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Cite as: 524 U. S. 417 (1998)

423

Opinion of the Court

On August 11, 1997, the President sent identical notices to
the Senate and to the House of Representatives canceling
“one item of new direct spending,” specifying § 4722(c) as
that item, and stating that he had determined that “this
cancellation will reduce the Federal budget deﬁcit.” He
explained that § 4722(c) would have permitted New York
“to continue relying upon impermissible provider taxes to
ﬁnance its Medicaid program” and that “[t]his preferential
treatment would have increased Medicaid costs, would have
treated New York differently from all other States, and
would have established a costly precedent for other States
to request comparable treatment.” 3

Section 968 of the Taxpayer Relief Act of 1997

A person who realizes a proﬁt from the sale of securities
is generally subject to a capital gains tax. Under existing
law, however, an ordinary business corporation can acquire
a corporation, including a food processing or reﬁning com-
pany, in a merger or stock-for-stock transaction in which no
gain is recognized to the seller, see 26 U. S. C. §§ 354(a),
If,
368(a); the seller’s tax payment, therefore, is deferred.
however, the purchaser is a farmers’ cooperative, the parties
cannot structure such a transaction because the stock of the
cooperative may be held only by its members, see § 521(b)(2);
thus, a seller dealing with a farmers’ cooperative cannot ob-
tain the beneﬁts of tax deferral.

a waiver be applied for, in accordance with subparagraph (E) of such sec-
tion, and, (if so applied for) upon which action by the Secretary of Health
and Human Services (including any judicial review of any such proceeding)
has not been completed as of July 23, 1997, are deemed to be permissible
health care related taxes and in compliance with the requirements of
subparagraphs (B) and (C) of section 1903(w)(3) of such Act.”
111 Stat.
515.

3 App. to Juris. Statement 63a–64a (Cancellation No. 97–3). The quoted
text is an excerpt from the statement of reasons for the cancellation, which
is required by the Line Item Veto Act. See 2 U. S. C. § 691a (1994 ed.,
Supp. II).