96 STAT. 1688
PUBLIC LAW 97-354—OCT. 19, 1982 of the shareholders' adjusted bases in such property, as determined under this subparagraph. "(C) COORDINATION WITH TRANSFER RULE OF PARAGRAPH
(9).—For purposes of paragraph (9)— "(i) an S corporation shall be treated as a partnership, and the shareholders of the S corporation shall be treated as partners, and "(ii) an election by a C corporation to become an S corporation shall be treated as a transfer of all its properties effective on the day on which such election first takes effect. "(D) COORDINATION WITH TRANSFER RULE OF PARAGRAPH
(10).—For purposes of paragraphs (9) and (10), if an S corporation becomes a C corporation, each shareholder shall be treated as having transferred to such corporation his pro rata share of all the assets of the S corporation." (b) WINDFALL PROFIT TAX.—
26 USC 4996.
(1) Paragraph (1) of section 4996(a) (defining producer) is amended by adding at the end thereof the following new subparagraph: "(C) SUBCHAPTER S CORPORATIONS.—
Ante, p. 1685. 26 USC 4992.
"(i) IN GENERAL.—If (but for this subparagraph) an S corporation would be treated as a producer of any crude oil— "(I) such crude oil shall be allocated among the shareholders of such corporation, and "(II) any shareholder to whom such crude oil is allocated (and not the S corporation) shall be treated as the producer of such crude oil. "(ii) ALLOCATION.—Except to the extent otherwise provided in regulations, any allocation under clause (i)(1) shall be determined on the basis of the shareholder's pro rata share (as determined under section 1377(a)) of the income of the corporation." (2) Section 4992 (relating to independent producer oil) is amended by adding at the end thereof the following new subsection: "(f) S CORPORATION TREATED AS PARTNERSHIP.—For purposes of
subsections (d) and (e)— "(1) an S corporation shall be treated as a partnership, and "(2) the shareholders of the S corporation shall be treated as partners of such partnership." (c) OPTIONAL WRITEOFF OF CERTAIN TAX PREFERENCES (SECTION
Ante, p. 417.
58(i)).(j) Subparagraph (C) of section 58(i)(4) (defining nonlimited partnership intangible drilling costs) is amended to read as follows: "(C) NONUMITED INTANGIBLE DRILLING COSTS.—For pur-
Ante, p. 411.
poses of this paragraph, the term 'nonlimited intangible drilling costs' means any qualified expenditure described in paragraph (2)(C) of an individual which is not allocable to a limited business interest (as defined in section 55(e)(8)(C)) of such individual." (2) Subparagraph (D) of section 58(i)(5) is amended— (A) by adding at the end thereof the following new sentence: "A similar rule shall apply in the case of an S corporation and its shareholders.', and
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