Volume 72 · 5
Public Law 85–320
To amend the Internal Revenue Code of 1954 with respect to the basis of stock acquired by the exercise of restricted stock options after the death of the employee.
Approved February 11, 1958
Statutory text
AN ACT
To amend the Internal Revenue Code of 1954 with respect to the basis of stock acquired by the exercise of restricted stock options after the death of the employee.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
That section 421 (d) (6) of the Internal Revenue Code of 1954 (relating to restricted stock options exercised by estate) is amended by adding at the end thereof the following new subparagraph:
“(C) Basis of shares acquired.—
In the case of a share of stock acquired by the exercise of an option to which subparagraph (A) applies—
“(i) the basis of such share shall include so much of the basis of the option as is attributable to such share; except that the basis of such share shall be reduced by the excess (if any) of the amount, which would have been includible in gross income under subsection (b) if the employee had exercised the option and held such share at the time of his death, over the amount which is includible in gross income under subsection (b); and
“(ii) the last sentence of subsection (b) shall apply only to the extent that the amount includible in gross income under such subsection exceeds so much of the basis of the option as is attributable to such share.”
Sec. 2.
Subsection (d) of section 1014 of the Internal Revenue Code
Repeal.
68a Stat. 298.
of 1954 (relating to basis of restricted stock options) is hereby repealed.
Sec. 3.
The amendments made by this Act shall apply with respect
Effective Date.
to taxable years ending after December 31, 1956, but only in the case of employees dying after such date.
Approved February 11, 1958.