§338 Certain stock purchases treated as asset acquisitions

A prior section 338, act Aug. 16, 1954, ch. 736, 68A Stat. 107, made reference to a special rule relating to the effect on earnings and profits of certain distributions in partial liquidation in section 312(e), prior to repeal by Pub. L. 97–248, § 222(e)(4).

2018—Subsec. (h)(3)(A)(iii). Pub. L. 115–141, § 401(a)(64), substituted “paragraph” for “paragaraph”. Subsec. (h)(6)(B)(i). Pub. L. 115–141, § 401(d)(1)(D)(vii), substituted “or a DISC” for “, a DISC, or a corporation to which an election under section 936 applies”. 2004—Subsec. (h)(13). Pub. L. 108–357 inserted at end “The preceding sentence shall not apply with respect to a qualified stock purchase for which an election is made under paragraph (10).” 2003—Subsec. (h)(14). Pub. L. 108–27 struck out heading and text of par. (14). Text read as follows: “For purposes of determining whether section 341 applies to a disposition within 1 year after the acquisition date of stock by a shareholder (other than the acquiring corporation) who held stock in the target corporation on the acquisition date, section 341 shall be applied without regard to this section.” 1990—Subsec. (h)(10)(C). Pub. L. 101–508 added subpar. (C). 1988—Subsec. (e)(3). Pub. L. 100–647, § 1018(d)(9), substituted “which meet the requirements of section 1504(a)(2)” for “which meet the 80 percent requirements of subparagraphs (A) and (B) of subsection (d)(3)”. Subsec. (h)(7). Pub. L. 100–647, § 1006(e)(20), struck out par. (7) which read as follows: “Additional percentage must be attributable to purchase, etc.—For purposes of subsection (c)(1), any increase in the maximum percentage of stock taken into account over the percentage of stock (by value) of the target corporation held by the purchasing corporation on the acquisition date shall be taken into account only to the extent such increase is attributable to— “(A) purchase, or “(B) a redemption of stock of the target corporation— “(i) to which section 302(a) applies, or “(ii) in the case of a shareholder who is not a corporation, to which section 301 applies.” Subsec. (h)(16). Pub. L. 100–647, § 1012(bb)(5)(A), added par. (16). 1986—Subsec. (a)(1). Pub. L. 99–514, § 631(b)(1), struck out “to which section 337 applies” after “in a single transaction”. Subsec. (c). Pub. L. 99–514, § 631(b)(2), struck out subsec. (c) relating to special rules for coordination with section 337 where purchasing corporation holds less than 100 percent of stock, and in case of certain redemptions where an election is made under this section. Subsec. (d)(3). Pub. L. 99–514, § 1804(e)(8)(A), amended par. (3) generally. Prior to amendment, par. (3) read as follows: “The term ‘qualified stock purchase’ means any transaction or series of transactions in which stock of 1 corporation possessing— “(A) at least 80 percent of total combined voting power of all classes of stock entitled to vote, and “(B) at least 80 percent of the total number of shares of all other classes of stock (except nonvoting stock which is limited and preferred as to dividends), is acquired by another corporation by purchase during the 12-month acquisition period.” Subsec. (h)(3)(C)(i). Pub. L. 99–514, § 1899A(7), substituted “subparagraphs” for “subparagraph”. Subsec. (h)(6)(B)(i). Pub. L. 99–514, § 1275(c)(6), struck out “a corporation described in section 934(b),” after “DISC,”. Subsec. (h)(10)(B). Pub. L. 99–514, § 631(b)(3), inserted provision that to the extent provided in

, term “selling consolidated group” also includes any affiliated group of corporations which includes the target corporation (whether or not such group files a consolidated return). Subsec. (h)(12). Pub. L. 99–514, § 631(e)(5), struck out par. (12) relating to applicability of section 337 where target had adopted plan for complete liquidation. 1984—Subsec. (a)(1). Pub. L. 98–369, § 712(k)(1)(A), inserted “at fair market value” after “acquisition date”. Subsec. (b). Pub. L. 98–369, § 712(k)(1)(B), substituted “Basis of assets after deemed purchase” for “Price at which deemed sale made” in heading. Subsec. (b)(1). Pub. L. 98–369, § 712(k)(1)(B), amended par. (1) generally, substituting “as purchased for an amount equal to the sum of” for “as sold (and purchased) at an amount equal to” in introductory text, “purchasing corporation’s recently purchased stock, and” for “purchasing corporation’s stock in the target corporation on the acquisition date” in subpar. (A), and “the basis of the purchasing corporation’s nonrecently purchased stock” in subpar. (B) in lieu of provision relating to adjustment for liabilities and other relevant items, now covered in par. (2). Subsec. (b)(2). Pub. L. 98–369, § 712(k)(1)(B), amended par. (2) generally, incorporating former par. (1)(B) provision, inserting heading “Adjustment for liabilities and other relevant items” and substituting “adjusted under

” for “properly adjusted under

”. Former par. (2) redesignated (4). Subsec. (b)(3). Pub. L. 98–369, § 712(k)(1)(B), added par. (3). Former par. (3) redesignated (5). Subsec. (b)(4). Pub. L. 98–369, § 712(k)(1)(B), redesignated former par. (2) as (4), substituted in introductory text “corporation’s recently purchased stock,” for “purchasing corporation’s stock in the target corporation on the acquisition date”, inserted in subpar. (A) “minus the percentage of stock (by value) in the target corporation attributable to the purchasing corporation’s nonrecently purchased stock”, and substituted in subpar. (B) “in the target corporation attributable to the purchasing corporation’s recently purchased stock” for “of the target corporation held by the purchasing corporation on the acquisition date”. Subsec. (b)(5). Pub. L. 98–369, § 712(k)(1)(B), redesignated former par. (3) as (5) and inserted reference to par. (2). Subsec. (b)(6). Pub. L. 98–369, § 712(k)(1)(B), added par. (6). Subsec. (c)(1). Pub. L. 98–369, § 712(k)(2), inserted in last sentence “and section 333 does not apply to such liquidation”. Subsec. (e)(2). Pub. L. 98–369, § 712(k)(3), substituted “wholly” for “(in whole or in part)” in subpar. (B), struck out subpar. (D) providing for nonapplication of par. (1) to any acquisition by the purchasing corporation if, to the extent provided in

, the property acquired is located outside the United States, redesignated subpar. (E) as (D), and, in subpar. (D) as redesignated, inserted “and meets such conditions as such

may provide”. Subsec. (g)(1). Pub. L. 98–369, § 712(k)(4), substituted “the 15th day of the 9th month beginning after the month in which the acquisition date occurs” for “75 days after the acquisition date”. Subsec. (h)(1). Pub. L. 98–369, § 712(k)(5)(C), included within 12-month acquisition period the period beginning with the date on which the acquiring corporation is first considered as owning stock owned by corporation from which acquisition was made. Subsec. (h)(3)(A)(ii). Pub. L. 98–369, § 712(k)(5)(D), included references to section 354, 355, and 356 and in defining “purchase” provided that the stock not be acquired in any other transaction described in

in which the transferor does not recognize the entire amount of the gain or loss realized on the transaction. Subsec. (h)(3)(B). Pub. L. 98–369, § 712(k)(5)(A), substituted in heading “under subsection (a)” for “of stock of subsidiaries” and in text “The term ‘purchase’ includes any deemed purchase under subsection (a)(2). The acquisition date for a corporation which is deemed purchased under subsection (a)(2) shall be determined under

prescribed by the Secretary” for “If stock in a corporation is acquired by purchase (within the meaning of subparagraph (A)) and, as a result of such acquisition, the corporation making such purchase is treated (by reason of section 318(a)) as owning stock in a 3rd corporation, the corporation making such purchase shall be treated as having purchased such stock in such 3rd corporation. The corporation making such purchase shall be treated as purchasing stock in the 3rd corporation by reason of the preceding sentence on the first day on which the purchasing corporation is considered under section 318(a) as owning such stock”. Subsec. (h)(3)(C). Pub. L. 98–369, § 712(k)(5)(B), added subpar. (C). Subsec. (h)(7). Pub. L. 98–369, § 712(k)(6)(A), added par. (7) and struck out former par. (7) which had provided that acquisitions by purchasing corporation include acquisitions by corporations affiliated with purchasing corporation. See subsec. (h)(8). Subsec. (h)(8). Pub. L. 98–369, § 712(k)(6)(A), added par. (8) incorporating former par. (7) provision stating that “Except as otherwise provided in

, an acquisition of stock or assets by any member of an affiliated group which includes a purchasing corporation shall be treated as made by the purchasing corporation.” Former par. (8) redesignated (9). Subsec. (h)(9). Pub. L. 98–369, § 712(k)(6)(A), (B), redesignated former par. (8) as (9) and substituted therein “paragraph (10)” for “paragraph (9)”. Former par. (9) redesignated (10). Subsec. (h)(10). Pub. L. 98–369, § 712(k)(6)(A), redesignated former par. (9) as (10). Subsec. (h)(11) to (15). Pub. L. 98–369, § 712(k)(6)(C), added pars. (11) to (15). Subsec. (i). Pub. L. 98–369, § 712(k)(7), provided in introductory text that the

be appropriate to carry out the purposes of this section; designated existing provisions as par. (1) and substituted therein “treatment of stock and asset sales and purchases” for “treatment of stock and asset purchases with respect to a target corporation and its target affiliates (whether by treating all of them as stock purchases or as asset purchases)” before “may not be circumvented”, and added par. (2). 1983—Subsec. (h)(8), (9). Pub. L. 97–448 added pars. (8) and (9).

of 2004 Amendment Pub. L. 108–357, title VIII, § 839(b), Oct. 22, 2004, 118 Stat. 1597, provided that: “The amendment made by subsection (a) [amending this section] shall apply to transactions occurring after the date of the enactment of this Act [Oct. 22, 2004].”

of 2003 AmendmentAmendment by Pub. L. 108–27 applicable, except as otherwise provided, to taxable years beginning after Dec. 31, 2002, see section 302(f) of Pub. L. 108–27, set out as an Effective and Termination Dates of 2003 Amendment note under section 1 of this title.

of 1990 Amendment Pub. L. 101–508, title XI, § 11323(d), Nov. 5, 1990, 104 Stat. 1388–465, provided that: “(1) In general.—Except as provided in paragraph (2), the

made by this section [amending this section and section 1060 and 6724 of this title] shall apply to acquisitions after October 9, 1990. “(2) Binding contract exception.—The

made by this section shall not apply to any acquisition pursuant to a written binding contract in effect on October 9, 1990, and at all times thereafter before such acquisition.”

of 1986 AmendmentAmendment by section 631(b), (e)(5) of Pub. L. 99–514 applicable to any distribution in complete liquidation, and any sale or exchange, made by a corporation after July 31, 1986, unless such corporation is completely liquidated before Jan. 1, 1987, any transaction described in section 338 of this title for which the acquisition date occurs after Dec. 31, 1986, and any distribution, not in complete liquidation, made after Dec. 31, 1986, with exceptions and special and transitional rules, see section 633 of Pub. L. 99–514, set out as an

note under section 336 of this title. Amendment by section 1275(c)(6) of Pub. L. 99–514 applicable to taxable years beginning after Dec. 31, 1986, with certain exceptions and qualifications, see section 1277 of Pub. L. 99–514, set out as a note under section 931 of this title. Pub. L. 99–514, title XVIII, § 1804(e)(8)(B), Oct. 22, 1986, 100 Stat. 2804, provided that: “The amendment made by subparagraph (A) [amending this section] shall apply in cases where the 12-month acquisition period (as defined in section 338(h)(1) of the Internal Revenue Code of 1954 [now 1986] begins after December 31, 1985.”

of 1984 Amendment Pub. L. 98–369, div. A, title VII, § 712(k)(9), July 18, 1984, 98 Stat. 952, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: “(A) In general.—The

of 1983 AmendmentAmendment by Pub. L. 97–448 effective as if included in the provisions of the Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. 97–248, to which such amendment relates, see section 311(d) of Pub. L. 97–448, set out as a note under section 31 of this title.

Pub. L. 97–248, title II, § 224(d), Sept. 3, 1982, 96 Stat. 489, as amended by Pub. L. 97–448, title III, § 306(a)(8)(B), Jan. 12, 1983, 96 Stat. 2403; Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: “(1) In general.—The

made by this section shall apply to the acquisition of such target corporation. “(3) Certain acquisitions of financial institutions.—In any case in which—“(A) there is, on July 22, 1982, a binding contract to acquire control (within the meaning of section 368(c) of such Code) of any financial institution, “(B) the approval of one or more regulatory authorities is required in order to complete such acquisition, and “(C) within 90 days after the date of the final approval of the last such regulatory authority granting final approval, a plan of complete liquidation of such financial institution is adopted, then the purchasing corporation may elect not to have the

made by paragraphs (5) and (6) [amending subsec. (h) and section 318(b)(4) of this title] of this subsection, the

made by such paragraphs shall not apply to such purchase unless such corporation elects (at such time and in such manner as the Secretary of the Treasury or his delegate may by

prescribe) to have the