[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: 26CFR1.1081-3]

[Page 190-191]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.1081-3  Exchanges of stock or securities solely for stock or 
securities.

    The exchange, without the recognition of gain or loss, that is 
provided for in section 1081 (a) must be one in which stock or 
securities in a corporation which is a registered holding company or a 
majority-owned subsidiary company are exchanged solely for stock or 
securities other than stock or securities which constitute nonexempt 
property. An exchange is not within the provisions of section 1081 (a) 
unless the stock or securities transferred and those received are stock 
or securities as defined by section 1083 (f). The stock or securities 
which may be received without the recognition of gain or loss are not 
limited to stock or securities in the corporation from which they are 
received. An exchange within the provisions of section 1081 (a) may be a 
transaction between the holder of stock or securities and the 
corporation which issued the stock or securities. Also the exchange may 
be made by a holder of stock or securities with an associate company 
(i.e., a corporation in the same holding company system with the issuing 
corporation) which is a registered holding company or a majority-owned 
subsidiary company. In either case, the nonrecognition provisions of 
section 1081 (a) apply only to the holder of the stock or securities. 
However, the transferee corporation must be acting in obedience to an 
order of the Securities and Exchange Commission directed to such 
corporation, if no gain or loss is to be recognized to the holder of the 
stock or securities

[[Page 191]]

who makes the exchange with such corporation. See also section 1081(b), 
in case the holder of the stock or securities is a registered holding 
company or an associate company of a registered holding company. An 
exchange is not within the provisions of section 1081(a) if it is within 
the provisions of section 1081(d), relating to transfers within a system 
group. For treatment when nonexempt property is received, see section 
1081(e); for further limitations, see section 1081(f).