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TITLE 26-INTERNAL REVENUE CODE the 10-year period ending on the date of the distribution by the distributee from a person the ownership of whose stock would (at the time of distribution) be at- tributable to the distributee under section 318(a), or (i1) any person owns (at the time of the distribution) stock the ownership of which is attributable to the distributee under section 318(a) and such person ac- quired any stock in the corporation, di- rectly or indirectly, from the distributee within the 10-year period ending on the date of the distribution, unless such stock so acquired from the distributee is re- deemed in the same transaction. The preceding sentence shall not apply If the acquisition (or, in the case of clause (ii), the disposition) by the distributee did not have as one of its principal purposes the avoidance of Federal income tax. (d) Redemptions treated as distributions of property Except as otherwise provided in this sub- chapter, if a corporation redeems its stock (within the meaning of section 317(b)), and if subsection (a) of this section does not apply, such redemption shall be treated as a distribu- tion of property to which section 301 applies. (e) Cross references For special rules relating to redemption- (1) Death Taxes.-Of stock to pay death taxes, see sec. tion 303. (2) Section 306 Stock.-Of section 306 stock, see sec. tion 306. (3) Llquldations.-Of stock in partial or complete liq- uidation, see section 331. (Aug. 16, 1954, ch. 736, 68A Stat. 85; Oct. 4, 1976, Pub. L. 94-455, title XIX, § 1906(b)(13)(A), 90 Stat. 1834.) REFERENCES IN TEXT Section 77 of the Bankruptcy Act, referred to in subsec. (b)(4), is classified to section 205 of Title 11, Bankruptcy. AMENDMENTS 1976-Subsec. (c)(2). Pub. L. 94-455 struck out "or his delegate" following "Secretary" wherever appear- ing. SAVINGS PROVISIONS Applicability of subsec. (b)(1) to the determination of gross investment income under sections 4940 and 4948(a) of this title, see section 101(l)(8) of Pub. L. 91- 172, set out as a Savings Provisions note under section 4940 of this title. CROSS REFERENCES Disposition of stock to which this section applies, see section 306 of this title. Distribution of property, see section 301 of this title. Earnings and profits, special rule for certain re- demptions, see section 312 of this title. Partial liquidation defined, treatment of certain re- demptions, see section 346 of this title. Redemption through use of related corporations, see section 304 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 48, 301, 304, 306, 311, 312, 318, 346, 1246, 1248 of this title. § 303. Distributions in redemption of stock to pay death taxes (a) In general A distribution of property to a shareholder by a corporation in redemption of part or all of the stock of such corporation which (for Feder- al estate tax purposes) is included in determin- ing the gross estate of a decedent, to the extent that the amount of such distribution does not exceed the sum of- (1) the estate, inheritance, legacy, and suc- cession taxes (including any interest collected as a part of such taxes) imposed because of such decedent's death, and (2) the amount of funeral and administra- tion expenses allowable as deductions to the estate under section 2053 (or under section 2106 in the case of the estate of a decedent nonresident, not a citizen of the United States), shall be treated as a distribution in full pay- ment in exchange for the stock so redeemed. (b) Limitations on application of subsection (a) (1) Period for distribution Subsection (a) shall apply only to amounts distributed after the death of the decedent and- (A) within the period of limitations pro- vided in section 6501(a) for the assessment of the Federal estate tax (determined with- out the application of any provision other than section 6501(a)), or within 90 days after the expiration of such period, (B) if a petition for redetermination of a deficiency in such estate tax has been filed with the Tax Court within the time pre- scribed in section 6213, at any time before the expiration of 60 days after the decision of the Tax Court becomes final, or (C) if an election has been made under section 6166 or 6166A and if the time pre- scribed by this subparagraph expires at a later date than the time prescribed by sub- paragraph (B) of this paragraph, within the time determined under section 6166 or 6166A for the payment of the installments. (2) Relationship of stock to decedent's estate (A) In general Subsection (a) shall apply to a distribu- tion by a corporation only if the value (for Federal estate tax purposes) of all of the stock of such corporation which is included in determining the value of the decedent's gross estate exceeds 50 percent of the excess of- (I) the value of the gross estate of such decedent, over (ii) the sum of the amounts allowable as a deduction under section 2053 or 2054. (B) Special rule for stock of two or more corpo- rations For purposes of the 50 percent require- ments of subparagraph (A), stock of two or more corporations, with respect to each of which there Is Included in determining the value of the decedent's gross estate more than 75 percent in value of the outstanding stock, shall be treated as the stock of a single corporation. For the purpose of the Page 233 § 303