CHAPTER 53

An Act to amend the Code ofVirginia by adding a new section numbered
58-85.8, relating to the treatment, for income tax purposes, of dis-
tributions of stock pursuant to order enforcing the anti-trust gs.

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Approved February 20, 1964

Be it enacted by the General Assembly of Virginia:

1. That the Code of Virginia be amended by adding a new section num-
bered 58-85.3, as follows:

§ 58-85.3. Distributions of stock pursuant to order enforcing the
anti-trust laws.—Notwithstanding Section 58-77 (9), a distribution of
divested stock shall not be deemed to be a dividend, 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 gain.

For purposes of this section, the term “anti-trust order” means, in
the case of any corporation, a final judgment rendered after January 1,
1961, by a court with respect to such corporation in a court proceeding
under the Sherman Act (26 Stat. 209, 15 U.S.C. 1-7) or the Clayton Act
(88 Stat. 730, 15 U.S.C. 12-27), or both, to which the United States is a
party, if such proceeding was commenced on or before January 1, 1959.

For purposes of this section, the term “divested stock” means stock
meeting the following requirements:

(1) The stock is the subject of an anti-trust order entered after
January 1, 1961, which

(a) Directs the distributing corporation to divest itself of such stock
oy distributing it to its shareholders (or requires such distribution as an
alternative to other action by any person) ;

(b) Specifies and itemizes the stock to be divested; and

(c) Fixes the period of time within which the distributing corporation
must divest itself of all stock to be disposed of by it by reason of the suit,
and such period expires not later than three years from the date on which
such order becomes final (appeal time having run or appeal having been
completed) ; and

(2) The court found or finds

(a) That the divestiture of such stock, in the manner described in
paragraph (1) (a), is necessary or appropriate to effectuate the policies
of the Sherman Act, or the Clayton Act, or both;

(b) That the application of Section 1111 (a) of the Internal Revenue
Code of 1954, as amended, is required to reach an equitable anti-trust order
in such suit or proceeding; and

(c) That the period of time for the complete divestiture fixed in the
order is the shortest period within which such divestiture can be executed
with due regard to the circumstances of the particular case; but no stock
shall be divested stock if the court finds that its divestiture is required
ert of an intentional violation of the Sherman Act, or the Clayton Act,
or both.

Notwithstanding § 58-85, the basis of stock acquired in a distribution
to which this section is applicable, shall be its fair market value on the
date of distribution.

This section shall apply to distributions made after December 31, 1968.