PUBLIC LAW 96-471—OCT. 19, 1980
94 STAT. 2249
sition is not a sale or exchange, an amount equal to the fair market value of the property disposed of shall be substituted for the amount realized. "(5)
LATER PAYMENTS TREATED AS RECEIPT OF TAX PAID
AMOUNTS.—If paragraph (1) applies for any taxable year, payments received in subsequent taxable years by the person making the first disposition shall not be treated as the receipt of payments with respect to the first disposition to the extent that the aggregate of such payments does not exceed the amount treated as received by reason of paragraph (1). "(6) EXCEPTION FOR CERTAIN DISPOSITIONS.—For purposes of this subsection— "(A) REACQUISITIONS OF STOCK BY ISSUING CORPORATION NOT TREATED AS FIRST DISPOSITIONS.—Any sale or exchange of
stock to the issuing corporation shall not be treated as a first disposition. "(B) INVOLUNTARY CONVERSIONS NOT TREATED AS SECOND
DISPOSITIONS.—A compulsory or involuntary conversion (within the meaning of section 1033) and any transfer 26 USC 1033. thereafter shall not be treated as a second disposition if the first disposition occurred before the threat or imminence of the conversion. "(C) DISPOSITIONS AFTER DEATH.—Any transfer after the earlier of— "(i) the death of the person making the first disposition, or "(ii) the death of the person acquiring the property in the first disposition, and any transfer thereafter shall not be treated as a second disposition. "(7) EXCEPTION WHERE TAX AVOIDANCE NOT A PRINCIPAL PUR-
POSE.—This subsection shall not apply to a second disposition (and any transfer thereafter) if it is established to the satisfaction of the Secretary that neither the first disposition nor the second disposition had as one of its principal purposes the avoidance of Federal income tax. "(8) EXTENSION OF STATUTE OF LIMITATIONS.—The period for assessing a deficiency with respect to a first disposition (to the extent such deficiency is attributable to the application of this subsection) shall not expire before the day which is 2 years after the date on which the person making the first disposition furnishes (in such manner as the Secretary may by regulations prescribe) a notice that there was a second disposition of the property to which this subsection may have applied. Such deficiency may be assessed notwithstanding the provisions of any law or rule of law which would otherwise prevent such assessment. "(f) DEFINITIONS AND SPECIAL RULES.—For purposes of this section— "(1) RELATED PERSON.—Except for purposes of subsections (g) and (h), the term 'related person' means a person whose stock would be attributed under section 318(a) (other than paragraph 26 USC 318. (4) thereof) to the person first disposing of the property. "(2) MARKETABLE SECURITIES.—The term 'marketable securities' means any security for which, as of the date of the disposition, there was a market on an established securities market or otherwise.
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