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TITLE 26-INTERNAL REVENUE CODE (ii) by treating any sale or exchange of property by such other corporation within such 3-year period (but only if at the time of such sale or exchange the shareholder owned more than 20 percent in value of the outstanding stock in such other corporation), gain or loss on which was not recognized to such other corpora- tion under section 337(a), as a sale or ex- change by such shareholder of his propor- tionate share of the property sold or ex- changed, does not exceed an amount equal to 15 per- cent of the net worth of the corporation. This paragraph shall not apply to any sale or ex- change of stock to the issuing corporation or, in the case of a shareholder who owns more than 20 percent in value of the outstanding stock of the corporation, to any sale or ex- change of stock by such shareholder to any person related to him (within the meaning of paragraph (8)). (2) Distributions in liquidation For purposes of subsection (a)(2), a corpora- tion shall not be considered to be a collapsible corporation with respect to any distribution to a shareholder pursuant to a plan of com- plete liquidation if, by reason of the applica- tion of paragraph (4) of this subsection, sec- tion 337(a) applies to sales or exchanges of property by the corporation within the 12- month period beginning on the date of the adoption of such plan, and if, at all times after the adoption of the plan -f liquidation, the sum of- (A) the net unrealized appreciation in subsection (e) assets of the corporation (as defined in paragraph (5)(A)), plus (B) if the shareholder owns more than 5 percent in value of the outstanding stock of the corporation, the net unrealized appre- ciation in assets of the corporation de- scribed in paragraph (1)(B) (other than assets described in subparagraph (A) of this paragraph), plus (C) if the shareholder owns more than 20 percent in value of the outstanding stock of the corporation and owns, or at any time during the preceding 3-year period owned, more than 20 percent in value of the out- standing stock of any other corporation more than 70 percent in value of the assets of which are, or were at any time during which such shareholder owned during such 3-year period more than 20 percent in value of the outstanding stock, assets similar or related in service or use to assets comprising more than 70 percent in value of the assets of the corporation, the net unrealized ap- preciation in assets of the corporation de- scribed in paragraph (1)(C) (other than assets described in subparagraph (A) of this paragraph), does not exceed an amount equal to 15 per- cent of the net worth of the corporation. (3) Recognition of gain in certain liquidations For purposes of section 333, a corporation shall not be considered to be a collapsible cor- poration if at all times after the adoption of the plan of liquidation, the net unrealized ap- preciation in subsection (e) assets of the cor- poration (as defined in paragraph (5)(B)) does not exceed an amount equal to 15 percent of the net worth of the corporation. (4) Gain or loss on sales or exchanges in connec- tion with certain liquidations For purposes of section 337, a corporation shall not be considered to be a collapsible cor- pora,ion with respect to any sale or exchange by it of property within the 12-month period beginning on the date of the adoption of a plan of complete liquidation, if- (A) at all times after the adoption of such plan, the net unrealized appreciation in sub- section (e) assets of the corporation (as de- fined in paragraph (5)(A)) does not exceed an amount equal to 15 percent of the net worth of the corporation, (B) within the 12-month period beginning on the date of the adoption of such plan, the corporation sells substantially all of the properties held by it on such date, and (C) following the adoption of such plan, no distribution is made of any property which in the hands of the corporation or in the hands of the distributee is property in respect of which a deduction for exhaus- tion, wear and tear, obsolescence, amortiza- tion, or depletion is allowable. This paragraph shall not apply with respect to any sale or exchange of property by the corporation to any shareholder who owns more than 20 percent in value of the out- standing stock of the corporation or to any person related to such shareholder (within the meaning of paragraph (8)), if such prop- erty in the hands of the corporation or in the hands of such shareholder or related person is property in respect of which a deduction for exhaustion, wear and tear, obsolescence, amortization, or depletion is allowable. (5) Subsection (e) asset defined (A) For purposes of paragraphs (1), (2), and (4), the term "subsection (e) asset" means, with respect to property held by any corporation- (1) property (except property used in the trade or business, as defined in para- graph (9)) which in the hands of the cor- poration is, or, in the hands of a share- holder who owns more than 20 percent in value of the outstanding stock of the cor- poration, would be property gain from the sale or exchange of which would under any provision of this chapter be consid- ered in whole or in part as ordinary income; (ii) property used in the trade or busi- ness (as defined in paragraph (9)), but only if the unrealized depreciation on all such property on which there Is unrea- lized depreciation exceeds the unrealized appreciation on all such property on which there is unrealized appreciation; (iti) if there is net unrealized apprecia- tion on all property used in the trade or business (as defined in paragraph (9)), property used in the trade or business (as defined in paragraph (9)) which, in the hands of a shareholder who owns more than 20 percent in value of the outstand- § 341 Page 255