AN ACT TO AMEND CHAPTER 11, TITLE 30, DELAWARE CODE, SO AS TO PROVIDE THAT DISTRIBUTIONS OF STOCK PURSUANT TO AN ORDER ENFORCING THE ANTI-TRUST LAWS SHALL NOT BE TREATED AS A DIVIDEND BUT AS A GAIN TO THE EXTENT THE BASIS OF THE UNDERLYING STOCK IS EXCEEDED.
Be it enacted by the General Assembly of the State of Delaware:
Section 1. Chapter 11, Title 30, Delaware Code, is amended by adding the following new Section:
§ 1148. Distributions of Stock pursuant to order enforcing the Anti-trust Laws
Notwithstanding Section 1101, a distribution of divested stock as defined in Section 1111 of the Internal Revenue Code of 1954, as amended, (U. S. Code, Title 26), shall not be deemed to be a distribution out of the earnings and profits of the distributing corporation, but the fair market value of such divested stock shall be applied against and reduce the basis of the stock with respect to which the distribution was made (but not below zero) and, to the extent that such value exceeds such basis, the excess shall be treated as capital gain. Where the stock with respect to which the distribution was made has been held for six months or more, only fifty percent of the capital gain shall be taken into account in computing net income.
Section 2. Section 1132 of Chapter 11, Title 30, Delaware Code, is amended by adding the following new paragraph:
(9) In the case of stock which was acquired in a distribution to which Section 1148 was applicable, the basis shall be its fair market value on the date of distribution.
Section 3. The amendments made by this Act shall apply only with respect to distributions made after the date of its enactment.
Approved April 19, 1962.