‘‘SEC. 1032. TRANSACTIONS BY A CORPORATION WITH RE-
SPECT TO ITS STOCK.
‘‘(a) NONRECOGNITION OF GAIN OR LOSS.—No gain
or loss shall be recognized to a corporation on the receipt
of property (including money) or services in exchange for
stock of such corporation.
‘‘(b) TREATMENT OF DERIVATIVE TRANSACTIONS.—
‘‘(1) NONRECOGNITION TREATMENT.—
‘‘(A) IN GENERAL.—Except as provided in
paragraph (2), section 1032 derivative items of
a corporation shall not be taken into account in
determining such corporation’s liability for tax
under this subtitle.
‘‘(B) SECTION 1032 DERIVATIVE ITEMS.—
For purposes of subparagraph (A), the term
‘section 1032 derivative item’ means any item
of income, gain, loss, or deduction if—
‘‘(i) such item arises out of the rights
or obligations under any option or forward
or futures contract to the extent such op-
tion or contract relates to the corporation’s
stock (or is attributable to any transfer or
extinguishment of any such right or obliga-
tion), or
‘‘(ii) such item arises under any other
contract or position but only to the extent
that such item reflects (or is determined by
reference to) changes in the value of such
stock or distributions thereon.
Such term shall not include any deduction al-
lowable under section 83 and shall not include
any deduction for any item which is in the na-
ture of compensation for services rendered. For
purposes of this subparagraph, de minimis rela-
tionships shall be disregarded.
‘‘(2) INCOME RECOGNITION ON CERTAIN FOR-
WARD CONTRACTS.—
‘‘(A) IN GENERAL.—If—
‘‘(i) a corporation acquires its stock,
and
‘‘(ii) such acquisition is part of a plan
(or series of related transactions) pursuant
to which the corporation enters into a for-
ward contract with respect to its stock,
such corporation shall include amounts in in-
come as if the excess of the amount to be re-
ceived under the forward contract over the fair
market value of the stock as of the date the
corporation entered into the forward contract
were original issue discount on a debt instru-
ment acquired on such date. The preceding sen-
tence shall apply only to the extent that the
amount of stock involved in the forward con-
tract does not exceed the amount acquired as
described in clause (i).
‘‘(B) PLAN
PRESUMED
TO
EXIST.—If a
corporation enters into a forward contract with
respect to its stock within the 60-day period be-
ginning on the date which is 30 days before the
date that the corporation acquires its stock,
such acquisition shall be treated as pursuant to
a plan described in subparagraph (A)(ii) unless
it is established that entering into such contract
and such acquisition are not pursuant to a plan
or series of related transactions.
‘‘(C) FORWARD
CONTRACT.—The term
‘forward contract’ has the meaning given to
such term by section 1259(d)(1); except that
such term shall include any transactions or se-
ries of related transactions having the same ef-
fect as a forward contract (as so defined).
‘‘(c) TREASURY STOCK TREATED AS STOCK.—Any
reference in this section to stock shall be treated as includ-
ing a reference to treasury stock.
‘‘(d) REGULATIONS.—The Secretary shall prescribe
such regulations as may be appropriate to carry out the
purposes of this section, including regulations which treat
the portion of an instrument which is described in sub-
section (b) separately from the portion of such instrument
which is not so described.
‘‘(e) BASIS.—For basis of property acquired by a cor-
poration in certain exchanges for its stock, see section
362.’’
(b) CLERICAL AMENDMENT.—The item relating to
section 1032 in the table of sections for part III of sub-
chapter O of chapter 1 of such Code is amended to read
as follows:
‘‘Sec. 1032. Transactions by a corporation with respect to its
stock.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to transactions entered into after
the date of the enactment of this Act.
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