Page:United States Statutes at Large Volume 52.djvu/531

 PUBLIC LAWS-CH. 2S9-MAY 28, 1938 Installment obliga- tions. Ante, p. 474. Adjusted basis for determining gain or loss. Basis (unadjusted) of property. Inventory value. Gifts after Decem- ber 31, 1920 Determination of loss. Fair market value. Transfer in trust after December 31, 1920. Gift or transfer in trust before January 1, 1921. Property trans- mitted at death. Transfer In trust with right torevoke. Without full con- sideration under gen- eral power of appoint- ment. to the satisfaction of the Commissioner that such exchange is not in pursuance of a plan having as one of its principal purposes the avoidance of Federal income taxes. (j) INSTALLMENT OBLIATIONS.- - For nonrecognition of gain or loss in the case of installment obligations, see section 44 (d). SEC. 113. ADJUSTED BASIS FOR DETERMINING GAIN OR LOSS. (a) BASIs (UNADJUSTED) or PROPERTY.-T he basis of property shall be the cost of such property- 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 thereof. (2) GIFTS AFTER DECEMBER 31, 1920.- -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 preced- ing owner by whom it was not acquired by gift, except that for the purpose of determining loss the basis shall be the basis so determined or the fair market value of the property at the time of the gift, whichever is lower. If the facts necessary to determine the basis in the hands of the donor or the last preced- ing owner are unknown to the donee, the Commissioner shall, if possible, obtain such facts from such donor or last preceding owner, or any other person cognizant thereof. If the Commis- sioner finds it impossible to obtain such facts, the basis in the hands of such donor or last preceding owner shall be the fair market value of such property as found by the Commissioner as of the date or approximate date at which, according to the best information that the Commissioner is able to obtain, such property was acquired by such donor or last preceding owner. (3) TRANSFER IN TRUST AFTER DECEMBER 31, 1920. --If the prop- erty was acquired after December 31, 1920, by a transfer in trust (other than by a transfer in trust by a bequest or devise) the basis shall be the same as it would be in the hands of the grantor, increased in the amount of gain or decreased in the amount of loss recognized to the grantor upon such transfer under the law applicable to the year in which the transfer was made. (4) GIFT OR TRANSFER IN TRUST BEFORE JANUARY 1, 1921. -If the property was acquired by gift or transfer in trust on or before December 31, 1920, the basis shall be the fair market value of such property at the time of such acquisition. (5) PROPERTY TRANSMITTED AT DEATH.--If the property was acquired by bequest, devise, or inheritance, or by the decedent's estate from the decedent, the basis shall be the fair market value of such property at the time of such acquisition. In the case of property transferred in trust to pay the income for life to or upon the order or direction of the grantor, with the right reserved to the grantor at all times prior to his death to revoke the trust, the basis of such property in the hands of the persons entitled under the terms of the trust instrument to the property after the grantor's death shall, after such death, be the same as if the trust instrument had been a will executed on the day of the grantor's death. For the purpose of this paragraph property passing without full and adequate consideration under a general power of appointment exercised by will shall be deemed to be property passing from the individual exercising such power by bequest or devise. If the property was acquired by bequest, devise, or inheritance, or by the decedent's estate from the dece- dent, and if the decedent died after August 26, 1937, and if the property consists of stock or securities of a foreign corporation, 490 [52 STAT.

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