Reorganization
In general
Special rules relating to paragraph (1)
Reorganizations described in both paragraph (1)(C) and paragraph (1)(D)
If a transaction is described in both paragraph (1)(C) and paragraph (1)(D), then, for purposes of this subchapter (other than for purposes of subparagraph (C)), such transaction shall be treated as described only in paragraph (1)(D).
Additional consideration in certain paragraph (1)(C) cases
Transfers of assets or stock to subsidiaries in certain paragraph (1)(A), (1)(B), (1)(C), and (1)(G) cases
A transaction otherwise qualifying under paragraph (1)(A), (1)(B), or (1)(C) shall not be disqualified by reason of the fact that part or all of the assets or stock which were acquired in the transaction are transferred to a corporation controlled by the corporation acquiring such assets or stock. A similar rule shall apply to a transaction otherwise qualifying under paragraph (1)(G) where the requirements of subparagraphs (A) and (B) of section 354(b)(1) are met with respect to the acquisition of the assets.
Use of stock of controlling corporation in paragraph (1)(A) and (1)(G) cases
Statutory merger using voting stock of corporation controlling merged corporation
Certain transactions involving 2 or more investment companies
Distribution requirement for paragraph (1)(C)
In general
A transaction shall fail to meet the requirements of paragraph (1)(C) unless the acquired corporation distributes the stock, securities, and other properties it receives, as well as its other properties, in pursuance of the plan of reorganization. For purposes of the preceding sentence, if the acquired corporation is liquidated pursuant to the plan of reorganization, any distribution to its creditors in connection with such liquidation shall be treated as pursuant to the plan of reorganization.
Exception
The Secretary may waive the application of clause (i) to any transaction subject to any conditions the Secretary may prescribe.
Special rules for determining whether certain transactions are qualified under paragraph (1)(D)
Additional rules relating to title 11 and similar cases
Title 11 or similar case defined
Transfer of assets in a title 11 or similar case
Reorganizations qualifying under paragraph (1)(G) and another provision
Agency receivership proceedings which involve financial institutions
For purposes of subparagraphs (A) and (B), in the case of a receivership, foreclosure, or similar proceeding before a Federal or State agency involving a financial institution referred to in section 581 or 591, the agency shall be treated as a court.
Application of paragraph (2)(E)(ii)
Party to a reorganization
Control defined
For purposes of part I (other than section 304), part II, this part, and part V, the term “control” means the ownership of stock possessing at least 80 percent of the total combined voting power of all classes of stock entitled to vote and at least 80 percent of the total number of shares of all other classes of stock of the corporation.
Aug. 16, 1954, ch. 73668A Stat. 120Pub. L. 88–272, title II, § 218(a)78 Stat. 57Pub. L. 90–621, § 1(a)82 Stat. 1310Pub. L. 91–693, § 1(a)84 Stat. 2077Pub. L. 94–455, title VIII, § 806(f)(1)90 Stat. 1605Pub. L. 95–600, title VII, § 701(j)(1)92 Stat. 2905Pub. L. 96–589, § 4(a)94 Stat. 3401–3403Pub. L. 97–34, title II, § 24195 Stat. 254Pub. L. 97–248, title II, § 225(a)96 Stat. 490Pub. L. 97–448, title III, § 304(b)96 Stat. 2398Pub. L. 98–369, div. A, title I98 Stat. 583Pub. L. 99–514, title VI, § 621(e)(1)l100 Stat. 2266Pub. L. 100–647, title I, § 1018(q)(5)102 Stat. 3586Pub. L. 101–73, title XIV, § 1401(a)(1)103 Stat. 548Pub. L. 105–34, title X, § 1012(c)(2)111 Stat. 917Pub. L. 105–206, title VI, § 6010(c)(3)(B)112 Stat. 813Pub. L. 105–277, div. J, title IV, § 4003(f)(2)112 Stat. 2681–910Pub. L. 106–36, title III, § 3001(a)(3)113 Stat. 182Pub. L. 115–141, div. U, title IV, § 401(a)(68)132 Stat. 1187(, ; , (b), , ; , (b), , , 1311; , (b), , ; , title XXI, § 2131(a), , , 1922; , , ; –(d), (h)(3), (4), , , 3405; , , ; , , ; , (c), , ; , §§ 63(a), 64(a), 174(b)(5)(D), , , 584, 707; , title IX, § 904(a), title XVIII, §§ 1804(g)(2), (h), 1879()(1), , , 2385, 2806, 2909; , title IV, § 4012(b)(1)(A), , , 3656; , (b)(1), , , 549; , , ; , , ; , , ; , , ; , , .)
Editorial Notes
References in Text
act Aug. 22, 1940, ch. 68654 Stat. 789section 80a–51 of Title 15The Investment Company Act of 1940, referred to in subsec. (a)(2)(F)(vii), is title I of , , which is classified generally to subchapter I (§ 80a–1 et seq.) of chapter 2D of Title 15, Commerce and Trade. For complete classification of this Act to the Code, see and Tables.
Amendments
Pub. L. 115–14115 U.S.C. 80a–2(a)(36)15 U.S.C. 80a–2(36)2018—Subsec. (a)(2)(F)(vii). substituted “()” for “()”.
Pub. L. 106–36, § 3001(a)(3)(A)1999—Subsec. (a)(1)(C). , struck out “, or the fact that property acquired is subject to a liability,” before “shall be disregarded”.
Pub. L. 106–36, § 3001(a)(3)(B)Subsec. (a)(2)(B). , which directed amendment of concluding provisions by striking out “, and the amount of any liability to which any property acquired from the acquiring corporation is subject,”, was executed by striking out “, and the amount of any liability to which any property acquired by the acquiring corporation is subject,” after “acquiring corporation”, to reflect the probable intent of Congress.
Pub. L. 105–2771998—Subsec. (a)(2)(H)(ii). inserted “, or the fact that the corporation whose stock was distributed issues additional stock,” after “dispose of part or all of the distributed stock”.
Pub. L. 105–206 amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows: “in the case of a transaction with respect to which the requirements of section 355 are met, the shareholders described in paragraph (1)(D) shall be treated as having control of the corporation to which the assets are transferred if such shareholders own (immediately after the distribution) stock possessing—
“(I) more than 50 percent of the total combined voting power of all classes of stock of such corporation entitled to vote, and
“(II) more than 50 percent of the total value of shares of all classes of stock of such corporation.”
Pub. L. 105–341997—Subsec. (a)(2)(H). amended heading and text of subpar. (H) generally. Prior to amendment, text read as follows: “In the case of any transaction with respect to which the requirements of subparagraphs (A) and (B) of section 354(b)(1) are met, for purposes of determining whether such transaction qualifies under subparagraph (D) of paragraph (1), the term ‘control’ has the meaning given to such term by section 304(c).”
Pub. L. 101–73, § 1401(b)(1)Pub. L. 99–514, § 904(a)1989—Subsec. (a)(3)(D). , repealed amendment made by , see 1986 Amendment note below.
Pub. L. 101–73, § 1401(a)(1), inserted “receivership” in heading and amended text generally, changing the structure of the subparagraph from one consisting of five clauses designated (i) to (v) to one consisting of a single undesignated subparagraph.
Pub. L. 100–647, § 1018(q)(5)1988—Subsec. (a)(2)(F)(ii). , struck out “(other than stock in a regulated investment company, a real estate investment trust, or an investment company which meets the requirements of this clause (ii))” after “any one issuer” and after “or fewer issuers” and inserted at end “For purposes of this clause, a person holding stock in a regulated investment company, a real estate investment trust, or an investment company which meets the requirements of this clause shall, except as provided in regulations, be treated as holding its proportionate share of the assets held by such company or trust.”
Pub. L. 100–647, § 4012(b)(1)(A)section 904(a) of Pub. L. 99–514Subsec. (a)(3)(D)(iv), (v). , amended subpar. (D), as in effect before the amendment made by , by adding cls. (iv) and (v).
Pub. L. 99–514, § 1804(h)(3)1986—Subsec. (a)(2)(A). , inserted “(other than for purposes of subparagraph (C))” after “subchapter”.
Pub. L. 99–514, § 1879lSubsec. (a)(2)(F)(ii). ()(1), amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows: “A corporation meets the requirements of this clause if not more than 25 percent of the value of its total assets is invested in the stock and securities of any one issuer, and not more than 50 percent of the value of its total assets is invested in the stock and securities of 5 or fewer issuers. For purposes of this clause, all members of a controlled group of corporations (within the meaning of section 1563(a)) shall be treated as one issuer.”
Pub. L. 99–514, § 1804(g)(2)Subsec. (a)(2)(G)(i). , inserted “For purposes of the preceding sentence, if the acquired corporation is liquidated pursuant to the plan of reorganization, any distribution to its creditors in connection with such liquidation shall be treated as pursuant to the plan of reorganization.”
Pub. L. 99–514, § 1804(h)(2)Subsec. (a)(2)(H). , added subpar. (H).
Pub. L. 99–514, § 904(a)Pub. L. 100–647, § 4012(a)(1)Agency receivership proceedings which involve financial institutionsPub. L. 101–73, § 1401(b)(1)Subsec. (a)(3)(D). , (c)(1), as amended by , which (applicable to acquisitions after , in taxable years ending after such date) directed amendment of subpar. (D) to read “(D) .—For purposes of subparagraphs (A) and (B), in the case of a receivership, foreclosure, or similar proceeding before a Federal or State agency involving a financial institution referred to in section 581 or 591, the agency shall be treated as a court.”, was repealed by , (c)(4), eff. , and I.R.C. of 1986 applicable as if the amendments made by such section had not been enacted.
Pub. L. 99–514, § 1804(h)(1)Subsec. (c). , in amending subsec. (c) generally, struck out par. (1) designation and struck out par. (2) defining term “control” as having meaning given to such term by section 304(c) in case of any transaction with respect to which requirements of subpars. (A) and (B) of section 354(b)(1) are met, for purposes of determining whether such transaction is described in subpar. (D) of subsec. (a)(1).
Pub. L. 99–514, § 621(e)(1)Pub. L. 94–455, § 806(f)(1), repealed amendment by . See 1976 Amendment note below.
Pub. L. 98–369, § 174(b)(5)(D)1984—Subsec. (a)(2)(F)(viii). , struck out cl. (viii) which provided that in applying paragraph (3) of section 267(b) in respect of any transaction to which this subparagraph applies, the reference to a personal holding company in such paragraph (3) be treated as including a reference to an investment company and the determination of whether a corporation is an investment company be made as of the time immediately before the transaction instead of with respect to the taxable year referred to in such paragraph (3).
Pub. L. 98–369, § 63(a)Subsec. (a)(2)(G). , added subpar. (G).
Pub. L. 98–369, § 64(a)Subsec. (c). , designated existing provisions as par. (1) and added par. (2).
Pub. L. 97–448, § 304(b)1983—Subsec. (a)(2)(C). , struck out “or stock” after “acquisition of the assets”.
Pub. L. 97–448, § 304(c)Subsec. (a)(3)(B)(i). , substituted “any party to the reorganization” for “such corporation”.
Pub. L. 97–2481982—Subsec. (a)(1)(F). inserted “of one corporation” after “place of organization”.
Pub. L. 97–341981—Subsec. (a)(3)(D). substituted “Agency proceedings” for “Agency receivership proceedings” in heading, incorporated existing provisions in text designated cl. (i), inserted in cl. (i)(II) definition for term “title 11 or similar case”, and added cls. (ii) and (iii).
Pub. L. 96–589, § 4(a)1980—Subsec. (a)(1)(G). , (h)(3), added subpar. (G).
Pub. L. 96–589, § 4(c)Subsec. (a)(2)(C). , inserted provision that a similar rule would apply to a transaction otherwise qualifying under par. (1)(G), where the requirements of subpars. (A) and (B) of section 354(b)(1) are met with respect to the acquisition of the assets or stock.
Pub. L. 96–589, § 4(d)Subsec. (a)(2)(D). , among other changes, inserted reference to par. (1)(G).
Pub. L. 96–589, § 4(b)Subsec. (a)(3). , added par. (3).
Pub. L. 96–589, § 4(h)(4)Subsec. (b). , substituted “paragraph (1)(A), (1)(B), (1)(C), or (1)(G) of subsection (a) by reason of paragraph (2)(C)” and “paragraph (1)(A) or (1)(G) of subsection (a) by reason of paragraph (2)(D)” for “paragraph (1)(A), (1)(B), or (1)(C) of subsection (a) by reason of paragraph (2)(C)” and “paragraph (1)(A) of subsection (a) by reason of paragraph (2)(D)”, respectively.
Pub. L. 95–6001978—Subsec. (a)(2)(F). substituted in cl. (iii), first sentence, “50 percent or more” and “80 percent or more” for “more than 50 percent” and “more than 80 percent”; substituted in cl. (vi), first sentence, “does not meet the requirements” for “is not diversified within the meaning”; struck from cl. (vi), second sentence, “(hereafter referred to as the (‘actual acquisition’)” after “section 368(a)(1)(B)” and “and security holders” after “the shareholders” and substituted “stock in such company for stock having a fair market value equal to the fair market value of their stock of such investment company immediately after the exchange” for “stock in such investment company for a percentage of the value of the total outstanding stock of the other corporation equal to the percentage of the value of the total outstanding stock of such investment company which such shareholders own immediately after the actual acquisition”; and added cls. (vii) and (viii).
Pub. L. 94–455, § 2131(a)1976—Subsec. (a)(2)(F). , added subpar. (F).
Pub. L. 94–455, § 806(f)(1)Pub. L. 99–514, § 621(e)(1)Subsec. (c). , which substituted “this part, and Part V,” for “and this part,” was repealed by . See Effective Date of 1986 and 1976 Amendment notes below.
Pub. L. 91–693, § 1(a)1971—Subsec. (a)(2)(E). , added subpar. (E).
Pub. L. 91–693, § 1(b)Subsec. (b). , defined “party to a reorganization” in the case of a reorganization qualifying under subsection (a)(1)(A) by reason of subsection (a)(2)(E).
Pub. L. 90–621, § 1(a)1968—Subsec. (a)(2)(D). , added subpar. (D).
Pub. L. 90–621, § 1(b)Subsec. (b). , inserted reference to the inclusion of the controlling corporation in term “a party to a reorganization” in reorganizations qualifying under paragraph (1)(A) of subsection (a) by reason of paragraph (2)(D) of subsection (a).
Pub. L. 88–272, § 218(a)1964—Subsec. (a). , (b)(1), inserted “(or in exchange solely for all or a part of the voting stock of a corporation which is in control of the acquiring corporation)” in par. (1)(B), and in par. (2)(C), inserted references to par. (1)(B), and substituted “assets or stock” for “assets” wherever appearing.
Pub. L. 88–272, § 218(b)(2)Subsec. (b). , inserted references to par. (1)(B) wherever appearing.
Statutory Notes and Related Subsidiaries
Effective Date of 1999 Amendment
Pub. L. 106–36section 3001(e) of Pub. L. 106–36section 351 of this titleAmendment by applicable to transfers after , see , set out as a note under .
Effective Date of 1998 Amendment
Pub. L. 105–277Pub. L. 105–34lPub. L. 105–277section 86 of this titleAmendment by effective as if included in the provision of the Taxpayer Relief Act of 1997, , to which such amendment relates, see section 4003() of , set out as a note under .
Pub. L. 105–206Pub. L. 105–34section 6024 of Pub. L. 105–206section 1 of this titleAmendment by effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, , to which such amendment relates, see , set out as a note under .
Effective Date of 1997 Amendment
Pub. L. 105–34section 1012(d) of Pub. L. 105–34section 351 of this titleAmendment by applicable, with certain exceptions, to transfers after , see , set out as a note under .
Effective Date of 1989 Amendment
section 904(a) of Pub. L. 99–514section 1401(b)(1) of Pub. L. 101–73section 597 of this titlesection 1401(c)(4) of Pub. L. 101–73section 597 of this titleRepeal of amendment by effective , and I.R.C. of 1986 applicable as if the amendment had not been enacted, see , set out as a Repeal of Provisions Relating to Repeal of Special Reorganization Rules for Financial Institutions note set out under , and , set out as Effective Date of 1989 Amendment note under .
Pub. L. 101–73, title XIV, § 1401(c)(1)103 Stat. 550
Effective Date of 1988 Amendment
section 1018(q)(5) of Pub. L. 100–647Pub. L. 99–514section 1019(a) of Pub. L. 100–647section 1 of this titleAmendment by effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, , to which such amendment relates, see , set out as a note under .
Pub. L. 100–647, title IV, § 4012(b)(1)(C)(i)102 Stat. 3657
Effective Date of 1986 Amendment
section 806(f)(1) of Pub. L. 94–455section 621(f)(2) of Pub. L. 99–514section 382 of this titleRepeal of amendment by effective , with certain exceptions, see , set out as a note under .
Pub. L. 99–514, title IX, § 904(c)(1)100 Stat. 2385Pub. L. 100–647, title IV, § 4012(a)(1)102 Stat. 3656Pub. L. 101–73, title XIV, § 1401(b)(1)103 Stat. 549, , , as amended by , , , which provided that the amendments made by subsection (a), amending this section, were to apply to acquisitions after , in taxable years ending after such date, was repealed by , , .
section 1804(g)(2) of Pub. L. 99–514section 1804(g)(4) of Pub. L. 99–514section 361 of this titleAmendment by applicable to plans of reorganizations adopted after , see , set out as a note under .
section 1804(h) of Pub. L. 99–514Pub. L. 98–369, div. Asection 1881 of Pub. L. 99–514section 48 of this titleAmendment by effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, , to which such amendment relates, see , set out as a note under .
Pub. L. 99–514, title XVIII, § 1879l100 Stat. 2910
Effective Date of 1984 Amendment
section 63(a) of Pub. L. 98–369section 63(c) of Pub. L. 98–369section 312 of this titleAmendment by applicable to transactions pursuant to plans adopted after , see , set out as a note under .
Pub. L. 98–369, div. A, title I, § 64(b)98 Stat. 584
section 174(b)(5)(D) of Pub. L. 98–369section 174(c)(2)(A) of Pub. L. 98–369section 267 of this titleAmendment by applicable to transactions after , in taxable years ending after that date, see , set out as a note under .
Effective Date of 1983 Amendment
Pub. L. 97–448, title III, § 311(b)(2)96 Stat. 2411
Effective Date of 1982 Amendment
Pub. L. 97–248, title II, § 225(b)96 Stat. 490
In general .—
Plans adopted on or before .—
Effective Date of 1981 Amendment
Pub. L. 97–34, title II, § 246(a)95 Stat. 256
Effective Date of 1980 Amendment
Pub. L. 96–589Pub. L. 96–589section 108 of this titleAmendment by applicable to bankruptcy cases or similar judicial proceedings commencing after , with exception permitting the debtor to make the amendment applicable to such cases or proceedings commencing after , see section 7(c)(1), (f) of , set out as a note under .
Effective Date of 1978 Amendment
Pub. L. 95–600, title VII, § 701(j)(2)92 Stat. 2906Pub. L. 99–514, § 2100 Stat. 2095
Effective Date of 1976 Amendment
Pub. L. 94–455, title XXI, § 2131(f)(1)90 Stat. 1924Pub. L. 99–514, § 2100 Stat. 2095
section 806(f)(1) of Pub. L. 94–455Pub. L. 94–455section 382 of this titleFor effective date of amendment by , see section 806(g)(2), (3) of , formerly set out as a note under .
Effective Date of 1971 Amendment
Pub. L. 91–693, § 1(c)84 Stat. 2077
Effective Date of 1968 Amendment
Pub. L. 90–621, § 1(c)82 Stat. 1311
Effective Date of 1964 Amendment
Pub. L. 88–272, title II, § 218(c)78 Stat. 57
Plan Amendments Not Required Until January 1, 1989
Pub. L. 99–514section 1140 of Pub. L. 99–514section 401 of this titleFor provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after , see , as amended, set out as a note under .