock option (or other similar right) or a stock appreciation right, the fair value of such option or right, and ‘‘(B) in any other case, the fair market value of such compensation. ‘‘(2) DATE FOR DETERMINING VALUE.—The determination of value shall be made— ‘‘(A) in the case of specified stock compensation held on the expatriation date, on such date, ‘‘(B) in the case of such compensation which is canceled during the 6 months before the expatriation date, on the day before such cancellation, and ‘‘(C) in the case of such compensation which is granted after the expatriation date, on the date such compensation is granted. 26 USC 7874 note.
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