{"data":{"id":"us/26-cfr-1.997-1","jurisdiction":"us","citation":"26 CFR 1.997-1","heading":"-1 Special rules for subchapter C of the Code.","body":"(a) For purposes of applying the provisions of sections 301 through 395 of the Code, any distribution in property to a corporation by a DISC, or former DISC, which is made out of previously taxed income or accumulated DISC income shall be treated as a distribution in the same amount as if such distribution of property were made to an individual, and have a basis, in the hands of the recipient corporation, equal to such amount treated as having been distributed.\n(b) This section may be illustrated by the following example:\nExample.\nX Corporation is the sole shareholder of Y Corporation which is a DISC. Y makes an actual distribution of property to X with respect to X's stock in Y. The property has a basis of $50 and a fair market value of $100. The distribution is treated as made out of accumulated DISC income under section 996(a) and is taxable as a dividend under section 301(c)(1). Even though X is a corporation, the amount of the distribution is $100 notwithstanding the provisions of section 301(b)(1)(B) and the basis the property in X's hands is $100 notwithstanding the provisions of section 301(d)(2).","path":["Title 26—Internal Revenue","CHAPTER I—INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY","SUBCHAPTER A—INCOME TAX","PART 1—INCOME TAXES"],"source_url":"https://www.ecfr.gov/api/versioner/v1/full/2026-08-25/title-26.xml","current_through":"2026-08-25","vintage":"","retrieved_at":"2026-08-27T02:25:11Z","sha256":"f4a206b023e3d0e2087092f2f0c8c4b18dd530ed8acd94420c288d0c1042cf00","source_id":"us-cfr","stale":true,"prev":"us/26-cfr-1.996-8","next":"us/26-cfr-1.998-1.1000"},"notice":"GroundRules: Original legal text. Not legal advice."}