Internal Revenue Code:Sec. 338. Certain stock purchases treated as asset acquisitions
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Location in Internal Revenue Code
TITLE 26 - INTERNAL REVENUE 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
Statute
Sec. 338. Certain stock purchases treated as asset acquisitions
(a) General rule
For purposes of this subtitle, if a purchasing corporation makes
an election under this section (or is treated under subsection (e)
as having made such an election), then, in the case of any
qualified stock purchase, the target corporation -
(1) shall be treated as having sold all of its assets at the
close of the acquisition date at fair market value in a single
transaction, and
(2) shall be treated as a new corporation which purchased all
of the assets referred to in paragraph (1) as of the beginning of
the day after the acquisition date.
(b) Basis of assets after deemed purchase
(1) In general
For purposes of subsection (a), the assets of the target
corporation shall be treated as purchased for an amount equal to
the sum of -
(A) the grossed-up basis of the purchasing corporation's
recently purchased stock, and
(B) the basis of the purchasing corporation's nonrecently
purchased stock.
(2) Adjustment for liabilities and other relevant items
The amount described in paragraph (1) shall be adjusted under
regulations prescribed by the Secretary for liabilities of the
target corporation and other relevant items.
(3) Election to step-up the basis of certain target stock
(A) In general
Under regulations prescribed by the Secretary, the basis of
the purchasing corporation's nonrecently purchased stock shall
be the basis amount determined under subparagraph (B) of this
paragraph if the purchasing corporation makes an election to
recognize gain as if such stock were sold on the acquisition
date for an amount equal to the basis amount determined under
subparagraph (B).
(B) Determination of basis amount
For purposes of subparagraph (A), the basis amount determined
under this subparagraph shall be an amount equal to the
grossed-up basis determined under subparagraph (A) of paragraph
(1) multiplied by a fraction -
(i) the numerator of which is the percentage of stock (by
value) in the target corporation attributable to the
purchasing corporation's nonrecently purchased stock, and
(ii) the denominator of which is 100 percent minus the
percentage referred to in clause (i).
(4) Grossed-up basis
For purposes of paragraph (1), the grossed-up basis shall be an
amount equal to the basis of the corporation's recently purchased
stock, multiplied by a fraction -
(A) the numerator of which is 100 percent, minus the
percentage of stock (by value) in the target corporation
attributable to the purchasing corporation's nonrecently
purchased stock, and
(B) the denominator of which is the percentage of stock (by
value) in the target corporation attributable to the purchasing
corporation's recently purchased stock.
(5) Allocation among assets
The amount determined under paragraphs (1) and (2) shall be
allocated among the assets of the target corporation under
regulations prescribed by the Secretary.
(6) Definitions of recently purchased stock and nonrecently
purchased stock
For purposes of this subsection -
(A) Recently purchased stock
The term ''recently purchased stock'' means any stock in the
target corporation which is held by the purchasing corporation
on the acquisition date and which was purchased by such
corporation during the 12-month acquisition period.
(B) Nonrecently purchased stock
The term ''nonrecently purchased stock'' means any stock in
the target corporation which is held by the purchasing
corporation on the acquisition date and which is not recently
purchased stock.
((c) Repealed. Pub. L. 99-514, title VI, Sec. 631(b)(2), Oct. 22,
1986, 100 Stat. 2272)
(d) Purchasing corporation; target corporation; qualified stock
purchase
For purposes of this section -
(1) Purchasing corporation
The term ''purchasing corporation'' means any corporation which
makes a qualified stock purchase of stock of another corporation.
(2) Target corporation
The term ''target corporation'' means any corporation the stock
of which is acquired by another corporation in a qualified stock
purchase.
(3) Qualified stock purchase
The term ''qualified stock purchase'' means any transaction or
series of transactions in which stock (meeting the requirements
of section 1504(a)(2)) of 1 corporation is acquired by another
corporation by purchase during the 12-month acquisition period.
(e) Deemed election where purchasing corporation acquires asset of
target corporation
(1) In general
A purchasing corporation shall be treated as having made an
election under this section with respect to any target
corporation if, at any time during the consistency period, it
acquires any asset of the target corporation (or a target
affiliate).
(2) Exceptions
Paragraph (1) shall not apply with respect to any acquisition
by the purchasing corporation if -
(A) such acquisition is pursuant to a sale by the target
corporation (or the target affiliate) in the ordinary course of
its trade or business,
(B) the basis of the property acquired is determined wholly
by reference to the adjusted basis of such property in the
hands of the person from whom acquired,
(C) such acquisition was before September 1, 1982, or
(D) such acquisition is described in regulations prescribed
by the Secretary and meets such conditions as such regulations
may provide.
(3) Anti-avoidance rule
Whenever necessary to carry out the purpose of this subsection
and subsection (f), the Secretary may treat stock acquisitions
which are pursuant to a plan and which meet the requirements of
section 1504(a)(2) as qualified stock purchases.
(f) Consistency required for all stock acquisitions from same
affiliated group
If a purchasing corporation makes qualified stock purchases with
respect to the target corporation and 1 or more target affiliates
during any consistency period, then (except as otherwise provided
in subsection (e)) -
(1) any election under this section with respect to the first
such purchase shall apply to each other such purchase, and
(2) no election may be made under this section with respect to
the second or subsequent such purchase if such an election was
not made with respect to the first such purchase.
(g) Election
(1) When made
Except as otherwise provided in regulations, an election under
this section shall be made not later than the 15th day of the 9th
month beginning after the month in which the acquisition date
occurs.
(2) Manner
An election by the purchasing corporation under this section
shall be made in such manner as the Secretary shall by
regulations prescribe.
(3) Election irrevocable
An election by a purchasing corporation under this section,
once made, shall be irrevocable.
(h) Definitions and special rules
For purposes of this section -
(1) 12-month acquisition period
The term ''12-month acquisition period'' means the 12-month
period beginning with the date of the first acquisition by
purchase of stock included in a qualified stock purchase (or, if
any of such stock was acquired in an acquisition which is a
purchase by reason of subparagraph (C) of paragraph (3), the date
on which the acquiring corporation is first considered under
section 318(a) (other than paragraph (4) thereof) as owning stock
owned by the corporation from which such acquisition was made).
(2) Acquisition date
The term ''acquisition date'' means, with respect to any
corporation, the first day on which there is a qualified stock
purchase with respect to the stock of such corporation.
(3) Purchase
(A) In general
The term ''purchase'' means any acquisition of stock, but
only if -
(i) the basis of the stock in the hands of the purchasing
corporation is not determined (I) in whole or in part by
reference to the adjusted basis of such stock in the hands of
the person from whom acquired, or (II) under section 1014(a)
(relating to property acquired from a decedent),
(ii) the stock is not acquired in an exchange to which
section 351, 354, 355, or 356 applies and is not acquired in
any other transaction described in regulations in which the
transferor does not recognize the entire amount of the gain
or loss realized on the transaction, and
(iii) the stock is not acquired from a person the ownership
of whose stock would, under section 318(a) (other than
paragaraph (FOOTNOTE 1) (4) thereof), be attributed to the
person acquiring such stock.
(FOOTNOTE 1) So in original.
(B) Deemed purchase under subsection (a)
The term ''purchase'' includes any deemed purchase under
subsection (a)(2). The acquisition date for a corporation which
is deemed purchased under subsection (a)(2) shall be determined
under regulations prescribed by the Secretary.
(C) Certain stock acquisitions from related corporations
(i) In general
Clause (iii) of subparagraph (A) shall not apply to an
acquisition of stock from a related corporation if at least
50 percent in value of the stock of such related corporation
was acquired by purchase (within the meaning of subparagraphs
(A) and (B)).
(ii) Certain distributions
Clause (i) of subparagraph (A) shall not apply to an
acquisition of stock described in clause (i) of this
subparagraph if the corporation acquiring such stock -
(I) made a qualified stock purchase of stock of the
related corporation, and
(II) made an election under this section (or is treated
under subsection (e) as having made such an election) with
respect to such qualified stock purchase.
(iii) Related corporation defined
For purposes of this subparagraph, a corporation is a
related corporation if stock owned by such corporation is
treated (under section 318(a) other than paragraph (4)
thereof) as owned by the corporation acquiring the stock.
(4) Consistency period
(A) In general
Except as provided in subparagraph (B), the term
''consistency period'' means the period consisting of -
(i) the 1-year period before the beginning of the 12-month
acquisition period for the target corporation,
(ii) such acquisition period (up to and including the
acquisition date), and
(iii) the 1-year period beginning on the day after the
acquisition date.
(B) Extension where there is plan
The period referred to in subparagraph (A) shall also include
any period during which the Secretary determines that there was
in effect a plan to make a qualified stock purchase plus 1 or
more other qualified stock purchases (or asset acquisitions
described in subsection (e)) with respect to the target
corporation or any target affiliate.
(5) Affiliated group
The term ''affiliated group'' has the meaning given to such
term by section 1504(a) (determined without regard to the
exceptions contained in section 1504(b)).
(6) Target affiliate
(A) In general
A corporation shall be treated as a target affiliate of the
target corporation if each of such corporations was, at any
time during so much of the consistency period as ends on the
acquisition date of the target corporation, a member of an
affiliated group which had the same common parent.
(B) Certain foreign corporations, etc.
Except as otherwise provided in regulations (and subject to
such conditions as may be provided in regulations) -
(i) the term ''target affiliate'' does not include a
foreign corporation, a DISC, or a corporation to which an
election under section 936 applies, and
(ii) stock held by a target affiliate in a foreign
corporation or a domestic corporation which is a DISC or
described in section 1248(e) shall be excluded from the
operation of this section.
((7) Repealed. Pub. L. 100-647, title I, Sec. 1006(e)(20), Nov.
10, 1988, 102 Stat. 3403)
(8) Acquisitions by affiliated group treated as made by 1
corporation
Except as provided in regulations prescribed by the Secretary,
stock and asset acquisitions made by members of the same
affiliated group shall be treated as made by 1 corporation.
(9) Target not treated as member of affiliated group
Except as otherwise provided in paragraph (10) or in
regulations prescribed under this paragraph, the target
corporation shall not be treated as a member of an affiliated
group with respect to the sale described in subsection (a)(1).
(10) Elective recognition of gain or loss by target corporation,
together with nonrecognition of gain or loss on stock sold by
selling consolidated group
(A) In general
Under regulations prescribed by the Secretary, an election
may be made under which if -
(i) the target corporation was, before the transaction, a
member of the selling consolidated group, and
(ii) the target corporation recognizes gain or loss with
respect to the transaction as if it sold all of its assets in
a single transaction,
then the target corporation shall be treated as a member of the
selling consolidated group with respect to such sale, and (to
the extent provided in regulations) no gain or loss will be
recognized on stock sold or exchanged in the transaction by
members of the selling consolidated group.
(B) Selling consolidated group
For purposes of subparagraph (A), the term ''selling
consolidated group'' means any group of corporations which (for
the taxable period which includes the transaction) -
(i) includes the target corporation, and
(ii) files a consolidated return.
To the extent provided in regulations, such term also includes
any affiliated group of corporations which includes the target
corporation (whether or not such group files a consolidated
return).
(C) Information required to be furnished to the Secretary
Under regulations, where an election is made under
subparagraph (A), the purchasing corporation and the common
parent of the selling consolidated group shall, at such times
and in such manner as may be provided in regulations, furnish
to the Secretary the following information:
(i) The amount allocated under subsection (b)(5) to
goodwill or going concern value.
(ii) Any modification of the amount described in clause
(i).
(iii) Any other information as the Secretary deems
necessary to carry out the provisions of this paragraph.
(11) Elective formula for determining fair market value
For purposes of subsection (a)(1), fair market value may be
determined on the basis of a formula provided in regulations
prescribed by the Secretary which takes into account liabilities
and other relevant items.
((12) Repealed. Pub. L. 99-514, title VI, Sec. 631(e)(5), Oct.
22, 1986, 100 Stat. 2273)
(13) Tax on deemed sale not taken into account for estimated tax
purposes
For purposes of section 6655, tax attributable to the sale
described in subsection (a)(1) shall not be taken into account.
The preceding sentence shall not apply with respect to a
qualified stock purchase for which an election is made under
paragraph (10).
(14) Repealed
(15) Combined deemed sale return
Under regulations prescribed by the Secretary, a combined
deemed sale return may be filed by all target corporations
acquired by a purchasing corporation on the same acquisition date
if such target corporations were members of the same selling
consolidated group (as defined in subparagraph (B) of paragraph
(10)).
(16) Coordination with foreign tax credit provisions
Except as provided in regulations, this section shall not apply
for purposes of determining the source or character of any item
for purposes of subpart A of part III of subchapter N of this
chapter (relating to foreign tax credit). The preceding sentence
shall not apply to any gain to the extent such gain is includible
in gross income as a dividend under section 1248 (determined
without regard to any deemed sale under this section by a foreign
corporation).
(i) Regulations
The Secretary shall prescribe such regulations as may be
necessary or appropriate to carry out the purposes of this section,
including -
(1) regulations to ensure that the purpose of this section to
require consistency of treatment of stock and asset sales and
purchases may not be circumvented through the use of any
provision of law or regulations (including the consolidated
return regulations) and
(2) regulations providing for the coordination of the
provisions of this section with the provision of this title
relating to foreign corporations and their shareholders.
Sources
(Added Pub. L. 97-248, title II, Sec. 224(a), Sept. 3, 1982, 96
Stat. 485; amended Pub. L. 97-448, title III, Sec. 306(a)(8)(A)(i),
Jan. 12, 1983, 96 Stat. 2402; Pub. L. 98-369, div. A, title VII,
Sec. 712(k)(1)-(5)(D), (6), (7), July 18, 1984, 98 Stat. 948-952;
Pub. L. 99-514, title VI, Sec. 631(b), (e)(5), title XII, Sec.
1275(c)(6), title XVIII, Sec. 1804(e)(8)(A), 1899A(7), Oct. 22,
1986, 100 Stat. 2272, 2273, 2599, 2804, 2958; Pub. L. 100-647,
title I, Sec. 1006(e)(20), 1012(bb)(5)(A), 1018(d)(9), Nov. 10,
1988, 102 Stat. 3403, 3535, 3581; Pub. L. 101-508, title XI, Sec.
11323(c)(1), Nov. 5, 1990, 104 Stat. 1388-465.)
Miscellaneous
PRIOR PROVISIONS
A prior section 338, act Aug. 16, 1954, ch. 736, 68A Stat. 107,
made reference to a special rule relating to the effect on earnings
and profits of certain distributions in partial liquidation in
section 312(e), prior to repeal by Pub. L. 97-248, Sec. 222(e)(4).
AMENDMENTS
2004 - Subsec.839(a),Pub.L.108-357, amended Sec.338(h)(13)
by adding the following sentence to paragraph (13):
"The preceding sentence shall not apply with respect to a
qualified stock purchase for which an election is made under
paragraph (10)".
2003 - Subsec.302(e)(4)(B), Pub. L. 108-27, repealed para. (14),
Sec.338(h).
1990 - Subsec. (h)(10)(C). Pub. L. 101-508 added subpar. (C).
1988 - Subsec. (e)(3). Pub. L. 100-647, Sec. 1018(d)(9),
substituted ''which meet the requirements of section 1504(a)(2)''
for ''which meet the 80 percent requirements of subparagraphs (A)
and (B) of subsection (d)(3)''.
Subsec. (h)(7). Pub. L. 100-647, Sec. 1006(e)(20), struck out
par. (7) which read as follows: ''Additional percentage must be
attributable to purchase, etc. - For purposes of subsection (c)(1),
any increase in the maximum percentage of stock taken into account
over the percentage of stock (by value) of the target corporation
held by the purchasing corporation on the acquisition date shall be
taken into account only to the extent such increase is attributable
to -
''(A) purchase, or
''(B) a redemption of stock of the target corporation -
''(i) to which section 302(a) applies, or
''(ii) in the case of a shareholder who is not a corporation,
to which section 301 applies.''
Subsec. (h)(16). Pub. L. 100-647, Sec. 1012(bb)(5)(A), added par.
(16).
1986 - Subsec. (a)(1). Pub. L. 99-514, Sec. 631(b)(1), struck out
''to which section 337 applies'' after ''in a single transaction''.
Subsec. (c). Pub. L. 99-514, Sec. 631(b)(2), struck out subsec.
(c) relating to special rules for coordination with section 337
where purchasing corporation holds less than 100 percent of stock,
and in case of certain redemptions where an election is made under
this section.
Subsec. (d)(3). Pub. L. 99-514, Sec. 1804(e)(8)(A), amended par.
(3) generally. Prior to amendment, par. (3) read as follows: ''The
term 'qualified stock purchase' means any transaction or series of
transactions in which stock of 1 corporation possessing -
''(A) at least 80 percent of total combined voting power of all
classes of stock entitled to vote, and
''(B) at least 80 percent of the total number of shares of all
other classes of stock (except nonvoting stock which is limited
and preferred as to dividends),
is acquired by another corporation by purchase during the 12-month
acquisition period.''
Subsec. (h)(3)(C)(i). Pub. L. 99-514, Sec. 1899A(7), substituted
''subparagraphs'' for ''subparagraph''.
Subsec. (h)(6)(B)(i). Pub. L. 99-514, Sec. 1275(c)(6), struck out
''a corporation described in section 934(b),'' after ''DISC,''.
Subsec. (h)(10)(B). Pub. L. 99-514, Sec. 631(b)(3), inserted
provision that to the extent provided in regulations, term
''selling consolidated group'' also includes any affiliated group
of corporations which includes the target corporation (whether or
not such group files a consolidated return).
Subsec. (h)(12). Pub. L. 99-514, Sec. 631(e)(5), struck out par.
(12) relating to applicability of section 337 where target had
adopted plan for complete liquidation.
1984 - Subsec. (a)(1). Pub. L. 98-369, Sec. 712(k)(1)(A),
inserted ''at fair market value'' after ''acquisition date''.
Subsec. (b). Pub. L. 98-369, Sec. 712(k)(1)(B), substituted
''Basis of assets after deemed purchase'' for ''Price at which
deemed sale made'' in heading.
Subsec. (b)(1). Pub. L. 98-369, Sec. 712(k)(1)(B), amended par.
(1) generally, substituting ''as purchased for an amount equal to
the sum of'' for ''as sold (and purchased) at an amount equal to''
in introductory text, ''purchasing corporation's recently purchased
stock, and'' for ''purchasing corporation's stock in the target
corporation on the acquisition date'' in subpar. (A), and ''the
basis of the purchasing corporation's nonrecently purchased stock''
in subpar. (B) in lieu of provision relating to adjustment for
liabilities and other relevant items, now covered in par. (2).
Subsec. (b)(2). Pub. L. 98-369, Sec. 712(k)(1)(B), amended par.
(2) generally, incorporating former par. (1)(B) provision,
inserting heading ''Adjustment for liabilities and other relevant
items'' and substituting ''adjusted under regulations'' for
''properly adjusted under regulations''. Former par. (2)
redesignated (4).
Subsec. (b)(3). Pub. L. 98-369, Sec. 712(k)(1)(B), added par.
(3). Former par. (3) redesignated (5).
Subsec. (b)(4). Pub. L. 98-369, Sec. 712(k)(1)(B), redesignated
former par. (2) as (4), substituted in introductory text
''corporation's recently purchased stock,'' for ''purchasing
corporation's stock in the target corporation on the acquisition
date'', inserted in subpar. (A) ''minus the percentage of stock (by
value) in the target corporation attributable to the purchasing
corporation's nonrecently purchased stock'', and substituted in
subpar. (B) ''in the target corporation attributable to the
purchasing corporation's recently purchased stock'' for ''of the
target corporation held by the purchasing corporation on the
acquisition date''.
Subsec. (b)(5). Pub. L. 98-369, Sec. 712(k)(1)(B), redesignated
former par. (3) as (5) and inserted reference to par. (2).
Subsec. (b)(6). Pub. L. 98-369, Sec. 712(k)(1)(B), added par.
(6).
Subsec. (c)(1). Pub. L. 98-369, Sec. 712(k)(2), inserted in last
sentence ''and section 333 does not apply to such liquidation''.
Subsec. (e)(2). Pub. L. 98-369, Sec. 712(k)(3), substituted
''wholly'' for ''(in whole or in part)'' in subpar. (B), struck out
subpar. (D) providing for nonapplication of par. (1) to any
acquisition by the purchasing corporation if, to the extent
provided in regulations, the property acquired is located outside
the United States, redesignated subpar. (E) as (D), and, in subpar.
(D) as redesignated, inserted ''and meets such conditions as such
regulations may provide''.
Subsec. (g)(1). Pub. L. 98-369, Sec. 712(k)(4), substituted ''the
15th day of the 9th month beginning after the month in which the
acquisition date occurs'' for ''75 days after the acquisition
date''.
Subsec. (h)(1). Pub. L. 98-369, Sec. 712(k)(5)(C), included
within 12-month acquisition period the period beginning with the
date on which the acquiring corporation is first considered as
owning stock owned by corporation from which acquisition was made.
Subsec. (h)(3)(A)(ii). Pub. L. 98-369, Sec. 712(k)(5)(D),
included references to sections 354, 355, and 356 and in defining
''purchase'' provided that the stock not be acquired in any other
transaction described in regulations in which the transferor does
not recognize the entire amount of the gain or loss realized on the
transaction.
Subsec. (h)(3)(B). Pub. L. 98-369, Sec. 712(k)(5)(A), substituted
in heading ''under subsection (a)'' for ''of stock of
subsidiaries'' and in text ''The term 'purchase' includes any
deemed purchase under subsection (a)(2). The acquisition date for a
corporation which is deemed purchased under subsection (a)(2) shall
be determined under regulations prescribed by the Secretary'' for
''If stock in a corporation is acquired by purchase (within the
meaning of subparagraph (A)) and, as a result of such acquisition,
the corporation making such purchase is treated (by reason of
section 318(a)) as owning stock in a 3rd corporation, the
corporation making such purchase shall be treated as having
purchased such stock in such 3rd corporation. The corporation
making such purchase shall be treated as purchasing stock in the
3rd corporation by reason of the preceding sentence on the first
day on which the purchasing corporation is considered under section
318(a) as owning such stock''.
Subsec. (h)(3)(C). Pub. L. 98-369, Sec. 712(k)(5)(B), added
subpar. (C).
Subsec. (h)(7). Pub. L. 98-369, Sec. 712(k)(6)(A), added par. (7)
and struck out former par. (7) which had provided that acquisitions
by purchasing corporation include acquisitions by corporations
affiliated with purchasing corporation. See subsec. (h)(8).
Subsec. (h)(8). Pub. L. 98-369, Sec. 712(k)(6)(A), added par. (8)
incorporating former par. (7) provision stating that ''Except as
otherwise provided in regulations, an acquisition of stock or
assets by any member of an affiliated group which includes a
purchasing corporation shall be treated as made by the purchasing
corporation.'' Former par. (8) redesignated (9).
Subsec. (h)(9). Pub. L. 98-369, Sec. 712(k)(6)(A), (B),
redesignated former par. (8) as (9) and substituted therein
''paragraph (10)'' for ''paragraph (9)''. Former par. (9)
redesignated (10).
Subsec. (h)(10). Pub. L. 98-369, Sec. 712(k)(6)(A), redesignated
former par. (9) as (10).
Subsec. (h)(11) to (15). Pub. L. 98-369, Sec. 712(k)(6)(C), added
pars. (11) to (15).
Subsec. (i). Pub. L. 98-369, Sec. 712(k)(7), provided in
introductory text that the regulations be appropriate to carry out
the purposes of this section; designated existing provisions as
par. (1) and substituted therein ''treatment of stock and asset
sales and purchases'' for ''treatment of stock and asset purchases
with respect to a target corporation and its target affiliates
(whether by treating all of them as stock purchases or as asset
purchases)'' before ''may not be circumvented'', and added par.
(2).
1983 - Subsec. (h)(8), (9). Pub. L. 97-448 added pars. (8) and
(9).
EFFECTIVE DATE OF 2004 AMENDMENT
Amendment by Pub.L.108-357,Sec.839, amended Sec.338(h)(13);
Effective Date.--The amendment made by subsection shall apply
to transactions occurring after the date of the enactment of this
Act.
EFFECTIVE DATE OF 1990 AMENDMENT
Section 11323(d) of Pub. L. 101-508 provided that:
''(1) In general. - Except as provided in paragraph (2), the
amendments made by this section (amending this section and sections
1060 and 6724 of this title) shall apply to acquisitions after
October 9, 1990.
''(2) Binding contract exception. - The amendments made by this
section shall not apply to any acquisition pursuant to a written
binding contract in effect on October 9, 1990, and at all times
thereafter before such acquisition.''
EFFECTIVE DATE OF 1988 AMENDMENT
Section 1012(bb)(5)(B) of Pub. L. 100-647 provided that: ''The
amendment made by subparagraph (A) (amending this section) shall
apply to qualified stock purchases (as defined in section 338(d)(3)
of the 1986 Code) after March 31, 1988, except that, in the case of
an election under section 338(h)(10) of the 1986 Code, such
amendment shall apply to qualified stock purchases (as so defined)
after June 10, 1987.''
Amendment by sections 1006(e)(20) and 1018(d)(9) of 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 1986 AMENDMENT
Amendment by section 631(b), (e)(5) of Pub. L. 99-514 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 an Effective Date note under section 336
of this title.
Amendment by section 1275(c)(6) of Pub. L. 99-514 applicable to
taxable years beginning after Dec. 31, 1986, with certain
exceptions and qualifications, see section 1277 of Pub. L. 99-514,
set out as a note under section 931 of this title.
Section 1804(e)(8)(B) of Pub. L. 99-514 provided that: ''The
amendment made by subparagraph (A) (amending this section) shall
apply in cases where the 12-month acquisition period (as defined in
section 338(h)(1) of the Internal Revenue Code of 1954 (now 1986)
begins after December 31, 1985.''
EFFECTIVE DATE OF 1984 AMENDMENT
Section 712(k)(9) of Pub. L. 98-369, as amended by Pub. L.
99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
''(A) In general. - The amendments made by this subsection
(amending this section and sections 269 and 318 of this title)
shall not apply to any qualified stock purchase (as defined in
section 338(d)(3) of the Internal Revenue Code of 1986 (formerly
I.R.C. 1954)) where the acquisition date (as defined in section
338(h)(2) of such Code) is before September 1, 1982.
''(B) Extension of time for making election. - In the case of any
qualified stock purchase described in subparagraph (A), the time
for making an election under section 338 of such Code shall not
expire before the close of the 60th day after the date of the
enactment of this Act (July 18, 1984).''
Amendment by section 712(k) of Pub. L. 98-369 effective as if
included in the provision of the Tax Equity and Fiscal
Responsibility Act of 1982, Pub. L. 97-248, to which such amendment
relates, see section 715 of Pub. L. 98-369, set out as a note under
section 31 of this title.
EFFECTIVE DATE OF 1983 AMENDMENT
Amendment by Pub. L. 97-448 effective as if included in the
provisions of the Tax Equity and Fiscal Responsibility Act of 1982,
Pub. L. 97-248, to which such amendment relates, see section 311(d)
of Pub. L. 97-448, set out as a note under section 31 of this
title.
EFFECTIVE DATE
Section 224(d) of Pub. L. 97-248, as amended by Pub. L. 97-448,
title III, Sec. 306(a)(8)(B), Jan. 12, 1983, 96 Stat. 2403; Pub. L.
99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
''(1) In general. - The amendments made by this section (enacting
this section and amending sections 168, 318, 334, 336, 337, 381,
and 617 of this title) shall apply to any target corporation
(within the meaning of section 338 of the Internal Revenue Code of
1986 (formerly I.R.C. 1954) as added by this section) with respect
to which the acquisition date (within the meaning of such section)
occurs after August 31, 1982.
''(2) Certain acquisitions before september 1, 1982. - If -
''(A) an acquisition date (within the meaning of section 338 of
such Code without regard to paragraph (5) of this subsection)
occurred after August 31, 1980, and before September 1, 1982,
''(B) the target corporation (within the meaning of section 338
of such Code) is not liquidated before September 1, 1982, and
''(C) the purchasing corporation (within the meaning of section
338 of such Code makes, not later than November 15, 1982, an
election under section 338 of such Code,
then the amendments made by this section shall apply to the
acquisition of such target corporation.
''(3) Certain acquisitions of financial institutions. - In any
case in which -
''(A) there is, on July 22, 1982, a binding contract to acquire
control (within the meaning of section 368(c) of such Code of any
financial institution,
''(B) the approval of one or more regulatory authorities is
required in order to complete such acquisition, and
''(C) within 90 days after the date of the final approval of
the last such regulatory authority granting final approval, a
plan of complete liquidation of such financial institution is
adopted,
then the purchasing corporation may elect not to have the
amendments made by this section apply to the acquisition pursuant
to such contract.
''(4) Extension of time for making elections; revocation of
elections. -
''(A) Extension. - The time for making an election under
section 338 of such Code shall not expire before the close of
February 28, 1983.
''(B) Revocation. - Any election made under section 338 of such
Code may be revoked by the purchasing corporation if revoked
before March 1, 1983.
''(5) Rules for acquisitions described in paragraph (2). -
''(A) In general. - For purposes of applying section 338 of
such Code with respect to any acquisition described in paragraph
(2) -
''(i) the date selected under subparagraph (B) of this
paragraph shall be treated as the acquisition date,
''(ii) a rule similar to the last sentence of section
334(b)(2) of such Code (as in effect on August 31, 1982) shall
apply, and
''(iii) subsections (e), (f), and (i) of such section 338,
and paragraphs (4), (6), (8), and (9) of subsection (h) of such
section 338, shall not apply.
''(B) Selection of acquisition date by purchasing corporation.
- The purchasing corporation may select any date for purposes of
subparagraph (A)(i) if such date -
''(i) is after the later of June 30, 1982, or the acquisition
date (within the meaning of section 338 of such Code without
regard to this paragraph), and
''(ii) is on or before the date on which the election
described in paragraph (2)(C) is made.''
TREATMENT OF CERTAIN CORPORATION ORGANIZED ON FEBRUARY 22, 1983
Section 1804(e)(9) of Pub. L. 99-514 provided that: ''In the case
of a Rhode Island corporation which was organized on February 22,
1983, and which on February 25, 1983 -
''(A) purchased the stock of another corporation,
''(B) filed an election under section 338(g) of the Internal
Revenue Code of 1986 with respect to such purchase, and
''(C) merged into the acquired corporation,
such purchase of stock shall be considered as made by the acquiring
corporation, such election shall be valid, and the acquiring
corporation shall be considered a purchasing corporation for
purposes of section 338 of such Code without regard to the duration
of the existence of the acquiring corporation.''
SPECIAL RULES FOR DEEMED PURCHASES UNDER PRIOR LAW
Section 712(k)(10) of Pub. L. 98-369, as amended by Pub. L.
99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ''If,
before October 20, 1983, a corporation was treated as making a
qualified stock purchase (as defined in section 338(d)(3) of the
Internal Revenue Code of 1986 (formerly I.R.C. 1954)), but would
not be so treated under the amendments made by paragraphs (5) and
(6) (amending subsec. (h) and section 318(b)(4) of this title) of
this subsection, the amendments made by such paragraphs shall not
apply to such purchase unless such corporation elects (at such time
and in such manner as the Secretary of the Treasury or his delegate
may by regulations prescribe) to have the amendments made by such
paragraphs apply.
EXCEPTION FOR STOCK PURCHASES IN CONTEMPLATION OF TARGET
CORPORATION AS MEMBER OF AFFILIATED GROUP
Section 306(a)(8)(A)(ii) of Pub. L. 97-448, as amended by Pub. L.
98-369, div. A, title VII, Sec. 722(a)(3), July 18, 1984, 98 Stat.
973; Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095,
provided that: ''If -
''(I) any portion of a qualified stock purchase is pursuant to
a binding contract entered into on or after September 1, 1982,
and on or before the date of the enactment of this Act (Jan. 12,
1983), and
''(II) the purchasing corporation establishes by clear and
convincing evidence that such contract was negotiated on the
contemplation that, with respect to the deemed sale under section
338 of the Internal Revenue Code of 1986 (formerly I.R.C. 1954),
the target corporation would be treated as a member of the
affiliated group which includes the selling corporation,
then the amendment made by clause (i) (amending subsec. (h)) shall
not apply to such qualified stock purchase.''
References
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 172, 269, 318, 382, 1060,
1362, 6724 of this title; title 45 section 1347.
