[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1279 Introduced in Senate (IS)]







107th CONGRESS
  1st Session
                                S. 1279

    To amend the Internal Revenue Code of 1986 to modify the active 
                 business definition under section 355.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 31, 2001

  Mr. Breaux introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
    To amend the Internal Revenue Code of 1986 to modify the active 
                 business definition under section 355.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. MODIFICATION OF ACTIVE BUSINESS DEFINITION UNDER SECTION 
              355.

    (a) In General.--Section 355(b) of the Internal Revenue Code of 
1986 (defining active conduct of a trade or business) is amended by 
adding at the end the following new paragraph:
            ``(3) Special rules relating to active business 
        requirement.--
                    ``(A) In general.--For purposes of determining 
                whether a corporation meets the requirement of 
                paragraph (2)(A), all members of such corporation's 
                separate affiliated group shall be treated as one 
                corporation. For purposes of the preceding sentence, a 
                corporation's separate affiliated group is the 
                affiliated group which would be determined under 
                section 1504(a) if such corporation were the common 
                parent and section 1504(b) did not apply.
                    ``(B) Control.--For purposes of paragraph (2)(D), 
                all distributee corporations which are members of the 
                same affiliated group (as defined in section 1504(a) 
                without regard to section 1504(b)) shall be treated as 
                one distributee corporation.''.
    (b) Conforming Amendments.--
            (1) Subparagraph (A) of section 355(b)(2) of the Internal 
        Revenue Code of 1986 is amended to read as follows:
                    ``(A) it is engaged in the active conduct of a 
                trade or business,''.
            (2) Section 355(b)(2) of such Code is amended by striking 
        the last sentence.
    (c) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to distributions after the date of the enactment of this 
        Act.
            (2) Transition rule.--The amendments made by this section 
        shall not apply to any distribution pursuant to a transaction 
        which is--
                    (A) made pursuant to an 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 on or before such date in a public 
                announcement or in a filing with the Securities and 
                Exchange Commission.
            (3) Election to have amendments apply.--Paragraph (2) shall 
        not apply if the distributing corporation elects not to have 
        such paragraph apply to distributions of such corporation. Any 
        such election, once made, shall be irrevocable.
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