Page:United States Statutes at Large Volume 45 Part 1.djvu/869

 818 SEVENTIETH CONGRESS. Suss. I. C$. 852 . 1928 . rxcoal>a TAX (g) Dist ribution of stock on reorga nization .- If th ere i s d ist ri but ed, No gain recognized if in pursuance of a plan of reorganization, to a shareholder in a add iti on al st ock re- ceived on reorganiza- corporation a party to the reorganization, stock or securities in tion, and holding not surr ender ed. such corpo ration or in anoth er cor poratio n a pa rty to the r eorgan i- zation, without the surrender by such shareholder of stock or securi- ties in such a corporation, no gain to the distributee from the receipt Stock distr ibuted on of such stock or securities shall be recognized. reorganization not eon- (h) Same-effect on future distributions .-The distribution, in pur- strued as earnings, etc. suance of a plan of reorganization, by or on behalf of a corpora- tion a party to the reorganization, of its stock or securities or stock or securities in a corporation a party to the reorganization, shall not b e cons idered a dis tribut ion of earnin gs or profit s with in the meaning of section 115(b) for the purpose of determining the taxability of subsequent distributions by the corporation. (i) Definition of reorganization .-As used in this section and sections 113 and 115- (1) The term "reorganization" means (A) a merger or con- solidation (including the acquisition by one corporation of at least a majority of the voting stock and at least a majority of the total number of shares of all other classes of stock of another corporation, or substantially all the properties of another cor- poration), or (B) a transfer by a corporation of all or a part of its a ssets to another c orporatio n if imme diately after the transfer the transferor or its stockholders or both are in control of the corporation to which the assets are transferred, or (C) a recap- italization, or (D) a mere change in identity, form, or place of orga nizati on, ho wever effect ed. (2) The term " a party to a reorganization " includes a cor- poration resulting from a reorganization and includes both cor- porations in the case of an acquisition by one corporation of at least a majority of the voting stock and at least a majority of the to tal numbe r of shar es of all other cl asses of stock of another corporation. (j) Definition of control.-As used in this section the term "control" means the ownership of at least 80 per centuin of the voting stock and at least 80 per centum of the total number of shares of all other classes of stock of the corporation. Reorganization. Corp orati on a cts c on- stituting. Corporation included as "a party to a reor- ganization ." Owner ship of stock constituting -control ." Basis for determining gain or loss . On cost va lue on sales acquired after February 28, 1913 . Excep tion s . Inventory value. Gifts after December 31, 1920. Ascertainment . Or fair market value wh en acquired by do- nor, etc. SEC . 113 . BASIS FOR DETERMINING GAIN OR LOSS . (a) Property acquired after February 28, 1913 .-The basis for deter- mining the gain or loss from the sale or other disposition of property acquired after February 28, 1913, shall be the cost of such pro erty ; except that-- (1) INVENTORY VALUE .-If the property should have been included in the last inventory, the basis shall be the last inven- tory value thereo f ; (2) GIFT AFT ER DEC EMB ER 31, 1020 .-If the property was acquired by gift after December 31, 1920, the basis shall be the same as it would be in the hands of the donor or the last pre- ceding owner by whom it was not acquired by gift . If the facts necessary to determine such basis are unknown to the donee, the Com missi oner shal l, if pos sible, obt ain such facts from suc h donor or last preceding owner, or any other person cognizant thereof. If the Commissioner finds it impossible to obtain such facts, the basi s shall b e the fai r market value of such prop erty as fou nd by the Comm issio ner as of the date or a pprox imate dat e at which, according to the best information that the Commis- sioner is able to obtain, such property was acquired by such donor or last preceding owner ;

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