26 U.S.C. § 307

Basis of stock and stock rights acquired in distributions

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(a) General rule

If a shareholder in a corporation receives its stock or rights to acquire its stock (referred to in this subsection as “new stock”) in a distribution to which section 305(a) applies, then the basis of such new stock and of the stock with respect to which it is distributed (referred to in this section as “old stock”), respectively, shall, in the shareholder’s hands, be determined by allocating between the old stock and the new stock the adjusted basis of the old stock. Such allocation shall be made under regulations prescribed by the Secretary.

(b) Exception for certain stock rights(1) In generalIf—(A) a corporation distributes rights to acquire its stock to a shareholder in a distribution to which section 305(a) applies, and(B) the fair market value of such rights at the time of the distribution is less than 15 percent of the fair market value of the old stock at such time,then subsection (a) shall not apply and the basis of such rights shall be zero, unless the taxpayer elects under paragraph (2) of this subsection to determine the basis of the old stock and of the stock rights under the method of allocation provided in subsection (a).(2) Election

The election referred to in paragraph (1) shall be made in the return filed within the time prescribed by law (including extensions thereof) for the taxable year in which such rights were received. Such election shall be made in such manner as the Secretary may by regulations prescribe, and shall be irrevocable when made.

For basis of stock and stock rights distributed before June 22, 1954, see section 1052.

(Aug. 16, 1954, ch. 736, 68A Stat. 93; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.)Editorial NotesAmendments

1976—Subsecs. (a), (b)(2). Pub. L. 94–455 struck out “or his delegate” after “Secretary”.

Notes of Decisions

Cited in 9 cases, 1928–1938 · leading case: Vukich v. United States

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Vukich v. United States (1928) ca9 “o counts of an indictment; the first count charging that he carried on the business of a distiller without having given bond as required by law, in violation of section 3281, Bevised Statutes (26 USCA § 306), and the second charging the making of mash fit for distillation of…”

Remaley v. Swope (1938) ca9 “26 U.S.C.A. § 307 , id. 26 U.S.C.A. sec. 1185 , 1934 ed.”

Oras v. United States (1933) ca9 “The defendants were indicted for a conspiracy to violate the National Prohibition Act and the internal revenue laws, specifically, for a violation of section 3289 of the Revised Statutes (26 USCA § 266), a violation of section 3282, Revised Statutes (26 USCA § 307), and a…”

Kempf v. United States (1929) ca1 “er without having given bond as required by law,” in violation of the provisions of section 3281 of the Revised Statutes (26 USCA § 306); in the second that, on the same date, “not being an authorized distiller,” he “by distillation did separate certain alcoholic spirits [naming…”

Palno v. United States (1932) ca8 “2, § 3 (27 USCA § 12); (3) the making, possessing, and fermenting of mash fit for distillation and the production of alcoholic spirits, in violation of the Internal Revenue Act (26 USCA § 307); and (4) the possession of whisky, in violation of the National Prohibition Act, tit.”

Mello v. United States (1933) ca3 “The fourth count charged them with making and fermenting mash fit for and intended for distillation in violation of the internal revenue laws (26 USCA § 307). The defendants urge that, under the provisions of the Willis-Campbell Act, § 5 (27 USCA § 3), a conviction on either…”

Mangiaracina v. United States (1930) ca8 · cites it 2× “The fourth count of the indictment is based upon 26 USCA § 307, and in substance charges that defendants made, possessed, and fermented 1,800 gallons, more or less, of mash fit for distillation and for the production of alcoholic spirits on premises other than a distillery duly…”

Capozzi v. United States (1937) ca3 “§ 306 , now section 1184) ; to make or ferment mash, wort, or wash in a building other than a distillery authorized by law ( 26 U.S.C.A. § 307 , now section 1185); and to distill on prohibited premises ( 26 U.”

United States ex rel. Louis v. Laubenheimer (1934) ca7 “Revised Statutes (26 USCA § 307), and asking that relator be apprehended and dealt with according to the law.”

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