An Act to amend section 367 of the Internal Revenue Code of 1954
PL 91-681 (H.R.19686), enacted 01/12/1971

84 STAT. ] 
PUBLIC LAW 91-681-JAN. 12, 1971 
20(55 
"(2) if any such advertising states separately the amount to 
be paid for such transportation or the amount of such taxes, shall 
state such total at least as prominently as the more prominently 
stated of the amount to be paid for such transportation or the 
amount of such taxes and shall describe such taxes substantially 
as: 'user taxes to pay for airport construction and airway safety 
and operations'.". 
SEC. 4. The amendments made by the third s
e
> tion of this Act shall 
apply to transportation beginning after June 30, 1970. 
Approved January 12, 1971. 
Public Law 91-681 
AN ACT 
January 12, 1971 
To aineiul sei-tion 307 of the Internal Revenue Code of 1954. 
[H. R. 19686] 
Effective date,, 
Taxes. 
Foreign 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled^ That (a) section 367 
of the Internal Revenue Code of 1954 (relating to foreign corpora- co^orau^ns. 
tions) is amended to read as follows: 
^^A stat. 119. 
' 
26 u s e 367. 
"SEC. 367. FOREIGN CORPORATIONS. 
"(a) GENERAL RULE.—In determining the extent to which gain 
shall be recognized in the case of any of the exchanges described in 
section 332, 351, 354, 355, 356, or 361, a foreign corporation shall not 8o^ltlt!l577.°^' 
be considered as a corporation unless— 
" (1) before such exchange, or 
"(2) in the case of an exchange described in subsection (b), 
either before or after such exchange, 
it has been established to the satisfaction of the Secretary or his dele-
gate that such exchange is not in pursuance of a plan having as one 
of its principal purposes the avoidance of Federal income taxes. 
"(b) APPLICATION or SUBSECTION (a)(2).—Subsection (a)(2) shall 
apply in the case of a mere change in fonn in Avhich there is an 
exchange by a foreign corporation of— 
" (1) stock in one foreign corporation for, 
" (2) stock in another foreign corporation, 
if the corporations referred to in paragraphs (1) and (2) differ only 
in their form of organization, and if the ownership of the corporation 
referred to in paragraph (1) immediately before such exchange is 
identical to the ownership of the corporation referred to in paragraph 
(2) immediately after such exchange. 
"(c) 
SECTION 355 
DISTRIBUTIONS TREATED AS EXCHANGES.—For 
purposes of this section, any distribution described in section 355 (or 
so much of section 356 as relates to section 355) shall be treated as an 
exchange whether or not it is an exchange. 
" ( d ) 
CONTRIBUTIONS OF CAPITAL TO CONTROLLED CORPORATIONS.— 
For purposes of this chapter, any transfer of property to a foreign 
corporation as a contribution to the capital of such corporation by 
one or more persons who, immediately after the transfer, own (within 
the meaning of section 318) stock possessing at least 80 percent of the 
^^^A stat. 99; 
total combined voting power of all classes of stock of such corporation 
^
*
^
*
* ^*^' 
entitled to vote shall be treated as an exchange of such property for 
stock of the foreign corporation equal in value to the fair market 
value of the property transferred unless, before such transfer, it has 
been established to the satisfaction of the Secretary or his delegate 
that such transfer is not in pursuance of a plan having as one of its 
principal purposes the avoidance of Federal income taxes." 
2066 
PUBLIC LAW 91-682-JAN. 12, 1971 
[84 STAT. 
Nontaxable 
transfers. 
68A Stat. 365. 
26 u s e 1492. 
Ante, p. 2065. 
Effective date. 
(b) Section 1492 of such Code (relating to nontaxable transfers) is 
amended— 
(1) by strikino; out the period at the end of paragraph (2) 
and inserting in lieu thereof a semicolon and "or"; and 
(2) by adding at the end thereof the following new paragraph: 
"(3) To a transfer to which section 367(d) applies." 
(c) The amendments made by this section shall apply to transfers 
made after December 31, 1967; except that sections 367(d) and 1492 
of the Internal Revenue Code of 1954 (as amended by this section) 
shall apply only with respect to transfers made after December 31, 
1970. 
Approved January 12, 1971. 
January 12, 1971 
[H. R. 15728] 
Public Law 91-682 
AN ACT 
To authorize the extension of certain naval vessel loans now in existence and 
new loans, and for other purposes. 
Naval vessels« 
Loans to foreign 
countries, exten-
sion. 
70A Stat. 452. 
50 u s e app. 
1878q-1878x. 
75 Stat. 424. 
22 u s e 2151 
note. 
Be it enacted hy the Senate and House of Representatwes 
of the 
United States of America in Congress assembled^ That notwithstand-
ing section 7307 of title 10, United States Code, or any other law, the 
President may extend on such terms and under such conditions as he 
deems appropriate the loan of ships, previously authorized as indi-
cated, as follows: (1) Greece, one submarine (Act of October 4, 1961 
(75 Stat. 815)) and, (2) Pakistan, one submarine (Act of October 4, 
1961 (75 Stat. 815)). 
SEC. 2. Notwithstanding section 7307 of title 10, United States Code, 
or any other provision of law, the President may lend tw^o destroyer 
escorts to the Republic of Vietnam and two destroyers and two 
submarines to the Government of Turkey in addition to any ships 
previously authorized to be loaned to these nations, with or without 
reimbursement and on such terms and under such conditions as the 
President may deem appropriate. All expenses involved in the activa-
tion, rehabilitation, and outfitting (including repairs, alterations, and 
logistic support) of ships transferred under this section shall be 
charged to funds programed for the recipient government as grant 
military assistance under the provisions of the Foreign Assistance 
Act of 1961, as amended, or successor legislation, or to funds provided 
by the recipient government. The authority of the President to lend 
naval vessels under this section shall terminate on December 31, 
1971. 
SEC. 3. All new loans and loan extensions executed under this Act 
shall be for periods not exceeding five years, but the President may in 
his discretion extend such loans for an additional period of not more 
than five years. Any agreement for a new loan or for the extension of 
a loan executed under this Act shall be made subject to the condition 
that the agreement may be terminated by the President if he finds that 
the armed forces of the borrowing country have engaged, at any time 
after the date of such agreement, in acts of warfare against any 
country which is a party to a mutual defense treaty ratified by the 
United States. All loans and loan extensions shall be made on the 
condition that they may be terminated at an earlier date if necessitated 
by the defense requirements of the United States.