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TITLE 26-INTERNAL REVENUE CODE Installment obligation, effect of distribution in liqui- dation on recognition of gain or loss, see section 453 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 48, 49, 334, 337, 341, 367, 381, 453, 1101, 1245, 1250, 1251 of this title. § 333. Election as to recognition of gain in certain liq. uldations (a) General rule In the case of property distributed in com- plete liquidation of a domestic corporation (other than a collapsible corporation to which section 341(a) applies), if- (1) the liquidation is made in pursuance of a plan of liquidation adopted, and (2) the distribution is in complete cancella- tion or redemption of all the stock, and the transfer of all the property under the liquida- tion occurs within some one calendar month, then in the case of each qualified electing shareholder (as defined in subsection (c)) gain on the shares owned by him at the time of the adoption of the plan of liquidation shall be rec- ognized only to the extent provided in subsec- tions (e) and f). (b) Excluded corporation For purposes of this section, the term "ex- cluded corporation" means a corporation which at any time between January 1, 1954, and the date of the adoption of the plan of liquidation, both dates inclusive, was the owner of stock possessing 50 percent or more of the total com- bined voting power of all classes of stock enti- tled to vote on the adoption of such plan. (c) Qualified electing shareholders For purposes of this section, the term "quali- fied electing shareholder" means a shareholder (other than an excluded corporation) of any class of stock (whether or not entitled to vote on the adoption of the plan of liquidation) who is a shareholder at the time of the adoption of such plan, and whose written election to have the benefits of subsection (a) has been made and filed in accordance with subsection (d), but- (1) in the case of a shareholder other than a corporation, only if written elections have been so filed by shareholders (other than cor- porations) who at the time of the adoption of the plan of liquidation are owners of stock possessing at least 80 percent of the total combined voting power (exclusive of voting power possessed by stock owned by corpora- tions) of all classes of sotck entitled to vote on the adoption of such plan of liquidation; or (2) in the case of a shareholder which is a corporation, only if written elections have been so filed by corporate shareholders (other than an excluded corporation) which at the time of the adoption of such plan of liquidation are owners of stock possessing at least 80 percent of the total combined voting power (exclusive of voting power possessed by stock owned by an excluded corporation and by shareholders who are not corporations) of all classes of stock entitled to vote on the adoption of such plan of liquidation. (d) Making and filing of elections The written elections referred to in subsec- tion (c) must be made and filed in such manner as to be not in contravention of regulations pre- scribed by the Secretary. The filing must be within 30 days after the date of the adoption of the plan of liquidation. (e) Noncorporate shareholders In the case of a qualified electing shareholder other than a corporation- (1) there shall be recognized, and treated as a dividend, so much of the gain as is not in excess of his ratable share of the earnings and profits of the corporation accumulated after February 28, 1913, such earnings and profits to be determined as of the close of the month in which the transfer in liquidation oc- curred under subsection (a)(2), but without diminution by reason of distributions made during such month; but by including in the computation thereof all amounts accrued up to the date on which the transfer of all the property under the liquidation is cowpleted; and (2) there shall be recognized, and treated as short-term or long-term capital gain, as the case may be, so much of the remainder of the gain as is not in excess of the amount by which the value of that portion of the assets received by him which consists of money, or of stock or securities acquired by the corpora- tion after December 31, 1953, exceeds his rat- able share of such earnings and profits. (f) Corporate shareholders In the case of a qualified electing shareholder which is a corporation, the gain shall be recog- nized only to the extent of the greater of the two following- (1) the portion of the assets received by it which consists of money, or of stock or securi- ties acquired by the liquidating corporation after December 31, 1953; or (2) its ratable share of the earnings and profits of the liquidating corporation accumu- lated after February 28, 19L3, such earnings and profits to be determined as of the close of the month in which the transfer in liquida- tion occurred under subsection (a)(2), , w without diminution by reason of distributin,., made during such month; but by including In the computation thereof all amounts accrued up to the date on which the transfer of all the property under the liquidation is complet- ed. (Aug. 16, 1954, ch. 736, 68A Stat. 103; Feb. 26, 1964, Pub. L. 88-272, title II, § 225(g), 78 Stat. 89; Oct. 4, 1976, Pub. L. 94-455, title XIX, §§ 1901(a)(44), 1906(b)(13)(A), 1951(b)(6)(A), 90 Stat. 1772, 1834, 1838.) AMENDMENTS 1976-Subsec. (a)(1). Pub. L. 94-455, § 1901(a)(44), struck out "on or after June 22, 1954" following "plan of liquidation adopted". Subsec. (d). Pub. L. 94-455, § 1906(b)(13)(A), struck out "or his delegate" following "Secretary". Subsee. (g). Pub. L. 94-455, § 1951(b)(6)(A), struck out subsec. (g) which related to a special rule for liqui- dations occurring before Jan. 1, 1967. 1964-Subsec. (g). Pub. L. 88-272 added subsection (g). Page 249 § 333