# 26 U.S.C. § 337: Nonrecognition for property distributed to parent in complete liquidation of subsidiary Source: OLRC release point 119-134 . Cite pinpoints as 26 U.S.C. § 337(a)(1). ## § 337(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. ## § 337(b) Treatment of indebtedness of subsidiary, etc. **§ 337(b)(1) Indebtedness of subsidiary to parent.** If— **§ 337(b)(1)(A)** a corporation is liquidated in a liquidation to which section 332 applies, and **§ 337(b)(1)(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. **§ 337(b)(2) Treatment of tax-exempt distributee.** **§ 337(b)(2)(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. **§ 337(b)(2)(B) Exception where property will be used in unrelated business.** **§ 337(b)(2)(B)(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). **§ 337(b)(2)(B)(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. ## § 337(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. ## § 337(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— **§ 337(d)(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 **§ 337(d)(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. ## Regulations - [Treas. Reg. § 1.337-1](/26/reg/1.337-1.md): Nonrecognition for property distributed to parent in complete liquidation of subsidiary. (interprets § 337) - [Treas. Reg. § 1.337(d)-1](/26/reg/1.337(d)-1.md): Transitional loss limitation rule. (interprets § 337(d)) - [Treas. Reg. § 1.337(d)-2](/26/reg/1.337(d)-2.md): Loss limitation rules. (interprets § 337(d)) - [Treas. Reg. § 1.337(d)-3](/26/reg/1.337(d)-3.md): Gain recognition upon certain partnership transactions involving a partner's stock. (interprets § 337(d)) - [Treas. Reg. § 1.337(d)-4](/26/reg/1.337(d)-4.md): Taxable to tax-exempt. (interprets § 337(d)) - [Treas. Reg. § 1.337(d)-5](/26/reg/1.337(d)-5.md): Old transitional rules imposing tax on property owned by a C corporation that becomes property of a RIC or REIT (interprets § 337(d)) - [Treas. Reg. § 1.337(d)-6](/26/reg/1.337(d)-6.md): New transitional rules imposing tax on property owned by a C corporation that becomes property of a RIC or REIT. (interprets § 337(d)) - [Treas. Reg. § 1.337(d)-7](/26/reg/1.337(d)-7.md): Tax on property owned by a C corporation that becomes property of a RIC or REIT. (interprets § 337(d)) ## Final rules - [84 FR 26559](https://www.federalregister.gov/documents/2019/06/07/2019-11753/certain-transfers-of-property-to-regulated-investment-companies-rics-and-real-estate-investment) (2019): Certain Transfers of Property to Regulated Investment Companies [RICs] and Real Estate Investment Trusts [REITs] - [83 FR 26580](https://www.federalregister.gov/documents/2018/06/08/2018-12407/partnership-transactions-involving-equity-interests-of-a-partner) (2018): Partnership Transactions Involving Equity Interests of a Partner - [82 FR 5387](https://www.federalregister.gov/documents/2017/01/18/2017-00479/certain-transfers-of-property-to-regulated-investment-companies-rics-and-real-estate-investment) (2017): Certain Transfers of Property to Regulated Investment Companies [RICs] and Real Estate Investment Trusts [REITs] - [81 FR 36793](https://www.federalregister.gov/documents/2016/06/08/2016-13443/certain-transfers-of-property-to-regulated-investment-companies-rics-and-real-estate-investment) (2016): Certain Transfers of Property to Regulated Investment Companies [RICs] and Real Estate Investment Trusts [REITs]; Final and Temporary Regulations - [81 FR 17066](https://www.federalregister.gov/documents/2016/03/28/2016-06227/limitations-on-the-importation-of-net-built-in-losses) (2016): Limitations on the Importation of Net Built-In Losses - [80 FR 33402](https://www.federalregister.gov/documents/2015/06/12/2015-14405/partnership-transactions-involving-equity-interests-of-a-partner) (2015): Partnership Transactions Involving Equity Interests of a Partner - [78 FR 46805](https://www.federalregister.gov/documents/2013/08/02/2013-18695/certain-transfers-of-property-to-regulated-investment-companies-rics-and-real-estate-investment) (2013): Certain Transfers of Property to Regulated Investment Companies [RICs] and Real Estate Investment Trusts [REITs] - [73 FR 53934](https://www.federalregister.gov/documents/2008/09/17/E8-21006/unified-rule-for-loss-on-subsidiary-stock) (2008): Unified Rule for Loss on Subsidiary Stock - [70 FR 10319](https://www.federalregister.gov/documents/2005/03/03/05-3951/loss-limitation-rules) (2005): Loss Limitation Rules - [69 FR 12799](https://www.federalregister.gov/documents/2004/03/18/04-6140/loss-limitation-rules) (2004): Loss Limitation Rules - [68 FR 12817](https://www.federalregister.gov/documents/2003/03/18/03-6221/certain-transfers-of-property-to-regulated-investment-companies-rics-and-real-estate-investment) (2003): Certain Transfers of Property to Regulated Investment Companies [RICs] and Real Estate Investment Trusts [REITs] - [67 FR 11034](https://www.federalregister.gov/documents/2002/03/12/02-5850/loss-limitation-rules) (2002): Loss Limitation Rules - [63 FR 71591](https://www.federalregister.gov/documents/1998/12/29/98-34210/certain-asset-transfers-to-a-tax-exempt-entity) (1998): Certain Asset Transfers to a Tax-Exempt Entity - [FR Doc. 94-19548](https://www.federalregister.gov/documents/1994/08/15/94-19548/consolidated-returnsstock-basis-and-excess-loss-accounts-earnings-and-profits-absorption-of) (1994): Consolidated ReturnsStock Basis and Excess Loss Accounts, Earnings and Profits, Absorption of Deductions and Losses, Joining and Leaving Consolidated Groups, Worthless Stock Loss, Nonapplicability of Section 357(c) ## Proposed regulations (not in force) - [Prop. Treas. Reg. § 1.337(d)-2](/26/prop/1.337(d)-2_04-6141.md): Loss limitation window period. (REG-153172-03, proposed 2004-03-18) - [Prop. Treas. Reg. § 1.337(d)-3](/26/prop/1.337(d)-3_2019-05545.md): Gain recognition upon certain partnership transactions involving a partner's stock. (REG-135671-17, proposed 2019-03-25) ## Connections Cites: § 332 Complete liquidations of subsidiaries; § 336 Gain or loss recognized on property distributed in complete liquidation; § 511 Imposition of tax on unrelated business income of charitable, etc., organizations; § 521 Exemption of farmers’ cooperatives from tax Cited by: § 334 Basis of property received in liquidations; § 336 Gain or loss recognized on property distributed in complete liquidation; § 367 Foreign corporations; § 453B Gain or loss on disposition of installment obligations; § 857 Taxation of real estate investment trusts and their beneficiaries ## Prior provisions - 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). ## Amendments - 1986-10-22: [Pub. L. 99-514](/26/act/99-514.md), 100 Stat. 2271 - 1987-12-22: [Pub. L. 100-203](/26/act/100-203.md), 101 Stat. 1330 - 1988-11-10: [Pub. L. 100-647](/26/act/100-647.md), 102 Stat. 3400