Collapse to view only § 4501. Repurchase of corporate stock
§ 4501. Repurchase of corporate stock
(a) General rule
(b) Covered corporation
(c) Repurchase
For purposes of this section—
(1) In general
The term “repurchase” means—
(A) a redemption within the meaning of section 317(b) with regard to the stock of a covered corporation, and
(B) any transaction determined by the Secretary to be economically similar to a transaction described in subparagraph (A).
(2) Treatment of purchases by specified affiliates
(A) In general
(B) Specified affiliate
For purposes of this section, the term “specified affiliate” means, with respect to any corporation—
(i) any corporation more than 50 percent of the stock of which is owned (by vote or by value), directly or indirectly, by such corporation, and
(ii) any partnership more than 50 percent of the capital interests or profits interests of which is held, directly or indirectly, by such corporation.
(3) Adjustment
(d) Special rules for acquisition of stock of certain foreign corporations
(1) In general
In the case of an acquisition of stock of an applicable foreign corporation by a specified affiliate of such corporation (other than a foreign corporation or a foreign partnership (unless such partnership has a domestic entity as a direct or indirect partner)) from a person who is not the applicable foreign corporation or a specified affiliate of such applicable foreign corporation, for purposes of this section—
(A) such specified affiliate shall be treated as a covered corporation with respect to such acquisition,
(B) such acquisition shall be treated as a repurchase of stock of a covered corporation by such covered corporation, and
(C) the adjustment under subsection (c)(3) shall be determined only with respect to stock issued or provided by such specified affiliate to employees of the specified affiliate.
(2) Surrogate foreign corporations
In the case of a repurchase of stock of a covered surrogate foreign corporation by such covered surrogate foreign corporation, or an acquisition of stock of a covered surrogate foreign corporation by a specified affiliate of such corporation, for purposes of this section—
(A) the expatriated entity with respect to such covered surrogate foreign corporation shall be treated as a covered corporation with respect to such repurchase or acquisition,
(B) such repurchase or acquisition shall be treated as a repurchase of stock of a covered corporation by such covered corporation, and
(C) the adjustment under subsection (c)(3) shall be determined only with respect to stock issued or provided by such expatriated entity to employees of the expatriated entity.
(3) Definitions
For purposes of this subsection—
(A) Applicable foreign corporation
(B) Covered surrogate foreign corporation
(C) Expatriated entity
(e) Exceptions
Subsection (a) shall not apply—
(1) to the extent that the repurchase is part of a reorganization (within the meaning of section 368(a)) and no gain or loss is recognized on such repurchase by the shareholder under chapter 1 by reason of such reorganization,
(2) in any case in which the stock repurchased is, or an amount of stock equal to the value of the stock repurchased is, contributed to an employer-sponsored retirement plan, employee stock ownership plan, or similar plan,
(3) in any case in which the total value of the stock repurchased during the taxable year does not exceed $1,000,000,
(4) under regulations prescribed by the Secretary, in cases in which the repurchase is by a dealer in securities in the ordinary course of business,
(5) to repurchases by a regulated investment company (as defined in section 851) or a real estate investment trust, or
(6) to the extent that the repurchase is treated as a dividend for purposes of this title.
(f) Regulations and guidance
The Secretary shall prescribe such regulations and other guidance as are necessary or appropriate to carry out, and to prevent the avoidance of, the purposes of this section, including regulations and other guidance—
(1) to prevent the abuse of the exceptions provided by subsection (e),
(2) to address special classes of stock and preferred stock, and
(3) for the application of the rules under subsection (d).
(Added Pub. L. 117–169, title I, § 10201(a), Aug. 16, 2022, 136 Stat. 1829.)