---
kind: "section"
citation: "26 U.S.C. § 355"
title: "26"
title_heading: "Internal Revenue Code"
number: "355"
heading: "Distribution of stock and securities of a controlled corporation"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/26/355"
units:
  - "Subtitle A — Income Taxes"
  - "Chapter 1 — Normal Taxes and Surtaxes"
  - "Subchapter C — Corporate Distributions and Adjustments"
  - "Part III — Corporate Organizations and Reorganizations"
  - "Subpart B — Effects on Shareholders and Security Holders"
---

# §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](/usc/26/1504.md?p=a-4), or
      - (ii) distributes to a security holder, in exchange for its [securities](/usc/26/368.md?p=a-2-F-vii),

      solely [stock](/usc/26/1504.md?p=a-4) or [securities](/usc/26/368.md?p=a-2-F-vii) of a corporation (referred to in this section as “controlled corporation”) which it [controls](/usc/26/851.md?p=c-2) 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](/usc/26/1504.md?p=a-4) or [securities](/usc/26/368.md?p=a-2-F-vii) 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)](#b) (relating to active businesses) are satisfied, and
    - (D) as part of the distribution, the distributing corporation distributes—
      - (i) all of the [stock](/usc/26/1504.md?p=a-4) and [securities](/usc/26/368.md?p=a-2-F-vii) in the controlled corporation held by it immediately before the distribution, or
      - (ii) an amount of [stock](/usc/26/1504.md?p=a-4) in the controlled corporation constituting [control](/usc/26/368.md?p=a-2-H-i) within the meaning of [section 368(c)](/usc/26/368.md?p=c), and it is established to the satisfaction of the Secretary that the retention by the distributing corporation of [stock](/usc/26/1504.md?p=a-4) (or [stock](/usc/26/1504.md?p=a-4) and [securities](/usc/26/368.md?p=a-2-F-vii)) 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 security holder on the receipt of such [stock](/usc/26/1504.md?p=a-4) or [securities](/usc/26/368.md?p=a-2-F-vii).

  - (2) **Non pro rata distributions, etc.** [Paragraph (1)](#a-1) shall be applied without regard to the following:
    - (A) whether or not the distribution is pro rata with respect to all of the shareholders of the distributing corporation,
    - (B) whether or not the shareholder surrenders [stock](/usc/26/1504.md?p=a-4) in the distributing corporation, and
    - (C) whether or not the distribution is in pursuance of a plan of [reorganization](/usc/26/368.md?p=a-1) (within the meaning of [section 368(a)(1)(D)](/usc/26/368.md?p=a-1-D)).
  - (3) **Limitations—**
    - (A) **Excess principal amount—** [Paragraph (1)](#a-1) shall not apply if—
      - (i) the principal amount of the [securities](/usc/26/368.md?p=a-2-F-vii) in the controlled corporation which are received exceeds the principal amount of the [securities](/usc/26/368.md?p=a-2-F-vii) which are surrendered in connection with such distribution, or
      - (ii) [securities](/usc/26/368.md?p=a-2-F-vii) in the controlled corporation are received and no [securities](/usc/26/368.md?p=a-2-F-vii) are surrendered in connection with such distribution.
    - (B) **Stock acquired in taxable transactions within 5 years treated as boot—** For purposes of this section (other than paragraph (1)(D) of this subsection) and so much of [section 356](/usc/26/356.md) as relates to this section, [stock](/usc/26/1504.md?p=a-4) of a controlled corporation acquired by the distributing corporation by reason of any transaction—
      - (i) which occurs within 5 years of the distribution of such [stock](/usc/26/1504.md?p=a-4), and
      - (ii) in which gain or loss was recognized in whole or in part,

      shall not be treated as [stock](/usc/26/1504.md?p=a-4) of such controlled corporation, but as other [property](/usc/26/317.md?p=a).

    - (C) **Property attributable to accrued interest—** Neither [paragraph (1)](#a-1) nor so much of [section 356](/usc/26/356.md) as relates to [paragraph (1)](#a-1) shall apply to the extent that any [stock](/usc/26/1504.md?p=a-4) (including nonqualified preferred [stock](/usc/26/1504.md?p=a-4), as defined in [section 351(g)(2)](/usc/26/351.md?p=g-2)), [securities](/usc/26/368.md?p=a-2-F-vii), or other [property](/usc/26/317.md?p=a) received is attributable to [interest](/usc/26/856.md?p=f-1) which has accrued on [securities](/usc/26/368.md?p=a-2-F-vii) on or after the beginning of the holder’s holding period.
    - (D) **Nonqualified preferred stock—** Nonqualified preferred [stock](/usc/26/1504.md?p=a-4) (as defined in [section 351(g)(2)](/usc/26/351.md?p=g-2)) received in a distribution with respect to [stock](/usc/26/1504.md?p=a-4) other than nonqualified preferred [stock](/usc/26/1504.md?p=a-4) (as so defined) shall not be treated as [stock](/usc/26/1504.md?p=a-4) or [securities](/usc/26/368.md?p=a-2-F-vii).
  - (4) **Cross references—**
    - (A) For treatment of the exchange if any [property](/usc/26/317.md?p=a) is received which is not permitted to be received under this subsection (including nonqualified preferred [stock](/usc/26/1504.md?p=a-4) and an excess principal amount of [securities](/usc/26/368.md?p=a-2-F-vii) received over [securities](/usc/26/368.md?p=a-2-F-vii) surrendered, but not including [property](/usc/26/317.md?p=a) to which [paragraph (3)(C)](#a-3-C) applies), see section 356.
    - (B) For treatment of accrued [interest](/usc/26/856.md?p=f-1) in the case of an exchange described in [paragraph (3)(C)](#a-3-C), see section 61.
- (b) **Requirements as to active business—**
  - (1) **In general—** [Subsection (a)](#a) shall apply only if either—
    - (A) the distributing corporation, and the controlled corporation (or, if [stock](/usc/26/1504.md?p=a-4) of more than one controlled corporation is distributed, each of such corporations), is engaged immediately after the distribution in the active conduct of a [trade or business](/usc/26/1402.md?p=c), or
    - (B) immediately before the distribution, the distributing corporation had no assets other than [stock](/usc/26/1504.md?p=a-4) or [securities](/usc/26/368.md?p=a-2-F-vii) in the controlled corporations and each of the controlled corporations is engaged immediately after the distribution in the active conduct of a [trade or business](/usc/26/1402.md?p=c).
  - (2) **Definition—** For purposes of [paragraph (1)](#b-1), a corporation shall be treated as engaged in the active conduct of a [trade or business](/usc/26/1402.md?p=c) if and only if—
    - (A) it is engaged in the active conduct of a [trade or business](/usc/26/1402.md?p=c),
    - (B) such [trade or business](/usc/26/1402.md?p=c) has been actively conducted throughout the 5-year period ending on the date of the distribution,
    - (C) such [trade or business](/usc/26/1402.md?p=c) was not acquired within the period described in [subparagraph (B)](#b-2-B) in a transaction in which gain or loss was recognized in whole or in part, and
    - (D) [control](/usc/26/368.md?p=a-2-H-i) of a corporation which (at the time of acquisition of [control](/usc/26/368.md?p=a-2-H-i)) was conducting such [trade or business](/usc/26/1402.md?p=c)—
      - (i) was not acquired by any distributee corporation directly (or through 1 or more corporations, whether through the distributing corporation or otherwise) within the period described in [subparagraph (B)](#b-2-B) and was not acquired by the distributing corporation directly (or through 1 or more corporations) within such period, or
      - (ii) was so acquired by any such corporation within such period, but, in each case in which such [control](/usc/26/368.md?p=a-2-H-i) was so acquired, it was so acquired, only by reason of transactions in which gain or loss was not recognized in whole or in part, or only by reason of such transactions combined with acquisitions before the beginning of such period.

      For purposes of [subparagraph (D)](#b-2-D), all distributee corporations which are members of the same [affiliated group](/usc/26/864.md?p=e-5-A) (as defined in [section 1504(a)](/usc/26/1504.md?p=a) without regard to [section 1504(b)](/usc/26/1504.md?p=b)) shall be treated as 1 distributee corporation.

  - (3) **Special rules for determining active conduct in the case of affiliated groups—**
    - (A) **In general—** For purposes of determining whether a corporation meets the requirements of [paragraph (2)(A)](#b-2-A), all members of such corporation’s separate [affiliated group](/usc/26/864.md?p=e-5-A) shall be treated as one corporation.
    - (B) **Separate affiliated group—** For purposes of this paragraph, the term “separate [affiliated group](/usc/26/864.md?p=e-5-A)” means, with respect to any corporation, the [affiliated group](/usc/26/864.md?p=e-5-A) which would be determined under [section 1504(a)](/usc/26/1504.md?p=a) if such corporation were the common parent and [section 1504(b)](/usc/26/1504.md?p=b) did not apply.
    - (C) **Treatment of trade or business conducted by acquired member—** If a corporation became a member of a separate [affiliated group](/usc/26/864.md?p=e-5-A) as a result of one or more transactions in which gain or loss was recognized in whole or in part, any [trade or business](/usc/26/1402.md?p=c) conducted by such corporation (at the time that such corporation became such a member) shall be treated for purposes of [paragraph (2)](#b-2) as acquired in a transaction in which gain or loss was recognized in whole or in part.
    - (D) **Regulations—** The Secretary shall prescribe such regulations as are necessary or appropriate to carry out the purposes of this paragraph, including regulations which provide for the proper application of subparagraphs [(B)](#b-2-B), [(C)](#b-2-C), and [(D)](#b-2-D) of paragraph (2), and modify the application of [subsection (a)(3)(B)](#a-3-B), in connection with the application of this paragraph.
- (c) **Taxability of corporation on distribution—**
  - (1) **In general—** Except as provided in [paragraph (2)](#c-2), no gain or loss shall be recognized to a corporation on any distribution to which this section (or so much of [section 356](/usc/26/356.md) as relates to this section) applies and which is not in pursuance of a plan of [reorganization](/usc/26/368.md?p=a-1).
  - (2) **Distribution of appreciated property—**
    - (A) **In general—** If—
      - (i) in a distribution referred to in [paragraph (1)](#c-1), the corporation distributes [property](/usc/26/317.md?p=a) other than qualified [property](/usc/26/317.md?p=a), and
      - (ii) the fair market [value](/usc/26/851.md?p=c-4) of such [property](/usc/26/317.md?p=a) exceeds its adjusted basis (in the hands of the distributing corporation),

      then gain shall be recognized to the distributing corporation as if such [property](/usc/26/317.md?p=a) were sold to the distributee at its fair market [value](/usc/26/851.md?p=c-4).

    - (B) **Qualified property—** For purposes of [subparagraph (A)](#c-2-A), the term “qualified [property](/usc/26/317.md?p=a)” means any [stock](/usc/26/1504.md?p=a-4) or [securities](/usc/26/368.md?p=a-2-F-vii) in the controlled corporation.
    - (C) **Treatment of liabilities—** If any [property](/usc/26/317.md?p=a) distributed in the distribution referred to in [paragraph (1)](#c-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)](#c-2-A), the fair market [value](/usc/26/851.md?p=c-4) of such [property](/usc/26/317.md?p=a) shall be treated as not less than the amount of such liability.
  - (3) **Coordination with sections 311 and 336(a)—** Sections [311](/usc/26/311.md) and [336(a)](/usc/26/336.md?p=a) shall not apply to any distribution referred to in [paragraph (1)](#c-1).
- (d) **Recognition of gain on certain distributions of stock or securities in controlled corporation—**
  - (1) **In general—** In the case of a disqualified distribution, any [stock](/usc/26/1504.md?p=a-4) or [securities](/usc/26/368.md?p=a-2-F-vii) in the controlled corporation shall not be treated as qualified [property](/usc/26/317.md?p=a) for purposes of [subsection (c)(2)](#c-2) of this section or [section 361(c)(2)](/usc/26/361.md?p=c-2).
  - (2) **Disqualified distribution—** For purposes of this subsection, the term “disqualified distribution” means any distribution to which this section (or so much of [section 356](/usc/26/356.md) as relates to this section) applies if, immediately after the distribution—
    - (A) any person holds disqualified [stock](/usc/26/1504.md?p=a-4) in the distributing corporation which constitutes a 50-percent or greater [interest](/usc/26/856.md?p=f-1) in such corporation, or
    - (B) any person holds disqualified [stock](/usc/26/1504.md?p=a-4) in the controlled corporation (or, if [stock](/usc/26/1504.md?p=a-4) of more than 1 controlled corporation is distributed, in any controlled corporation) which constitutes a 50-percent or greater [interest](/usc/26/856.md?p=f-1) in such corporation.
  - (3) **Disqualified stock—** For purposes of this subsection, the term “disqualified [stock](/usc/26/1504.md?p=a-4)” means—
    - (A) any [stock](/usc/26/1504.md?p=a-4) in the distributing corporation acquired by [purchase](/usc/26/1361.md?p=e-1-C) during the 5-year period ending on the date of the distribution, and
    - (B) any [stock](/usc/26/1504.md?p=a-4) in any controlled corporation—
      - (i) acquired by [purchase](/usc/26/1361.md?p=e-1-C) during the 5-year period ending on the date of the distribution, or
      - (ii) received in the distribution to the extent attributable to distributions on—
        - (I) [stock](/usc/26/1504.md?p=a-4) described in [subparagraph (A)](#d-3-A), or
        - (II) any [securities](/usc/26/368.md?p=a-2-F-vii) in the distributing corporation acquired by [purchase](/usc/26/1361.md?p=e-1-C) during the 5-year period ending on the date of the distribution.
  - (4) **50-percent or greater interest—** For purposes of this subsection, the term “50-percent or greater [interest](/usc/26/856.md?p=f-1)” means [stock](/usc/26/1504.md?p=a-4) possessing at least 50 percent of the total combined voting power of all classes of [stock](/usc/26/1504.md?p=a-4) entitled to vote or at least 50 percent of the total [value](/usc/26/851.md?p=c-4) of shares of all classes of [stock](/usc/26/1504.md?p=a-4).
  - (5) **Purchase—** For purposes of this subsection—
    - (A) **In general—** Except as otherwise provided in this paragraph, the term “[purchase](/usc/26/1361.md?p=e-1-C)” means any acquisition but only if—
      - (i) the basis of the [property](/usc/26/317.md?p=a) acquired in the hands of the acquirer is not determined (I) in whole or in part by reference to the adjusted basis of such [property](/usc/26/317.md?p=a) in the hands of the person from whom acquired, or (II) under [section 1014(a)](/usc/26/1014.md?p=a), and
      - (ii) the [property](/usc/26/317.md?p=a) is not acquired in an exchange to which section [351](/usc/26/351.md), [354](/usc/26/354.md), 355, or [356](/usc/26/356.md) applies.
    - (B) **Certain section 351 exchanges treated as purchases—** The term “[purchase](/usc/26/1361.md?p=e-1-C)” includes any acquisition of [property](/usc/26/317.md?p=a) in an exchange to which [section 351](/usc/26/351.md) applies to the extent such [property](/usc/26/317.md?p=a) is acquired in exchange for—
      - (i) any [cash](/usc/26/856.md?p=c-5-K) or [cash](/usc/26/856.md?p=c-5-K) item,
      - (ii) any marketable [stock](/usc/26/1504.md?p=a-4) or security, or
      - (iii) any debt of the transferor.
    - (C) **Carryover basis transactions—** If—
      - (i) any person acquires [property](/usc/26/317.md?p=a) from another person who acquired such [property](/usc/26/317.md?p=a) by [purchase](/usc/26/1361.md?p=e-1-C) (as determined under this paragraph with regard to this subparagraph), and
      - (ii) the adjusted basis of such [property](/usc/26/317.md?p=a) in the hands of such acquirer is determined in whole or in part by reference to the adjusted basis of such [property](/usc/26/317.md?p=a) in the hands of such other person,

      such acquirer shall be treated as having acquired such [property](/usc/26/317.md?p=a) by [purchase](/usc/26/1361.md?p=e-1-C) on the date it was so acquired by such other person.

  - (6) **Special rule where substantial diminution of risk—**
    - (A) **In general—** If this paragraph applies to any [stock](/usc/26/1504.md?p=a-4) or [securities](/usc/26/368.md?p=a-2-F-vii) for any period, the running of any 5-year period set forth in subparagraph [(A)](#d-3-A) or [(B)](#d-3-B) of paragraph (3) (whichever applies) shall be suspended during such period.
    - (B) **Property to which suspension applies—** This paragraph applies to any [stock](/usc/26/1504.md?p=a-4) or [securities](/usc/26/368.md?p=a-2-F-vii) for any period during which the holder’s risk of loss with respect to such [stock](/usc/26/1504.md?p=a-4) or [securities](/usc/26/368.md?p=a-2-F-vii), or with respect to any portion of the activities of the corporation, is (directly or [indirectly](/usc/26/101.md?p=a-3-B)) substantially diminished by—
      - (i) an option,
      - (ii) a short sale,
      - (iii) any special class of [stock](/usc/26/1504.md?p=a-4), or
      - (iv) any other device or transaction.
  - (7) **Aggregation rules—**
    - (A) **In general—** For purposes of this subsection, a person and all persons related to such person (within the meaning of section [267(b)](/usc/26/267.md?p=b) or [707(b)(1)](/usc/26/707.md?p=b-1)) shall be treated as one person.
    - (B) **Persons acting pursuant to plans or arrangements—** If two or more persons act pursuant to a plan or arrangement with respect to acquisitions of [stock](/usc/26/1504.md?p=a-4) or [securities](/usc/26/368.md?p=a-2-F-vii) in the distributing corporation or controlled corporation, such persons shall be treated as one person for purposes of this subsection.
  - (8) **Attribution from entities—**
    - (A) **In general—** [Paragraph (2)](/usc/26/318.md?p=a-2) of section 318(a) shall apply in determining whether a person holds [stock](/usc/26/1504.md?p=a-4) or [securities](/usc/26/368.md?p=a-2-F-vii) in any corporation (determined by substituting “10 percent” for “50 percent” in subparagraph (C) of such [paragraph (2)](#d-2) and by treating any reference to [stock](/usc/26/1504.md?p=a-4) as including a reference to [securities](/usc/26/368.md?p=a-2-F-vii)).
    - (B) **Deemed purchase rule—** If—
      - (i) any person acquires by [purchase](/usc/26/1361.md?p=e-1-C) an [interest](/usc/26/856.md?p=f-1) in any entity, and
      - (ii) such person is treated under [subparagraph (A)](#d-8-A) as holding any [stock](/usc/26/1504.md?p=a-4) or [securities](/usc/26/368.md?p=a-2-F-vii) by reason of holding such [interest](/usc/26/856.md?p=f-1),

      such [stock](/usc/26/1504.md?p=a-4) or [securities](/usc/26/368.md?p=a-2-F-vii) shall be treated as acquired by [purchase](/usc/26/1361.md?p=e-1-C) by such person on the later of the date of the [purchase](/usc/26/1361.md?p=e-1-C) of the [interest](/usc/26/856.md?p=f-1) in such entity or the date such [stock](/usc/26/1504.md?p=a-4) or [securities](/usc/26/368.md?p=a-2-F-vii) are acquired by [purchase](/usc/26/1361.md?p=e-1-C) by such entity.

  - (9) **Regulations—** The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this subsection, including—
    - (A) regulations to prevent the avoidance of the purposes of this subsection through the use of [related persons](/usc/26/414.md?p=n-6-A), intermediaries, pass-thru entities, options, or other arrangements, and
    - (B) regulations modifying the definition of the term “[purchase](/usc/26/1361.md?p=e-1-C)”.
- (e) **Recognition of gain on certain distributions of stock or securities in connection with acquisitions—**
  - (1) **General rule—** If there is a distribution to which this subsection applies, any [stock](/usc/26/1504.md?p=a-4) or [securities](/usc/26/368.md?p=a-2-F-vii) in the controlled corporation shall not be treated as qualified [property](/usc/26/317.md?p=a) for purposes of [subsection (c)(2)](#c-2) of this section or [section 361(c)(2)](/usc/26/361.md?p=c-2).
  - (2) **Distributions to which subsection applies—**
    - (A) **In general—** This subsection shall apply to any distribution—
      - (i) to which this section (or so much of [section 356](/usc/26/356.md) as relates to this section) applies, and
      - (ii) which is part of a plan (or series of related transactions) pursuant to which 1 or more persons acquire directly or [indirectly](/usc/26/101.md?p=a-3-B) [stock](/usc/26/1504.md?p=a-4) representing a 50-percent or greater [interest](/usc/26/856.md?p=f-1) in the distributing corporation or any controlled corporation.
    - (B) **Plan presumed to exist in certain cases—** If 1 or more persons acquire directly or [indirectly](/usc/26/101.md?p=a-3-B) [stock](/usc/26/1504.md?p=a-4) representing a 50-percent or greater [interest](/usc/26/856.md?p=f-1) in the distributing corporation or any controlled corporation during the 4-year period beginning on the date which is 2 years before the date of the distribution, such acquisition shall be treated as pursuant to a plan described in [subparagraph (A)(ii)](#e-2-A-ii) unless it is established that the distribution and the acquisition are not pursuant to a plan or series of related transactions.
    - (C) **Certain plans disregarded—** A plan (or series of related transactions) shall not be treated as described in [subparagraph (A)(ii)](#e-2-A-ii) if, immediately after the completion of such plan or transactions, the distributing corporation and all controlled corporations are members of a single [affiliated group](/usc/26/864.md?p=e-5-A) (as defined in [section 1504](/usc/26/1504.md) without regard to [subsection (b)](#b) thereof).
    - (D) **Coordination with subsection (d)—** This subsection shall not apply to any distribution to which [subsection (d)](#d) applies.
  - (3) **Special rules relating to acquisitions—**
    - (A) **Certain acquisitions not taken into account—** Except as provided in regulations, the following acquisitions shall not be taken into account in applying [paragraph (2)(A)(ii)](#e-2-A-ii):
      - (i) The acquisition of [stock](/usc/26/1504.md?p=a-4) in any controlled corporation by the distributing corporation.
      - (ii) The acquisition by a person of [stock](/usc/26/1504.md?p=a-4) in any controlled corporation by reason of holding [stock](/usc/26/1504.md?p=a-4) or [securities](/usc/26/368.md?p=a-2-F-vii) in the distributing corporation.
      - (iii) The acquisition by a person of [stock](/usc/26/1504.md?p=a-4) in any successor corporation of the distributing corporation or any controlled corporation by reason of holding [stock](/usc/26/1504.md?p=a-4) or [securities](/usc/26/368.md?p=a-2-F-vii) in such distributing or controlled corporation.
      - (iv) The acquisition of [stock](/usc/26/1504.md?p=a-4) in the distributing corporation or any controlled corporation to the extent that the percentage of [stock](/usc/26/1504.md?p=a-4) owned directly or [indirectly](/usc/26/101.md?p=a-3-B) in such corporation by each person owning [stock](/usc/26/1504.md?p=a-4) in such corporation immediately before the acquisition does not decrease.

      This subparagraph shall not apply to any acquisition if the [stock](/usc/26/1504.md?p=a-4) held before the acquisition was acquired pursuant to a plan (or series of related transactions) described in [paragraph (2)(A)(ii)](#e-2-A-ii).

    - (B) **Asset acquisitions—** Except as provided in regulations, for purposes of this subsection, if the assets of the distributing corporation or any controlled corporation are acquired by a successor corporation in a transaction described in subparagraph [(A)](/usc/26/368.md?p=a-1-A), [(C)](/usc/26/368.md?p=a-1-C), or [(D)](/usc/26/368.md?p=a-1-D) of section 368(a)(1) or any other transaction specified in regulations by the Secretary, the shareholders (immediately before the acquisition) of the corporation acquiring such assets shall be treated as acquiring [stock](/usc/26/1504.md?p=a-4) in the corporation from which the assets were acquired.
  - (4) **Definition and special rules—** For purposes of this subsection—
    - (A) **50-percent or greater interest—** The term “50-percent or greater [interest](/usc/26/856.md?p=f-1)” has the meaning given such term by [subsection (d)(4)](#d-4).
    - (B) **Distributions in title 11 or similar case—** [Paragraph (1)](#e-1) shall not apply to any distribution made in a [title 11](/usc/11.md) or similar case (as defined in [section 368(a)(3)](/usc/26/368.md?p=a-3)).
    - (C) **Aggregation and attribution rules—**
      - (i) **Aggregation—** The rules of [paragraph (7)(A)](#d-7-A) of subsection (d) shall apply.
      - (ii) **Attribution—** [Section 318(a)(2)](/usc/26/318.md?p=a-2) shall apply in determining whether a person holds [stock](/usc/26/1504.md?p=a-4) or [securities](/usc/26/368.md?p=a-2-F-vii) in any corporation. Except as provided in regulations, [section 318(a)(2)(C)](/usc/26/318.md?p=a-2-C) shall be applied without regard to the phrase “50 percent or more in [value](/usc/26/851.md?p=c-4)” for purposes of the preceding sentence.
    - (D) **Successors and predecessors—** For purposes of this subsection, any reference to a controlled corporation or a distributing corporation shall include a reference to any predecessor or successor of such corporation.
    - (E) **Statute of limitations—** If there is a distribution to which [paragraph (1)](#e-1) applies—
      - (i) the statutory period for the assessment of any deficiency attributable to any part of the gain recognized under this subsection by reason of such distribution shall not expire before the expiration of 3 years from the date the Secretary is notified by the [taxpayer](/usc/26/1313.md?p=b) (in such manner as the Secretary may by regulations prescribe) that such distribution occurred, and
      - (ii) such deficiency may be assessed before the expiration of such 3-year period notwithstanding the provisions of any other law or rule of law which would otherwise prevent such assessment.
  - (5) **Regulations—** The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this subsection, including regulations—
    - (A) providing for the application of this subsection where there is more than 1 controlled corporation,
    - (B) treating 2 or more distributions as 1 distribution where necessary to prevent the avoidance of such purposes, and
    - (C) providing for the application of rules similar to the rules of [subsection (d)(6)](#d-6) where appropriate for purposes of [paragraph (2)(B)](#e-2-B).
- (f) **Section not to apply to certain intragroup distributions—** Except as provided in regulations, this section (or so much of [section 356](/usc/26/356.md) as relates to this section) shall not apply to the distribution of [stock](/usc/26/1504.md?p=a-4) from 1 member of an [affiliated group](/usc/26/864.md?p=e-5-A) (as defined in [section 1504(a)](/usc/26/1504.md?p=a)) to another member of such group if such distribution is part of a plan (or series of related transactions) described in [subsection (e)(2)(A)(ii)](#e-2-A-ii) (determined after the application of [subsection (e)](#e)).
- (g) **Section not to apply to distributions involving disqualified investment corporations—**
  - (1) **In general—** This section (and so much of [section 356](/usc/26/356.md) as relates to this section) shall not apply to any distribution which is part of a transaction if—
    - (A) either the distributing corporation or controlled corporation is, immediately after the transaction, a disqualified investment corporation, and
    - (B) any person holds, immediately after the transaction, a 50-percent or greater [interest](/usc/26/856.md?p=f-1) in any disqualified investment corporation, but only if such person did not hold such an [interest](/usc/26/856.md?p=f-1) in such corporation immediately before the transaction.
  - (2) **Disqualified investment corporation—** For purposes of this subsection—
    - (A) **In general—** The term “disqualified investment corporation” means any distributing or controlled corporation if the fair market [value](/usc/26/851.md?p=c-4) of the investment assets of the corporation is—
      - (i) in the case of distributions after the end of the 1-year period beginning on the date of the enactment of this subsection, ⅔ or more of the fair market [value](/usc/26/851.md?p=c-4) of all assets of the corporation, and
      - (ii) in the case of distributions during such 1-year period, ¾ or more of the fair market [value](/usc/26/851.md?p=c-4) of all assets of the corporation.
    - (B) **Investment assets—**
      - (i) **In general—** Except as otherwise provided in this subparagraph, the term “investment assets” means—
        - (I) [cash](/usc/26/856.md?p=c-5-K),
        - (II) any [stock](/usc/26/1504.md?p=a-4) or [securities](/usc/26/368.md?p=a-2-F-vii) in a corporation,
        - (III) any [interest](/usc/26/856.md?p=f-1) in a [partnership](/usc/26/761.md?p=a),
        - (IV) any [debt instrument](/usc/26/1275.md?p=a-1-A) or other evidence of indebtedness,
        - (V) any option, forward or futures [contract](/usc/26/101.md?p=f-3-A), notional principal [contract](/usc/26/101.md?p=f-3-A), or derivative,
        - (VI) foreign currency, or
        - (VII) any similar asset.
      - (ii) **Exception for assets used in active conduct of certain financial trades or businesses—** Such term shall not include any asset which is held for use in the active and regular conduct of—
        - (I) a [lending or finance business](/usc/26/542.md?p=d-1-A) (within the meaning of [section 954(h)(4)](/usc/26/954.md?p=h-4)),
        - (II) a banking business through a bank (as defined in [section 581](/usc/26/581.md)), a domestic building and loan association (within the meaning of [section 7701(a)(19)](/usc/26/7701.md?p=a-19)), or any similar institution specified by the Secretary, or
        - (III) an insurance business if the conduct of the business is licensed, authorized, or regulated by an applicable insurance regulatory body.

      This clause shall only apply with respect to any business if substantially all of the income of the business is derived from persons who are not related (within the meaning of section [267(b)](/usc/26/267.md?p=b) or [707(b)(1)](/usc/26/707.md?p=b-1)) to the person conducting the business.

      - (iii) **Exception for securities marked to market—** Such term shall not include any security (as defined in [section 475(c)(2)](/usc/26/475.md?p=c-2)) which is held by a dealer in [securities](/usc/26/368.md?p=a-2-F-vii) and to which [section 475(a)](/usc/26/475.md?p=a) applies.
      - (iv) **Stock or securities in a 20-percent controlled entity—**
        - (I) **In general—** Such term shall not include any [stock](/usc/26/1504.md?p=a-4) and [securities](/usc/26/368.md?p=a-2-F-vii) in, or any asset described in subclause [(IV)](#g-2-B-i-IV) or [(V)](#g-2-B-i-V) of clause (i) issued by, a corporation which is a 20-percent controlled entity with respect to the distributing or controlled corporation.
        - (II) **Look-thru rule—** The distributing or controlled corporation shall, for purposes of applying this subsection, be treated as owning its ratable share of the assets of any 20-percent controlled entity.
        - (III) **20-percent controlled entity—** For purposes of this clause, the term “20-percent controlled entity” means, with respect to any distributing or controlled corporation, any corporation with respect to which the distributing or controlled corporation owns directly or [indirectly](/usc/26/101.md?p=a-3-B) [stock](/usc/26/1504.md?p=a-4) meeting the requirements of [section 1504(a)(2)](/usc/26/1504.md?p=a-2), except that such section shall be applied by substituting “20 percent” for “80 percent” and without regard to [stock](/usc/26/1504.md?p=a-4) described in [section 1504(a)(4)](/usc/26/1504.md?p=a-4).
      - (v) **Interests in certain partnerships—**
        - (I) **In general—** Such term shall not include any [interest](/usc/26/856.md?p=f-1) in a [partnership](/usc/26/761.md?p=a), or any [debt instrument](/usc/26/1275.md?p=a-1-A) or other evidence of indebtedness, issued by the [partnership](/usc/26/761.md?p=a), if 1 or more of the trades or businesses of the [partnership](/usc/26/761.md?p=a) are (or, without regard to the 5-year requirement under [subsection (b)(2)(B)](#b-2-B), would be) taken into account by the distributing or controlled corporation, as the case may be, in determining whether the requirements of [subsection (b)](#b) are met with respect to the distribution.
        - (II) **Look-thru rule—** The distributing or controlled corporation shall, for purposes of applying this subsection, be treated as owning its ratable share of the assets of any [partnership](/usc/26/761.md?p=a) described in [subclause (I)](#g-2-B-v-I).
  - (3) **50-percent or greater interest—** For purposes of this subsection—
    - (A) **In general—** The term “50-percent or greater [interest](/usc/26/856.md?p=f-1)” has the meaning given such term by [subsection (d)(4)](#d-4).
    - (B) **Attribution rules—** The rules of [section 318](/usc/26/318.md) shall apply for purposes of determining ownership of [stock](/usc/26/1504.md?p=a-4) for purposes of this paragraph.
  - (4) **Transaction—** For purposes of this subsection, the term “transaction” includes a series of transactions.
  - (5) **Regulations—** The Secretary shall prescribe such regulations as may be necessary to carry out, or prevent the avoidance of, the purposes of this subsection, including regulations—
    - (A) to carry out, or prevent the avoidance of, the purposes of this subsection in cases involving—
      - (i) the use of [related persons](/usc/26/414.md?p=n-6-A), intermediaries, pass-thru entities, options, or other arrangements, and
      - (ii) the treatment of assets unrelated to the [trade or business](/usc/26/1402.md?p=c) of a corporation as investment assets if, prior to the distribution, investment assets were used to acquire such unrelated assets,
    - (B) which in appropriate cases exclude from the application of this subsection a distribution which does not have the character of a redemption which would be treated as a [sale or exchange](/usc/26/864.md?p=c-8-D) under [section 302](/usc/26/302.md), and
    - (C) which modify the application of the attribution rules applied for purposes of this subsection.
- (h) **Restriction on distributions involving real estate investment trusts—**
  - (1) **In general—** This section (and so much of [section 356](/usc/26/356.md) as relates to this section) shall not apply to any distribution if either the distributing corporation or controlled corporation is a [real estate investment trust](/usc/26/856.md?p=a).
  - (2) **Exceptions for certain distributions—**
    - (A) **Distributions of a real estate investment trust by another real estate investment trust—** [Paragraph (1)](#h-1) shall not apply to any distribution if, immediately after the distribution, the distributing corporation and the controlled corporation are both [real estate investment trusts](/usc/26/856.md?p=a).
    - (B) **Distributions of certain taxable REIT subsidiaries—** [Paragraph (1)](#h-1) shall not apply to any distribution if—
      - (i) the distributing corporation has been a [real estate investment trust](/usc/26/856.md?p=a) at all times during the 3-year period ending on the date of such distribution,
      - (ii) the controlled corporation has been a [taxable REIT subsidiary](/usc/26/856.md?p=l-1) (as defined in [section 856(l)](/usc/26/856.md?p=l)) of the distributing corporation at all times during such period, and
      - (iii) the distributing corporation had [control](/usc/26/368.md?p=a-2-H-i) (as defined in [section 368(c)](/usc/26/368.md?p=c) applied by taking into account [stock](/usc/26/1504.md?p=a-4) owned directly or [indirectly](/usc/26/101.md?p=a-3-B), including through one or more corporations or [partnerships](/usc/26/761.md?p=a), by the distributing corporation) of the controlled corporation at all times during such period.

      A controlled corporation will be treated as meeting the requirements of clauses [(ii)](#h-2-B-ii) and [(iii)](#h-2-B-iii) if the [stock](/usc/26/1504.md?p=a-4) of such corporation was distributed by a [taxable REIT subsidiary](/usc/26/856.md?p=l-1) in a transaction to which this section (or so much of [section 356](/usc/26/356.md) as relates to this section) applies and the assets of such corporation consist solely of the [stock](/usc/26/1504.md?p=a-4) or assets held by one or more [taxable REIT subsidiaries](/usc/26/856.md?p=l-1) of the distributing corporation meeting the requirements of clauses [(ii)](#h-2-B-ii) and [(iii)](#h-2-B-iii). For purposes of [clause (iii)](#h-2-B-iii), [control](/usc/26/368.md?p=a-2-H-i) of a [partnership](/usc/26/761.md?p=a) means ownership of at least 80 percent of the profits [interest](/usc/26/856.md?p=f-1) and at least 80 percent of the capital [interests](/usc/26/856.md?p=f-1).


## Source credit

(Aug. 16, 1954, ch. 736, 68A Stat. 113; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 96–589, § 4(e)(2), Dec. 24, 1980, 94 Stat. 3403; Pub. L. 100–203, title X, § 10223(b), Dec. 22, 1987, 101 Stat. 1330–411; Pub. L. 100–647, title I, § 1018(d)(5)(C), title II, § 2004(k)(1), Nov. 10, 1988, 102 Stat. 3580, 3605; Pub. L. 101–508, title XI, §§ 11321(a), 11702(e)(2), Nov. 5, 1990, 104 Stat. 1388–460, 1388–515; Pub. L. 104–188, title I, § 1704(t)(31), Aug. 20, 1996, 110 Stat. 1889; Pub. L. 105–34, title X, §§ 1012(a), (b)(1), 1014(c), (e)(1), (2), Aug. 5, 1997, 111 Stat. 914, 916, 921; Pub. L. 105–206, title VI, § 6010(c)(2), July 22, 1998, 112 Stat. 813; Pub. L. 109–222, title II, § 202, title V, § 507(a), May 17, 2006, 120 Stat. 348, 358; Pub. L. 109–432, div. A, title IV, § 410(a), Dec. 20, 2006, 120 Stat. 2963; Pub. L. 110–172, § 4(b)(1), (2), Dec. 29, 2007, 121 Stat. 2476; Pub. L. 113–295, div. A, title II, § 221(a)(50), Dec. 19, 2014, 128 Stat. 4045; Pub. L. 114–113, div. Q, title III, § 311(a), Dec. 18, 2015, 129 Stat. 3090; Pub. L. 115–141, div. U, title I, § 101(m), title IV, § 401(a)(65), Mar. 23, 2018, 132 Stat. 1165, 1187.)

## Notes

### Editorial Notes

### References in Text

The date of the enactment of this subsection, referred to in subsec. (g)(2)(A)(i), is the date of enactment of Pub. L. 109–222, which was approved May 17, 2006.

### Amendments

2018—Subsec. (h)(2). Pub. L. 115–141, § 101(m)(2)(A), substituted “distributions” for “spinoffs” in heading.

Subsec. (h)(2)(A). Pub. L. 115–141, § 101(m)(2)(B), substituted “Distributions” for “Spinoffs” in heading.

Subsec. (h)(2)(B). Pub. L. 115–141, § 401(a)(65), struck out “of assets” after “the stock or assets” in concluding provisions.

Pub. L. 115–141, § 101(m)(2)(B), substituted “Distributions” for “Spinoffs” in heading.

Pub. L. 115–141, § 101(m)(1), in concluding provisions, substituted “at least 80 percent” for “80 percent” in two places.

2015—Subsec. (h). Pub. L. 114–113 added subsec. (h).

2014—Subsec. (d)(3)(A), (B)(i), (ii)(II). Pub. L. 113–295 struck out “after October 9, 1990, and” after “acquired by purchase”.

2007—Subsec. (b)(2)(A). Pub. L. 110–172, § 4(b)(1), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: “it is engaged in the active conduct of a trade or business, or substantially all of its assets consist of stock and securities of a corporation controlled by it (immediately after the distribution) which is so engaged,”.

Subsec. (b)(3). Pub. L. 110–172, § 4(b)(2), amended par. (3) generally. Prior to amendment, par. (3) provided for special rule relating to active business requirement applicable in the case of any distribution made after May 17, 2006.

2006—Subsec. (b)(3). Pub. L. 109–222, § 202, added par. (3).

Subsec. (b)(3)(A), (D). Pub. L. 109–432 struck out “and on or before December 31, 2010” after “this paragraph” in subpar. (A) and after “such date” in subpar. (D).

Subsec. (g). Pub. L. 109–222, § 507(a), added subsec. (g).

1998—Subsec. (e)(3)(A). Pub. L. 105–206, § 6010(c)(2)(A), substituted “shall not be taken into account in applying” for “shall not be treated as described in” in introductory provisions.

Subsec. (e)(3)(A)(iv). Pub. L. 105–206, § 6010(c)(2)(B), added cl. (iv) and struck out former cl. (iv) which read as follows: “The acquisition of stock in a corporation if shareholders owning directly or indirectly stock possessing—

“(I) more than 50 percent of the total combined voting power of all classes of stock entitled to vote, and

“(II) more than 50 percent of the total value of shares of all classes of stock,

in the distributing corporation or any controlled corporation before such acquisition own directly or indirectly stock possessing such vote and value in such distributing or controlled corporation after such acquisition.”

1997—Subsec. (a)(3)(C). Pub. L. 105–34, § 1014(e)(1), inserted “(including nonqualified preferred stock, as defined in section 351(g)(2))” after “stock”.

Subsec. (a)(3)(D). Pub. L. 105–34, § 1014(c), added subpar. (D).

Subsec. (a)(4)(A). Pub. L. 105–34, § 1014(e)(2), inserted “nonqualified preferred stock and” after “subsection (including”.

Subsec. (e). Pub. L. 105–34, § 1012(a), added subsec. (e).

Subsec. (f). Pub. L. 105–34, § 1012(b)(1), added subsec. (f).

1996—Subsec. (d)(7)(A). Pub. L. 104–188 inserted “section” before “267(b)”.

1990—Subsec. (c). Pub. L. 101–508, § 11321(a), added subsec. (c) and struck out former subsec. (c) which read as follows:

“(1) In general.—Except as provided in paragraph (2), no gain or loss shall be recognized to a corporation on any distribution to which this section (or so much of section 356 as relates to this section) applies and which is not in pursuance of a plan of reorganization.

“(2) Distribution of appreciated property.—

“(A) In general.—If—

“(i) in a distribution referred to in paragraph (1), the corporation distributes property other than stock or securities in the controlled corporation, 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) 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) Coordination with sections 311 and 336(a).—Sections 311 and 336(a) shall not apply to any distribution referred to in paragraph (1).”

Pub. L. 101–508, § 11702(e)(2), amended subsec. (c) generally. Prior to amendment, subsec. (c) read as follows: “Section 311 shall apply to any distribution—

“(1) to which this section (or so much of section 356 as relates to this section) applies, and

“(2) which is not in pursuance of a plan of reorganization,

in the same manner as if such distribution were a distribution to which subpart A of part I applies; except that subsection (b) of section 311 shall not apply to any distribution of stock or securities in the controlled corporation.”

Subsec. (d). Pub. L. 101–508, § 11321(a), added subsec. (d).

1988—Subsec. (b)(2)(D)(i), (ii). Pub. L. 100–647, § 2004(k)(1), added cls. (i) and (ii) and struck out former cls. (i) and (ii) which read as follows:

“(i) was not acquired by any distributee corporation directly (or through 1 or more corporations, whether through the distributing corporation or otherwise) within the period described in subparagraph (B), or

“(ii) was so acquired such distributee corporation within such period, but such control was so acquired only by reason of transactions in which gain or loss was not recognized in whole or in part, or only by reason of such transactions combined with acquisitions before the beginning of such period.”

Subsec. (c). Pub. L. 100–647, § 1018(d)(5)(C), added subsec. (c).

1987—Subsec. (b)(2)(D). Pub. L. 100–203, § 10223(b)(3), inserted at end “For purposes of subparagraph (D), all distributee corporations which are members of the same affiliated group (as defined in section 1504(a) without regard to section 1504(b)) shall be treated as 1 distributee corporation.”

Subsec. (b)(2)(D)(i). Pub. L. 100–203, § 10223(b)(1), amended cl. (i) generally. Prior to amendment, cl. (i) read as follows: “was not acquired directly (or through one or more corporations) by another corporation within the period described in subparagraph (B), or”.

Subsec. (b)(2)(D)(ii). Pub. L. 100–203, § 10223(b)(2), substituted “such distributee corporation” for “by another corporation”.

1980—Subsec. (a)(3). Pub. L. 96–589 designated existing provisions as subpars. (A) and (B) and added subpar. (C).

Subsec. (a)(4). Pub. L. 96–589, § 4(e)(2), designated existing provisions as subpar. (A), substituted “exchange if any property” for “distribution if any property”, inserted provisions excluding property to which paragraph (3)(C) applies, and added subpar. (B).

1976—Subsec. (a)(1)(D)(ii). Pub. L. 94–455 struck out “or his delegate” after “Secretary”.

### Statutory Notes and Related Subsidiaries

### Effective Date of 2018 Amendment

Amendment by section 101(m) of Pub. L. 115–141 effective as if included in the provision of the Protecting Americans from Tax Hikes Act of 2015, div. Q of Pub. L. 114–113, to which such amendment relates, see section 101(s) of Pub. L. 115–141, set out as a note under section 24 of this title.

### Effective Date of 2015 Amendment

Pub. L. 114–113, div. Q, title III, § 311(c), Dec. 18, 2015, 129 Stat. 3091, provided that: “The amendments made by this section [amending this section and section 856 of this title] shall apply to distributions on or after December 7, 2015, but shall not apply to any distribution pursuant to a transaction described in a ruling request initially submitted to the Internal Revenue Service on or before such date, which request has not been withdrawn and with respect to which a ruling has not been issued or denied in its entirety as of such date.”

### Effective Date of 2014 Amendment

Amendment by Pub. L. 113–295 effective Dec. 19, 2014, subject to a savings provision, see section 221(b) of Pub. L. 113–295, set out as a note under section 1 of this title.

### Effective Date of 2007 Amendment

Pub. L. 110–172, § 4(d), Dec. 29, 2007, 121 Stat. 2478, provided that: In general.—Except as otherwise provided in this subsection, the amendments made by this section [amending this section and sections 911 and 954 of this title] shall take effect as if included in the provisions of the Tax Increase Prevention and Reconciliation Act of 2005 [Pub. L. 109–222] to which they relate.Modification of active business definition under section 355.— In general.—Except as otherwise provided in this paragraph, the amendments made by subsection (b) [amending this section] shall apply to distributions made after May 17, 2006. Transition rule.—The amendments made by subsection (b) shall not apply to any distribution pursuant to a transaction which is— made pursuant to an agreement which was binding on May 17, 2006, and at all times thereafter, described in a ruling request submitted to the Internal Revenue Service on or before such date, or described on or before such date in a public announcement or in a filing with the Securities and Exchange Commission. Election out of transition rule.—Subparagraph (B) shall not apply if the distributing corporation elects not to have such subparagraph apply to distributions of such corporation. Any such election, once made, shall be irrevocable. Special rule for certain pre-enactment distributions.—For purposes of determining the continued qualification under section 355(b)(2)(A) of the Internal Revenue Code of 1986 of distributions made on or before May 17, 2006, as a result of an acquisition, disposition, or other restructuring after such date, such distribution shall be treated as made on the date of such acquisition, disposition, or restructuring for purposes of applying subparagraphs (A) through (C) of this paragraph. The preceding sentence shall only apply with respect to the corporation that undertakes such acquisition, disposition, or other restructuring, and only if such application results in continued qualification under section 355(b)(2)(A) of such Code. Amendment related to section 515 of the act.—The amendment made by subsection (c) [amending section 911 of this title] shall apply to taxable years beginning after December 31, 2006.”

### Effective Date of 2006 Amendment

Pub. L. 109–432, div. A, title IV, § 410(b), Dec. 20, 2006, 120 Stat. 2963, provided that: “The amendments made by this section [amending this section] shall take effect as if included in section 202 of the Tax Increase Prevention and Reconciliation Act of 2005 [Pub. L. 109–222].”

Pub. L. 109–222, title V, § 507(b), May 17, 2006, 120 Stat. 361, provided that: In general.—The amendments made by this section [amending this section] shall apply to distributions after the date of the enactment of this Act [May 17, 2006]. Transition rule.—The amendments made by this section shall not apply to any distribution pursuant to a transaction which is— made pursuant to an agreement which was binding on such date of enactment and at all times thereafter, described in a ruling request submitted to the Internal Revenue Service on or before such date, or described on or before such date in a public announcement or in a filing with the Securities and Exchange Commission.”

### Effective Date of 1998 Amendment

Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.

### Effective Date of 1997 Amendment

Amendment by section 1012(a), (b)(1) of Pub. L. 105–34 applicable, with transition rule, to distributions after Apr. 16, 1997, except that amendment by section 1012(a) applicable to such distributions only if pursuant to a plan (or series of related transactions) which involves an acquisition described in subsec. (e)(2)(A)(ii) of this section occurring after such date, see section 1012(d) of Pub. L. 105–34, as amended, set out as a note under section 351 of this title.

Amendment by section 1014(c), (e)(1), (2) of Pub. L. 105–34 applicable, with certain exceptions, to transactions after June 8, 1997, see section 1014(f) of Pub. L. 105–34, set out as a note under section 351 of this title.

### Effective Date of 1990 Amendment

Pub. L. 101–508, title XI, § 11321(c), Nov. 5, 1990, 104 Stat. 1388–463, provided that: In general.—Except as otherwise provided in this subsection, the amendments made by this section [amending this section and section 361 of this title] shall apply to distributions after October 9, 1990. Binding contract exception.—The amendments made by this section shall not apply to any distribution pursuant to a written binding contract in effect on October 9, 1990, and at all times thereafter before such distribution. Transitional rules.—For purposes of subparagraphs (A) and (B) of section 355(d)(3) of the Internal Revenue Code of 1986 (as amended by subsection (a)), an acquisition shall be treated as occurring on or before October 9, 1990, if— such acquisition is pursuant to a written binding contract in effect on October 9, 1990, and at all times thereafter before such acquisition, such acquisition is pursuant to a transaction which was described in documents filed with the Securities and Exchange Commission on or before October 9, 1990, or such acquisition is pursuant to a transaction— the material terms of which were described in a written public announcement on or before October 9, 1990, which was the subject of a prior filing with the Securities and Exchange Commission, and which is the subject of a subsequent filing with the Securities and Exchange Commission before January 1, 1991.”

Amendment by section 11702(e)(2) of Pub. L. 101–508 effective as if included in the provision of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100–647, to which such amendment relates, see section 11702(j) of Pub. L. 101–508, set out as a note under section 59 of this title.

### Effective Date of 1988 Amendment

Amendment by section 1018(d)(5)(C) of Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title.

Amendment by section 2004(k)(1) of Pub. L. 100–647 effective, except as otherwise provided, as if included in the provisions of the Revenue Act of 1987, Pub. L. 100–203, title X, to which such amendment relates, see section 2004(u) of Pub. L. 100–647, set out as a note under section 56 of this title.

### Effective Date of 1987 Amendment

Amendment by Pub. L. 100–203 applicable to distributions or transfers after Dec. 15, 1987, with exceptions for certain distributee corporations and distributions covered by prior transition rule, see section 10223(d) of Pub. L. 100–203, set out as a note under section 304 of this title.

### Effective Date of 1980 Amendment

Amendment by Pub. L. 96–589 applicable to bankruptcy cases or similar judicial proceedings commencing after Dec. 31, 1980, and to exchanges which occur after Dec. 31, 1980, and which do not occur in a bankruptcy case or similar judicial proceeding or in a proceeding under Title 11, Bankruptcy, commenced on or before Dec. 31, 1980, with an exception permitting the debtor to make the amendment applicable to such cases, proceedings or exchanges commencing after Sept. 30, 1979, see section 7(c), (f) of Pub. L. 96–589, set out as a note under section 108 of this title.

### Termination of Tax Increase Prevention and Reconciliation Act of 2005 and Tax Relief and Health Care Act of 2006 Amendments

Pub. L. 110–172, § 4(b)(3), Dec. 29, 2007, 121 Stat. 2476, provided that: “The Internal Revenue Code of 1986 shall be applied and administered as if the amendments made by section 202 of the Tax Increase Prevention and Reconciliation Act of 2005 [Pub. L. 109–222, amending this section] and by section 410 of division A of the Tax Relief and Health Care Act of 2006 [Pub. L. 109–432, amending this section] had never been enacted.”