Title 26 — Internal Revenue Code
Part IX · Chapter 1 — Normal Taxes and Surtaxes
§ 269. Acquisitions made to evade or avoid income tax
Statutory text
In general
If—
any person or persons acquire, directly or indirectly, control of a corporation, or
any corporation acquires, directly or indirectly, property of another corporation, not controlled, directly or indirectly, immediately before such acquisition, by such acquiring corporation or its stockholders, the basis of which property, in the hands of the acquiring corporation, is determined by reference to the basis in the hands of the transferor corporation,
and the principal purpose for which such acquisition was made is evasion or avoidance of Federal income tax by securing the benefit of a deduction, credit, or other allowance which such person or corporation would not otherwise enjoy, then the Secretary may disallow such deduction, credit, or other allowance. For purposes of paragraphs (1) and (2), control means the ownership of stock possessing at least 50 percent of the total combined voting power of all classes of stock entitled to vote or at least 50 percent of the total value of shares of all classes of stock of the corporation.
Certain liquidations after qualified stock purchases
In general
If—
there is a qualified stock purchase by a corporation of another corporation,
an election is not made under section 338 with respect to such purchase,
the acquired corporation is liquidated pursuant to a plan of liquidation adopted not more than 2 years after the acquisition date, and
the principal purpose for such liquidation is the evasion or avoidance of Federal income tax by securing the benefit of a deduction, credit, or other allowance which the acquiring corporation would not otherwise enjoy,
then the Secretary may disallow such deduction, credit, or other allowance.
Meaning of terms
For purposes of paragraph (1), the terms “qualified stock purchase” and “acquisition date” have the same respective meanings as when used in section 338.
Power of Secretary to allow deduction, etc., in part
In any case to which subsection (a) or (b) applies the Secretary is authorized—
to allow as a deduction, credit, or allowance any part of any amount disallowed by such subsection, if he determines that such allowance will not result in the evasion or avoidance of Federal income tax for which the acquisition was made; or
to distribute, apportion, or allocate gross income, and distribute, apportion, or allocate the deductions, credits, or allowances the benefit of which was sought to be secured, between or among the corporations, or properties, or parts thereof, involved, and to allow such deductions, credits, or allowances so distributed, apportioned, or allocated, but to give effect to such allowance only to such extent as he determines will not result in the evasion or avoidance of Federal income tax for which the acquisition was made; or
to exercise his powers in part under paragraph (1) and in part under paragraph (2).
Legislative history
Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.
Aug. 16, 1954, ch. 736, 68A Stat. 80 · 68A Stat. 80
Enacted · 26 U.S.C. § 269
Aug. 16, 1954, ch. 736, 68A Stat. 80
Source evidence
Code source credit
Aug. 16, 1954, ch. 736, 68A Stat. 80Revenue Act of 1964
Pub. L. 88–272 title II § 235(c)(2) · 78 Stat. 19
Substituted · 26 U.S.C. § 269(a)
Pub. L. 88–272 substituted “the Secretary or his delegate may disallow such deduction, credit, or other allowance” for “such deduction, credit or other allowance shall not be allowed”
Source evidence
Code amendment note
Subsec. (a). Pub. L. 88–272 substituted “the Secretary or his delegate may disallow such deduction, credit, or other allowance” for “such deduction, credit or other allowance shall not be allowed”.Enacted provision · exact public law section
(2) Amendment of section 269.— Section 269(a) (relating to acquisitions made to evade or avoid income tax) is a mended by striking out “then such deduction, credit, or other allowance shall not be allowed” at the end of the first sentence and inserting in lieu thereof “then the Secretary or his delegate may disallow such deduction, credit, or other allowance”.Pub. L. 94–455 § 1906(b)(13)(A) · 90 Stat. 1520
Struck · 26 U.S.C. § 269(a); 26 U.S.C. § 269(b)
Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary” wherever appearing
Source evidence
Code amendment note
Subsecs. (a), (b). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary” wherever appearing.Enacted provision · exact public law section
(A) The Internal Revenue Code of 1954, as amended by this Act, is amended by striking out “Secretary or his delegate” each place it appears and inserting in lieu thereof “Secretary”.Pub. L. 94–455 § 1901(a)(38) · 90 Stat. 1520
Struck · 26 U.S.C. § 269(c)
Pub. L. 94–455, § 1901(a)(38), struck out subsec. (c) relating to presumptions in the case of disproportionate purchase price
Source evidence
Code amendment note
Subsec. (c). Pub. L. 94–455, § 1901(a)(38), struck out subsec. (c) relating to presumptions in the case of disproportionate purchase price.Enacted provision · exact public law section
(38) Amendment of section 269.— Section 269 (relating to 26 USC 269. acquisitions made to evade or avoid income tax) is amended by striking out subsection (c) (relating to presumption in the ease of disproportionate purchase price).Tax Reform Act of 1984
Pub. L. 98–369 div. A title VII § 712(k)(8)(A) · 98 Stat. 494
Added · 26 U.S.C. § 269(b); 26 U.S.C. § 269(c)
Pub. L. 98–369 added subsec. (b)
Redesignated · 26 U.S.C. § 269(b); 26 U.S.C. § 269(c)
Pub. L. 98–369 redesignated former subsec. (b) as (c)
Inserted · 26 U.S.C. § 269(b); 26 U.S.C. § 269(c)
Pub. L. 98–369 inserted reference to subsec. (b)
Source evidence
Code amendment note
Subsecs. (b), (c). Pub. L. 98–369 added subsec. (b), redesignated former subsec. (b) as (c) and inserted reference to subsec. (b).Enacted provision · exact public law section
(A) In general.— Section 269 (relating to acquisitions made to evade or avoid income tax) is amended by redesignating subsection (b) as subsection (c) and by inserting after subsection (a) the following new subsection: “(b) Certain Liquidations After Qualified Stock Purchases.— “(1) In general.— If— “(A) there is a qualified stock purchase by a corporation of another corporation, “(B) an election is not made under section 338 with respect to such purchase, “(C) the acquired corporation is liquidated pursuant to a plan of liquidation adopted not more than 2 years after the acquisition date, and “(D) the principal purpose for such liquidation is the evasion or avoidance of Federal income tax by securing the benefit of a deduction, credit, or other allowance which the acquiring corporation would not otherwise enjoy, then the Secretary may disallow such deduction, credit, or other allowance. “(2) Meaning of terms.— For purposes of paragraph (1), the terms ‘qualified stock purchase’ and ‘acquisition date’ have the same respective meanings as when used in section 338.”Tax Technical Corrections Act of 2014
Pub. L. 113–295 div. A title II § 221(a)(45) · 128 Stat. 4010
Struck · 26 U.S.C. § 269(a)
Pub. L. 113–295 struck out “or acquired on or after October 8, 1940,” after “persons acquire,” in par. (1) and after “corporation acquires,” in par. (2)
Source evidence
Code amendment note
Subsec. (a). Pub. L. 113–295 struck out “or acquired on or after October 8, 1940,” after “persons acquire,” in par. (1) and after “corporation acquires,” in par. (2).Enacted provision · exact public law section
(45) Acquisitions made to evade or avoid income tax.— Paragraphs (1) and (2) of section 269(a) are each amended by striking “or acquired on or after October 8, 1940,”.Effective date note
Amendment by Pub. L. 113–295 effective Dec. 19, 2014, subject to a savings provision, see section 221(b) of Pub. L. 113–295, set out as a note under section 1 of this title.
7 of 8 references resolved to an enrolled provision · 1 partial
Editorial Notes
Amendments1964–2014 · 4 rounds
2014
Subsec. (a). Pub. L. 113–295 struck out “or acquired on or after ,” after “persons acquire,” in par. (1) and after “corporation acquires,” in par. (2).
1984
Subsecs. (b), (c). Pub. L. 98–369 added subsec. (b), redesignated former subsec. (b) as (c) and inserted reference to subsec. (b).
1976
Subsecs. (a), (b). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary” wherever appearing.
Subsec. (c). Pub. L. 94–455, § 1901(a)(38), struck out subsec. (c) relating to presumptions in the case of disproportionate purchase price.
1964
Subsec. (a). Pub. L. 88–272 substituted “the Secretary or his delegate may disallow such deduction, credit, or other allowance” for “such deduction, credit or other allowance shall not be allowed”.
Statutory Notes and Related Subsidiaries
Effective Date of 2014 Amendment
Amendment by Pub. L. 113–295 effective , subject to a savings provision, see section 221(b) of Pub. L. 113–295, set out as a note under section 1 of this title.
Effective Date of 1984 Amendment
Pub. L. 98–369, div. A, title VII, § 712(k)(8)(C), , 98 Stat. 952, provided that: “The amendments made by this paragraph [amending this section] shall apply to liquidations after , in taxable years ending after such date.”
Effective Date of 1964 Amendment
Pub. L. 88–272, title II, § 235(d), , 78 Stat. 127, provided that: “The amendments made by subsections (a) and (c) [enacting sections 1561 to 1563 of this title and amending this section and sections 441 and 802 of this title] shall apply with respect to taxable years ending after . The amendment made by subsection (b) [amending section 1551 of this title] shall apply with respect to transfers made after .”
Credits
1954–2014 · 5 acts
- 1954Aug. 16, 1954, ch. 736, 68A Stat. 80
- 1964Pub. L. 88–272, title II, § 235(c)(2), , 78 Stat. 126
- 1976Pub. L. 94–455, title XIX, §§ 1901(a)(38), 1906(b)(13)(A), , 90 Stat. 1771, 1834
- 1984Pub. L. 98–369, div. A, title VII, § 712(k)(8)(A), (B), , 98 Stat. 952
- 2014Pub. L. 113–295, div. A, title II, § 221(a)(45), , 128 Stat. 4045.
Show as published
(Aug. 16, 1954, ch. 736, 68A Stat. 80; Pub. L. 88–272, title II, § 235(c)(2), , 78 Stat. 126; Pub. L. 94–455, title XIX, §§ 1901(a)(38), 1906(b)(13)(A), , 90 Stat. 1771, 1834; Pub. L. 98–369, div. A, title VII, § 712(k)(8)(A), (B), , 98 Stat. 952; Pub. L. 113–295, div. A, title II, § 221(a)(45), , 128 Stat. 4045.)