120 STAT. 360
This clause shall only apply with respect to any business if substantially all of the income of the business is derived from persons who are not related (within the meaning of section 267(b) or 707(b)(1)) to the person conducting the business. ‘‘(iii) EXCEPTION FOR SECURITIES MARKED TO MARKET.—Such term shall not include any security (as defined in section 475(c)(2)) which is held by a dealer in securities and to which section 475(a) applies. ‘‘(iv) STOCK OR SECURITIES IN A 20-PERCENT CONTROLLED ENTITY.— ‘‘(I) IN GENERAL.—Such term shall not include any stock and securities in, or any asset described in subclause (IV) or (V) of clause (i) issued by, a corporation which is a 20-percent controlled entity with respect to the distributing or controlled corporation. ‘‘(II) LOOK-THRU RULE.—The distributing or controlled corporation shall, for purposes of applying this subsection, be treated as owning its ratable share of the assets of any 20-percent controlled entity. ‘‘(III) 20-PERCENT CONTROLLED ENTITY.—For purposes of this clause, the term ‘20-percent controlled entity’ means, with respect to any distributing or controlled corporation, any corporation with respect to which the distributing or controlled corporation owns directly or indirectly stock meeting the requirements of section 1504(a)(2), except that such section shall be applied by substituting ‘20 percent’ for ‘80 percent’ and without regard to stock described in section 1504(a)(4). ‘‘(v) INTERESTS IN CERTAIN PARTNERSHIPS.— ‘‘(I) IN GENERAL.—Such term shall not include any interest in a partnership, or any debt instrument or other evidence of indebtedness, issued by the partnership, if 1 or more of the trades or businesses of the partnership are (or, without regard to the 5-year requirement under subsection (b)(2)(B), would be) taken into account by the distributing or controlled corporation, as the case may be, in determining whether the requirements of subsection (b) are met with respect to the distribution. ‘‘(II) LOOK-THRU RULE.—The distributing or controlled corporation shall, for purposes of applying this subsection, be treated as owning its ratable share of the assets of any partnership described in subclause (I). ‘‘(3) 50-PERCENT OR GREATER INTEREST.—For purposes of this subsection— ‘‘(A) IN GENERAL.—The term ‘50-percent or greater interest’ has the meaning given such term by subsection (d)(4). ‘‘(B) ATTRIBUTION RULES.—The rules of section 318 shall apply for purposes of determining ownership of stock for purposes of this paragraph.
Applicability.
Applicability.
Applicability.
VerDate 14-DEC-2004
10:20 Jul 12, 2007
PUBLIC LAW 109–222—MAY 17, 2006
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