76
STAT.] "(3)
PUBLIC LAW 87-834-OCT. 16, 1962
1041
PARTIAL LIQUIDATIONS AND REDEMPTIONS.—
" (A) IN GENERAL.—If a foreign investment company (as defined in section 1246) distributes amounts in partial liquidation or in a redemption to which section 302(a) or 303 applies, the part of such distribution which is properlv chargeable to earnings and profits shall be an amount which is not in excess of the ratable share of the earnings and profits of the company accumulated after February 28, 1913, attributable to the stock so redeemed. " (B) EFFECTIVE DATE.—Subparagraph (A) shall apply only with respect to distributions made after December 31, 1962." (2) SALE OR EXCHANGE OF INTEREST IN rARTNERsiiip.—Section 751(d)(2) (relating to inventory items which have appreciated substantially in value) is amended by striking out "and" at the end of subparagraph (B), and by striking out subparagraph (C) and inserting in lieu thereof the following new subparagraphs: " (C) any other property of the partnership which, if sold or exchanged by the partnership, would result in a gain taxable under subsection (a) of section 1246 (relating to gain on foreign investment company stock), and " (D) any other property held by the partnership which, if held by the selling or distributee partner, would be considered property of the type described in subparagraph (A), (B),or(C)." (3)
HOLDING PERIOD OF PROPERTY.—Section 1223
(relating to
Ante, p. i:o36. 26 USC 302,303.
26 USC 751.
26 USC 1223.
liolding period of property) is amended by redesignating paragraph (10) as paragraph (11) and inserting after paragraph (9) the following paragraph: "(10) In determining the period for which the taxpayer has held trust certificates of a trust to which subsection (d) of section 1246 applies, or the period for which the taxpayer has held stock in a corporation to which subsection (d) of section 1246 applies, there shall be included the period for which the trust or corporation (as the case may be) held the stock of foreign investment companies." (c) EFFECTIVE DATE.—The amendments made by this section shall apply with respect to taxable years beginning after December 31, 1962.
SEC. 15. GAIN FROM CERTAIN SALES OR EXCHANGES OF STOCK IN CERTAIN FOREIGN CORPORATIONS. (a) TREATMENT OF G A I N FROM THE REDEMPTION, CANCELLATION, OR SALE OF STOCK I N CERTAIN FOREIGN CORPORATIONS.—Part IV of sub-
chapter P of chapter 1 (relating to special rules for determining capital gains and losses) is amended by adding after section 1247 (as added by section 14 of this Act) the following new section: "SEC. 1248. GAIN FROM CERTAIN SALES OR EXCHANGES OF STOCK IN CERTAIN FOREIGN CORPORATIONS. "(a)
Ante, p. 1037.
GENERAL RULE.—If—
"(1) a United States person sells or exchanges stock in a foreign corporation, or if a United States person receives a distribution from a foreign corporation which, under section 302 or 331, is treated as an exchange of stock, and "(2) such person owns, within the meaning of section 958(a), or is considered as owning by applying the rules of ownership of section 958(b), 10 percent or more of the total combined voting power of all classes of stock entitled to vote of such foreign corporation at any time during the 5-year period ending on the date of the sale or exchange when such foreign corporation was a controlled foreign corporation (as defined in section 957), 78135 0-63—69
26 USC 302,33 u Ante, p. 1 is. . 0
Ante. p. 11017.
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