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26 U.S.C. § 358 — Basis to distributees
Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** In the case of an exchange to which section 351, 354, 355, 356, or 361 applies—
(1) **Nonrecognition property** — The basis of the property permitted to be received under such section without the recognition of gain or loss shall be the same as that of the property exchanged—
(A) decreased by—
(i) the fair market value of any other property (except money) received by the taxpayer,
(ii) the amount of any money received by the taxpayer, and
(iii) the amount of loss to the taxpayer which was recognized on such exchange, and
(B) increased by—
(i) the amount which was treated as a dividend, and
(ii) the amount of gain to the taxpayer which was recognized on such exchange (not including any portion of such gain which was treated as a dividend).
(2) **Other property** — The basis of any other property (except money) received by the taxpayer shall be its fair market value.
**(b) Allocation of basis**
(1) **In general** — Under regulations prescribed by the Secretary, the basis determined under subsection (a)(1) shall be allocated among the properties permitted to be received without the recognition of gain or loss.
(2) **Special rule for section 355** — In the case of an exchange to which section 355 (or so much of section 356 as relates to section 355) applies, then in making the allocation under paragraph (1) of this subsection, there shall be taken into account not only the property so permitted to be received without the recognition of gain or loss, but also the stock or securities (if any) of the distributing corporation which are retained, and the allocation of basis shall be made among all such properties.
**(c) Section 355 transactions which are not exchanges** For purposes of this section, a distribution to whic
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Source location: Title 26, Chapter 1, § 358; chapter-001-normal-taxes-and-surtaxes.md
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**(a) General rule** In the case of an exchange to which section 351, 354, 355, 356, or 361 applies—
(1) **Nonrecognition property** — The basis of the property permitted to be received under such section without the recognition of gain or loss shall be the same as that of the property exchanged—
(A) decreased by—
(i) the fair market value of any other property (except money) received by the taxpayer,
(ii) the amount of any money received by the taxpayer, and
(iii) the amount of loss to the taxpayer which was recognized on such exchange, and
(B) increased by—
(i) the amount which was treated as a dividend, and
(ii) the amount of gain to the taxpayer which was recognized on such exchange (not including any portion of such gain which was treated as a dividend).
(2) **Other property** — The basis of any other property (except money) received by the taxpayer shall be its fair market value.
**(b) Allocation of basis**
(1) **In general** — Under regulations prescribed by the Secretary, the basis determined under subsection (a)(1) shall be allocated among the properties permitted to be received without the recognition of gain or loss.
(2) **Special rule for section 355** — In the case of an exchange to which section 355 (or so much of section 356 as relates to section 355) applies, then in making the allocation under paragraph (1) of this subsection, there shall be taken into account not only the property so permitted to be received without the recognition of gain or loss, but also the stock or securities (if any) of the distributing corporation which are retained, and the allocation of basis shall be made among all such properties.
**(c) Section 355 transactions which are not exchanges** For purposes of this section, a distribution to which section 355 (or so much of section 356 as relates to section 355) applies shall be treated as an exchange, and for such purposes the stock and securities of the distributing corporation which are retained shall be treated as surrendered, and received back, in the exchange.
**(d) Assumption of liability**
(1) **In general** — Where, as part of the consideration to the taxpayer, another party to the exchange assumed a liability of the taxpayer, such assumption shall, for purposes of this section, be treated as money received by the taxpayer on the exchange.
(2) **Exception** — Paragraph (1) shall not apply to the amount of any liability excluded under section 357(c)(3).
**(e) Exception** This section shall not apply to property acquired by a corporation by the exchange of its stock or securities (or the stock or securities of a corporation which is in control of the acquiring corporation) as consideration in whole or in part for the transfer of the property to it.
**(f) Definition of nonrecognition property in case of section 361 exchange** For purposes of this section, the property permitted to be received under section 361 without the recognition of gain or loss shall be treated as consisting only of stock or securities in another corporation a party to the reorganization.
**(g) Adjustments in intragroup transactions involving section 355** In the case of a distribution to which section 355 (or so much of section 356 as relates to section 355) applies and which involves the distribution of stock from 1 member of an affiliated group (as defined in section 1504(a) without regard to subsection (b) thereof) to another member of such group, the Secretary may, notwithstanding any other provision of this section, provide adjustments to the adjusted basis of any stock which—
(1) is in a corporation which is a member of such group, and
(2) is held by another member of such group,
to appropriately reflect the proper treatment of such distribution.
**(h) Special rules for assumption of liabilities to which subsection (d) does not apply**
(1) **In general** — If, after application of the other provisions of this section to an exchange or series of exchanges, the basis of property to which subsection (a)(1) applies exceeds the fair market value of such property, then such basis shall be reduced (but not below such fair market value) by the amount (determined as of the date of the exchange) of any liability—
(A) which is assumed by another person as part of the exchange, and
(B) with respect to which subsection (d)(1) does not apply to the assumption.
(2) **Exceptions** — Except as provided by the Secretary, paragraph (1) shall not apply to any liability if—
(A) the trade or business with which the liability is associated is transferred to the person assuming the liability as part of the exchange, or
(B) substantially all of the assets with which the liability is associated are transferred to the person assuming the liability as part of the exchange.
(3) **Liability** — For purposes of this subsection, the term “liability” shall include any fixed or contingent obligation to make payment, without regard to whether the obligation is otherwise taken into account for purposes of this title.
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Federal law — U.S. Code and appendices · legal_authorities
**(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
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Findings** The Congress finds and declares that—
(1) Essential rail service in the midwest and northeast region of the United States is provided by railroads which are today insolvent and attempting to undergo reorganization under the Bankruptcy Act.
(2) This essential rail service is threatened with cessation or significant curtailment because of the inability of the trustees of such railroads to formulate acceptable plans for reorganization. This rail service is operated over rail properties which were acquired for a public use, but which have been permitted to deteriorate and now require extensive rehabilitation and modernization.
(3) The public convenience and necessity require adequate and efficient rail service in this region and throughout the Nation to meet the needs of commerce, the national defense, the environment, and the service requirements of passengers, United States mail, shippers, States and their political subdivisions, and consumers.
(4) Continuation and improvement of essential rail service in this region is also necessary to preserve and maintain adequate national rail services and an efficient national rail transportation system.
(5) Rail service and rail transportation offer economic and environmental advantages with respect to land use, air pollution, noise levels, energy efficiency and conservation, resource allocation, safety, and cost per ton-mile of movement to such extent that the preservation and maintenance of adequate and efficient rail service is in the national interest.
(6) These needs cannot be met without substantial action by the Federal Government.
**(b) Purposes** It is therefore declared to be the purpose of Congress in this chapter to provide for—
(1) the identification of a rail service system in the midwest and
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Property acquired by issuance of stock or as paid-in surplus** If property was acquired by a corporation—
(1) in connection with a transaction to which section 351 (relating to transfer of property to corporation controlled by transferor) applies, or
(2) as paid-in surplus or as a contribution to capital,
then the basis shall be the same as it would be in the hands of the transferor, increased in the amount of gain recognized to the transferor on such transfer.
**(b) Transfers to corporations** If property was acquired by a corporation in connection with a reorganization to which this part applies, then the basis shall be the same as it would be in the hands of the transferor, increased in the amount of gain recognized to the transferor on such transfer. This subsection shall not apply if the property acquired consists of stock or securities in a corporation a party to the reorganization, unless acquired by the exchange of stock or securities of the transferee (or of a corporation which is in control of the transferee) as the consideration in whole or in part for the transfer.
**(c) Special rule for certain contributions to capital**
(1) **Property other than money** — Notwithstanding subsection (a)(2), if property other than money—
(A) is acquired by a corporation as a contribution to capital, and
(B) is not contributed by a shareholder as such,
then the basis of such property shall be zero.
(2) **Money** — Notwithstanding subsection (a)(2), if money—
(A) is received by a corporation as a contribution to capital, and
(B) is not contributed by a shareholder as such,
then the basis of any property acquired with such money during the 12-month period beginning on the day the contribution is received shall be reduced by the amount of such contrib
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Abolition and termination**
(1) Effective April 1, 1987, the United States Railway Association is abolished.
(2) On January 1, 1987, all powers, duties, rights, and obligations of such association relating to the Corporation under the Regional Rail Reorganization Act of 1973 ([45 U.S.C. 701](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title45-section701&num=0&edition=prelim) et seq.) shall be transferred to the Secretary of Transportation.
(3) The sole function of the United States Railway Association after January 1, 1987, shall be the termination of its affairs and the liquidation of its assets.
**(b) Transfer of securities and responsibilities**
(1) Any securities of the Corporation held by the United States Railway Association shall, upon 11 So in original. Probably should be “on”. October 21, 1986, be transferred to the Secretary of Transportation.
(2) If, on the date the United States Railway Association is abolished under subsection (a), such association shall not have completed the termination of its affairs and the liquidation of its assets, the duty of completing such winding up of its affairs and liquidation shall be transferred to the Secretary of Transportation, who for such purposes shall succeed to all remaining powers, duties, rights, and obligations of such association.
**(c) Financing agreement**
(1) On January 1, 1987, the Amended and Restated Financing Agreement, dated May 10, 1979, between the United States Railway Association and the Corporation, together with any and all rights and obligations of or on behalf of any person with respect to such agreement, shall terminate and be of no further force or effect, except for those provisions specifying terms and conditions for payments made to the United States with respect
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Federal law — U.S. Code and appendices · legal_authorities
**(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
**(a) General rule**
(1) **In general** — No gain or loss shall be recognized if stock or securities in a corporation a party to a reorganization are, in pursuance of the plan of reorganization, exchanged solely for stock or securities in such corporation or in another corporation a party to the reorganization.
(2) **Limitation**
(A) *Excess principal amount* — Paragraph (1) shall not apply if—
(i) the principal amount of any such securities received exceeds the principal amount of any such securities surrendered, or
(ii) any such securities are received and no such securities are surrendered.
(B) *Property attributable to accrued interest* — Neither paragraph (1) nor so much of section 356 as relates to paragraph (1) shall apply to the extent that any stock (including nonqualified preferred stock, as defined in section 351(g)(2)), securities, or other property received is attributable to interest which has accrued on securities on or after the beginning of the holder’s holding period.
(C) *Nonqualified preferred stock*
(i) *In general* — Nonqualified preferred stock (as defined in section 351(g)(2)) received in exchange for stock other than nonqualified preferred stock (as so defined) shall not be treated as stock or securities.
(ii) *Recapitalizations of family-owned corporations*
(I) *In general* — Clause (i) shall not apply in the case of a recapitalization under section 368(a)(1)(E) of a family-owned corporation.
(II) *Family-owned corporation* — For purposes of this clause, except as provided in regulations, the term “family-owned corporation” means any corporation which is described in clause (i) of section 447(d)(2)(C) 11 See References in Text note below. throughout the 8-year period beginning on the date which is 5
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Allowance of deductions** In the case of an individual, the exemptions provided by this section shall be allowed as deductions in computing taxable income.
**(b) Taxpayer and spouse** An exemption of the exemption amount for the taxpayer; and an additional exemption of the exemption amount for the spouse of the taxpayer if a joint return is not made by the taxpayer and his spouse, and if the spouse, for the calendar year in which the taxable year of the taxpayer begins, has no gross income and is not the dependent of another taxpayer.
**(c) Additional exemption for dependents** An exemption of the exemption amount for each individual who is a dependent (as defined in section 152) of the taxpayer for the taxable year.
**(d) Exemption amount** For purposes of this section—
(1) **In general** — Except as otherwise provided in this subsection, the term “exemption amount” means $2,000.
(2) **Exemption amount disallowed in case of certain dependents** — In the case of an individual with respect to whom a deduction under this section is allowable to another taxpayer for a taxable year beginning in the calendar year in which the individual’s taxable year begins, the exemption amount applicable to such individual for such individual’s taxable year shall be zero.
(3) **Phaseout**
(A) *In general* — In the case of any taxpayer whose adjusted gross income for the taxable year exceeds the applicable amount in effect under section 68(b),11 See References in Text note below. the exemption amount shall be reduced by the applicable percentage.
(B) *Applicable percentage* — For purposes of subparagraph (A), the term “applicable percentage” means 2 percentage points for each $2,500 (or fraction thereof) by which the taxpayer’s adjusted gross income for the taxable year e
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 151
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Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** No gain or loss shall be recognized if property is transferred to a corporation by one or more persons solely in exchange for stock in such corporation and immediately after the exchange such person or persons are in control (as defined in section 368(c)) of the corporation.
**(b) Receipt of property** If subsection (a) would apply to an exchange but for the fact that there is received, in addition to the stock permitted to be received under subsection (a), other property or money, then—
(1) gain (if any) to such recipient shall be recognized, but not in excess of—
(A) the amount of money received, plus
(B) the fair market value of such other property received; and
(2) no loss to such recipient shall be recognized.
**(c) Special rules where distribution to shareholders**
(1) **In general** — In determining control for purposes of this section, the fact that any corporate transferor distributes part or all of the stock in the corporation which it receives in the exchange to its shareholders shall not be taken into account.
(2) **Special rule for section 355** — If the requirements of section 355 (or so much of section 356 as relates to section 355) are met with respect to a distribution described in paragraph (1), then, solely for purposes of determining the tax treatment of the transfers of property to the controlled corporation by the distributing corporation, the fact that the shareholders of the distributing corporation dispose of part or all of the distributed stock, or the fact that the corporation whose stock was distributed issues additional stock, shall not be taken into account in determining control for purposes of this section.
**(d) Services, certain indebtedness, and accrued interest not treated as property** For purposes o
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Federal law — U.S. Code and appendices · legal_authorities
Page 1136
TITLE 26—INTERNAL REVENUE CODE
§ 358
(B) the fair market value of such other as-
sets (determined without regard to section
7701(g)).
(3) Regulations
The Secretary shall prescribe such regula-
tions as may be necessary to carry out the
purposes of this subsection and section 362(d).
The Secretary may also prescribe regulations
which provide that the manner in which a li-
ability is treated as assumed under this sub-
section is applied, where appropriate, else-
where in this title.
(Aug. 16, 1954, ch. 736, 68A Stat. 116; June 29, 1956,
ch. 463, § 2, 70 Stat. 403; Pub. L. 95–600, title III,
§ 365(a), Nov. 6, 1978, 92 Stat. 2854; Pub. L. 96–222,
title I, § 103(a)(12), Apr. 1, 1980, 94 Stat. 213; Pub.
L. 96–589, § 4(h)(2), Dec. 24, 1980, 94 Stat. 3405;
Pub. L. 101–508, title XI, § 11801(c)(8)(F), Nov. 5,
1990, 104 Stat. 1388–524; Pub. L. 106–36, title III,
§ 3001(a)(1), (b)(1), (d)(2)–(5), June 25, 1999, 113
Stat. 181–184; Pub. L. 106–554, § 1(a)(7) [title III,
§ 309(b)], Dec. 21, 2000, 114 Stat. 2763, 2763A–638;
Pub. L. 108–357, title VIII, § 898(b), Oct. 22, 2004,
118 Stat. 1649; Pub. L. 109–135, title IV, § 403(jj)(2),
Dec. 21, 2005, 119 Stat. 2632.)
Editorial Notes
AMENDMENTS
2005—Subsec. (d)(1). Pub. L. 109–135 inserted ‘‘section
361(b)(3),’’ after ‘‘section 358(h),’’.
2004—Subsec. (c)(1)(B). Pub. L. 108–357 inserted ‘‘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’’ after
‘‘section 368(a)(1)(D)’’.
2000—Subsec. (d)(1). Pub. L. 106–554 inserted ‘‘section
358(h),’’ after ‘‘section 358(d),’’ in introductory provi-
sions.
1999—Subsec. (a). Pub. L. 106–36, § 3001(d)(2), struck
out ‘‘or acquisition’’ after ‘‘assumption’
Source: Supplied 2024 U.S. Code historical extraction · 26 U.S.C. § 358
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