Section 337: Nonrecognition for property distributed to parent in complete liquidation of subsidiary
Internal Revenue Code
§337. Nonrecognition for property distributed to parent in complete liquidation of subsidiary
(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.
(A) a corporation is liquidated in a liquidation to which section 332 applies, and
(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.
(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) 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).
(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.
(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.
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—
(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
(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.
References in Text
The Tax Reform Act of 1986, referred to in subsec. (d), is
A prior section 337, acts Aug. 16, 1954, ch. 736,
Effective Date of 1988 Amendment
"(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."
Effective Date of 1987 Amendment
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