SEC. 341-Continued (e) (added 1958)-Continued (e) (12) _ (added) Do... (in part) corporation more than 50 percent in value of the outstanding stock of which is owned by the same person. For purposes of determining the ownership of stock in applying subparagraphs (A) and (B), the rules of section 267 (c) shall apply, except that the family of an individual shall include only his spouse, ancestors, and lineal descendants. For purposes of this paragraph, control means the ownership of stock possessing at least 50 percent of the total combined voting power of all classes of stock entitled to vote or at least 50 percent of the total value of shares of all classes of stock of the corporation. "(9) PROPERTY USED IN THE TRADE OR BUSINESS. For purposes of this subsection, the term 'property used in the trade or business' means property described in section 1231 (b), without regard to any holding period therein provided. "(10) OWNERSHIP OF STOCK. For purposes of this subsection (other than paragraph (8)), the ownership of stock shall be determined in the manner prescribed in subsection (d). "(11) CORPORATIONS AND SHAREHOLDERS NOT MEETING REQUIREMENTS.—In determining whether or not any corporation is a collapsible corporation within the meaning of subsection (b), the fact that such corporation, or such corporation with respect to any of its shareholders, does not meet the requirements of paragraph (1), (2), (3), or (4) of this subsection shall not be taken into account, and such determination, in the case of a corporation which does not meet such requirements, shall be made as if this subsection had not been enacted." Applicability: Taxable years beginning after December 31, 1957, but only with respect to sales, exchanges, and distributions after the date of enactment (September 2, 1958). (Id., § 20(b), 72 Stat. 1620.) Oct. 16, 1962, H.R. 10650, P.L. 87-834, § 13(f)(4), 76 Stat. 1035: Amended Sec. 341 (e) (as added by P.L. 85-866, § 20(a)) by adding after paragraph (11) (corporations and shareholders not meeting requirements) the following new paragraph: "(12) NONAPPLICATION OF SECTION 1245 (a).-For purposes of this subsection, the determination of whether gain from the sale or exchange of property would under any provision of this chapter be considered as gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231(b) shall be made without regard to the application of section 1245(a).' Applicability: Taxable years beginning after December 31, 1962. (Id., § 13(g), 76 Stat. 1035.) Feb. 26, 1964, H.R. 8363, P.L. 88-272, § 231(b)(4), 78 Stat. 105: Amended Sec. 341(e) (12) (as added by P.L. 87-834, § 13 (f) (4)) by striking out "section 1245(a)" and inserting in lieu thereof "sections 1245(a) and 1250(a)". Applicability: Dispositions after December 31, 1963, in taxable years ending after such date. (Id., § 231(c), 78 Stat. 105.) SEC. 341-Continued August 22, 1964, H.R. 7301, P.L. 88-484, § 1(a), 78 Stat. 596-597: Amended Sec. 341 by adding at the end thereof, after subsection (e) (as added by P.L. 85-866, § 20(a) and amended by P.L. 87-834, § 13(f) (4) and by P.L. 88-272, § 231(b) (4)), the following new subsection (f): "(f) CERTAIN SALES OF STOCK OF CONSENTING CORPORATIONS."(1) IN GENERAL.-Subsection (a) (1) shall not apply to a sale of stock of a corporation (other than a sale to the issuing corporation) if such corporation (hereinafter in this subsection referred to as 'consenting corporation') consents (at such time and in such manner as the Secretary or his delegate may by regulations prescribe) to have the provisions of paragraph (2) apply. Such consent shall apply with respect to each sale of stock of such corporation made within the 6-month period beginning with the date on which such consent is filed. "(2) RECOGNITION OF GAIN.-Except as provided in paragraph (3), if a subsection (f) asset (as defined in paragraph (4)) is disposed of at any time by a consenting corporation (or, if paragraph (3) applies, by a transferee corporation), then the amount by which "(A) in the case of a sale, exchange, or involuntary conversion, the amount realized, or "(B) in the case of any other disposition, the fair market value of such asset, exceeds the adjusted basis of such asset shall be treated as gain from the sale or exchange of such asset. Such gain shall be recognized notwithstanding any other provision of this subtitle, but only to the extent such gain is not recognized under any other provision of this subtitle. (3) EXCEPTION FOR CERTAIN TAX-FREE TRANSACTIONS.-If the basis of a subsection (f) asset in the hands of a transferee is determined by reference to its basis in the hands of the transferor by reason of the application of section 332, 351, 361, 371(a), or 374(a), then the amount of gain taken into account by the transferor under paragraph (2) shall not exceed the amount of gain recognized to the transferor on the transfer of such asset (determined without regard to this subsection). This paragraph shall apply only if the transferee "(A) is not an organization which is exempt from tax imposed by this chapter, and "(B) agrees (at such time and in such manner as the Secretary or his delegate may by regulations prescribe) to have the provisions of paragraph (2) apply to any disposition by it of such subsection (f) asset. "(4) SUBSECTION (f) ASSET DEFINED. For purposes of this subsection "(A) IN GENERAL.-The term 'subsection (f) asset' means any property which, as of the date of any sale of stock referred to in paragraph (1), is not a capital asset and is property owned by, or subject to an option to acquire held by, the consenting corporation. For purposes of this subparagraph, land or any interest in real property (other than a security interest), and unrealized receivables or fees (as defined in subsection (b) (4)), shall be treated as property which is not a capital asset. "(B) PROPERTY UNDER CONSTRUCTION.-If manufacture, construction, or production with respect to any property described in subparagraph (A) has commenced before any SEC. 341-Continued (f) (added 1964)-Continued date of sale described therein, the term 'subsection (f) asset' includes the property resulting from such manufacture, construction, or production. "(C) SPECIAL Rule for land. In the case of land or any interest in real property (other than a security interest) described in subparagraph (A), the term 'subsection (f) asset' includes any improvements resulting from construction with respect to such property if such construction is commenced (by the consenting corporation or by a transferee corporation which has agreed to the application of paragraph (2)) within 2 years after the date of any sale described in subparagraph (A). "(5) 5-YEAR LIMITATION AS TO SHAREHOLDER.-Paragraph (1) shall not apply to the sale of stock of a corporation by a shareholder if, during the 5-year period ending on the date of such sale, such shareholder (or any related person within the meaning of subsection (e) (8) (A)) sold any stock of another consenting corporation within any 6-month period beginning on a date on which a consent was filed under paragraph (1) by such other corporation. "(6) SPECIAL RULE FOR STOCK OWNERSHIP IN OTHER CORPORATIONS.-If a corporation (hereinafter in this paragraph referred to as 'owning corporation') owns 5 percent or more in value of the outstanding stock of another corporation on the date of any sale of stock of the owning corporation during a 6-month period with respect to which a consent under paragraph (1) was filed by the owning corporation, such consent shall not be valid with respect to such sale unless such other corporation has (within the 6-month period ending on the date of such sale) filed a valid consent under paragraph (1) with respect to sales of its stock. For purposes of applying paragraph (4) to such other corporation, a sale of stock of the owning corporation to which paragraph (1) applies shall be treated as a sale of stock of such other corporation. In the case of a chain of corporations connected by the 5-percent ownership requirements of this paragraph, rules similar to the rules of the two preceding sentences shall be applied. "(7) ADJUSTMENTS TO BASIS.-The Secretary or his delegate shall prescribe such regulations as he may deem necessary to provide for adjustments to the basis of property to reflect gain recognized under paragraph (2)." Applicability: Transactions after the date of enactment (August 22, 1964) in taxable years ending after such date. (Id., § 2, 78 Stat. 597.) CH. 1, SUBCH. C, PART II, SUBPART D-DEFINITION (68A Stat. 110-111): NOTE: The table of sections for Subpart D of Part II of Subchapter C of Chapter 1 reads as follows (68A Stat. 110): "Sec. 346. Partial liquidation defined.” No amendments have been made to this table or to section 346. CH. 1, SUBCH. C, PART III-CORPORATE ORGANIZATIONS AND REORGANIZATIONS (68A Stat. 111-121): NOTE: The table of subparts for Part III of Subchapter C of Chapter 1 reads as follows (68A Stat. 111): "Subpart A. Corporate organizations. "Subpart B. Effects on shareholders and security holders. This table has not been amended. CH. 1, SUBCH. C, PART III, SUBPART A-CORPORATE ORGANIZATIONS (68A Stat. 111-112): NOTE: The table of sections for Subpart A of Part III of Subchapter C of Chapter 1 reads as follows (68A Stat. 111): "Sec. 351. Transfer to corporation controlled by transferor." No amendments have been made to this table or to section 351. CH. 1, SUBCH. C, PART III, SUBPART B-EFFECTS ON SHARE- "SEC. 354. Exchanges of stock and securities in certain reorganizations. "SEC. 357. Assumption of liability. "SEC. 358. Basis to distributees." This table has not been amended. SEC. 357. ASSUMPTION OF LIABILITY (68A Stat. 116-117): (a), (b)............... June 29, 1956, H.R. 7247, P.L. 84-628, § 2(1), 70 Stat. 403: (in part) Amended Sec. 357 (a) (general rule) and (b) (tax avoidance purpose) by striking out wherever it appeared (c)(2)(B).......... (in part) "or 371" and inserting in lieu thereof "371, or 374". Effective date: June 29, 1956-the date of enactment. June 29, 1956, H.R. 7247, P.L. 84-628, § 2(2), 70 Stat. 403: Amended subparagraph (B) of Sec. 357 (c) (2) (liabilities in excess of basis exceptions) by striking out "371" and inserting in lieu thereof "371 or 374". Effective date: June 29, 1956-the date of enactment. SEC. 358. BASIS TO DISTRIBUTEES (68A Stat. 117–118): (a) (1) (A).... Sept. 2, 1958, H.R. 8381, P.L. 85-866, § 21(a), 72 Stat. 1620: (cl. iii added) Amended Sec. 358 (a) (1) (A) 95 (relating to decrease in basis to dis 95 Subsection (a) of section 358 originally read as follows (68A Stat. 117): "(a) GENERAL RULE.-In the case of an exchange to which section 351, 354, 355, 356, 361, or 371(b) applies "(1) NONRECOGNITION PROPERTY.-The basis of the property permitted to be received under such section without the recognition of gain or loss shall be the same as that of the property exchanged [Footnote 95 continued on following page] SEC. 358-Continued (a)(1)(A) (amended 1958)-Continued tributees of property received in certain corporate organizations and reorganizations) by inserting after clause (ii) a new clause (iii), as follows: "(iii) the amount of loss to the taxpayer which was recognized on such exchange, and". Applicability: "The amendment made by subsection (a) shall apply as provided in section 393 of the Internal Revenue Code of 1954 [effective dates of Parts III and IV of Subchapter C of Chapter 1] as if the clause (iii) added by such amendment had been included in such Code at the time of its enactment." (Id., § 21(b), 72 Stat. 1620.) CH. 1, SUBCH. C, PART III, SUBPART C-EFFECTS ON CORPORATION (68A Stat. 118-119): NOTE: The table of sections for Subpart C of Part III of Subchapter C of Chapter 1 reads as follows (68A Stat. 118): "Sec. 361. Nonrecognition of gain or loss to corporations. "Sec. 362. Basis to corporations. "Sec. 363. Effect on earnings and profits." No amendments have been made to this table or to any of the sections listed therein. CH. 1, SUBCH. C, PART III, SUBPART D-SPECIAL RULE; DEFI NITIONS (68A Stat. 119-121): NOTE: The table of sections for Subpart D of Part III of Subchapter C of Chapter 1 reads as follows (68A Stat. 119): "Sec. 367. Foreign corporations. "Sec. 368. Definitions relating to corporate reorganizations." This table has not been amended. SEC. 368. DEFINITIONS RELATING TO CORPORATE REORGANIZATIONS (68A Stat. 120–121): (a) (1) (B). (in part) Feb. 26, 1964, H.R. 8363, P.L. 88-272, § 218(a), 78 Stat. 57: Amended Sec. 368(a)(1)(B) 96 by inserting after "voting stock" the following: Footnote 95-Continued "(A) decreased by and 66 (i) the fair market value of any other property (except money) received by the taxpayer, (ii) the amount of any money received by the taxpayer, and "(B) increased by "(i) the amount which was treated as a dividend, and "(ii) the amount of gain to the taxpayer which was recognized on such exchange (not including any portion of such gain which was treated as a dividend). "(2) OTHER PROPERTY.-The basis of any other property (except money) received by the taxpayer shall be its fair market value." 96 Subsection (a)(1)(A) and (B) of section 368 originally read as follows (68A Stat. 120): "(a) REORGANIZATION.— "(1) IN GENERAL.-For purposes of parts I and II and this part, the term 'reorganization' means "(A) a statutory merger or consolidation; (B) the acquisition by one corporation, in exchange solely for all or a part of its voting stock, of stock of another corporation if, immediately after the acquisition, the acquiring corporation has control of such other corporation (whether or not such acquiring corporation had control immediately before the acquisition);”. |