65 STAT.]
PUBLIC LAW 183—OCT. 20, 1951
503
" (B) For the purposes of subparagraph (A), a corporation shall be deemed to have manufactured, constructed, produced, or purchased property, if— " (i) it engaged in the manufacture, construction, or production of such property to any extent, " ( i i) it holds property having a basis determined, in whole or in part, by reference to the cost of such p r o p e r ^ in the hands of a person who manufactured, constructed, produced, or purchased the property, or "(iii) it holds property having a basis determined, in whole or in part, by reference to the cost of property manufactured, constructed, produced, or purchased by the corporation." (b) LIMITATIONS ON APPLICATION or SECTION 117 (m).—Subparagraphs (A), (B), and (C) of section 117(m)(3) (relating to the ^6*u.1;c*§ii7(ra) limitations on the application of section 117(m)) are hereby amended <3)to read as follows: " (A) this subsection shall not apply unless, at any time after the commencement of the manufacture, construction, or production of the property, or a t the time of the purchase of the property described in subsection (a)(1)(A) or a t leu.^s.^a§ 117(a) any time thereafter, such shareholder (i) owned (or was d)(A). considered as owning) more than 10 per centum in value of the outstanding stock of the corporation, or (ii) owned stock which was considered as owned at such time by another shareholder who then owned (or was considered as owning) more than 10 per centum in value of the outstanding stock of the corporation; " (B) this subsection shall not apply to the gain recognized during a taxable year unless more than 70 per centum of such gain is attributable to the property so manufactured, constructed, produced, or purchased; and " (C) this subsection shall not apply to gain realized after the expiration of three years following the completion of such manufacture, construction, production, or purchase." (c) EFFECTIVE DATE.—The amendments made by this section shall be applicable to taxable years ending after August 31, 1951, but shall be applicable only with respect to gains realized after such date. The determination of the tax treatment of gains realized prior to September 1, 1951, shall be made as if this section had not been enacted and without inferences drawn from the fact that the amendments to section 117(m) made by this section are not expressly made applicable to gains realized prior to September 1, 1951, and without inferences drawn from the limitations contained in section 117(m), as amended by this section. SEC. 327. DEALERS IN SECURITIES—CAPITAL GAINS AND ORDINARY LOSSES. Effective with respect to sales or exchanges made after the expiration of the thirtieth day after the date of the enactment of this Act, section 117 is hereby amended by adding at the end thereof the following new subsection: " (n) DEALERS IN SECDKITIES.— " (1) CAPITAL GAINS.—Gain
by a dealer in securities from the sale or exchange of any security shall in no event be considered as gain from the sale or exchange of a capital asset unless— " (A) the security was, prior to the expiration of the thirtieth day after the date or its acquisition or after the date of the enactment of the Revenue Act of 1951 (whichever is
H ff*| ^-. ^^ supra.'
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