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SEC. 6010. AMENDMENTS RELATED TO TITLE X OF 1997 ACT.
(a) AMENDMENTS RELATED TO SECTION 1001 OF 1997
ACT.—
(1) Paragraph (2) of section 1259(b) of the 1986
Code is amended—
(A) by striking ‘‘debt’’ each place it appears
in subparagraph (A) and inserting ‘‘position’’,
(B) by striking ‘‘and’’ at the end of sub-
paragraph (A), and
(C) by redesignating subparagraph (B) as
subparagraph (C) and by inserting after sub-
paragraph (A) the following new subparagraph:
‘‘(B) any hedge with respect to a position
described in subparagraph (A), and’’.
(2) Section 1259(d)(1) of the 1986 Code is
amended by inserting ‘‘(including cash)’’ after ‘‘prop-
erty’’.
(3) Subparagraph (D) of section 475(f)(1) of the
1986 Code is amended by adding at the end the fol-
lowing new sentence: ‘‘Subsection (d)(3) shall not
apply under the preceding sentence for purposes of
applying sections 1402 and 7704.’’
(4) Subparagraph (C) of section 1001(d)(3) of
the 1997 Act is amended by striking ‘‘within the 30-
day period beginning on’’ and inserting ‘‘before the
close of the 30th day after’’.
476
(b) AMENDMENT RELATED TO SECTION 1011 OF 1997
ACT.—Paragraph (1) of section 1059(g) of the 1986 Code
is amended by striking ‘‘and in the case of stock held by
pass-thru entities’’ and inserting ‘‘, in the case of stock held
by pass-thru entities, and in the case of consolidated
groups’’.
(c) AMENDMENTS RELATED TO SECTION 1012 OF 1997
ACT.—
(1) Paragraph (1) of section 1012(d) of the 1997
Act is amended by striking ‘‘1997, pursuant’’ and in-
serting ‘‘1997; except that the amendment made by
subsection (a) shall apply to such distributions only
if pursuant’’.
(2) Subparagraph (A) of section 355(e)(3) of the
1986 Code is amended—
(A) by striking ‘‘shall not be treated as de-
scribed in’’ and inserting ‘‘shall not be taken
into account in applying’’, and
(B) by striking clause (iv) and inserting the
following new clause:
‘‘(iv) The acquisition of stock in the
distributing corporation or any controlled
corporation to the extent that the percentage
of stock owned directly or indirectly in such
corporation by each person owning stock in
477
such corporation immediately before the ac-
quisition does not decrease.’’
(3)(A) Subsection (c) of section 351 of the 1986
Code is amended to read as follows:
‘‘(c) SPECIAL
RULES
WHERE
DISTRIBUTION
TO
SHAREHOLDERS.—
‘‘(1) IN GENERAL.—In determining control for
purposes of this section, the fact that any corporate
transferor distributes part or all of the stock in the
corporation which it receives in the exchange to its
shareholders shall not be taken into account.
‘‘(2) SPECIAL RULE FOR SECTION 355.—If the re-
quirements of section 355 (or so much of section 356
as relates to section 355) are met with respect to a
distribution described in paragraph (1), then, solely
for purposes of determining the tax treatment of the
transfers of property to the controlled corporation by
the distributing corporation, the fact that the share-
holders of the distributing corporation dispose of part
or all of the distributed stock shall not be taken into
account in determining control for purposes of this
section.’’
(B) Clause (ii) of section 368(a)(2)(H) of the
1986 Code is amended to read as follows:
478
‘‘(ii) in the case of a transaction with
respect to which the requirements of section
355 (or so much of section 356 as relates to
section 355) are met, the fact that the share-
holders of the distributing corporation dis-
pose of part or all of the distributed stock
shall not be taken into account.’’
(d) AMENDMENTS RELATED TO SECTION 1013 OF 1997
ACT.—
(1) Paragraph (5) of section 304(b) of the 1986
Code is amended by striking subparagraph (B) and
by redesignating subparagraph (C) as subparagraph
(B).
(2) Subsection (b) of section 304 of the 1986
Code is amended by adding at the end the following
new paragraph:
‘‘(6) AVOIDANCE
OF
MULTIPLE
INCLUSIONS,
ETC.—In the case of any acquisition to which sub-
section (a) applies in which the acquiring corporation
or the issuing corporation is a foreign corporation,
the Secretary shall prescribe such regulations as are
appropriate in order to eliminate a multiple inclu-
sion of any item in income by reason of this subpart
and to provide appropriate basis adjustments (includ-
479
ing modifications to the application of sections 959
and 961).’’
(e) AMENDMENTS RELATED TO SECTION 1014 OF 1997
ACT.—
(1) Paragraph (1) of section 351(g) of the 1986
Code is amended by adding ‘‘and’’ at the end of sub-
paragraph (A) and by striking subparagraphs (B)
and (C) and inserting the following new subpara-
graph:
‘‘(B) if (and only if) the transferor receives
stock other than nonqualified preferred stock—
‘‘(i) subsection (b) shall apply to such
transferor, and
‘‘(ii) such nonqualified preferred stock
shall be treated as other property for pur-
poses of applying subsection (b).’’
(2) Clause (ii) of section 354(a)(2)(C) of 1986
Code is amended by adding at the end the following
new subclause:
‘‘(III) EXTENSION OF STATUTE OF
LIMITATIONS.—The statutory period
for the assessment of any deficiency at-
tributable to a corporation failing to be
a family-owned corporation shall not
expire before the expiration of 3 years
480
after the date the Secretary is notified
by the corporation (in such manner as
the Secretary may prescribe) of such
failure, and such deficiency may be as-
sessed before the expiration of such 3-
year period notwithstanding the provi-
sions of any other law or rule of law
which would otherwise prevent such as-
sessment.’’
(f) AMENDMENT RELATED TO SECTION 1024 OF 1997
ACT.—Section 6331(h)(1) of the 1986 Code is amended by
striking ‘‘The effect of a levy’’ and inserting ‘‘If the Sec-
retary approves a levy under this subsection, the effect of
such levy’’.
(g) AMENDMENTS RELATED TO SECTION 1031 OF 1997
ACT.—
(1) Subsection (l) of section 4041 of the 1986
Code is amended by striking ‘‘subsection (e) or (f)’’
and inserting ‘‘subsection (f) or (g)’’.
(2) Subsection (b) of section 9502 of the 1986
Code is amended by moving the sentence added at the
end of paragraph (1) to the end of such subsection.
(3) Subsection (c) of section 6421 of the 1986
Code is amended—
481
(A) by striking ‘‘(2)(A)’’ and inserting
‘‘(2)’’, and
(B) by adding at the end the following sen-
tence: ‘‘Subsection (a) shall not apply to gasoline
to which this subsection applies.’’
(h) AMENDMENTS RELATED TO SECTION 1032 OF 1997
ACT.—
(1) Section 1032(a) of the 1997 Act is amended
by striking ‘‘Subsection (a) of section 4083’’ and in-
serting ‘‘Paragraph (1) of section 4083(a)’’.
(2) Section 1032(e)(12)(A) of the 1997 Act shall
be applied as if ‘‘gasoline, diesel fuel,’’ were the mate-
rial proposed to be stricken.
(3) Paragraph (1) of section 4101(e) of the 1986
Code is amended by striking ‘‘dyed diesel fuel and
kerosene’’ and inserting ‘‘such fuel in a dyed form’’.
(i) AMENDMENT RELATED TO SECTION 1034 OF 1997
ACT.—Paragraph (3) of section 4251(d) of the 1986 Code
is amended by striking ‘‘other similar arrangement’’ and
inserting ‘‘any other similar arrangement’’.
(j) AMENDMENTS RELATED TO SECTION 1041 OF 1997
ACT.—
(1) Subparagraph (A) of section 512(b)(13) of
the 1986 Code is amended by inserting ‘‘or accrues’’
after ‘‘receives’’.
482
(2) Subclause (I) of section 512(b)(13)(B)(i) of
the 1986 Code is amended by striking ‘‘(as defined in
section 513A(a)(5)(A))’’.
(3) Paragraph (2) of section 1041(b) of the 1997
Act is amended to read as follows:
‘‘(2) BINDING
CONTRACTS.—The amendments
made by this section shall not apply to any amount
received or accrued during the first 2 taxable years
beginning on or after the date of the enactment of this
Act if such amount is received or accrued pursuant
to a written binding contract in effect on June 8,
1997, and at all times thereafter before such amount
is received or accrued. The preceding sentence shall
not apply to any amount which would (but for the ex-
ercise of an option to accelerate payment of such
amount) be received or accrued after such 2 taxable
years.’’
(k) AMENDMENTS RELATED TO SECTION 1053 OF 1997
ACT.—
(1) Section 853 of the 1986 Code is amended by
redesignating subsection (e) as subsection (f) and by
inserting after subsection (d) the following new sub-
section:
‘‘(e) TREATMENT
OF TAXES NOT ALLOWED
AS
A
CREDIT UNDER SECTION 901(k).—This section shall not
483
apply to any tax with respect to which the regulated invest-
ment company is not allowed a credit under section 901
by reason of section 901(k).’’
(2) Subsection (c) of section 853 of the 1986
Code is amended by striking the last sentence.
(l) AMENDMENT RELATED TO SECTION 1055 OF 1997
ACT.—Section 6611(g)(1) of the 1986 Code is amended by
striking ‘‘(e), and (h)’’ and inserting ‘‘and (e)’’.
(m) AMENDMENT RELATED TO SECTION 1061 OF 1997
ACT.—Subsection (c) of section 751 of the 1986 Code is
amended by striking ‘‘731’’ each place it appears and in-
serting ‘‘731, 732,’’.
(n) AMENDMENT RELATED TO SECTION 1083 OF 1997
ACT.—Section 1083(a)(2) of the 1997 Act is amended—
(1) by striking ‘‘21’’ and inserting ‘‘20’’, and
(2) by striking ‘‘22’’ and inserting ‘‘21’’.
(o) AMENDMENT RELATED TO SECTION 1084 OF 1997
ACT.—
(1) Paragraph (3) of section 264(a) of the 1986
Code is amended by striking ‘‘subsection (c)’’ and in-
serting ‘‘subsection (d)’’.
(2) Paragraph (4) of section 264(a) of the 1986
Code is amended by striking ‘‘subsection (d)’’ and in-
serting ‘‘subsection (e)’’.
484
(3)(A) Paragraph (4) of section 264(f) of the
1986 Code is amended by adding at the end the fol-
lowing new subparagraph:
‘‘(E) MASTER CONTRACTS.—If coverage for
each insured under a master contract is treated
as a separate contract for purposes of sections
817(h), 7702, and 7702A, coverage for each such
insured shall be treated as a separate contract
for purposes of subparagraph (A). For purposes
of the preceding sentence, the term ‘master con-
tract’ shall not include any group life insurance
contract (as defined in section 848(e)(2)).’’
(B) The second sentence of section 1084(d) of the
1997 Act is amended by striking ‘‘but’’ and all that
follows and inserting ‘‘except that, in the case of a
master contract (within the meaning of section
264(f)(4)(E) of the Internal Revenue Code of 1986),
the addition of covered lives shall be treated as a new
contract only with respect to such additional covered
lives.’’
(4)(A) Clause (iv) of section 264(f)(5)(A) of the
1986 Code is amended by striking the second sentence.
(B) Subparagraph (B) of section 6724(d)(1) of
the 1986 Code is amended by striking ‘‘or’’ at the end
of clause (xv), by striking the period at the end of
485
clause (xvi) and inserting ‘‘, or’’, and by adding at
the end the following new clause:
‘‘(xvii) section 264(f)(5)(A)(iv) (relat-
ing to reporting with respect to certain life
insurance and annuity contracts).’’
(C) Paragraph (2) of section 6724(d) of the 1986
Code is amended by striking ‘‘or’’ at the end of sub-
paragraph (Y), by striking the period at the end of
subparagraph (Z) and inserting ‘‘or’’, and by adding
at the end the following new subparagraph:
‘‘(AA) section 264(f)(5)(A)(iv) (relating to
reporting with respect to certain life insurance
and annuity contracts).’’
(p) AMENDMENTS RELATED TO SECTION 1085 OF 1997
ACT.—
(1) Paragraph (5) of section 32(c) of the 1986
Code is amended—
(A) by inserting before the period at the end
of subparagraph (A) ‘‘and increased by the
amounts described in subparagraph (C)’’,
(B) by adding ‘‘or’’ at the end of clause (iii)
of subparagraph (B), and
(C) by striking all that follows subclause
(II) of subparagraph (B)(iv) and inserting the
following:
486
‘‘(III) other trades or businesses.
For purposes of clause (iv), there shall not
be taken into account items which are at-
tributable to a trade or business which con-
sists of the performance of services by the
taxpayer as an employee.
‘‘(C) CERTAIN
AMOUNTS
INCLUDED.—An
amount is described in this subparagraph if it
is—
‘‘(i) interest received or accrued during
the taxable year which is exempt from tax
imposed by this chapter, or
‘‘(ii) amounts received as a pension or
annuity, and any distributions or payments
received from an individual retirement
plan, by the taxpayer during the taxable
year to the extent not included in gross in-
come.
Clause (ii) shall not include any amount which
is not includible in gross income by reason of a
trustee-to-trustee transfer or a rollover distribu-
tion.’’
(2) Clause (v) of section 32(c)(2)(B) of the 1986
Code is amended by inserting ‘‘shall be taken into ac-
count’’ before ‘‘, but only’’.
487
(3) The text of paragraph (3) of section 1085(a)
of the 1997 Act is amended to read as follows: ‘‘Para-
graph (2) of section 6213(g) (relating to the definition
of mathematical or clerical errors) is amended by
striking ‘‘and’’ at the end of subparagraph (I), by
striking the period at the end of subparagraph (J)
and inserting ‘‘, and’’, and by inserting after sub-
paragraph (J) the following new subparagraph:
‘‘(K) an omission of information required
by section 32(k)(2) (relating to taxpayers mak-
ing improper prior claims of earned income
credit).’’
(q) AMENDMENT RELATED TO SECTION 1088 OF 1997
ACT.—Section 1088(b)(2)(C) of the 1997 Act is amended
by inserting ‘‘more than 1 year’’ before ‘‘after’’.
(r) AMENDMENT RELATED TO SECTION 1089 OF 1997
ACT.—Paragraphs (1)(C) and (2)(C) of section 664(d) of
the 
1986 
Code 
are 
each 
amended 
by 
adding
‘‘, and’’ at the end.
SEC. 6011. AMENDMENTS RELATED TO TITLE XI OF 1997
ACT.
(a) AMENDMENT RELATED TO SECTION 1103 OF 1997
ACT.—The paragraph (3) of section 59(a) added by section
1103 of the 1997 Act is redesignated as paragraph (4).
488
(b) AMENDMENTS RELATED TO SECTION 1121 OF 1997
ACT.—
(1) Subsection (e) of section 1297 of the 1986
Code is amended by adding at the end the following
new paragraph:
‘‘(4) TREATMENT OF HOLDERS OF OPTIONS.—
Paragraph (1) shall not apply to stock treated as
owned by a person by reason of section 1298(a)(4)
(relating to the treatment of a person that has an op-
tion to acquire stock as owning such stock) unless
such person establishes that such stock is owned (with-
in the meaning of section 958(a)) by a United States
shareholder (as defined in section 951(b)) who is not
exempt from tax under this chapter.’’
(2) Section 1298(a)(2)(B) of the 1986 Code is
amended by adding at the end the following new sen-
tence: ‘‘Section 1297(e) shall not apply in determin-
ing whether a corporation is a passive foreign invest-
ment company for purposes of this subparagraph.’’
(c) AMENDMENTS RELATED TO SECTION 1122 OF 1997
ACT.—
(1) Section 672(f)(3)(B) of the 1986 Code is
amended by striking ‘‘section 1296’’ and inserting
‘‘section 1297’’.
489
(2) Paragraph (1) of section 1291(d) of the 1986
Code is amended by adding at the end the following
new sentence: ‘‘In the case of stock which is marked
to market under section 475 or any other provision
of this chapter, this section shall not apply, except
that rules similar to the rules of section 1296(j) shall
apply.’’
(3) Subsection (d) of section 1296 of the 1986
Code is amended by adding at the end the following
new sentence: ‘‘In the case of a regulated investment
company which elected to mark to market the stock
held by such company as of the last day of the taxable
year preceding such company’s first taxable year for
which such company elects the application of this sec-
tion, the amount referred to in paragraph (1) shall
include amounts included in gross income under such
mark to market with respect to such stock for prior
taxable years.’’
(d) AMENDMENT RELATED TO SECTION 1123 OF 1997
ACT.—The subsection (e) of section 1297 of the 1986 Code
added by section 1123 of the 1997 Act is redesignated as
subsection (f).
(e) AMENDMENTS RELATED TO SECTION 1131 OF 1997
ACT.—