109 HR 4393 IH: To amend the Internal Revenue Code of 1986 to clarify the application of section 584(h) of such Code. U.S. House of Representatives 2005-11-18 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

I 109th CONGRESS 1st Session H. R. 4393 IN THE HOUSE OF REPRESENTATIVES November 18, 2005 Mr. Brady of Texas introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to clarify the application of section 584(h) of such Code.

1.

Clarification of nonrecognition rules to tiered common trusts funds

(a)

In general

Subsection (h) of section 584 of the Internal Revenue Code of 1986 (relating to nonrecognition treatment for certain transfers to regulated investment companies) is amended by adding at the end the following new paragraph: (5)

Tiered common trust funds

(A)

In general

If— (i)substantially all of the assets of a common trust fund is stock in one or more regulated investment companies, (ii)at least some of such stock was received in an exchange described in paragraph (1)(B) on which no gain or loss was recognized, and (iii)the stock described in clause (i) is distributed by such common trust fund to participants in such common trust fund in exchange solely for their interests in such common trust fund,no gain or loss shall be recognized by such common trust fund by reason of such distribution, and no gain or loss shall be recognized by any participant in such common trust fund by reason of such exchange. (B)

Basis rules

The basis of stock received in an exchange referred to in subparagraph (A)(iii) shall be determined under paragraph (2)(B).. (b)

Effective date

The amendment made by this section shall apply to distributions after the date of the enactment of this Act in taxable years ending after such date.