Final Regs Reflect Statutory Changes to Distribution Rules

Final Regs Reflect Statutory Changes to Distribution Rules

Internal Revenue Service

The IRS has published final regulations (T.D. 9954) under section 301 to reflect statutory changes providing that the amount of a distribution of property made by a corporation to its shareholder is the fair market value of the distributed property. Effective September 22, 2021, the final regs adopt with no substantive changes proposed regs (<a href="/lr/resolve//2992g">REG-121694-16</a>) released in March 2019. Section 301 provides rules for the treatment of a distribution of property, including money, made by a corporation to its shareholder regarding that shareholder’s stock ownership in that corporation. The Technical and Miscellaneous Revenue Act of 1988 amended section 301(b)(1) to provide that for purposes of section 301, the amount of any distribution is the amount of money received plus the FMV of the other property received. Section 301(d) was amended to provide that the basis of property received in a distribution to which section 301(a) applies is the FMV of the property. The final regs update the existing regulations under section 301 to reflect the statutory changes made by the 1988 legislation. The scope of the 2019 proposed regs was limited to (1) deleting provisions made obsolete by statutory changes, (2) making minor additions and revisions to reflect current statutory text, and (3) making some non-substantive changes for purposes of clarity and readability, including reordering and redesignating paragraphs. The 2019 proposed regs also amended cross-references in various reg sections to reflect the proposed reordering and redesignating of paragraphs in reg. section 1.301-1.

The IRS has published final regulations (T.D. 9954) under section 301 to reflect statutory changes providing that the amount of a distribution of property made by a corporation to its shareholder is the fair market value of the distributed property.

The IRS has published final regulations (T.D. 9954) under section 301 to reflect statutory changes providing that the amount of a distribution of property made by a corporation to its shareholder is the fair market value of the distributed property. Effective September 22, 2021, the final regs adopt with no substantive changes proposed regs (REG-121694-16) released in March 2019. Section 301 provides rules for the treatment of a distribution of property, including money, made by a corporation to its shareholder regarding that shareholder’s stock ownership in that corporation. The Technical and Miscellaneous Revenue Act of 1988 amended section 301(b)(1) to provide that for purposes of section 301, the amount of any distribution is the amount of money received plus the FMV of the other property received. Section 301(d) was amended to provide that the basis of property received in a distribution to which section 301(a) applies is the FMV of the property. The final regs update the existing regulations under section 301 to reflect the statutory changes made by the 1988 legislation. The scope of the 2019 proposed regs was limited to (1) deleting provisions made obsolete by statutory changes, (2) making minor additions and revisions to reflect current statutory text, and (3) making some non-substantive changes for purposes of clarity and readability, including reordering and redesignating paragraphs. The 2019 proposed regs also amended cross-references in various reg sections to reflect the proposed reordering and redesignating of paragraphs in reg. section 1.301-1.

Sec. 301 Distributions of property

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Final Regs Reflect Statutory Changes to Distribution Rules