§ 337 Nonrecognition for property distributed to parent in complete liquidation of subsidiary

OLRC 119-134 · eCFR 2026-10-19 · 8 regs · 2 amending Acts · cited by 5 sections

Enacted 1986 · Pub. L. 99-514 Amended · 2 Acts

198619871988(a) In general(b) Treatment of indebtedness of subsidiary, etc.(c) 80-percent distributee(d) Regulations
Prior provisions 1
  • A prior section 337, acts Aug. 16, 1954, ch. 736, 68A Stat. 106; Sept. 2, 1958, Pub. L. 85–866, title I, § 19, 72 Stat. 1615; Oct. 4, 1976, Pub. L. 94–455, title XIX, §§ 1901(a)(46), 1906(b)(13)(A), title XXI, § 2118(a), 90 Stat. 1772, 1834, 1912; Nov. 6, 1978, Pub. L. 95–600, title VII, § 701(i)(1), 92 Stat. 2904; Nov. 10, 1978, Pub. L. 95–628, § 4(a), 92 Stat. 3628; Apr. 2, 1980, Pub. L. 96–223, title IV, § 403(b)(2)(A), 94 Stat. 304; Oct. 19, 1980, Pub. L. 96–471, § 2(c)(2), 94 Stat. 2254; Dec. 24, 1980, Pub. L. 96–589, § 5(c), 94 Stat. 3405; Sept. 3, 1982, Pub. L. 97–248, title II, § 224(c)(5), (6), 96 Stat. 489; Oct. 22, 1986, Pub. L. 99–514, title XVIII, § 1804(e)(7)(A), 100 Stat. 2803, related to gain or loss on sales or exchanges in connection with certain liquidations, prior to repeal by Pub. L. 99–514, § 631(a).
Connections Cited by 5 · Cites 4
§ 337 Nonrecognition for property distributed to parent in complete liquidation of subsidiary
§ 1.337-1 Nonrecognition for property distributed to parent in complete liquidation of subsidiary.
Final rules 14

    (a) In general No gain or loss shall be recognized to the liquidating corporation on the distribution to the 80-percent distributee of any property in a complete liquidation to which section 332 applies.

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      (b) Treatment of indebtedness of subsidiary, etc.

      (1) Indebtedness of subsidiary to parent If—

      “any transfer of property to the 80-percent distributee in satisfaction of such indebtedness” Closing words
      Textual readingALL OF= transfer treated as distribution in liquidation

      (A) a corporation is liquidated in a liquidation to which section 332 applies, and

      (B) on the date of the adoption of the plan of liquidation, such corporation was indebted to the 80-percent distributee,

      for purposes of this section and section 336, any transfer of property to the 80-percent distributee in satisfaction of such indebtedness shall be treated as a distribution to such distributee in such liquidation.

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        (2) Treatment of tax-exempt distributee

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          (A) In general Except as provided in subparagraph (B), paragraph (1) and subsection (a) shall not apply where the 80-percent distributee is an organization (other than a cooperative described in section 521) which is exempt from the tax imposed by this chapter.

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            (B) Exception where property will be used in unrelated business

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              (i) In general Subparagraph (A) shall not apply to any distribution of property to an organization described in section 511(a)(2) if, immediately after such distribution, such organization uses such property in an activity the income from which is subject to tax under section 511(a).

              Amended 1988
              • 1988 Pub. L. 100-647 Pub. L. 100–647, § 1006(e)(4)(A), (B), substituted “described in section 511(a)(2)” for “described in section 511(a)(2) or 511(b)(2)” and “in an activity the income from which is subject to tax under section 511(a)” for “in an unrelated trade or business (as defined in section 513)”.
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                (ii) Later disposition or change in use If any property to which clause (i) applied is disposed of by the organization acquiring such property, notwithstanding any other provision of law, any gain (not in excess of the amount not recognized by reason of clause (i)) shall be included in such organization’s unrelated business taxable income. For purposes of the preceding sentence, if such property ceases to be used in an activity referred to in clause (i), such organization shall be treated as having disposed of such property on the date of such cessation.

                Amended 1988
                • 1988 Pub. L. 100-647 Pub. L. 100–647, § 1006(e)(4)(C), substituted “an activity referred to in clause (i)” for “an unrelated trade or business of such organization”.

                (c) 80-percent distributee For purposes of this section, the term “80-percent distributee” means only the corporation which meets the 80-percent stock ownership requirements specified in section 332(b). For purposes of this section, the determination of whether any corporation is an 80-percent distributee shall be made without regard to any consolidated return regulation.

                Amended 1987
                • 1987 Pub. L. 100-203 Pub. L. 100–203 inserted at end “For purposes of this section, the determination of whether any corporation is an 80-percent distributee shall be made without regard to any consolidated return regulation.”
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                  (d) Regulations The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of the amendments made by subtitle D of title VI of the Tax Reform Act of 1986, including—

                  § 1.337(d)-1 Transitional loss limitation rule.§ 1.337(d)-2 Loss limitation rules.§ 1.337(d)-3 Gain recognition upon certain partnership transactions involving a partner's stock.§ 1.337(d)-4 Taxable to tax-exempt.§ 1.337(d)-5 Old transitional rules imposing tax on property owned by a C corporation that becomes property of a RIC or REIT§ 1.337(d)-6 New transitional rules imposing tax on property owned by a C corporation that becomes property of a RIC or REIT.§ 1.337(d)-7 Tax on property owned by a C corporation that becomes property of a RIC or REIT.Prop. § 1.337(d)-2 Proposed 2004 · Loss limitation window period.Prop. § 1.337(d)-3 Proposed 2019 · Gain recognition upon certain partnership transactions involving a partner's stock.
                  Amended 1988
                  • 1988 Pub. L. 100-647 Pub. L. 100–647, § 1006(e)(5)(A), in introductory provisions, substituted “amendments made by subtitle D of title VI of the Tax Reform Act of 1986” for “amendments made to this subpart by the Tax Reform Act of 1986”, and in par. (1), substituted “this subchapter) or through the use of a regulated investment company, real estate investment trust, or tax-exempt entity” for “this subchapter)”.
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                    (1) regulations to ensure that such purposes may not be circumvented through the use of any provision of law or regulations (including the consolidated return regulations and part III of this subchapter) or through the use of a regulated investment company, real estate investment trust, or tax-exempt entity, and

                    (2) regulations providing for appropriate coordination of the provisions of this section with the provisions of this title relating to taxation of foreign corporations and their shareholders.