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TITLE 26-INTERNAL REVENUE CODE stock received in an exchange to which sub- section (c)(2) applies)- (i) to a shareholder (with respect to its stock held by such shareholder), without the surrender by such shareholder of stock in such corporation; or (ii) to a shareholder, in exchange for its preferred stock; or (iii) to a security holder, in exchange for its securities; and (B) the Board has, before the distribution, certified that the distribution of such pro- hibited property is necessary or appropriate to effectuate section 4 of the Bank Holding Company Act of 1956, then no gain to the shareholder or security holder from the receipt of such property shall be recognl~ed. (2) Distributions of stock and securities received in an exchange to which subsection (c)(2) applies If- (A) a qualified bank holding corporation distributes- (i) common stock received in an ex- change to which subsection (c)(2) applies to a shareholder (with respect to its stock held by such shareholder), without the surrender by such shareholder of stock in such corporation; or (ii) common stock received in an ex- change to which subsection (c)(2) applies to a shareholder, in exchange for its common stock; or (iII) preferred stock or common stock re- ceived in an exchange to which subsection (c)(2) applies to a shareholder, in ex- change for its preferred stock; or (iv) securities or preferred or common stock received in an exchange to which subsection (c)(2) applies to a security holder, in exchange for its securities; and (B) any preferred stock received has sub- stantially the same terms as the preferred stock exchanged, and any securities re- ceived have substantially the same terms as the securities exchanged, then, except as provided in subsection (f), no gain to the shareholder or security holder from the receipt of such stock or such securi- ties or such stock and securities shall be rec- ognized. (3) Non pro rats distributions Paragraphs (1) and (2) shall apply to a dis- tribution whether or not the distribution is pro rata with respect to all of the sharehold- ers of the distributing qualified bank holding corporation. (4) Exception This subsection shall not apply to any dis- tribution by a corporation which has made any distribution pursuant to subsection (b). (5) Distributions involving gift or compensation In the case of a distribution to which paragraph (1) or (2) applies, but which- (A) results in a gift, see section 2501, and following, or (M) has the effect of the payment of compensation, see section 61(a)(1). (b) Corporation ceasing to be a bank holding com- pany (1) Distributions of property which cause a corpo. ration to be a bank holding company If- (A) a qualified bank holding corporation distributes property (other than stock re- ceived in an exchange to which subsection (c)(3) applies)- (i) to a shareholder (with respect to its stock held by such shareholder), without the surrender by such shareholder of stock in such corporation; or (ii) to a shareholder, in exchange for its preferred stock; or (iiI) to a security holder, in exchange for its securities; and (B) the Board has, before the distribution, certified that- (i) such property is all or part of the property by reason of which such corpora- tion controls (within the meaning of sec- tion 2(a) of the Bank Holding Company Act of 1956) a bank or bank holding com- pany, or such property is part of the prop- erty by reason of which such corporation did control a bank or a bank holding com- pany before any property of the same kind was distributed under this subsection or exchanged under subsection (c)(3); and (ii) the distribution is necessary or ap- propriate to effectuate the policies of such Act, then no gain to the shareholder or security holder from the receipt of such property shall be recognized. (2) Distributions of stock and securities received in an exchange to which subsection (c)(3) applies If- (A) a qualified bank holding corporation distributes- (I) common stock received in an ex- change to which subsection (c)(3) applies to a shareholder (with respect to its stock held by such shareholder), without the surrender by such shareholder of stock in such corporation; or (ii) common stock received in an ex- change to which subsection (c)(3) applies to a shareholder, in exchange for its common stock; or (iii) preferred stock or common stock re- ceived in an exchange to which subsection (c)(3) applies to a shareholder, in ex- change for its preferred stock; or (iv) securities or preferred or common stock received in an exchange to which subsection (c)(3) applies to a security holder, in exchange for its securities; and (B) any preferred stock received has sub- stantially the same terms as the preferred stock exchanged, and any securities re- ceived have substantially the same terms as the securities exchanged, then, except as provided in subsection f), no gain to the shareholder or security holder from the receipt of such stock or such securi- ties or such stock and securities shall be rec- ognized. § 1101 Page 664