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26 USC § 331 - Gain or loss to shareholder in corporate liquidations 

---
identifier: "/us/usc/t26/s331"
source: "usc"
legal_status: "official_prima_facie"
title: "26 USC § 331 - Gain or loss to shareholder in corporate liquidations"
title_number: 26
title_name: "INTERNAL REVENUE CODE"
section_number: "331"
section_name: "Gain or loss to shareholder in corporate liquidations"
chapter_number: 1
chapter_name: "NORMAL TAXES AND SURTAXES"
subchapter_number: "C"
subchapter_name: "Corporate Distributions and Adjustments"
part_number: "II"
part_name: "CORPORATE LIQUIDATIONS"
positive_law: false
currency: "119-84"
last_updated: "2026-04-17"
format_version: "1.1.0"
generator: "[email protected]"
source_credit: "(Aug. 16, 1954, ch. 736, 68A Stat. 101; Pub. L. 88–272, title II, § 225(f)(2), Feb. 26, 1964, 78 Stat. 88; Pub. L. 94–455, title XIX, § 1901(b)(28)(A), Oct. 4, 1976, 90 Stat. 1799; Pub. L. 97–248, title II, § 222(a), (e)(1)(B), Sept. 3, 1982, 96 Stat. 478, 480; Pub. L. 115–141, div. U, title IV, § 401(a)(63), Mar. 23, 2018, 132 Stat. 1187.)"
---

# § 331. Gain or loss to shareholder in corporate liquidations

**(a)** **Distributions in complete liquidation treated as exchanges** Amounts received by a shareholder in a distribution in complete liquidation of a corporation shall be treated as in full payment in exchange for the stock.

**(b)** **Nonapplication of section 301** Section 301 (relating to effects on shareholder of distributions of property) shall not apply to any distribution of property (other than a distribution referred to in paragraph (2)(B) of section 316(b)) in complete liquidation.

**(c)** **Cross reference** For general rule for determination of the amount of gain or loss recognized, see section 1001.

---

**Source Credit**: (Aug. 16, 1954, ch. 736, 68A Stat. 101; Pub. L. 88–272, title II, § 225(f)(2), Feb. 26, 1964, 78 Stat. 88; Pub. L. 94–455, title XIX, § 1901(b)(28)(A), Oct. 4, 1976, 90 Stat. 1799; Pub. L. 97–248, title II, § 222(a), (e)(1)(B), Sept. 3, 1982, 96 Stat. 478, 480; Pub. L. 115–141, div. U, title IV, § 401(a)(63), Mar. 23, 2018, 132 Stat. 1187.)

## Editorial Notes

### Amendments

2018— substituted “shareholder” for “shareholders” in section catchline.

1982—Subsec. (a). , substituted provisions that amounts received by a shareholder in a distribution in complete liquidation of a corporation shall be treated as in full payment in exchange for the stock for provisions that, in complete liquidations, amounts distributed shall be treated as in full payment in exchange for the stock, while amounts distributed in partial liquidation shall be treated as in part or full payment in exchange for the stock.

Subsec. (b). , struck out “partial or” before “complete liquidation”.

1976—Subsec. (c).  substituted “reference” for “references” in heading and struck out cross reference relating to general rule for determination of the amount of gain or loss to the distributee and substituted “section 1001” for “section 1002”.

1964—Subsec. (b).  inserted “(other than a distribution referred to in paragraph (2)(B) of section 316(b))”.

## Statutory Notes and Related Subsidiaries

### Effective Date of 1982 Amendment

Amendment by  applicable to distributions after , with exceptions for certain partial liquidations, see , set out as a note under .

### Effective Date of 1976 Amendment

Amendment by  effective for taxable years beginning after , see , set out as a note under .

### Effective Date of 1964 Amendment

Amendment by  applicable to distribution made in any taxable year of the distributing corporation beginning after , see section 225() of , set out as a note under .

### Liquidations Before January 1, 1966

, , , provided that in the case of corporations referred to in former subsec. (g)(3) of this section the amendments made by  do not apply if there is a complete liquidation of such corporation and if the distribution of all the property under such liquidation occurs before , except for certain liquidations to which  applies.