26 U.S.C. § 301
Distributions of property
# (a) In general
Except as otherwise provided in this chapter, a distribution of property (as defined in section 317(a)) made by a corporation to a shareholder with respect to its stock shall be treated in the manner provided in subsection (c).
# (b) Amount distributed
(1) General rule For purposes of this section, the amount of any distribution shall be the amount of money received, plus the fair market value of the other property received. (2) Reduction for liabilities The amount of any distribution determined under paragraph (1) shall be reduced (but not below zero) by— (A) the amount of any liability of the corporation assumed by the shareholder in connection with the distribution, and (B) the amount of any liability to which the property received by the shareholder is subject immediately before, and immediately after, the distribution. (3) Determination of fair market value For purposes of this section, fair market value shall be determined as of the date of the distribution.
# (c) Amount taxable
In the case of a distribution to which subsection (a) applies— (1) Amount constituting dividend That portion of the distribution which is a dividend (as defined in section 316) shall be included in gross income. (2) Amount applied against basis That portion of the distribution which is not a dividend shall be applied against and reduce the adjusted basis of the stock. (3) Amount in excess of basis (A) In general Except as provided in subparagraph (B), that portion of the distribution which is not a dividend, to the extent that it exceeds the adjusted basis of the stock, shall be treated as gain from the sale or exchange of property. (B) Distributions out of increase in value accrued before March 1, 1913 That portion of the distribution which is not a dividend, to the extent that it exceeds the adjusted basis of the stock and to the extent that it is out of increase in value accrued before March 1, 1913 , shall be exempt from tax.
# (d) Basis
The basis of property received in a distribution to which subsection (a) applies shall be the fair market value of such property.
# (e) Special rule for certain distributions received by 20 percent corporate shareholder
(1) In general Except to the extent otherwise provided in regulations, solely for purposes of determining the taxable income of any 20 percent corporate shareholder (and its adjusted basis in the stock of the distributing corporation), section 312 shall be applied with respect to the distributing corporation as if it did not contain subsections (k) and (n) thereof.
(2) 20 percent corporate shareholder For purposes of this subsection, the term “20 percent corporate shareholder” means, with respect to any distribution, any corporation which owns (directly or through the application of section 318)— (A) stock in the corporation making the distribution possessing at least 20 percent of the total combined voting power of all classes of stock entitled to vote, or (B) at least 20 percent of the total value of all stock of the distributing corporation (except nonvoting stock which is limited and preferred as to dividends), but only if, but for this subsection, the distributee corporation would be entitled to a deduction under section 243 or 245 with respect to such distribution.
(3) Application of section 312(n)(7) not affected The reference in paragraph (1) to subsection (n) of section 312 shall be treated as not including a reference to paragraph (7) of such subsection.
(4) Regulations The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection.
# (f) Special rules
(1) For distributions in redemption of stock, see section 302. (2) For distributions in complete liquidation, see part II (sec. 331 and following). (3) For distributions in corporate organizations and reorganizations, see part III (sec. 351 and following). (4) For taxation of dividends received by individuals at capital gain rates, see section 1(h)(11).
Source: view the official text
Cited by 160
- 26 CFR § 1.1001-1 — Computation of gain or loss.
- 26 CFR § 1.1014-1 — Basis of property acquired from a decedent.
- 26 CFR § 1.1016-5 — Miscellaneous adjustments to basis.
- 26 CFR § 1.1036-1 — Stock for stock of the same corporation.
- 26 CFR § 1.1041-2 — Redemptions of stock.
- 26 CFR § 1.1059(e)-1 — Non-pro rata redemptions.
- 26 CFR § 1.108(i)-1 — Deferred discharge of indebtedness income and deferred original issue discount deductions of C corporations.
- 26 CFR § 1.1234-1 — Options to buy or sell.
- 26 CFR § 1.1245-2 — Definition of recomputed basis.
- 26 CFR § 1.1248-1 — Treatment of gain from certain sales or exchanges of stock in certain foreign corporations.
- 26 CFR § 1.1250-2 — Additional depreciation defined.
- 26 CFR § 1.1254-0 — Table of contents for section 1254 recapture rules.
Show 48 more
- 26 CFR § 1.1254-3 — Section 1254 costs immediately after certain acquisitions.
- 26 CFR § 1.1368-1 — Distributions by S corporations.
- 26 CFR § 1.1371-1 — Distributions of money by an eligible terminated S corporation.
- 26 CFR § 1.1371-2 — Impact of Audit PTTP on ETSC Period.
- 26 CFR § 1.1374-3 — Net unrealized built-in gain.
- 26 CFR § 1.1400Z2(b)-1 — Inclusion of gains that have been deferred under section 1400Z-2(a).
- 26 CFR § 1.1400Z2(c)-1 — Investments held for at least 10 years.
- 26 CFR § 1.1441-3 — Determination of amounts to be withheld.
- 26 CFR § 1.1445-5 — Special rules concerning distributions and other transactions by corporations, partnerships, trusts, and estates.
- 26 CFR § 1.1445-7 — Treatment of foreign corporation that has made an election under section 897(i) to be treated as a domestic corporation.
- 26 CFR § 1.1461-1 — Payment and returns of tax withheld.
- 26 CFR § 1.15-1 — Changes in rate during a taxable year.
- 26 CFR § 1.1502-13 — Intercompany transactions.
- 26 CFR § 1.1502-19 — Excess loss accounts.
- 26 CFR § 1.1502-32 — Investment adjustments.
- 26 CFR § 1.1502-33 — Earnings and profits.
- 26 CFR § 1.162-3 — Materials and supplies.
- 26 CFR § 1.179-4 — Definitions.
- 26 CFR § 1.245-1 — Dividends received from certain foreign corporations.
- 26 CFR § 1.245A(d)-1 — Disallowance of foreign tax credit or deduction.
- 26 CFR § 1.245A-10 — Examples.
- 26 CFR § 1.263(a)-1 — Capital expenditures; in general.
- 26 CFR § 1.263(a)-2 — Amounts paid to acquire or produce tangible property.
- 26 CFR § 1.263(a)-3 — Amounts paid to improve tangible property.
- 26 CFR § 1.274-2 — Disallowance of deductions for certain expenses for entertainment, amusement, recreation, or travel.
- 26 CFR § 1.279-5 — Rules for application of section 279(b).
- 26 CFR § 1.279-6 — Application of section 279 to certain affiliated groups.
- 26 CFR § 1.301-1 — Rules applicable with respect to distributions of money and other property.
- 26 CFR § 1.302-1 — General.
- 26 CFR § 1.302-2 — Redemptions not taxable as dividends.
- 26 CFR § 1.302-4 — Termination of shareholder's interest.
- 26 CFR § 1.304-2 — Acquisition by related corporation (other than subsidiary).
- 26 CFR § 1.304-3 — Acquisition by a subsidiary.
- 26 CFR § 1.304-4 — Special rules for the use of related corporations to avoid the application of section 304.
- 26 CFR § 1.304-7 — Certain acquisitions by foreign acquiring corporations.
- 26 CFR § 1.305-1 — Stock dividends.
- 26 CFR § 1.305-2 — Distributions in lieu of money.
- 26 CFR § 1.305-3 — Disproportionate distributions.
- 26 CFR § 1.305-4 — Distributions of common and preferred stock.
- 26 CFR § 1.305-5 — Distributions on preferred stock.
- 26 CFR § 1.305-6 — Distributions of convertible preferred.
- 26 CFR § 1.305-7 — Certain transactions treated as distributions.
- 26 CFR § 1.305-8 — Effective dates.
- 26 CFR § 1.306-1 — General.
- 26 CFR § 1.306-3 — Section 306 stock defined.
- 26 CFR § 1.312-5 — Special rule for partial liquidations and certain redemptions.
- 26 CFR § 1.312-8 — Effect on earnings and profits of receipt of tax-free distributions requiring adjustment or allocation of basis of stock.
- 26 CFR § 1.316-1 — Dividends.
Nearby sections (25 sections)
- 279 · Interest on indebtedness incurred by corporation to acquire stock…
- 280 · Repealed. Pub. L. 99–514, title VIII, § 803(b)(2)(A), Oct. 22,…
- 280A · Disallowance of certain expenses in connection with business use…
- 280B · Demolition of structures
- 280C · Certain expenses for which credits are allowable
- 280D · Repealed. Pub. L. 100–418, title I, § 1941(b)(4)(A), Aug. 23,…
- 280E · Expenditures in connection with the illegal sale of drugs
- 280F · Limitation on depreciation for luxury automobiles; limitation…
- 280G · Golden parachute payments
- 280H · Limitation on certain amounts paid to employee-owners by…
- 281 · Terminal railroad corporations and their shareholders
- 291 · Special rules relating to corporate preference items
- 301 · Distributions of property
- 302 · Distributions in redemption of stock
- 303 · Distributions in redemption of stock to pay death taxes
- 304 · Redemption through use of related corporations
- 305 · Distributions of stock and stock rights
- 306 · Dispositions of certain stock
- 307 · Basis of stock and stock rights acquired in distributions
- 311 · Taxability of corporation on distribution
- 312 · Effect on earnings and profits
- 316 · Dividend defined
- 317 · Other definitions
- 318 · Constructive ownership of stock
- 331 · Gain or loss to shareholder in corporate liquidations