[Code of Federal Regulations]
[Title 26, Volume 4]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.303-3]

[Page 19-20]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.303-3  Application of other sections.

    (a) The sole effect of section 303 is to exempt from tax as a 
dividend a distribution to which such section is applicable when made in 
redemption of stock includible in a decedent's gross estate. Such 
section does not, however, in any other manner affect the principles set 
forth in sections 302 and 306.

[[Page 20]]

Thus, if stock of a corporation is owned equally by A, B, and the C 
Estate, and the corporation redeems one-half of the stock of each 
shareholder, the determination of whether the distributions to A and B 
are essentially equivalent to dividends shall be made without regard to 
the effect which section 303 may have upon the taxability of the 
distribution to the C Estate.
    (b) See section 304 relative to redemption of stock through the use 
of related corporations.