PUBLIC LAW 87-403-FEB. 2, 1962
[76 STAT.
Public Law 87-403 February 2, 1962 [H. R. 8847]
Stock, antitrust distribution. Income tax treatment. 68A Stat. 295; 70 Stat. 139. 26 USC 1 1 0 11103.
AN ACT To amend the Internal Revenue Code of 1954 so as to provide that a distribution of stock made to an individual (or certain corporations) pursuant to an order enforcing the antitrust laws shall not be treated as a dividend distribution but shall be treated as a return of capital; and to provide that the amount of such a distribution made to a corporation shall be the fair market value of the distribution. Be It enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That (a) subchapter O of chapter 1 of the Internal Revenue Code of 1954 (relating to gain or loss on disposition of property) is amended by adding at the end thereof the following new part: TART
IX—DISTRIBUTIONS P U R S U A N T TO ORDERS ENFORCING THE ANTITRUST LAWS
"Sec. 1111. Distribution of stock pursuant to order enforcing the antitrust laws. "SEC. 1111. DISTRIBUTION OF STOCK PURSUANT TO ORDER ENFORCING THE ANTITRUST LAWS. 68A Stat. 84, 95, 98. 26 USC 3 0 1, 3 1 2, 316.
" (a) GENERAL RULE.—Notwithstanding sections 301, 312, and 316, a
distribution of divested stock (as defined in subsection (e)), to a qualifying shareholder (as defined in subsection (b)), to which section 301 (c)(1) would, but for this section, apply, shall be a distribution which is not out of the earnings and profits of the distributing corporation for purposes of this subtitle. Definitions. " (b) QUALIFYING SHAREHOLDER.—For purposes of this section, the term 'qualifying shareholder' means any shareholder other than a corporation which may be allowed a deduction under section 243, 244, 26 USC 243-245. or 245 with respect to dividends received. " (c) SPECIAL RULES.— " (1) DISTRIBUTIONS TO AVOID FEDERAL INCOME TAX.—Subsection
71 Stat. 163. 73 Stat. 243.
(a) shall not apply to any transaction one of the principal purposes of which is the distribution of the earnings and profits of the distributing corporation or of the corporation whose stock is distributed, or both. "(2) STOCK.—For purposes of this section, the term 'stock' includes rights to fractional shares. " (d) DEFINITION OF ANTITRUST ORDER.—For purposes of this section, the term 'antitrust order' means, in the case of any corporation, a final judgment rendered after January 1, 1961, by a court with respect to such corporation in a court proceeding under the Sherman Act (26 Stat. 209; 15 U.S.C. 1-7) or the Clayton Act (38 Stat. 730; 15 U.S.C. 12-27), or both, to which the United States is a party, if such proceeding was commenced on or before January 1, 1959. "(e) DEFINITION OF DIVESTED STOCK.—For purposes of this section, the term 'divested stock' means stock meeting the following requirements: "(1) the stock is the subject of an antitrust order entered after January 1, 1961, which— " (A) directs the distributing corporation to divest itself of such stock by distributing it to its shareholders (or requires such distribution as an alternative to other action by any person); " (B) specifies and itemizes the stock to be divested; and
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