26 U.S.C. § 311: Taxability of corporation on distribution

its stock (or rights to acquire its stock), or property. a corporation distributes property (other than an obligation of such corporation) to a shareholder in a distribution to which subpart A applies, and the fair market value of such property exceeds its adjusted basis (in the hands of the distributing corporation), Rules similar to the rules of section 336(b) shall apply for purposes of this subsection. If the property distributed consists of an interest in a partnership or trust, the Secretary may by regulations provide that the amount of the gain recognized under paragraph (1) shall be computed without regard to any loss attributable to property contributed to the partnership or trust for the principal purpose of recognizing such loss on the distribution. Except as otherwise provided in this subsection, the amendments made by subsection (a) [amending this section] shall apply to distributions declared on or after June 14, 1984 , in taxable years ending after such date. The amendment made by subsection (b) [amending section 301 of this title ] shall apply to distributions after the date of the enactment of this Act [ July 18, 1984 ] in taxable years ending after such date. The amendments made by subsection (a) shall not apply to any distribution before January 1, 1985 , to an 80-percent corporate shareholder if the basis of the property distributed is determined under section 301(d)(2) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954]. stock in the corporation making the distribution possessing at least 80 percent of the total combined voting power of all classes of stock entitled to vote, and at least 80 percent of the total number of shares of all other classes of stock of the distributing corporation (except nonvoting stock which is limited and preferred as to dividends). For purposes of this paragraph and paragraph (4), all members of the same affiliated group (as defined in section 1504 of the Internal Revenue Code of 1986) which file a consolidated return for the taxable year which includes the date of the distribution shall be treated as 1 corporation. In the case of a transaction to which this subparagraph applies, subparagraph (A) shall be applied by substituting ‘1988’ for ‘1985’ and the amendments made by subtitle D of title VI of the Tax Reform Act of 1986 [sections 631 to 634 of Pub. L. 99–514 , enacting sections 336 and 337 of this title, amending this section and sections 26, 312, 332, 334, 338, 341, 346, 367, 453, 453B, 467, 852, 897, 1056, 1248, 1255, 1276, 1363, 1366, 1374, and 1375 of this title, repealing sections 333, 336, and 337 of this title, and enacting provisions set out as a note under section 301 of this title ] shall not apply. with respect to which such Delaware corporation is a 100-percent corporate shareholder, and which is a Tennessee corporation which was incorporated on March 2, 1978 ,, [sic] and which is a successor to an Indiana corporation which was incorporated on June 28, 1946 , and acquired by the transferee on December 9 [10], 1968. such distribution consists of qualified stock held (directly or indirectly) on June 15, 1984 , by the distributing corporation, control of the distributing corporation (as defined in section 368(c) of the Internal Revenue Code of 1986) is acquired other than in a tax-free transaction after January 1, 1984 , but before January 1, 1985 , a tender offer for the shares of the distributing corporation was commenced on May 23, 1984 , and was amended on May 24, 1984 , and the distributing corporation and the distributee corporation are members of the same affiliated group (as defined in section 1504 of such Code) which filed a consolidated return for the taxable year which includes the date of the distribution. For purposes of subparagraph (A), the term ‘qualified stock’ means any stock in a corporation which on June 15, 1984 , was a member of the same affiliated group as the distributing corporation and which filed a consolidated return with the distributing corporation for the taxable year which included June 15, 1984 . the controlled corporation, or any subsidiary controlled corporation, acquired, during the 1-year period ending on February 1, 1984 , at least 10 percent of the outstanding stock of the controlled corporation, held at least 10 percent of the outstanding stock of the common parent on February 1, 1984 , and submitted a proposal for distributions of interests in a royalty trust from the common parent or the controlled corporation, and the common parent acquired control of the controlled corporation during the 1-year period ending on February 1, 1984 . The term ‘common parent’ has the meaning given such term by section 1504(a) of the Internal Revenue Code of 1986. The term ‘controlled corporation’ means a corporation with respect to which 50 percent or more of the outstanding stock of its common parent is tendered for pursuant to a tender offer outstanding on March 7, 1984 . The term ‘subsidiary controlled corporation’ means any corporation with respect to which the controlled corporation has control (within the meaning of section 368(c) of such Code) on March 7, 1984 . such interest was owned by the distributing corporation (or any member of an affiliated group within the meaning of section 1504(a) of such Code of which the distributing corporation was a member) on March 7, 1984 , the distributing corporation (or any such affiliated member) owned more than 80 percent of the interests in such partnership on March 7, 1984 , and more than 10 percent of the interests in such partnership was offered for sale to the public during the 1-year period ending on March 7, 1984 .” Except as otherwise provided in this subsection, the amendments made by this section [amending this section] shall apply to distributions after August 31, 1982 . pursuant to a ruling granted pursuant to such request, and either before October 21, 1982 , or within 90 days after the date of such ruling. In the case of a final judgment described in section 311(d)(2)(C) of such Code (as in effect before the amendments made by this section) rendered before July 23, 1982 , the amendments made by this section [amending this section] shall not apply to distributions made before January 1, 1986 , pursuant to such judgment. which meet the requirements of section 311(d)(2)(A) of such Code (as in effect on the day before the date of the enactment of this Act [ Sept. 3, 1982 ]), which are made on or before August 31, 1983 , and which are made with respect to stock acquired after 1980 and before May 1982. a forest products company distributes timberland to a shareholder in redemption of the common and preferred stock in such corporation held by such shareholder, section 311(d)(2)(A) of the Internal Revenue Code of 1986 (as in effect before the amendments made by this section) would have applied to such distributions, and such distributions are made pursuant to 1 of 2 options contained in a contract between such company and such shareholder which is binding on August 31, 1982 , and at all times thereafter, Except as provided in paragraphs (2), (3), (4), and (5), the amendments made by subsections (a) and (b) [amending this section and sections 301 and 312 of this title] shall apply with respect to distributions after November 30, 1969 . a written contract which was binding on the distributing corporation on November 30, 1969 , and at all times thereafter before the distribution, an offer made by the distributing corporation before December 1, 1969 , an offer made in accordance with a request for a ruling filed by the distributing corporation with the Internal Revenue Service before December 1, 1969 , or an offer made in accordance with a registration statement filed with the Securities and Exchange Commission before December 1, 1969 . every holder of such stock on such date had the right to demand redemption of his stock in such specific property, and the corporation had such specific property on hand on such date in a quantity sufficient to redeem all of such stock. such redemption is pursuant to a resolution adopted before November 1, 1969 , by the Board of Directors authorizing the redemption of a specific amount of stock constituting more than 10 percent of the outstanding stock of the corporation at the time of the adoption of such resolution; and more than 40 percent of the stock authorized to be redeemed pursuant to such resolution was redeemed before December 30, 1969 , and more than one-half of the stock so redeemed was redeemed with property other than money. the stock being distributed was owned by the distributing corporation on November 30, 1969 , the stock being redeemed was acquired before January 1, 1973 , pursuant to such equity participation plan by the shareholder presenting such stock for redemption (or by a predecessor of such shareholder), the employment of the shareholder presenting the stock for redemption (or the predecessor of such shareholder) by the employer corporation commenced before January 1, 1971 , at least 90 percent in value of the assets of the distributing corporation on November 30, 1969 , consisted of common stock of the employer corporation, and at least 50 percent of the outstanding voting stock of the employer corporation is owned by the distributing corporation at any time within the nine-year period ending one year before the date of such distribution.”