118 STAT. 1596 PUBLIC LAW 108–357—OCT. 22, 2004 ‘‘(1) IN GENERAL.—If property is received by a corporate distributee in a distribution in a complete liquidation to which section 332 applies (or in a transfer described in section 337(b)(1)), the basis of such property in the hands of such distributee shall be the same as it would be in the hands of the transferor; except that the basis of such property in the hands of such distributee shall be the fair market value of the property at the time of the distribution— ‘‘(A) in any case in which gain or loss is recognized by the liquidating corporation with respect to such prop erty, or ‘‘(B) in any case in which the liquidating corporation is a foreign corporation, the corporate distributee is a domestic corporation, and the corporate distributee’s aggre gate adjusted bases of property described in section 362(e)(1)(B) which is distributed in such liquidation would (but for this subparagraph) exceed the fair market value of such property immediately after such liquidation.’’. (c) EFFECTIVE DATES.— (1) IN GENERAL.—The amendment made by subsection (a) shall apply to transactions after the date of the enactment of this Act. (2) LIQUIDATIONS.—The amendment made by subsection (b) shall apply to liquidations after the date of the enactment of this Act. SEC. 837. CLARIFICATION OF BANKING BUSINESS FOR PURPOSES OF DETERMINING INVESTMENT OF EARNINGS IN UNITED STATES PROPERTY. (a) IN GENERAL.—Subparagraph (A) of section 956(c)(2) is amended to read as follows: ‘‘(A) obligations of the United States, money, or deposits with— ‘‘(i) any bank (as defined by section 2(c) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)), without regard to subparagraphs (C) and (G) of para graph (2) of such section), or ‘‘(ii) any corporation not described in clause (i) with respect to which a bank holding company (as defined by section 2(a) of such Act) or financial holding company (as defined by section 2(p) of such Act) owns directly or indirectly more than 80 percent by vote or value of the stock of such corporation;’’. (b) EFFECTIVE DATE.—The amendment made by this section shall take effect on the date of the enactment of this Act. SEC. 838. DENIAL OF DEDUCTION FOR INTEREST ON UNDERPAYMENTS ATTRIBUTABLE TO NONDISCLOSED REPORTABLE TRANS ACTIONS. (a) IN GENERAL.—Section 163 (relating to deduction for interest) is amended by redesignating subsection (m) as subsection (n) and by inserting after subsection (l) the following new subsection: ‘‘(m) INTEREST ON UNPAID TAXES ATTRIBUTABLE TO NONDIS CLOSED REPORTABLE TRANSACTIONS.—No deduction shall be allowed under this chapter for any interest paid or accrued under section 6601 on any underpayment of tax which is attributable to the portion of any reportable transaction understatement (as defined 26 USC 956 note. 26 USC 334 note. 26 USC 362 note.
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