All 70 Stat, 138. Ante, p.136. 62, Stat. 750. security for advances made to any person or company: Provided, however, That any bank may accept such capital stock, bonds, debentures, or other obligations as security for debts previously contracted, but such collateral shall not be held for a period of over two years; (3) to purchase securities, other assets or obligations under repurchase agreement from a bank holding company of which it is a subsidiary or any other subsidiary of such bank holding company; and (4) to make any loan, discount or extension of credit to a bank holding company of which it is a subsidiary or to any other subsidiary of such bank holding company. Non-interest-bearing deposits to the credit of a bank shall not be deemed to be a loan or advance to the bank of deposit, nor shall the giving of immediate credit to a bank upon uncollected items received in the ordinary course of business be deemed to be a loan or advance to the depositing bank. (b) The provisions of this section shall not apply (1) to the capital stock, bonds, debentures, or other obligations of any company described in section 4 (c) (1) of this Act, or (2) to any company whose subsidiary status has arisen out of a bona fide debt to the bank contracted prior to the date of the creation of such status, or (3) to any company whose subsidiary status exists by reason of the ownership or control of voting shares thereof by the bank as executor, administrator, trustee, receiver, agent, or depositary, or in any other fiduciary capacity, except where such shares are held for the benefit of all or a majority of the stockholders of such bank. RESERVATION OF RIGHTS TO STATES SEC. 7. The enactment by the Congress of the Bank Holding Company Act of 1956 shall not be construed as preventing any State from exercising such powers and jurisdiction which it now has or may hereafter have with respect to banks, bank holding companies, and subsidiaries thereof. PENALTIES SEC. 8. Any company which willfully violates any provision of this Act, or any regulation or order issued by the Board pursuant thereto, shall upon conviction be fined not more than $1,000 for each day during which the violation continues. Any individual who willfully participates in a violation of any provision of this Act shall upon conviction be fined not more than $10,000 or imprisoned not more than one year, or both. Every officer, director, agent, and employee of a bank holding company shall be subject to the same penalties for false entries in any book, report, or statement of such bank holding company as are applicable to officers, directors, agents, and employees of member banks for false entries in any books, reports, or statements of member banks under section 1005 of title 18, United States Code. JUDICIAL REVIEW SEC. 9. Any party aggrieved by an order of the Board under this Act may obtain a review of such order in the United States Court of Appeals within any circuit wherein such party has its principal place of business, or in the Court of Appeals in the District of Columbia, by filing in the court, within sixty days after the entry of the Board's order, a petition praying that the order of the Board be set aside. A copy of such petition shall be forthwith served upon the All 70 Stat. 139. Board, and thereupon the Board shall certify and file in the court a transcript of the record made before the Board. Upon the filing of the transcript the court shall have jurisdiction to affirm, set aside, or modify the order of the Board and to require the Board to take such action with regard to the matter under review as the court deems proper. The findings of the Board as to the facts, if supported by substantial evidence, shall be conclusive. AMENDMENTS TO INTERNAL REVENUE CODE OF 1954 26 USC 1001 SEC. 10. (a) Subchapter O of chapter 1 of the Internal Revenue 68A Stat. 295. Code of 1954 is amended by adding at the end thereof the following 1091. new part: "PART VIII-DISTRIBUTIONS PURSUANT TO BANK HOLDING COMPANY ACT OF 1956 "Sec. 1101. Distributions pursuant to Bank Holding Company Act of 1956. "Sec. 1102. Special rules. "Sec. 1103. Definitions. "SEC. 1101. DISTRIBUTIONS PURSUANT TO BANK HOLDING COMPANY ACT OF 1956. "(a) DISTRIBUTIONS OF CERTAIN NON-BANKING PROPERTY.— "(1) DISTRIBUTIONS OF PROHIBITED PROPERTY.-If "(A) a qualified bank holding corporation distributes prohibited property (other than stock received in an exchange to which subsection (c) (2) applies) "(i) to a shareholder (with respect to its stock held by such shareholder), without the surrender by such shareholder of stock in such corporation; or "(ii) to a shareholder, in exchange for its preferred stock: or 66 "(iii) to a security holder, in exchange for its securities; and "(B) the Board has, before the distribution, certified that the distribution of such prohibited property is necessary or appropriate to effectuate section 4 of the Bank Holding Ante, p. 135. Company Act of 1956, then no gain to the shareholder or security holder from the receipt of such property shall be recognized. "(2) DISTRIBUTIONS OF STOCK AND SECURITIES RECEIVED IN AN EXCHANGE TO WHICH SUBSECTION (C) (2) APPLIES.-If "(A) a qualified bank holding corporation distributes "(i) common stock received in an exchange to which subsection (c) (2) applies to a shareholder (with respect to its stock held by such shareholder), without the surrender by such shareholder of stock in such corporation; or "(ii) common stock received in an exchange to which subsection (c) (2) applies to a shareholder, in exchange for its common stock; or "(iii) preferred stock or common stock received in an "(iv) securities or preferred or common stock received 68A Stat. 403. Ante, p. 133. All 70 Stat. 140. ties received have substantially the same terms as the securities exchanged, then, except as provided in subsection (f), no gain to the shareholder or security holder from the receipt of such stock or such securities or such stock and securities shall be recognized. "(3) NON PRO RATA DISTRIBUTIONS.-Paragraphs (1) and (2) shall apply to a distribution whether or not the distribution is pro rata with respect to all of the shareholders of the distributing qualified bank holding corporation. "(4) EXCEPTION.-This subsection shall not apply to any distribution by a corporation which has made any distribution pursuant to subsection (b). "(5) DISTRIBUTIONS INVOLVING GIFT OR COMPENSATION. "In the case of a distribution to which paragraph (1) or (2) applies, but which "(A) results in a gift, see section 2501, and following, or "(b) CORPORATION CEASING TO BE A BANK HOLDING COMPANY.- "(A) a qualified bank holding corporation distributes property (other than stock received in an exchange to which subsection (c) (3) applies) "(i) to a shareholder (with respect to its stock held by such shareholder), without the surrender by such shareholder of stock in such corporation; or "(ii) to a shareholder, in exchange for its preferred stock; or "(iii) to a security holder, in exchange for its securities; and "(B) the Board has, before the distribution, certified that "(i) such property is all or part of the property by reason of which such corporation controls (within the meaning of section 2 (a) of the Bank Holding Company Act of 1956) a bank or bank holding company, or such property is part of the property by reason of which such corporation did control a bank or a bank holding company before any property of the same kind was distributed under this subsection or exchanged under subsection (c) (3); and "(ii) the distribution is necessary or appropriate to effectuate the policies of such Act, then no gain to the shareholder or security holder from the receipt of such property shall be recognized. "(2) DISTRIBUTIONS OF STOCK AND SECURITIES RECEIVED IN AN EXCHANGE TO WHICH SUBSECTION (c) (3) APPLIES.—If— "(A) a qualified bank holding corporation distributes "(i) common stock received in an exchange to which subsection (c) (3) applies to a shareholder (with respect to its stock held by such shareholder), without the surrender by such shareholder of stock in such corporation; or "(ii) common stock received in an exchange to which subsection (c) (3) applies to a shareholder, in exchange for its common stock; or 66 All 70 Stat. 141. "(iii) preferred stock or common stock received in "(iv) securities or preferred or common stock received then, except as provided in subsection (f), no gain to the share- "(3) NON PRO RATA DISTRIBUTIONS.-Paragraphs (1) and (2) shall apply to a distribution whether or not the distribution is pro rata with respect to all of the shareholders of the distributing qualified bank holding corporation. "(4) EXCEPTION.-This subsection shall not apply to any distribution by a corporation which has made any distribution pursuant to subsection (a). (5) DISTRIBUTIONS INVOLVING GIFT OR COMPENSATION.— "In the case of a distribution to which paragraph (1) or (2) applies, "(A) results in a gift, see section 2501, and following, or "(c) PROPERTY ACQUIRED AFTER MAY 15, 1955.— “(1) IN GENERAL.-Except as provided in paragraphs (2) and (3), subsection (a) or (b) shall not apply to 68A Stat. 403. 26 USC 2501. 26 USC 61. "(A) any property acquired by the distributing corporation after May 15, 1955, unless (1) gain to such corporation with respect to the receipt of such property was not recognized by reason of subsection (a) or (b), or (ii) such property was received by it in exchange for all of its stock in an exchange to which paragraph (2) or (3) applies, or (iii) such property was acquired by the distributing corporation in a transaction in which gain was not recognized under section 305 (a) or section 332, or under section 354 with 26 USC 305, respect to a reorganization described in section 368 (a) (1) 332, 354, 368. (E) or (F), or "(B) any property which was acquired by the distributing corporation in a distribution with respect to stock acquired by such corporation after May 15, 1955, unless such stock was acquired by such corporation (i) in a distribution (with respect to stock held by it on May 15, 1955, or with respect to stock in respect of which all previous applications of this clause are satisfied) with respect to which gain to it was not recognized by reason of subsection (a) or (b), or (ii) in exchange for all of its stock in an exchange to which paragraph (2) or (3) applies, or (iii) in a transaction in which gain was not recognized under section 305 (a) or section 332, or under section 354 with respect to a reorganization described in section 368 (a) (1) (E) or (F), or "(C) any property acquired by the distributing corporation in a transaction in which gain was not recognized under section 332, unless such property was acquired from a corporation which, if it had been a qualified bank holding corporation, could have distributed such property under subsection (a) (1) or (b) (1). Ante, p. 135. Ante, p.133. All 70 Stat. 142. "(2) EXCHANGES INVOLVING PROHIBITED PROPERTY.—If— "(A) Any qualified bank holding corporation exchanges (i) property, which, under subsection (a) (1), such corporation could distribute directly to its shareholders or security holders without the recognition of gain to such shareholders or security holders, and other property (except property described in subsection (b) (1) (B) (i)), for (ii) all of the stock of a second corporation created and availed of solely for the purpose of receiving such property; "(B) immediately after the exchange, the qualified bank holding corporation distributes all of such stock in a manner prescribed in subsection (a) (2) (A); and "(C) before such exchange, the Board has certified (with respect to the property exchanged which consists of property which, under subsection (a) (I), such corporation could distribute directly to its shareholders or security holders without the recognition of gain) that the exchange and distribution are necessary or appropriate to effectuate section 4 of the Bank Holding Company Act of 1956, then paragraph (1) shall not apply with respect to such distribu tion. "(3) EXCHANGES INVOLVING INTERESTS IN BANKS.—If— "(A) any qualified bank holding corporation exchanges (i) property which, under subsection (b) (1), such corporation could distribute directly to its shareholders or security holders without the recognition of gain to such shareholders or security holders, and other property (except prohibited property), for (ii) all of the stock of a second corporation created and availed of solely for the purpose of receiving such property; "(B) immediately after the exchange, the qualified bank holding corporation distributes all of such stock in a manner prescribed in subsection (b) (2) (A); and "(C) before such exchange, the Board has certified (with respect to the property exchanged which consists of property which, under subsection (b) (1), such corporation could distribute directly to its shareholders or security holders without the recognition of gain) that— "(i) such property is all or part of the property by reason of which such corporation controls (within the meaning of section 2 (a) of the Bank Holding Company Act of 1956) a bank or bank holding company, or such property is part of the property by reason of which such corporation did control a bank or a bank holding company before any property of the same kind was distributed under subsection (b) (1) or exchanged under this paragraph; and "(ii) the exchange and distribution are necessary or appropriate to effectuate the policies of such Act, then paragraph (1) shall not apply with respect to such distri bution. "(d) DISTRIBUTIONS TO AVOID FEDERAL INCOME TAX.— "(1) PROHIBITED PROPERTY.-Subsection (a) shall not apply to a distribution if, in connection with such distribution, the distributing corporation retains, or transfers after May 15, 1955, to any corporation, property (other than prohibited property) as part of a plan one of the principal purposes of which is the distribution of the earnings and profits of any corporation. "(2) BANKING PROPERTY.-Subsection (b) shall not apply to a distribution if, in connection with such distribution, the dis |