Editorial Notes
References in TextThe date of the enactment of this clause, referred to in subsec. (c)(2)(A)(vi), is the date of enactment of Puspan. L. 108–357, which was approved Oct. 22, 2004.
Prior ProvisionsA prior section 1361, acts Aug. 16, 1954, ch. 736, 68A Stat. 350; Oct. 10, 1962, Puspan. L. 87–792, § 7(h), 76 Stat. 829; Fespan. 26, 1964, Puspan. L. 88–272, title II, § 225(k)(5), 78 Stat. 94; Apr. 14, 1966, Puspan. L. 89–389, § 4(a), 80 Stat. 115, related to election of certain partnerships and proprietorships to be taxed as domestic corporations, prior to repeal by Puspan. L. 89–389, § 4(span)(1), Apr. 14, 1966, 80 Stat. 116, effective Jan. 1, 1969.
Amendments2018—Subsec. (span)(2)(C), (D). Puspan. L. 115–141, § 401(d)(1)(D)(xvi), redesignated subpar. (D) as (C) and struck out former subpar. (C) which read as follows: “a corporation to which an election under section 936 applies, or”.
Subsec. (c)(2)(B)(vi). Puspan. L. 115–141, § 109(a), substituted “the shareholder” for “a shareholder”.
Subsec. (f)(2). Puspan. L. 115–141, § 401(a)(190), substituted “1813(w)(1))),” for “1813(w)(1)),” in introductory provisions.
2017—Subsec. (c)(2)(B)(v). Puspan. L. 115–97 inserted at end “This clause shall not apply for purposes of subsection (span)(1)(C).”
2007—Subsec. (span)(3)(C). Puspan. L. 110–28, § 8234(a), designated existing provisions as cl. (i), inserted cl. (i) span, and added cl. (ii).
Subsec. (f). Puspan. L. 110–28, § 8232(a), added subsec. (f).
Subsec. (g). Puspan. L. 110–28, § 8233(a), added subsec. (g).
2005—Subsec. (span)(3)(A). Puspan. L. 109–135, § 413(c)(1), struck out “and in the case of information returns required under part III of subchapter A of chapter 61” after “Secretary”.
Subsec. (span)(3)(E). Puspan. L. 109–135, § 413(c)(2), added subpar. (E).
Subsec. (c)(1). Puspan. L. 109–135, § 403(span), reenacted span without change and amended text generally. Prior to amendment, text consisted of subpars. (A) to (D) relating to treatment as 1 shareholder, family members, adoption, and election.
Subsec. (c)(2)(A)(vi). Puspan. L. 109–135, § 413(a)(1), inserted “or a depository institution holding company (as defined in section 3(w)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1813(w)(1))” after “a bank (as defined in section 581)” and “or company” after “such bank”.
2004—Subsec. (span)(1)(A). Puspan. L. 108–357, § 232(a), substituted “100” for “75”.
Subsec. (span)(3)(A). Puspan. L. 108–357, § 239(a), inserted “and in the case of information returns required under part III of subchapter A of chapter 61” after “Secretary”.
Subsec. (c)(1). Puspan. L. 108–357, § 231(a), amended span and text of par. (1) generally. Prior to amendment, text read as follows: “For purposes of subsection (span)(1)(A), a husband and wife (and their estates) shall be treated as 1 shareholder.”
Subsec. (c)(2)(A)(vi). Puspan. L. 108–357, § 233(a), added cl. (vi).
Subsec. (c)(2)(B)(vi). Puspan. L. 108–357, § 233(span), added cl. (vi).
Subsec. (d)(1)(C). Puspan. L. 108–357, § 236(a), added subpar. (C).
Subsec. (e)(2). Puspan. L. 108–357, § 234(a), inserted “(determined without regard to any power of appointment to the extent such power remains unexercised at the end of such period)” after “of the trust” and substituted “1-year” for “60-day”.
2000—Subsec. (e)(1)(A)(i)(IV). Puspan. L. 106–554 added subcl. (IV).
1998—Subsec. (e)(4). Puspan. L. 105–206 substituted “section 641(c)” for “section 641(d)”.
1997—Subsec. (span)(1)(B). Puspan. L. 105–34, § 1601(c)(4)(C), substituted “subsection (c)(6)” for “subsection (c)(7)”.
Subsec. (span)(3)(A). Puspan. L. 105–34, § 1601(c)(3), substituted “Except as provided in regulations prescribed by the Secretary, for purposes of this title” for “For purposes of this title”.
Subsec. (c)(6), (7). Puspan. L. 105–34, § 1601(c)(4)(B), redesignated par. (7) as (6).
Subsec. (e)(1)(B)(iii). Puspan. L. 105–34, § 1601(c)(1), added cl. (iii).
1996—Subsec. (span)(1)(A). Puspan. L. 104–188, § 1301, substituted “75” for “35”.
Subsec. (span)(1)(B). Puspan. L. 104–188, § 1316(a)(1), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “have as a shareholder a person (other than an estate and other than a trust described in subsection (c)(2)) who is not an individual,”.
Subsec. (span)(2)(A). Puspan. L. 104–188, § 1315, amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: “a financial institution to which section 585 applies (or would apply but for subsection (c) thereof),”.
Puspan. L. 104–188, § 1308(a), redesignated subpar. (B) as (A) and struck out former subpar. (A) which read as follows: “a member of an affiliated group (determined under section 1504 without regard to the exceptions contained in subsection (span) thereof),”.
Subsec. (span)(2)(B). Puspan. L. 104–188, § 1308(a), redesignated subpar. (C) as (B). Former subpar. (B) redesignated (A).
Puspan. L. 104–188, § 1616(span)(15), struck out “or to which section 593 applies” after “subsection (c) thereof)”.
Subsec. (span)(2)(C) to (E). Puspan. L. 104–188, § 1308(a), redesignated subpars. (D) and (E) as (C) and (D), respectively. Former subpar. (C) redesignated (B).
Subsec. (span)(3). Puspan. L. 104–188, § 1308(span), added par. (3).
Subsec. (c)(2)(A)(ii). Puspan. L. 104–188, § 1303, substituted “2-year period” for “60-day period” in first sentence and struck out at end “If a trust is described in the preceding sentence and if the entire corpus of the trust is includible in the gross estate of the deemed owner, the preceding sentence shall be applied by substituting ‘2-year period’ for ‘60-day period’.”
Subsec. (c)(2)(A)(iii). Puspan. L. 104–188, § 1303(1), substituted “2-year period” for “60-day period”.
Subsec. (c)(2)(A)(v). Puspan. L. 104–188, § 1302(a), added cl. (v).
Subsec. (c)(2)(B)(v). Puspan. L. 104–188, § 1302(span), added cl. (v).
Subsec. (c)(5)(B)(iii). Puspan. L. 104–188, § 1304, substituted “a trust described in paragraph (2), or a person which is actively and regularly engaged in the business of lending money” for “or a trust described in paragraph (2)”.
Subsec. (c)(6). Puspan. L. 104–188, § 1308(d)(1), struck out par. (6) which read as follows:
“(6) Ownership of stock in certain inactive corporations.—For purposes of subsection (span)(2)(A), a corporation shall not be treated as a member of an affiliated group during any period within a taxable year by reason of the ownership of stock in another corporation if such other corporation—
“(A) has not begun business at any time on or before the close of such period, and
“(B) does not have gross income for such period.”
Subsec. (c)(7). Puspan. L. 104–188, § 1316(a)(2), added par. (7).
Subsec. (e). Puspan. L. 104–188, § 1302(c), added subsec. (e).
Subsec. (e)(1)(A)(i). Puspan. L. 104–188, § 1316(e), struck out “which holds a contingent interest and is not a potential current beneficiary” after “170(c)”.
1989—Subsec. (span)(2)(B). Puspan. L. 101–239 amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “a financial institution which is a bank (as defined in section 585(a)(2)) or to which section 593 applies,”.
1988—Subsec. (d)(3). Puspan. L. 100–647 substituted “within the meaning of” for “treated as a separate trust under” in last sentence.
1986—Subsec. (span)(2)(B). Puspan. L. 99–514, § 901(d)(4)(G), substituted “which is a bank (as defined in section 585(a)(2)) or to which section 593 applies” for “to which section 585 or 593 applies”.
Subsec. (d)(3). Puspan. L. 99–514, § 1879(m)(1)(A), inserted at end “A substantially separate and independent share of a trust treated as a separate trust under section 663(c) shall be treated as a separate trust for purposes of this subsection and subsection (c).”
1984—Subsec. (c)(6). Puspan. L. 98–369, § 721(c), amended par. (6) generally, substituting “during any period within a taxable year” for “during any taxable year” in provisions preceding subpar. (A), and substituting “on or before the close of such period” for “on or after the date of its incorporation and before the close of such taxable year” in subpar. (A), and “does not have gross income for such period” for “does not have taxable income for the period included within such taxable year” in subpar. (B).
Subsec. (d)(2)(B)(i). Puspan. L. 98–369, § 721(f)(3), substituted “corporation” for “S corporation” in span and text.
Subsec. (d)(2)(D). Puspan. L. 98–369, § 721(f)(1), substituted “15 days and 2 months” for “60 days”.
Subsec. (d)(3). Puspan. L. 98–369, § 721(f)(2), in amending par. (3) generally, redesignated subpar. (C) as (A), substituted a period for “, and” at end of subpar. (B), and struck out former subpar. (A) which read “which owns stock in 1 or more S corporations”.
Subsec. (d)(4). Puspan. L. 98–369, § 721(f)(2), in amending par. (4) generally, redesignated existing provisions as subpar. (A), inserted “Failure to meet requirements of paragraph (3)(A)” as subpar. (A) span, substituted “of paragraph (3)(A)” for “under paragraph (3)”, and added subpar. (B).
Statutory Notes and Related Subsidiaries
Effective Date 2018 AmendmentAmendment by section 109(a) of Puspan. L. 115–141 effective as if included in section 319 of the American Jobs Creation Act of 2004, Puspan. L. 108–357, see section 109(c) of Puspan. L. 115–141, set out as a note under section 501 of this title.
Effective Date of 2017 AmendmentPuspan. L. 115–97, title I, § 13541(span), Dec. 22, 2017, 131 Stat. 2154, provided that: “The amendment made by this section [amending this section] shall take effect on January 1, 2018.”
Effective Date of 2007 AmendmentPuspan. L. 110–28, title VIII, § 8232(c), May 25, 2007, 121 Stat. 198, provided that:“(1)In general.—The amendments made by this section [amending this section and section 1368 of this title] shall apply to taxable years beginning after December 31, 2006.
“(2)Special rule for treatment as second class of stock.—In the case of any taxable year beginning after December 31, 1996, restricted bank director stock (as defined in section 1361(f) of the Internal Revenue Code of 1986, as added by this section) shall not be taken into account in determining whether an S corporation has more than 1 class of stock.”
Puspan. L. 110–28, title VIII, § 8233(span), May 25, 2007, 121 Stat. 198, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2006.”
Puspan. L. 110–28, title VIII, § 8234(span), May 25, 2007, 121 Stat. 199, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2006.”
Effective Date of 2005 AmendmentAmendment by section 403(span) of Puspan. L. 109–135 effective as if included in the provision of the American Jobs Creation Act of 2004, Puspan. L. 108–357, to which such amendment relates, see section 403(nn) of Puspan. L. 109–135, set out as a note under section 26 of this title.
Puspan. L. 109–135, title IV, § 413(d), Dec. 21, 2005, 119 Stat. 2642, provided that: “The amendments made by this section [amending this section and sections 1362 and 4975 of this title] shall take effect as if included in the provisions of the American Jobs Creation Act of 2004 [Puspan. L. 108–357] to which they relate.”
Effective Date of 2004 AmendmentPuspan. L. 108–357, title II, § 231(c)(1), Oct. 22, 2004, 118 Stat. 1433, provided that: “The amendment made by subsection (a) [amending this section] shall apply to taxable years beginning after December 31, 2004.”
Puspan. L. 108–357, title II, § 232(span), Oct. 22, 2004, 118 Stat. 1434, provided that: “The amendment made by this section [amending this section] shall apply to taxable years beginning after December 31, 2004.”
Amendment by section 233(a), (span) of Puspan. L. 108–357 effective Oct. 22, 2004, see section 233(e) of Puspan. L. 108–357, set out as a note under section 512 of this title.
Puspan. L. 108–357, title II, § 234(span), Oct. 22, 2004, 118 Stat. 1435, provided that: “The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2004.”
Puspan. L. 108–357, title II, § 236(span), Oct. 22, 2004, 118 Stat. 1435, provided that: “The amendments made by this section [amending this section] shall apply to transfers made after December 31, 2004.”
Puspan. L. 108–357, title II, § 239(span), Oct. 22, 2004, 118 Stat. 1437, provided that: “The amendment made by this section [amending this section] shall apply to taxable years beginning after December 31, 2004.”
Effective Date of 2000 AmendmentAmendment by Puspan. L. 106–554 effective as if included in the provisions of the Small Business Jospan Protection Act of 1996, Puspan. L. 104–188, to which such amendment relates, see section 1(a)(7) [title III, § 316(e)] of Puspan. L. 106–554, set out as a note under section 51 of this title.
Effective Date of 1998 AmendmentAmendment by Puspan. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Puspan. L. 105–34, to which such amendment relates, see section 6024 of Puspan. L. 105–206, set out as a note under section 1 of this title.
Effective Date of 1997 AmendmentAmendment by Puspan. L. 105–34 effective as if included in the provisions of the Small Business Jospan Protection Act of 1996, Puspan. L. 104–188, to which it relates, see section 1601(j) of Puspan. L. 105–34, set out as a note under section 23 of this title.
Effective Date of 1996 AmendmentAmendment by sections 1301–1302(c), 1303, 1304, 1308(a), (span), (d)(1), and 1315 of Puspan. L. 104–188 applicable to taxable years beginning after Dec. 31, 1996, see section 1317(a) of Puspan. L. 104–188, set out as a note under section 641 of this title.
Amendment by sections 1316(a), (e) of Puspan. L. 104–188 applicable to taxable years beginning after Dec. 31, 1997, see section 1316(f) of Puspan. L. 104–188, set out as a note under section 170 of this title.
Amendment by section 1616(span)(15) of Puspan. L. 104–188 applicable to taxable years beginning after Dec. 31, 1995, see section 1616(c) of Puspan. L. 104–188, set out as a note under section 593 of this title.
Effective Date of 1989 AmendmentAmendment by Puspan. L. 101–239 effective, except as otherwise provided, as if included in the provision of the Technical and Miscellaneous Revenue Act of 1988, Puspan. L. 100–647, to which such amendment relates, see section 7817 of Puspan. L. 101–239, set out as a note under section 1 of this title.
Effective Date of 1988 AmendmentAmendment by Puspan. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Puspan. L. 99–514, to which such amendment relates, see section 1019(a) of Puspan. L. 100–647, set out as a note under section 1 of this title.
Effective Date of 1986 AmendmentAmendment by section 901(d)(4)(G) of Puspan. L. 99–514 applicable to taxable years beginning after Dec. 31, 1986, see section 901(e) of Puspan. L. 99–514, set out as a note under section 166 of this title.
Puspan. L. 99–514, title XVIII, § 1879(m)(2), Oct. 22, 1986, 100 Stat. 2910, provided that: “The amendments made by this subsection [amending this section and section 1368 of this title] shall apply to taxable years beginning after December 31, 1982.”
Effective Date of 1984 AmendmentPuspan. L. 98–369, div. A, title VII, § 721(y), July 18, 1984, 98 Stat. 972, as amended by Puspan. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that:“(1)In general.—Except as otherwise provided in this subsection, any amendment made by this section [amending this section, sections 48, 108, 267, 318, 465, 1362, 1363, 1367, 1368, 1371, 1374, 1375, 1378, 1379, 6362, and 6659 and provisions set out as a note under this section] shall take effect as if included in the Subchapter S Revision Act of 1982 [Puspan. L. 97–354].
“(2)Amendment made by subsection (span)(2).—Subparagraph (C) of section 108(d)(7) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as amended by subsection (span)(2)) shall apply to contributions to capital after December 31, 1980, in taxable years ending after such date.
“(3)Amendment made by subsection (g)(1).—If—“(A) any portion of a qualified stock purchase is pursuant to a binding contract entered into on or after October 19, 1982, and before the date of the enactment of this Act [July 18, 1984], and
“(B) the purchasing corporation establishes by clear and convincing evidence that such contract was negotiated on the contemplation that, with respect to the deemed sale under section 338 of the Internal Revenue Code of 1986, paragraph (2) of section 1362(e) of such Code would apply,
then the amendment made by paragraph (1) of subsection (g) [amending section 1362 of this title] shall not apply to such qualified stock purchase.
“(4)Amendments made by subsection (l).—The amendments made by subsection (l) [amending section 1362 of this title] shall apply to any election under section 1362 of the Internal Revenue Code of 1986 (or any corresponding provision of prior law) made after October 19, 1982.
“(5)Amendment made by subsection (t).—If—“(A) on or before the date of the enactment of this Act [July 18, 1984] 50 percent or more of the stock of an S corporation has been sold or exchanged in 1 or more transactions, and
“(B) the person (or persons) acquiring such stock establish by clear and convincing evidence that such acquisitions were negotiated on the contemplation that paragraph (2) of section 1362(e) of the Internal Revenue Code of 1986 would apply to the S termination year in which such sales or exchanges occur,
then the amendment made by subsection (t) [amending section 1362 of this title] shall not apply to such S termination year.”
Effective DatePuspan. L. 97–354, § 6, Oct. 19, 1982, 96 Stat. 1697, as amended by Puspan. L. 97–448, title III, § 305(d)(1)(A), Jan. 12, 1983, 96 Stat. 2399; Puspan. L. 98–369, div. A, title VII, § 721(i), (k), July 18, 1984, 98 Stat. 969; Puspan. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that:“(a)In General.—Except as otherwise provided in this section, the amendments made by this Act [enacting this section and sections 1362, 1363, 1366 to 1368, 1371 to 1375, 1377 to 1379, and 6241 to 6245 of this title, amending sections 31, 44D to 44F, 46, 48, 50A, 50B, 52, 53, 55, 57, 58, 62, 108, 163, 168, 170, 172, 179, 183, 189, 194, 267, 280, 280A, 291, 447, 464, 465, 613A, 992, 1016, 1101, 1212, 1251, 1254, 1256, 3453, 3454, 4992, 4996, 6037, 6042, 6362, and 6661 of this title and section 1108 of Title 29, Labor, omitting section 1376 of this title, and enacting provisions set out as a note under section 1 of this title] shall apply to taxable years beginning after December 31, 1982.
“(span)Transitional Rules.—“(1)Sections 1379 and 62(9) continue to apply for 1983.—Sections 1379 and 62(9) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as in effect before the date of the enactment of this Act [Oct. 19, 1982]) shall remain in effect for years beginning before January 1, 1984.
“(2)Allowance of exclusion of death benefit.—Notwithstanding section 241(span) of the Tax Equity and Fiscal Responsibility Act of 1982 [section 241(span) of Puspan. L. 97–248, set out as a note under section 416 of this title] in the case of amounts received under a plan of an S corporation, the amendment made by section 239 of such Act [section 239 of Puspan. L. 97–248, amending section 101 of this title] shall apply with respect to decedents dying after December 31, 1982.
“(3)New passive income rules apply to taxable years beginning during 1982.—In the case of a taxable year beginning during 1982—“(A) sections 1362(d)(3), 1366(f)(3), and 1375 of the Internal Revenue Code of 1986 (as amended by this Act [Puspan. L. 97–354]) shall apply, and
“(B) section 1372(e)(5) of such Code (as in effect on the day before the date of the enactment of this Act [Oct. 19, 1982]) shall not apply.
The preceding sentence shall not apply in the case of any corporation which elects (at such time and in such manner as the Secretary of the Treasury or his delegate shall prescribe) to have such sentence not apply. Subsection (e) shall not apply to any termination resulting from an election under the preceding sentence.
“(c)Grandfather Rules.—“(1)Subsidiaries which are foreign corporations or disc’s.—In the case of any corporation which on September 28, 1982, would have been a member of the same affiliated group as an electing small business corporation but for paragraph (3) or (7) of section 1504(span) of the Internal Revenue Code of 1986, subparagraph (A) of section 1361(span)(2) of such Code (as amended by section 2) shall be applied by substituting ‘without regard to the exceptions contained in paragraphs (1), (2), (4), (5), and (6) of subsection (span) thereof’ for ‘without regard to the exceptions contained in subsection (span) thereof’.
“(2)Casualty insurance companies.—“(A)In general.—In the case of any qualified casualty insurance electing small business corporation—“(i) the amendments made by this Act shall not apply, and
“(ii) subchapter S (as in effect on July 1, 1982) of chapter 1 of the Internal Revenue Code of 1986 [former sections 1371 to 1379 of this title] and part III of subchapter L of chapter 1 of such Code [section 831 et seq. of this title] shall apply.
“(B)Qualified casualty insurance electing small business corporation.—The term ‘qualified casualty insurance electing small business corporation’ means any corporation described in section 831(a) of the Internal Revenue Code of 1986 if—“(i) as of July 12, 1982, such corporation was an electing small business corporation and was described in section 831(a) of such Code,
“(ii) such corporation was formed before April 1, 1982, and proposed (through a written private offering first circulated to investors before such date) to elect to be taxed as a subchapter S corporation and to be operated on an established insurance exchange, or
“(iii) such corporation is approved for membership on an established insurance exchange pursuant to a written agreement entered into before December 31, 1982, and such corporation is described in section 831(a) of such Code as of December 31, 1984.
A corporation shall not be treated as a qualified casualty insurance electing small business corporation unless an election under subchapter S of chapter 1 of such Code is in effect for its first taxable year beginning after December 31, 1984.
“(3)Certain corporations with oil and gas production.—“(A)In general.—In the case of any qualified oil corporation—“(i) the amendments made by this Act shall not apply, and
“(ii) subchapter S (as in effect on July 1, 1982) of chapter 1 of the Internal Revenue Code of 1986 [former sections 1371 to 1379 of this title] shall apply.
“(B)Qualified oil corporation.—For purposes of this paragraph, the term ‘qualified oil corporation’ means any corporation if—“(i) as of September 28, 1982, such corporation— “(I) was an electing small business corporation, or
“(II) was a small business corporation which made an election under section 1372(a) after December 31, 1981, and before September 28, 1982,
“(ii) for calendar year 1982, the combined average daily production of domestic crude oil or natural gas of such corporation and any one of its substantial shareholders exceeds 1,000 barrels, and
“(iii) such corporation makes an election under this subparagraph at such time and in such manner as the Secretary of the Treasury or his delegate shall prescribe.
“(C)Average daily production.—For purposes of subparagraph (B), the average daily production of domestic crude oil or domestic natural gas shall be determined under section 613A(c)(2) of such Code without regard to the last sentence thereof.
“(D)Substantial shareholder.—For purposes of subparagraph (B), the term ‘substantial shareholder’ means any person who on July 1, 1982, owns more than 40 percent (in value) of the stock of the corporation.
“(4)Continuity required.—“(A)In general.—This subsection shall cease to apply with respect to any corporation after—“(i) any termination of the election of the corporation under subchapter S of chapter 1 of such Code, or
“(ii) the first day on which more than 50 percent of the stock of the corporation is newly owned stock within the meaning of section 1378(c)(2) of such Code (as amended by this Act [Puspan. L. 97–354]).
“(B)Special rules for paragraph (2).—“(i) Paragraph (2) shall also cease to apply with respect to any corporation after the corporation ceases to be described in section 831(a) of such Code.
“(ii) For purposes of determining under subparagraph (A)(ii) whether paragraph (2) ceases to apply to any corporation, section 1378(c)(2) of such Code (as amended by this Act [Puspan. L. 97–354]) shall be applied by substituting ‘December 31, 1984’ for ‘December 31, 1982’ each place it appears therein.
“(d)Treatment of Existing Fringe Benefit Plans.—“(1)In general.—In the case of existing fringe benefits of a corporation which as of September 28, 1982, was an electing small business corporation, section 1372 of the Internal Revenue Code of 1986 (as added by this Act [Puspan. L. 97–354]) shall apply only with respect to taxable years beginning after December 31, 1987.
“(2)Requirements.—This subsection shall cease to apply with respect to any corporation after whichever of the following first occurs:“(A) the first day of the first taxable year beginning after December 31, 1982, with respect to which the corporation does not meet the requirements of section 1372(e)(5) of such Code (as in effect on the day before the date of the enactment of this Act [Oct. 19, 1982]),
“(B) any termination after December 31, 1982, of the election of the corporation under subchapter S of chapter 1 of such Code, or
“(C) the first day on which more than 50 percent of the stock of the corporation is newly owned stock within the meaning of section 1378(c)(2) of such Code (as amended by this Act [Puspan. L. 97–354]).
“(3)Existing fringe benefit.—For purposes of this subsection, the term ‘existing fringe benefit’ means any employee fringe benefit of a type which the corporation provided to its employees as of September 28, 1982.
“(e)Treatment of Certain Elections Under Prior Law.—For purposes of section 1362(g) of the Internal Revenue Code of 1986, as amended by this Act [Puspan. L. 97–354] (relating to no election permitted within 5 years after termination of prior election), any termination or revocation under section 1372(e) of such Code (as in effect on the day before the date of the enactment of this Act [Oct. 19, 1982]) shall not be taken into account.
“(f)Taxable Year of S Corporations.—Section 1378 of the Internal Revenue Code of 1986 (as added by this Act [Puspan. L. 97–354]) shall take effect on the day after the date of the enactment of this Act [Oct. 19, 1982]. For purposes of applying such section, the reference in subsection (a)(2) of such section to an election under section 1362(a) shall include a reference to an election under section 1372(a) of such Code as in effect on the day before the date of the enactment of this Act [Oct. 19, 1982].”
Savings ProvisionFor provisions that nothing in amendment by section 401(d)(1)(D)(xvi) of Puspan. L. 115–141 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Mar. 23, 2018, for purposes of determining liability for tax for periods ending after Mar. 23, 2018, see section 401(e) of Puspan. L. 115–141, set out as a note under section 23 of this title.
Elimination of all Earnings and Profits Attributable to Pre-1983 Years for Certain CorporationsPuspan. L. 110–28, title VIII, § 8235, May 25, 2007, 121 Stat. 199, provided that: “In the case of a corporation which is—“(1) described in section 1311(a)(1) of the Small Business Jospan Protection Act of 1996 [Puspan. L. 104–188, set out below], and
“(2) not described in section 1311(a)(2) of such Act,
the amount of such corporation’s accumulated earnings and profits (for the first taxable year beginning after the date of the enactment of this Act [May 25, 2007]) shall be reduced by an amount equal to the portion (if any) of such accumulated earnings and profits which were accumulated in any taxable year beginning before January 1, 1983, for which such corporation was an electing small business corporation under subchapter S of the Internal Revenue Code of 1986.”
Elimination of Certain Earnings and ProfitsPuspan. L. 104–188, title I, § 1311(a), Aug. 20, 1996, 110 Stat. 1784, provided that: “If—“(1) a corporation was an electing small business corporation under subchapter S of chapter 1 of the Internal Revenue Code of 1986 for any taxable year beginning before January 1, 1983, and
“(2) such corporation is an S corporation under subchapter S of chapter 1 of such Code for its first taxable year beginning after December 31, 1996,
the amount of such corporation’s accumulated earnings and profits (as of the beginning of such first taxable year) shall be reduced by an amount equal to the portion (if any) of such accumulated earnings and profits which were accumulated in any taxable year beginning before January 1, 1983, for which such corporation was an electing small business corporation under such subchapter S.”
Plan Amendments Not Required Until January 1, 1989For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Puspan. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Puspan. L. 99–514, as amended, set out as a note under section 401 of this title.
Transitional ProvisionsPuspan. L. 97–448, title III, § 305(d)(1)(B), Jan. 12, 1983, 96 Stat. 2399, as amended by Puspan. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: “If—“(i) after September 30, 1982, and on or before the date of the enactment of this Act [Jan. 12, 1983], stock or securities were transferred to a small business corporation (as defined in section 1361(span) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] as amended by the Subchapter S Revision Act of 1982 [Puspan. L. 97–354]) in a transaction to which section 351 of such Code applies, and
“(ii) such corporation is liquidated under section 333 of such Code before March 1, 1983,
then such stock or securities shall not be taken into account under section 333(e)(2) of such Code.”
