SEC. 3. SPECIAL RULES RELATING TO

INVOLUNTARY CONVERSIONS.

(a) Replacement Property Acquired by Corporations From Related Persons. (1) In general. —Section 1033 of the Internal Revenue Code of 1986 (relating to involuntary conversions) is amended by redesignating subsection (i) as subsection (j) and by inserting after subsection (h) the following new subsection:

‘‘(i) Nonrecognition Not To Apply if Corporation Acquires Replacement Property From Related Person. ‘‘(1) In general. —In the case of— ‘‘(A) a C corporation, or ‘‘(B) a partnership in which 1 or more C corporations own, directly or indirectly (determined in accordance with section 707(b)(3)), more than 50 percent of the capital interest, or profits interest, in such partnership at the time of the involuntary conversion, subsection (a) shall not apply if the replacement property or stock is acquired from a related person. The preceding sentence shall not apply to the extent that the related person acquired the replacement property or stock from an unrelated person during the period described in subsection (a)(2)(B).

‘‘(2) Related person. —For purposes of this subsection, a person is related to another person if the person bears a relationship to the other person described in section 267(b) or 707(b)(1).’’ (2) Effective date. —The amendment made by paragraph (1) shall apply to involuntary conversions occurring on or after February 6, 1995.

(b) Application of Section 1033 to Certain Sales Required for Microwave Relocation. (1) In general. —Section 1033 of the Internal Revenue Code of 1986 (relating to involuntary conversions), as amended by subsection (a), is amended by redesignating subsection (j) as subsection (k) and by inserting after subsection (i) the folowing new subsection:

‘‘(j) Sales or Exchanges To Imple- ment Microwave Relocation Policy. ‘‘(1) In general. —For purposes of this subtitle, if a taxpayer elects the

1995–2 C.B. 325

Subpart B.—Legislation and Related Committee Reports

Public Law 104–7 104th Congress

An Act to amend the Internal Revenue Code of 1986 to permanently extend the deduction for the health insurance costs of self-employed individuals, to repeal the provision permitting nonrecognition of gain on sales and exchanges effectuating policies of the Federal Communications Commission, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,