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26 U.S.C. § 361 — Nonrecognition of gain or loss to corporations; treatment of distributions

Federal law — U.S. Code and appendices · legal_authorities

26 U.S.C. § 361 — Nonrecognition of gain or loss to corporations; treatment of distributions

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Source file: Laws/federal/codes/united-states-code/title-26/section-361-nonrecognition-of-gain-or-loss-to-corporations-treatment-of-distribution--496680d84d.md
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Source location: Title 26, Chapter 1, § 361; chapter-001-normal-taxes-and-surtaxes.md

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**(a) General rule** No gain or loss shall be recognized to a corporation if such corporation is a party to a reorganization and exchanges property, in pursuance of the plan of reorganization, solely for stock or securities in another corporation a party to the reorganization. **(b) Exchanges not solely in kind** (1) **Gain** — If subsection (a) would apply to an exchange but for the fact that the property received in exchange consists not only of stock or securities permitted by subsection (a) to be received without the recognition of gain, but also of other property or money, then— (A) *Property distributed* — If the corporation receiving such other property or money distributes it in pursuance of the plan of reorganization, no gain to the corporation shall be recognized from the exchange, but (B) *Property not distributed* — If the corporation receiving such other property or money does not distribute it in pursuance of the plan of reorganization, the gain, if any, to the corporation shall be recognized. The amount of gain recognized under subparagraph (B) shall not exceed the sum of the money and the fair market value of the other property so received which is not so distributed. (2) **Loss** — If subsection (a) would apply to an exchange but for the fact that the property received in exchange consists not only of property permitted by subsection (a) to be received without the recognition of gain or loss, but also of other property or money, then no loss from the exchange shall be recognized. (3) **Treatment of transfers to creditors** — For purposes of paragraph (1), any transfer of the other property or money received in the exchange by the corporation to its creditors in connection with the reorganization shall be treated as a distribution in pursuance of the plan of reorganization. The Secretary may prescribe such regulations as may be necessary to prevent avoidance of tax through abuse of the preceding sentence or subsection (c)(3). In the case of a reorganization described in section 368(a)(1)(D) with respect to which stock or securities of the corporation to which the assets are transferred are distributed in a transaction which qualifies under section 355, this paragraph shall apply only to the extent that the sum of the money and the fair market value of other property transferred to such creditors does not exceed the adjusted bases of such assets transferred (reduced by the amount of the liabilities assumed (within the meaning of section 357(c))). **(c) Treatment of distributions** (1) **In general** — Except as provided in paragraph (2), no gain or loss shall be recognized to a corporation a party to a reorganization on the distribution to its shareholders of property in pursuance of the plan of reorganization. (2) **Distributions of appreciated property** (A) *In general* — If— (i) in a distribution referred to in paragraph (1), the corporation distributes property other than qualified property, and (ii) the fair market value of such property exceeds its adjusted basis (in the hands of the distributing corporation), then gain shall be recognized to the distributing corporation as if such property were sold to the distributee at its fair market value. (B) *Qualified property* — For purposes of this subsection, the term “qualified property” means— (i) any stock in (or right to acquire stock in) the distributing corporation or obligation of the distributing corporation, or (ii) any stock in (or right to acquire stock in) another corporation which is a party to the reorganization or obligation of another corporation which is such a party if such stock (or right) or obligation is received by the distributing corporation in the exchange. (C) *Treatment of liabilities* — If any property distributed in the distribution referred to in paragraph (1) is subject to a liability or the shareholder assumes a liability of the distributing corporation in connection with the distribution, then, for purposes of subparagraph (A), the fair market value of such property shall be treated as not less than the amount of such liability. (3) **Treatment of certain transfers to creditors** — For purposes of this subsection, any transfer of qualified property by the corporation to its creditors in connection with the reorganization shall be treated as a distribution to its shareholders pursuant to the plan of reorganization. (4) **Coordination with other provisions** — Section 311 and subpart B of part II of this subchapter shall not apply to any distribution referred to in paragraph (1). (5) **Cross reference** — For provision providing for recognition of gain in certain distributions, see section 355(d).

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Federal law — U.S. Code and appendices · legal_authorities

26 U.S.C. § 357 — Assumption of liability

**(a) General rule** Except as provided in subsections (b) and (c), if— (1) the taxpayer receives property which would be permitted to be received under section 351 or 361 without the recognition of gain if it were the sole consideration, and (2) as part of the consideration, another party to the exchange assumes a liability of the taxpayer, then such assumption shall not be treated as money or other property, and shall not prevent the exchange from being within the provisions of section 351 or 361, as the case may be. **(b) Tax avoidance purpose** (1) **In general** — If, taking into consideration the nature of the liability and the circumstances in the light of which the arrangement for the assumption was made, it appears that the principal purpose of the taxpayer with respect to the assumption described in subsection (a)— (A) was a purpose to avoid Federal income tax on the exchange, or (B) if not such purpose, was not a bona fide business purpose, then such assumption (in the total amount of the liability assumed pursuant to such exchange) shall, for purposes of section 351 or 361 (as the case may be), be considered as money received by the taxpayer on the exchange. (2) **Burden of proof** — In any suit or proceeding where the burden is on the taxpayer to prove such assumption is not to be treated as money received by the taxpayer, such burden shall not be considered as sustained unless the taxpayer sustains such burden by the clear preponderance of the evidence. **(c) Liabilities in excess of basis** (1) **In general** — In the case of an exchange— (A) to which section 351 applies, or (B) to which section 361 applies by reason of a plan of reorganization within the meaning of section 368(a)(1)(D) with respect to which stock or securities of the

Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 357

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Federal law — U.S. Code and appendices · legal_authorities

26 U.S.C. § 368 — Definitions relating to corporate reorganizations

**(a) Reorganization** (1) **In general** — For purposes of parts I and II and this part, the term “reorganization” means— (A) a statutory merger or consolidation; (B) the acquisition by one corporation, in exchange solely for all or a part of its voting stock (or in exchange solely for all or a part of the voting stock of a corporation which is in control of the acquiring corporation), of stock of another corporation if, immediately after the acquisition, the acquiring corporation has control of such other corporation (whether or not such acquiring corporation had control immediately before the acquisition); (C) the acquisition by one corporation, in exchange solely for all or a part of its voting stock (or in exchange solely for all or a part of the voting stock of a corporation which is in control of the acquiring corporation), of substantially all of the properties of another corporation, but in determining whether the exchange is solely for stock the assumption by the acquiring corporation of a liability of the other shall be disregarded; (D) a transfer by a corporation of all or a part of its assets to another corporation if immediately after the transfer the transferor, or one or more of its shareholders (including persons who were shareholders immediately before the transfer), or any combination thereof, is in control of the corporation to which the assets are transferred; but only if, in pursuance of the plan, stock or securities of the corporation to which the assets are transferred are distributed in a transaction which qualifies under section 354, 355, or 356; (E) a recapitalization; (F) a mere change in identity, form, or place of organization of one corporation, however effected; or (G) a transfer by a corporation of all or part of it

Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 368

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Federal law — U.S. Code and appendices · legal_authorities

26 U.S.C. § 1 — Tax imposed

**(a) Married individuals filing joint returns and surviving spouses** There is hereby imposed on the taxable income of— (1) every married individual (as defined in section 7703) who makes a single return jointly with his spouse under section 6013, and (2) every surviving spouse (as defined in section 2(a)), a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $36,90015% of taxable income. Over $36,900 but not over $89,150$5,535, plus 28% of the excess over $36,900. Over $89,150 but not over $140,000$20,165, plus 31% of the excess over $89,150. Over $140,000 but not over $250,000$35,928.50, plus 36% of the excess over $140,000. Over $250,000$75,528.50, plus 39.6% of the excess over $250,000. **(b) Heads of households** There is hereby imposed on the taxable income of every head of a household (as defined in section 2(b)) a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $29,60015% of taxable income. Over $29,600 but not over $76,400$4,440, plus 28% of the excess over $29,600. Over $76,400 but not over $127,500$17,544, plus 31% of the excess over $76,400. Over $127,500 but not over $250,000$33,385, plus 36% of the excess over $127,500. Over $250,000$77,485, plus 39.6% of the excess over $250,000. **(c) Unmarried individuals (other than surviving spouses and heads of households)** There is hereby imposed on the taxable income of every individual (other than a surviving spouse as defined in section 2(a) or the head of a household as defined in section 2(b)) who is not a married individual (as defined in section 7703) a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $22,10015% of taxable income. Over $22,100 but not over $53,50

Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 1

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Federal law — U.S. Code and appendices · legal_authorities

26 U.S.C. § 355 — Distribution of stock and securities of a controlled corporation

**(a) Effect on distributees** (1) **General rule** — If— (A) a corporation (referred to in this section as the “distributing corporation”)— (i) distributes to a shareholder, with respect to its stock, or (ii) distributes to a security holder, in exchange for its securities, solely stock or securities of a corporation (referred to in this section as “controlled corporation”) which it controls immediately before the distribution, (B) the transaction was not used principally as a device for the distribution of the earnings and profits of the distributing corporation or the controlled corporation or both (but the mere fact that subsequent to the distribution stock or securities in one or more of such corporations are sold or exchanged by all or some of the distributees (other than pursuant to an arrangement negotiated or agreed upon prior to such distribution) shall not be construed to mean that the transaction was used principally as such a device), (C) the requirements of subsection (b) (relating to active businesses) are satisfied, and (D) as part of the distribution, the distributing corporation distributes— (i) all of the stock and securities in the controlled corporation held by it immediately before the distribution, or (ii) an amount of stock in the controlled corporation constituting control within the meaning of section 368(c), and it is established to the satisfaction of the Secretary that the retention by the distributing corporation of stock (or stock and securities) in the controlled corporation was not in pursuance of a plan having as one of its principal purposes the avoidance of Federal income tax, then no gain or loss shall be recognized to (and no amount shall be includible in the income of) such shareholder or secu

Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 355

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Federal law — U.S. Code and appendices · legal_authorities

26 U.S.C. § 26 — Limitation based on tax liability; definition of tax liability

**(a) Limitation based on amount of tax** The aggregate amount of credits allowed by this subpart for the taxable year shall not exceed the sum of— (1) the taxpayer’s regular tax liability for the taxable year reduced by the foreign tax credit allowable under section 27, and (2) the tax imposed by section 55(a) for the taxable year. **(b) Regular tax liability** For purposes of this part— (1) **In general** — The term “regular tax liability” means the tax imposed by this chapter for the taxable year. (2) **Exception for certain taxes** — For purposes of paragraph (1), any tax imposed by any of the following provisions shall not be treated as tax imposed by this chapter: (A) section 55 (relating to minimum tax), (B) section 59A (relating to base erosion and anti-abuse tax), (C) subsection (m)(5)(B), (q), (t), or (v) of section 72 (relating to additional taxes on certain distributions), (D) section 143(m) (relating to recapture of proration of Federal subsidy from use of mortgage bonds and mortgage credit certificates), (E) section 530(d)(4) (relating to additional tax on certain distributions from Coverdell education savings accounts), (F) section 531 (relating to accumulated earnings tax), (G) section 541 (relating to personal holding company tax), (H) section 1351(d)(1) (relating to recoveries of foreign expropriation losses), (I) section 1374 (relating to tax on certain built-in gains of S corporations), (J) section 1375 (relating to tax imposed when passive investment income of corporation having subchapter C earnings and profits exceeds 25 percent of gross receipts), (K) subparagraph (A) of section 7518(g)(6) (relating to nonqualified withdrawals from capital construction funds taxed at highest marginal rate), (L) sections 87

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Federal law — U.S. Code and appendices · legal_authorities

26 U.S.C. § 401 — Qualified pension, profit-sharing, and stock bonus plans

**(a) Requirements for qualification** A trust created or organized in the United States and forming part of a stock bonus, pension, or profit-sharing plan of an employer for the exclusive benefit of his employees or their beneficiaries shall constitute a qualified trust under this section— (1) if contributions are made to the trust by such employer, or employees, or both, or by another employer who is entitled to deduct his contributions under section 404(a)(3)(B) (relating to deduction for contributions to profit-sharing and stock bonus plans), or by a charitable remainder trust pursuant to a qualified gratuitous transfer (as defined in section 664(g)(1)), for the purpose of distributing to such employees or their beneficiaries the corpus and income of the fund accumulated by the trust in accordance with such plan; (2) if under the trust instrument it is impossible, at any time prior to the satisfaction of all liabilities with respect to employees and their beneficiaries under the trust, for any part of the corpus or income to be (within the taxable year or thereafter) used for, or diverted to, purposes other than for the exclusive benefit of his employees or their beneficiaries (but this paragraph shall not be construed, in the case of a multiemployer plan, to prohibit the return of a contribution within 6 months after the plan administrator determines that the contribution was made by a mistake of fact or law (other than a mistake relating to whether the plan is described in section 401(a) or the trust which is part of such plan is exempt from taxation under section 501(a), or the return of any withdrawal liability payment determined to be an overpayment within 6 months of such determination)); (3) if the plan of which such trust is a part satisfies the requireme

Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 401

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26 U.S.C. § 361 — Nonrecognition of gain or loss to corpora-

Page 1139 TITLE 26—INTERNAL REVENUE CODE § 361 ‘‘(1) shall prescribe rules which provide appropriate adjustments under subchapter K of chapter 1 of the Internal Revenue Code of 1986 to prevent the accel- eration or duplication of losses through the assump- tion of (or transfer of assets subject to) liabilities de- scribed in section 358(h)(3) of such Code (as added by subsection (a)) in transactions involving partner- ships, and ‘‘(2) may prescribe rules which provide appropriate adjustments under subchapter S of chapter 1 of such Code in transactions described in paragraph (1) in- volving S corporations rather than partnerships.’’ SUBPART C—EFFECTS ON CORPORATIONS Sec. 361. Nonrecognition of gain or loss to corpora- tions; treatment of distributions. 362. Basis to corporations. [363. Repealed.] Editorial Notes AMENDMENTS 2018—Pub. L. 115–141, div. U, title IV, § 401(a)(66), Mar. 23, 2018, 132 Stat. 1187, substituted ‘‘Corporations’’ for ‘‘Corporation’’ in subpart heading. 1988—Pub. L. 100–647, title I, § 1018(d)(5)(F), Nov. 10, 1988, 102 Stat. 3580, substituted ‘‘corporations; treat- ment of distributions.’’ for ‘‘transferor corporation; other treatment of transferor corporation; etc.’’ in item 361. 1986—Pub. L. 99–514, title XVIII, § 1804(g)(3), Oct. 22, 1986, 100 Stat. 2806, substituted ‘‘to transferor corpora- tion; other treatment of transferor corporation; etc.’’ for ‘‘corporations’’ in item 361. 1976—Pub. L. 94–455, title XIX, § 1901(b)(13), Oct. 4, 1976, 90 Stat. 1795, struck out item 363 ‘‘Effect on earn- ings and profits’’. § 361. Nonrecognition of gain or loss to corpora- tions; treatment of distributions (a) General rule No gain or loss shall be recognized to a cor- poration if such corporation is a party to a reor- ganization an

Source: Supplied 2024 U.S. Code historical extraction · 26 U.S.C. § 361

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