§ 1.355-4. Non pro rata distributions, etc.
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/us/cfr/t26/s§ 1.355-4·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
Section 355 provides for nonrecognition of gain or loss with respect to a distribution whether or not
(a)the distribution is pro rata with respect to all of the shareholders of the distributing corporation,
(b)the distribution is pursuant to a plan of reorganization within the meaning of section 368
(a)(1)(D), or
(c)the shareholder surrenders stock in the distributing corporation. Under section 355, the stock of a controlled corporation may consist of common stock or preferred stock. (See, however, section 306 and the regulations thereunder.) Section 355 does not apply, however, if the substance of a transaction is merely an exchange between shareholders or security holders of stock or securities in one corporation for stock or securities in another corporation. For example, if two individuals, A and B, each own directly 50 percent of the stock of corporation X and 50 percent of the stock of corporation Y, section 355 would not apply to a transaction in which A and B transfer all of their stock of X and Y to a new corporation Z, for all of the stock of Z, and Z then distributes the stock of X to A and the stock of Y to B. [T.D. 8238, 54 FR 296, Jan. 5, 1989]
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- T.D. 8238
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§ 1.355-4
Non pro rata distributions, etc.
Treas. Dec.T.D. 8238
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