PUBLIC LAW 105-34—AUG. 5, 1997 111 STAT. 849 "(1) IN GENERAL.— For purposes of this section, the term 'quahfied family-owned business interest' means— "(A) an interest as a proprietor in a trade or business carried on as a proprietorship, or "(B) an interest in an entity carrying on a trade or business, if— "(i) at leasts "(I) 50 percent of such entity is owned (directly or indirectly) by the decedent and members of the decedent's family, "(II) 70 percent of such entity is so owned by members of 2 families, or "(III) 90 percent of such entity is so owned by members of 3 families, and "(ii) for purposes of subclause (II) or (III) of clause (i), at least 30 percent of such entity is so owned by the decedent and members of the decedent's family. "(2) LIMITATION. —Such term shall not include— "(A) any interest in a trade or business the principal place of business of which is not located in the United States, "(B) any interest in an entity, if the stock or debt of such entity or a controlled group (as defined in section 267(f)(1)) of which such entity was a member was readily tradable on an established securities market or secondary market (as defined by the Secretary) at any time within 3 years of the date of the decedent's death, "(C) any interest in a trade or business not described in section 542(c)(2), if more than 35 percent of the adjusted ordinary gross income of such trade or business for the taxable year which includes the date of the decedent's death would qualify as personal holding company income (as defined in section 543(a)), "(D) that portion of an interest in a trade or business that is attributable to— "(i) cash or marketable securities, or both, in excess of the reasonably expected day-to-day working capital needs of such trade or business, and "(ii) any other assets of the trade or business (other than assets used in the active conduct of a trade or business described in section 542(c)(2)), which produce, or are held for the production of, income of which is described in section 543(a) or in section 954(c)(1) (determined without regard to subparagraph (A) thereof and by substituting 'trade or business' for 'controlled foreign corporation'). " (3) RULES REGARDING OWNERSHIP.— "(A) OWNERSHIP OF ENTITIES.— For purposes of paragraph (1)(B)— "(i) CORPORATIONS.—Ownership of a corporation shall be determined by the holding of stock possessing the appropriate percentage of the total combined voting power of all classes of stock entitled to vote and the appropriate percentage of the total value of shares of all classes of stock.
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