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TITLE 26-INTERNAL REVENUE CODE such controlled corporation at all times since December 31, 1957. Paragraphs (3), (4), and (5) shall not apply to that portion of the distribution of stock of the controlled corporation equal to the increase in the aggregate adjusted basis of such stock after December 31, 1957, except to the extent such increase results from an acquisition of stock in the controlled corporation in a transaction de- scribed in paragraph (3)(B). If any part of the increase in the aggregate adjusted basis of stock of the controlled corporation after De- cember 31, 1957, results from the transfer (other than as part of a transaction described in paragraph (3)(B)) by the distributing corpo- ration to the controlled corporation of property which has a fair market value in excess of its adjusted basis at the time of the transfer, para- graphs (3), (4), and (5) also shall not apply to that portion of the distribution equal to such excess. (g) Certain distributions related to former subsidlar. les If subsection (f)(5) applied to the distribution by a life insurance company of the stock of a corporation which was a controlled corpora- tion- (1) any distribution by such corporation to its shareholders (after the date of the distri- bution of its stock by the life Insurance com- pany), and (2) any disposition of the stock of such cor- poration by the distributee corporation, shall, for purposes of this section, be treated as a distribution to its shareholders by such life insurance company, until the amounts so treat- ed equal the amount of the distribution of such stock which by reason of subsection (f)(5) was not included as a distribution for purposes of this section. (Added Pub. L. 86-69, § 2(a), June 25, 1959, 73 Stat. 129, and amended Pub. L. 87-790, § 3(b), Oct. 10, 1962, 76 Stat. 808; Pub. L. 87-858, § 3(b)(4), (e), Oct. 23. 1962, 76 Stat. 1137; Pub. L. 88-571, §§ 2, 3(a), 4(a), Sept. 2, 1964, 78 Stat. 857, 859; Pub. L. 90-225, § 4(a), (b), Dec. 27, 1967, 81 Stat. 733, 734; Pub. L. 91-172, title IX, § 907(b), Dec. 30, 1969, 83 Stat. 715; Pub. L. 94- 331, § l(a), June 30, 1976, 90 Stat. 781; Pub. L. 94-455, title XIX, §§ 1901(b)(1)(O), (24), (33)(H), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1791, 1798, 1801, 1834.) PRIOR PROVISIONS A prior section 816, act. Aug. 16, 1954, ch. 736, § 816, as added Mar. 13, 1956, ch. 83, § 2, 70 Stat. 46, which related to taxation of foreign life insurance compa- nies, was omitted from this part by Pub. L. 86-69, § 2(a), June 25, 1959, 73 Stat. 112, which amended this part in its entirety. See section 819(a), (d) of this title. AMENDMENTS 1976-Subsec. (b)(2)(A)(ii). Pub. L. 94-455, § 1901(b)(33)(H), substituted "of the net capital gain" for "by which the net long-term capital gain exceeds the net short-term capital loss". Subsec. (b)(2)(A)(iii). Pub. L. 94-455, § 1901(b)(1)(O), struck out "the deduction for partially tax-exempt in- terest provided by section 242 (as modified by section 804(a)(3))," before "the deductions for dividends". Subsec. (c)(3)(B). Pub. L. 94-455, § 1901(b)(24), struck out "(determined without regard to section 802(a)(3))" following "the amount". Subsec. (d). Pub. L. 94-455, § 1906(b)(13)(A), struck out "or his delegate" following "Secretary" in par. (2). Pub. L. 94-331 added par. (6). 1969-Subsec. (f). Pub. L. 91-172, § 907(b)(1), added par. (5) and inserted references to par. (5) in the mate- rial following par. (5). Subsec. (g). Pub. L. 91-172, § 907(b)(2), added subsec. (g). 1967-Subsec. (f). Pub. L. 90-225 struck-out "or" at the end of par. (2), struck out the period at the end of par. (3)(B)(ii) and inserted in lieu ", or", and added par. (4), and in material following par. (4) added refer- ences to par. (4) wherever appearing, and substituted "paragraph (3)(B)." for "subparagraph (B) of such paragraph". 1964-Subsec. (a). Pub. 88-571, §4(a)(1), eliminated definitions of "distribution." See subsec. (f) of this sec- tion. Subsec. (b)(2)(A)(ii). Pub. L. 88-571, § 2, inserted "re- duced (in the case of a taxable year beginning after December 31, 1961) by the amount referred to in clpuse (i)". Subsec. (d)(5). Pub. L. 88-571, § 3(a), added par. (5). Subsec. (f). Pub. L. 88-571, §4(a)(2), added subsec. (f). 1962-Subsec. (a). Pub. L. 87-858, § 3(e), added provi- sion that "for purposes of this section, the term 'distri- bution' does not include any distribution before Janu- ary 1, 1964, of the stock of a controlled corporation to which section 355 applies, if such controlled corpora. tion is an insurance company subject to the tax im- posed by section 831 and control has been acquired prior to January 1, 1963, in a transaction qualifying as a reorganization under section 368(a)(1)(B)". Subsec. (c)(2). Pub. L. 87-790 substituted "accident and health insurance and group life insurance con. tracts" for "group life and group accident and health insurance contracts" in cl. (C). Subsec. (c)(3)(B). Pub. L. 87-858, § 3(b)(4), substitut. ed "802(a)" for "802(a)(1)". EFFECTIVE DATE OF 1976 AMENDMENT Amendment of subsecs. (b)(2)(A)(ii), (iii), (c)(3)(B) by section 1901(b)(1)(O), (24), (33)(H) of Pub. L. 94- 455 effective for taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94-455, set out as an Effective Date of 1976 Amendment note under sec- tion 2 of this title. Section l(b) of Pub. L. 94-331 provided that: "The amendment made by this section [amending subsec. (d)(6) of this section) shall apply with respect to tax- able years ending after December 31, 1957." EFFECTIVE DATE OF 1969 AMENDMENT Amendment by section 907(b) of Pub. L. 91-172 ap- plicable to taxable years beginning after Dec. 31, 1968, see section 907(d) of Pub. L. 91-172, set out as an Ef- fective Date of 1969 Amendment note under section 805 of this title. EFFECTIVE DATE OF 1967 AMENDMENT Section 4(c) of Pub. L. 90-225 provided that: "The amendments made by this section [amending subsec. (f) of this section] shall apply to taxable years begin- ning after December 31, 1966." EFFECTIVE DATE OF 1964 AMENDMENT Section 3(f) of Pub. L. 88-571 provided that: "The amendments made by this section [to subsec. (d) of this section, and sections 6501, 6511, 6601 and 6611 of this title] shall apply with respect to amounts added to policyholders surplus accounts (within the meaning of section 815(c) of the Internal Revenue Code of 1954) [subsec. (c) of this section] for taxable years be- ginning after December 31, 1958." Section 4(b) of Pub. L. 88-571 provided that: "The amendments made by subsection (a) [adding subsec. § 815 Page 512