# 26 U.S.C. § 311: Taxability of corporation on distribution

Source: OLRC release point 119-134 <https://uscode.house.gov/us/usc/119-134/t26/s311>. Cite pinpoints as 26 U.S.C. § 311(a)(1).

## § 311(a) General rule

Except as provided in subsection (b), no gain or loss shall be recognized to a corporation on the distribution (not in complete liquidation) with respect to its stock of—

**§ 311(a)(1)** its stock (or rights to acquire its stock), or

**§ 311(a)(2)** property.

## § 311(b) Distributions of appreciated property

**§ 311(b)(1) In general.** If—

**§ 311(b)(1)(A)** a corporation distributes property (other than an obligation of such corporation) to a shareholder in a distribution to which subpart A applies, and

**§ 311(b)(1)(B)** the fair market value of such property exceeds its adjusted basis (in the hands of the distributing corporation),

then gain shall be recognized to the distributing corporation as if such property were sold to the distributee at its fair market value.

**§ 311(b)(2) Treatment of liabilities.** Rules similar to the rules of section 336(b) shall apply for purposes of this subsection.

**§ 311(b)(3) Special rule for certain distributions of partnership or trust interests.** If the property distributed consists of an interest in a partnership or trust, the Secretary may by regulations provide that the amount of the gain recognized under paragraph (1) shall be computed without regard to any loss attributable to property contributed to the partnership or trust for the principal purpose of recognizing such loss on the distribution.

## Leading cases

- [Pope & Talbot, Inc. v. Commissioner, 162 F.3d 1236 (9th Cir. 1999)](https://www.courtlistener.com/opinion/760102/pope-talbot-inc-and-subsidiaries-v-commissioner-of-internal-revenue/)

## Connections

Cites: § 336 Gain or loss recognized on property distributed in complete liquidation

Cited by: § 351 Transfer to corporation controlled by transferor; § 646 Tax treatment of electing Alaska Native Settlement Trusts; § 1248 Gain from certain sales or exchanges of stock in certain foreign corporations; § 9509 Oil Spill Liability Trust Fund

## Amendments

- 1954-08-16: [Act Aug. 16, 1954, ch. 736](/26/act/1954-ch736.md), 68A Stat. 94
- 1969-12-30: [Pub. L. 91-172](/26/act/91-172.md), 83 Stat. 713
- 1976-10-02: [Pub. L. 94-452](/26/act/94-452.md), 90 Stat. 1511
- 1976-10-04: [Pub. L. 94-455](/26/act/94-455.md), 90 Stat. 1771
- 1978-11-06: [Pub. L. 95-600](/26/act/95-600.md), 92 Stat. 2941
- 1980-10-19: [Pub. L. 96-471](/26/act/96-471.md), 94 Stat. 2253
- 1982-09-03: [Pub. L. 97-248](/26/act/97-248.md), 96 Stat. 483
- 1984-07-18: [Pub. L. 98-369](/26/act/98-369.md), 98 Stat. 568
- 1986-10-22: [Pub. L. 99-514](/26/act/99-514.md), 100 Stat. 2272
- 1988-11-10: [Pub. L. 100-647](/26/act/100-647.md), 102 Stat. 3401