[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: 26CFR1.381(b)-1]

[Page 361-362]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.381(b)-1  Operating rules applicable to carryovers in certain 
corporate acquisitions.

    (a) Closing of taxable year--(1) In general. Except in the case of 
certain reorganizations qualifying under section 368(a)(1)(F), the 
taxable year of the distributor or transferor corporation shall end with 
the close of the date of distribution or transfer. With regard to the 
closing of the taxable year of the transferor corporation in certain 
reorganizations under section 368(a)(1)(F) involving a foreign 
corporation after December 31, 1986, see Sec. Sec. 1.367(a)-1T(e) and 
1.367(b)-2(f).
    (2) Reorganizations under section 368(a)(1)(F). In the case of a 
reorganization qualifying under section 368(a)(1)(F) (whether or not 
such reorganization also qualifies under any other provision of section 
368(a)(1)), the acquiring corporation shall be treated (for purposes of 
section 381) just as the transferor corporation would have been treated 
if there had been no reorganization. Thus, the taxable year of the 
transferor corporation shall not end on the date of transfer merely 
because of the transfer; a net operating loss of the acquiring 
corporation for any taxable year ending after the date of transfer shall 
be carried back in accordance with section 172(b) in computing the 
taxable income of the transferor corporation for a taxable year ending 
before the date of transfer; and the tax attributes of the transferor 
corporation enumerated in section 381(c) shall be taken into account by 
the acquiring corporation as if there had been no reorganization.
    (b) Date of distribution or transfer. (1) The date of distribution 
or transfer shall be that day on which are distributed or transferred 
all those properties of the distributor or transferor corporation which 
are to be distributed or transferred pursuant to a liquidation or 
reorganization described in paragraph (b)(1) of Sec. 1.381(a)-1. If the 
distribution or transfer of all such properties is not made on one day, 
then, except as provided in subparagraph (2) of this paragraph, the date 
of distribution or transfer shall be that day on which the distribution 
or transfer of all such properties is completed.
    (2) If the distributor or transferor and acquiring corporations file 
the statements described in subparagraph (3) of this paragraph, the date 
of distribution or transfer shall be that day as of which (i) 
substantially all of the properties to be distributed or transferred 
have been distributed or transferred, and (ii) the distributor or 
transferor corporation has ceased all operations (other than liquidating 
activities). Such day also shall be the date of distribution or transfer 
if the completion of the distribution or transfer is unreasonably 
postponed beyond the date as of which substantially all the properties 
to be distributed or transferred have been distributed or transferred 
and the distributor or transferor corporation has ceased all operations 
other than liquidating activities. A corporation shall be considered to 
have distributed or transferred substantially all of its properties to 
be distributed or transferred even though it retains money or other 
property in a reasonable amount to pay outstanding debts or preserve the 
corporation's legal existence. A corporation shall be considered to have 
ceased all operations, other than liquidating activities, when it ceases 
to be a going concern and its activities are merely for the purpose of 
winding up its affairs, paying its debts, and distributing any remaining 
balance of its money or other properties to its shareholders.
    (3) The statements referred to in subparagraph (2) of this paragraph 
shall specify the day considered to be the date of distribution or 
transfer and shall specify, as of such date (i) the nature and amount of 
the total assets which were distributed or transferred and the dates so 
distributed or transferred, (ii) the nature and amount of the assets not 
distributed or transferred and the purpose for which they were retained, 
and (iii) the date on which the distributor or transferor corporation 
ceased all operations other than liquidating activities. Such statements 
shall be attached to the timely filed income tax return of the 
distributor or transferor corporation for its taxable year ending with 
such date of distribution or transfer and to the timely filed income tax 
return of the

[[Page 362]]

acquiring corporation for its first taxable year ending after such date, 
except that, with respect to any income tax return filed before October 
11, 1960, any such statement shall be filed before October 11, 1960, 
with the district director with whom such return is filed.
    (4) If--
    (i) The last day of the acquiring corporation's taxable year is a 
Saturday, Sunday, or legal holiday, and
    (ii) The day specified in subparagraph (1) or (2) of this paragraph 
as the date of distribution or transfer is the last business day before 
such Saturday, Sunday, or holiday,

then the last day of the acquiring corporation's taxable year shall be 
the date of distribution or transfer for purposes of section 381(b) and 
this section. For purposes of this subparagraph, the term business day 
means a day which is not a Saturday, Sunday, or legal holiday, and also 
means a Saturday, Sunday, or legal holiday if the date of distribution 
or transfer determined under subparagraph (1) or (2) of this paragraph 
is such Saturday, Sunday, or holiday.
    (c) Return of distributor or transferor corporation. The distributor 
or transferor corporation shall file an income tax return for the 
taxable year ending with the date of distribution or transfer described 
in paragraph (b) of this section. If the distributor or transferor 
corporation remains in existence after such date of distribution or 
transfer, it shall file an income tax return for the taxable year 
beginning on the day following the date of distribution or transfer and 
ending with the date on which the distributor or transferor 
corporation's taxable year would have ended if there had been no 
distribution or transfer.
    (d) Carryback of net operating losses. For provisions relating to 
the carryback of net operating losses of the acquiring corporation, see 
paragraph (b) of Sec. 1.381(c)(1)-1.

[T.D. 6500, 25 FR 11607, Nov. 26, 1960, as amended at T.D. 8280, 55 FR 
1417, Jan. 16, 1990; T.D. 8862, 65 FR 3609, Jan. 24, 2000]