83 STAT. ]
PUBLIC LAW 91-172-DEC. 30, 1%9
607
"(d) TAXABLE YEARS TO W H I C H APPLICABLE.—In applying this section— "(1) FIRST YEAR OF DISALLOWANCE.—The deduction of interest
on any obligation shall not be disallowed under subsection (a) before the hrst taxable year of the issuing corporation as of the last day of which the application of either subparagraph (A) or subparagraph (B) of subsection (b)(4) results in such obligation being corporate acquisition indebtedness. "(2) GENERAL RULE FOR SUCCEEDING YEARS.—Except as provided in paragraphs (3), (4), and (5), if an obligation is determined to be corporate acquisition indebtedness as of the last day of any taxable year of the issuing corporation, it shall be corporate acquisition indebtedness for such taxable year and all subsequent taxable years. "(3) REDETERMINATION WHERE CONTROL, ETC., IS ACQUIRED.—
If an obligation is determined to be corporate acquisition indebt^,^,. edness as of the close of a taxable year of the issuing corporation " in which clause (i) of subsection (c)(3)(A) applied, but would not be corporate acquisition indebtedness if the determination were made as of the close of the first taxable year of such corporation thereafter in which clause (ii) of subsection (c)(3)(A) could apply, such obligation shall be considered not to be corporate acquisition indebtedness for such later taxable year and all taxable years thereafter. "(4) SPECIAL 3-YEAR RUT:,E.—If an obligation which has been determined to be corporate acquisition indebtedness for any taxable year would not be such indebtedness for each of any 3 consecutive taxable years thereafter if subsection (b)(4) were applied as of the close of each of such 3 years, then such obligation shall not be corporate acquisition indebtedness for all taxable years after such 3 consecutive taxable years. "(5) 5 PERCENT STOCK RULE.—In the case of obligations issued to provide consideration for the acquisition of stock in another corporation, such obligations shall be corporate acquisition indebtedness for a taxable year only if at some time after October 9, 1969, and before the close of such year the issuing corporation owns 5 percent or more of the total combined voting power of all classes of stock entitled to vote of such other corporation. "(e) CERTAIN NONTAXABLE TRANSACTIONS.—An acquisition of stock of a corporation of which the issuing corporation is in control (as defined in section 368(c)) in a transaction in which gain or loss is not 26^?c*368^°' recognized shall be deemed an acquisition described m paragraph (1) of subsection (b) only if immediately before such transaction (1) the acquired corporation was in existence, and (2) the issuing corporation was not in control (as defined in section 368(c)) of such corporation. "(f) EXEMPTION FOR CERTAIN ACQUISITIONS OF FOREIGN CORPORA-
TIONS.—For purposes of this section, the term 'corporate acquisition indebtedness' does not include any indebtedness issued to any person to provide consideration for the acquisition of stock in, or assets of, any foreign corporation substantially all of the income of which, for the ^-year period ending with the date of such acquisition or for such part of such period as the foreign corporation was in existence, is from sources without the United States. ,(g) AFFILIATED GROUPS.—In any case in which the issuing corporation is a member of an affiliated group, the application of this section shall be determined, pursuant to regulations prescribed by the Secretary or his delegate, by treating all of the members of the affiliated group in the aggregate as the issuing: corporation, except that the ratio 01 debt to equity of, projected earnings of, and annual interest to be
�
