The law follows:
No deduction shall be allowed in respect of any loss from the sale or exchange of property, directly or indirectly, between persons specified in any of the paragraphs of subsection (b).
267(b)(1) Members of a family, as defined in subsection (c)(4);
267(b)(2) An individual and a corporation more than 50 percent in value of the outstanding stock of which is owned, directly or indirectly, by or for such individual;
267(b)(3) Two corporations which are members of the same controlled group (as defined in subsection (f));
267(b)(4) A grantor and a fiduciary of any trust;
267(b)(5) A fiduciary of a trust and a fiduciary of another trust, if the same person is a grantor of both trusts;
267(b)(6) A fiduciary of a trust and a beneficiary of such trust;
267(b)(7) A fiduciary of a trust and a beneficiary of another trust, if the same person is a grantor of both trusts;
267(b)(8) A fiduciary of a trust and a corporation more than 50 percent in value of the outstanding stock of which is owned, directly or indirectly, by or for the trust or by or for a person who is a grantor of the trust;
267(b)(9) A person and an organization to which section 501 (relating to certain educational and charitable organizations which are exempt from tax) applies and which is controlled directly or indirectly by such person or (if such person is an individual) by members of the family of such individual;
267(b)(10) A corporation and a partnership if the same persons own--
267(b)(10)(A) more than 50 percent in value of the outstanding stock of the corporation, and
267(b)(10)(B) more than 50 percent of the capital interest, or the profits interest, in the partnership;
267(b)(11) An S corporation and another S corporation if the same persons own more than 50 percent in value of the outstanding stock of each corporation;
267(b)(12) An S corporation and a C corporation, if the same persons own more than 50 percent in value of the outstanding stock of each corporation; or
267(b)(13) Except in the case of a sale or exchange in satisfaction of a pecuniary bequest, an executor of an estate and a beneficiary of such estate.
267(c) Constructive Ownership Of Stock
For purposes of determining, in applying subsection (b), the ownership of stock--
267(c)(1) Stock owned, directly or indirectly, by or for a corporation, partnership, estate, or trust shall be considered as being owned proportionately by or for its shareholders, partners, or beneficiaries;
267(c)(2) An individual shall be considered as owning the stock owned, directly or indirectly, by or for his family;
267(c)(3) An individual owning (otherwise than by the application of paragraph (2)) any stock in a corporation shall be considered as owning the stock owned, directly or indirectly, by or for his partner;
267(c)(4) The family of an individual shall include only his brothers and sisters (whether by the whole or half blood), spouse, ancestors, and lineal descendants; and
267(c)(5) Stock constructively owned by a person by reason of the application of paragraph (1) shall, for the purpose of applying paragraph (1), (2), or (3), be treated as actually owned by such person, but stock constructively owned by an individual by reason of the application of paragraph (2) or (3) shall not be treated as owned by him for the purpose of again applying either of such paragraphs in order to make another the constructive owner of such stock. |
