---
kind: "section"
citation: "12 U.S.C. § 5261"
title: "12"
title_heading: "Banks and Banking"
number: "5261"
heading: "Gain or loss from sale or exchange of certain preferred stock"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/12/5261"
units:
  - "Chapter 52 — Emergency Economic Stabilization"
  - "Subchapter III — Tax Provisions"
---

# §5261. Gain or loss from sale or exchange of certain preferred stock

- (a) **In general—** For purposes of [title 26](/usc/26.md), gain or loss from the sale or exchange of any applicable preferred stock by any applicable [financial institution](/usc/12/5202.md?p=5) shall be treated as ordinary income or loss.
- (b) **Applicable preferred stock—** For purposes of this section, the term “applicable preferred stock” means any stock—
  - (1) which is preferred stock in—
    - (A) the Federal National [Mortgage](/usc/12/1707.md?p=a) Association, established pursuant to the Federal National [Mortgage](/usc/12/1707.md?p=a) Association Charter Act ([12 U.S.C. 1716](/usc/12/1716.md) et seq.), or
    - (B) the Federal Home Loan [Mortgage](/usc/12/1707.md?p=a) [Corporation](/usc/12/5202.md?p=4), established pursuant to the Federal Home Loan [Mortgage](/usc/12/1707.md?p=a) Corporation Act ([12 U.S.C. 1451](/usc/12/1451.md) et seq.), and
  - (2) which—
    - (A) was held by the applicable [financial institution](/usc/12/5202.md?p=5) on September 6, 2008, or
    - (B) was sold or exchanged by the applicable [financial institution](/usc/12/5202.md?p=5) on or after January 1, 2008, and before September 7, 2008.
- (c) **Applicable financial institution—** For purposes of this section:
  - (1) **In general—** Except as provided in [paragraph (2)](#c-2), the term “applicable [financial institution](/usc/12/5202.md?p=5)” means—
    - (A) a [financial institution](/usc/12/5202.md?p=5) referred to in [section 582(c)(2) of title 26](/usc/26/582.md?p=c-2), or
    - (B) a [depository institution](/usc/12/1861.md?p=b-4) holding company (as defined in [section 1813(w)(1) of this title](/usc/12/1813.md?p=w-1)).
  - (2) **Special rules for certain sales—** In the case of—
    - (A) a sale or exchange described in [subsection (b)(2)(B)](#b-2-B), an entity shall be treated as an applicable [financial institution](/usc/12/5202.md?p=5) only if it was an entity described in subparagraph [(A)](#c-1-A) or [(B)](#c-1-B) of paragraph (1) at the time of the sale or exchange, and
    - (B) a sale or exchange after September 6, 2008, of preferred stock described in [subsection (b)(2)(A)](#b-2-A), an entity shall be treated as an applicable [financial institution](/usc/12/5202.md?p=5) only if it was an entity described in subparagraph [(A)](#c-1-A) or [(B)](#c-1-B) of paragraph (1) at all times during the period beginning on September 6, 2008, and ending on the date of the sale or exchange of the preferred stock.
- (d) **Special rule for certain property not held on September 6, 2008—** The [Secretary](/usc/12/5202.md?p=7) of the Treasury or the [Secretary](/usc/12/5202.md?p=7)’s delegate may extend the application of this section to all or a portion of the gain or loss from a sale or exchange in any case where—
  - (1) an applicable [financial institution](/usc/12/5202.md?p=5) sells or exchanges applicable preferred stock after September 6, 2008, which the applicable [financial institution](/usc/12/5202.md?p=5) did not hold on such date, but the basis of which in the hands of the applicable [financial institution](/usc/12/5202.md?p=5) at the time of the sale or exchange is the same as the basis in the hands of the [person](/usc/12/5481.md?p=19) which held such stock on such date, or
  - (2) the applicable [financial institution](/usc/12/5202.md?p=5) is a partner in a partnership which—
    - (A) held such stock on September 6, 2008, and later sold or exchanged such stock, or
    - (B) sold or exchanged such stock during the period described in [subsection (b)(2)(B)](#b-2-B).
- (e) **Regulatory authority—** The [Secretary](/usc/12/5202.md?p=7) of the Treasury or the [Secretary](/usc/12/5202.md?p=7)’s delegate may prescribe such guidance, rules, or regulations as are necessary to carry out the purposes of this section.
- (f) **Effective date—** This section shall apply to sales or exchanges occurring after December 31, 2007, in taxable years ending after such date.

## Source credit

(Pub. L. 110–343, div. A, title III, § 301, Oct. 3, 2008, 122 Stat. 3802.)

## Notes

### Editorial Notes

### References in Text

The Federal National Mortgage Association Charter Act, referred to in subsec. (b)(1)(A), is title III of act June 27, 1934, ch. 847, 48 Stat. 1252, which is classified generally to subchapter III (§ 1716 et seq.) of chapter 13 of this title. For complete classification of this Act to the Code, see Short Title note set out under section 1716 of this title and Tables.

The Federal Home Loan Mortgage Corporation Act, referred to in subsec. (b)(1)(B), is title III of Pub. L. 91–351, July 24, 1970, 84 Stat. 451, which is classified generally to chapter 11A (§ 1451 et seq.) of this title. For complete classification of this Act to the Code, see Short Title and Statement of Purpose note set out under section 1451 of this title and Tables.