PUBLIC LAW 91-172-DEC. 30, 1969
26 USC 402. 78 Stat. 61.
(g) Ijy striking out "section 402(a)(2) " and inserting in lieu thereof "section 72(n), section 402(a)(2),". ^3^ Section 407(c) (relating to termination of status as deemed employee not to be treated as separation from service for purposes of capital gain provisions) is amended— (A)
by striking out "PROVISIONS." in the heading and inserting in lieu thereof "PROVISIONS AND LIMITATION OF T A X. "; and
78 Stat. 108.
68A Stat. 295;
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(B) by striking out "section 402(a)(2) " and inserting in lieu thereof "section 72(n), section 402(a)(2),". (4) Section 1304(b)(2) (relating to certain provisions inapplicable) is amended to read as follows: "(2) section 72(n)(2) (relating to limitation of tax in case of total distribution),", (d) EFFECTIVE DATE.—The amendments made by this section shall apply to taxable years ending after December 31, 1969. SEC. 516. OTHER CHANGES IN CAPITAL GAINS TREATMENT. (a) SALES OF TERM INTERESTS.—Section 1001 (relating to determina-
tion of amount of and recognition of gain or loss) is amended by adding at the end thereof the following new subsection: " (e) CERTAIN TERM INTERESTS.—
^g2 USC 1014,
" (1) IN GENERAL.—In determining gain or loss from the sale or other disposition of a term interest in property, that portion of the adjusted basis of such interest which is determined pursuant to section 1014 or 1015 (to the extent that such adjusted basis is a portion of the entire adjusted basis of the property) shall be disregarded. " (2) TERM INTEREST I N PROPERTY DEFINED.—For purposes of
68A Stat. 325.
paragraph (1), the term 'term interest in property' means— " (A) a life interest in property, " (B) an interest in property for a term of years, or " (C) an income interest in a trust. "(3) EXCEPTION.—Paragraph (1) shall not apply to a sale or other disposition which is a part of a transaction in which the entire interest in property is transferred to any person or persons." (b) CERTAIN CASUALTY LOSSES UNDER SECTION 1231.—Section 1231 ^g^^ (relating to property used in the trade or business and involuntary conversions) is amended by striking out all that follows paragraph (1) and inserting in lieu thereof the following: "(2) losses (including losses not compensated for by insurance or otherwise) upon the destruction, in whole or in part, theft or seizure, or requisition or condemnation of (A) property used in the trade or business or (B) capital assets held for more than 6 months shall be considered losses from a compulsory or involuntary conversion. I n the case of any involuntary conversion (subject to the provisions of this subsection but for this sentence) arising from fire, storm, shipwreck, or other casualty, or from theft, of any property used in the trade or business or of any capital asset held for more than 6 months, this subsection shall not apply to such conversion (whether resulting in gain or loss) if during the taxable year the recognized losses from such conversions exceed the recognized gains from such conversions."