§355 Distribution of stock and securities of a controlled corporation

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 section 311 and 336(a).—section 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”.

made by subsection (b) shall not apply to any distribution pursuant to a transaction which is—“(i) made pursuant to an agreement which was binding on

May 17, 2006, and at all times thereafter, “(ii) described in a ruling request submitted to the Internal Revenue Service on or before such date, or “(iii) described on or before such date in a public announcement or in a filing with the Securities and Exchange Commission. “(C) 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. “(D) 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. “(3) 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.”

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. “(3) 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—“(A) such acquisition is pursuant to a written binding contract in effect on

October 9, 1990, and at all times thereafter before such acquisition, “(B) 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 “(C) such acquisition is pursuant to a transaction—“(i) the material terms of which were described in a written public announcement on or before

October 9, 1990, “(ii) which was the subject of a prior filing with the Securities and Exchange Commission, and “(iii) 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.