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TITLE 26-INTERNAL REVENUE CODE (2) Banking property Subsection (b) shall not apply to a distribu- tion if, in connection with such distribution, the distributing corporation retains, or trans- fers after May 15, 1955, to any corporation, property (other than property described in subsection (b)(1)(B)(i) as part of a plan one of the principal purposes of which is the distri- bution of the earnings and profits of any cor- poration. (3) Certain contributions to capital In the case of a distribution a portion of which is attributable to a transfer which is a contribution to the capital of a corporation, made after May 15, 1955, and prior to the date of the enactment of this part, if subsec- tion (a) or (b) would apply to such distribu- tion but for the fact that, under paragraph (1) or (2) (as the case may be) of this subsec- tion, such contribution to capital is part of a plan one of the principal purposes of which is to distribute the earnings and profits of any corporation, then, notwithstanding para- graph (1) or (2), subsection (a) or(b) (as the case may be) shall apply to that portion of such distribution not attributable to such contribution to capital, and shall not apply to that portion of such distribution attributable to such contribution to capital. (e) Final certification (1) For subsection (a) Subsection (a) shall not apply with respect to any distribution by a corporation unless the Board certifies that, before the expiration of the period permitted under section 4(a) of the Bank Holding Company Act of 1956 (in- cluding any extensions thereof granted to such corporation under such section 4(a)), the corporation has disposed of all the property the disposition of which is necessary or ap- propriate to effectuate section 4 of such Act (or would have been so necessary or appropri- ate if the corporation had continued to bit a bank holding company). (2) For subsection (b) (A) Subsection (b) shall not apply with re- spect to any distribution by any corporation unless the Board certifies that, before the expiration of the period specified in subpar- agraph (B), the corporation has ceased to be a bank holding company. (B) The period referred to in subpara- graph (A) is the period which expires 2 years after the date of the enactment of this part or 2 years after the date on which the corporation becomes a bank holding company, whichever date is later. The Board is authorized, on application by any corporation, to extend such period from time to time with respect to such corpora- tion for not more than one year at a time if, in its Judgment, such an extension would not be detrimental to the public interest; except that such period may not in any case be extended beyond the date 5 years after the date of the enactment of this part or 5 years after the date on which the corpora- tion becomes a bank holding company, whichever date is later. (f) Certain exchanges of securities In the case of an exchange described in sub- section (a)(2)(A)(iv) or subsection (b)(2)(A)(iv), subsection (a) or subsection (b) (as the case may be) shall apply only to the extent that the principal amount of the securities received does not exceed the principal amount of the securi- ties exchanged. (Added May 9, 1956, ch. 240, § 10(a), 70 Stat. 139.) SECTION EFFECTIVE OCTOBER 1, 1977 Pub. L. 94-452, § 2(a), (d)(1), Oct. 2, 1976, 90 Stat. 1503, 1512, provided that, effective on Oct. 1, 1977, with respect to distributions after July 7, 1970, in taxable years ending after July 7, 1970, section 1101 will read as follows: § 1101. Distributions pursuant to Bank Holding Com- pany Act (a) Distributions of certain non-banking property (1) Distributions of prohibited property f- (A) a qualified bank holding corporation distributes prohibited property (other than 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, then no gain to the shareholder or security holder from the receipt of such property shall be recognized. (') Distributions of stock and securities received in an exchange to which subsection (c)(2) applies IV- (A) a qualified bank holding corporation distributes- (M) 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 sur- render 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 received § 1101 Page 666