26 USC 356 - Receipt of additional consideration

U.S Code last checked for updates: Nov 23, 2024

§ 356.

Receipt of additional consideration

(a)

Gain on exchanges

(1)

Recognition of gain

If—

(A)

section 354 or 355 would apply to an exchange but for the fact that

(B)

the property received in the exchange consists not only of property permitted by section 354 or 355 to be received without the recognition of gain but also of other property or money,

then the gain, if any, to the recipient shall be recognized, but in an amount not in excess of the sum of such money and the fair market value of such other property.

(2)

Treatment as dividend

(b)

Additional consideration received in certain distributions

If—

(1)

section 355 would apply to a distribution but for the fact that

(2)

the property received in the distribution consists not only of property permitted by section 355 to be received without the recognition of gain, but also of other property or money,

then an amount equal to the sum of such money and the fair market value of such other property shall be treated as a distribution of property to which section 301 applies.

(c)

Loss

If—

(1)

section 354 would apply to an exchange or section 355 would apply to an exchange or distribution, but for the fact that

(2)

the property received in the exchange or distribution consists not only of property permitted by section 354 or 355 to be received without the recognition of gain or loss, but also of other property or money,

then no loss from the exchange or distribution shall be recognized.

(d)

Securities as other property

For purposes of this section—

(1)

In general

(2)

Exceptions

(A)

Securities with respect to which nonrecognition of gain would be permitted

(B)

Greater principal amount in section 354 exchange

If—

(i)

in an exchange described in section 354 (other than subsection (c) thereof), securities of a corporation a party to the reorganization are surrendered and securities of any corporation a party to the reorganization are received, and

(ii)

the principal amount of such securities received exceeds the principal amount of such securities surrendered,

then, with respect to such securities received, the term “other property” means only the fair market value of such excess. For purposes of this subparagraph and subparagraph (C), if no securities are surrendered, the excess shall be the entire principal amount of the securities received.

(C)

Greater principal amount in section 355 transaction

(e)

Nonqualified preferred stock treated as other property

For purposes of this section—

(1)

In general

(2)

Exception

(f)

Exchanges for section 306 stock

(g)

Transactions involving gift or compensation

For special rules for a transaction described in section 354, 355, or this section, but which—

(1)

results in a gift, see section 2501 and following, or

(2)

has the effect of the payment of compensation, see section 61(a)(1).

(Aug. 16, 1954, ch. 736, 68A Stat. 115; Pub. L. 94–253, § 1(c), Mar. 31, 1976, 90 Stat. 296; Pub. L. 97–248, title II, § 227(b), Sept. 3, 1982, 96 Stat. 492; Pub. L. 101–508, title XI, § 11801(c)(8)(E), Nov. 5, 1990, 104 Stat. 1388–524; Pub. L. 105–34, title X, § 1014(d), Aug. 5, 1997, 111 Stat. 921.)

cite as: 26 USC 356