II 111th CONGRESS 2d Session S. 3380 IN THE SENATE OF THE UNITED STATES May 17, 2010 Mr. Rockefeller (for himself and Mr. Kerry) 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 provide for the treatment of securities of a controlled corporation exchanged for assets in certain reorganizations.

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)

Special rules for transactions involving section 355 distributions

In the case of a reorganization described in section 368(a)(1)(D) with respect to which stock or securities of the corporation to which the assets are transferred are distributed in a transaction which qualifies under section 355— (1)this section shall be applied by substituting stock other than nonqualified preferred stock (as defined in section 351(g)(2)) for stock or securities in subsections (a) and (b)(1), and (2)the first sentence of subsection (b)(3) shall apply only to the extent that the sum of the money and the fair market value of the other property transferred to such creditors does not exceed the adjusted bases of such assets transferred (reduced by the amount of the liabilities assumed (within the meaning of section 357(c))). . (b)

Conforming amendment

Paragraph (3) of section 361(b) of the Internal Revenue Code of 1986 is amended by striking the last sentence. (c)

Effective date

(1)

In general

Except as provided in paragraph (2), the amendments made by this section shall apply to exchanges after the date of the enactment of this Act. (2)

Transition rule

The amendments made by this section shall not apply to any exchange pursuant to a transaction which is— (A)made pursuant to an agreement which was binding on March 15, 2010, 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.