26 CFR Part 13 — Temporary Income Tax Regulations Under the Tax Reform Act of 1969

PART 13—TEMPORARY INCOME TAX REGULATIONS UNDER THE TAX REFORM ACT OF 1969 Authority: 26 U.S.C. 7805. §§ 13.0-13.9 [Reserved] § 13.10 Distribution of money in lieu of fractional shares. (a) In general. (2) The general rule, and not the exception, applies in the case where cash is distributed in lieu of fractional shares to which the shareholders would otherwise be entitled, provided the purpose in distributing the cash is to save the distributing corporation the trouble, expense, and inconvenience of issuing and transferring fractional shares (or scrip representing fractional shares), or issuing full shares representing the sum of fractional shares, and not to give any particular group of shareholders an increased interest in the assets or earnings and profits of the corporation. (b) Illustration. Example. Corporation X is a large corporation whose stock is widely held by the public, no one shareholder owning more than 10 percent of the outstanding stock. The stock is listed on a recognized exchange and is currently selling at less than $75 per share. During the year the corporation pays a 3-percent stock dividend. Cash is paid to each shareholder in lieu of a fractional share to which he would otherwise be entitled. The distribution of cash in lieu of fractional shares is not intended to give any particular group of shareholders an increased interest in the assets or earnings and profits of the corporation, but is intended to save the corporation the trouble, expense, and inconvenience of issuing and transferring scrip representing fractional shares. The general rule, and not the exception, applies in this situation. (Sec. 305(c), 83 Stat. 614; 26 U.S.C. 305(c)) [T.D. 7039, 35 FR 7012, May 2, 1970] § 13.11 Revocation of election to report income on the installment basis. (a) In general. (b) Time and manner of revoking election. [T.D. 7044, 35 FR 8823, June 6, 1970]

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