26 CFR §1.305-2

1. (a)In general. Under section 305(b)(1), if any shareholder has the right to an election or option with respect to whether a distribution shall be made either in money or any other property, or in stock or rights to acquire stock of the distributing corporation, then, with respect to all shareholders, the distribution of stock or rights to acquire stock is treated as a distribution of property to which section 301 applies regardless of—
   1. (1)Whether the distribution is actually made in whole or in part in stock or in stock rights;
   2. (2)Whether the election or option is exercised or exercisable before or after the declaration of the distribution;
   3. (3)Whether the declaration of the distribution provides that the distribution will be made in one medium unless the shareholder specifically requests payment in the other;
   4. (4)Whether the election governing the nature of the distribution is provided in the declaration of the distribution or in the corporate charter or arises from the circumstances of the distribution; or
   5. (5)Whether all or part of the shareholders have the election.
2. (b)Examples. The application of section 305(b)(1) may be illustrated by the following examples: