Interest Equalization Tax Extension Act
PL 93-17 (H.R.3577), enacted 04/10/1973

12 
PUBLIC LAW 9a-16-APR. 9, 1973 
[87 STAT. 
Public Law 93-16 
April 9, 1973 
JOINT RESOLUTION 
[H.J. Res. 5] 
Requesting the President to issue a proclamation designating tlie week of 
April 23, 1973, as "Nicolaus Copernicus Week" marking the quinquecentennial 
of his birth. 
Nicolaus 
Copernicus Week. 
Resolved 
hy the Senate 
and House of Re'presentatives 
of the 
United 
States 
of America 
in Congress 
assembled. 
That the President of the 
Drsignauon"i^ 
United States is hereby authorized and requested to issue a proclama-
thorization. 
tlou designating the week of April 23, 1973, as "Nicolaus Copernicus 
Week" and calling upon the people of the United States to join with 
the Nation's scientific community as well as that of Poland and other 
nations in observing such week with appropriate ceremonies and 
activities. 
Approved April 9, 1973. 
Public Law 93-17 
April 10,1973 
AN ACT 
[H. R. 3577] 
xo provide an extension of the interest equalization tax, and for other purposes. 
Be it enacted 
hy the Senate 
and House 
of Representatives 
of 
the 
Interest Equal- 
JJuited States of America 
in Congress 
assembled, 
ization Tax Ex-
tension Act of 
S E C T I O N 1. S H O R T TITLE, ETC. 
^ ^^^" 
(a) SHORT TITLE.—This Act may be cited as the "Interest Equaliza-
tion Tax Extension Act of 1973". 
(b) AMENDMENT OF 1951 CODE.—Whenever in this Act an amend-
ment is expressed in terms of an amendment to a section or other 
provision, the reference is to a section or other provision of the Internal 
68A Stat. 3. 
Reveuue Code of 1954. 
26 u s e 1 ef seq. 
SEC. 2. EXTENSION OF INTEREST EQUALIZATION TAX. 
78 Stat. 809; 
Sectlou 4911(d) is amended by striking out "March 31, 1973" and 
85 Stat. 13. 
inserting in lieu thereof "June 30,1974". 
SEC. 3. OTHER AMENDMENTS. 
(a) 
ESTATE TAXATION OF CERTAIN D E B T W H E R E INTEREST E Q U A L -
IZATION T A X A P P L I E S . — 
(1) ESTATE TAX NOT TO APPLY.—The last sentence of section 
2104(c) 
(relating to treatment of certain debt obligations for 
estate tax purposes) is amended by inserting "or section 861(a) 
sollalilsia. 
( 1 ) ( G ) " after "by reason of section 861 ( a ) ( 1 ) ( B ) " . 
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 
shall apply with respect to estates of decedents dying 
after 
December 31, 1972, except that in the case of the assumption of a 
80 Stat. 15 72. 
87 STAT.] 
PUBLIC LAW 93-17-APR. 10, 1973 
13 
debt obligation of a foi-eijfii corporation which is treated as issued 
under section 4912(c)(2) after December 31, 1972, and before 
lll^^^-l^{2 
January 1, 1974, the amendment made by paragraph (1) shall 
apply with respect to estates of decedents dying after Decem-
ber 31,1973. 
(b) KEPEAL OF ExEMrriox FOR SHIPPING COMPANIES IN LESS DEVEL-
OPED COUNTRIES.— 
(1) I N GENERAL.—Section 4916 (relatino; to investments in less 
^^ S'^'- ^27. 
developed countries) is amended by adding at the end thereof 
the following new subsection : 
"(e) 
REPEAL OF P^XCLUSION FOR ISSUES AFTER JANUARY 29, 1973 IN 
THE CASE OF LESS DEVELOPED COUNTRY SHII'PIN(J COMPANIES.—Sub-
section (a) (2) shall not apply to acquisitions of stock or debt obliga-
tions of a corporation described in subsection (c) (1) (B) (relating to 
si stat. is9. 
certain less developed country shipping companies) which were issued 
after January 29,1973."' 
(2) CONFORMING AMENDMENT.—Section 4916 (a) (2) is amended 
by inserting "(except as provided in subsection (e))" after "less 
developed country corporation"'. 
(c) 
EXCEPTIONS TO EXCLUSION RULES FOR CERTAIN PRE-EXISTING 
COMMITMENTS, ETC.— 
(1) 
ExcEi»i'ioN 
FOR 
PRE-EXISTING 
COMMITMENTS.—Section 
4916(e) of the Internal Revenue Code of 1954 (relating to repeal 
supra. 
of exclusion for issues after January 29, 1973, in the case of less 
developed country shipping companies) shall not apply to an 
acquisition— 
(A) made pursuant to an obligation to acquire which, on 
Januarj^ 29,1973— 
(i) was unconditional, or 
(ii) was subject only to conditions contained in a 
formal contract under which partial performance had 
occurred ; 
(B) as to which on or before January 29,1973, the acquir-
ing United States person (or, in a case where 2 or more 
United States persons are making acquisitions as part of a 
single transaction, a majority in interest of such persons) 
had taken every action to signify approval of the acquisition 
under the procedures ordinarily employed by such person 
(or persons) in similar transactions, subject only to the exe-
cution of formal documents evidencing the acquisition and to 
customary closing conditions, and the acquiring United 
States person (or persons) — 
(i) had sent or deposited for delivery to the foreign 
issuer or obligor from whom the acquisition was made 
written evidence of such approval in the form of a com-
14 
PUBLIC LAW 93-17-APR. 10, 1973 
[87 STAT. 
mitment letter, memorandum of terms, draft purchase 
contract, or other documents setting forth, or referring 
to a document sent by the foreign issuer or obligor from 
whoni the acquisition was made which set forth, the 
principal terms of such acquisition, or 
(ii) had received from the foreign issuer or obligor 
from whom the acquisition was made a memorandum of 
terms, draft purchase contract, or other document set-
ting forth, or referring to a document sent by the acquir-
ing United States person (or persons) which set forth, 
the principal terms of such acquisitions; 
(C) of stock or a debt obligation issued in connection with 
the purchase or lease of a vessel the construction of which was 
begun before January 30, 1973, if— 
(i) the acquisition meets the requirements of sub-
paragraph (B) (except that for purposes of this clause, 
the term "January 29, 1973" appearing in such subpara-
graph shall be read as "April 30, 1973"), and 
(ii) the contract for the construction of the vessel was 
entered into by the United States person, or by a less 
developed country corporation described in section 4916 
26 use ili^e 
(^) (^) (^) ^^ *^^ Internal Revenue Code of 1954 which 
is a member of the same controlled group (within the 
83^statr602! ' 
meaning of section 1563(a) of such Code) as that person, 
which purchased or leased such vessel; or 
(D) of stock or a debt obligation issued in connection with 
a purchase or lease of a vessel the construction of which was 
begun before January 30,1973 if— 
(i) a request for a ruling had been filed with the Inter-
nal Revenue Service within 60 days prior to January 30, 
1973, with respect to the transaction, 
(ii) before such date the United States person financ-
ing the transaction (or if two or more such persons are 
participating in financing the transaction, a majority in 
interest of such persons) had approved the transaction, 
or given a commitment to participate in the transaction 
(orally or in writing), subject to customary closing con-
ditions, and 
(iii) the vessel to be acquired in the transaction was 
delivered on or before March 1,1973. 
For purposes of this paragraph— 
"Foreign is- 
(I) FoREiGN ISSUER O
R OBLIGOR.—The term "foreign issuer or 
suer or obligor." 
obligor" shall iuclude any person which, on the date of such 
acquisition, owned at least 80 percent of each class of stock of the 
foreign issuer or obligor, as determined under section 958(a) of 
87 STAT. ] 
PUBLIC LAW 93-17-APR. 10, 1973 
15 
the Internal Revenue Code of 1954, or which is the agent or rep- 
76 stat. lois. 
resentative of such person. 
^^ "^^ ^^^' 
(II) ACQUIRING UNITED STATES PERSON.—The term "acquiring un'itt'd'sta'tet pet-
United States person (or persons)" includes the immediate prede- son (or persons)." 
cesser in interest to such person or persons. 
(2) EXCEPTION FOR PUBLIC OFFERING.—Such section 4916(e) 
Ante,p.iz. 
shall not apply to an acquisition if— 
(A) a registration statement (within the meaning of the 
Securities Act of 1933) had been m effect, with respect to the 
'•^ ^tat. 74. 
stock or debt obligation acquired, at the time of its issuance; 
^^ ^^^ ^^^* 
(B) the registration statement was first filed with the 
Securities and Exchange Commission on January 29, 1973, 
or within 90 days before that date; and 
(C) no amendment was filed with the Securities and 
Exchange Commission after January 29, 1973, and before 
the issuance of such stock or debt obligation which had the 
effect of increasing the number of shares of stock or the 
aggregate face amount of the debt obligations covered by 
the registration statement. 
(3) EXCEPTION FOR OPTIONS, FORECLOSURES, AND CONVERSIONS.— 
Such section 4916(e) shall not apply to an acquisition— 
(A) of stock pursuant to the exercise of an option or similar 
right (or a right to convert a debt obligation into stock), if 
such option or right was held on January 29, 1973, by the 
person making the acquisition or by a decedent from whom 
such person acquired the right to exercise such option or right 
by bequest or inheritance or by reason of such decedent's 
death, or 
(B) of stock or debt obligations as a result of a foreclosure 
by a creditor pursuant to the terms of an instrument held by 
such creditor on January 29, 1973. 
(4) CONSTRUCTION.—The provisions of this subsection shall be 
construed and applied as if this subsection were part of chapter 
41 of the Internal Revenue Code of 1954 (relating to interest ^^l^^^ "^^^^ 
equalization tax), and the terms used in this subsection shall have 
the same meaning as such terms have when used in such chapter, 
(d) 
EXCLUSION FOR SECURITIES ISSUED To FINANCE NEW OR ADDI-
TIONAL DIRECT INVESTMENT IN THE UNITED STATES.— 
(1) EXCLUSION FROM TAX.—Subchapter A of chapter 41 (relat- 
^s stat. 809; 
ing to acquisition of foreign stock and debt obligations) is ^^^'^^-^i-
amended by adding at the end thereof the following new section: 
"SEC. 4922. EXCLUSION FOR CERTAIN ISSUES TO FINANCE NEW OR 
ADDITIONAL DIRECT INVESTMENT IN THE UNITED 
STATES. 
"(a) GENERAL RULE.—The tax imposed by section 4911 shall not 
apply to the acquisition by a United States person of— 
"(1) stock or a debt obligation constituting all or part of a 
new issue (as defined in section 4917(c)) which was issued for 
^* ^*^*- ^^^'• 
the purpose of financing new or additional direct investment (as 
defined by the Secretary or his delegate) in the United States 
by the foreign issuer or obligor and which qualifies under subsec-
tion (b), 
"(2) stock pursuant to a right to convert a debt obligation 
into stock without the payment of any further consideration if 
such debt obligation qualified for exclusion from tax under this 
subsection when it was issued, or 
"(3) a debt obligation issued for the purpose of refunding or 
refinancing a new or original issue which met the requirements 
of paragraph (1) when that new or original issue was issued. 
16 
PUBLIC LAW 93-17-APR. 10, 1973 
[87 STAT. 
"(b) QUALIFICATION FOR EXCLUSION.—In order for any issue of 
stock or debt obligations to qualify for an exclusion under subsec-
tion (a), the foreign issuer or obligor (prior to the issuance of such 
stock or debt obligations) shall have established to the satisfaction of 
the Secretary or his delegate, pursuant to rules or regulations pre-
scribed by the Secretary or his delegate, that— 
" (1) at least 50 percent of the total funds required for the 
direct investment involved will come from sources outside the 
United States; 
"(2) such investment will be made for a period of at least 
10 years; 
"(3) during such 10-year period the aggregate amount of all 
investments in the United States by the foreign issuer or obligor 
will at no time be reduced below the aggregate amount of such 
investments as determined immediately after the investment to 
which the exclusion applies; 
"(4) during such 10-year period the foreign issuer or obligor 
will comply with such other conditions and requirements as the 
Secretary or his delegate may prescribe and make applicable to 
such issuer or obligor; and 
"(5) during such 10-year period the foreign issuer or obligor 
will submit such reports and information, in such form and 
manner, as may be required by the Secretary or his delegate to 
substantiate compliance by the foreign issuer or obligor with the 
requirements of the preceding paragraphs. 
For purposes of this subsection, a foreign issuer or obligor shall 
not be considered to have failed to meet the requirements of this sub-
section with respect to an issue of stock described in subsection (a)(2), 
or a debt obligation described in subsection (a) (3), if he continues 
to comply with the requirements imposed on him by this subsection 
with respect to the debt obligation converted, refunded, or refinanced, 
for the full 10-year period. 
"(c) Loss OF ENTITLEMENT TO EXCLUSION IN CASE OF SUBSEQUENT 
NONCOMPLIANCE.— 
"(1) I N GENERAL.—Where an exclusion under subsection (a) 
has applied with respect to the acquisition of any stock or debt 
obligation, but the foreign issuer or obligor subsequently fails 
Ante, p. 12. 
(bcWe the termination date specified in section 4911(d)) to 
comply with any of the requirements enumerated in subsection 
(b) or made applicable to such issuer or obligor under paragraph 
78 Stat. 809. 
^4^ thereof, then liability for the tax imposed by section 4911 
"^^ 
* 
(in an amount determined under paragraph (2) of this subsec-
tion) shall be incurred by such foreign issuer or obligor (with 
T-espect to such stock or debt obligations) at the time such failure 
to comply occurs as determined by the Secretary or his delegate. 
"(2) AMOUNT OF TAX.—In any case where an exclusion under 
subsection (a) has applied with respect to an original or new issue 
of stock or debt obligations, but a subsequent failure to comply 
with the requirements enumerated in or made applicable to the 
foreign issuer or obligor under subsection (b) occurs and liability 
for the tax imposed by section 4911 is incurred by the issuer or 
obligor as a result thereof, the amount of such tax shall be equal 
to the amount of tax for which all persons acquiring such stock 
or debt obligations (as part of the original or new issue) would 
have been liable under such section upon their acquisition thereof 
if such exclusion had not applied to such acquisition." 
6
8
A Stat. 828; 
(£) PENALTY.—Subchapter B of chapter 68 (relating to assess-
1496.^ ' 
' 
able penalties) is amended by adding at the end thereof the 
26 use 6671. 
following new section: 
Ante, 
p. 15. 
78 Stat. 810. 
87 STAT. ] 
PUBLIC LAW 93-17-APR. 10, 1973 
17 
"SEC. 6689. FAILURE BY CERTAIN FOREIGN ISSUERS AND OBLIGORS 
TO COMPLY WITH UNITED STATES INVESTMENT EQUALI-
ZATION TAX REQUIREMENTS. 
"In addition to any other penalties imposed by law, any foreign 
issuer or obligor with respect to an original or new issue of whose 
stock or debt obligations an exclusion from tax under section 4922 
applied, but who fails to comply with any of the applicable require-
ments enumerated in or made applicable to such issuer or obligor 
under subsection (b) of such section and (under section 4922(c)) 
incurs liability for the tax imposed by section 4911 as a result thereof, 
78 stat. 809. 
shall, unless it is shown that such failure to comply is due to rea- 
^^ use 4911. 
sonable cause and not due to willful neglect, be liable (in addition to 
the liability for tax so incurred) for a penalty equal to 25 percent of 
the total amount of such tax." 
(3) CONFORMING AMENDMENTS.— 
(A) The table of sections for subchapter A of chapter 41 
is amended by adding at the end thereof the following new 
item: 
"Sec. 4922. Exclusion for certain issues to finance new or additional 
direct investment in the United States.". 
(B) The table of sections for subchapter B of chapter 68 
is amended by adding at the end thereof the following new 
item: 
"Sec. 6689. Failure by certain foreign issuers and obligors to comply 
with United States investment equalization tax re-
quirements.". 
(e) CORPORATIONS FORMED To ACQUIRE FOREIGN SECURITIES.—Sec-
tion 4912(b) (3) (relating to acquisitions from domestic corporation 
or partnership formed or availed of to obtain funds for foreign issuer 
or obligor) is amended by adding at the end thereof the following: 
"The preceding sentence shall not apply to the acquisition of stock or 
a debt obligation of a domestic corporation all of whose acquisitions 
of stock or debt obligations of foreign issuers or obligors are either 
subject to the tax imposed by section 4911 or without liability for 
payment of such tax under section 4916, 4917, 4918, or 4920(b). An 
78 stat. 827 
acquisition to which section 4914(c) applies shall not be taken into 
79 Itat'. 963 
consideration in determining whether a domestic corporation or part- 
Post, p. 18. 
nership is formed or availed of for the purpose of obtaining funds 
(directly or indirectly) for a foreign issuer or obligor." 
(f) 
EXPORT FINANCING.— 
(1) 
SALE OR LEASE OF UNITED STATES PROPERTY OR SERVICES.— 
Section 4914(c) (1) (relating to export credit, etc., transactions) 
^^ ^*^'- ^^^ 
is amended to read as follows: 
^
^ ^*^*- ^^^• 
"(1) I N GENERAL.—The tax imposed by section 4911 shall not 
apply to the acquisition of a debt obligation arising out of the 
sale or lease of tangible personal property or services, or both, if— 
"(A) payment of such debt obligation (or of any related 
debt obligation arising out of such sale or lease) is guaranteed 
or insured, in whole or in part, by an agency or wholly owned 
instrumentality of the United States; or 
"(B) (i) not less than 85 percent of the amount of the loan 
or the amount paid or other consideration given to acquire 
such debt obligation is attributable to the sale or lease of prop-
erty manufactured, produced, grown, or extracted in the 
United States, or to the performance of services by United 
States persons, or to both, and 
" (ii) the extension of credit and the acquisition of the 
debt obligation related thereto are reasonably necessary 
to accomplish the sale or lease of property or services out 
^ i which the debt obligation arises, and the terms of the 
22-150 O - 75 - 4 
18 
PUBLIC LAW 93-17-APR. 10, 1973 
[87 STAT. 
debt obligation are not unreasonable in light of credit 
practices in the business in which the person selling or 
leasing such property or services is engaged. 
"Services." 
rpj^^ term 'serviccs' as used in this paragraph and paragraph (2), 
shall not be construed to include functions performed as an 
underwriter." 
(2) 
REFUNDING OR REFINANCING CERTAIN DEBT OBLIGATIONS.— 
s/stat^Vss^^' 
Section 4914(c) is amended by redesignating paragraph (8) as 
2 6 use 4914. 
(9), and by inserting after paragraph (7) the following new 
paragraph: 
"(8) 
REFUNDING OR REFINANCING CERTAIN DEBT OBLIGATIONS.— 
78 Stat. 809. 
The tax imposed by section 4911 shall not apply to the acquisition 
of a debt obligation issued for the purpose of refunding or refi-
nancing a new or original debt obligation if— 
(A) the purpose for which and circumstances under which 
the new or original debt obligation was issued are such that, 
were such debt obligation issued on the date on which the 
refunding or refinancing debt obligation is issued, the acqui-
sition of that new or original debt obligation would not be 
subject to tax under section 4911, and 
"(B) the terms of the refunding or refinancing debt obliga-
tion are not unreasonable in light of credit practices in the 
business in which the person acquiring the debt obligation is 
engaged and the refunding or refinancing of the new or 
original debt obligation is customary in transactions of the 
type out of which it arose." 
(g) (1) EXCLUSION FOR ACQUISITTONS BY QLFC'S TO FINANCE EXPORTS.— 
85 Stat. 17. 
Section 4915(e) (1) (A) is amended to read as follows: 
" (A) (i) the amounts received by the corporation as a result 
of the acquisition will not be used to acquire stock of foreign 
issuers or debt obligations of foreign obligors (other than 
stock or debt obligations the acquisition of which is not sub-
ject to the tax imposed by section 4911 on account of section 
4914(c)), or utilized in any way outside of the United States 
other than for the acquisition of tangible personal property 
for leasing which is manufactured or produced in the United 
States, or (ii) the funds used for such acquisition were 
obtained from sources outside the United States; and". 
85 Stat. 18. 
^2) DEFINITION OF QLFC AMENDED.—Section 4920(d) (2) is amended 
by striking out everything preceding subparagraph (A) and inserting 
in lieu thereof the following: 
"(2) all debt obligations of foreign obligors (other than debt 
obligations the acquisition of which is not subject to the tax 
imposed by section 4911 on account of section 4914(c)) acquired 
by such corporation, and all tangible personal property not manu-
factured or produced in the United States acquired by such cor-
poration for leasing, are acquired and carried solely out of—". 
(h) (1) 
PARTICIPATING FIRMS TRADING FOR THEIR OWN ACCOUNTS.— 
^^81 Stat. 148, 
Section 4918(e) (relating to sales effected by participating firms in 
connection with exempt acquisitions) is amended by— 
(A) striking "or" at the end of paragraph (7), 
(B) redesignating paragraph (8) as (9), and 
(C) inserting after paragraph (7) the following new para-
graph : 
"(8) sells for its own account and pays the tax imposed under 
section 4911 on its acquisition of such stock or debt obligation 
not later than the time it would be required to pay over such tax 
to the Secretary or his delegate if such tax were withheld under 
paragraph (7); or". 
87 STAT. ] 
PUBLIC LAW 93-17-APR. 10, 1973 
19 
(2) EFFECTIVE DATE.—The amendment made by this subsection shall 
apply to acquisitions of stock or debt obligations made on or after 
July 15,1967. 
(i)(l) 
INTEREST EQUALIZATION TAX REFUNDS.—Section 4919(a) 
(relating to credit or refund) is amended by striking out "credit or 
refund (without interest)" and inserting in lieu thereof "credit (with-
out interest) or refund". 
(2) GRACE PERIOD FOR PROMPT REFUNDS.—Section 6611 (relating to 
interest on overpayments) is amended by redesignating subsection 
(h) as (i), and by inserting after subsection (g) the following new 
subsection: 
"(h) 
REFUND W I T H I N 45 DATS AFTER FILING CLAIM FOR REFUND 
OF INTEREST EQUALIZATION TAX PAID ON SECURITIES SOLD TO FOR-
EIGNERS.—No interest shall be allowed under subsection (a) on any 
overpayment of the tax imposed by section 4911, arising by reason of 
section 4919(a), if the overpayment is refunded within 45 days after 
the filing of a claim for refund for that overpayment of tax with 
respect to a prior quarter." 
(j) CHANGES IN DEFINITIONS AND SPECIAL RULES.— 
(1) FOREIGN LENDING OR FINANCE BUSINESSES.—Section 4920 
(a) (3A) is amended by— 
(A) amending subparagraph (A) to read as follows: 
"(A) the term 'lending or finance business' has the mean-
ing given to it by section 542(d) (1), except that the portion 
of subparagraph (B) (i) of such section following '60 
months' shall be disregarded;" and 
(B) adding at the end of such section the following sen-
tence: "For purposes of determining whether a domestic 
corporation is primarily engaged in the lending or finance 
business, ownership of stock of an affiliated corporation 
which satisfies the requirements of clause (i) and (ii) of 
paragraph (3) (C) shall be disregarded." 
(2) FUNDING OF STOCK OPTIONS AND OTHER ISSUES OF STOCK.— 
Section 4920(b)(2) 
(relating to class of stock defined) is 
amended by— 
(A) striking "or" at the end of subparagraph (C), 
(B) redesignating subparagraph (D) as (E). 
L
g after subparagraph (C) the lo 
subparagraph; 
(C) inserting after subparagraph (C) the following new 
"(D) issued after November 10, 1964, and prior to Janu-
ary 30, 1973, upon exercise of a stock option granted to an 
individual, in connection with his employment by the 
employer corporation, or its parent or subsidiary corpora-
tion, to purchase stock of any such corporations if the tax 
imposed by section 4911 has been paid;", 
(D) amending clause (ii) of subparagraph (E) (as 
redesignated by subparagraph (B) of this paragraph) by 
inserting before the semicolon the following: ", or on the 
latest record date before the issuance of such additional 
shares", 
(E) amending clause (iv) of such subparagraph (E) by 
inserting after 
4917," the following: "or are shares issued 
after January 29, 1973, upon exercise of an option described 
in section 4914 (a)(8) (determined without regard to whether 
or not the optionee is a United States person) granted to an 
employee who immediately after such option is granted is 
an individual described in section 422(b) (7) (provided that 
the aggregate number of shares of such class subject to all 
options described in section 4914(a) (8) (determined without 
regard to whether or not the optionee is a United States per-
son) that are granted during one calendar year does not 
78 Stat. 833; 
85 Stat. 20. 
26 u s e 4919. 
68A Stat. 819; 
72 Stat. 1640. 
78 Stat. 809. 
Supra. 
81 Stat. 161, 
"Lending or 
finance business." 
78 Stat. 80. 
79 Stat. 963; 
85 Stat. 20. 
78 Stat. 813,, 
78 Stat. 64. 
20 
PUBLIC LAW 93-17-APR. 10, 1973 
[87 STAT. 
exceed one percent of the total number of outstanding shares 
of such class on the first day of such calendar year) /', 
(F) striking the period at the end of clause (v) of such 
^"'^' ^' ^^' 
subparagraph (E) and inserting a semicolon and "or", 
(G) inserting after such subparagraph (E) the following 
new subparagraph: 
"(F) issued after March 31, 1973, as consideration for, 
or upon conversion (or in connection with the prior con-
version) of debt obligations which were the consideration 
for, the acquisition of stock of a foreign corporation, if 
immediately after such acquisition the acquiring corporation 
owns (directly or indirectly) more than 50 percent of the 
total combined voting power of all classes of stock of such 
foreign corporation, or the acquisition of more than 50 per-
cent (in value) of the assets of a foreign corporation, if— 
"(i) such corporation satisfied the requirements of 
sections 4920(b)(2)(E) (i), (ii), and (iii); 
"(ii) shares of such class were held of record by more 
than 5,000 persons on such corporation's latest record 
date before January 1, 1973; 
"(iii) during the period beginning on January 1,1973, 
and running through the date of issuance of such shares, 
shares of such class were listed for trading on one or 
more national securities exchanges registered with the 
Securities and Exchange Commission; 
"(iv) during the period beginning on January 1, 1973, 
and running through the date of the issuance of the 
additional shares such corporation has maintained its 
principal oJfRce in the United States; 
"(v) during the period beginning on January 1, 1973, 
and running through the date of issuance of the addi-
tional shares such corporation has been engaged in trade 
or business in the United States; 
"(vi) during the 5-year period immediately preced-
ing the date of issuance, the aggregate number of addi-
tional shares (other than additional shares issued under 
subparagraph (B), (C), (D),or (E) of this subsection) 
does not exceed 5 percent of the total number of out-
standing shares of such class on the first day of such 
5-year period, and 
" (vii) the acquired foreign corporation was engaged in 
the active conduct of a trade or business (other than as 
^ 
a dealer in securities) immediately before the date of 
such acquisition.", and 
(H) striking "subparagraph (D)" wherever it appears 
in the text of such section 4920(b)(2) after subparagraph 
(F) (added by subparagraph (G) of this paragraph) and 
inserting in lieu thereof "subparagraph (E)", 
(3) 
FOREIGN SOURCE BORROWING BY QLFC FROM RELATED CORPO-
85 Stat. 18. 
RATIONS.—Sectiou 4920(d) (2) (A) (iii) is amended to read as 
26 use 4920. 
follows: 
"(iii) a foreign corporation (not including a qualified 
lending or financing corporation or a foreign corpora-
tion engaged in the commercial banking business which 
acquires such debt obligations in the ordinary course of 
such commercial banking business), if such corporation 
87 STAT. ] 
PUBLIC LAW 93-17-APR. 10, 1973 
21 
68A Stat. 369. 
2 6 u s e 15 04. 
(or one or more includible corporations in an affiliated 
g-ronp, as defined in section 1504, of which such corpora-
tion is a member) owns directly or indirectly (within 
the meanino- of section 4015(a) (1)) 10 percent or more 
78 stat. 824. 
of the total combined votin<2: })Ower of all classes of stock 
of such foreign corporation, except to the extent such 
foreign corporation has, after having given advance 
notice to the Secretary or his delegate, sold its debt obli-
gations to persons other than persons described in clauses 
(i) and (ii) and this clause and is using the j)roceeds of 
the sales of such debt obligations to acquire the debt 
obligations of such corporation (or such other domestic 
corporation),"'. 
(4) 
PERCENTAGE OF STOCK CHVXED BY PAPVEXT COPXPORATIOX or 
• 
QLFC—Section 4920(d) (2) (1^) is amended by striking out "by 
^s stat. is. 
one or more members of a controlled gi'oup (as defined in section 
48(c) (3) (C)) of which such corporation is a member (or by a 
^3 stat. 603. 
corporation which would be such a member if it were a domestic 
corporation)" and inserting "by a corporation owning directly 
or indirectly (within the meaning of section 4915(a) (1)) 10 per-
cent or more of the total combined voting power of all classes of 
stock of such corporation". 
(5) SOURCE O
P
^ FUNDS FOR QLFC'S,—Section 4920(d)(2) 
is 
amended by— 
(A) striking "or*' at the end of subparagraph (C), 
(B) striking the semicolon at the end of subparagraph 
(I)) and inserting in lieu thereof a connna and "or", and 
(C) adding at the end thereof 
the following 
new 
subparagi-aph: 
(E) the proceeds of the sale of debt obligations (by a 
domestic corporation which has made an election under 
section 4912(c) with respect to such debt obligatioiis) to a 
ss stat. M. 
person other than a person described in clause (i), (ii), or 
(iii) of subparagi-aph (A) if the proceeds are ti'ansferred 
directly from the lender to such corporation;"'. 
(6) Egurry INVESTMENTS OF QLFC"S.—Section 4920(d)(3) is 
amended to read as follows: 
"(3) which does not acipiire oi' own any stock of foreign issuers 
or of domestic coipoi'ations oi' domestic ])artnei'ships other 
than— 
"(xV) stock of one or more membei's of a conti'olled group 
(as defined in section 48(c) (3) (C)) of which such corpoi'a-
tion is a membei- (or of a coi-poration which would be a mem-
ber if it were a domestic corporation) acquired as payment 
for stock, or as a contribution to ca})ital, of such cor])oration, 
"(B) (i) stock of a corporation described in section 4915(e) 
(2) (C) ()]• section 4920(a) (3B), if 10 percent or more of the 
^s stat. 17, 1 
total combined voting power of all classes of such stock is 
owned (directly or indirectly) by the acquiring corporation, 
or 
"(ii) stock of a partnei'ship which meets the require-
ments of section 4920((1) (1) and (2) under regulations 
^"(e, p. 20. 
pronudgated by the Secretary or his delegate, if immediately 
following the acquisition such corporation owns (directly 
or indirectly) 10 percent or more of the profits interest in 
such i)artnership, 
22 
PUBLIC LAW 93-18-APR. 14, 1973 
[87 STAT. 
85 Stat. 2 1 . 
26 u s e 4920. 
68A Stat. 2 71; 
83 Stat. 63 7. 
78 Stat. 830; 
79 Stat. 960. 
26 u s e 4911, 
Report to 
Congress. 
"(C) stock acquired by such corporation through fore-
closure, where such stock was held by such corporation as 
security for loans or leases described' in paragraph (1) if 
sucli stock is disposed of within a 90-day period beginning 
on the day after the date of such foreclosure (including any 
additional 90-day periods reasonably necessary to dispose 
of such stock that the Secretary or his delegate may allow), 
or 
"(D) stock of a foreign corporation acquired in connection 
with and incidental to an acquisition of a debt obligation in a 
transaction described in paragraph (1) if (i) at the time of 
the acquisition of the debt obligation the value of such stock 
does not exceed 10 percent of the value of the debt obligation, 
and (ii) the terms of the debt obligation are not unreason-
able in light of credit practices in the business in which the 
corporation acquiring such debt obligation is engaged; and". 
(7) 
STOCK DIVTOENDS BY CERTAIN MUTUAL EUNDS.—Section 
4920(e) (relating to certain mutual funds) is amended by insert-
ing before the period ", except stock issued as a capital gain 
dividend, as defined in section 852(b) (3) (C)". 
SEC. 
4
. 
REPORT 
BY 
SECRETARY 
OF 
TREASURY. 
The Secretary of the Treasury shall study the effect on international 
monetary stability of the exemption granted under the authority of 
section 4917 of the Internal Revenue Code of 1954 (relating to exclu-
sion for original or new issues whei-e required for international mone-
tary stability) from the tax imposed by chapter 41 of such Code 
(relating to interest equalization tax) of new issues of Canadian stock 
or debt obligations. The Secretary shall report to the Congress, not 
later than September 30, 1973, the results of such study and his con-
clusions as to whether the termination of such exemption will have 
such consequences for Canada as to imperil or threaten to imperil the 
stability of the international monetary system, together with any rec-
ommendations, including recommendations for legislation, he may 
have. 
Approved April 10, 1973. 
April 14,1973 
[H. J. Res. 437] 
Public Law 93-18 
JOINT RESOLUTION 
To authorize the I'resident to designate the period beginning April l;j, 1973, as 
"National Clean Water Week". 
National Clean 
Water Week. 
Designation 
authorization. 
Resolved by the Senate and House of Representatives 
of the United 
States of Ainerlca in Congress assembled. That, to emphasize the 
importance of intelligently planned use and distribution of thei 
Nation's water resources, and in recognition of the highly developed 
professional and industrial techniques which jjrovide the American 
people with a constant supply of clean water for use in home, office, 
school, factory, hospital, and wherever else such clean water is needed, 
the President is hereby authorized and requested to issue a proclama-
tion designating the period beginning April 15, 1973, and ending 
April 22, 1973, as "National Clean Water Week", calling upon inter-
ested groups and organizations to observe such week with appropriate 
ceremonies and activities. 
Approved April 14, 1973.