An Act to authorize the extension of certain naval vessel loans now in existence and new loans, and for other purposes
PL 91-682 (H.R.15728), enacted 01/12/1971

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. 
84 STAT. ] 
PUBLIC LAW 91-683-JAN. 12, 1971 
2067 
Consultation 
SEC. 4. No loan may be made or extended under this Act unless the 
Secretary of Defense, after consultation with the Joint Chiefs of 
Staff, determines tliat such loan or extension is in the best interest of 
the United States. The Secretary of Defense shall keep the Congress „o";°nca^;r""' 
currently advised of all loans made or extended under this Act. 
SEC. 5. The President may promulgate such rules and regulations as 
he deems necessary to carry out the provisions of this Act. 
Approved January 12, 1971. 
Rules and 
regulations* 
Public Law 91-683 
A N A C T 
January 12, 1971 
To amend section 1372 of the Internal Revenue Code of 1954, relating to passive 
[H. R. 19627] 
investment income. 
Taxes. 
Corporations, 
passive invest-
ment income. 
80 Stat. 114. 
Effective date. 
Conditions. 
Be it enacted by the Senate and House of Representatives 
of the 
United States of America in Congress assembled^ That (a) subpara-
graph (C) of section 1372(e) (5) of the Internal Revenue Code of 1954 
(relating to passive investment mcome of small business corporations) 
is amended by inserting at the end thereof the following new sentence : 26 us^c i372. 
"Gross receipts derived from sales or exchanges of stock or securities 
for purposes of this paragraph shall not include amounts received by 
an electing small business corporation which are treated under section 
331 (relating to corporate liquidations) as payments in exchange for 
stock where the electing small business corporation owned more than 
50 percent of each class of the stock of the liquidating corporation." 
(b) The amendment made by subsection (a) shall apply to taxable 
years of electing small business corporations ending after the date of 
the enactment of this Act. Such amendment shall also apply with 
respect to any taxable year ending before October 7,1970, but only if— 
(1) on such date the making of a refund or the allowance of 
a credit to the electing small business corporation is not prevented 
by any law^ or rule of law, and 
(2) within one year after the date of enactment of this Act and 
in such manner as the Secretary of the Treasury or his delegate 
prescribes by regulations— 
(A) the corporation elects to have such amendment so 
apply, and 
(B) all persons (or their personal representatives) who 
were shareholders of such corporation at any time during any 
taxable year beginning with the first taxable year to which 
this amendment applies and ending on or before the date of 
the enactment of this Act consent to such election and to the 
application of the amendment made by subsection (a). 
(c) If tne assessment of any deficiency in income tax resulting from 
deficiency 
the filing of such election for a taxable year ending before the date of ^^^^^^""^^ • 
such filing is prevented before the expiration of one year after the date 
of such filing by any law or rule of law, such deficiency (to the extent 
attributable to such election) may be assessed at any time prior to the 
expiration of such one-year period notwithstanding any law or rule of 
law which would otherwise prevent such assessment. 
(d) If the election of a corporation under subsection (a) of section 
1372 of the Internal Eevenue Code of 1954 would have been terminated 
^^ ^*^*- ^^^° 
because of the application of subsection (e) (5) of such section (before 
the amendment made by subsection (a) of this section) but for the 
election by such corporation under paragraph (2) of subsection (b) 
(and the consent of shareholders under such paragraph), such election 
under section 1372(a) of such code shall not be treated as terminated 
47-348 O - 72 - 47 (pt. 2)