[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: 26CFR1.1059(e)-1]

[Page 176]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.1059(e)-1  Non-pro rata redemptions.

    (a) In general. Section 1059(d)(6) (exception where stock held 
during entire existence of corporation) and section 1059(e)(2) 
(qualifying dividends) do not apply to any distribution treated as an 
extraordinary dividend under section 1059(e)(1). For example, if a 
redemption of stock is not pro rata as to all shareholders, any amount 
treated as a dividend under section 301 is treated as an extraordinary 
dividend regardless of whether the dividend is a qualifying dividend.
    (b) Reorganizations. For purposes of section 1059(e)(1), any 
exchange under section 356 is treated as a redemption and, to the extent 
any amount is treated as a dividend under section 356(a)(2), it is 
treated as a dividend under section 301.
    (c) Effective date. This section applies to distributions announced 
(within the meaning of section 1059(d)(5)) on or after June 17, 1996.

[T.D. 8724, 62 FR 38028, July 16, 1997]