[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: 26CFR1.1081-11] [Page 196-198] TITLE 26--INTERNAL REVENUE CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY (CONTINUED) PART 1_INCOME TAXES--Table of Contents Sec. 1.1081-11 Records to be kept and information to be filed with returns. (a) Exchanges; holders of stock or securities. Every holder of stock or securities who receives stock or securities and other property (including money) upon an exchange shall, if the exchange is made with a corporation acting in obedience to an order of the Securities and Exchange Commission, file as a part of his income tax return for the taxable year in which the exchange takes place a complete statement of all facts pertinent to the nonrecognition of gain or loss upon such exchange, including-- (1) A clear description of the stock or securities transferred in the exchange, together with a statement of the cost or other basis of such stock or securities. (2) The name and address of the corporation from which the stock or securities were received in the exchange. (3) A statement of the amount of stock or securities and other property (including money) received from the exchange. The amount of each kind of stock or securities and other property received shall be set forth upon the basis of the fair market value thereof at the date of the exchange. (b) Exchanges; corporations subject to S.E.C. orders. Each corporation which is a party to an exchange made in obedience to an order of the Securities and Exchange Commission directed to such corporation shall file as a part of its income tax return for its taxable year in which the exchange takes place a complete statement of all facts pertinent to the nonrecognition of gain or loss upon such exchange, including-- (1) A copy of the order of the Securities and Exchange Commission directed to such corporation, in obedience to which the exchange was made. (2) A certified copy of the corporate resolution authorizing the exchange. (3) A clear description of all property, including all stock or securities, transferred in the exchange, together with a complete statement of the cost or other basis of each class of property. (4) The date of acquisition of any stock or securities transferred in the exchange, and, if any of such stock or securities were acquired by the corporation in obedience to an order of the Securities and Exchange Commission, a copy of such order. (5) The name and address of all persons to whom any property was transferred in the exchange. (6) If any property transferred in the exchange was transferred to another corporation, a copy of any order of the Securities and Exchange Commission directed to the other corporation, in obedience to which the exchange was made by such other corporation. (7) If the corporation transfers any nonexempt property, the amount of the undistributed earnings and profits of the corporation accumulated after February 28, 1913, to the time of the exchange, computed in accordance with [[Page 197]] the last sentence in paragraph (b) of Sec. 1.316-2. (8) A statement of the amount of stock or securities and other property (including money) received upon the exchange, including a statement of all distributions or other dispositions made thereof. The amount of each kind of stock or securities and other property received shall be stated on the basis of the fair market value thereof at the date of the exchange. (9) A statement showing as to each class of its stock the number of shares and percentage owned by any other corporation, the voting rights and voting power, and the preference (if any) as to both dividends and assets. (10) The term exchange shall, whenever occurring in this paragraph, be read as exchange, expenditure, or investment. (c) Distributions; shareholders. Each shareholder who receives stock or securities or other property (including money) upon a distribution made by a corporation in obedience to an order of the Securities and Exchange Commission shall file as a part of his income tax return for the taxable year in which such distribution is received a complete statement of all facts pertinent to the nonrecognition of gain upon such distribution, including-- (1) The name and address of the corporation from which the distribution is received. (2) A statement of the amount of stock or securities or other property received upon the distribution, including (in case the shareholder is a corporation) a statement of all distributions or other disposition made of such stock or securities or other property by the shareholder. The amount of each class of stock or securities and each kind of property shall be stated on the basis of the fair market value thereof at the date of the distribution. (3) If the shareholder is a corporation, a statement showing as to each class of its stock the number of shares and percentage owned by a registered holding company or a majority-owned subsidiary company of a registered holding company, the voting rights and voting power, and the preference (if any) as to both dividends and assets. (d) Distributions; distributing corporations subject to S.E.C. orders. Every corporation making a distribution in obedience to an order of the Securities and Exchange Commission shall file as a part of its income tax return for its taxable year in which the distribution is made a complete statement of all facts pertinent to the nonrecognition of gain to the distributee upon such distribution including-- (1) A copy of the order of the Securities and Exchange Commission, in obedience to which the distribution was made. (2) A certified copy of the corporate resolution authorizing the distribution. (3) A statement of the amount of stock or securities or other property (including money) distributed to each shareholder. The amount of each kind of stock or securities or other property shall be stated on the basis of the fair market value thereof at the date of the distribution. (4) The date of acquisition of the stock or securities distributed, and, if any of such stock or securities were acquired by the distributing corporation in obedience to an order of the Securities and Exchange Commission, a copy of such order. (5) The amount of the undistributed earnings and profits of the corporation accumulated after February 28, 1913, to the time of the distribution, computed in accordance with the last sentence in paragraph (b) of Sec. 1.316-2. (6) A statement showing as to each class of its stock the number of shares and percentage owned by any other corporation, the voting rights and voting power, and the preference (if any) as to both dividends and assets. (e) Sales by members of system groups. Each corporation which is a member of a system group and which in obedience to an order of the Securities and Exchange Commission sells stock or securities received upon an exchange (made in obedience to an order of the Securities and Exchange Commission) and applies the proceeds derived therefrom in retirement or cancellation of its own stock or securities shall file as a part of its income tax return for the taxable year in which the sale is made a complete statement of all facts pertaining [[Page 198]] to the nonrecognition of gain or loss upon such sale, including-- (1) A copy of the order of the Securities and Exchange Commission in obedience to which the sale was made. (2) A copy of the order of the Securities and Exchange Commission in obedience to which the proceeds derived from the sale were applied in whole or in part in the retirement or cancellation of its stock or securities. (3) A certified copy of the corporate resolutions authorizing the sale of the stock or securities and the application of the proceeds derived therefrom. (4) A clear description of the stock or securities sold, including the name and address of the corporation by which they were issued. (5) The date of acquisition of the stock or securities sold, together with a statement of the fair market value of such stock or securities at the date of acquisition, and a copy of all orders of the Securities and Exchange Commission in obedience to which such stock or securities were acquired. (6) The amount of the proceeds derived from such sale. (7) The portion of the proceeds of such sale which was applied in retirement or cancellation of its stock or securities, together with a statement showing how long such stock or securities were outstanding prior to retirement or cancellation. (8) The issuing price of its stock or securities which were retired or canceled. (f) Section 1081 (c)(2) distributions; shareholders. Each shareholder who receives a distribution described in section 1081 (c)(2) (concerning rights to acquire common stock) shall file as a part of his income tax return for the taxable year in which such distribution is received a complete statement of all the facts pertinent to the nonrecognition of gain upon such distribution, including-- (1) The name and address of the corporation from which the distribution is received. (2) A statement of the amount of the rights received upon the distribution, stated on the basis of their fair market value at the date of the distribution. (g) Section 1081 (c)(2) distributions; distributing corporations. Every corporation making a distribution described in section 1081(c)(2) (concerning rights to acquire common stock) shall file as a part of its income tax return for its taxable year in which the distribution is made a complete statement of all facts pertinent to the nonrecognition of gain to the distributees upon such distribution including-- (1) A copy of the arrangement forming the basis for the issuance of the order by the Securities and Exchange Commission. (2) A copy of the order issued by the Securities and Exchange Commission pursuant to section 3 of the Public Utility Holding Company Act of 1935 (15 U.S.C. 79c). (3) A certified copy of the corporate resolution authorizing the arrangement and the distribution. (4) A statement of the amount of the rights distributed to each shareholder, stated on the basis of their fair market value at the date of the distribution. (5) The date of acquisition of the stock with respect to which such rights are distributed, and if any were acquired by the distributing corporation in obedience to an order of the Securities and Exchange Commission, a copy of such order. (6) The amount of the undistributed earnings and profits of the distributing corporation accumulated after February 28, 1913, to the time of the distribution computed in accordance with the last sentence in paragraph (b) of Sec. 1.316-2. (h) General requirements. Permanent records in substantial form shall be kept by every taxpayer who participates in an exchange or distribution to which sections 1081 to 1083, inclusive, are applicable, showing the cost or other basis of the property transferred and the amount of stock or securities and other property (including money) received, in order to facilitate the determination of gain or loss from a subsequent disposition of such stock or securities and other property received on the exchange or distribution.