(a)Treatment of certain stock purchases
(1)Acquisition by related corporation (other than subsidiary)
For purposes of sections 302 and 303, if—
(A)one or more persons are in control of each of two corporations, and
(B)in return for property, one of the corporations acquires stock in the other corporation from the person (or persons) so in control,then (unless paragraph (2) applies) such property shall be treated as a distribution in redemption of the stock of the corporation acquiring such stock. To the extent that such distribution is treated as a distribution to which section 301 applies, the transferor and the acquiring corporation shall be treated in the same manner as if the transferor had transferred the stock so acquired to the acquiring corporation in exchange for stock of the acquiring corporation in a transaction to which section 351(a) applies, and then the acquiring corporation had redeemed the stock it was treated as issuing in such transaction.
(2)Acquisition by subsidiary
For purposes of sections 302 and 303, if—
(A)in return for property, one corporation acquires from a shareholder of another corporation stock in such other corporation, and
(B)the issuing corporation controls the acquiring corporation,then such property shall be treated as a distribution in redemption of the stock of the issuing corporation.
This article does not constitute legal or tax advice. Please consult with your legal or tax advisor with respect to your particular circumstance.
