§ 307. Basis of stock and stock rights acquired in distributions

316 words·~1 min read·/usc/title-26/section-307

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

(a)General rule If a shareholder in a corporation receives its stock or rights to acquire its stock (referred to in this subsection as “new stock”) in a distribution to which section 305(a) applies, then the basis of such new stock and of the stock with respect to which it is distributed (referred to in this section as “old stock”), respectively, shall, in the shareholder’s hands, be determined by allocating between the old stock and the new stock the adjusted basis of the old stock. Such allocation shall be made under regulations prescribed by the Secretary.

(b)Exception for certain stock rights

(1)In general If—

(A)a corporation distributes rights to acquire its stock to a shareholder in a distribution to which section 305(a) applies, and

(B)the fair market value of such rights at the time of the distribution is less than 15 percent of the fair market value of the old stock at such time,

then subsection

(a)shall not apply and the basis of such rights shall be zero, unless the taxpayer elects under paragraph

(2)of this subsection to determine the basis of the old stock and of the stock rights under the method of allocation provided in subsection (a).

(2)Election The election referred to in paragraph

(1)shall be made in the return filed within the time prescribed by law (including extensions thereof) for the taxable year in which such rights were received. Such election shall be made in such manner as the Secretary may by regulations prescribe, and shall be irrevocable when made.

(c)Cross reference For basis of stock and stock rights distributed before June 22, 1954, see section 1052.

(Aug. 16, 1954, ch. 736, 68A Stat. 93; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)

Connections1 cite this

Cited by 1 section

statutes-at-large

Public Law 97–34
To amend the Internal Revenue Code of 1954 to encourage economic growth through reduction of the tax rates for individual taxpayers, acceleration of capital cost recovery of investment in plant, equipment, and real property, and incentives for savings, and for other purposes

5 references not yet in our index

Aug. 16, 1954, ch. 736
68A Stat. 93
Pub. L. 94–455, title XIX, § 1906(b)(13)(A)
90 Stat. 1834
Pub. L. 94–455

Citation graph

cites case law

§ 307

Basis of stock and stock rights acquired in distributions

Stat.×1

ActAug. 16, 1954, ch. 736

Stat.68A Stat. 93

Pub. L.Pub. L. 94–455, title XIX, § 1906(b)(13)(A)

Stat.90 Stat. 1834

Pub. L.Pub. L. 94–455

Cites 5Cited by 1 across 1 source