[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: 26CFR1.356-6]

[Page 235]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.356-6  Rules for treatment of nonqualified preferred stock as 
other property.

    (a) In general. For purposes of Sec. Sec. 1.354-1(e), 1.355-1(c), 
and 1.356-3(b), the terms stock and securities do not include--
    (1) Nonqualified preferred stock, as defined in section 351(g)(2), 
received in exchange for (or in a distribution with respect to) stock, 
or a right to acquire stock, other than nonqualified preferred stock; or
    (2) A right to acquire such nonqualified preferred stock, received 
in exchange for (or in a distribution with respect to) stock, or a right 
to acquire stock, other than nonqualified preferred stock.
    (b) Exceptions. The following exceptions apply:
    (1) Certain recapitalizations. Paragraph (a) of this section does 
not apply in the case of a recapitalization under section 368(a)(1)(E) 
of a family-owned corporation as described in section 
354(a)(2)(C)(ii)(II).
    (2) Transition rule. Paragraph (a) of this section does not apply to 
a transaction described in section 1014(f)(2) of the Taxpayer Relief Act 
of 1997 (111 Stat. 921).
    (c) Effective date. This section applies to nonqualified preferred 
stock, or a right to acquire such stock, received in connection with a 
transaction occurring on or after March 9, 1998.

[T.D. 8753, 63 FR 411, Jan. 6, 1998. Redesignated by T.D. 8882, 65 FR 
31078, May 16, 2000]