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TITLE 26-INTERNAL REVENUE CODE ea basis of such stock in the hands of the person from whom acquired, or (ii) under section 1014(a) (relating to property ac- quired from a decedent), (B) the stock is not acquired in an ex- change to which section 351 applies, and (C) the stock is not acquired from a person the ownership of whose stock would, under section 318(a), be attributed to the person acquiring such stock. Notwithstanding subparagraph (C) of this paragraph, for purposes of paragraph (2)(B), the term "purchase" also means an acquisi- tion of stock from a corporation when owner- ship of such stock would be attributed under section 318(a) to the person acquiring such stock, if the stock of such corporation by reason of which such ownership would be at- tributed was acquired by purchase (within the meaning of the preceding sentence). (4) Distributee defined For purposes of this subsection, the term "distributee" means only the corporation which meets the 80 percent stock ownership requirements specified in section 332(b). (c) Property received in liquidation under section 333 If- (1) property was acquired by a shareholder in the liquidation of a corporation in cancella- tion or redemption of stock, and (2) with respect to such acquisition- (A) gain was realized, but (B) as the result of an election made by the shareholder under section 333, the extent to which gain was recognized was de- termined under section 333, then the basis shall be the same as the basis of such stock cancelled or redeemed in the liquida- tion, decreased in the amount of any money re- ceived by the shareholder, and increased in the amount of gain recognized to him.. (Aug. 16, 1954, ch. 736, 68A Stat. 104; Nov. 13, 1966, Pub. L. 89-809, title II, § 202(a), (b), 80 Stat. 1576; Oct. 4, 1976, Pub. L. 94-455, title XIX, §§ 1901(a)(45), 1906(b)(13)(A), 90 Stat. 1772, 1834.) AMENDMENTS 1976-Subsec. (b)(2). Pub. L. 94-455, §§ 1901(a)(45), 1906(b)(13)(A), struck out in subpar. (A) provision re- lating to distributions made pursuant to a plan of liq- uidation adopted on or before June 22, 1954, and in provisions following subpar. (B)(ii) "or his delegate" following "Secretary". 1966-Subsec. (b)(2)(B). Pub. L. 89-809, § 202(b), in- serted provisions for the determination of the date on which to commence the running of the 12-month period during which the distributee must have ac- quired the stock by purchase by adding clauses (i) and (it). Subsec. (b)(3). Pub. L. 89-809, § 202(a), added provi- sion that, for purposes of par. (2)(B), the term "pur- chase" also means an acquisition of stock from a cor- poration when ownership of such stock would be at- tributed under section 318(a) to the person acquiring such stock, if the stock of such corporation by reason of which such ownership would be attributed was ac- quired by purchase. EFFECTIVE DATE OF 1976 AMENDMENT Amendment of subsec. (b)(2) by section 1901(a)(45) 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. EFFECTIVE DATE OF 1966 AMENDMENT Section 202(d) of Pub. L. 89-809 provided that: "The amendment made by subsection (a) [amending subsec. (b)(3) of this section] shall apply only with respect to acquisitions of stock after December 31, 1965. The amendment made by subsections (b) and (c) [amend- ing subsec. (b)(2)(B) of this section and section 453(d)(4)(A) of this title] shall apply only with respect to distributions made after the date of the enactment of this Act [Nov. 13, 1966]." ADJUSTMENT FOR LIABILITY TO BASIS OF PROPERTY Dis- TRIBUTED IN COMPLETE LIQUIDATION OF CORPORATION PRIOR TO JULY 1. 1957; DEDUCTION FOR UNCOMPENSAT- ED LIABILITY Pub. L. 93-497, § 3, Oct. 29, 1974. 88 Stat. 1534, pro- vided that: "(a) Notwithstanding the provisions of section 334 of the Internal Revenue Code of 1954 [this section] (re- lating to basis of property received in liquidations), no adjustment to the basis of any property distributed in complete liquidation of a corporation prior to July 1, 1957, shall be made for any liability if- "(1) the distributor and distributee did not consid- er the liability relevant to the value of the stock with respect to which the distribution was made, "(2) the distributor and distributee reasonably relied upon a decision of a United States district court specifically adjudicating the amount of the li- ability and its affirmance by the appropriate United States court of appeals, and "(3) the amount of liability so adjudicated was not greater than would be compensated for by insur- ance. The provisions of this section apply without regard to whether such decision was subsequently reversed or modified by that United States court of appeals fol- lowing distribution of such property in complete liqui- dation. "(b) To the extent that the liability described in sub- section (a) is not compensated for by insurance or oth- erwise, the amount thereof shall be allowed as a de- duction under the appropriate provision of the Inter- nal Revenue Code of 1954 [this title] for the taxable year in which payment thereof was made and shall be effective in determining income tax liabilities of all taxable years prior thereto." CROSS REFERENCES Carryovers in corporate acquisitions, exception where basis of assets distributed is determined under subsection (b)(2) of this section, see section 381 of this section. Corporate organizations, basis to distributees, see section 358 of this title. Gain or loss on sales or exchanges in connection with liquidations to which section 332 applies, see sec- tion 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 48, 49, 318, 337, 381, 453, 617 of this title. SUBPART B-EFFECTS ON CORPORATION SeC. 336. General rule. 337. Gain or loss on sales or exchanges in connection with certain liquidations. 338. Effect on earnings and profits. § 336. General rule Except as provided in section 453(d) (relating to disposition of installment obligations), no gain or loss shall be recognized to a corporation Page 251 § 336