I.R.C. § 1059(a) General Rule —
If any corporation receives any extraordinary dividend with respect to any share
of stock and such corporation has not held such stock for more than 2 years before
the dividend announcement date—
I.R.C. § 1059(a)(1) Reduction In Basis —
The basis of such corporation in such stock shall be reduced (but not below zero)
by the nontaxed portion of such dividends.
I.R.C. § 1059(a)(2) Amounts In Excess Of Basis —
If the nontaxed portion of such dividends exceeds such basis, such excess shall
be treated as gain from the sale or exchange of such stock for the taxable year in
which the extraordinary dividend is received.
I.R.C. § 1059(b) Nontaxed Portion —
For purposes of this section—
I.R.C. § 1059(b)(1) In General —
The nontaxed portion of any dividend is the excess
(if any) of—
I.R.C. § 1059(b)(1)(A) —
the amount of such dividend, over
I.R.C. § 1059(b)(1)(B) —
the taxable portion of such dividend.
I.R.C. § 1059(b)(2) Taxable Portion —
The taxable portion of any dividend is—
I.R.C. § 1059(b)(2)(A) —
the portion of such dividend includible in gross income, reduced by
I.R.C. § 1059(b)(2)(B) —
the amount of any deduction allowable with respect to such dividend under section
243, 245, or 245A.
I.R.C. § 1059(c) Extraordinary Dividend Defined —
For purposes of this section—
I.R.C. § 1059(c)(1) In General —
The term “extraordinary dividend” means any dividend with respect to a share of
stock if the amount of such dividend equals or exceeds the threshold percentage of
the taxpayer's adjusted basis in such share of stock.
I.R.C. § 1059(c)(2) Threshold Percentage —
The term “threshold percentage” means--
I.R.C. § 1059(c)(2)(A) —
5 percent in the case of stock which is preferred as to dividends, and
I.R.C. § 1059(c)(2)(B) —
10 percent in the case of any other stock.
I.R.C. § 1059(c)(3) Aggregation Of Dividends
I.R.C. § 1059(c)(3)(A) Aggregation Within 85-Day Period —
All dividends—
I.R.C. § 1059(c)(3)(A)(i) —
which are received by the taxpayer
(or a person described in subparagraph (C)) with respect to any share of stock, and
I.R.C. § 1059(c)(3)(A)(ii) —
which have ex-dividend dates within the same period of 85 consecutive days,
shall be treated as 1 dividend.
I.R.C. § 1059(c)(3)(B) Aggregation Within 1 Year Where Dividends Exceed 20 Percent Of Adjusted Basis —
All dividends—
I.R.C. § 1059(c)(3)(B)(i) —
which are received by the taxpayer
(or a person described in subparagraph (C)) with respect to any share of stock, and
I.R.C. § 1059(c)(3)(B)(ii) —
which have ex-dividend dates during the same period of 365 consecutive days,
shall be treated as extraordinary dividends if the aggregate of such dividends exceeds
20 percent of the taxpayer's adjusted basis in such stock (determined without regard
to this section).
I.R.C. § 1059(c)(3)(C) Substituted Basis Transactions —
In the case of any stock, a person is described in this subparagraph if—
I.R.C. § 1059(c)(3)(C)(i) —
the basis of such stock in the hands of such person is determined in whole or in
part by reference to the basis of such stock in the hands of the taxpayer, or
I.R.C. § 1059(c)(3)(C)(ii) —
the basis of such stock in the hands of the taxpayer is determined in whole or in
part by reference to the basis of such stock in the hands of such person.
I.R.C. § 1059(c)(4) Fair Market Value Determination —
If the taxpayer establishes to the satisfaction of the Secretary the fair market
value of any share of stock as of the day before the ex-dividend date, the taxpayer
may elect to apply paragraphs (1) and (3) by substituting such value for the taxpayer's
adjusted basis.
I.R.C. § 1059(d) Special Rules —
For purposes of this section—
I.R.C. § 1059(d)(1) Time For Reduction —
Any reduction in basis under subsection (a)(1) shall be treated as occurring at
the beginning of the ex-dividend date of the extraordinary dividend to which the
reduction relates.
I.R.C. § 1059(d)(2) Distributions In Kind —
To the extent any dividend consists of property other than cash, the amount of such
dividend shall be treated as the fair market value of such property (as of the date
of the distribution)
reduced as provided in section 301(b)(2).
I.R.C. § 1059(d)(3) Determination Of Holding Period —
For purposes of determining the holding period of stock under subsection (a), rules
similar to the rules of paragraphs (3)
and (4) of section 246(c)
shall apply and there shall not be taken into account any day which is more than 2
years after the date on which such share becomes ex-dividend.
I.R.C. § 1059(d)(4) Ex-Dividend Date —
The term “ex-dividend date” means the date on which the share of stock becomes ex-dividend.
I.R.C. § 1059(d)(5) Dividend Announcement Date —
The term “dividend announcement date” means, with respect to any dividend, the date
on which the corporation declares, announces, or agrees to the amount or payment
of such dividend, whichever is the earliest.
I.R.C. § 1059(d)(6) Exception Where Stock Held During Entire Existence Of Corporation
I.R.C. § 1059(d)(6)(A) In General —
Subsection (a) shall not apply to any extraordinary dividend with respect to any
share of stock of a corporation if—
I.R.C. § 1059(d)(6)(A)(i) —
such stock was held by the taxpayer during the entire period such corporation was
in existence, and
I.R.C. § 1059(d)(6)(A)(ii) —
except as provided in regulations, no earnings and profits of such corporation were
attributable to transfers of property from (or earnings and profits of) a corporation
which is not a qualified corporation.
I.R.C. § 1059(d)(6)(B) Qualified Corporation —
For purposes of subparagraph (A), the term “qualified corporation” means any corporation
(including a predecessor corporation)—
I.R.C. § 1059(d)(6)(B)(i) —
with respect to which the taxpayer holds directly or indirectly during the entire
period of such corporation's existence at least the same ownership interest as the
taxpayer holds in the corporation distributing the extraordinary dividend, and
I.R.C. § 1059(d)(6)(B)(ii) —
which has no earnings and profits—
I.R.C. § 1059(d)(6)(B)(ii)(I) —
which were earned by, or
I.R.C. § 1059(d)(6)(B)(ii)(II) —
which are attributable to gain on property which accrued during a period the corporation
holding the property was,
a corporation not described in clause
(i).
I.R.C. § 1059(d)(6)(C) Application Of Paragraph —
This paragraph shall not apply to any extraordinary dividend to the extent such
application is inconsistent with the purposes of this section.
I.R.C. § 1059(e) Special Rules For Certain Distributions
I.R.C. § 1059(e)(1) Treatment Of Partial Liquidations And Certain Redemptions —
Except as otherwise provided in regulations—
I.R.C. § 1059(e)(1)(A) Redemptions —
In the case of any redemption of stock—
I.R.C. § 1059(e)(1)(A)(i) —
which is part of a partial liquidation
(within the meaning of section 302(e))
of the redeeming corporation,
I.R.C. § 1059(e)(1)(A)(ii) —
which is not pro rata as to all shareholders, or
I.R.C. § 1059(e)(1)(A)(iii) —
which would not have been treated
(in whole or in part) as a dividend if--
I.R.C. § 1059(e)(1)(A)(iii)(I) —
any options had not been taken into account under section 318(a)(4),
or
I.R.C. § 1059(e)(1)(A)(iii)(II) —
section 304(a) had not applied,
any amount treated as a dividend with respect to such redemption shall be treated
as an extraordinary dividend to which paragraphs (1) and (2) of subsection (a) apply
without regard to the period the taxpayer held such stock. In the case of a redemption
described in clause (iii), only the basis in the stock redeemed shall be taken into
account under subsection
(a).
I.R.C. § 1059(e)(1)(B) Reorganizations, Etc. —
An exchange described in section 356 which is treated as a dividend shall be treated as a redemption of stock for purposes
of applying subparagraph (A).
I.R.C. § 1059(e)(2) Qualifying Dividends
I.R.C. § 1059(e)(2)(A) In General —
Except as provided in regulations, the term “extraordinary dividend” does not include
any qualifying dividend (within the meaning of section 243).
I.R.C. § 1059(e)(2)(B) Exception —
Subparagraph (A) shall not apply to any portion of a dividend which is attributable
to earnings and profits which—
I.R.C. § 1059(e)(2)(B)(i) —
were earned by a corporation during a period it was not a member of the affiliated
group, or
I.R.C. § 1059(e)(2)(B)(ii) —
are attributable to gain on property which accrued during a period the corporation
holding the property was not a member of the affiliated group.
I.R.C. § 1059(e)(3) Qualified Preferred Dividends
I.R.C. § 1059(e)(3)(A) In General —
In the case of 1 or more qualified preferred dividends with respect to any share
of stock—
I.R.C. § 1059(e)(3)(A)(i) —
this section shall not apply to such dividends if the taxpayer holds such stock
for more than 5 years, and
I.R.C. § 1059(e)(3)(A)(ii) —
if the taxpayer disposes of such stock before it has been held for more than 5 years,
the aggregate reduction under subsection (a)(1) with respect to such dividends shall
not be greater than the excess (if any) of—
I.R.C. § 1059(e)(3)(A)(ii)(I) —
the qualified preferred dividends paid with respect to such stock during the period
the taxpayer held such stock, over
I.R.C. § 1059(e)(3)(A)(ii)(II) —
the qualified preferred dividends which would have been paid during such period
on the basis of the stated rate of return.
I.R.C. § 1059(e)(3)(B) Rate Of Return —
For purposes of this paragraph—
I.R.C. § 1059(e)(3)(B)(i) Actual Rate Of Return —
The actual rate of return shall be the rate of return for the period for which the
taxpayer held the stock, determined—
I.R.C. § 1059(e)(3)(B)(i)(I) —
by only taking into account dividends during such period, and
I.R.C. § 1059(e)(3)(B)(i)(II) —
by using the lesser of the adjusted basis of the taxpayer in such stock or the liquidation
preference of such stock.
I.R.C. § 1059(e)(3)(B)(ii) Stated Rate Of Return —
The stated rate of return shall be the annual rate of the qualified preferred dividend
payable with respect to any share of stock (expressed as a percentage of the amount
described in clause
(i)(II)).
I.R.C. § 1059(e)(3)(C) Definitions And Special Rules —
For purposes of this paragraph—
I.R.C. § 1059(e)(3)(C)(i) Qualified Preferred Dividend —
The term “qualified preferred dividend” means any fixed dividend payable with respect
to any share of stock which—
I.R.C. § 1059(e)(3)(C)(i)(I) —
provides for fixed preferred dividends payable not less frequently than annually,
and
I.R.C. § 1059(e)(3)(C)(i)(II) —
is not in arrears as to dividends at the time the taxpayer acquires the stock.
Such term shall not include any dividend payable with respect to any share of stock
if the actual rate of return on such stock exceeds 15 percent.
I.R.C. § 1059(e)(3)(C)(ii) Holding Period —
In determining the holding period for purposes of subparagraph
(A)(ii), subsection (d)(3) shall be applied by substituting “5 years"
for “2 years”.
I.R.C. § 1059(f) Treatment Of Dividends On Certain Preferred Stock
I.R.C. § 1059(f)(1) In General —
Any dividend with respect to disqualified preferred stock shall be treated as an
extraordinary dividend to which paragraphs
(1) and (2) of subsection (a) apply without regard to the period the taxpayer held
the stock.
I.R.C. § 1059(f)(2) Disqualified Preferred Stock —
For purposes of this subsection, the term “disqualified preferred stock” means any
stock which is preferred as to dividends if—
I.R.C. § 1059(f)(2)(A) —
when issued, such stock has a dividend rate which declines (or can reasonably be
expected to decline) in the future,
I.R.C. § 1059(f)(2)(B) —
the issue price of such stock exceeds its liquidation rights or its stated redemption
price, or
I.R.C. § 1059(f)(2)(C) —
such stock is otherwise structured—
I.R.C. § 1059(f)(2)(C)(i) —
to avoid the other provisions of this section, and
I.R.C. § 1059(f)(2)(C)(ii) —
to enable corporate shareholders to reduce tax through a combination of dividend
received deductions and loss on the disposition of the stock.
I.R.C. § 1059(g) Regulations —
The Secretary shall prescribe such regulations as may be appropriate to carry out
the purposes of this section, including regulations—
I.R.C. § 1059(g)(1) —
providing for the application of this section in the case of stock dividends, stock
splits, reorganizations, and other similar transactions, in the case of stock held
by pass-thru entities, and in the case of consolidated groups, and
I.R.C. § 1059(g)(2) —
providing that the rules of subsection
(f) shall apply in the case of stock which is not preferred as to dividends in cases
where stock is structured to avoid the purposes of this section.
(Added by Pub. L. 98-369, div. A, title I, Sec. 53(a), July 18, 1984, 98 Stat. 565, and amended by Pub. L. 99-514, title VI, Sec. 614(a)-(e), Oct. 22, 1986, 100 Stat. 2251-2253; Pub. L. 100-647, title I, Sec. 1006(c), Nov. 10, 1988, 102 Stat. 3393; Pub. L. 101-239, title VII, Sec. 7206(a), Dec. 19, 1989, 103 Stat. 2336; Pub. L. 105-34, title X, XVI, Sec. 1011, 1013(b), 1604(d)(1), Aug. 5, 1997, 111 Stat 788; Pub. L. 105-206, title VI, Sec. 6010(b), July 22, 1998, 112 Stat 685; Pub. L. 113-295, Div. A, title II, Sec. 221(a)(41)(G), Dec. 19, 2014, 128 Stat. 4010; Pub. L. 115-97, title I, Sec. 14101(c)(2), Dec. 22, 2017, 131 Stat. 2054; Pub. L. 115-141, Div. U, title IV, Sec. 401(a)(169), Mar. 23, 2018, 132 Stat. 348.)
BACKGROUND NOTES
AMENDMENTS
2018--Subsec. (d)(3). Pub. L. 115-141, Div. U, Sec. 401(a)(169), amended par. (3) by substituting “and there shall not
be taken into account any day which is more than 2 years after the date on which such
share becomes ex-dividend.’’ for ‘‘; except that ‘2 years' shall be substituted for
the number of days specified in subparagraph
(B) of section 246(c)(3).”.
2017--Subsec. (b)(2)(B). Pub. L. 115-97, Sec. 14101(c)(2), amended subpar. (B) by striking ‘‘or 245’’
and inserting “245, or 245A”.
2014--Subsec. (b)(2)(B). Pub. L. 113-295, Div. A, Sec. 221(a)(41)(G), amended subpar.
(B) by striking “244”.
1998--Subsec. (g)(1). Pub. L. 105-206, Sec. 6010(b), amended par. (1) by substituting “, in the case of stock held by pass-thru entities,
and in the case of consolidated groups” for “and in the case of stock held by pass-thru
entities”.
1997--Subsec. (a)(2). Pub. L. 105-34, Sec. 1011(a) revised paragraph (2) generally. Prior to amendment it read as follows:
“(2) Recognition upon sale or disposition in certain cases
“In addition to any gain recognized under this chapter, there shall be treated as
gain from the sale or exchange of any stock for the taxable year in which the sale
or disposition of such stock occurs an amount equal to the aggregate nontaxed portions
of any extraordinary dividends with respect to such stock which did not reduce the
basis of such stock by reason of the limitation on reducing basis below zero.”
Subsec. (d)(1). Pub. L. 105-34, Sec. 1011(c) amended paragraph (1) generally. Prior to amendment it read as follows:
“(1) Time for reduction
“(A) In general
“Except as provided in subparagraph (B), any reduction in basis under subsection (a)(1)
shall occur immediately before any sale or disposition of the stock.
“(B) Special rule for computing extraordinary dividend
“In determining a taxpayer's adjusted basis for purposes of subsection (c)(1), any
reduction in basis under subsection
(a)(1) by reason of a prior distribution which was an extraordinary dividend shall
be treated as occurring at the beginning of the ex-dividend date for such distribution.”
Subsec. (d)(3). Pub. L. 105-34, Sec. 1604(d)(1) substituted
“subsection (a)” for “subsection (a)(2)”.
Subsec. (e)(1). Pub. L. 105-34, Sec. 1011(b) amended paragraph (1) generally. Prior to amendment it read as follows:
“(1) Treatment of partial liquidations and non-pro rata redemptions
“Except as otherwise provided in regulations, in the case of any redemption of stock
which is--
“(A) part of a partial liquidation
(within the meaning of section 302(e)) of the redeeming corporation, or
“(B) not pro rata as to all shareholders, any amount treated as a dividend under section
301 with respect to such redemption shall be treated as an extraordinary dividend
to which paragraphs (1) and (2) of subsection (a) apply without regard to the period
the taxpayer held such stock.”
Subsec. (e)(1)(A)(iii). Pub. L. 105-34, Sec. 1013(b) amended clause (iii) (as added by Sec. 1011(b)). Prior to amendment it read as follows:
“(iii) which would not have been treated (in whole or in part) as a dividend if any
options had not been taken into account under section 318(a)(4),”
1989--Subsecs. (f), (g). Pub. L. 101-239 added subsecs. (f)
and (g) and struck out former subsec. (f) which read as follows: ‘Regulations.
- The Secretary shall prescribe such regulations as may be appropriate to carry out
the purposes of this section, including regulations providing for the application
of this section in the case of stock dividends, stock splits, reorganizations, and
other similar transactions and in the case of stock held by pass-thru entities.’
1988--Subsec. (d)(5). Pub. L. 100-647, Sec. 1006(c)(2), inserted ‘amount or’ after ‘agrees to the’.
Pub. L. 100-647, Sec. 1006(c)(1), redesignated par. (6)
as (5) and struck out former par. (5) which related to extension to certain property
distributions.
Subsec. (d)(6). Pub. L. 100-647, Sec. 1006(c)(3), amended par. (6) generally. Prior to amendment, par. (6) read as follows:
‘Subsection (a) shall not apply to any extraordinary dividend with respect to any
share of stock of a corporation if -
‘(A) such stock was held by the taxpayer during the entire period such corporation
(and any precedessor corporation) was in existence,
‘(B) except as provided in regulations, the only earnings and profits of such corporation
were earnings and profits accumulated by such corporation (or any predecessor corporation)
during such period, and
‘(C) the application of this paragraph to such dividend is not inconsistent with the
purposes of this section.’
Pub. L. 100-647, Sec. 1006(c)(1), redesignated par. (7)
as (6). Former par. (6) redesignated (5).
Subsec. (d)(7). Pub. L. 100-647, Sec. 1006(c)(1), redesignated par. (7) as (6).
Subsec. (e)(1). Pub. L. 100-647, Sec. 1006(c)(4), substituted ‘to which paragraphs (1) and (2) of subsection (a) apply without regard
to the period the taxpayer held such stock’ for ‘for purposes of this section (without
regard to the holding period of the stock)’.
Subsec. (e)(2). Pub. L. 100-647, Sec. 1006(c)(5), amended par. (2) generally. Prior to amendment, par. (2) read as follows:
‘Except as provided in regulations, the term ‘extraordinary dividend’
shall not include any qualifying dividend (within the meaning of section 243(b)(1)).'
Subsec. (e)(3)(A). Pub. L. 100-647, Sec. 1006(c)(6), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows:
‘A qualified preferred dividend shall be treated as an extraordinary dividend -
‘(i) only if the actual rate of return of the taxpayer on the stock with respect to
which such dividend was paid exceeds 15 percent, or
‘(ii) if clause (i) does not apply, and the taxpayer disposes of such stock before
the taxpayer has held such stock for more than 5 years, only to the extent the actual
rate of return exceeds the stated rate of return.’
Subsec. (e)(3)(B). Pub. L. 100-647, Sec. 1006(c)(8)(A), which directed the amendment of subpar. (B) ‘by striking out ‘subparagraph
(A)’ and the material preceding clause (i) and inserting in lieu thereof
‘this paragraph’ ‘, was executed by striking out ‘subparagraph (A)’
in the material preceding clause (i) and inserting in lieu thereof
‘this paragraph’, to reflect the probable intent of Congress.
Subsec. (e)(3)(B)(ii). Pub. L. 100-647, Sec. 1006(c)(8)(B), substituted ‘clause (i)(II)’ for ‘subparagraph (B)(i)(II)’.
Subsec. (e)(3)(C)(i). Pub. L. 100-647, Sec. 1006(c)(7), inserted ‘fixed’ before ‘dividend payable’ in introductory provisions and inserted
at end ‘Such term shall not include any dividend payable with respect to any share
of stock if the actual rate of return on such stock exceeds 15 percent.’
Subsec. (f). Pub. L. 100-647, Sec. 1006(c)(9), inserted ‘and in the case of stock held by pass-thru entities’ after
‘other similar transactions’.
1986--Subsec. (a). Pub. L. 99-514, Sec. 614(a)(1), amended subsec. (a) generally. Prior to amendment, subsec. (a) read as follows:
‘If any corporation -
‘(1) receives an extraordinary dividend with respect to any share of stock, and
‘(2) sells or otherwise disposes of such stock before such stock has been held for
more than 1 year, the basis of such corporation in such stock shall be reduced by
the nontaxed portion of such dividend. If the nontaxed portion of such dividend exceeds
such basis, such excess shall be treated as gain from the sale or exchange of such
stock.’
Subsec. (c)(1). Pub. L. 99-514, Sec. 614(c)(2), struck out ‘(determined without regard to this section)’ after ‘such share of stock’.
Subsec. (c)(4). Pub. L. 99-514, Sec. 614(b), added par. (4).
Subsec. (d)(1). Pub. L. 99-514, Sec. 614(c)(1), amended par. (1) generally. Prior to amendment, par. (1) read as follows:
‘Any reduction in basis under subsection (a) by reason of any distribution which is
an extraordinary dividend shall occur at the beginning of the ex-dividend date for
such distribution.’
Subsec. (d)(3). Pub. L. 99-514, Sec. 614(a)(3), substituted ‘2 years’ for ‘1 year’.
Subsec. (d)(6). Pub. L. 99-514, Sec. 614(a)(2), added par. (6).
Subsec. (d)(7). Pub. L. 99-514, Sec. 614(d), added par. (7).
Subsecs. (e), (f). Pub. L. 99-514, Sec. 614(e), added subsec. (e) and redesignated former subsec. (e) as (f).
EFFECTIVE DATE OF 2018 AMENDMENTS
Amendment by Pub. L. 115-141, Div. U, Sec. 401(a)(169), effective March 23, 2018.
EFFECTIVE DATE OF 2017 AMENDMENTS
Amendments by Pub. L. 115-97, Sec. 14101(c)(2), effective for distributions made after December 31, 2017.
EFFECTIVE DATE OF 2014 AMENDMENTS
Amendments by Pub. L. 113-295, Div. A, Sec. 221(a)(41), effective on the date of the enactment of this Act [Enacted:
Dec. 19, 2014]. Pub. L. 113-295, Div. A, Sec. 221(a)(41)(K), provided that:
“(K) The amendments made by this paragraph shall not apply to preferred stock issued
before October 1, 1942 (determined in the same manner as under section 247 of the Internal Revenue Codeof 1986 as in effect before its repeal by such amendments).”
Section 221(b)(2) of Pub. L. 113-295, Div. A, provided the following Savings Provision:
“(2)
SAVINGS PROVISION.—If—
“(A)
any provision amended or repealed by the amendments made by this section applied to—
“(i)
any transaction occurring before the date of the enactment of this Act [Enacted: Dec.
19, 2014],
“(ii)
any property acquired before such date of enactment, or
“(iii)
any item of income, loss, deduction, or credit taken into account before such date
of enactment, and
“(B)
the treatment of such transaction, property, or item under such provision would (without
regard to the amendments or repeals made by this section)
affect the liability for tax for periods ending after date of enactment, nothing in
the amendments or repeals made by this section shall be construed to affect the treatment
of such transaction, property, or item for purposes of determining liability for tax
for periods ending after such date of enactment.”
EFFECTIVE DATE OF 1998 AMENDMENTS
Amendment by Sec. 6010(b) of Pub. L. 105-206 effective as if included in the provisions of the Taxpayer Relief Act of 1997 to
which it relates [Effective Date of Pub. L. 105-34, Sec. 1011: distributions after May 3, 1995, but see transition rule set forth below].
EFFECTIVE DATE OF 1997 AMENDMENTS
Section 1011(d) of Pub. L. 105-34 provided that:
“(1) In general.--The amendments made by this section shall apply to distributions
after May 3, 1995.
“(2) Transition rule.--The amendments made by this section shall not apply to any
distribution made pursuant to the terms of--
“(A) a written binding contract in effect on May 3, 1995, and at all times thereafter
before such distribution, or
“(B) a tender offer outstanding on May 3, 1995.
“(3) Certain dividends not pursuant to certain redemptions.--In determining whether
the amendment made by subsection
(a) applies to any extraordinary dividend other than a dividend treated as an extraordinary
dividend under section 1059(e)(1) of the Internal Revenue Code of 1986 (as amended by this Act), paragraphs (1) and (2) shall be applied by substituting
“September 13, 1995” for “May 3, 1995”.”
Section 1013(d) of Pub. L. 105-34 provided that:
“(1) In general.--The amendments made by this section shall apply to distributions
and acquisitions after June 8, 1997.
“(2) Transition rule.--The amendments made by this section shall not apply to any
distribution or acquisition after June 8, 1997, if such distribution or acquisition
is--
“(A) made pursuant to a written agreement which was binding on such date and at all
times thereafter,
“(B) described in a ruling request submitted to the Internal Revenue Service on or
before such date, or
“(C) described in a public announcement or filing with the Securities and Exchange
Commission on or before such date.”
EFFECTIVE DATE OF 1989 AMENDMENTS
Section 7206(b) of Pub. L. 101-239 provided that:
‘(1) In general. - Except as provided in paragraph
(2), the amendment made by subsection (a) (amending this section)
shall apply to stock issued after July 10, 1989, in taxable years ending after such
date.
‘(2) Binding contract. - The amendment made by subsection (a) shall not apply to any
stock issued pursuant to a written binding contract in effect on July 10, 1989, and
at all times thereafter before the stock is issued.’
EFFECTIVE DATE OF 1988 AMENDMENTS
Amendment by Pub. L. 100-647 effective, except as otherwise provided, as if included in the provision of the Tax
Reform Act of 1986, Pub. L. 99-514, to which such amendment relates, see section 1019(a) of Pub. L. 100-647, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1986 AMENDMENTS
Section 614(f) of Pub. L. 99-514 provided that:
‘(1) In general. - Except as provided in this subsection, the amendments made by this
section (amending this section) shall apply to dividends declared after July 18, 1986,
in taxable years ending after such date.
‘(2) Aggregation. - For purposes of section 1059(c)(3) of the Internal Revenue Code of 1986, dividends declared after July 18, 1986, shall not be aggregated with dividends
declared on or before July 18, 1986.
‘(3) Redemptions. - Section 1059(e)(1) of the Internal Revenue Code of 1986 (as added by subsection (e)) shall apply to dividends declared after the date
of the enactment of this Act (Oct. 22, 1986), in taxable years ending after such date.'
EFFECTIVE DATE
Section 53(e) of Pub. L. 98-369, as amended by Pub. L. 99-514, Sec. 2, title XVIII, Sec. 1804(b)(2), Oct. 22, 1986, 100 Stat. 2095, 2798, provided that:
‘(1) In general. - Except as provided in this subsection, the amendments made by this
section (enacting this section and amending sections 246, 1016, and 7701 of this title)
shall apply to distributions after March 1, 1984, in taxable years ending after such
date.
‘(2) Subsection (b). - The amendments made by subsection
(b) (amending section 246 of this title) shall apply to stock acquired after the date
of the enactment of this Act (July 18, 1984) in taxable years ending after such date.
‘(3) Related person provisions. -
‘(A) In general. - Except as otherwise provided in subparagraph (B), the amendment
made by subsection
(c) (amending section 7701 of this title) shall take effect on July 18, 1984.
‘(B) Special rule for purposes of section 265(2). - The amendment made by subsection
(c) insofar as it relates to section 265(2) of the Internal Revenue Code of 1986 (formerly I.R.C. 1954) shall apply to -
‘(i) term loans made after July 18, 1984, and
‘(ii) demand loans outstanding after July 18, 1984 (other than any loan outstanding
on July 18, 1984, and repaid before September 18, 1984).
‘(C) Treatment of renegotiations, etc. - For purposes of this paragraph, any loan
renegotiated, extended, or revised after July 18, 1984, shall be treated as a loan
made after such date.
‘(D) Definition of term and demand loans. - For purposes of this paragraph, the terms
‘demand loan’ and ‘term loan’ have the respective meanings given such terms by paragraphs
(5) and (6) of section 7872(f) of the Internal Revenue Code of 1986 (formerly I.R.C. 1954), except that the second sentence of such paragraph (5) shall not apply.'
PRIOR PROVISIONS
A prior section 1059 was renumbered section 1061 of this title.
