Internal Revenue Code · 26 U.S.C.
§ 336. Gain or loss recognized on property distributed in complete liquidation
Official text, no changes From the Office of the Law Revision Counsel, release point 119-121 (current through Public Law 119-121 (October 9, 2026)). Compare it with the official text at uscode.house.gov (external site).
Cite as 26 U.S.C. § 336
At a glance
Read from the text, the source credit and the official notes. Not part of the law.
- Status
- In force
- Added
- October 22, 1986 by Pub. L. 99–514
- Last amended
- November 10, 1988 by Pub. L. 100–647
- Amendments
- 1 dated changes in the source credit
- Length
- 5 subsections · 772 words · about 3 min to read
- Defines
- 1 term
- Cross-references
- cites 6; cited by 4 Code sections and 29 other regulations
- Regulations
- 6 issued under this section
Except as otherwise provided in this section or section 337, gain or loss shall be recognized to a liquidating corporation on the distribution of property in complete liquidation as if such property were sold to the distributee at its fair market value.
If any property distributed in the liquidation is subject to a liability or the shareholder assumes a liability of the liquidating corporation in connection with the distribution, for purposes of subsection (a) and section 337, the fair market value of such property shall be treated as not less than the amount of such liability.
For provision providing that this subpart does not apply to distributions in pursuance of a plan of reorganization, see section 361(c)(4).
For purposes of subparagraph (A), the term “disqualified property” means any property which is acquired by the liquidating corporation in a transaction to which section 351 applied, or as a contribution to capital, during the 5-year period ending on the date of the distribution. Such term includes any property if the adjusted basis of such property is determined (in whole or in part) by reference to the adjusted basis of property described in the preceding sentence.
For purposes of clause (i), any property described in clause (i)(I) acquired by the liquidated corporation after the date 2 years before the date of the adoption of the plan of complete liquidation shall, except as provided in regulations, be treated as acquired as part of a plan described in clause (i)(II).
The Secretary may prescribe regulations under which, in lieu of disallowing a loss under subparagraph (A) for a prior taxable year, the gross income of the liquidating corporation for the taxable year in which the plan of complete liquidation is adopted shall be increased by the amount of the disallowed loss.
In the case of any liquidation to which section 332 applies, no loss shall be recognized to the liquidating corporation on any distribution in such liquidation. The preceding sentence shall apply to any distribution to the 80-percent distributee only if subsection (a) or (b)(1) of section 337 applies to such distribution.
(Added Pub. L. 99–514, title VI, § 631(a), Oct. 22, 1986, 100 Stat. 2269; amended Pub. L. 100–647, title I, §§ 1006(e)(1)–(3), (21)(A), 1018(d)(5)(D), Nov. 10, 1988, 102 Stat. 3400, 3403, 3580.)
Terms defined here
Where the text says “the term … means”. Select a term to jump to its definition.
Regulations under this section
Treasury regulations (26 CFR) issued under § 336
- § 1.336-0 Table of contents.
- § 1.336-1 General principles, nomenclature, and definitions for a section 336(e) election.
- § 1.336-2 Availability, mechanics, and consequences of section 336(e) election.
- § 1.336-3 Aggregate deemed asset disposition price; various aspects of taxation of the deemed asset disposition.
- § 1.336-4 Adjusted grossed-up basis.
- § 1.336-5 Applicability dates.
Cross-references
Computed from the citations in the text of Title 26 and 26 CFR.
This section cites 6 other sections
- § 337 Nonrecognition for property distributed to parent in complete liquidation of subsidiary
- § 361(c)(4) Nonrecognition of gain or loss to corporations; treatment of distributions
- § 267 Losses, expenses, and interest with respect to transactions between related taxpayers
- § 351 Transfer to corporation controlled by transferor
- § 332 Complete liquidations of subsidiaries
- § 1504(a)(2) Definitions
Cited by 4 Code sections
- § 311(b)(2) Taxability of corporation on distribution
- § 337(b)(1)(B) Nonrecognition for property distributed to parent in complete liquidation of subsidiary
- § 355(c)(3) Distribution of stock and securities of a controlled corporation
- § 6038B(a)(2) Notice of certain transfers to foreign persons
Cited in 29 regulations not issued under it
- § 1.56(g)-1 Adjusted current earnings.
- § 1.162-33 Certain employee remuneration in excess of $1,000,000 not deductible for taxable years beginning after December 31, 2017.
- § 1.163(j)-10 Allocation of interest expense, interest income, and other items of expense and gross income to an excepted trade or business.
- § 1.168(k)-2 Additional first year depreciation deduction for property acquired and placed in service after September 27, 2017.
- § 1.179-4 Definitions.
- § 1.179-6 Effective/applicability dates.
- § 1.337(d)-3 Gain recognition upon certain partnership transactions involving a partner's stock.
- § 1.337(d)-4 Taxable to tax-exempt.
- § 1.337(d)-6 New transitional rules imposing tax on property owned by a C corporation that becomes property of a RIC or REIT.
- § 1.337(d)-7 Tax on property owned by a C corporation that becomes property of a RIC or REIT.
- § 1.338-1 General principles; status of old target and new target.
- § 1.338(h)(10)-1 Deemed asset sale and liquidation.
- § 1.355-0 Outline of sections.
- § 1.355-8 Definition of predecessor and successor and limitations on gain recognition under section 355(e) and section 355(f).
- § 1.367(b)-3 Repatriation of foreign corporate assets in certain nonrecognition transactions.
- § 1.367(e)-2 Distributions described in section 367(e)(2).
- § 1.385-3 Certain distributions of debt instruments and similar transactions.
- § 1.451-3 Timing of income inclusion for taxpayers with an applicable financial statement using an accrual method of accounting.
- § 1.453-11 Installment obligations received from a liquidating corporation.
- § 1.897-3 Election by foreign corporation to be treated as a domestic corporation under section 897(i).
- § 1.897-5T Corporate distributions (temporary).
- § 1.901-2 Income, war profits, or excess profits tax paid or accrued.
- § 1.1245-1 General rule for treatment of gain from dispositions of certain depreciable property.
- § 1.1250-1 Gain from dispositions of certain depreciable realty.
Show 5 more
- § 1.1400Z2(b)-1 Inclusion of gains that have been deferred under section 1400Z-2(a).
- § 1.1502-13 Intercompany transactions.
- § 1.1502-68 Additional first year depreciation deduction for property acquired and placed in service after September 27, 2017.
- § 53.4960-0 Table of contents.
- § 53.4960-1 Scope and definitions.
Amendment history
From the source credit and the official notes, newest first.
- Amended by Pub. L. 100–647Parts changed in 1988: (b) (c) (d)(2)(B)(ii) (d)(3) (e)
- Added by Pub. L. 99–514
Where it sits in the Code
- Subtitle A Income Taxes
- Chapter 1 NORMAL TAXES AND SURTAXES
- Subchapter C Corporate Distributions and Adjustments
- Part II CORPORATE LIQUIDATIONS
- Subpart B Effects on Corporation
Nearby sections
- § 336 Gain or loss recognized on property distributed in complete liquidation
- § 337 Nonrecognition for property distributed to parent in complete liquidation of subsidiary
- § 338 Certain stock purchases treated as asset acquisitions
Official notes
The Law Revision Counsel's notes for this section (amendments, effective dates and related laws) are long, so they have their own page.