Page:United States Statutes at Large Volume 68A.djvu/150

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INTERNAL REVENUE CODE OF 1954

of that individual's brothers and sisters (whether by the whole or half blood) and the spouses of that individual's lineal descendants. SEC. 342. LIQUIDATION OF CERTAIN FOREIGN PERSONAL HOLDING COMPANIES. (a) IN GENERAL.—If any distribution—

(1) is, within the meaning of the Internal Revenue Code of 1939, a distribution in partial liquidation or in complete liquidation (including any one of a series of distributions made by the corporation in complete cancellation or redemption of all its stock) and (2) is made by a foreign corporation which, with respect to any taxable year beginning on or before, and ending after, August 26, 1937, was a foreign personal h®lding company, and with respect to which a United States group (as defined in section 552(a)(2)) existed after August 26, 1937, and before January 1, 1938, then the distribution shall be treated as a distribution in full or part payment in exchange for the stock, and the amount of the gain recognized (determined under section 1002 without regard to this part) resulting from such distribution shall be considered as a gain from the sale or exchange of a capital asset held for not more than 6 months. (b) SPECIAL RULE FOR CERTAIN LIQUIDATIONS B E FOR E 1956.— Subsection (a) shall not apply in the case of a series of distributions in complete liquidation described in subsection (a) if— (1) the first distribution is made on or after June 22, 1954, and (2) the final distribution is made before January 1, 1956; and the amount of the gain recognized (determined under section 1002 without regard to this part) resulting from such distributions shall be considered as a gain from the sale or exchange of a capital asset, or of property which is not a capital asset, as the case may be. Subpart D—Definition Sec. 346. Partial liquidation defined. SEC. 346. PARTIAL LIQUIDATION DEFINED.

(a) IN GENERAL.—For purposes of this subchapter, a distribution shall be treated as in partial liquidation of a corporation if— (1) the distribution is one of a series of distributions in redemption of all of the stock of the corporation pursuant to a plan; or (2) the distribution is not essentially equivalent to a dividend, is in redemption of a part of the stock of the corporation pursuant to a plan, and occurs within the taxable year in which the plan is adopted or within the succeeding taxable year, including (but not limited to) a distribution which meets the requirements of subsection (b). For purposes of section 562(b) (relating to the dividends paid deduction) and section 6043 (relating to information returns), a partial liquidation includes a redemption of stock to which section 302 applies. (b) TERMINATION OF A BUSINESS.—A distribution shall be treated as a distribution described in subsection (a)(2) if the requirements of paragraphs (1) and (2) of this subsection are met. (1) The distribution is attributable to the corporation's ceasing to conduct, or consists of the assets of, a trade or business which has § 341(d)

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