§356 — Receipt of additional consideration
52 cases·7 followed·10 distinguished·1 overruled·34 cited—13% support
Statute Text — 26 U.S.C. §356
If—
section 354 or 355 would apply to an exchange but for the fact that
the property received in the exchange consists not only of property permitted by section 354 or 355 to be received without the recognition of gain but also of other property or money,
then the gain, if any, to the recipient shall be recognized, but in an amount not in excess of the sum of such money and the fair market value of such other property.
If an exchange is described in paragraph (1) but has the effect of the distribution of a dividend (determined with the application of section 318(a)), then there shall be treated as a dividend to each distributee such an amount of the gain recognized under paragraph (1) as is not in excess of his ratable share of the undistributed earnings and profits of the corporation accumulated after February 28, 1913. The remainder, if any, of the gain recognized under paragraph (1) shall be treated as gain from the exchange of property.
If—
section 355 would apply to a distribution but for the fact that
the property received in the distribution consists not only of property permitted by section 355 to be received without the recognition of gain, but also of other property or money,
then an amount equal to the sum of such money and the fair market value of such other property shall be treated as a distribution of property to which section 301 applies.
If—
section 354 would apply to an exchange or section 355 would apply to an exchange or distribution, but for the fact that
the property received in the exchange or distribution consists not only of property permitted by section 354 or 355 to be received without the recognition of gain or loss, but also of other property or money,
then no loss from the exchange or distribution shall be recognized.
For purposes of this section—
Except as provided in paragraph (2), the term “other property” includes securities.
The term “other property” does not include securities to the extent that, under section 354 or 355, such securities would be permitted to be received without the recognition of gain.
If—
in an exchange described in section 354 (other than subsection (c) thereof), securities of a corporation a party to the reorganization are surrendered and securities of any corporation a party to the reorganization are received, and
the principal amount of such securities received exceeds the principal amount of such securities surrendered,
then, with respect to such securities received, the term “other property” means only the fair market value of such excess. For purposes of this subparagraph and subparagraph (C), if no securities are surrendered, the excess shall be the entire principal amount of the securities received.
If, in an exchange or distribution described in section 355, the principal amount of the securities in the controlled corporation which are received exceeds the principal amount of the securities in the distributing corporation which are surrendered, then, with respect to such securities received, the term “other property” means only the fair market value of such excess.
For purposes of this section—
Except as provided in paragraph (2), the term “other property” includes nonqualified preferred stock (as defined in section 351(g)(2)).
The term “other property” does not include nonqualified preferred stock (as so defined) to the extent that, under section 354 or 355, such preferred stock would be permitted to be received without the recognition of gain.
Notwithstanding any other provision of this section, to the extent that any of the other property (or money) is received in exchange for section 306 stock, an amount equal to the fair market value of such other property (or the amount of such money) shall be treated as a distribution of property to which section 301 applies.
For special rules for a transaction described in section 354, 355, or this section, but which—
results in a gift, see section 2501 and following, or
has the effect of the payment of compensation, see section 61(a)(1).
Treasury Regulations
- Treas. Reg. §Treas. Reg. §1.356-1 Receipt of additional consideration in connection with an exchange
- Treas. Reg. §Treas. Reg. §1.356-1(a) §1.356-1(a)
- Treas. Reg. §Treas. Reg. §1.356-1(b) For purposes of computing the gain, if any, recognized pursuant to section 356 and paragraph (a)(1) of this section, to the extent the terms of the exchange specify the other property or money that is received in exchange for a particular share of stock or security surrendered or a particular class of stock or securities surrendered, such terms shall control provided that such terms are economically reasonable.
- Treas. Reg. §Treas. Reg. §1.356-1(c) §1.356-1(c)
- Treas. Reg. §Treas. Reg. §1.356-1(d) §1.356-1(d)
- Treas. Reg. §Treas. Reg. §1.356-1(e) Section 301(b)(1)(B) and section 301(d)(2) do not apply to a distribution of “other property” to a corporate shareholder if such distribution is within the provisions of section 356.
- Treas. Reg. §Treas. Reg. §1.356-1(f) See § 1.
- Treas. Reg. §Treas. Reg. §1.356-1(g) This section applies to exchanges and distributions of stock and securities occurring on or after January 23, 2006.
- Treas. Reg. §Treas. Reg. §1.356-2 Receipt of additional consideration not in connection with an exchange
- Treas. Reg. §Treas. Reg. §1.356-2(a) If, in a transaction to which section 355 would apply except for the fact that a shareholder (individual or corporate) receives property permitted by section 355 to be received without the recognition of gain, together with other property or money, without the surrender of any stock or securities of the distributing corporation, then the sum of the money and the fair market value of the other property as of the date of the distribution shall be treated as a distribution of property to which the
- Treas. Reg. §Treas. Reg. §1.356-2(b) §1.356-2(b)
- Treas. Reg. §Treas. Reg. §1.356-3 Rules for treatment of securities as “other property”
- Treas. Reg. §Treas. Reg. §1.356-3(a) As a general rule, for purposes of section 356, the term other property includes securities.
- Treas. Reg. §Treas. Reg. §1.356-3(b) Except as provided in § 1.
- Treas. Reg. §Treas. Reg. §1.356-3(c) In the examples in this paragraph (c), stock means common stock and warrants means rights to acquire common stock.
- Treas. Reg. §Treas. Reg. §1.356-4 Exchanges for section 306 stock
- Treas. Reg. §Treas. Reg. §1.356-5 Transactions involving gift or compensation
- Treas. Reg. §Treas. Reg. §1.356-5(a) §1.356-5(a)
- Treas. Reg. §Treas. Reg. §1.356-5(b) Have the effect of the payment of compensation, see section 61(a)(1), and the regulations pertaining thereto.
- Treas. Reg. §Treas. Reg. §1.356-6 Rules for treatment of nonqualified preferred stock as other property
- Treas. Reg. §Treas. Reg. §1.356-6(a) In general.
- Treas. Reg. §Treas. Reg. §1.356-6(b) Exceptions.
- Treas. Reg. §Treas. Reg. §1.356-6(c) Effective date.
- Treas. Reg. §Treas. Reg. §1.356-7 Rules for treatment of nonqualified preferred stock and other preferred stock received in certain transactions
- Treas. Reg. §Treas. Reg. §1.356-7(a) Stock issued prior to effective date.
52 Citing Cases
68-23, supra, wherein, as stated, the Commissioner concluded that, in determining gain or loss on a merger transaction to which section 356 applies, blocks ofstock in which a taxpayerhas different bases are to be considered separately, and a loss on one block ofstock may not offset or reduce a gain recognized on another block ofstock.
ates the general rule that “No gain or loss shall be recognized if stock or securities in a corporation a party to a reorganization are, in pursuance of the plan of reorganization, exchanged solely for stock or securities in such corporation or in another corporation a party to the reorganization.” Section 356 requires recognition of gain from an exchange in which property other than that permitted under - 107 - section 354 (or section 355) (i.e., boot) is received; the gain recognized is not i
isition of all of the common stock in a tax-free reorganization under section 368(a)(1)(C), is taxable to the shareholders under section 302 as a transaction separate from the reorganization. The cash is not “boot” taxable to the shareholders under section 356. In both of the G.C.M.’s, Counsel explicitly bases his determination on the fact that the acquired corporation used its own funds for the redemption. Although the issue of which corporation provided the funds for the redemption was not spe
isition of all of the common stock in a tax-free reorganization under section 368(a)(1)(C), is taxable to the shareholders under section 302 as a transaction separate from the reorganization. The cash is not “boot” taxable to the shareholders under section 356. In both of the G.C.M.’s, Counsel explicitly bases his determination on the fact that the acquired corporation used its own funds for the redemption. Although the issue of which corporation provided the funds for the redemption was not spe
isition of all of the common stock in a tax-free reorganization under section 368(a)(1)(C), is taxable to the shareholders under section 302 as a transaction separate from the reorganization. The cash is not “boot” taxable to the shareholders under section 356. In both of the G.C.M.’s, Counsel explicitly bases his determination on the fact that the acquired corporation used its own funds for the redemption. Although the issue of which corporation provided the funds for the redemption was not spe
be recognized if stock or securities in a corporation a party to a reorganization are, in pursuance of the plan of reorganization, exchanged solely for stock or securities in such corporation or in another corporation a party to the reorganization.” Section 356 requires recognition of gain from an exchange in which property other than that permitted under section 354 (or section 355) (i.e., boot) is received; the gain recognized is not in excess of the sum of money or the fair market value of ot
2021). Consequently, that provision of the divorce instrument requiring Alejandro to make family support payments only until both minor children emancipate is a child-related contingency that encompasses types of contingencies expressly specified in section 71(c)(2)(A), i.e., “attaining a specified age, marrying . . . or a similar c
The benefits must be in an amount equal to 60 percent of the "average salary" as defined in section 353 .651, subdivision 2, plus an additional percent specified in section 356 .315, subdivision 6, of that average salary for each year of service in excess of 20 -19- years .
uisition of all of the common stock in a tax-free reorganization under section 368(a)(1)(C), is taxable to the shareholders under section 302 as a transaction separate from the reorganization. The cash is not “boot” taxable to the shareholders under section 356. In both of the G.C.M.’s, Counsel explicitly bases his determination on the fact that the acquired corporation used its own funds for the redemption. Although the issue of which corporation provided the funds for the redemption was not sp