### Question
What is the definition of operating corporation?


### Answer
The definition of **operating corporation** is as follows in *26 U.S.C. § 1042*:

> a corporation more than 50 percent of the assets of which were, at the time the security was purchased or before the close of the replacement period, used in the active conduct of the trade or business

#### Citation:
  - *26 U.S.C. § 1042*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter O-Gain or Loss on Disposition of Property > PART III-COMMON NONTAXABLE EXCHANGES**

