To amend section 341 of the Internal Revenue Code of 1954, relating to collapsible corporations, and to amend section 543 (a) (2) of such Code, relating to the inclusion of rents in personal holding company income.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That (a) section 341 Taxes.

of the Internal Revenue Code of 1954 (relating to collapsible corpora- Collapsible oortions) is amended by striking out "except as provided in subsection porations. (d)," in subsection (a) and inserting in lieu thereof "except as other- 68A Stat. 1073 wise provided in this section," and by adding after subsection (e) the following new subsection:

"(f) CERTAIN SALES OF STOCK OF CONSENTING CORPORATIONS.—

"(1) IN GENERAL.-Subsection (a) (1) shall not apply to a sale of stock of a corporation (other than a sale to the issuing corporation) if such corporation (hereinafter in this subsection referred to as 'consenting corporation') consents (at such time and in such manner as the Secretary or his delegate may by regulations prescribe) to have the provisions of paragraph (2) apply. Such consent shall apply with respect to each sale of stock of such corporation made within the 6-month period beginning with the date on which such consent is filed.

"(2) RECOGNITION OF GAIN.-Except as provided in paragraph (3), if a subsection (f) asset (as defined in paragraph (4)) is disposed of at any time by a consenting corporation (or, if paragraph (3) applies, by a transferee corporation), then the amount by which

"(A) in the case of a sale, exchange, or involuntary conversion, the amount realized, or

"(B) in the case of any other disposition, the fair market value of such asset,

exceeds the adjusted basis of such asset shall be treated as gain from the sale or exchange of such asset. Such gain shall be recognized notwithstanding any other provision of this subtitle, but only to the extent such gain is not recognized under any other provision of this subtitle.

'(3) EXCEPTION FOR CERTAIN TAX-FREE TRANSACTIONS.-If the basis of a subsection (f) asset in the hands of a transferee is determined by reference to its basis in the hands of the transferor by reason of the application of section 332, 351, 361, 371(a),

72 Stat. 1615.

or 374 (a), then the amount of gain taken into account by the 68A Stat. 102; transferor under paragraph (2) shall not exceed the amount of 70 Stat. 402. gain recognized to the transferor on the transfer of such asset 26 USC 332,351, (determined without regard to this subsection). This paragraph 361, 371, 374.

only if the transferee

shall apply is not an organization which is exempt from tax

imposed by this chapter, and

(B) agrees (at such time and in such manner as the Secretary or his delegate may by regulations prescribe) to have the provisions of paragraph (2) apply to any disposition by it of such subsection (f) asset.

"(4) SUBSECTION (f) ASSET DEFINED. For purposes of this subsection

"(A) IN GENERAL.-The term 'subsection (f) asset' means any property which, as of the date of any sale of stock referred to in paragraph (1), is not a capital asset and is property owned by, or subject to an option to acquire held by, the consenting corporation. For purposes of this subparagraph, land or any interest in real property (other than

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68A Stat. 84.

26 USC 301, 312. Ante, p. 596.

76 Stat. 1035. 26 USC 453.

Effective date.

78 STAT. 597.

a security interest), and unrealized receivables or fees (as defined in subsection (b) (4)), shall be treated as property which is not a capital asset.

"(B) PROPERTY UNDER CONSTRUCTION.-If manufacture, construction, or production with respect to any property described in subparagraph (A) has commenced before any date of sale described therein, the term 'subsection (f) asset' includes the property resulting from such manufacture, construction, or production.

"(C) SPECIAL RULE FOR LAND.—In the case of land or any interest in real property (other than a security interest) described in subparagraph (A), the term 'subsection (f) asset' includes any improvements resulting from construction with respect to such property if such construction is commenced (by the consenting corporation or by a transferee corporation which has agreed to the application of paragraph (2)) within 2 years after the date of any sale described in subparagraph (A).

"(5) 5-YEAR LIMITATION AS TO SHAREHOLDER.-Paragraph (1) shall not apply to the sale of stock of a corporation by a shareholder if, during the 5-year period ending on the date of such sale, such shareholder (or any related person within the meaning of subsection (e) (8) (A)) sold any stock of another consenting corporation within any 6-month period beginning on a date on which a consent was filed under paragraph (1) by such other corporation.

"(6) SPECIAL RULE FOR STOCK OWNERSHIP IN OTHER CORPORATIONS.-If a corporation (hereinafter in this paragraph referred to as 'owning corporation') owns 5 percent or more in value of the outstanding stock of another corporation on the date of any sale of stock of the owning corporation during a 6-month period with respect to which a consent under paragraph (1) was filed by the owning corporation, such consent shall not be valid with respect to such sale unless such other corporation has (within the 6-month period ending on the date of such sale) filed a valid consent under paragraph (1) with respect to sales of its stock. For purposes of applying paragraph (4) to such other corporation, a sale of stock of the owning corporation to which paragraph (1) applies shall be treated as a sale of stock of such other corporation. In the case of a chain of corporations connected by the 5-percent ownership requirements of this paragraph, rules similar to the rules of the two preceding sentences shall be applied.

(7) ADJUSTMENTS TO BASIS.-The Secretary or his delegate shall prescribe such regulations as he may deem necessary to provide for adjustments to the basis of property to reflect gain recognized under paragraph (2)."

(b) (1) Subsections (b) and (d) of section 301 (relating to amount distributed), and paragraph (3) of section 312(c) (relating to adjustments of earnings and profits), of the Internal Revenue Code of 1954 are each amended by striking out "section 311" and inserting in lieu thereof "section 311, under section 341 (f),”.

(2) Subparagraphs (A) and (B) of section 453 (d) (4) of such Code (relating to distribution of installment obligations in certain corporate liquidations) are each amended by inserting "section 341(f) or" before "section 1245 (a)".

SEC. 2. The amendments made by the first section of this Act shall apply with respect to transactions after the date of the enactment of this Act in taxable years ending after such date.

78 STAT. 598.

SEC. 3. (a) Section 543 (a) (2) of the Internal Revenue Code of 1954 Personal holding (relating to rents) is amended by adding at the end thereof the fol- company income. lowing new sentence: "For purposes of applying this paragraph, Rents. royalties received for the use of, or for the privilege of using, a patent, Ante, p. 81. invention, model, or design (whether or not patented), secret formula 26 USC 543. or process, or any other similar property right shall be treated as rent, if such property right is also used by the corporation receiving such royalties in the manufacture or production of tangible personal property held for lease to customers, and if the amount (computed without regard to this sentence) constituting rent from such leases to customers meets the requirements of subparagraph (A)."

(b) The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 1963.

Approved August 22, 1964.

LEGISLATIVE HISTORY:

HOUSE REPORT No. 1308 (Comm. on Ways and Means).
SENATE REPORT No. 1241 (Comm. on Finance).
CONGRESSIONAL RECORD, Vol. 110 (1964):

June 29: Considered and passed House.

July 29: Considered and passed Senate, amended.
Aug. 11: House concurred in Senate amendments.

Public Law 89-289
89th Congress, H. R. 7169
October 22, 1965

An Act

79 STAT. 1051.

To amend the Securities Act of 1933 with respect to certain registration fees.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 6(b)

of the Securities Act of 1933 (15 U.S.C. 77f(b)) is amended by 48 Stat. 78. striking out "one one-hundredth" and inserting in lieu thereof "onefiftieth", and by striking out "$25." and inserting in lieu thereof

"$100."

SEC. 2. The amendments made by the first section of this Act shall Effective date. take effect January 1, 1966.

Approved October 22, 1965.

LEGISLATIVE HISTORY:

HOUSE REPORT No. 1015 (Comm. on Interstate & Foreign Commerce).
SENATE REPORT No. 812 accompanying S. 1707 (Comm. on Banking &
Currency).

CONGRESSIONAL RECORD, Vol. 111 (1965):

Oct. 5: Passed House.

Oct. 6: Passed Senate, in lieu of S. 1707.

21-137 O-68-23

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Public Law 89-485

89th Congress, H. R. 7371

July 1, 1966

An Act

To amend the Bank Holding Company Act of 1956.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That subsection (a) of section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841 (a)) is amended to read as follows:

80 STAT. 236

Ban!: Holding Company Act of 1956, amendments.

70 Stat. 133. "Bank holding company."

"(a) 'Bank holding company' means any company (1) that directly or indirectly owns, controls, or holds with power to vote 25 per centum or more of the voting shares of each of two or more banks or of a company that is or becomes a bank holding company by virtue of this Act, or (2) that controls in any manner the election of a majority of the directors of each of two or more banks; and, for the purposes of this Act, any successor to any such company shall be deemed to be a bank holding company from the date as of which such predecessor company became a bank holding company. Notwithstanding the foregoing, (A) no bank and no company owning or controlling voting shares of a bank shall be a bank holding company by virtue of such bank's ownership or control of shares in a fiduciary capacity, except as provided in paragraphs (2) and (3) of subsection (g) of this section, (B) no company shall be a bank holding company by virtue Post, of its ownership or control of shares acquired by it in connection with its underwriting of securities if such shares are held only for such period of time as will permit the sale thereof on a reasonable basis, and (C) no company formed for the sole purpose of participating in a proxy solicitation shall be a bank holding company by virtue of its control of voting rights of shares acquired in the course of such solicitation."

SEC. 2. Subsection (b) of section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841 (b)) is amended to read as follows:

P. 237.

"(b) Company' means any corporation, business trust, association, "Company." or similar organization, or any other trust unless by its terms it must terminate within twenty-five years or not later than twenty-one years and ten months after the death of individuals living on the effective date of the trust, but shall not include (1) any corporation the majority of the shares of which are owned by the United States or by any State, or (2) any partnership."

SEC. 3. Subsection (c) of section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841 (c)) is amended to read as follows: "(c) 'Bank' means any institution that accepts deposits that the "Bank." depositor has a legal right to withdraw on demand, but shall not include any organization operating under section 25 or section 25 (a) of the Federal Reserve Act, or any organization that does not do business within the United States. District bank' means any bank organzed or operating under the Code of Law for the District of Columbia.

SEC. 4. Subsection (d) of section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841 (d)) is amended to read as follows:

39 Stat. 755; 41 Stat. 378; Post, p. 241.

12 USC 601-631.

"District bank."

"Subsidiary."

"(d) "Subsidiary', with respect to a specified bank holding company, means (1) any company 25 per centum or more of whose voting shares (excluding shares owned by the United States or by any company wholly owned by the United States) is directly or indirectly owned or controlled by such bank holding company, or is held by it with power to vote; or (2) any company the election of a majority of whose directors is controlled in any manner by such bank holding company." SEC. 5. Subsection (g) of section 2 of the Bank Holding Company Repeal. Act of 1956 (12 U.S.C. 1841 (g)) is repealed.

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