45 U.S.C. § 1347 — Tax treatment of Conrail public sale
submitted 40 years ago by Pub. L. 99-509 to r/title-45-RAILROADS · 507 words · no verdicts yet
After Conrail’s public sale, tax law treats Conrail as a new corporation that bought its assets at a deemed purchase price. The section sets the price and asset allocation rules and addresses debt cancellation, deductions, employee stock plans, and definitions.
(a)(1) For periods after the public sale, title 26 treats Conrail as a new corporation* that bought all its assets at the start of the day after the sale for the deemed purchase price. (2) The price must be allocated among Conrail’s assets under the temporary section 338 regulations in effect October 21, 1986. The Secretary must issue guidelines making each asset’s basis clear. Accounts receivable and materials and supplies are treated as cash equivalents for applying those regulations. (3) The deemed purchase price equals the gross amount received in the public sale multiplied by a fraction whose numerator is 100 percent and whose denominator is the percentage by value of Conrail stock sold. The Secretary must adjust the result by regulation for Conrail liabilities* and other relevant items.
(b) No person* includes an amount in gross income because Conrail cancels an obligation or preferred stock* in connection with the public sale.
(c) Conrail may not deduct an amount paid after the public sale to employees for services performed on or before the sale date*.
(d) To decide whether Conrail employee stock ownership plans qualify under sections 401 and 501 of title 26, section 415 limits on qualified-plan benefits and contributions do not apply to stock interests transferred under this Act or an earlier law, and the two-year withdrawal waiting period does not apply to withdrawals from participant accounts connected with the public sale.
(e) “Conrail” means Consolidated Rail Corporation and includes a corporation that was its subsidiary* immediately before the public sale. “Public sale” means a Conrail stock sale under a public offering* under the Conrail Privatization Act; if there was more than one offering, it means the initial offering. “Secretary” means the Treasury Secretary or the Secretary’s delegate.
For periods after the public sale, for purposes of title 26, Conrail shall be treated as a new corporation which purchased all of its assets as of the beginning of the day after the date of the public sale for an amount equal to the deemed purchase price.
The deemed purchase price shall be allocated among the assets of Conrail in accordance with the temporary regulations prescribed under section 338 of title 26 (as such regulations were in effect on October 21, 1986). The Secretary shall establish specific guidelines for carrying out the preceding sentence so that the basis of each asset will be clearly ascertainable. For purposes of applying the regulations referred to in the first sentence, accounts receivable and materials and supplies shall be treated as cash equivalents.
For purposes of this subsection, the deemed purchase price is an amount equal to the gross amount received pursuant to the public sale, multiplied by a fraction—
the numerator of which is 100 percent, and
the denominator of which is the percentage (by value) of the stock of Conrail sold in the public sale.
The amount determined under the preceding sentence shall be adjusted under regulations prescribed by the Secretary for liabilities* of Conrail and other relevant items.
No amount shall be included in the gross income of any person* by reason of any cancellation of any obligation (or preferred stock) of Conrail in connection with the public sale.
No deduction shall be allowed to Conrail for any amount which is paid after the date of the public sale to employees of Conrail for services performed on or before the date of the public sale.
For purposes of determining whether the employee stock ownership plans of Conrail meet the qualifications of sections 401 and 501 of title 26—
the limits of section 415 of such title (relating to limitations on benefits and contributions under qualified plans) shall not apply with respect to interests in stock transferred pursuant to this Act or a law heretofore enacted, and
the 2-year waiting period for withdrawals shall not apply to withdrawals of amounts (or shares) in participants accounts in connection with the public sale.
For purposes of this section—
The term “Conrail” means the Consolidated Rail Corporation. Such term includes any corporation which was a subsidiary* of Conrail immediately before the public sale.
The term “public sale” means the sale of stock in Conrail pursuant to a public offering* under the Conrail Privatization Act [45 U.S.C. 1301 et seq.]. If there is more than 1 public offering under such Act, such term means the sale pursuant to the initial public offering under such Act.
The term “Secretary” means the Secretary of the Treasury or his delegate.
Source credit: (Pub. L. 99–509, title VIII, § 8021, Oct. 21, 1986, 100 Stat. 1954; Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095.)
- 1986Enacted · Pub. L. 99-509 · 100 Stat. 1954
- 1986Amended · Pub. L. 99-514 · 100 Stat. 2095
A history note hasn’t been published yet. The record shows enactment by Pub. L. 99-509 on 1986-10-21.
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