Sec. 3101. Revision of treatment of contributions to capital

455 words·~2 min read·/bill/113/hr/1/ih/section-3101

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Part II of subchapter B of chapter 1 is amended by inserting after section 75 the following new section: Gross income includes— any contribution to the capital of any entity, and any premium received by such entity with respect to any option on any interest in such entity. In the case of any contribution of money or other property to a corporation in exchange for stock of such corporation— such contribution shall not be treated for purposes of subsection

(a)as a contribution to the capital of such corporation (and shall not be includible in the gross income of such corporation), and no gain or loss shall be recognized to such corporation upon the issuance of such stock. For purposes of this subsection, a contribution of money or other property to a corporation shall be treated as being in exchange for stock of such corporation only to the extent that the fair market value of such money and other property does not exceed the fair market value of such stock. In the case of any entity other than a corporation, rules similar to the rules of paragraphs

(1)and

(2)shall apply in the case of any contribution of money or other property to such entity in exchange for any interest in such entity. Any reference in this section to stock shall be treated as including a reference to treasury stock. . Subsection

(c)of section 362 is amended to read as follows: If property other than money is transferred to a corporation as a contribution to the capital of such corporation (within the meaning of section 76) then the basis of such property shall be the greater of— the basis determined in the hands of the transferor, increased by the amount of gain recognized to the transferor on such transfer, or the amount included in gross income by such corporation under section 76 with respect to such contribution. . Paragraph

(2)of section 362(a) is amended by striking contribution to capital and inserting contribution in exchange for stock of such corporation (determined under rules similar to the rules of paragraphs

(2)and

(3)of section 76(b)) . Section 108(e) is amended by striking paragraph (6). Part III of subchapter B of chapter 1 is amended by striking section 118 (and by striking the item relating to such section in the table of sections for such part). The table of sections for part II of subchapter B of chapter 1 is amended by inserting after the item relating to section 75 the following new item: Sec. 76. Contributions to capital. . The amendments made by this section shall apply to contributions made, and transactions entered into, after the date of the enactment of this Act.