For Tax Professionals  
T.D. 8724 October 21, 1997

Section 1059 Extraordinary Dividends

[4830-01-u] DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [TD 8724] RIN 1545-AU16

TITLE: Section 1059 Extraordinary Dividends

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final regulations.

SUMMARY: This document contains final regulations under section 1059(e) of the Internal Revenue Code. The final regulations clarify that certain distributions in redemption of stock held by a corporate shareholder are treated as extraordinary dividends notwithstanding provisions that otherwise might exempt the distributions from extraordinary dividend treatment. Corporations that receive a distribution in redemption of stock may be affected if the redemption is either part of a partial liquidation of the redeeming corporation or is not pro rata as to all shareholders. The final regulations also provide that section 1059(e)(1) applies to certain exchanges described in section 356.

DATES: This regulation is effective July 16, 1997. For date of applicability, see 1.1059(e)-1(c).

FOR FURTHER INFORMATION CONTACT: Richard K. Passales, (202) 622-7530 (not a toll-free number).

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