I.R.C. § 337(a) In General —
No gain or loss shall be recognized to the liquidating corporation on the distribution
to the 80-percent distributee of any property in a complete liquidation to which
section 332 applies.
I.R.C. § 337(b) Treatment Of Indebtedness Of Subsidiary, Etc.
I.R.C. § 337(b)(1) Indebtedness Of Subsidiary To Parent —
If—
I.R.C. § 337(b)(1)(A) —
a corporation is liquidated in a liquidation to which section 332 applies,
and
I.R.C. § 337(b)(1)(B) —
on the date of the adoption of the plan of liquidation, such corporation was indebted
to the 80-percent distributee, for purposes of this section and section 336,
any transfer of property to the 80-percent distributee in satisfaction of such indebtedness
shall be treated as a distribution to such distributee in such liquidation.
I.R.C. § 337(b)(2) Treatment Of Tax-Exempt Distributee
I.R.C. § 337(b)(2)(A) In General —
Except as provided in subparagraph (B), paragraph (1) and subsection (a) shall not apply where the 80-percent distributee is an organization (other than
a cooperative described in section 521)
which is exempt from the tax imposed by this chapter.
I.R.C. § 337(b)(2)(B) Exception Where Property Will Be Used In Unrelated Business
I.R.C. § 337(b)(2)(B)(i) In General —
Subparagraph (A) shall not apply to any distribution of property to an organization described in
section 511(a)(2) if, immediately after such distribution, such organization uses such property in
an activity the income from which is subject to tax under section 511(a).
I.R.C. § 337(b)(2)(B)(ii) Later Disposition Or Change In Use —
If any property to which clause (i) applied is disposed of by the organization acquiring such property, notwithstanding
any other provision of law, any gain (not in excess of the amount not recognized
by reason of clause (i))
shall be included in such organization's unrelated business taxable income. For purposes
of the preceding sentence, if such property
ceases to be used in an activity referred to in clause (i), such organization shall be treated as having disposed of such property on the
date of such cessation.
I.R.C. § 337(c) 80-Percent Distributee —
For purposes of this section, the term “80-percent distributee” means only the corporation
which meets the 80-percent stock ownership requirements specified in section 332(b). For purposes of this section, the determination of whether any corporation is an
80-percent distributee shall be made without regard to any consolidated return regulation.
I.R.C. § 337(d) Regulations —
The Secretary shall prescribe such regulations as may be necessary or appropriate
to carry out the purposes of the amendments made by subtitle D of title VI of the
Tax Reform Act of 1986, including—
I.R.C. § 337(d)(1) —
regulations to ensure that such purposes may not be circumvented through the use
of any provision of law or regulations (including the consolidated return regulations
and part III of this subchapter) or through the use of a regulated investment company,
real estate investment trust, or tax-exempt entity, and
I.R.C. § 337(d)(2) —
regulations providing for appropriate coordination of the provisions of this section
with the provisions of this title relating to taxation of foreign corporations and
their shareholders.
(Added Pub. L. 99-514, title VI, 631(a), Oct. 22, 1986, 100 Stat. 2271, and amended Pub. L. 100-203, title X, 10223(a), Dec. 22, 1987, 101 Stat. 1330-411; Pub. L. 100-647, title I, 1006(e)(4), (5)(A), Nov. 10, 1988, 102 Stat. 3400.)
BACKGROUND NOTES
AMENDMENTS
1988--Subsec. (b)(2)(B)(i). Pub. L. 100-647, 1006(e)(4)(A), (B), substituted
“described in section 511(a)(2)” for “described in section 511(a)(2)
or 511(b)(2)” and “in an activity the income from which is subject to tax under section
511(a)” for “in an unrelated trade or business
(as defined in section 513)”.
Subsec. (b)(2)(B)(ii). Pub. L. 100-647, 1006(e)(4)(C), substituted “an activity referred to in clause (i)” for “an unrelated
trade or business of such organization”.
Subsec. (d). Pub. L. 100-647, 1006(e)(5)(A), in introductory provisions, substituted
“amendments made by subtitle D of title VI of the Tax Reform Act of 1986” for “amendments
made to this subpart by the Tax Reform Act of 1986”, and in par. (1), substituted
“this subchapter) or through the use of a regulated investment company, real estate
investment trust, or tax-exempt entity” for “this subchapter)”.
1987--Subsec. (c). Pub. L. 100-203 inserted at end “For purposes of this section, the determination of whether any corporation
is an 80-percent distributee shall be made without regard to any consolidated return
regulation.”
EFFECTIVE DATE OF 1988 AMENDMENT
Section 1006(e)(5)(B) of Pub. L. 100-647 provided that: “The amendment made by subparagraph
(A)(ii) [amending this section] shall not apply to any reorganization if before June
10, 1987--
“(i) the board of directors of a party to the reorganization adopted a resolution
to solicit shareholder approval for the transaction, or
“(ii) the shareholders or the board of directors of a party to the reorganization
approved the transaction.”
Amendment by Pub. L. 100-647 effective, except as otherwise provided, as if included in the provision of the Tax
Reform Act of 1986, Pub. L. 99-514, to which such amendment relates, see section 1019(a) of Pub. L. 100-647, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1987 AMENDMENT
Amendment by Pub. L. 100-203 applicable to distributions or transfers after Dec. 15, 1987, with exceptions for
certain distributee corporations and distributions covered by prior transition rule,
see section 10223(d)
of Pub. L. 100-203, set out as a note under section 304 of this title.
EFFECTIVE DATE
Section 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 a note under section 336 of this title.
TAX TREATMENT OF STATE OWNERSHIP OF RAILROAD REAL ESTATE INVESTMENT TRUST
Sec. 11146(b) of Pub. L. 109-59 provided that:
”(b) Gain or Loss not Recognized on Conversion-
”Notwithstanding section 337(d) of the Internal Revenue Code of 1986--
”(1) no gain or loss shall be recognized under section 336 or 337 of such Code, and
”(2) no change in basis of the property of such corporation shall occur, because of
any change of status of a corporation to a tax-exempt entity by reason of the application
of subsection (a).”
PRIOR PROVISIONS
A prior section 337, acts Aug. 16, 1954, ch. 736, 68A Stat. 106; Sept. 2, 1958, Pub. L. 85-866, title I, 19, 72 Stat. 1615; Oct. 4, 1976, Pub. L. 94-455, title XIX, 1901(a)(46), 1906(b)(13)(A), title XXI, 2118(a), 90 Stat. 1772, 1834,
1912; Nov. 6, 1978, Pub. L. 95-600, title VII, 701(i)(1), 92 Stat. 2904; Nov. 10, 1978, Pub. L. 95-628, 4(a), 92 Stat. 3628; Apr. 2, 1980, Pub. L. 96-223, title IV, 403(b)(2)(A), 94 Stat. 304; Oct. 19, 1980, Pub. L. 96-471, 2(c)(2), 94 Stat. 2254;
Dec. 24, 1980, Pub. L. 96-589, 5(c), 94 Stat. 3405; Sept. 3, 1982, Pub. L. 97-248, title II, 224(c)(5), (6), 96 Stat. 489; Oct. 22, 1986, Pub. L. 99-514, title XVIII, 1804(e)(7)(A), 100 Stat. 2803, which related to gain or loss on sales
or exchanges in connection with certain liquidations, was repealed by Pub. L. 99-514, title VI, 631(a), Oct. 22, 1986, 100 Stat. 2269.
