Us Code § 5261 - Gain or loss from sale or exchange of certain preferred stock

Full text of Us Code United States Code § 5261 — Gain or loss from sale or exchange of certain preferred stock, with citation guidance and answers to common questions.

§ 5261. Gain or loss from sale or exchange of certain preferred stock

(a) In general

For purposes of title 26, gain or loss from the sale or exchange of any applicable preferred stock by any applicable financial institution shall be treated as ordinary income or loss.

(b) Applicable preferred stock

For purposes of this section, the term "applicable preferred stock" means any stock—

(1) which is preferred stock in—

(A) the Federal National Mortgage Association, established pursuant to the Federal National Mortgage Association Charter Act (12 U.S.C. 1716 et seq.), or

(B) the Federal Home Loan Mortgage Corporation, established pursuant to the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1451 et seq.), and


(2) which—

(A) was held by the applicable financial institution on September 6, 2008, or

(B) was sold or exchanged by the applicable financial institution on or after January 1, 2008, and before September 7, 2008.

(c) Applicable financial institution

For purposes of this section:

(1) In general

Except as provided in paragraph (2), the term "applicable financial institution" means—

(A) a financial institution referred to in section 582(c)(2) of title 26, or

(B) a depository institution holding company (as defined in section 1813(w)(1) of this title).

(2) Special rules for certain sales

In the case of—

(A) a sale or exchange described in subsection (b)(2)(B), an entity shall be treated as an applicable financial institution only if it was an entity described in subparagraph (A) or (B) of paragraph (1) at the time of the sale or exchange, and

(B) a sale or exchange after September 6, 2008, of preferred stock described in subsection (b)(2)(A), an entity shall be treated as an applicable financial institution only if it was an entity described in subparagraph (A) or (B) of paragraph (1) at all times during the period beginning on September 6, 2008, and ending on the date of the sale or exchange of the preferred stock.

(d) Special rule for certain property not held on September 6, 2008

The Secretary of the Treasury or the Secretary's delegate may extend the application of this section to all or a portion of the gain or loss from a sale or exchange in any case where—

(1) an applicable financial institution sells or exchanges applicable preferred stock after September 6, 2008, which the applicable financial institution did not hold on such date, but the basis of which in the hands of the applicable financial institution at the time of the sale or exchange is the same as the basis in the hands of the person which held such stock on such date, or

(2) the applicable financial institution is a partner in a partnership which—

(A) held such stock on September 6, 2008, and later sold or exchanged such stock, or

(B) sold or exchanged such stock during the period described in subsection (b)(2)(B).

(e) Regulatory authority

The Secretary of the Treasury or the Secretary's delegate may prescribe such guidance, rules, or regulations as are necessary to carry out the purposes of this section.

(f) Effective date

This section shall apply to sales or exchanges occurring after December 31, 2007, in taxable years ending after such date.

(Pub. L. 110–343, div. A, title III, §301, Oct. 3, 2008, 122 Stat. 3802.)


Editorial Notes

References in Text

The Federal National Mortgage Association Charter Act, referred to in subsec. (b)(1)(A), is title III of act June 27, 1934, ch. 847, 48 Stat. 1252, which is classified generally to subchapter III (§1716 et seq.) of chapter 13 of this title. For complete classification of this Act to the Code, see Short Title note set out under section 1716 of this title and Tables.

The Federal Home Loan Mortgage Corporation Act, referred to in subsec. (b)(1)(B), is title III of Pub. L. 91–351, July 24, 1970, 84 Stat. 451, which is classified generally to chapter 11A (§1451 et seq.) of this title. For complete classification of this Act to the Code, see Short Title and Statement of Purpose note set out under section 1451 of this title and Tables.

CHAPTER 53—WALL STREET REFORM AND CONSUMER PROTECTION

Sec.
5301.
Definitions.
5302.
Severability.
5303.
Antitrust savings clause.

        

SUBCHAPTER I—FINANCIAL STABILITY

5311.
Definitions.

        

Part A—Financial Stability Oversight Council

5321.
Financial Stability Oversight Council established.
5322.
Council authority.
5323.
Authority to require supervision and regulation of certain nonbank financial companies.
5324.
Registration of nonbank financial companies supervised by the Board of Governors.
5325.
Enhanced supervision and prudential standards for nonbank financial companies supervised by the Board of Governors and certain bank holding companies.
5326.
Reports.
5327.
Treatment of certain companies that cease to be bank holding companies.
5328.
Council funding.
5329.
Resolution of supervisory jurisdictional disputes among member agencies.
5330.
Additional standards applicable to activities or practices for financial stability purposes.
5331.
Mitigation of risks to financial stability.
5332.
GAO audit of Council.
5333.
Study of the effects of size and complexity of financial institutions on capital market efficiency and economic growth.
5334.
Data standards.
5335.
Open data publication.

        

Part B—Office of Financial Research

5341.
Definitions.
5342.
Office of Financial Research established.
5343.
Purpose and duties of the Office.
5344.
Organizational structure; responsibilities of primary programmatic units.
5345.
Funding.
5346.
Transition oversight.

        

Part C—Additional Board of Governors Authority for Certain Nonbank Financial Companies and Bank Holding Companies

5361.
Reports by and examinations of nonbank financial companies by the Board of Governors.
5362.
Enforcement.
5363.
Acquisitions.
5364.
Prohibition against management interlocks between certain financial companies.
5365.
Enhanced supervision and prudential standards for nonbank financial companies supervised by the Board of Governors and certain bank holding companies.
5366.
Early remediation requirements.
5367.
Affiliations.
5368.
Regulations.
5369.
Avoiding duplication.
5370.
Safe harbor.
5371.
Leverage and risk-based capital requirements.
5372.
Rule of construction.
5373.
International policy coordination.
5374.
Rule of construction.

        

SUBCHAPTER II—ORDERLY LIQUIDATION AUTHORITY

5381.
Definitions.
5382.
Judicial review.
5383.
Systemic risk determination.
5384.
Orderly liquidation of covered financial companies.
5385.
Orderly liquidation of covered brokers and dealers.
5386.
Mandatory terms and conditions for all orderly liquidation actions.
5387.
Directors not liable for acquiescing in appointment of receiver.
5388.
Dismissal and exclusion of other actions.
5389.
Rulemaking; non-conflicting law.
5390.
Powers and duties of the Corporation.
5391.
Inspector General reviews.
5392.
Prohibition of circumvention and prevention of conflicts of interest.
5393.
Ban on certain activities by senior executives and directors.
5394.
Prohibition on taxpayer funding.

        

SUBCHAPTER III—TRANSFER OF POWERS TO THE COMPTROLLER OF THE CURRENCY, THE CORPORATION, AND THE BOARD OF GOVERNORS

5401.
Purposes.
5402.
Definition.

        

Part A—Transfer of Powers and Duties

5411.
Transfer date.
5412.
Powers and duties transferred.
5413.
Abolishment.
5414.
Savings provisions.
5415.
References in Federal law to Federal banking agencies.
5416.
Contracting and leasing authority.

        

Part B—Transitional Provisions

5431.
Interim use of funds, personnel, and property of the Office of Thrift Supervision.
5432.
Transfer of employees.
5433.
Property transferred.
5434.
Funds transferred.
5435.
Disposition of affairs.
5436.
Continuation of services.
5437.
Implementation plan and reports.

        

Part C—Other Matters

5451.
Branching.
5452.
Office of Minority and Women Inclusion.

        

SUBCHAPTER IV—PAYMENT, CLEARING, AND SETTLEMENT SUPERVISION

5461.
Findings and purposes.
5462.
Definitions.
5463.
Designation of systemic importance.
5464.
Standards for systemically important financial market utilities and payment, clearing, or settlement activities.
5465.
Operations of designated financial market utilities.
5466.
Examination of and enforcement actions against designated financial market utilities.
5467.
Examination of and enforcement actions against financial institutions subject to standards for designated activities.
5468.
Requests for information, reports, or records.
5469.
Rulemaking.
5470.
Other authority.
5471.
Consultation.
5472.
Common framework for designated clearing entity risk management.

        

SUBCHAPTER V—BUREAU OF CONSUMER FINANCIAL PROTECTION

5481.
Definitions.

        

Part A—Bureau of Consumer Financial Protection

5491.
Establishment of the Bureau of Consumer Financial Protection.
5492.
Executive and administrative powers.
5493.
Administration.
5494.
Consumer Advisory Board.
5495.
Coordination.
5496.
Appearances before and reports to Congress.
5496a.
Annual audits.
5496b.
GAO study of financial regulations.
5497.
Funding; penalties and fines.
5498.
Data standards.
5499.
Open data publication.

        

Part B—General Powers of the Bureau

5511.
Purpose, objectives, and functions.
5512.
Rulemaking authority.
5513.
Review of Bureau regulations.
5514.
Supervision of nondepository covered persons.
5515.
Supervision of very large banks, savings associations, and credit unions.
5516.
Other banks, savings associations, and credit unions.
5517.
Limitations on authorities of the Bureau; preservation of authorities.
5518.
Authority to restrict mandatory pre-dispute arbitration.
5519.
Exclusion for auto dealers.

        

Part C—Specific Bureau Authorities

5531.
Prohibiting unfair, deceptive, or abusive acts or practices.
5532.
Disclosures.
5533.
Consumer rights to access information.
5534.
Response to consumer complaints and inquiries.
5535.
Private Education Loan Ombudsman.
5536.
Prohibited acts.
5537.
Senior investor protections.
5538.
Mortgage loans; rulemaking procedures; enforcement.

        

Part D—Preservation of State Law

5551.
Relation to State law.
5552.
Preservation of enforcement powers of States.
5553.
Preservation of existing contracts.

        

Part E—Enforcement Powers

5561.
Definitions.
5562.
Investigations and administrative discovery.
5563.
Hearings and adjudication proceedings.
5564.
Litigation authority.
5565.
Relief available.
5566.
Referrals for criminal proceedings.
5567.
Employee protection.

        

Part F—Transfer of Functions and Personnel; Transitional Provisions

5581.
Transfer of consumer financial protection functions.
5582.
Designated transfer date.
5583.
Savings provisions.
5584.
Transfer of certain personnel.
5585.
Incidental transfers.
5586.
Interim authority of the Secretary.
5587.
Transition oversight.Part G—Regulatory Improvements
5601.
Remittance transfers.
5602.
Reverse mortgage study and regulations.
5603.
Review, report, and program with respect to exchange facilitators.

        

SUBCHAPTER VI—FEDERAL RESERVE SYSTEM PROVISIONS

5611.
Liquidity event determination.
5612.
Emergency financial stabilization.
5613.
Additional related matters.
5614.
Exercise of Federal Reserve authority.

        

SUBCHAPTER VII—IMPROVING ACCESS TO MAINSTREAM FINANCIAL INSTITUTIONS

5621.
Purpose.
5622.
Definitions.
5623.
Expanded access to mainstream financial institutions.
5624.
Low-cost alternatives to small dollar loans.
5625.
Procedural provisions.
5626.
Authorization of appropriations.
5627.
Regulations.
5628.
Evaluation and reports to Congress.

        

SUBCHAPTER VIII—MISCELLANEOUS

5641.
Enhanced compensation structure reporting.

        

About This Section

12 U.S.C. § 5261 is part of Title 12 of the United States Code. The United States Code is the official codification of federal statutes maintained by the Office of the Law Revision Counsel of the U.S. House of Representatives. Congress amends the Code through new public laws, which are eventually incorporated into the relevant title.

This section may be cited in legal writing as 12 U.S.C. § 5261. For the most current official text, including any recent amendments, use the official source links below. Do not rely on this page as the sole authority for legal citation or litigation.

How to Read This Statute

Statutes are organized by title, chapter, section, and subsection. Pay attention to words like "shall," "may," "and," and "or," because they determine whether a requirement is mandatory or permissive and whether multiple conditions must all be met. Historical notes and amendments often appear at the end of a section.

Using This Page

This page is intended for research and educational use. Lawyers, students, journalists, and compliance professionals can use it as a starting point, but should always verify the current text through an official government source before relying on it for legal advice, filings, or compliance decisions.

Sources

Source: official Us Code text · Last verified 2026-08-27

Related Us Code Legal Topics

Frequently Asked Questions About Us Code § 5261

What does United States Code § 5261 cover?

Section 5261 ("Gain or loss from sale or exchange of certain preferred stock") is part of the United States Code, the codified statutory law of Us Code. It sets out the legal rule or procedure described in the text above. Statutes are amended regularly, so always verify against the official source.

How do I cite Us Code § 5261?

A common citation format is "United States Code § 5261" (Us Code). Legal writing may require the code abbreviation, section number, and year or edition. Match the style required by your court, professor, or publisher.

Is this the official text of Us Code law?

No. This page is for research and education and may not include the most recent amendments. For official current law, check the Us Code official source linked on this page or consult a licensed Us Code attorney.

How does Us Code § 5261 apply to my situation?

Statutes are interpreted in context, and application depends on your specific facts. Only a licensed attorney in Us Code can advise on how this section applies to you. Contact your state or local bar association for a referral.

Sources & Verification

Not legal advice. Verify against the official source and consult a licensed attorney in Us Code.