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TITLE 26-INTERNAL REVENUE CODE (4) Special 3-year rule If an obligation which has been determined to be corporate acquisition indebtedness for any taxable year would not be such indebted- ness for each of any 3 consecutive taxable years thereafter if subsection (b)(4) were ap- plied as of the close of each of such 3 years, then such obligation shall not be corporate acquisition indebtedness for all taxable years after such 3 consecutive tcxable years. (5) 5 percent stock rule In the case of obligations issued to provide consideration for the acquisition of stock in another corporation, such obligations shall be corporate acquisition indebtedness for a tax- able year only if at some time after October 9, 1969, and before the close of such year the is- suing corporation owns 5 percent or more of the total combined voting power of all classes of stock entitled to vote of such other corpo- ration. (e) Certain nontaxable transactions An acquisition of stock of a corporation of which the issuing corporation is in control (as defined in section 368(c)) in a transaction in which gain or loss is not recognized shall be deemed an acquisition described in paragraph (1) of subsection (b) only if immediately before such transaction (1) the acquired corporation was in existence, and (2) the issuing corpora- tion was not in control (as defined in section 368(c)) of such corporation. (f) Exemption for certain acquisitions of foreign cor- porations For purposes of this section, the term "corpo- rate acquisition indebtedness" does not include any indebtedness issued to any person to pro- vide consideration for the acquisition of stock in, or assets of, any foreign corporation sub- stantially all of the income of which, for the 3- year period ending with the date of such acqui- sition or for such part of such period as the for- eign corporation was in existence, is from sources without the United States. (g) Affiliated groups In any case in which the issuing corporation is a member of an affiliated group, the applica- tion of this section shall be determined, pursu- ant to regulations prescribed by the Secretary, by treating all of the members of the affiliated group in the aggregate as the issuing corpora- tion, except that the ratio of debt to equity of, projected earnings of, and annual interest to be paid or incurred by any corporation (other than the issuing corporation determined without regard to this subsection) shall be included in the determinations required under subpara- graphs (A) and (B) of subsection (b)(4) as of any day only If such corporation is a member of the affiliated group on such day, and, in deter- mining projected earnings of such corporation under subsection (c)(3), there shall be taken into account only the earnings and profits of such corporation for the period during which it was a member of the affiliated group. For pur- poses of the preceding sentence, the term "af- filiated group" has the meaning assigned to such term by section 1504(a), except that all corporations other than the acquired corpora- tion shall be treated as includible corporations (without any exclusion under section 1504(b)) and the acquired corporation shall not be treat- ed as an includible corporation. (h) Changes in obligation For purposes of this section- (1) Any extension, renewal, or refinancing of an obligation evidencing a preexisting in- debtedness shall not be deemed to be the issu- ance of a new obligation. (2) Any obligation which is corporate acqui- sition indebtedness of the issuing corporation is also corporate acquisition indebtedness of any corporation which becomes liable for such obligation as guarantor, endorser, or in- demnitor or which assumes liability for such obligation in any transaction. (I) Certain obligations ii sued after October 9, 1969 For purposes of this section, an obligation shall not be corporate acquisition indebtedness If issued after October 9, 1969, to provide con- sideration for the acquisition of- (1) stock or assets pursuant to a binding written contract which was in effect on Octo- ber 9, 1969, and at all times thereafter before such acquisition, or (2) stock in any corporation where the issu- ing corporation, on October 9, 1969, and at all times thereafter before such acquisition, owned at least 50 percent of the total com- bined voting power nf all classes of stock enti- tled to vote of the acquired corporation. (j) Effect on other provisions No inference shall be drawn from any provi- sion in this section that any instrument desig- nated as a bond, debenture, note, or certificate or other evidence of indebtedness by its issuer represents an obligation or indebtedness of such issuer in applying any other provision of this title. (Added Pub. L. 91-172, title IV, §411(a), Dec. 30, 1969, 83 Stat. 604, and amended Pub. L. 94- 455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 94-514, § l(a), Oct. 15, 1976, 90 Stat. 2443.) AMENDMENTS 1976-Subsec. (c)(3)(B). Pub. L. 94-455 struck out "or his delegate" following "Secretary". Subsec. (g). Pub. L. 94-455 struck out "or his dele- gate" following "Secretary". Subsec. (I). Pub. L. 94-514 struck out provisions that par. (2) would cease to apply when (at any time on or after October 9, 1969) the issuing corporation has ac- quired control (as defined in section 368(c)) of the ac- quired corporation. EFFECTIVE DATE OF 1976 AMENDMENT Section l(b) of Pub. L. 94-514 provided that: "The amendment made by subsection (a) [amending subsec. (i) of this section] shall apply to taxable years ending after October 9, 1969. If refund or credit of any over- payment of income tax resulting from the amendment made by subsection (a) [amending subsec. (i) of this section] is prevented on the date of the enactment of this Act [Oct. 15, 1976], or at any time within one year after such date, by the operation of any law or rule of law, refund or credit of such overpayment may, never- theless, be made or allowed if claim therefor is filed within one year from such date." EFFECTIVE DATE Section 411(c) of Pub. L. 91-172 provided that: "The amendments made by this section [enacting this see- § 279 Page 225