Page:United States Statutes at Large Volume 83.djvu/641

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[83 STAT. 613]
[83 STAT. 613]
PUBLIC LAW 91-000—MMMM. DD, 1969

83 STAT. ]

PUBLIC LAW 91-172-DEC. 30, 1969

613

indebtedness which are not convertible. The preceding sentence shall not apply to the extent that the corporation can demonstrate to the satisfaction of the Secretary or his delegate that such excess is attributable to the cost of borrowing and is not attributable to the conversion "(b) SPECIAL RULES.—For purposes of subsection (a) — "(1) ADJUSTED ISSUE PRICE.—The adjusted issue price is the issue price (as defined in section 1232(b)) increased by any amount of discount deducted before repurchase, or, in the case of bonds or other evidences of indebtedness issued after February 28, 1913, decreased by any amount of premium included in gross income before repurchase by the issuing corporation. " (2) CONTROL.—The term 'control' has the meaning assigned to such term by section 368(c)." (b) CLERICAL AMENDMENT.—The table of sections for part VIII of subchapter B of chapter 1 is amended by adding at the end thereof the following new item: "Sec. 249. Limitation on deduction of bond premium on repurchase." (c) EFFECTIVE DATE.—The amendments made by this section shall apply to a convertible bond or other convertible evidence of indebtedness repurchased after April 22, 1969, other than such a bond or other evidence of indebtedness repurchased pursuant to a binding obligation incurred on or before April 22, 1969, to repurchase such bond or other evidence of indebtedness at a specified call premium, but no inference shall be drawn from the fact that section 249 of the Internal Revenue Code of 1954 (as added by subsection (a) of this section) does not apply to the repurchase of such convertible bond or other convertible evidence of indebtedness. SEC. 4 5 TREATMENT OF CERTAIN CORPORATE INTERESTS AS STOCK 1. OR INDEBTEDNESS. (a) IN GENERAL.—Subchapter C of Chapter 1 (relating to corporate distributions and adjustments) is amended by redesignating part VI (relating to effective date of subchapter C) as part VII and by inserting after part V the following new part:

Arite.p.en.

68A Stat. 120. 26 USC 368. -

Ante. p. 612.

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"Part VI—Treatment of Certain Corporate Interests as Stock or Indebtedness "See. 385. Treatment of certain interests in corporations as stock or indebtedness. "SEC. 3 5 TREATMENT OF CERTAIN INTERESTS IN CORPORATIONS AS 8. STOCK OR INDEBTEDNESS. "(a)

AUTHORITY To PRESCRIBE REGULATIONS.—The Secretary or his

delegate is authorized to prescribe such regulations as may be necessary or appropriate to determine whether an interest in a corporation is to be treated for purposes of this title as stock or indebtedness. "(b) FACTORS.—The regulations prescribed under this section shall set forth factors which are to be taken into account in determining with respect to a particular factual situation whether a debtor-creditor relationship exists or a corporation-shareholder relationship exists. The factors so set forth in the regulations may include among other ractors: "(1) whether there is a written unconditional promise to pay on demand or on a specified date a sum certain in money in return for an adequate consideration in money or money's worth, and to pay a fixed rate of interest,

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