PUBLIC LAW 98-369—JULY 18, 1984 "(B) the amount so treated shall be reduced by the amount of any reduction in basis under section 301(c)(2) by reason of such distribution. "(e) REGULATIONS.—The Secretary shall prescribe such regulations as may be appropriate to carry out the purposes of this section, including regulations providing for the application of this section in the case of stock dividends, stock splits, reorganizations, and other similar transactions."
98 STAT. 567
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(b) HOLDING PERIODS.— (1) 45-DAY HOLDING PERIOD.—Subsection (c) of section 246 (re-
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26 USC 246.
lating to the exclusion of certain dividends) is amended by striking out "15" each place it appears and inserting in lieu thereof "45". •
(2) RULES FOR COMPUTING HOLDING PERIODS.—Subsection (c) of section 246 (relating to the exclusion of certain dividends) is amended by a d d i n g a t the e n d thereof the following n e w p a r a -
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graph: "(4) HOLDING PERIOD REDUCED FOR PERIODS WHERE RISK OF LOSS
DIMINISHED.—The holding periods determined under paragraph (3) shall be appropriately reduced (in the manner provided in regulations prescribed by the Secretary) for any period (during such periods) in which— "(A) the taxpayer has an option to sell, is under a contractual obligation to sell, or has made (and not closed) a short sale of, substantially identical stock or securities, "(B) the taxpayer is the grantor of an option to buy substantially identical stock or securities, or .i-^: "(C) under regulations prescribed by the Secretary, a ., taxpayer has diminished his risk of loss by holding 1 or more other positions with respect to substantially similar or related property. ^. The preceding sentence shall not apply in the case of any qualified covered call (as defined in section 1092(c)(4) but without regard to the requirement that gain or loss with respect to ,.; the option not be ordinary income or loss)." j (3) Subparagraph (B) of section 246(c)(1) is amended to read as follows: .. "(B) to the extent that the taxpayer is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property." (4) Paragraph (3) of section 246(c) is amended by striking out the last sentence. (c) APPLICATION OF RELATED PERSON RULES TO SECTION 246(c) AND
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Post, p. 616.
CERTAIN OTHER PROVISIONS.—Section 7701 is amended by redesig-
nating subsection (f) as (g) and by inserting after subsection (e) the Ante, p. 518. following new subsection: "(f) USE OF RELATED PERSONS OR PASS-THRU ENTITIES.—The Secre- Regulations, tary shall prescribe such regulations as may be necessary or appropriate to prevent the avoidance of those provisions of this title which deal with— "(1) the linking of borrowing to investment, or "(2) diminishing risks, through the use of related persons, pass-thru entities, or other intermediaries." (d) CONFORMING AMENDMENTS.—
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