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TITLE 26-INTERNAL REVENUE CODE Subsec, (c)(2). Pub. L. 94-455, §§ 1906(b)(13)(A), 2118(a), struck out in subpar. (B) "or his delegate" fol- lowing "Secretary" and added provisions following subpar. (B) limiting the applicability of this paragraph in certain instances where there is a sale or exchange by a member of an affiliated group of corporations. Subsec. (d). Pub. L. 94-455, § 1901(a)(46)(B), struck out "on or after January 1, 1958" following "adopts a plan of complete liquidation". 1958-Subsec. (d). Pub. L. 85-866 added subsection (d). EFFECTIVE DATE OF 1976 AMENDMENT Amendment of subsecs. (a) and (d) by section 1901(a)(46) 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. Section 2118(b) of Pub. L. 94-455 provided that: "The amendments made by subsection (a) [amending this section] Rhall apply to sales or exchanges made pursuant to a plan of complete liquidation adopted after December 31, 1975". EFFECTIVE DATE OF 1958 AMENDMENT Subsection (d) of this section applicable to taxable years beginning after Dec. 31, 1953, and ending after Aug. 16, 1954, see section l(c) of Pub. L. 85-866, set out as an Effective Date of 1958 Amendment note under section 165 of this title. CROSS REFERENCES Gain or loss to shareholders in corporate liquida- tions, see section 331 of this title. Installment obligation, effect of distribution in liqui- dation on recognition of gain or loss, see section 453 of this title. Partial liquidation defined, see section 346 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to :n sections 341, 453, 995, 1248 of this title. § 338. Effect on earnings and profits For special rule relating to the effect on earnings and profits of certain distributions in partial liquidation, see section 312(e). (Aug. 16, 1954, ch. 736, 68A Stat. 107.) SUBPART C-COLLAPSIBLE CORPORATIONS Sec. 341. Collapsible corporations. [342. Repealed.] AMENDMENTS 1976-Pub. L. 94-455, title XIX, § 1901(b)(12)(C), (D), Oct. 4, 1976, 90 Stat. 1795, struck out in Subpart head- ing "; Foreign Personal Holding Companies" following "Collapsible Corporations" and item 342 "Liquidation of certain foreign personal holding companies.". § 341. Collapsible corporations (a) Treatment of gain to shareholders Gain from- (1) the sale or exchange of stock of a col- lapsible corporation, (2) a distribution in partial or complete liq- uidation of a collapsible corporation, which distribution is treated under this part as in part or full payment in exchange for stock, and (3) a distribution made by a collapsible cor- poration which, under section 301(c)(3)(A), is treated, to the extent it exceeds the basis of the stock, in the same manner as a gain from the sale or exchange of property, to the extent that it would be considered (but for the provisions of this section) as gain from the sale or exchange of a capital asset held for more than 9 months shall, except as otherwise provided in this section, be considered as ordi- nary income. (b) Definitions (1) Collapsible corporation For purposes of this section, the term "col- lapsible corporation" means a corporation formed o-- availed of principally for the manu- facture, construction, or production of prop- erty, for the purchase of property which (in the hands of the corporation) is property de- scribed in paragraph (3), or for the holding of stock in a corporation so formed or availed of, with a view to- (A) the sale or exchange of stock by its shareholders (whether in liquidation or oth- erwise), or a distribution to its shareholders, before the realization by the corporation manufacturing, constructing, producing, or purchasing the property of a substantial part of the taxable income to be derived from such property, and (B) the realization by such shareholders of gain attributable to such property. (2) Production or purchase of property For purposes of paragraph (1), a corpora- tion shall be v eemed to have manufactured, constructed, produced, or purchased proper- ty, if- (A) it engaged in the manufacture, con- struction, or production of such property to any extent, (B) it holds property having a basis deter- mined, in whole or in part, by reference to the cost of such property in the hands of a person who manufactured, constructed, pro- duced, or purchased the property, or (C) it holds property having a basis deter. mined, in whole or in part, by reference to the cost of property manufactured, con- structed, produced, or purchased by" the cor- poration. (3) Section 341 assets For purposes of this section, the term "sec- tion 341 assets" means property held for a period of less than 3 years which is- (A) stock in trade of the corporation, or other property of a kind which would prop- erly be included in the inventory of the cor- poration if on hand at the close of the tax- able year; (B) property held by the corporation pri- marily for sale to customers in the ordinary course of its trade or business; (C) unrealized receivables or fees, except receivables from sales of property other than property described in this paragraph; or (D) property described in section 1231(b) (without regard to any holding period therein provided), except such property which is or has been used in connection with the manufacture, construction, pro- duction, or sale of property described in subparagraph (A) or (B). Page 253 § 341