§ 354. Exchanges of stock and securities in certain reorganizations

Footnotes

1. 1 See References in Text note below.

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.

1. 1954

   Aug. 16, 1954, ch. 736, 68A Stat. 112 · 68A Stat. 112

   Enacted · 26 U.S.C. § 354

   Aug. 16, 1954, ch. 736, 68A Stat. 112

   Source evidence

   Code source credit
   Aug. 16, 1954, ch. 736, 68A Stat. 112

2. 1976

   Pub. L. 94–253 § 1(c) · 90 Stat. 295

   Added · 26 U.S.C. § 354(d)

   Pub. L. 94–253 added subsec. (d)

   Source evidence

   Code amendment note
   Subsec. (d). Pub. L. 94–253 added subsec. (d).

   Enacted provision · exact public law section
   (c) Effects on Shareholders and Security Holders.— Section 354 26 USC 354. of such Code (relating to exchanges of stock and securities in certain reorganizations) is amended by adding at the end thereof the following new subsection: “(d) Exchanges Under the Final System Plan for ConRail.— No gain or loss shall be recognized if stock or securities in a corporation are, in pursuance of an exchange to which paragraph (1) or (2) of section 374(c) applies, exchanged solely for stock of the Consolidated Rail Corporation, securities of such Corporation, certificates of value of the United States Railway Association, or any combination thereof.” 26 USC 356. Clause (i) of section 356(d)(2)(B) of such Code (relating to receipt of additional consideration) is amended by striking out “subsection (c) thereof” and inserting in lieu thereof “subsection (c) or (d) thereof”.

3. 1978

   Pub. L. 95–473 § 2(a)(2)(F) · 92 Stat. 1337

   Substituted · 26 U.S.C. § 354(c)

   Pub. L. 95–473 substituted “subchapter IV of chapter 113 of title 49” for “section 20b of the Interstate Commerce Act”

   Source evidence

   Code amendment note
   Subsec. (c). Pub. L. 95–473 substituted “subchapter IV of chapter 113 of title 49” for “section 20b of the Interstate Commerce Act”.

   Enacted provision · exact public law section
   (F) by striking out of section 354(c) “section 20b of the Interstate 26 USC 354. Commerce Act” and substituting “subchapter IV of chapter 113 of title 49”;

4. 1980

   Pub. L. 96–589 § 4(e)(1) · 94 Stat. 3389

   1. Redesignated · 26 U.S.C. § 354(a)(2)

      Pub. L. 96–589, § 4(e)(1), redesignated existing pars. (A) and (B) as par. (A)(i), (ii)

   2. Added · 26 U.S.C. § 354(a)(2)

      Pub. L. 96–589, § 4(e)(1), added par. (B)

   Source evidence

   Code amendment note
   Subsec. (a)(2). Pub. L. 96–589, § 4(e)(1), redesignated existing pars. (A) and (B) as par. (A)(i), (ii), and added par. (B).

   Enacted provision · exact public law section
   (1) Amendment of section 354.— Subsection (a) of section 354 26 USC 354. (relating to exchanges of stocks and securities in certain reorganizations) is amended by striking out paragraphs (2) and (3) and inserting in lieu thereof the following: “(2) Limitations.— “(A) Excess principal amount.— Paragraph (1) shall not apply if— “(i) the principal amount of any such securities received exceeds the principal amount of any such securities surrendered, or “(ii) any such securities are received and no such securities are surrendered. “(B) Property attributable to accrued interest.— Neither paragraph (1) nor so much of section 356 as relates to paragraph (1) shall apply to the extent that any stock, securities, or other property received is attributable to interest which has accrued on securities on or after the beginning of the holder’s holding period. “(3) Cross references.— “(A) For treatment of the exchange if any property is received which is not permitted to be received under this subsection (including an excess principal amount of securities received over securities surrendered, but not including property to which paragraph (2)(B) applies), see section 356. “(B) For treatment of accrued interest in the case of an exchange described in paragraph (2)(B), see section 61.”

5. 1980

   Pub. L. 96–589 § 4(e)(1) · 94 Stat. 3389

   1. Amended · 26 U.S.C. § 354(a)(3)

      Pub. L. 96–589, § 4(e)(1), designated existing provisions as subpar. (A)

   2. Inserted · 26 U.S.C. § 354(a)(3)

      Pub. L. 96–589, § 4(e)(1), inserted provisions excluding property to which paragraph (2)(B) applies

   3. Added · 26 U.S.C. § 354(a)(3)

      Pub. L. 96–589, § 4(e)(1), added subpar. (B)

   Source evidence

   Code amendment note
   Subsec. (a)(3). Pub. L. 96–589, § 4(e)(1), designated existing provisions as subpar. (A), inserted provisions excluding property to which paragraph (2)(B) applies, and added subpar. (B).

   Enacted provision · exact public law section
   (1) Amendment of section 354.— Subsection (a) of section 354 26 USC 354. (relating to exchanges of stocks and securities in certain reorganizations) is amended by striking out paragraphs (2) and (3) and inserting in lieu thereof the following: “(2) Limitations.— “(A) Excess principal amount.— Paragraph (1) shall not apply if— “(i) the principal amount of any such securities received exceeds the principal amount of any such securities surrendered, or “(ii) any such securities are received and no such securities are surrendered. “(B) Property attributable to accrued interest.— Neither paragraph (1) nor so much of section 356 as relates to paragraph (1) shall apply to the extent that any stock, securities, or other property received is attributable to interest which has accrued on securities on or after the beginning of the holder’s holding period. “(3) Cross references.— “(A) For treatment of the exchange if any property is received which is not permitted to be received under this subsection (including an excess principal amount of securities received over securities surrendered, but not including property to which paragraph (2)(B) applies), see section 356. “(B) For treatment of accrued interest in the case of an exchange described in paragraph (2)(B), see section 61.”

6. 1980

   Pub. L. 96–589 § 4(h)(1) · 94 Stat. 3389

   Substituted · 26 U.S.C. § 354(b)

   Pub. L. 96–589, § 4(h)(1), substituted “subparagraph (D) or (G) of section 368(a)(1)” for “section 368(a)(1)(D)”, wherever appearing

   Source evidence

   Code amendment note
   Subsec. (b). Pub. L. 96–589, § 4(h)(1), substituted “subparagraph (D) or (G) of section 368(a)(1)” for “section 368(a)(1)(D)”, wherever appearing.

   Enacted provision · exact public law section
   (1) Paragraphs (1) and (2) of section 354(b) (relating to exception to general rule on exchanges of stock and securities in certain reorganizations) are each amended by striking out “section 368(a)(1)(D)” and inserting in lieu thereof “subparagraph (D) or (G) of section 368(a)(1)”.

7. 1980

   Pub. L. 96–589 § 6(i)(2) · 94 Stat. 3389

   Substituted · 26 U.S.C. § 354(c)

   Pub. L. 96–589, § 6(i)(2), substituted “confirmed under section 1173 of title 11 of the United States Code, or approved by the Interstate Commerce Commission” for “approved by the Interstate Commerce Commission under section 77 of the Bankruptcy Act, or”

   Source evidence

   Code amendment note
   Subsec. (c). Pub. L. 96–589, § 6(i)(2), substituted “confirmed under section 1173 of title 11 of the United States Code, or approved by the Interstate Commerce Commission” for “approved by the Interstate Commerce Commission under section 77 of the Bankruptcy Act, or”.

   Enacted provision · exact public law section
   (2) Subsection (c) of section 354 (relating to certain railroad reorganizations) is amended by striking out “approved by the Interstate Commerce Commission under section 77 of the Bankruptcy Act, or” and inserting in lieu thereof “confirmed under section 1173 of title 11 of the United States Code, or approved by the Interstate Commerce Commission”.

8. 1990

   Revenue Reconciliation Act of 1990

   Pub. L. 101–508 title XI § 11801(c)(8)(D) · 104 Stat. 1388

   Struck · 26 U.S.C. § 354(d)

   Pub. L. 101–508 struck out subsec. (d) “Exchanges under the final system plan for ConRail” which read as follows: “No gain or loss shall be recognized if stock or securities in a corporation are, in pursuance of an exchange to which paragraph (1) or (2) of section 374(c) applies, exchanged solely for stock of the Consolidated Rail Corporation, securities of such Corporation, certificates of value of the United States Railway Association, or any combination thereof.”

   Source evidence

   Code amendment note
   Subsec. (d). Pub. L. 101–508 struck out subsec. (d) “Exchanges under the final system plan for ConRail” which read as follows: “No gain or loss shall be recognized if stock or securities in a corporation are, in pursuance of an exchange to which paragraph (1) or (2) of section 374(c) applies, exchanged solely for stock of the Consolidated Rail Corporation, securities of such Corporation, certificates of value of the United States Railway Association, or any combination thereof.”

   Enacted provision · exact public law section
   (D) Subsection (d) of section 354 is hereby repealed.

9. 1995

   ICC Termination Act of 1995

   Pub. L. 104–88 title III § 304(c) · 109 Stat. 803

   Struck · 26 U.S.C. § 354(c)

   Pub. L. 104–88 struck out “or approved by the Interstate Commerce Commission under subchapter IV of chapter 113 of title 49,” after “Code,”

   Source evidence

   Code amendment note
   Subsec. (c). Pub. L. 104–88 struck out “or approved by the Interstate Commerce Commission under subchapter IV of chapter 113 of title 49,” after “Code,”.

   Enacted provision · exact public law section
   (c) Section 354.— Section 354(c) of such Code is amended by striking “or approved by the Interstate Commerce Commission under subchapter IV of chapter 113 of title 49,”.

10. 1997

    Pub. L. 105–34 § 1014(e)(1) · 111 Stat. 788

    Inserted · 26 U.S.C. § 354(a)(2)(B)

    Pub. L. 105–34, § 1014(e)(1), inserted “(including nonqualified preferred stock, as defined in section 351(g)(2))” after “stock”

    Source evidence

    Code amendment note
    Subsec. (a)(2)(B). Pub. L. 105–34, § 1014(e)(1), inserted “(including nonqualified preferred stock, as defined in section 351(g)(2))” after “stock”.

    Enacted provision · exact public law section
    (1) Subparagraph (B) of section 354(a)(2) and subparagraph (C) of section 355(a)(3)(C) are each amended by inserting “(including nonqualified preferred stock, as defined in section 351(g)(2))”after “stock”.

    Effective date note
    Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.

11. 1997

    Pub. L. 105–34 § 1014(b) · 111 Stat. 788

    Added · 26 U.S.C. § 354(a)(2)(C)

    Pub. L. 105–34, § 1014(b), added subpar. (C)

    Source evidence

    Code amendment note
    Subsec. (a)(2)(C). Pub. L. 105–34, § 1014(b), added subpar. (C).

    Enacted provision · exact public law section
    (b) Section 354.— Paragraph (2) of section 354(a) (relating to exchanges of stock and securities in certain reorganizations) is amended by adding at the end the following new subparagraph: “(C) Nonqualified preferred stock.— “(i) In general.— Nonqualified preferred stock (as defined in section 351(g)(2)) received in exchange for stock other than nonqualified preferred stock (as so defined) shall not be treated as stock or securities. “(ii) Recapitalizations of family-owned corporations.— “(I) In general.— Clause (i) shall not apply in the case of a recapitalization under section 368(a)(1)(E) of a family-owned corporation. “(II) Family-owned corporation.— For purposes of this clause, except as provided in regulations, the term ‘family-owned corporation’ means any corporation which is described in clause (i) of section 447(d)(2)(C) throughout the 8-year period beginning on the date which is 5 years before the date of the recapitalization. For purposes of the preceding sentence, stock shall not be treated as owned by a family member during any period described in section 355(d)(6)(B).”.

    Effective date note
    Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.

12. 1997

    Pub. L. 105–34 § 1014(e)(2) · 111 Stat. 788

    Inserted · 26 U.S.C. § 354(a)(3)(A)

    Pub. L. 105–34, § 1014(e)(2), inserted “nonqualified preferred stock and” after “subsection (including”

    Source evidence

    Code amendment note
    Subsec. (a)(3)(A). Pub. L. 105–34, § 1014(e)(2), inserted “nonqualified preferred stock and” after “subsection (including”.

    Enacted provision · exact public law section
    (2) Subparagraph (A) of section 354(a)(3) and subparagraph (A) of section 355(a)(4) are each amended by inserting “nonqualified preferred stock and” after “including”.

    Effective date note
    Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.

13. 1998

    Internal Revenue Service Restructuring and Reform Act of 1998

    Pub. L. 105–206 title VI § 6010(e)(2) · 112 Stat. 685

    Added · 26 U.S.C. § 354(a)(2)(C)(ii)(III)

    Pub. L. 105–206 added subcl. (III)

    Source evidence

    Code amendment note
    Subsec. (a)(2)(C)(ii)(III). Pub. L. 105–206 added subcl. (III).

    Enacted provision · exact public law section
    (2) Clause (ii) of section 354(a)(2)(C) of 1986 Code is amended by adding at the end the following new subclause: “(III) Extension of statute of limitations.— The statutory period for the assessment of any deficiency attributable to a corporation failing to be a family-owned corporation shall not expire before the expiration of 3 years after the date the Secretary is notified by the corporation (in such manner as the Secretary may prescribe) of such failure, and such deficiency may be assessed before the expiration of such 3-year period notwithstanding the provisions of any other law or rule of law which would otherwise prevent such assessment.”.

    Effective date note
    Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.

15 of 16 references resolved to an enrolled provision · 1 partial