An Act relating to the income tax treatment of certain statutory mergers of corporations
PL 90-621 (H.R.18942), enacted 10/22/1968

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PUBLIC LAW 90-621-OCT. 22, 1968 
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Approved October 22, 1968. 
Public Law 90-621 
October 22, 1968 
A N A C T 
[H.R. 189421 
Relating to the income tax treatment of certain statutory mergers of coriwrations. 
Taxes. 
Corporations; 
statutory mergers. 
68A Stat. 120. 
26 u s e 368. 
Be it enacted hy the Senate and House of Reprenentaticea of the 
United States of America 
in Congress assembled^ That (a) section 
868(a) (2) of the Internal Revenue Code of 1954 (relating to special 
rules with respect to the definition of corporate reorganizations) is 
amended by adding at the end thereof the following new subpara-
graph : 
"(D) 
STATUTORY MERGER USING STOCK OF CONTROLLING COR-
PORATION.—The acquisition by one corporation, in exchange 
for stock of a corporation (referred to in this subparagraph 
as 'controlling corporation') which is in control of the acquir-
ing corporation, of substantially all of the properties of 
another corporation which in the transaction is merged into 
the acquiring corporation shall not disqualify a transaction 
under paragraph (1) (A) if (i) such transaction would have 
82 STAT. ] 
PUBLIC LAW 90-622-OCT. 22, 1968 
1311 
68A Stat. 120; 
78 Stat. 57. 
26 u s e 368. 
68A Stat. 118. 
qualified under paragraph (1)(A) if the merger had been 
into the controlling corporation, and (ii) no stock of the 
acquiring corporation is used in the transaction." 
(b) Section 368(b) of such Code (relating to definition of a party to 
a reorganization) is amended by adding at the end thereof the follow-
ing new sentence: "In the case of a reorganization qualifying under 
paragraph (1) (A) of subsection (a) by reason of paragraph (2) (D) 
of that subsection, the term 'a party to a reorganization' includes the 
controlling corporation referred to in such paragraph (2)(D)." 
(c) The amendments made by subsections (a) and (b) shall apply 
to statutory mergers occurring after the date of the enactment of this 
Act. 
SEC. 2, (a) Section 358(e) of the Liternal Revenue Code of 1954 
(relating to the exception to the rule for determining basis to dis-
tributees in corporate reorganizations) is amended to read as follows: 
"(e) EXCEPTION.—This section shall not apply to property acquired 
by a corporation by the exchange of its stock or securities (or the 
stock or securities of a corporation which is in control of the acquiring 
corporation) as consideration in whole or in part for the transfer of 
the property to it." 
(b) The last sentence of section 362(b) of such Code (relating to 
basis of property transferred to corporations in corporate reorgani-
zations) is amended to read as follows: "This subsection shall not applicability. 
apply if the property acquired consists of stock or securities in a cor- 
^^^ ^*^' ^^^ 
poration a party to the reorganization, unless acquired by the ex-
change of stock or securities of the transferee (or of a corporation 
which is in control of the transferee) as the consideration in whole or 
in part for the transfer." 
(c) The amendments made by subsections (a) and (b) shall apply 
only in respect of plans of reorganization adopted after the date of 
the enactment of this Act. 
Approved October 22, 1968. 
Property trans-
fers to corpora-
tions, non-
Applicability. 
Public Law 90-622 
A N A C T 
October 22, 1968 
To amend the Internal Revenue Code of 19.54 with respect to the treatment of 
[H. R. 18486] 
income from the operation of a c<minuinications satellite .system. 
Be U endcted hy the Senate and Hou-'se of ReirreaentatlceH of the 
Ignited States of America In Congress assembled, That (a) section 883 
of the Internal Revenue Code of 1954 (relating to exclusions from 
gross income) is amended by inserting "(a) INCOME or FOREIGN COR-
PORATIONS FROM SHIPS AND AIRCRAFT.—" before "The", and by adding 
at the end thereof the following new subsection: 
"(b) 
EARNINGS DERIVED FROM COMMUNICATIONS SATELLITE SYS-
TEM.—The earnings derived from the ownership or operation of a 
communications satellite system by a foreign entity designated by a 
foreign government to participate in such ownership or operation 
shall be exempt from taxation under this subtitle, if the United States, 
through its designated entity, participates in such system pursuant to 
the Communications Satellite Act of 1962 (47^ U.S.C. 701 and 
following)." 
(b) The amendment made by subsection (a) shall apply with resj^ect 
to taxaole years beginning after December 31,1966. 
Approved October 22, 1968. 
Taxes. 
Global commu-
nications satel-
lite system, tax 
exemption. 
68A Stat. 283-
26 u s e 88 3. 
76 Stat. 419-
Effective date.