[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: 26CFR1.1081-8]

[Page 195]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.1081-8  Exchanges in which money or other nonexempt property is 
received.

    (a) Under section 1081(e)(1), if in any exchange (not within any of 
the provisions of section 1081(d)) in which stock or securities in a 
corporation which is a registered holding company or a majority-owned 
subsidiary are exchanged for stock or securities as provided for in 
section 1081 (a), there is received by the taxpayer money or other 
nonexempt property (in addition to property permitted to be received 
without recognition of gain), then--
    (1) The gain, if any, to the taxpayer is to be recognized in an 
amount not in excess of the sum of the money and the fair market value 
of the other nonexempt property, but
    (2) The loss, if any, to the taxpayer from such an exchange is not 
to be recognized to any extent.
    (b) If money or other nonexempt property is received from a 
corporation in an exchange described in paragraph (a) of this section 
and if the distribution of such money or other nonexempt property by or 
on behalf of such corporation has the effect of the distribution of a 
taxable dividend, then, as provided in section 1081 (e)(2), there shall 
be taxed to each distributee (1) as a dividend, such an amount of the 
gain recognized on the exchange as is not in excess of the distributee's 
ratable share of the undistributed earnings and profits of the 
corporation accumulated after February 28, 1913, and (2) the remainder 
of the gain so recognized shall be taxed as a gain from the exchange of 
property.