26 U.S.C. § 307
Section 307 · Basis of stock and stock rights acquired in distributions
Amended 2 times on record
Applied in 11 court decisions — leading case Vukich v. United States (1928)
Most recently applied in Magness v. Commissioner (September 1965)
How often courts cite this section
Court decisions citing this, by year.Markers show enactment, consequential amendments, and circuit splits over this section — watch for a citation surge after a change or a disagreement. The dip in the last several years is a data-coverage gap, not a real trend — our corpus holds fewer opinions from the most recent years, so recent citations are undercounted.
If a shareholder in a corporation receives its stock or rights to acquire its stock (referred to in this subsection as “new stock”) in a distribution to which section 305(a) applies, then the basis of such new stock and of the stock with respect to which it is distributed (referred to in this section as “old stock”), respectively, shall, in the shareholder's hands, be determined by allocating between the old stock and the new stock the adjusted basis of the old stock. Such allocation shall be made under regulations prescribed by the Secretary.
(1) In general
If—
(A) a corporation distributes rights to acquire its stock to a shareholder in a distribution to which section 305(a) applies, and
(B) the fair market value of such rights at the time of the distribution is less than 15 percent of the fair market value of the old stock at such time,
then subsection (a) shall not apply and the basis of such rights shall be zero, unless the taxpayer elects under paragraph (2) of this subsection to determine the basis of the old stock and of the stock rights under the method of allocation provided in subsection (a).
(2) Election
The election referred to in paragraph (1) shall be made in the return filed within the time prescribed by law (including extensions thereof) for the taxable year in which such rights were received. Such election shall be made in such manner as the Secretary may by regulations prescribe, and shall be irrevocable when made.
For basis of stock and stock rights distributed before June 22, 1954, see section 1052.
Editorial notes U.S. Code · Office of the Law Revision Counsel
Amendments
1976—Subsecs. (a), (b)(2). Pub. L. 94–455 struck out “or his delegate” after “Secretary”.
Cross References
Capital gains and losses, determination of period for which taxpayer has held stock or rights to acquire stock received on a distribution, if basis is determined under this section, see section 1223 of this title.
Corporate—
Liquidations, basis of property received in corporate liquidations, see section 334 of this title.
Organizations, basis to distributees, see section 358 of this title.
Effect on earnings and profits of receipt of tax free distributions, see section 312 of this title.