Internal Revenue Code · 26 U.S.C.
§ 358. Basis to distributees
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. § 358
At a glance
Read from the text, the source credit and the official notes. Not part of the law.
- Status
- In force
- Enacted
- September 2, 1958 by Pub. L. 85–866
- Last amended
- March 9, 2002 by Pub. L. 107–147
- Amendments
- 10 dated changes in the source credit
- Length
- 8 subsections · 979 words · about 4 min to read
- Defines
- 1 term
- Cross-references
- cites 6; cited by 3 Code sections and 40 other regulations
- Regulations
- 7 issued under this section
The basis of any other property (except money) received by the taxpayer shall be its fair market value.
In the case of an exchange to which section 355 (or so much of section 356 as relates to section 355) applies, then in making the allocation under paragraph (1) of this subsection, there shall be taken into account not only the property so permitted to be received without the recognition of gain or loss, but also the stock or securities (if any) of the distributing corporation which are retained, and the allocation of basis shall be made among all such properties.
For purposes of this section, a distribution to which section 355 (or so much of section 356 as relates to section 355) applies shall be treated as an exchange, and for such purposes the stock and securities of the distributing corporation which are retained shall be treated as surrendered, and received back, in the exchange.
Where, as part of the consideration to the taxpayer, another party to the exchange assumed a liability of the taxpayer, such assumption shall, for purposes of this section, be treated as money received by the taxpayer on the exchange.
Paragraph (1) shall not apply to the amount of any liability excluded under section 357(c)(3).
This section shall not apply to property acquired by a corporation by the exchange of its stock or securities (or the stock or securities of a corporation which is in control of the acquiring corporation) as consideration in whole or in part for the transfer of the property to it.
For purposes of this section, the property permitted to be received under section 361 without the recognition of gain or loss shall be treated as consisting only of stock or securities in another corporation a party to the reorganization.
For purposes of this subsection, the term “liability” shall include any fixed or contingent obligation to make payment, without regard to whether the obligation is otherwise taken into account for purposes of this title.
(Aug. 16, 1954, ch. 736, 68A Stat. 117; Pub. L. 85–866, title I, § 21(a), Sept. 2, 1958, 72 Stat. 1620; Pub. L. 90–621, § 2(a), Oct. 22, 1968, 82 Stat. 1311; Pub. L. 94–253, § 1(b), Mar. 31, 1976, 90 Stat. 296; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 95–600, title III, § 365(b), Nov. 6, 1978, 92 Stat. 2855; Pub. L. 100–647, title I, § 1018(d)(5)(B), Nov. 10, 1988, 102 Stat. 3580; Pub. L. 101–508, title XI, § 11801(c)(8)(G), Nov. 5, 1990, 104 Stat. 1388–524; Pub. L. 105–34, title X, § 1012(b)(2), Aug. 5, 1997, 111 Stat. 916; Pub. L. 106–36, title III, § 3001(a)(2), (d)(6), June 25, 1999, 113 Stat. 182, 184; Pub. L. 106–554, § 1(a)(7) [title III, § 309(a)], Dec. 21, 2000, 114 Stat. 2763, 2763A–638; Pub. L. 107–147, title IV, § 412(c), Mar. 9, 2002, 116 Stat. 53.)
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 § 358
- § 1.358-1 Basis to distributees.
- § 1.358-2 Allocation of basis among nonrecognition property.
- § 1.358-3 Treatment of assumption of liabilities.
- § 1.358-4 Exceptions.
- § 1.358-5 Special rules for assumption of liabilities.
- § 1.358-6 Stock basis in certain triangular reorganizations.
- § 1.358-7 Transfers by partners and partnerships to corporations.
Cross-references
Computed from the citations in the text of Title 26 and 26 CFR.
This section cites 6 other sections
- § 351 Transfer to corporation controlled by transferor
- § 355 Distribution of stock and securities of a controlled corporation
- § 356 Receipt of additional consideration
- § 357(c)(3) Assumption of liability
- § 361 Nonrecognition of gain or loss to corporations; treatment of distributions
- § 1504(a) Definitions
Cited by 3 Code sections
- § 304(b)(3)(A) Redemption through use of related corporations
- § 351(h)(2) Transfer to corporation controlled by transferor
- § 357(d)(1) Assumption of liability
Cited in 40 regulations not issued under it
- § 1.245A-10 Examples.
- § 1.338-3 Qualification for the section 338 election.
- § 1.338-8 Asset and stock consistency.
- § 1.351-2 Receipt of property.
- § 1.355-6 Recognition of gain on certain distributions of stock or securities in controlled corporation.
- § 1.356-2 Receipt of additional consideration not in connection with an exchange.
- § 1.362-3 Basis of importation property acquired in loss importation transaction.
- § 1.362-4 Basis of loss duplication property.
- § 1.367(a)-1 Transfers to foreign corporations subject to section 367(a): In general.
- § 1.367(a)-3 Treatment of transfers of stock or securities to foreign corporations.
- § 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(a)-9T Treatment of deemed section 351 exchanges pursuant to section 304(a)(1) (temporary).
- § 1.367(b)-2 Definitions and special rules.
- § 1.367(b)-3 Repatriation of foreign corporate assets in certain nonrecognition transactions.
- § 1.367(b)-4 Acquisition of foreign corporate stock or assets by a foreign corporation in certain nonrecognition transactions.
- § 1.367(b)-5 Distributions of stock described in section 355.
- § 1.367(e)-1 Distributions described in section 367(e)(1).
- § 1.460-4 Methods of accounting for long-term contracts.
- § 1.467-7 Section 467 recapture and other rules relating to dispositions and modifications.
- § 1.752-0 Table of contents.
- § 1.752-6 Partnership assumption of partner's section 358(h)(3) liability after October 18, 1999, and before June 24, 2003.
- § 1.752-7 Partnership assumption of partner's § 1.752-7 liability on or after June 24, 2003.
- § 1.851-6 Investment companies furnishing capital to development corporations.
Show 16 more
- § 1.865-2 Loss with respect to stock.
- § 1.897-5T Corporate distributions (temporary).
- § 1.897-6T Nonrecognition exchanges applicable to corporations, their shareholders, and other taxpayers, and certain transfers of property in corporate reorganizations (temporary).
- § 1.921-1T Temporary regulations providing transition rules for DISCs and FSCs.
- § 1.956-2 Definition of United States property.
- § 1.1032-3 Disposition of stock or stock options in certain transactions not qualifying under any other nonrecognition provision.
- § 1.1244(d)-1 Contributions of property having basis in excess of value.
- § 1.1244(d)-3 Stock dividend, recapitalizations, changes in name, etc.
- § 1.1248(f)-1 Certain nonrecognition distributions.
- § 1.1248(f)-2 Exceptions for certain distributions and attribution rules.
- § 1.1254-3 Section 1254 costs immediately after certain acquisitions.
- § 1.1502-13 Intercompany transactions.
- § 1.1502-19 Excess loss accounts.
- § 1.1502-31 Stock basis after a group structure change.
- § 1.1502-32 Investment adjustments.
- § 1.1502-36 Unified loss rule.
Amendment history
From the source credit and the official notes, newest first.
- Amended by Pub. L. 107–147Parts changed in 2002: (h)(1)(A)
- Amended by Pub. L. 106–554Parts changed in 2000: (h)
- Amended by Pub. L. 106–36Parts changed in 1999: (d)(1)
- Amended by Pub. L. 105–34Parts changed in 1997: (g)
- Amended by Pub. L. 101–508Parts changed in 1990: (a) (b)(3)
- Amended by Pub. L. 100–647Parts changed in 1988: (f)
- Amended by Pub. L. 95–600Parts changed in 1978: (d)
- Amended by Pub. L. 94–455Parts changed in 1976: (a) (b)(1)
- Amended by Pub. L. 94–253
- Amended by Pub. L. 90–621Parts changed in 1968: (e)
- Enacted by Pub. L. 85–866Parts changed in 1958: (a)(1)(A)(iii)
Where it sits in the Code
- Subtitle A Income Taxes
- Chapter 1 NORMAL TAXES AND SURTAXES
- Subchapter C Corporate Distributions and Adjustments
- Part III CORPORATE ORGANIZATIONS AND REORGANIZATIONS
- Subpart B Effects on Shareholders and Security Holders
Nearby sections
Official notes
Show the Law Revision Counsel's notes (amendments, effective dates)
Editorial Notes
Amendments
2002—Subsec. (h)(1)(A). Pub. L. 107–147 amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: “which is assumed in exchange for such property, and”.
2000—Subsec. (h). Pub. L. 106–554 added subsec. (h).
1999—Subsec. (d)(1). Pub. L. 106–36 struck out “or acquired from the taxpayer property subject to a liability” after “liability of the taxpayer” and “or acquisition (in the amount of the liability)” after “such assumption”.
1997—Subsec. (g). Pub. L. 105–34 added subsec. (g).
1990—Subsec. (a). Pub. L. 101–508, § 11801(c)(8)(G)(i), substituted “or 361” for “361, 371(b), or 374”.
Subsec. (b)(3). Pub. L. 101–508, § 11801(c)(8)(G)(ii), struck out par. (3) “Certain exchanges involving ConRail” which read as follows: “To the extent provided in regulations prescribed by the Secretary in the case of an exchange to which section 354(d) (or so much of section 356 as relates to section 354(d)) or section 374(c) applies, for purposes of allocating basis under paragraph (1), stock of the Consolidated Rail Corporation and the certificate of value of the United States Railway Association which relates to such stock shall, so long as they are held by the same person, be treated as one property.”
1988—Subsec. (f). Pub. L. 100–647 added subsec. (f).
1978—Subsec. (d). Pub. L. 95–600 designated existing provisions as par. (1) and added par. (2).
1976—Subsec. (a). Pub. L. 94–253, § 1(b)(1), substituted “371(b), or 374” for “or 371(b)”.
Subsec. (b)(1), (3). Pub. L. 94–455 struck out “or his delegate” after “Secretary”.
Pub. L. 94–253, § 1(b)(2), added par. (3).
1968—Subsec. (e). Pub. L. 90–621 substituted exchange of stock and securities for issuance of stock or securities as the transaction involved and inserted parenthetical provisions making reference to stock or securities of a corporation which is in control of the acquiring corporation.
1958—Subsec. (a)(1)(A)(iii). Pub. L. 85–866 added cl. (iii).
Statutory Notes and Related Subsidiaries
Effective Date of 2002 Amendment
Amendment by Pub. L. 107–147 effective as if included in the provisions of the Community Renewal Tax Relief Act of 2000 [H.R. 5662, as enacted by Pub. L. 106–554], to which such amendment relates, see section 412(e) of Pub. L. 107–147, set out as a note under section 151 of this title.
Effective Date of 2000 Amendment
Pub. L. 106–554, § 1(a)(7) [title III, § 309(d)], Dec. 21, 2000, 114 Stat. 2763, 2763A–638, provided that:
“(1) In general.— The amendments made by this section [amending this section and section 357 of this title] shall apply to assumptions of liability after October 18, 1999.“(2) Rules.— The rules prescribed under subsection (c) [see Application of Comparable Rules to Partnerships and S Corporations note below] shall apply to assumptions of liability after October 18, 1999, or such later date as may be prescribed in such rules.”
Effective Date of 1999 Amendment
Amendment by Pub. L. 106–36 applicable to transfers after Oct. 18, 1998, see section 3001(e) of Pub. L. 106–36, set out as a note under section 351 of this title.
Effective Date of 1997 Amendment
Amendment by Pub. L. 105–34 applicable, with certain exceptions, to distributions after Apr. 16, 1997, pursuant to a plan (or series of related transactions) which involves an acquisition described in section 355(e)(2)(A)(ii) of this title occurring after such date, see section 1012(d) of Pub. L. 105–34, set out as a note under section 351 of this title.
Effective Date of 1988 Amendment
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 1978 Amendment
Amendment by Pub. L. 95–600 applicable to transfers occurring on or after Nov. 6, 1978, see section 365(c) of Pub. L. 95–600, set out as a note under section 357 of this title.
Effective Date of 1976 Amendment
Amendment by Pub. L. 94–253 applicable to taxable years ending after Mar. 31, 1976, see section 2 of Pub. L. 94–253, set out as a note under section 354 of this title.
Effective Date of 1968 Amendment
Pub. L. 90–621, § 2(c), Oct. 22, 1968, 82 Stat. 1311, provided that: “The amendments made by subsections (a) and (b) [amending this section and section 362 of this title] shall apply only in respect of plans of reorganization adopted after the date of the enactment of this Act [Oct. 22, 1968].”
Effective Date of 1958 Amendment
Pub. L. 85–866, § 21(b), Sept. 2, 1958, 72 Stat. 1620, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: “The amendment made by subsection (a) [amending this section] shall apply as provided in section 393 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] as if the clause (iii) added by such amendment had been included in such Code at the time of its enactment [Aug. 16, 1954].”
Savings Provision
For provisions that nothing in amendment by Pub. L. 101–508 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Nov. 5, 1990, for purposes of determining liability for tax for periods ending after Nov. 5, 1990, see section 11821(b) of Pub. L. 101–508, set out as a note under section 45K of this title.
Abolition of United States Railway Association and Transfer of Functions
United States Railway Association abolished effective Apr. 1, 1987, all powers, duties, rights, and obligations of Association relating to Consolidated Rail Corporation under Regional Rail Reorganization Act of 1973 (45 U.S.C. 701 et seq.) transferred to Secretary of Transportation on Jan. 1, 1987, and any securities of Corporation held by Association transferred to Secretary of Transportation on Oct. 21, 1986, see section 1341 of Title 45, Railroads.
Application of Comparable Rules to Partnerships and S Corporations
Pub. L. 106–554, § 1(a)(7) [title III, § 309(c)], Dec. 21, 2000, 114 Stat. 2763, 2763A–638, provided that:
“The Secretary of the Treasury or his delegate—“(1) shall prescribe rules which provide appropriate adjustments under subchapter K of chapter 1 of the Internal Revenue Code of 1986 to prevent the acceleration or duplication of losses through the assumption of (or transfer of assets subject to) liabilities described in section 358(h)(3) of such Code (as added by subsection (a)) in transactions involving partnerships, and“(2) may prescribe rules which provide appropriate adjustments under subchapter S of chapter 1 of such Code in transactions described in paragraph (1) involving S corporations rather than partnerships.”