PRIA, Government Policy, Made Personal

Summary

You do not have to report a gain or loss when common stock is swapped only for common stock of the same corporation, or when preferred stock is swapped only for preferred stock of the same corporation. Nonqualified preferred stock (see section 351(g)(2)) counts as property, not stock. If the swap is not exactly like-for-like, rules about recognizing gain or loss are in section 1031(b) and (c). Rules about the tax basis of what you get are in section 1031(d).

Title 26, §1036

Internal Revenue Code, Source: USLM XML via OLRC

(a)General rule

No gain or loss shall be recognized if common stock in a corporation is exchanged solely for common stock in the same corporation, or if preferred stock in a corporation is exchanged solely for preferred stock in the same corporation.

(b)Nonqualified preferred stock not treated as stock

For purposes of this section, nonqualified preferred stock (as defined in section 351(g)(2)) shall be treated as property other than stock.

(c)Cross references

(1)For rules relating to recognition of gain or loss where an exchange is not solely in kind, see subsections (b) and (c) of section 1031.

(2)For rules relating to the basis of property acquired in an exchange described in subsection (a), see subsection (d) of section 1031.

Notes & Related Subsidiaries

Editorial Notes

Amendments

1997—Subsecs. (b), (c). Pub. L. 105–34 added subsec. (b) and redesignated former subsec. (b) as (c).

Statutory Notes and Related Subsidiaries

Effective Date

of 1997 AmendmentAmendment by 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.

§1036 Stock for Stock of Same Corporation