Page:United States Statutes at Large Volume 49 Part 1.djvu/1728

 74TII C ONGRESS. SESS. II. CH. 690. JUNE 22, 1936. 1 683 year in which the exchange was made. If the property so a Partly partly exc han ge acquired consisted in part of the type of property permitted p roperty . b y section 112 (b) to be received without the recognition of gain or loss, and in part of other property, the basis provided in this pa ragrap h shal l be a lloca ted be tween the p ropert ies (o ther t han money ) received, and for the purpose of the a llocation there shal l be assigned to such other pr operty an amount equivalent to its fair market value at the date of the exchange. This p aragra ph Stock issued as con - shall not apply to property acquired by a corporation by the sid eration excep ted. issuance of its stock or securities as the consideration in whole or in part for the transfer of the property to it. (7) TRANSFERS TO CORPORATION .-If the property' was acquired Trans fers to corpor a- after December 31, 1917, by a corporation in connection with a tion. reorganization, then the basis shall be the same as it would be in the hands of the transferor, increased in the amount of gain or decreased in the amount of loss recognized to the transferor upon such transfer under the law applicable to the year in which the transfer was made. This paragraph shall not apply if the prop- stoopro ertyconsists of erty acquired consists of stock or securities in a corporation a party to the reorganization, unless acquired by the issuance of stock or securities of the transfere e as the consideration in whol e or in part for the transfer. (8) PROPERTY ACQUIRED BY ISSUANCE OF STOCK OR AS PAID-IN Property acquired by issuance of stock or as SURPLUS .-If the property was acquired after December 31, 1920, paid-in surplus by a bya corpor ation- co rpor atio n af ter 1920 . (A) by the iss uance of its stock or se curities in connection w ith Issuance of stock con- trolled by transferor- a transaction described in section 112 (b) (5) (including, also, Ante, p . 167'j . cases where part of the con sideration for the transfer of such property to the corporation was property or money, in add ition to such stock or secur ities), or (B) as paid-in surplus or as a contribution to capital, Pai d-in surp lus, etc. then the basis shall be the same as it would be in the hands of Basis. the transferor, increased in the amount of gain or decreased in the amount of loss recognized to the transferor upon such transfer under the law applicable to the year in which the transfer was made. (9) INVOLUNTARY CONVERSION .-If the property was acquired, a Acquiired byinvolun- after February 28, 1913, as the result of a compulsory or invol- untary conversion described in section 112 (f), the basis shall be Ante, p. 1681. the same as in the case of the property so converted, decreased in the amount of any money received by the taxpayer which was not expended in accordance with the provisions of law (applicable to the year in which such conversion was made) determining the taxable status of the gain or loss upon such conversion, and increased in the amount of gain or decreased in the amount of loss to the taxpayer recognized upon such conversion under the law applicable to the year in which such conversion was made. (10) 11 7 ASH SALES OF ST OCK .-If the p roperty consists of stock Wash sales of stock, etc., on which loss not or securities the acquisition of which (or the contract or option to allowed . acquire which) resulted in the nondeductibility (under section 118 Post, p. 1692. of this Act or corresponding provisions of prior income tax laws, relating to wash sales) of the loss from the sale or other disposition of substantially identical stock or securities, then the basis shall Basis. be the basis of the stock or securities so sold or disposed of, increased or decreased, as the case may be, by the difference, if any, between the price at which the property was acquired and the, price at which such substantially identical stock or securities were sold or otherwise disposed of.