26 U.S.C. § 307 — Basis of stock and stock rights acquired in distributions

FEDERAL · 26 U.S.C. · Chapter Subchapter C—Corporate Distributions and Adjustments

Basis of stock and stock rights acquired in distributions

26 U.S.C. § 307

ChapterSubchapter C—Corporate Distributions and Adjustments

PartSubpart A—Effects on Recipients

This text of 26 U.S.C. § 307 (Basis of stock and stock rights acquired in distributions) is published on Counsel Stack Legal Research, covering United States primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

26 U.S.C. § 307.

Text

(a)General rule If a shareholder in a corporation receives its stock or rights to acquire its stock (referred to in this subsection as "new stock") in a distribution to which section 305(a) applies, then the basis of such new stock and of the stock with respect to which it is distributed (referred to in this section as "old stock"), respectively, shall, in the shareholder's hands, be determined by allocating between the old stock and the new stock the adjusted basis of the old stock. Such allocation shall be made under regulations prescribed by the Secretary.

(b)Exception for certain stock rights If—

(A)a corporation distributes rights to acquire its stock to a shareholder in a distribution to which section 305(a) applies, and

(B)the fair market value of such rights at the time of the

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(a) General rule
If a shareholder in a corporation receives its stock or rights to acquire its stock (referred to in this subsection as "new stock") in a distribution to which section 305(a) applies, then the basis of such new stock and of the stock with respect to which it is distributed (referred to in this section as "old stock"), respectively, shall, in the shareholder's hands, be determined by allocating between the old stock and the new stock the adjusted basis of the old stock. Such allocation shall be made under regulations prescribed by the Secretary.
(b) Exception for certain stock rights
If—
(A) a corporation distributes rights to acquire its stock to a shareholder in a distribution to which section 305(a) applies, and
(B) the fair market value of such rights at the time of the distribution is less than 15 percent of the fair market value of the old stock at such time,
then subsection (a) shall not apply and the basis of such rights shall be zero, unless the taxpayer elects under paragraph (2) of this subsection to determine the basis of the old stock and of the stock rights under the method of allocation provided in subsection (a).
The election referred to in paragraph (1) shall be made in the return filed within the time prescribed by law (including extensions thereof) for the taxable year in which such rights were received. Such election shall be made in such manner as the Secretary may by regulations prescribe, and shall be irrevocable when made.
(c) Cross reference

Source Credit

History

(Aug. 16, 1954, ch. 736, 68A Stat. 93; Pub. L. 94–455, title XIX, §1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)

Editorial Notes

For basis of stock and stock rights distributed before June 22, 1954, see section 1052.

Editorial Notes

Amendments
1976—Subsecs. (a), (b)(2). Pub. L. 94–455 struck out "or his delegate" after "Secretary".

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Bluebook (online)

26 U.S.C. § 307, Counsel Stack Legal Research, https://law.counselstack.com/usc/26/307.

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Editorial Notes

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