I 111th CONGRESS 2d Session H. R. 4486 IN THE HOUSE OF REPRESENTATIVES January 21, 2010 Mr. Hodes (for himself, Ms. Slaughter, Ms. Shea-Porter, Mr. Mollohan, Mr. Rahall, Mr. Tierney, Mr. Welch, Mr. Van Hollen, Mr. Ellison, Ms. Pingree of Maine, Mr. Michaud, Ms. Sutton, Mr. Oberstar, Mr. Walz, Ms. Schakowsky, Ms. Kaptur, Mr. Massa, Mr. Peterson, Ms. McCollum, Mr. DeFazio, Mr. Kagen, and Mr. Costello) 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 treat distributions of debt securities in a tax free spin-off transaction in the same manner as distributions of cash or other property.

1.

Treatment of securities of a controlled corporation exchanged for assets in certain reorganizations

(a)

In general

Section 361 of the Internal Revenue Code of 1986 (relating to nonrecognition of gain or loss to corporations; treatment of distributions) is amended by adding at the end the following new subsection: (d)

Receipt of securities, etc., in exchange for assets in certain reorganizations

If— (1)property is transferred to a corporation (hereinafter in this subsection referred to as the controlled corporation) pursuant to a plan of reorganization described in section 368(a)(1)(D), and (2)pursuant to such plan of reorganization, stock or securities in the controlled corporation are distributed in a transaction which qualifies under section 355, then any securities and nonqualified preferred stock (as defined in section 351(g)(2)) of the controlled corporation shall be treated as other property for purposes of subsections (a) and (b).. (b)

Effective date

The amendment made by subsection (a) shall apply to distributions after December 31, 2009.