SEC. 4914 (added 1964)-Continued (f). (g). (heading) Oct. 9, 1965, H.R. 4750, P.L. 89-243, § 4(h)(1), 79 Stat. 960: Amended Sec. 4914(f) 597 (as added by P.L. 88-563, § 2(a)) by adding at the end thereof (after and below paragraph (2)) the following new sentence: "For purposes of this subsection, stock or debt obligations acquired as a result of the investment or reinvestment of such contributions or fees which consist of insurance premiums (other than premiums paid to a mutual insurance company or association described in section 501 (c) (15)) paid by the members of such local organizations shall be treated as held exclusively for the benefit of such members if primarily so held, notwithstanding that such stock or debt obligations may, under certain contingencies, be used for the benefit of other members of such United States person." Applicability: With respect to acquisitions of stock and debt obligations made. after July 18, 1963. (Id., § 4(h)(2), 79 Stat. 960.) Oct. 9, 1965, H.R. 4750, P.L. 89-243, § 4(b) (3), 79 Stat. 957: Amended the heading of Sec. 4914(g) 598 (as added by P.L. 88-563, § 2(a)) by inserting "OR SALE OF FOREIGN BRANCH" after "SUBSIDIARY". Applicability: With respect to acquisitions of stock and debt obligations made after February 10, 1965. (Id., § 4(q), 79 Stat. 965. See n. 591, p. 850 above.) (g)(1)(C)___ Oct. 9, 1965, H.R. 4750, P.L. 89–243, § 4(b)(1), 79 Stat. 957: (added) Amended Sec. 4914(g) (1) (as added by P.L. 88-563, § 2(a)-see n. 598) (A) by striking out "or" at the end of subparagraph (A); (B) by striking out the period at the end of subparagraph (B) and inserting in lieu thereof"; or"; and 597 Subsection (f) of section 4914, as added by P.L. 88-563, § 2(a), read as follows (78 Stat. 821) "(f) ACQUISITIONS BY CERTAIN TAX-EXEMPT Labor, FRATERNAL, AND SIMILAR ORGANIZATIONS HAVING FOREIGN BRANCHES OR CHAPTERS.-The tax imposed by section 4911 shall not apply to the acquisition of stock or debt obligations by a United States person which is described in section 501(c) and exempt from taxation under subtitle A, and which operates in a foreign country through a local organization or organizations, to the extent that "(1) such acquisition results from the investment or reinvestment of contributions or membership fees paid in the currency of such country by individuals who are members of the local organization or organizations, and "(2) the stock or debt obligations acquired are held exclusively for the benefit of the members of any of such local organizations.' 598 Subsection (g) of section 4914, as added by P.L. 88-563, § 2(a), read as follows (78 Stat. 821-822): "(g) SALE OR LIQUIDATION OF WHOLLY OWNED FOREIGN SUBSIDIARY.— (1) IN GENERAL.-The tax imposed by section 4911 shall not apply to the acquisition by a United States person of a debt obligation of a foreign obligor if the debt obligation is acquired"(A) in connection with the sale by such United States person (or by one or more includible corporations in an affiliated group, as defined in section 48(c) (3) (C), of which such United States person is a member) of all of the outstanding stock, except for qualifying shares, of a foreign corporation; "(B) in connection with the liquidation by such United States person (or by one or more such includible corporations) of a foreign corporation all of the outstanding stock of which, except for qualifying shares, is owned by such United States person (or by one or more such includible corporations), but only if such debt obligation had been received by such foreign corporation as part or all of the purchase price in a sale of substantially all of its assets. "(2) LIMITATION.—Paragraph (1) shall not apply to the acquisition of a debt obligation if any of the stock sold or surrendered in connection with its acquisition was originally acquired with the intent to sell or surrender." SEC. 4914 (added 1964)—Continued (g)(1)(C) (added 1965)—Continued (C) by adding at the end thereof the following new subparagraph (C): "(C) as part or all of the purchase price in a sale by such United States person of substantially all of the assets of a branch of such United States person located outside the United States." Applicability: With respect to acquisitions of stock and debt obligations made after February 10, 1965. (Id., § 4(q), 79 Stat. 965. See n. 591, p. 850 above.) (g)(2)------ Oct. 9, 1965, H.R. 4750, P.L. 89–243, § 4(b)(2), 79 Stat. 957: (revised) Amended Sec. 4914(g) (2) (as added by P.L. 88-563, § 2(a)see n. 598) to read as follows: (h). (revised) “(2) LIMITATIONS. Subparagraphs (A) and (B) of paragraph (1) shall not apply to the acquisition of a debt obligation if any of the stock sold or surrendered in connection with its acquisition was originally acquired with the intent to sell or surrender. Subparagraph (C) of paragraph (1) shall not apply to the acquisition of a debt obligation if any of the assets sold had been transferred to the branch for the purpose of sale (other than sale in the ordinary course of its trade or business)." Applicability: With respect to acquisitions of stock and debt obligations made after February 10, 1965. (Id., § 4(q), 79 Stat. 965. See n. 591, p. 850 above.) Oct. 9, 1965, H.R. 4750, P.L. 89-243, § 4(c) (1), 79 Stat. 957-958: Amended Sec. 4914 (h) 599 (as added by P.L. 88-563, § 2(a)) to read as follows: "(h) CERTAIN DEBT OBLIGATIONS SECURED BY UNITED STATES MORTGAGES, ETC. "(1) IN GENERAL.-The tax imposed by section 4911 shall not apply to the acquisition from a foreign obligor by a United States person of "(A) a debt obligation of such foreign obligor which is secured by real property located in the United States, to the extent that such debt obligation "(i) is a part of the purchase price of such real property (or of such real property and related personal property) or, 599 Subsection (h) of section 4914, as added by P.L. 88-563, § 2(a), read as follows (78 Stat. 822): "(h) CERTAIN DEBT OBLIGATIONS SECURED BY UNITED STATES MORTGAGES, ETC.— "(1) IN GENERAL.-The tax imposed by section 4911 shall not apply to the acquisition from a foreign obligor by a United States person of a debt obligation of such foreign obligor which is secured by real property located in the United States, to the extent that "(A) the debt obligation is a part of the purchase price of such real property (or of such real property and related personal property); or "(B) the debt obligation arises out of a loan made by such United States person to the foreign obligor the proceeds of which are concurrently used as part of the purchase price of such real property (or of such real property and related personal property). "(2) LIMITATION.-Paragraph (1) shall apply to the acquisition of a debt obligation only if"(A) the owner of the property sold is a United States person; and "(B) at least 25 percent of the purchase price of the property sold is, at the time of such sale, paid in United States currency to such United States person by the foreign obligor from funds not obtained from United States persons for the purpose of purchasing such property. (3) RELATED PERSONAL PROPERTY.-For purposes of paragraph (1), the term 'related personal property' means personal property which is sold in connection with the sale of real property for use in the operation of such real property." 60-448-67-55 SEC. 4914 (added 1964)—Continued (h) (revised 1965)—Continued "(ii) arises out of a loan made by such United States person to the foreign obligor the proceeds of which are concurrently used as part of the purchase price of such real property (or of such real property and related personal property); or "(B) a debt obligation of such foreign obligor which is secured by real property located in the United States on which improvements are under construction by the obligor, if such debt obligation arises out of a loan made by such United States person all the proceeds of which are used "(i) to finance the construction of such improvements, or "(ii) to repay all or any part of a loan made to finance such construction, if the construction loan has qualified (or would have qualified) under paragraph (2)(B) and such repayment occurs within 5 years after such construction loan is made. "(2) LIMITATIONS.-Paragraph (1) shall apply to the acquisition of a debt obligation only if "(A) in the case of the sale of property referred to in paragraph (1)(A) "(i) the seller is a United States person, and "(ii) at least 25 percent of the purchase price of the property sold is, at the time of such sale, paid in United States currency to such United States person by the foreign obligor from funds not obtained from United States persons for the purpose of purchasing such property; or "(B) in the case of the construction of improvements referred to in paragraph (1)(B)— (i) at the time any proceeds of the loan out of which such debt obligation arises are advanced, an amount equal to at least one-third of the amount of such advance, plus one-third of the amount of any previous advances of such proceeds, has been expended for such construction by the foreign obligor in United States currency from funds not obtained from United States persons for the purpose of financing such construction, and "(ii) not less than 85 percent of the cost of such construction attributable to property or services is attributable to property grown, extracted, manufactured, or produced in the United States, or to services performed by United States persons, or to both. "(3) RELATED PERSONAL PROPERTY.-For purposes of paragraph (1)(A), the term 'related personal property' means personal property which is sold in connection with the sale of real property for use in the operation of such real property." Applicability: With respect to acquisitions of stock and debt obligations made after February 10, 1965. (Id., § 4(q), 79 Stat. 965. See n. 591, p. 850 above.) SEC. 4914 (added 1964)-Continued (j)(1)------- Oct. 9, 1965, H.R. 4750, P.L. 89-243, § 4(a) (3), 79 Stat. 956: Amended Sec. 4914 (j) (1) 600 (as added by P.L. 88-563, § 2(a)) (j) (2)__ (sentence added) (A) by striking out "or (5)" in subparagraph (A) and inserting in lieu thereof "(5), or (6)"; (B) by striking out "or (5)" in subparagraph (D) and inserting in lieu thereof "(5), or (6)"; and (C) by striking out "or (3)" in clause (iii) in subparagraph (A) and inserting in lieu thereof "(3), or (6)" and by inserting after the word "sale" in such clause the words "or lease". Applicability: With respect to acquisitions of stock and debt obligations made after February 10, 1965. (Id., § 4(q), 79 Stat. 965. See n. 591, p. 850 above.) Oct. 9, 1965, H.R. 4750, P.L. 89-243, § 4(f) (2), 79 Stat. 959: Amended Sec. 4914(j) (2)601 (as added by P.L. 88-563, § 2(a)) by adding at the end thereof the following new sentence: "For purposes of this chapter, if, after July 18, 1963, a United States person sells or otherwise disposes of stock or a debt obligation 600 Paragraph (1) of section 4914(j) (as added by P.L. 88-563, § 2(a)) read as follows (78 Stat. 823-824): "(1) IN GENERAL.— "(A) Where an exclusion provided by paragraph (1)(B), (2), (3), (4), or (5) of subsection (c), or the exclusion provided by subsection (d), has applied with respect to the acquisition of a debt obligation by any person, but such debt obligation is subsequently transferred by such person (before the termination date specified in section 4911(d)) to a United States person otherwise than "(i) to any agency or wholly-owned instrumentality of the United States; "(ii) to a commercial bank acquiring the obligation in the ordinary course of its commercial banking business; "(iii) in the case of an exclusion provided by paragraph (1)(B), (2), or (3) of subsection (c), to any transferee where the extension of credit by such person and the acquisition of the debt obligation related thereto were reasonably necessary to accomplish the sale of property or services out of which the debt obligation arose, and the terms of the debt obligation are not unreasonable in light of credit practices in the business in which such person is engaged; or "(iv) in a transaction described in subsection (a) (1) or (2), or a transaction (other than a transfer by gift) described in subsection (a)(3). then liability for the tax imposed by section 4911 (in an amount determined under subparagraph (D) of this paragraph) shall be incurred by the transferor (with respect to such debt obligation) at the time of such subsequent transfer. "(B) Where the exclusion provided by paragraph (2) or (3) of subsection (c) has applied with respect to the acquisition of stock by any person, but such stock is subsequently_transferred by such person (before the termination date specified in section 4911(d)) to a United States person otherwise than in a transaction described in subsection (a) (1) or (2), or a transaction (other than a transfer by gift) described in subsection (a) (3), then liability for the tax imposed by section 4911 (in an amount determined under subparagraph (D) of this paragraph) shall be incurred by the transferor (with respect to such stock) at the time of such subsequent transfer. "(C) Where the exclusion provided by subsection (f) has applied with respect to the acquisition of stock or a debt obligation by any person, but such stock or debt obligation is subsequently transferred by such person (before the termination date specified in section 4911(d)) to any United States person, then liability for the tax imposed by section 4911 (in an amount determined under subparagraph (D) of this paragraph) shall be incurred by the transferor (with respect to such stock or debt obligation) at the time of such subsequent transfer. "(D) In any case where an exclusion provided by paragraph (1)(B), (2), (3), (4), or (5) of subsection (c) or by subsection (d) or (f) has applied, but a subsequent transfer described in subparagraph (A), (B), or (C) of this paragraph occurs and liability for the tax imposed by section 4911 is incurred by the transferor as a result thereof, the amount of such tax shall be equal to the amount of tax for which the transferor would have been liable under such section upon his acquisition of the stock or debt obligation involved if such exclusion had not applied with respect to such acquisition." 601 Paragraph (2) of section 4914(j), as added by P.L. 88-563, § 2(a), read as follows (78 Stat. 824): “(2) UNITED STATES PERSON TREATED AS FOREIGN PERSON ON DISPOSITION OF CERTAIN SECURITIES. For purposes of this chapter, if, after December 10, 1963, a United States person sells or other wise disposes of stock or a debt obligation which it [Footnote 601 continued on following page] SEC. 4914 (added 1964)-Continued (j) (2) (amended 1965)-Continued to the acquisition of which the last sentence of subsection (b) (2) applied, such person shall not, with respect to that stock or debt obligation, be considered a United States person." SEC. 4916. EXCLUSION FOR INVESTMENTS IN LESS DEVELOPED COUNTRIES (Added 1964-78 Stat. 827–830): (c) (1) Oct. 9, 1965, H.R. 4750, P.L. 89-243, § 4(i), 79 Stat. 960: "A foreign partnership, as defined in section 7701(a) (2) and (5), the assets and gross income of which, for the applicable periods set forth in paragraph (3), satisfy the requirements of subparagraph (A) or (B) of the first sentence of this paragraph, shall be treated as a less developed country corporation for purposes of this section." Applicability: With respect to acquisitions of stock and debt obligations made after February 10, 1965. (Id., § 4(q), 79 Stat. 965. See n. 591, p. 850 above.) Footnote 601-Continued. "(A) acquired to satisfy minimum requirements imposed by foreign law and with respect to which it claimed an exclusion under subsection (b) (3), or "(B) designated (or was required to designate) as part of a fund of assets under subsection (e), such person shall not, with respect to that stock or debt obligation, be considered a United States person." 602 Section 4916, as added by P.L. 88-563, § 2(a), read as follows (78 Stat. 827-830): "SEC. 4916. EXCLUSION FOR INVEST MENTS IN LESS DEVELOPED COUNTRIES. "(a) GENERAL RULE.-The tax imposed by section 4911 shall not apply to the acquisition by a United States person of "(1) a debt obligation issued or guaranteed by the government of a less developed country or a political subdivision thereof, or by an agency or instrumentality of such a government; "(2) stock or a debt obligation of a less developed country corporation; '(3) a debt obligation issued by an individual or partnership resident in a less developed contry in return for money or other property which is used, consumed, or disposed of wholly within one or more less developed countries; or "(4) stock or a debt obligation of a foreign issuer or obligor, to the extent that such acquisition is required as a reinvestment within a less developed country by the terms of a contract of sale to, or of a contract of indemnification with respect to the nationalization, expropriation, or seizure by, the government of such less developed country or a political subdivision thereof, or an agency or instrumentality of such government, of property owned within such less developed country or such political subdivision by such United States person, or by a controlled foreign corporation (as defined in section 957) more than 50 percent of the total combined voting power of all classes of stock entitled to vote of which is owned (within the meaning of section 958) by such United States person, but only if such contract was entered into because the government of such less developed country or political subdivision, or such agency or instrumentality— "(A) has nationalized or has expropriated or seized, or has threatened to nationalize or to expropriate or seize, a substantial portion of the property owned within such less developed country or such political subdivision by such United States person or such controlled foreign corporation; or (B) has taken action which has the effect of nationalizing or of expropriating or seizing, or of threatening to nationalize or to expropriate or seize, a substantial portion of the property so owned. For purposes of this subsection, an instrumentality of the government of a less developed country or a political subdivision thereof includes a corporation or other entity with respect to which such government, or any agency of such government, owns more than 50 percent of the total combined voting power of all classes of stock entitled to vote or, in the case of a corporation or other entity [Footnote 602 continued on following page] |