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.

Amends the Internal Revenue Code to treat securities and nonqualified preferred stock paid to a parent corporation by a subsidiary in a corporate reorganization as cash payments, thus subjecting the gain attributable to such payments to tax.

[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4486 Introduced in House (IH)]

111th CONGRESS
  2d Session
                                H. R. 4486

 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.


_______________________________________________________________________


                    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.

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

SECTION 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.
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