# 26 U.S.C. § 331: Gain or loss to shareholder in corporate liquidations

Source: OLRC release point 119-134 <https://uscode.house.gov/us/usc/119-134/t26/s331>. Cite pinpoints as 26 U.S.C. § 331(a)(1).

## § 331(a) Distributions in complete liquidation treated as exchanges

Amounts received by a shareholder in a distribution in complete liquidation of a corporation shall be treated as in full payment in exchange for the stock.

## § 331(b) Nonapplication of section 301

Section 301 (relating to effects on shareholder of distributions of property) shall not apply to any distribution of property (other than a distribution referred to in paragraph (2)(B) of section 316(b)) in complete liquidation.

## § 331(c) Cross reference

For general rule for determination of the amount of gain or loss recognized, see section 1001.

## Regulations

- [Treas. Reg. § 1.331-1](/26/reg/1.331-1.md): Corporate liquidations. (interprets § 331)

## Final rules

- [72 FR 32794](https://www.federalregister.gov/documents/2007/06/14/E7-11148/guidance-necessary-to-facilitate-business-electronic-filing-and-burden-reduction) (2007): Guidance Necessary To Facilitate Business Electronic Filing and Burden Reduction
- [71 FR 30591](https://www.federalregister.gov/documents/2006/05/30/06-4873/guidance-necessary-to-facilitate-business-electronic-filing-and-burden-reduction) (2006): Guidance Necessary to Facilitate Business Electronic Filing and Burden Reduction

## Leading cases

- [Commissioner v. Berghash, 361 F.2d 257 (2d Cir. 1966)](https://www.courtlistener.com/opinion/271927/commissioner-of-internal-revenue-v-hyman-h-berghash-and-rose-berghash/)
- [Atlas Tool Co. v. Commissioner, 70 T.C. 86 (1978)](https://www.courtlistener.com/opinion/4704837/atlas-tool-co-v-commissioner/)
- [James Armour, Inc. v. Commissioner, 43 T.C. 295 (1964)](https://www.courtlistener.com/opinion/4701759/james-armour-inc-v-commissioner/)

## Connections

Cites: § 316 Dividend defined; § 1001 Determination of amount of and recognition of gain or loss

Cited by: § 302 Distributions in redemption of stock; § 332 Complete liquidations of subsidiaries; § 453 Installment method

Derived from: 1939 § 115(c)

## Amendments

- 1954-08-16: [Act Aug. 16, 1954, ch. 736](/26/act/1954-ch736.md), 68A Stat. 101
- 1964-02-26: [Pub. L. 88-272](/26/act/88-272.md), 78 Stat. 88
- 1976-10-04: [Pub. L. 94-455](/26/act/94-455.md), 90 Stat. 1799
- 1982-09-03: [Pub. L. 97-248](/26/act/97-248.md), 96 Stat. 478
- 2018-03-23: [Pub. L. 115-141](/26/act/115-141.md), 132 Stat. 1187