Internal Revenue Code · 26 U.S.C.
§ 337. Nonrecognition for property distributed to parent in complete liquidation of subsidiary
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. § 337
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
- 2 dated changes in the source credit
- Length
- 4 subsections · 520 words · about 2 min to read
- Defines
- 1 term
- Cross-references
- cites 4; cited by 4 Code sections and 23 other regulations
- Regulations
- 8 issued under this section
No gain or loss shall be recognized to the liquidating corporation on the distribution to the 80-percent distributee of any property in a complete liquidation to which section 332 applies.
Except as provided in subparagraph (B), paragraph (1) and subsection (a) shall not apply where the 80-percent distributee is an organization (other than a cooperative described in section 521) which is exempt from the tax imposed by this chapter.
Subparagraph (A) shall not apply to any distribution of property to an organization described in section 511(a)(2) if, immediately after such distribution, such organization uses such property in an activity the income from which is subject to tax under section 511(a).
If any property to which clause (i) applied is disposed of by the organization acquiring such property, notwithstanding any other provision of law, any gain (not in excess of the amount not recognized by reason of clause (i)) shall be included in such organization’s unrelated business taxable income. For purposes of the preceding sentence, if such property ceases to be used in an activity referred to in clause (i), such organization shall be treated as having disposed of such property on the date of such cessation.
For purposes of this section, the term “80-percent distributee” means only the corporation which meets the 80-percent stock ownership requirements specified in section 332(b). For purposes of this section, the determination of whether any corporation is an 80-percent distributee shall be made without regard to any consolidated return regulation.
(Added Pub. L. 99–514, title VI, § 631(a), Oct. 22, 1986, 100 Stat. 2271; amended Pub. L. 100–203, title X, § 10223(a), Dec. 22, 1987, 101 Stat. 1330–411; Pub. L. 100–647, title I, § 1006(e)(4), (5)(A), Nov. 10, 1988, 102 Stat. 3400.)
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 § 337
- § 1.337-1 Nonrecognition for property distributed to parent in complete liquidation of subsidiary.
- § 1.337(d)-1 Transitional loss limitation rule.
- § 1.337(d)-2 Loss limitation rules.
- § 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)-5 Old transitional rules imposing tax on property owned by a C corporation that becomes property of a RIC or REIT
- § 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.
Cross-references
Computed from the citations in the text of Title 26 and 26 CFR.
This section cites 4 other sections
- § 332 Complete liquidations of subsidiaries
- § 336 Gain or loss recognized on property distributed in complete liquidation
- § 521 Exemption of farmers’ cooperatives from tax
- § 511(a)(2) Imposition of tax on unrelated business income of charitable, etc., organizations
Cited by 4 Code sections
- § 334(b)(1) Basis of property received in liquidations
- § 336(a) Gain or loss recognized on property distributed in complete liquidation
- § 367(e)(2) Foreign corporations
- § 453B(d) Gain or loss on disposition of installment obligations
Cited in 23 regulations not issued under it
- § 1.332-7 Indebtedness of subsidiary to parent.
- § 1.334-1 Basis of property received in liquidations.
- § 1.367(a)-7 Outbound transfers of property described in section 361(a) or (b).
- § 1.367(a)-8 Gain recognition agreement requirements.
- § 1.367(b)-3 Repatriation of foreign corporate assets in certain nonrecognition transactions.
- § 1.367(b)-3T Repatriation of foreign corporate assets in certain nonrecognition transactions (temporary).
- § 1.367(e)-2 Distributions described in section 367(e)(2).
- § 1.453-9 Gain or loss on disposition of installment obligations.
- § 1.897-5T Corporate distributions (temporary).
- § 1.1244(c)-1 Section 1244 stock defined.
- § 1.1248-1 Treatment of gain from certain sales or exchanges of stock in certain foreign corporations.
- § 1.1248-2 Earnings and profits attributable to a block of stock in simple cases.
- § 1.1248-3 Earnings and profits attributable to stock in complex cases.
- § 1.1248-6 Sale or exchange of stock in certain domestic corporations.
- § 1.1248(f)-1 Certain nonrecognition distributions.
- § 1.1248(f)-2 Exceptions for certain distributions and attribution rules.
- § 1.1400Z2(b)-1 Inclusion of gains that have been deferred under section 1400Z-2(a).
- § 1.1445-5 Special rules concerning distributions and other transactions by corporations, partnerships, trusts, and estates.
- § 1.1502-13 Intercompany transactions.
- § 1.1502-34 Special aggregate stock ownership rules.
- § 15a.453-1 Installment method reporting for sales of real property and casual sales of personal property.
- § 58.4501-5 Examples.
- § 601.201 Rulings and determinations letters.
Amendment history
From the source credit and the official notes, newest first.
- Amended by Pub. L. 100–647Parts changed in 1988: (b)(2)(B)(i) (b)(2)(B)(ii) (d)
- Amended by Pub. L. 100–203Parts changed in 1987: (c)
- 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
Show the Law Revision Counsel's notes (amendments, effective dates)
Editorial Notes
References in Text
The Tax Reform Act of 1986, referred to in subsec. (d), is Pub. L. 99–514, Oct. 22, 1986, 100 Stat. 2085. Subtitle D (§§ 631–634) of title VI of the Tax Reform Act of 1986 enacted sections 336 and 337 of this title, amended sections 26, 311, 312, 332, 334, 338, 341, 346, 367, 453, 453B, 467, 852, 897, 1056, 1248, 1255, 1276, 1363, 1366, 1374, and 1375 of this title, and repealed former sections 333, 336, and 337 of this title. For complete classification of this Act to the Code, see Tables.
Prior Provisions
A prior section 337, acts Aug. 16, 1954, ch. 736, 68A Stat. 106; Sept. 2, 1958, Pub. L. 85–866, title I, § 19, 72 Stat. 1615; Oct. 4, 1976, Pub. L. 94–455, title XIX, §§ 1901(a)(46), 1906(b)(13)(A), title XXI, § 2118(a), 90 Stat. 1772, 1834, 1912; Nov. 6, 1978, Pub. L. 95–600, title VII, § 701(i)(1), 92 Stat. 2904; Nov. 10, 1978, Pub. L. 95–628, § 4(a), 92 Stat. 3628; Apr. 2, 1980, Pub. L. 96–223, title IV, § 403(b)(2)(A), 94 Stat. 304; Oct. 19, 1980, Pub. L. 96–471, § 2(c)(2), 94 Stat. 2254; Dec. 24, 1980, Pub. L. 96–589, § 5(c), 94 Stat. 3405; Sept. 3, 1982, Pub. L. 97–248, title II, § 224(c)(5), (6), 96 Stat. 489; Oct. 22, 1986, Pub. L. 99–514, title XVIII, § 1804(e)(7)(A), 100 Stat. 2803, related to gain or loss on sales or exchanges in connection with certain liquidations, prior to repeal by Pub. L. 99–514, § 631(a).
Amendments
1988—Subsec. (b)(2)(B)(i). Pub. L. 100–647, § 1006(e)(4)(A), (B), substituted “described in section 511(a)(2)” for “described in section 511(a)(2) or 511(b)(2)” and “in an activity the income from which is subject to tax under section 511(a)” for “in an unrelated trade or business (as defined in section 513)”.
Subsec. (b)(2)(B)(ii). Pub. L. 100–647, § 1006(e)(4)(C), substituted “an activity referred to in clause (i)” for “an unrelated trade or business of such organization”.
Subsec. (d). Pub. L. 100–647, § 1006(e)(5)(A), in introductory provisions, substituted “amendments made by subtitle D of title VI of the Tax Reform Act of 1986” for “amendments made to this subpart by the Tax Reform Act of 1986”, and in par. (1), substituted “this subchapter) or through the use of a regulated investment company, real estate investment trust, or tax-exempt entity” for “this subchapter)”.
1987—Subsec. (c). Pub. L. 100–203 inserted at end “For purposes of this section, the determination of whether any corporation is an 80-percent distributee shall be made without regard to any consolidated return regulation.”
Statutory Notes and Related Subsidiaries
Effective Date of 1988 Amendment
Pub. L. 100–647, title I, § 1006(e)(5)(B), Nov. 10, 1988, 102 Stat. 3401, provided that:
“The amendment made by subparagraph (A)(ii) [amending this section] shall not apply to any reorganization if before June 10, 1987—“(i) the board of directors of a party to the reorganization adopted a resolution to solicit shareholder approval for the transaction, or“(ii) the shareholders or the board of directors of a party to the reorganization approved the transaction.”
Amendment by Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title.
Effective Date of 1987 Amendment
Amendment by Pub. L. 100–203 applicable to distributions or transfers after Dec. 15, 1987, with exceptions for certain distributee corporations and distributions covered by prior transition rule, see section 10223(d) of Pub. L. 100–203, set out as a note under section 304 of this title.
Effective Date
Section applicable to any distribution in complete liquidation, and any sale or exchange, made by a corporation after July 31, 1986, unless such corporation is completely liquidated before Jan. 1, 1987, any transaction described in section 338 of this title for which the acquisition date occurs after Dec. 31, 1986, and any distribution, not in complete liquidation, made after Dec. 31, 1986, with exceptions and special and transitional rules, see section 633 of Pub. L. 99–514, set out as a note under section 336 of this title.