United States Code
USC most recently checked for updates: Jun 04, 2023
Except as otherwise provided in this chapter, a distribution of property (as defined in section 317(a)) made by a corporation to a shareholder with respect to its stock shall be treated in the manner provided in subsection (c).
For purposes of this section, the amount of any distribution shall be the amount of money received, plus the fair market value of the other property received.
For purposes of this section, fair market value shall be determined as of the date of the distribution.
That portion of the distribution which is a dividend (as defined in section 316) shall be included in gross income.
That portion of the distribution which is not a dividend shall be applied against and reduce the adjusted basis of the stock.
Except as provided in subparagraph (B), that portion of the distribution which is not a dividend, to the extent that it exceeds the adjusted basis of the stock, shall be treated as gain from the sale or exchange of property.
That portion of the distribution which is not a dividend, to the extent that it exceeds the adjusted basis of the stock and to the extent that it is out of increase in value accrued before
The basis of property received in a distribution to which subsection (a) applies shall be the fair market value of such property.
Except to the extent otherwise provided in regulations, solely for purposes of determining the taxable income of any 20 percent corporate shareholder (and its adjusted basis in the stock of the distributing corporation), section 312 shall be applied with respect to the distributing corporation as if it did not contain subsections (k) and (n) thereof.
The reference in paragraph (1) to subsection (n) of section 312 shall be treated as not including a reference to paragraph (7) of such subsection.
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection.