2023 U.S. Code
Title 26 - Internal Revenue Code
Subtitle A - Income Taxes
Chapter 1 - Normal Taxes and Surtaxes
Subchapter C - Corporate Distributions and Adjustments
Part III - Corporate Organizations and Reorganizations
Subpart B - Effects on Shareholders and Security Holders
Sec. 356 - Receipt of additional consideration
| 26 U.S.C. § 356 (2023) |
| §356. Receipt of additional consideration |
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(a) Gain on exchanges
(1) Recognition of gain
If— (A) section 354 or 355 would apply to an exchange but for the fact that (B) the property received in the exchange consists not only of property permitted by section 354 or 355 to be received without the recognition of gain but also of other property or money, then the gain, if any, to the recipient shall be recognized, but in an amount not in excess of the sum of such money and the fair market value of such other property. If an exchange is described in paragraph (1) but has the effect of the distribution of a dividend (determined with the application of section 318(a)), then there shall be treated as a dividend to each distributee such an amount of the gain recognized under paragraph (1) as is not in excess of his ratable share of the undistributed earnings and profits of the corporation accumulated after February 28, 1913. The remainder, if any, of the gain recognized under paragraph (1) shall be treated as gain from the exchange of property. If— (1) section 355 would apply to a distribution but for the fact that (2) the property received in the distribution consists not only of property permitted by section 355 to be received without the recognition of gain, but also of other property or money, then an amount equal to the sum of such money and the fair market value of such other property shall be treated as a distribution of property to which section 301 applies. (c) LossIf— (1) section 354 would apply to an exchange or section 355 would apply to an exchange or distribution, but for the fact that (2) the property received in the exchange or distribution consists not only of property permitted by section 354 or 355 to be received without the recognition of gain or loss, but also of other property or money, then no loss from the exchange or distribution shall be recognized. (d) Securities as other propertyFor purposes of this section— (1) In generalExcept as provided in paragraph (2), the term "other property" includes securities. The term "other property" does not include securities to the extent that, under section 354 or 355, such securities would be permitted to be received without the recognition of gain. If— (i) in an exchange described in section 354 (other than subsection (c) thereof), securities of a corporation a party to the reorganization are surrendered and securities of any corporation a party to the reorganization are received, and (ii) the principal amount of such securities received exceeds the principal amount of such securities surrendered, then, with respect to such securities received, the term "other property" means only the fair market value of such excess. For purposes of this subparagraph and subparagraph (C), if no securities are surrendered, the excess shall be the entire principal amount of the securities received. If, in an exchange or distribution described in section 355, the principal amount of the securities in the controlled corporation which are received exceeds the principal amount of the securities in the distributing corporation which are surrendered, then, with respect to such securities received, the term "other property" means only the fair market value of such excess. For purposes of this section— (1) In generalExcept as provided in paragraph (2), the term "other property" includes nonqualified preferred stock (as defined in section 351(g)(2)). The term "other property" does not include nonqualified preferred stock (as so defined) to the extent that, under section 354 or 355, such preferred stock would be permitted to be received without the recognition of gain. Notwithstanding any other provision of this section, to the extent that any of the other property (or money) is received in exchange for section 306 stock, an amount equal to the fair market value of such other property (or the amount of such money) shall be treated as a distribution of property to which section 301 applies. (g) Transactions involving gift or compensationFor special rules for a transaction described in section 354, 355, or this section, but which— (1) results in a gift, see section 2501 and following, or (2) has the effect of the payment of compensation, see section 61(a)(1). |
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(Aug. 16, 1954, ch. 736, 68A Stat. 115; Pub. L. 94–253, §1(c), Mar. 31, 1976, 90 Stat. 296; Pub. L. 97–248, title II, §227(b), Sept. 3, 1982, 96 Stat. 492; Pub. L. 101–508, title XI, §11801(c)(8)(E), Nov. 5, 1990, 104 Stat. 1388–524; Pub. L. 105–34, title X, §1014(d), Aug. 5, 1997, 111 Stat. 921.) |
| EDITORIAL NOTES
AMENDMENTS
1997—Subsecs. (e) to (g). Pub. L. 105–34 added subsec. (e) and redesignated former subsecs. (e) and (f) as (f) and (g), respectively. 1990—Subsec. (d)(2)(B)(i). Pub. L. 101–508 struck out "or (d)" after "subsection (c)". 1982—Subsec. (a)(2). Pub. L. 97–248 inserted "(determined with the application of section 318(a))" after "distribution of a dividend". 1976—Subsec. (d)(2)(B)(i). Pub. L. 94–253 substituted "subsection (c) or (d) thereof" for "subsection (c) thereof". STATUTORY NOTES AND RELATED SUBSIDIARIES EFFECTIVE DATE OF 1997 AMENDMENT Amendment 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. EFFECTIVE DATE OF 1982 AMENDMENTPub. L. 97–248, title II, §227(c)(2), Sept. 3, 1982, 96 Stat. 492, provided that: "The amendment made by subsection (b) [amending this section] shall apply to distributions after August 31, 1982, in taxable years ending after such date." EFFECTIVE DATE OF 1976 AMENDMENTAmendment by Pub. L. 94–253 applicable to taxable years ending after Mar. 31, 1976, see section 2 of Pub. L. 94–253, set out as a note under section 354 of this title. SAVINGS PROVISIONFor provisions that nothing in amendment by Pub. L. 101–508 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Nov. 5, 1990, for purposes of determining liability for tax for periods ending after Nov. 5, 1990, see section 11821(b) of Pub. L. 101–508, set out as a note under section 45K of this title. |
| United States Code, 2018 Edition, Supplement 5, Title 26 - INTERNAL REVENUE CODE |
| Bills and Statutes |
| United States Code |
| Y 1.2/5: |
| Title 26 - INTERNAL REVENUE CODE Subtitle A - Income Taxes CHAPTER 1 - NORMAL TAXES AND SURTAXES Subchapter C - Corporate Distributions and Adjustments PART III - CORPORATE ORGANIZATIONS AND REORGANIZATIONS Subpart B - Effects on Shareholders and Security Holders Sec. 356 - Receipt of additional consideration |
| section 356 |
| 2023 |
| January 3, 2024 |
| No |
| standard |
| 90 Stat. 296 96 Stat. 492 104 Stat. 1388-524 111 Stat. 921 |
| Public Law 94-253, Public Law 97-248, Public Law 101-508, Public Law 105-34 |
