§1032 — Exchange of stock for property
19 cases·3 followed·2 distinguished·1 criticized·13 cited—16% support
Statute Text — 26 U.S.C. §1032
No gain or loss shall be recognized to a corporation on the receipt of money or other property in exchange for stock (including treasury stock) of such corporation. No gain or loss shall be recognized by a corporation with respect to any lapse or acquisition of an option, or with respect to a securities futures contract (as defined in section 1234B), to buy or sell its stock (including treasury stock).
For basis of property acquired by a corporation in certain exchanges for its stock, see section 362.
Treasury Regulations
- Treas. Reg. §Treas. Reg. §1.1032-1 Disposition by a corporation of its own capital stock
- Treas. Reg. §Treas. Reg. §1.1032-1(a) The disposition by a corporation of shares of its own stock (including treasury stock) for money or other property does not give rise to taxable gain or deductible loss to the corporation regardless of the nature of the transaction or the facts and circumstances involved.
- Treas. Reg. §Treas. Reg. §1.1032-1(b) Section 1032(a) does not apply to the acquisition by a corporation of shares of its own stock except where the corporation acquires such shares in exchange for shares of its own stock (including treasury stock).
- Treas. Reg. §Treas. Reg. §1.1032-1(c) Where a corporation acquires shares of its own stock in exchange for shares of its own stock (including treasury stock) the transaction may qualify not only under section 1032(a), but also under section 368(a)(1)(E) (recapitalization) or section 305(a) (distribution of stock and stock rights).
- Treas. Reg. §Treas. Reg. §1.1032-1(d) For basis of property acquired by a corporation in connection with a transaction to which section 351 applies or in connection with a reorganization, see section 362.
- Treas. Reg. §Treas. Reg. §1.1032-2 Disposition by a corporation of stock of a controlling corporation in certain triangular reorganizations
- Treas. Reg. §Treas. Reg. §1.1032-2(a) Scope.
- Treas. Reg. §Treas. Reg. §1.1032-2(b) General nonrecognition of gain or loss.
- Treas. Reg. §Treas. Reg. §1.1032-2(c) Treatment of S.
- Treas. Reg. §Treas. Reg. §1.1032-2(d) Examples.
- Treas. Reg. §Treas. Reg. §1.1032-2(e) Stock options.
- Treas. Reg. §Treas. Reg. §1.1032-2(f) Effective dates.
- Treas. Reg. §Treas. Reg. §1.1032-3 Disposition of stock or stock options in certain transactions not qualifying under any other nonrecognition provision
- Treas. Reg. §Treas. Reg. §1.1032-3(a) Scope.
- Treas. Reg. §Treas. Reg. §1.1032-3(b) Nonrecognition of gain or loss—(1) General rule.
- Treas. Reg. §Treas. Reg. §1.1032-3(c) Applicability.
- Treas. Reg. §Treas. Reg. §1.1032-3(d) Stock options.
- Treas. Reg. §Treas. Reg. §1.1032-3(e) Examples.
- Treas. Reg. §Treas. Reg. §1.1032-3(f) Effective date.
19 Citing Cases
36 [*36] provides that the gross income of a corporation does not include any contribution to capital, and section 1032, which provides that a corporation recognizes no gain or loss on the receipt of money in exchange for stock, and their related regulations support its position.
- 32 - To accede to petitioners' blandishments and hold that Metals is entitled to a capital loss would, in effect, be the equivalent of allowing a loss to which Metals was not entitled on the conversion, under section 1032, albeit as a capital loss rather than an ordinary loss, or the equivalent of a bond premium amortization deduction disallowed by section 249.
ated, all Rule references are to the Tax Court Rules of Practice and Procedure, and all section references are to the Internal Revenue Code in effect for the taxable year in issue. 6This departure from the general rule is due to the fact that under sec. 1032, a corporation does not recognize any gain or loss when it receives property in exchange for its own stock. FX Sys. Corp. v. Commissioner, 79 T.C. 957, 963 n.4 (1982); Pittsburgh Terminal Corp. v. Commissioner, 60 T.C. 80, 87-88 (1973), affd
To accede to petitioners’ blandishments and hold that Metals is entitled to a capital loss would, in effect, be the equivalent of allowing a loss to which Metals was not entitled on the conversion, under section 1032, albeit as a capital loss rather than an ordinary loss, or the equivalent of a bond premium amortization deduction disallowed by section 249.