[Code of Federal Regulations]
[Title 26, Volume 11]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.1032-1]

[Page 117]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.1032-1  Disposition by a corporation of its own capital stock.

    (a) The disposition by a corporation of shares of its own stock 
(including treasury stock) for money or other property does not give 
rise to taxable gain or deductible loss to the corporation regardless of 
the nature of the transaction or the facts and circumstances involved. 
For example, the receipt by a corporation of the subscription price of 
shares of its stock upon their original issuance gives rise to neither 
taxable gain nor deductible loss, whether the subscription or issue 
price be equal to, in excess of, or less than, the par or stated value 
of such stock. Also, the exchange or sale by a corporation of its own 
shares for money or other property does not result in taxable gain or 
deductible loss, even though the corporation deals in such shares as it 
might in the shares of another corporation. A transfer by a corporation 
of shares of its own stock (including treasury stock) as compensation 
for services is considered, for purposes of section 1032(a), as a 
disposition by the corporation of such shares for money or other 
property.
    (b) Section 1032(a) does not apply to the acquisition by a 
corporation of shares of its own stock except where the corporation 
acquires such shares in exchange for shares of its own stock (including 
treasury stock). See paragraph (e) of Sec. 1.311-1, relating to 
treatment of acquisitions of a corporation's own stock. Section 1032(a) 
also does not relate to the tax treatment of the recipient of a 
corporation's stock.
    (c) Where a corporation acquires shares of its own stock in exchange 
for shares of its own stock (including treasury stock) the transaction 
may qualify not only under section 1032(a), but also under section 
368(a)(1)(E) (recapitalization) or section 305(a) (distribution of stock 
and stock rights).
    (d) For basis of property acquired by a corporation in connection 
with a transaction to which section 351 applies or in connection with a 
reorganization, see section 362. For basis of property acquired by a 
corporation in a transaction to which section 1032 applies but which 
does not qualify under any other nonrecognition provision, see section 
1012.