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TITLE 26-INTERNAL REVENUE CODE EFFECTIVE DATE OF 1976 AMENDMENT Amendment of subsec. (a)(1) by section 1901(a)(44) of Pub. L. 94-455 effective for taxable years beginning after Dec. 31. 1976, see section 1901(d) of Pub. L. 94- 455, set out as an Effective Date of 1976 Amendment note under section 2 of this title. Amendment of subsec. (g) by section 1951(b)(6)(A) of Pub. L. 94-455 effective, except as otherwise ex- pressly provided, for taxable years beginning after Dec. 31, 1976, see section 1951(d) of Pub. L. 94-455, set out as an Effective Date of 1976 Amendment note under section 72 of this title. EFFECTIVE DATE OF 1964 AMENDMENT Amendment of section Pub. L. 88-272 applicable to distributions made in any taxable year of the distrib- uting corporation beginning after Dec. 31, 1963, see section 225(l) of Pub. L. 88-272, set out as an Effective Date of 1976 Amendment note under section 316 of this title. SAVINGS PROVISION Section 1951(b)(6)(B) of Pub. L. 94-455 provided that: "Notwithstanding subparagraph (A) [repealing subsec. (g) of this section], if any corporation meets all the requirements of section 333(g)(2)(B) [subsec. (g)(2)(B) of this section], as in effect before its repeal by this Act [see Tables volume for distribution of Pub. L. 94-455], the liquidation of such corporation shall be treated as if paragraphs (2), (3), and (4) of section 333(g) had not been repealed." PHASE-IN OF 12-MONTH HOLDING PERIOD REQUIREMENT Section 1951(b)(6)(C) of Pub. L. 94-455 provided that: "For purposes of subparagraph (B), the period for holding of stock specified in section 333(g)(2)(A)(ii) (subsee. (g)(2)(A)(ii) of this section], as in effect before such repeal, shall- "(i) in the case of taxable years beginning in 1977, be considered to be '9 months'; and "(i) in the case of taxable years beginning after December 31, 1977, be considered to be '1 year'." RECOGNITION OF GAIN IN CERTAIN LIQUIDATIONS Pub. L. 91-172, title IX, § 917, Dec. 30, 1969, 83 Stat. 724, provided that in applying subscs. (e) and (f) of this section to a distribution in liquidation of a corpo- ration during 1970, stock or securities received by a qualified electing shareholder in exchange for his stock in the liquidating corporation was to be consid- ered as if acquired by the liquidating corporation before Jan. 1, 1954 if certain conditions were met. CROSS REFERENCES Basis of property received in liquidation under this section, see section 334 of this title. For application of section 225(h) of Pub. L. 88-272 to taxable years beginning after Dec. 31, 1963, see section 225(l) of Pub. L. 88-272, set out as an Effective Date of 1964 Amendment note under section 316 of this title. Gain or loss. section as not applicable to any sale or exchange following adoption of a plan of complete liq- uidation to which this section applies, see section 337 of this title. Partial liquidation defined, see section 346 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 334, 337 of this title. § 334. Basis of property received in liquidations (a) General rule If property is received in a distribution in par- tial or complete liquidation (other than a distri- bution to which section 333 applies), and if gain or loss is recognized on receipt of such proper- ty, then the basis of the property in the hands of the distributee shall be the fair market value of such property at the time of the distribution. (b) Liquidation of subsidiary (1) In general If property is received by a corporation in a distribution in complete liquidation of an- other corporation (within the meaning of sec- tion 332(b)), then, except as provided in para- graph (2), the basis of the property in the hands of the distributee shall be the same as It would be in the hands of the transferor. If property is received by a corporation in a transfer to which section 332(c) applies, and if paragraph (2) of this subsection does not apply, then the basis of the property in the hands of the transferee shall be the same as it would be in the hands of the transferor. (2) Exception If property is received by a corporation in a distribution in complete liquidation of an- other corporation (within the meaning of sec- tion 332(b)), and if- (A) the distribution is pursuant to a plan of liquidation adopted not more than 2 years after the date of the transaction de- scribed in subparagraph (B) (or, in the case of a series of transactions, the date of the last such transaction); and (B) stock of the distributing corporation possessing at least 80 percent of the total combined voting power of all classes of stock entitled to vote, and at least 80 per- cent of the total number of shares of all other classes of stock (except nonvoting stock which is limited and preferred as to dividends), was acquired by the distributee by purchase (as defined in paragraph (3)) during a 12-month period beginning with the earlier of- (i) the date of the first acquisition by purchase of such stock, or (1i) if any of such stock was acquired in an acquisition which is a purchase within the meaning of the second sentence of paragraph (3), the date on which the dis- tributee is first considered under section 318(a) as owning stock owned by the cor- poration from which such acquisition was made, then the basis of the property in the hands of the distributee shall be the adjusted basis of the stock with respect to which the distribution was made. For purposes of the preceding sentence, under regulations pre- scribed by the Secretary, proper adjustment in the adjusted basis of any stock shall be made for any distribution made to the dis- tributee with respect to such stock before the adoption of the plan of liquidation, for any money received, for any liabilities as- sumed or subject to which the property was received, and for other items. (3) Purchase defined For purposes of paragraph (2)(B), the term "purchase" means any acquisition of stock, but only if- (A) the basis of the stock in the hands of the distributee is not determined (1) in whole or in part by reference to the adjust- § 334 Page 250