Sec. 311. Taxability of corporation on distribution
    (a) General rule
      Except as provided in subsection (b), no gain or loss shall be
    recognized to a corporation on the distribution (not in complete
    liquidation) with respect to its stock of -
        (1) its stock (or rights to acquire its stock), or
        (2) property.
    (b) Distributions of appreciated property
      (1) In general
        If -
          (A) a corporation distributes property (other than an
        obligation of such corporation) to a shareholder in a
        distribution to which subpart A applies, and
          (B) the fair market value of such property exceeds its
        adjusted basis (in the hands of the distributing corporation),
      then gain shall be recognized to the distributing corporation as
      if such property were sold to the distributee at its fair market
      (2) Treatment of liabilities
        Rules similar to the rules of section 336(b) shall apply for
      purposes of this subsection.
      (3) Special rule for certain distributions of partnership or
          trust interests
        If the property distributed consists of an interest in a
      partnership or trust, the Secretary may by regulations provide
      that the amount of the gain recognized under paragraph (1) shall
      be computed without regard to any loss attributable to property
      contributed to the partnership or trust for the principal purpose
      of recognizing such loss on the distribution.