### Question
How does Income Taxes define collapsible corporation?


### Answer
Under *26 U.S.C. § 341*, **collapsible corporation** is defined as:

> a corporation formed or availed of principally for the manufacture, construction, or production of property, for the purchase of property which (in the hands of the corporation) is property described in paragraph (3), or for the holding of stock in a corporation so formed or availed of, with a view to—


(A) the sale or exchange of stock by its shareholders (whether in liquidation or otherwise), or a distribution to its shareholders, before the realization by the corporation manufacturing, constructing, producing, or purchasing the property of 2/3 of the taxable income to be derived from such property, and


(B) the realization by such shareholders of gain attributable to such property

#### Citation:
  - *26 U.S.C. § 341*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter C-Corporate Distributions and Adjustments > PART II-CORPORATE LIQUIDATIONS > Subpart C-Collapsible Corporations**

