26 CFR § 1.305-4 - Distributions of common and preferred stock.

---
identifier: "/us/cfr/t26/s1.305-4"
source: "ecfr"
legal_status: "authoritative_unofficial"
title: "26 CFR § 1.305-4 - Distributions of common and preferred stock."
title_number: 26
title_name: "Internal Revenue"
section_number: "1.305-4"
section_name: "Distributions of common and preferred stock."
chapter_name: "INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY"
subchapter_number: "A"
subchapter_name: "INCOME TAX"
part_number: "1"
part_name: "INCOME TAXES"
positive_law: false
currency: "2026-04-05"
last_updated: "2026-04-05"
format_version: "1.1.0"
generator: "[email protected]"
authority: "26 U.S.C. 7805, unless otherwise noted."
regulatory_source: "T.D. 6500, 25 FR 11402, Nov. 26, 1960; 25 FR 14021, Dec. 21, 1960; T.D. 9989, 89 FR 17606, Mar. 11, 2024, unless otherwise noted."
cfr_part: "1"
---


# 1.305-4 Distributions of common and preferred stock.

(a) *In general.* Under section 305(b)(3), a distribution (or a series of distributions) by a corporation which results in the receipt of preferred stock whether or not convertible into common stock) by some common shareholders and the receipt of common stock by other common shareholders is treated as a distribution of property to which section 301 applies. For the meaning of the term *a series of distribution,* see subparagraphs (1) through (6) of § 1.305-3(b).

(b) *Examples.* The application of section 305(b)(3) may be illustrated by the following examples:

[T.D. 7281, 38 FR 18536, July 12, 1973]