26 U.S.C. § 331 — Gain or loss to shareholder in corporate

Page 1103 TITLE 26—INTERNAL REVENUE CODE § 332 Editorial Notes AMENDMENTS 1986—Pub. L. 99–514, title VI, § 631(e)(16), Oct. 22, 1986, 100 Stat. 2275, struck out item 333 ‘‘Election as to rec- ognition of gain in certain liquidations’’. § 331. Gain or loss to shareholder in corporate liquidations (a) Distributions in complete liquidation treated as exchanges Amounts received by a shareholder in a dis- tribution in complete liquidation of a corpora- tion shall be treated as in full payment in ex- change for the stock. (b) Nonapplication of section 301 Section 301 (relating to effects on shareholder of distributions of property) shall not apply to any distribution of property (other than a dis- tribution referred to in paragraph (2)(B) of sec- tion 316(b)) in complete liquidation. (c) Cross reference For general rule for determination of the amount of gain or loss recognized, see section 1001. (Aug. 16, 1954, ch. 736, 68A Stat. 101; Pub. L. 88–272, title II, § 225(f)(2), Feb. 26, 1964, 78 Stat. 88; Pub. L. 94–455, title XIX, § 1901(b)(28)(A), Oct. 4, 1976, 90 Stat. 1799; Pub. L. 97–248, title II, § 222(a), (e)(1)(B), Sept. 3, 1982, 96 Stat. 478, 480; Pub. L. 115–141, div. U, title IV, § 401(a)(63), Mar. 23, 2018, 132 Stat. 1187.) Editorial Notes AMENDMENTS 2018—Pub. L. 115–141 substituted ‘‘shareholder’’ for ‘‘shareholders’’ in section catchline. 1982—Subsec. (a). Pub. L. 97–248, § 222(a), substituted provisions that amounts received by a shareholder in a distribution in complete liquidation of a corporation shall be treated as in full payment in exchange for the stock for provisions that, in complete liquidations, amounts distributed shall be treated as in full payment in exchange for the stock, while amounts distributed in partial liquidation shall be treated as in part or full payment in exchange for the stock. Subsec. (b). Pub. L. 97–248, § 222(e)(1)(B), struck out ‘‘partial or’’ before ‘‘complete liquidation’’. 1976—Subsec. (c). Pub. L. 94–455 substituted ‘‘ref- erence’’ for ‘‘references’’ in heading and struck out cross reference relating to general rule for determina- tion of the amount of gain or loss to the distributee and substituted ‘‘section 1001’’ for ‘‘section 1002’’. 1964—Subsec. (b). Pub. L. 88–272 inserted ‘‘(other than a distribution referred to in paragraph (2)(B) of section 316(b))’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1982 AMENDMENT Amendment by Pub. L. 97–248 applicable to distribu- tions after Aug. 31, 1982, with exceptions for certain partial liquidations, see section 222(f) of Pub. L. 97–248, set out as a note under section 302 of this title. EFFECTIVE DATE OF 1976 AMENDMENT Amendment by Pub. L. 94–455 effective for taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94–455, set out as a note under section 2 of this title. EFFECTIVE DATE OF 1964 AMENDMENT Amendment by Pub. L. 88–272 applicable to distribu- tion made in any taxable year of the distributing cor- poration beginning after Dec. 31, 1963, see section 225(l) of Pub. L. 88–272, set out as a note under section 316 of this title. LIQUIDATIONS BEFORE JANUARY 1, 1966 Pub. L. 88–272, title II, § 225(h), Feb. 26, 1964, 78 Stat. 90, provided that in the case of corporations referred to in former subsec. (g)(3) of this section the amendments made by section 225 of Pub. L. 88–272 do not apply if there is a complete liquidation of such corporation and if the distribution of all the property under such liq- uidation occurs before Jan. 1, 1966, except for certain liquidations to which section 332 of this title applies. § 332. Complete liquidations of subsidiaries (a) General rule No gain or loss shall be recognized on the re- ceipt by a corporation of property distributed in complete liquidation of another corporation. (b) Liquidations to which section applies For purposes of this section, a distribution shall be considered to be in complete liquidation only if— (1) the corporation receiving such property was, on the date of the adoption of the plan of liquidation, and has continued to be at all times until the receipt of the property, the owner of stock (in such other corporation) meeting the requirements of section 1504(a)(2); and either (2) the distribution is by such other corpora- tion in complete cancellation or redemption of all its stock, and the transfer of all the prop- erty occurs within the taxable year; in such case the adoption by the shareholders of the resolution under which is authorized the dis- tribution of all the assets of such corporation in complete cancellation or redemption of all its stock shall be considered an adoption of a plan of liquidation, even though no time for the completion of the transfer of the property is specified in such resolution; or (3) such distribution is one of a series of dis- tributions by such other corporation in com- plete cancellation or redemption of all its stock in accordance with a plan of liquidation under which the transfer of all the property under the liquidation is to be completed with- in 3 years from the close of the taxable year during which is made the first of the series of distributions under the plan, except that if such transfer is not completed within such pe- riod, or if the taxpayer does not continue qualified under paragraph (1) until the comple- tion of such transfer, no distribution under the plan shall be considered a distribution in com- plete liquidation. If such transfer of all the property does not occur within the taxable year, the Secretary may require of the taxpayer such bond, or waiv- er of the statute of limitations on assessment and collection, or both, as he may deem nec- essary to insure, if the transfer of the property is not completed within such 3-year period, or if the taxpayer does not continue qualified under paragraph (1) until the completion of such trans- fer, the assessment and collection of all income taxes then imposed by law for such taxable year or subsequent taxable years, to the extent at- tributable to property so received. A distribu-