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26 U.S.C. § 337 — Nonrecognition for property distributed to parent in complete liquidation of subsidiary
Federal law — U.S. Code and appendices · legal_authorities
**(a) In general** No gain or loss shall be recognized to the liquidating corporation on the distribution to the 80-percent distributee of any property in a complete liquidation to which section 332 applies.
**(b) Treatment of indebtedness of subsidiary, etc.**
(1) **Indebtedness of subsidiary to parent** — If—
(A) a corporation is liquidated in a liquidation to which section 332 applies, and
(B) on the date of the adoption of the plan of liquidation, such corporation was indebted to the 80-percent distributee,
for purposes of this section and section 336, any transfer of property to the 80-percent distributee in satisfaction of such indebtedness shall be treated as a distribution to such distributee in such liquidation.
(2) **Treatment of tax-exempt distributee**
(A) *In general* — Except as provided in subparagraph (B), paragraph (1) and subsection (a) shall not apply where the 80-percent distributee is an organization (other than a cooperative described in section 521) which is exempt from the tax imposed by this chapter.
(B) *Exception where property will be used in unrelated business*
(i) *In general* — Subparagraph (A) shall not apply to any distribution of property to an organization described in section 511(a)(2) if, immediately after such distribution, such organization uses such property in an activity the income from which is subject to tax under section 511(a).
(ii) *Later disposition or change in use* — If any property to which clause (i) applied is disposed of by the organization acquiring such property, notwithstanding any other provision of law, any gain (not in excess of the amount not recognized by reason of clause (i)) shall be included in such organization’s unrelated business taxable income. For purposes of the preceding s
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Source location: Title 26, Chapter 1, § 337; chapter-001-normal-taxes-and-surtaxes.md
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**(a) In general** No gain or loss shall be recognized to the liquidating corporation on the distribution to the 80-percent distributee of any property in a complete liquidation to which section 332 applies.
**(b) Treatment of indebtedness of subsidiary, etc.**
(1) **Indebtedness of subsidiary to parent** — If—
(A) a corporation is liquidated in a liquidation to which section 332 applies, and
(B) on the date of the adoption of the plan of liquidation, such corporation was indebted to the 80-percent distributee,
for purposes of this section and section 336, any transfer of property to the 80-percent distributee in satisfaction of such indebtedness shall be treated as a distribution to such distributee in such liquidation.
(2) **Treatment of tax-exempt distributee**
(A) *In general* — Except as provided in subparagraph (B), paragraph (1) and subsection (a) shall not apply where the 80-percent distributee is an organization (other than a cooperative described in section 521) which is exempt from the tax imposed by this chapter.
(B) *Exception where property will be used in unrelated business*
(i) *In general* — Subparagraph (A) shall not apply to any distribution of property to an organization described in section 511(a)(2) if, immediately after such distribution, such organization uses such property in an activity the income from which is subject to tax under section 511(a).
(ii) *Later disposition or change in use* — If any property to which clause (i) applied is disposed of by the organization acquiring such property, notwithstanding any other provision of law, any gain (not in excess of the amount not recognized by reason of clause (i)) shall be included in such organization’s unrelated business taxable income. For purposes of the preceding sentence, if such property ceases to be used in an activity referred to in clause (i), such organization shall be treated as having disposed of such property on the date of such cessation.
**(c) 80-percent distributee** For purposes of this section, the term “80-percent distributee” means only the corporation which meets the 80-percent stock ownership requirements specified in section 332(b). For purposes of this section, the determination of whether any corporation is an 80-percent distributee shall be made without regard to any consolidated return regulation.
**(d) Regulations** The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of the amendments made by subtitle D of title VI of the Tax Reform Act of 1986, including—
(1) regulations to ensure that such purposes may not be circumvented through the use of any provision of law or regulations (including the consolidated return regulations and part III of this subchapter) or through the use of a regulated investment company, real estate investment trust, or tax-exempt entity, and
(2) regulations providing for appropriate coordination of the provisions of this section with the provisions of this title relating to taxation of foreign corporations and their shareholders.
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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
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Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** For purposes of this subtitle, if a purchasing corporation makes an election under this section (or is treated under subsection (e) as having made such an election), then, in the case of any qualified stock purchase, the target corporation—
(1) shall be treated as having sold all of its assets at the close of the acquisition date at fair market value in a single transaction, and
(2) shall be treated as a new corporation which purchased all of the assets referred to in paragraph (1) as of the beginning of the day after the acquisition date.
**(b) Basis of assets after deemed purchase**
(1) **In general** — For purposes of subsection (a), the assets of the target corporation shall be treated as purchased for an amount equal to the sum of—
(A) the grossed-up basis of the purchasing corporation’s recently purchased stock, and
(B) the basis of the purchasing corporation’s nonrecently purchased stock.
(2) **Adjustment for liabilities and other relevant items** — The amount described in paragraph (1) shall be adjusted under regulations prescribed by the Secretary for liabilities of the target corporation and other relevant items.
(3) **Election to step-up the basis of certain target stock**
(A) *In general* — Under regulations prescribed by the Secretary, the basis of the purchasing corporation’s nonrecently purchased stock shall be the basis amount determined under subparagraph (B) of this paragraph if the purchasing corporation makes an election to recognize gain as if such stock were sold on the acquisition date for an amount equal to the basis amount determined under subparagraph (B).
(B) *Determination of basis amount* — For purposes of subparagraph (A), the basis amount determined under this subparagraph shall be an amount equal to
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Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** Except as otherwise provided in this section or section 337, gain or loss shall be recognized to a liquidating corporation on the distribution of property in complete liquidation as if such property were sold to the distributee at its fair market value.
**(b) Treatment of liabilities** If any property distributed in the liquidation is subject to a liability or the shareholder assumes a liability of the liquidating corporation in connection with the distribution, for purposes of subsection (a) and section 337, the fair market value of such property shall be treated as not less than the amount of such liability.
**(c) Exception for liquidations which are part of a reorganization** For provision providing that this subpart does not apply to distributions in pursuance of a plan of reorganization, see section 361(c)(4).
**(d) Limitations on recognition of loss**
(1) **No loss recognized in certain distributions to related persons**
(A) *In general* — No loss shall be recognized to a liquidating corporation on the distribution of any property to a related person (within the meaning of section 267) if—
(i) such distribution is not pro rata, or
(ii) such property is disqualified property.
(B) *Disqualified property* — For purposes of subparagraph (A), the term “disqualified property” means any property which is acquired by the liquidating corporation in a transaction to which section 351 applied, or as a contribution to capital, during the 5-year period ending on the date of the distribution. Such term includes any property if the adjusted basis of such property is determined (in whole or in part) by reference to the adjusted basis of property described in the preceding sentence.
(2) **Special rule for certain property acquired in cert
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Treatment of certain stock purchases**
(1) **Acquisition by related corporation (other than subsidiary)** — For purposes of sections 302 and 303, if—
(A) one or more persons are in control of each of two corporations, and
(B) in return for property, one of the corporations acquires stock in the other corporation from the person (or persons) so in control,
then (unless paragraph (2) applies) such property shall be treated as a distribution in redemption of the stock of the corporation acquiring such stock. To the extent that such distribution is treated as a distribution to which section 301 applies, the transferor and the acquiring corporation shall be treated in the same manner as if the transferor had transferred the stock so acquired to the acquiring corporation in exchange for stock of the acquiring corporation in a transaction to which section 351(a) applies, and then the acquiring corporation had redeemed the stock it was treated as issuing in such transaction.
(2) **Acquisition by subsidiary** — For purposes of sections 302 and 303, if—
(A) in return for property, one corporation acquires from a shareholder of another corporation stock in such other corporation, and
(B) the issuing corporation controls the acquiring corporation,
then such property shall be treated as a distribution in redemption of the stock of the issuing corporation.
**(b) Special rules for application of subsection (a)**
(1) **Rules for determinations under section 302(b)** — In the case of any acquisition of stock to which subsection (a) of this section applies, determinations as to whether the acquisition is, by reason of section 302(b), to be treated as a distribution in part or full payment in exchange for the stock shall be made by reference to the stock of the i
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Exclusion from gross income**
(1) **In general** — Gross income does not include any amount which (but for this subsection) would be includible in gross income by reason of the discharge (in whole or in part) of indebtedness of the taxpayer if—
(A) the discharge occurs in a title 11 case,
(B) the discharge occurs when the taxpayer is insolvent,
(C) the indebtedness discharged is qualified farm indebtedness,
(D) in the case of a taxpayer other than a C corporation, the indebtedness discharged is qualified real property business indebtedness, or
(E) the indebtedness discharged is qualified principal residence indebtedness which is discharged—
(i) before January 1, 2026, or
(ii) subject to an arrangement that is entered into and evidenced in writing before January 1, 2026.
(2) **Coordination of exclusions**
(A) *Title 11 exclusion takes precedence* — Subparagraphs (B), (C), (D), and (E) of paragraph (1) shall not apply to a discharge which occurs in a title 11 case.
(B) *Insolvency exclusion takes precedence over qualified farm exclusion and qualified real property business exclusion* — Subparagraphs (C) and (D) of paragraph (1) shall not apply to a discharge to the extent the taxpayer is insolvent.
(C) *Principal residence exclusion takes precedence over insolvency exclusion unless elected otherwise* — Paragraph (1)(B) shall not apply to a discharge to which paragraph (1)(E) applies unless the taxpayer elects to apply paragraph (1)(B) in lieu of paragraph (1)(E).
(3) **Insolvency exclusion limited to amount of insolvency** — In the case of a discharge to which paragraph (1)(B) applies, the amount excluded under paragraph (1)(B) shall not exceed the amount by which the taxpayer is insolvent.
**(b) Reduction of tax attributes**
(
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Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** Except as otherwise provided in this section, income from an installment sale shall be taken into account for purposes of this title under the installment method.
**(b) Installment sale defined** For purposes of this section—
(1) **In general** — The term “installment sale” means a disposition of property where at least 1 payment is to be received after the close of the taxable year in which the disposition occurs.
(2) **Exceptions** — The term “installment sale” does not include—
(A) *Dealer dispositions* — Any dealer disposition (as defined in subsection (l)).
(B) *Inventories of personal property* — A disposition of personal property of a kind which is required to be included in the inventory of the taxpayer if on hand at the close of the taxable year.
**(c) Installment method defined** For purposes of this section, the term “installment method” means a method under which the income recognized for any taxable year from a disposition is that proportion of the payments received in that year which the gross profit (realized or to be realized when payment is completed) bears to the total contract price.
**(d) Election out**
(1) **In general** — Subsection (a) shall not apply to any disposition if the taxpayer elects to have subsection (a) not apply to such disposition.
(2) **Time and manner for making election** — Except as otherwise provided by regulations, an election under paragraph (1) with respect to a disposition may be made only on or before the due date prescribed by law (including extensions) for filing the taxpayer’s return of the tax imposed by this chapter for the taxable year in which the disposition occurs. Such an election shall be made in the manner prescribed by regulations.
(3) **Election revocable only with consent**
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Federal law — U.S. Code and appendices · legal_authorities
Page 1111
TITLE 26—INTERNAL REVENUE CODE
§ 337
‘‘(B) For purposes of subparagraph (A), a distribu-
tion, or sale, or exchange, of a distributee corpora-
tion (within the meaning of section 337(c)(3) of the In-
ternal Revenue Code of 1986) shall be treated as satis-
fying the requirements of subparagraph (A) if its sub-
sidiary satisfies the requirements of subparagraph
(A).
‘‘(C) For purposes of section 56 of the Internal Rev-
enue Code of 1986 (as amended by this Act), any gain
or loss not recognized by reason of this paragraph
shall not be taken into account in determining the
adjusted net book income of the corporation.
‘‘(5) In the case of a corporation incorporated under
the laws of Wisconsin on April 3, 1948—
‘‘(A) a voting trust established not later than De-
cember 31, 1987, shall qualify as a trust permitted as
a shareholder of an S corporation and shall be
treated as only 1 shareholder if the holders of bene-
ficial interests in such voting trust are—
‘‘(i) employees or retirees of such corporation,
or
‘‘(ii) in the case of stock or voting trust certifi-
cates acquired from an employee or retiree of
such corporation, the spouse, child, or estate of
such employee or retiree or a trust created by
such employee or retiree which is described in
section 1361(c)(2) of the Internal Revenue Code of
1986 (or treated as described in such section by
reason of section 1361(d) of such Code), and
‘‘(B) the amendment made by section 632 (other
than subsection (b) thereof) shall not apply to such
corporation if it elects to be an S corporation be-
fore January 1, 1989.
‘‘(6) The amendments made by this subtitle shall
not apply to the liquidation of a corporation incor-
porated on January 26, 1982, under the laws of the
State of Alabama with a principal
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