Treasury Regulations · 26 CFR
§ 1.996-5. Adjustment to basis.
Regulation text, no changes From the eCFR, current as of October 15, 2026. The eCFR is an authoritative but unofficial editorial compilation of the Code of Federal Regulations; the official text is the annual CFR on govinfo. Compare it with this section on ecfr.gov (external site) or the official annual CFR on govinfo (external site).
Regulation under 26 U.S.C. § 996
Cite as 26 CFR § 1.996-5
At a glance
Read from the text and its source citation. Not part of the regulation.
- Status
- In the current eCFR
- Issued
- September 30, 1974 by T.D. 7324
- Issued under
- 26 U.S.C. § 996
- Length
- 178 words · about 1 min to read
- Cross-references
- cites 4 Code sections and 0 regulations; cited by 2
¶(b) Reductions of basis. Under section 996(e)(2), the portion of an actual distribution treated as made out of previously taxed income shall reduce the basis of the stock with respect to which it is made and, to the extent that it exceeds the adjusted basis of such stock, shall be treated as gain from the sale or exchange of property. In the case of stock includible in the gross estate of a decedent for which an election is made under section 2032 (relating to alternate valuation), this paragraph shall not apply to any distribution made after the date of the decendent's death and before the alternate valuation date provided by section 2032. See section 1014(d) for a special rule for determining the basis of stock in a DISC, or former DISC, acquired from a decedent.
[T.D. 7324, 39 FR 35124, Sept. 30, 1974]
Cross-references
Computed from the citations in the text of 26 CFR.
Code sections it cites
- § 996 Rules for allocation in the case of distributions and losses
- § 995 Taxation of DISC income to shareholders
- § 2032 Alternate valuation
- § 1014 Basis of property acquired from a decedent
Cited by 2 other regulations
Amendment history
From the source citation at the end of the section, newest first. T.D. is a Treasury decision; FR is the Federal Register.
- Issued by T.D. 7324 (39 FR 35124)
Where it sits in 26 CFR
- Subchapter A Income tax
- Part 1 Income taxes
- Domestic International Sales Corporations
Nearby sections
- § 1.996-1 Rules for actual distributions and certain deemed distributions.
- § 1.996-2 Ordering rules for losses.
- § 1.996-3 Divisions of earnings and profits.
- § 1.996-4 Subsequent effect of previous disposition of DISC stock.
- § 1.996-5 Adjustment to basis.
- § 1.996-6 Effectively connected income.
- § 1.996-7 Carryover of DISC tax attributes.
- § 1.996-8 Effect of carryback of capital loss or net operating loss to prior DISC taxable year.
- § 1.997-1 Special rules for subchapter C of the Code.