PUBLIC LAW 97-248—SEPT. 3, 1982
96 STAT. 479
(2) Section 302 is amended by redesignating subsection (e) a s 26 USC 302. subsection (f) and by inserting after subsection (d) the following new subsection: "(e) P A R T I A L LIQUIDATION D E F I N E D. —
"(1) IN GENERAL.—For purposes of subsection (b)(4), a distribution shall be t r e a t e d as in partial liquidation of a corporation if— "(A) the distribution is not essentially equivalent to a dividend (determined a t the corporate level r a the r than a t the shareholder level), and "(B) the distribution is pursuant to a plan and occurs within the taxable year in which the plan is adopted or within the succeeding taxable year. "(2) TERMINATION OF BUSINESS.—The d i s t r i b u t i o n s which m e e t
the requirements of paragraph (1)(A) shall include (but shall not be limited to) a distribution which meets the requirements of subparagraph s (A) and (B) of this paragraph: "(A) The distribution is a t t r i b u t a b l e to the distributing corporation's ceasing to conduct, or consists of the assets of, a qualified trade or business. "(B) Immediately after the distribution, the distributing corporation is actively engaged in the conduct of a qualified trade or business. "(3) QUALIFIED TRADE OR BUSINESS.—For purposes of p a r a -
g r a p h (2), the term 'qualified trade or business' means any trade or business which— "(A) was actively conducted throughout the 5-year period ending on the date of the redemption, and "(B) was not acquired by the corporation within such period in a t r a n s a c t i o n in which gain or loss was recognized in whole or in part. "(4)
REDEMPTION
MAY BE PRO R A T A. — W h e the r
or
not
a
redemption meets the requirements of subparagraph s (A) and (B) of paragraph (2) shall be determined without regard to w h e the r or not the redemption is pro r a t a with respect to all of the shareholders of the corporation. "(5) T R E A T M E N T OF CERTAIN PASS-THRU ENTITIES.—For
pur-
poses of determining under subsection (b)(4) w h e the r any stock is held by a shareholder who is not a corporation, any stock held by a partnership, estate, or t r u s t shall be treated as if it were actually held proportionately by its part n e r s or beneficiaries." (3) Subsection (a) of section 302 is amended by striking o u t " paragraph (1), (2), or (3)" and inserting in lieu thereof "paragraph (1), (2), (3), or (4)". (4) Paragraph (5) of section 302(b) (as redesignated by paragraph (1)) is amended— (A) by striking out " paragraph (2) or (3)" and inserting in lieu thereof " paragraph (2), (3), or (4)", and (B) by striking out " paragraph (1) or (2)" and inserting in lieu thereof " paragraph (1), (2), or (4)". (d) DEFINITION AND SPECIAL RULE. — S e c t i o n 346 (defining partial
liquidation) is amended to read as follows: "SFX\ 346. DEFINITION AND SPECIAL RULE. "(a) COMPLETE L I Q U I D A T I O N. — For purposes of t h i s subchapter, a
distribution shall be t r e a t e d as in complete liquidation of a corpora-
26 USC 346.
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