102 STAT. 3412
Gifts and property.
26 USC 671 note.
PUBLIC LAW 100-647—NOV. 10, 1988 "(i) surface rights to property the acquisition of which— "(I) is necessary to mine mineral rights held on October 22, 1986, and "(II) is required by a written binding agreement between the entity and an unrelated person entered into on or before October 22, 1986, "(ii) surface rights to property which are not described in clause (i) and which— "(I) are acquired in an exchange to which section 1031 applies, and "(II) a r e necessary to mine mineral rights held on October 22, 1986, "(iii) tangible personal property incidental to the leasing of mineral property and activities incidental thereto, or "(iv) part of any required reserves of the entity." (5) Paragraph (1) of section 646(d) of the Reform Act is amended by striking out subparagraph (B) and inserting in lieu thereof: "(B) for purposes of section 333 of such Code (as so in effect)— "(i) any person holding a n income interest in such entity as of such time shall be treated as a qualified electing shareholder, and "(ii) the e a r n i n g and profits, and the value of money or stock or securities, of such entity shall be apportioned ratably among persons described in clause (i). The amendments made by subtitle D of this title and section 1804 of this Act s h ^ l not apply to any liquidation under this paragraph." (6)(A) Paragraph (2) of section 646(d) of the Reform Act is amended to read as follows: "(2) TERMINATION OF ELECTION.—If an entity ceases to be
described in subsection (b) or violates any term of the agreement described in subsection (c)(2), the entity shall, for purposes of the Internal Revenue C!ode of 1986, be treated as a corporation for the taxable year in which such cessation or violation occurs and for all subsequent taxable years." (B) Paragraph (3) of section 646(c) of the Reform Act is amended to read as follows: "(3) BEGINNING OP PERIOD FOR WHICH ELECTION IS IN EFFECT.—
The period during which an election is in effect under this subsection shall begin on the 1st day of the 1st taxable year beginning after the date of the enactment of this Act and following the taxable year in which the election is made." (7)(A) Subsection (e) of section 646 of the Reform Act is amended to read as follows: "(e) SPECIAL RULE FOR PERSONS HOLDING INCOME INTERESTS.—In
applying subpart E of part I of subchapter J of chapter 1 of the Internal Revenue Code of 1986 to any entity to which this section applies— "(1) a reversionary interest shall not be taken into account until it comes into possession, and "(2) all items of income, gain, loss, deduction, and credit shall be allocated to persons holding income interests for the period of the allocation."
�
