1 2 3 4 5 6 7 8 9 10 11 12 13 shares and securities bears to the value of the gross estate as determined under chapter 11 (including section 2092, relating to alternative valuation). "(3) NET APPRECIATION. The net appreciation in value of all shares and securities to which subsection (a) applies is the amount by which the fair market value of all such shares and securities exceeds the basis of such property in the hands of the decedent. "(4) FAIR MARKET VALUE. For purposes of this section, the term fair market value' means fair market value determined under chapter 11 (including section 2032, relating to alternate valuation). "(d) LIMITATIONS. This section shall not apply to 14 any foreign personal holding company referred to in section 15 342(a)(2)." (2) AMENDMENT OF SECTION 1010(a). Section 1016(a) (relating to adjustments to basis) is amended by striking out the period at the end thereof and by inserting in lieu thereof a semicolon and by adding at the end thereof the following new paragraph: "(21) to the extent provided in section 1022, relating to increase in basis for certain foreign personal holding company holdings, or in section 216(j) (4) of the Revenue Act of 1963." (8) CLERICAL AMENDM (A) The table of sections for part II of sub chapter 0 of chapter 1 is amended by striking out "See, 1022. Cross references." and inserting in lieu thereof the following: "See. 1092. Increase in basis with respect to certain foreign personal holding company holdings. "See: 1023. Cross references." (4) ONE MONTH LIQUIDATIONS. If (A) a corporation was a foreign personal holding company for its most recent taxable year ending before the date of the enactment of this Aet, (B) all of the stock of such corporation is owned on August 15, 1963, and at the time of liquidation, by individuals and estates, and (C) the transfer of all the property under the liquidation occurs within one of the first 4 calendar months ending after such date of enactment, then such corporation shall be treated as a domestie corporation for purposes of section 333 of the Internal Revenue Code of 1954 (relating to 1 month liquidations), and shall be treated as a foreign corporation for purposes of section 367 of such Code (relating to foreign corporations). In applying such section 367 for purposes of this paragraph, references in the first sentence of such section 367 to other sections of such Code shall be treated as including a reference to such section 333. (5) BASIS OF CERTAIN PROPERTY ACQUIRED FROM A DECEDENT. (A) In the ease of property described in subparagraph (B) acquired from a decedent or passing from a decedent (within the meaning of section 1014(b) of the Internal Revenue Code of 1954), the basis shall fin lieu of being the basis provided section 1014 of such Code) be the basis immedi ately before the death of the decedent, increased by the amount of any Federal estate tax attributable to the net appreciation in value of such property (determined in accordance with section 1022 of such Code as if such property were stock and securities referred to in such section). (B) Subparagraph (A) shall apply to (i) property which the decedent received as a qualified electing shareholder, and (ii) property the basis of which (without the application of this paragraph) is a substituted basis (as defined in section 1016(b) of the Internal Revenue Code of 1954) deter mined by reference to the basis of such property or other property received by any individual or estate as a qualified electing shareholder. For purposes of this subparagraph, property shall be treated as property received as a qualified eleeting shareholder if, with respect to such property, the recipient was a qualified electing shareholder (within the meaning of section 333(e) of such Code) in a corporate liquidation to which section 333 of such Code applied by reason of paragraph (4) of this subsection. (C) In the ease of property acquired from the decedent by gift, the increase in basis under this paragraph shall not exceed the amount by which the increase under this paragraph is greater than the increase allowable under section 1015 (d) of the Internal Revenue Code of 1954. (6) LIMITATIONS. The provisions of paragraphs (4) and (5) of this subsection shall not apply to any foreign corporation referred to in section 342(a)(2) of the Internal Revenue Code of 1954. (7) MEANING OF TERMS. Terms used in para graphs (4) through (6) of this subsection shall have the same meaning as when used in chapter 1 of the Internal Revenue Code of 1954. 1 2 3 4 5 6 7 8 9 10 11 121 13 14 15 16 17 18 19 (k)(j) TECHNICAL AMENDMENTS.— (1) Section 542 (b) (relating to corporations filing consolidated returns) is amended by striking out "gross income" each place it appears and inserting in lieu thereof "adjusted ordinary gross income". (2) Section 543 (relating to personal holding company income) is amended by striking out subsection (d) (relating to special adjustment on disposition of antitrust stock received as a dividend). (3) Section 544 (relating to rules for determining stock ownership) is amended (A) by striking out "section 543 (a) (5)” each place it appears and inserting in lieu thereof "section 543 (a) (7)", and (B) by striking out "section 543 (a) (9)” each place it appears and inserting in lieu thereof "section 543 (a) (4)". (4) REAL ESTATE INVESTMENT TRUSTS.-Paragraph (6) of section 856 (a) (relating to definition of real estate investment trust) is amended by striking out "gross income" and inserting in lieu thereof "adjusted 22 ordinary gross income (as defined in section 543 23 24 25 (b) (2))". (5) UNINCORPORATED BUSINESS ENTERPRISES ELECTING TO BE TAXED AS DOMESTIC CORPORATIONS.— |