52 STAT.] 75TH CONG. , 3D SESS.-CH. 2S9-MAY 28, 1938 (7) ELECTION AS TO RECOGNITION OF GAIN IN CERTAIN COR- PORATE LIQUIDATIONS.- (A) GENERAL RULE.- In the case of property distributed in complete liquidation of a domestic corporation, if- (i) the liquidation is made in pursuance of a plan of liquidation adopted after the date of the enactment of this Act, whether the taxable year of the corporation began on, before, or after January 1, 1938; and (ii) the distribution is in complete cancellation or re- demption of all the stock, and the transfer of all the property under the liquidation occurs within the month of December, 1938- then in the case of each qualified electing shareholder (as de- fined in subparagraph (C)) gain upon the shares owned by him at the time of the adoption of the plan of liquidation shall be recognized only to the extent provided in subpara- graphs (E) and (F). (B) EXCLUDED CORPORATION. - T he term "excluded cor- poration" means a corporation which at any time between April 9, 1938, and the date of the adoption of the plan of liquidation, both dates inclusive, was the owner of stock pos- sessing 50 per centum or more of the total combined voting power of all classes of stock entitled to vote on the adoption of such plan. (C) QUALIFIED ELECTING SHAREIOLDERS. -The term "quali- fied electing shareholder" means a shareholder (other than an excluded corporation) of any class of stock (whether or not entitled to vote on the adoption of the plan of liquida- tion) who is a shareholder at the time of the adoption of such plan, and whose written election to have the benefits of subparagraph (A) has been made and filed in accordance with subparagraph (D), but- (i) in the case of a shareholder other than a corpora- tion, only if written elections have been so filed by share- holders (other than corporations) who at the time of the adoption of the plan of liquidation are owners of stock possessing at least 80 per centum of the total combined voting power (exclusive of voting power possessed by stock owned by corporations) of all classes of stock entitled to vote on the adoption of such plan of liquida- tion; or (ii) in the case of a shareholder which is a corpora- tion, only if written elections have been so filed by corporate shareholders (other than an excluded corpo- ration) which at the time of the adoption of such plan of liquidation are owners of stock possessing at least 80 per centum of the total combined voting power (exclu- sive of voting power possessed by stock owned by an excluded corporation and by shareholders who are not corporations) of all classes of stock entitled to vote on the adoption of such plan of liquidation. (D) MAKING AND FI.ING OF ELECTIONS.-The written elec- tions referred to in subparagraph (C) must be made and filed in such manner as to be not in contravention of regu- lations prescribed by the Commissioner with the approval of the Secretary. The filing must be within thirty days after the adoption of the plan of liquidation, and may be by the liquidating corporation or by the shareholder. 487 Election as to recog- nition of gain in cer- tain corporate liquida- tions. General rule. "Excluded corpora- tion" defined. "Qualified electing shareholder" defined. Shareholder other than a corporation. Where shareholder is a corporation. Making and filing of elections. Time limitation.
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