| The Tax Increase Prevention and Reconciliation Act of 2005 | |||||||||||||||||||||||||||||||||||
| TIPRA, H.R. 4297, Public Law 109-222 | |||||||||||||||||||||||||||||||||||
The Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) was signed into law by President George W. Bush on May 17, 2006, after the Senate passed the bill on May 11, 2006, and the House of Representatives passed the bill on December 8, 2005. For a full history of all Congressional actions, see the Library of Congress web site. The full text of TIPRA was taken from the Library of Congress. H.R.4297(Enrolled as Agreed to or Passed by Both House and Senate) --H.R.4297-- H.R.4297
Begun and held at the City of Washington on Tuesday, the third day of January, two thousand and six An Act
SECTION 1. SHORT TITLE, ETC.
TITLE I--EXTENSION AND MODIFICATION OF CERTAIN PROVISIONSTITLE II--OTHER PROVISIONSTITLE III--ALTERNATIVE MINIMUM TAX RELIEFTITLE IV--CORPORATE ESTIMATED TAX PROVISIONSTITLE V--REVENUE OFFSET PROVISIONS
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'For Calendar Year: |
Applicable percentage is: |
2006 |
20 percent |
2007 |
40 percent |
2008 |
60 percent |
2009 |
80 percent. |
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'(iv) TERMINATION- The State veterans limit for
the States specified in clause (ii) for any calendar year after 2010 is
zero.'.
-
(2) EFFECTIVE DATE- The amendments made by this
subsection shall apply to allocations of State volume limit after April
5, 2006.
SEC. 204. CAPITAL GAINS TREATMENT FOR CERTAIN SELF-CREATED MUSICAL WORKS.
-
(a) In General- Subsection (b) of section 1221 (relating to
capital asset defined) is amended by redesignating paragraph (3) as
paragraph (4) and by inserting after paragraph (2) the following new
paragraph:
-
'(3) SALE OR EXCHANGE OF SELF-CREATED MUSICAL WORKS- At
the election of the taxpayer, paragraphs (1) and (3) of subsection (a)
shall not apply to musical compositions or copyrights in musical works
sold or exchanged before January 1, 2011, by a taxpayer described in
subsection (a)(3).'.
-
(b) Limitation on Charitable Contributions- Subparagraph
(A) of section 170(e)(1) is amended by inserting '(determined without
regard to section 1221(b)(3))' after 'long-term capital gain'.
-
(c) Effective Date- The amendments made by this section
shall apply to sales and exchanges in taxable years beginning after the
date of the enactment of this Act.
SEC. 205. VESSEL TONNAGE LIMIT.
-
(a) In General- Paragraph (4) of section 1355(a) (relating
to qualifying vessel) is amended by inserting '(6,000, in the case of
taxable years beginning after December 31, 2005, and ending before
January 1, 2011)' after '10,000'.
-
(b) Effective Date- The amendment made by subsection (a) shall apply to
taxable years beginning after December 31, 2005.
SEC. 206. MODIFICATION OF SPECIAL ARBITRAGE RULE FOR CERTAIN FUNDS.
-
In the case of bonds issued after the date of the enactment of this Act
and before August 31, 2009--
-
(1) the requirement of paragraph (1) of section 648 of
the Deficit Reduction Act of 1984 (98 Stat. 941) shall be treated as
met with respect to the securities or obligations referred to in such
section if such securities or obligations are held in a fund the annual
distributions from which cannot exceed 7 percent of the average fair
market value of the assets held in such fund except to the extent
distributions are necessary to pay debt service on the bond issue, and
-
(2) paragraph (3) of such section shall be applied by
substituting 'distributions from' for 'the investment earnings of' both
places it appears.
SEC. 207. AMORTIZATION OF EXPENSES INCURRED IN CREATING OR ACQUIRING MUSIC OR MUSIC COPYRIGHTS.
-
(a) In General- Section 167(g) (relating to depreciation
under income forecast method) is amended by adding at the end the
following new paragraph:
-
'(8) SPECIAL RULES FOR CERTAIN MUSICAL WORKS AND COPYRIGHTS-
-
'(A) IN GENERAL- If an election is in effect under
this paragraph for any taxable year, then, notwithstanding paragraph
(1), any expense which--
-
'(i) is paid or incurred by the taxpayer in
creating or acquiring any applicable musical property placed in service
during the taxable year, and
-
'(ii) is otherwise properly chargeable to capital account,
-
shall be amortized ratably over the 5-year period
beginning with the month in which the property was placed in service.
The preceding sentence shall not apply to any expense which, without
regard to this paragraph, would not be allowable as a deduction.
-
'(B) EXCLUSIVE METHOD- Except as provided in this
paragraph, no depreciation or amortization deduction shall be allowed
with respect to any expense to which subparagraph (A) applies.
-
'(C) APPLICABLE MUSICAL PROPERTY- For purposes of this paragraph--
-
'(i) IN GENERAL- The term 'applicable musical
property' means any musical composition (including any accompanying
words), or any copyright with respect to a musical composition, which
is property to which this subsection applies without regard to this
paragraph.
-
'(ii) EXCEPTIONS- Such term shall not include any property--
-
'(I) with respect to which expenses are treated as qualified creative
expenses to which section 263A(h) applies,
-
'(II) to which a simplified procedure established under section
263A(j)(2) applies, or
-
'(III) which is an amortizable section 197 intangible (as defined in
section 197(c)).
-
'(D) ELECTION- An election under this paragraph
shall be made at such time and in such form as the Secretary may
prescribe and shall apply to all applicable musical property placed in
service during the taxable year for which the election applies.
-
'(E) TERMINATION- An election may not be made under this paragraph for
any taxable year beginning after December 31, 2010.'.
-
(b) Effective Date- The amendments made by this section
shall apply to expenses paid or incurred with respect to property
placed in service in taxable years beginning after December 31, 2005.
SEC. 208. MODIFICATION OF EFFECTIVE DATE OF DISREGARD OF CERTAIN CAPITAL EXPENDITURES FOR PURPOSES OF QUALIFIED SMALL ISSUE BONDS.
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(a) In General- Section 144(a)(4)(G) is amended by striking 'September
30, 2009' and inserting 'December 31, 2006'.
-
(b) Conforming Amendment- Section 144(a)(4)(F) is amended by striking
'September 30, 2009' and inserting 'December 31, 2006'.
SEC. 209. MODIFICATION OF TREATMENT OF LOANS TO QUALIFIED CONTINUING CARE FACILITIES.
-
(a) In General- Section 7872 is amended by redesignating
subsection (h) as subsection (i) and inserting after subsection (g) the
following new subsection:
-
'(h) Exception for Loans to Qualified Continuing Care Facilities-
-
'(1) IN GENERAL- This section shall not apply for any
calendar year to any below-market loan owed by a facility which on the
last day of such year is a qualified continuing care facility, if such
loan was made pursuant to a continuing care contract and if the lender
(or the lender's spouse) attains age 62 before the close of such year.
-
'(2) CONTINUING CARE CONTRACT- For purposes of this
section, the term 'continuing care contract' means a written contract
between an individual and a qualified continuing care facility under
which--
-
'(A) the individual or individual's spouse may use a qualified
continuing care facility for their life or lives,
-
'(B) the individual or individual's spouse will be
provided with housing, as appropriate for the health of such individual
or individual's spouse--
-
'(i) in an independent living unit (which has
additional available facilities outside such unit for the provision of
meals and other personal care), and
-
'(ii) in an assisted living facility or a nursing facility, as is
available in the continuing care facility, and
-
'(C) the individual or individual's spouse will be
provided assisted living or nursing care as the health of such
individual or individual's spouse requires, and as is available in the
continuing care facility.
-
The Secretary shall issue guidance which limits such
term to contracts which provide only facilities, care, and services
described in this paragraph.
-
'(3) QUALIFIED CONTINUING CARE FACILITY-
-
'(A) IN GENERAL- For purposes of this section, the term 'qualified
continuing care facility' means 1 or more facilities--
-
'(i) which are designed to provide services under continuing care
contracts,
-
'(ii) which include an independent living unit, plus an assisted living
or nursing facility, or both, and
-
'(iii) substantially all of the independent living unit residents of
which are covered by continuing care contracts.
-
'(B) NURSING HOMES EXCLUDED- The term 'qualified
continuing care facility' shall not include any facility which is of a
type which is traditionally considered a nursing home.
-
'(4) TERMINATION- This subsection shall not apply to any calendar year
after 2010.'.
-
(b) Conforming Amendments-
-
(1) Section 7872(g) is amended by adding at the end the following new
paragraph:
-
'(6) SUSPENSION OF APPLICATION- Paragraph (1) shall not apply for any
calendar year to which subsection (h) applies.'.
-
(2) Section 142(d)(2)(B) is amended by striking 'Section 7872(g)' and
inserting 'Subsections (g) and (h) of section 7872'.
-
(c) Effective Date- The amendment made by this section
shall apply to calendar years beginning after December 31, 2005, with
respect to loans made before, on, or after such date.
TITLE III--ALTERNATIVE MINIMUM TAX RELIEF
SEC. 301. INCREASE IN ALTERNATIVE MINIMUM TAX EXEMPTION AMOUNT FOR 2006.
-
(a) In General- Section 55(d)(1) (relating to exemption amount for
taxpayers other than corporations) is amended--
-
(1) by striking '$58,000' and all that follows through '2005' in
subparagraph (A) and inserting '$62,550 in the case of
taxable years beginning in 2006', and
-
(2) by striking '$40,250' and all that follows through '2005' in
subparagraph (B) and inserting '$42,500 in the case of
taxable years beginning in 2006'.
-
(b) Effective Date- The amendments made by this section shall apply to
taxable years beginning after December 31, 2005.
SEC. 302. ALLOWANCE OF NONREFUNDABLE PERSONAL CREDITS AGAINST REGULAR AND ALTERNATIVE MINIMUM TAX LIABILITY.
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(a) In General- Paragraph (2) of section 26(a) is amended--
-
(1) by striking '2005' in the heading thereof and inserting '2006', and
-
(2) by striking 'or 2005' and inserting '2005, or 2006'.
-
(b) Effective Date- The amendments made by this section shall apply to
taxable years beginning after December 31, 2005.
TITLE IV--CORPORATE ESTIMATED TAX PROVISIONS
SEC. 401. TIME FOR PAYMENT OF CORPORATE ESTIMATED TAXES.
-
Notwithstanding section 6655 of the Internal Revenue Code of 1986--
-
(1) in the case of a corporation with assets of not
less than $1,000,000,000 (determined as of the end of the preceding
taxable year)--
-
(A) the amount of any required installment of
corporate estimated tax which is otherwise due in July, August, or
September of 2006 shall be 105 percent of such amount,
-
(B) the amount of any required installment of
corporate estimated tax which is otherwise due in July, August, or
September of 2012 shall be 106.25 percent of such amount,
-
(C) the amount of any required installment of
corporate estimated tax which is otherwise due in July, August, or
September of 2013 shall be 100.75 percent of such amount, and
-
(D) the amount of the next required installment
after an installment referred to in subparagraph (A), (B), or (C) shall
be appropriately reduced to reflect the amount of the increase by
reason of such subparagraph,
-
(2) 20.5 percent of the amount of any required
installment of corporate estimated tax which is otherwise due in
September 2010 shall not be due until October 1, 2010, and
-
(3) 27.5 percent of the amount of any required
installment of corporate estimated tax which is otherwise due in
September 2011 shall not be due until October 1, 2011.
TITLE V--REVENUE OFFSET PROVISIONS
SEC. 501. APPLICATION OF EARNINGS STRIPPING RULES TO PARTNERS WHICH ARE CORPORATIONS.
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(a) In General- Section 163(j) (relating to limitation on
deduction for interest on certain indebtedness) is amended by
redesignating paragraph (8) as paragraph (9) and by inserting after
paragraph (7) the following new paragraph:
-
'(8) TREATMENT OF CORPORATE PARTNERS- Except to the
extent provided by regulations, in applying this subsection to a
corporation which owns (directly or indirectly) an interest in a
partnership--
-
'(A) such corporation's distributive share of
interest income paid or accrued to such partnership shall be treated as
interest income paid or accrued to such corporation,
-
'(B) such corporation's distributive share of
interest paid or accrued by such partnership shall be treated as
interest paid or accrued by such corporation, and
-
'(C) such corporation's share of the liabilities of such partnership
shall be treated as liabilities of such corporation.'.
-
(b) Additional Regulatory Authority- Section 163(j)(9)
(relating to regulations), as redesignated by subsection (a), is
amended by striking 'and' at the end of subparagraph (B), by striking
the period at the end of subparagraph (C) and inserting ', and', and by
adding at the end the following new subparagraph:
-
'(D) regulations providing for the reallocation of
shares of partnership indebtedness, or distributive shares of the
partnership's interest income or interest expense.'.
-
(c) Effective Date- The amendments made by this section
shall apply to taxable years beginning on or after the date of the
enactment of this Act.
SEC. 502. REPORTING OF INTEREST ON TAX-EXEMPT BONDS.
-
(a) In General- Section 6049(b)(2) (relating to exceptions)
is amended by striking subparagraph (B) and by redesignating
subparagraphs (C) and (D) as subparagraphs (B) and (C), respectively.
-
(b) Conforming Amendment- Section 6049(b)(2)(C), as
redesignated by subsection (a), is amended by striking 'subparagraph
(C)' and inserting 'subparagraph (B)'.
-
(c) Effective Date- The amendments made by this section shall apply to
interest paid after December 31, 2005.
SEC. 503. 5-YEAR AMORTIZATION OF GEOLOGICAL AND GEOPHYSICAL EXPENDITURES FOR CERTAIN MAJOR INTEGRATED OIL COMPANIES.
-
(a) In General- Section 167(h) (relating to amortization of
geological and geophysical expenditures) is amended by adding at the
end the following new paragraph:
-
'(5) SPECIAL RULE FOR MAJOR INTEGRATED OIL COMPANIES-
-
'(A) IN GENERAL- In the case of a major integrated
oil company, paragraphs (1) and (4) shall be applied by substituting
'5-year' for '24 month'.
-
'(B) MAJOR INTEGRATED OIL COMPANY- For purposes of
this paragraph, the term 'major integrated oil company' means, with
respect to any taxable year, a producer of crude oil--
-
'(i) which has an average daily worldwide production of crude oil of at
least 500,000 barrels for the taxable year,
-
'(ii) which had gross receipts in excess of $1,000,000,000 for its last
taxable year ending during calendar year 2005, and
-
'(iii) to which subsection (c) of section 613A does not apply by reason
of paragraph (4) of section 613A(d), determined--
-
'(I) by substituting '15 percent' for '5 percent' each place it occurs
in paragraph (3) of section 613A(d), and
-
'(II) without regard to whether subsection (c) of section 613A does not
apply by reason of paragraph (2) of section 613A(d).
-
For purposes of clauses (i) and (ii), all persons
treated as a single employer under subsections (a) and (b) of section
52 shall be treated as 1 person and, in case of a short taxable year,
the rule under section 448(c)(3)(B) shall apply.'.
-
(b) Effective Date- The amendment made by this section
shall apply to amounts paid or incurred after the date of the enactment
of this Act.
SEC. 504. APPLICATION OF FIRPTA TO REGULATED INVESTMENT COMPANIES.
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(a) In General- Subclause (II) of section 897(h)(4)(A)(i)
(defining qualified investment entity) is amended by inserting 'which
is a United States real property holding corporation or which would be
a United States real property holding corporation if the exceptions
provided in subsections (c)(3) and (h)(2) did not apply to interests in
any real estate investment trust or regulated investment company' after
'regulated investment company'.
-
(b) Effective Date- The amendment made by this section
shall take effect as if included in the provisions of section 411 of
the American Jobs Creation Act of 2004 to which it relates.
SEC. 505. TREATMENT OF DISTRIBUTIONS ATTRIBUTABLE TO FIRPTA GAINS.
-
(a) Qualified Investment Entity-
-
(1) IN GENERAL- Section 897(h)(1) is amended--
-
(A) by striking 'a nonresident alien individual or
a foreign corporation' in the first sentence and inserting 'a
nonresident alien individual, a foreign corporation, or other qualified
investment entity',
-
(B) by striking 'such nonresident alien individual
or foreign corporation' in the first sentence and inserting 'such
nonresident alien individual, foreign corporation, or other qualified
investment entity', and
-
(C) by striking the second sentence and inserting
the following new sentence: 'Notwithstanding the preceding sentence,
any distribution by a qualified investment entity to a nonresident
alien individual or a foreign corporation with respect to any class of
stock which is regularly traded on an established securities market
located in the United States shall not be treated as gain recognized
from the sale or exchange of a United States real property interest if
such individual or corporation did not own more than 5 percent of such
class of stock at any time during the 1-year period ending on the date
of such distribution.'.
-
(2) EXCEPTION TO TERMINATION OF APPLICATION OF SECTION
897 RULES TO REGULATED INVESTMENT COMPANIES- Clause (ii) of section
897(h)(4)(A) is amended by adding at the end the following new
sentence: 'Notwithstanding the preceding sentence, an entity described
in clause (i)(II) shall be treated as a qualified investment entity for
purposes of applying paragraphs (1) and (5) and section 1445 with
respect to any distribution by the entity to a nonresident alien
individual or a foreign corporation which is attributable directly or
indirectly to a distribution to the entity from a real estate
investment trust.'.
-
(b) Withholding on Distributions Treated as Gain From
United States Real Property Interests- Section 1445(e) (relating to
special rules for distributions, etc. by corporations, partnerships,
trusts, or estates) is amended by redesignating paragraph (6) as
paragraph (7) and by inserting after paragraph (5) the following new
paragraph:
-
'(6) DISTRIBUTIONS BY REGULATED INVESTMENT COMPANIES
AND REAL ESTATE INVESTMENT TRUSTS- If any portion of a distribution
from a qualified investment entity (as defined in section 897(h)(4)) to
a nonresident alien individual or a foreign corporation is treated
under section 897(h)(1) as gain realized by such individual or
corporation from the sale or exchange of a United States real property
interest, the qualified investment entity shall deduct and withhold
under subsection (a) a tax equal to 35 percent (or, to the extent
provided in regulations, 15 percent (20 percent in the case of taxable
years beginning after December 31, 2010)) of the amount so treated.'.
-
(c) Treatment of Certain Distributions as Dividends-
-
(1) IN GENERAL- Section 852(b)(3) (relating to capital gains) is
amended by adding at the end the following new subparagraph:
-
'(E) CERTAIN DISTRIBUTIONS- In the case of a
distribution to which section 897 does not apply by reason of the
second sentence of section 897(h)(1), the amount of such distribution
which would be included in computing long-term capital gains for the
shareholder under subparagraph (B) or (D) (without regard to this
subparagraph)--
-
'(i) shall not be included in computing such shareholder's long-term
capital gains, and
-
'(ii) shall be included in such shareholder's gross income as a
dividend from the regulated investment company.'.
-
(2) CONFORMING AMENDMENT- Section 871(k)(2) (relating
to short-term capital gain dividends) is amended by adding at the end
the following new subparagraph:
-
'(E) CERTAIN DISTRIBUTIONS- In the case of a
distribution to which section 897 does not apply by reason of the
second sentence of section 897(h)(1), the amount which would be treated
as a short-term capital gain dividend to the shareholder (without
regard to this subparagraph)--
-
'(i) shall not be treated as a short-term capital gain dividend, and
-
'(ii) shall be included in such shareholder's gross income as a
dividend from the regulated investment company.'.
-
(d) Effective Dates- The amendments made by this section
shall apply to taxable years of qualified investment entities beginning
after December 31, 2005, except that no amount shall be required to be
withheld under section 1441, 1442, or 1445 of the Internal Revenue Code
of 1986 with respect to any distribution before the date of the
enactment of this Act if such amount was not otherwise required to be
withheld under any such section as in effect before such amendments.
SEC. 506. PREVENTION OF AVOIDANCE OF TAX ON INVESTMENTS OF FOREIGN PERSONS IN UNITED STATES REAL PROPERTY THROUGH WASH SALE TRANSACTIONS.
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(a) In General- Section 897(h) (relating to special rules
for certain investment entities) is amended by adding at the end the
following new paragraph:
-
'(5) TREATMENT OF CERTAIN WASH SALE TRANSACTIONS-
-
'(A) IN GENERAL- If an interest in a domestically
controlled qualified investment entity is disposed of in an applicable
wash sale transaction, the taxpayer shall, for purposes of this
section, be treated as having gain from the sale or exchange of a
United States real property interest in an amount equal to the portion
of the distribution described in subparagraph (B) with respect to such
interest which, but for the disposition, would have been treated by the
taxpayer as gain from the sale or exchange of a United States real
property interest under paragraph (1).
-
'(B) APPLICABLE WASH SALES TRANSACTION- For purposes of this
paragraph--
-
'(i) IN GENERAL- The term 'applicable wash
sales transaction' means any transaction (or series of transactions)
under which a nonresident alien individual, foreign corporation, or
qualified investment entity--
-
'(I) disposes of an interest in a
domestically controlled qualified investment entity during the 30-day
period preceding the ex-dividend date of a distribution which is to be
made with respect to the interest and any portion of which, but for the
disposition, would have been treated by the taxpayer as gain from the
sale or exchange of a United States real property interest under
paragraph (1), and
-
'(II) acquires, or enters into a contract
or option to acquire, a substantially identical interest in such entity
during the 61-day period beginning with the 1st day of the 30-day
period described in subclause (I).
-
For purposes of subclause (II), a nonresident
alien individual, foreign corporation, or qualified investment entity
shall be treated as having acquired any interest acquired by a person
related (within the meaning of section 267(b) or 707(b)(1)) to the
individual, corporation, or entity, and any interest which such person
has entered into any contract or option to acquire.
-
'(ii) APPLICATION TO SUBSTITUTE DIVIDEND AND SIMILAR PAYMENTS-
Subparagraph (A) shall apply to--
-
'(I) any substitute dividend payment (within the meaning of section
861), or
-
'(II) any other similar payment specified
in regulations which the Secretary determines necessary to prevent
avoidance of the purposes of this paragraph.
-
The portion of any such payment treated by the
taxpayer as gain from the sale or exchange of a United States real
property interest under subparagraph (A) by reason of this clause shall
be equal to the portion of the distribution such payment is in lieu of
which would have been so treated but for the transaction giving rise to
such payment.
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'(iii) EXCEPTION WHERE DISTRIBUTION ACTUALLY
RECEIVED- A transaction shall not be treated as an applicable wash
sales transaction if the nonresident alien individual, foreign
corporation, or qualified investment entity receives the distribution
described in clause (i)(I) with respect to either the interest which
was disposed of, or acquired, in the transaction.
-
'(iv) EXCEPTION FOR CERTAIN PUBLICLY TRADED
STOCK- A transaction shall not be treated as an applicable wash sales
transaction if it involves the disposition of any class of stock in a
qualified investment entity which is regularly traded on an established
securities market within the United States but only if the nonresident
alien individual, foreign corporation, or qualified investment entity
did not own more than 5 percent of such class of stock at any time
during the 1-year period ending on the date of the distribution
described in clause (i)(I).'.
-
(b) No Withholding Required- Section 1445(b) (relating to
exemptions) is amended by adding at the end the following new
paragraph:
-
'(8) APPLICABLE WASH SALES TRANSACTIONS- No person
shall be required to deduct and withhold any amount under subsection
(a) with respect to a disposition which is treated as a disposition of
a United States real property interest solely by reason of section
897(h)(5).'.
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(c) Effective Date- The amendments made by this section
shall apply to taxable years beginning after December 31, 2005, except
that such amendments shall not apply to any distribution, or substitute
dividend payment, occurring before the date that is 30 days after the
date of the enactment of this Act.
SEC. 507. SECTION 355 NOT TO APPLY TO DISTRIBUTIONS INVOLVING DISQUALIFIED INVESTMENT COMPANIES.
-
(a) In General-
-
Section 355 (relating to distributions of stock and
securities of a controlled corporation) is amended by adding at the end
the following new subsection:
-
'(g) Section Not to Apply to Distributions Involving Disqualified
Investment Corporations-
-
'(1) IN GENERAL- This section (and so much of section
356 as relates to this section) shall not apply to any distribution
which is part of a transaction if--
-
'(A) either the distributing corporation or
controlled corporation is, immediately after the transaction, a
disqualified investment corporation, and
-
'(B) any person holds, immediately after the
transaction, a 50-percent or greater interest in any disqualified
investment corporation, but only if such person did not hold such an
interest in such corporation immediately before the transaction.
-
'(2) DISQUALIFIED INVESTMENT CORPORATION- For purposes of this
subsection--
-
'(A) IN GENERAL- The term 'disqualified investment
corporation' means any distributing or controlled corporation if the
fair market value of the investment assets of the corporation is--
-
'(i) in the case of distributions after the end
of the 1-year period beginning on the date of the enactment of this
subsection, 2/3 or more of the fair market value of all assets of the
corporation, and
-
'(ii) in the case of distributions during such
1-year period, 3/4 or more of the fair market value of all assets of
the corporation.
-
'(B) INVESTMENT ASSETS-
-
'(i) IN GENERAL- Except as otherwise provided in this subparagraph, the
term 'investment assets' means--
-
'(I) cash,
-
'(II) any stock or securities in a corporation,
-
'(III) any interest in a partnership,
-
'(IV) any debt instrument or other evidence of indebtedness,
-
'(V) any option, forward or futures contract, notional principal
contract, or derivative,
-
'(VI) foreign currency, or
-
'(VII) any similar asset.
-
'(ii) EXCEPTION FOR ASSETS USED IN ACTIVE
CONDUCT OF CERTAIN FINANCIAL TRADES OR BUSINESSES- Such term shall not
include any asset which is held for use in the active and regular
conduct of--
-
'(I) a lending or finance business (within the meaning of section
954(h)(4)),
-
'(II) a banking business through a bank (as
defined in section 581), a domestic building and loan association
(within the meaning of section 7701(a)(19)), or any similar institution
specified by the Secretary, or
-
'(III) an insurance business if the conduct
of the business is licensed, authorized, or regulated by an applicable
insurance regulatory body.
-
This clause shall only apply with respect to any
business if substantially all of the income of the bus