Reg. § 1.304-1 General.
(a) Except as provided in of this section, section is applicable where a shareholder sells stock of one corporation to a related corporation as defined in section . Sales to which section is applicable shall be treated as redemptions subject to sections and .
(b) In the case of—
(1) Any acquisition of stock described in section which occurred before June 22, 1954, and
(2) Any acquisition of stock described in section which occurred on or after June 22, 1954, and on or before December 31, 1958, pursuant to a contract entered into before June 22, 1954.
The extent to which the property received in return for such acquisition shall be treated as a dividend shall be determined as if the Internal Revenue Code of 1939 continued to apply in respect of such acquisition and as if the Internal Revenue Code of 1954 had not been enacted. See section 391. In cases to which this paragraph applies, the basis of the stock received by the acquiring corporation shall be determined as if the Internal Revenue Code of 1939 continued to apply in respect of such acquisition and as if the Internal Revenue Code of 1954 had not been enacted.
[T.D. 6533, 26 FR 401, Jan. 19, 1961]