Sec. 318. Reform of family attribution rule
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Section 414 of the Internal Revenue Code of 1986 is amended— in subsection (b)— by striking For purposes of and inserting the following: For purposes of , and by adding at the end the following new paragraphs: For purposes of applying the attribution rules under section 1563 with respect to paragraph (1), the following rules apply: Community property laws shall be disregarded for purposes of determining ownership. Except as provided by the Secretary, stock of an individual not attributed under section 1563(e)(5) to such individual’s spouse shall not be attributed to such spouse by reason of 1563(e)(6)(A).
Except as provided by the Secretary, in the case of stock in different corporations that is attributed to a child under section 1563(e)(6)(A) from each parent, and is not attributed to such parents as spouses under section 1563(e)(5), such attribution to the child shall not by itself result in such corporations being members of the same controlled group. If application of paragraph
(2)causes two or more entities to be a controlled group, or an affiliated service group, or to no longer be in a controlled group or an affiliated service group, such change shall be treated as a transaction to which section 410(b)(6)(C) applies. , and in subsection (m)(6)(B), by striking apply and inserting apply, except that community property laws shall be disregarded for purposes of determining ownership . The amendments made by this section shall apply to plan years beginning on or after the date of the enactment of this section.