Page:United States Statutes at Large Volume 111 Part 1.djvu/940

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Ill STAT. 916 PUBLIC LAW 105-34—AUG. 5, 1997 (in such manner as the Secretary may by regulations prescribe) that such distribution occurred, and "(ii) such deficiency may be assessed before the expiration of such 3-year period notwithstanding the provisions of any other law or rule of law which would otherwise prevent such assessment. "(5) REGULATIONS.—The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this subsection, including regulations— "(A) providing for the application of this subsection where there is more than 1 controlled corporation, "(B) treating 2 or more distributions as 1 distribution where necessary to prevent the avoidance of such purposes, and "(C) providing for the application of rules similar to the rules of subsection (d)(6) where appropriate for purposes of paragraph (2)(B).". (b) SPECIAL RULES FOR CERTAIN INTRAGROUP TRANSACTIONS.— (1) SECTION 355 NOT TO APPLY.—Section 355, as amended by subsection (a), is amended by adding at the end the following new subsection: " (f) SECTION NOT TO APPLY TO CERTAIN INTRAGROUP DISTRIBU- TIO^fS. —Except as provided in regulations, this section (or so much of section 356 as relates to this section) shall not apply to the distribution of stock from 1 member of an affiliated group (as defined in section 1504(a)) to another member of such group if such distribution is part of a plan (or series of related transactions) described in subsection (e)(2)(A)(ii) (determined after the application of subsection (e)).". (2) ADJUSTMENTS TO BASIS.—Section 358 (relating to basis to distributees) is amended by adding at the end the following new subsection: "(g) ADJUSTMENTS IN INTRAGROUP TRANSACTIONS INVOLVING SECTION 355.— In the case of a distribution to which section 355 (or so much of section 356 as relates to section 355) applies and which involves the distribution of stock from 1 member of an affiliated group (as defined in section 1504(a) without regard to subsection (b) thereof) to another member of such group, the Secretary may, notwithstanding any other provision of this section, provide adjustments to the adjusted basis of any stock which— "(1) is in a corporation which is a member of such group, and "(2) is held by Einother member of such group, to appropriately reflect the proper treatment of such distribution.". (c) DETERMINATION OF CONTROL IN CERTAIN DIVISIVE TRANS- ACTIONS. — (1) SECTION 351 TRANSACTIONS.— Section 351(c) (relating to special rule) is amended to read as follows: " (c) SPECIAL RULES WHERE DISTRIBUTION TO SHAREHOLDERS.— In determining control for purposes of this section— "(1) the fact that any corporate transferor distributes part or all of the stock in the corporation which it receives in the exchange to its shareholders shall not be taken into account, and "(2) if the requirements of section 355 are met with respect to such distribution, the shareholders shall be treated as in control of such corporation immediately after the exchange