Page:United States Statutes at Large Volume 52.djvu/532

 52 STAT.] 75TH CONG., 3 D SESS.-CH. 289-MAY 28, 1938 which with respect to its taxable year next preceding the date of the decedent's death was, under the law applicable to such year, a foreign personal holding company, then the basis shall be the fair market value of such property at the time of such acquisition or the basis in the hands of the decedent, whichever is lower. (6) TAX-FREE EXCHANGES GENERALLY.- If the property was acquired, after February 28, 1913, upon an exchange described in section 112 (b) to (e), inclusive, the basis (except as pro- vided in paragraph (15), (17), or (18) of this subsection) shall be the same as in the case of the property exchanged, decreased in the amount of any money received by the taxpayer and increased in the amount of gain or decreased in the amount of loss to the taxpayer that was recognized upon such exchange under the law applicable to the year in which the exchange was made. If the property so acquired consisted in part of the type of property permitted by section 112 (b) to be received without the recogni- tion of gain or loss, and in part of other property, the basis pro- vided in this paragraph shall be allocated between the properties (other than money) received, and for the purpose of the alloca- tion there shall be assigned to such other property an amount equivalent to its fair market value at the date of the exchange. This paragraph shall not apply to property acquired by a cor- poration by the issuance of its stock or securities as the considera- tion in whole or in part for the transfer of the property to it. (7) TRANSFERS TO C ORPOR A T I ON.- If the property was acquired- (A) after December 31, 1917, and in a taxable year begin- ning before January 1, 1936, by a corporation in connection with a reorganization, and immediately after the transfer an interest or control in such property of 50 per centum or more remained in the same persons or any of them, or (B) in a taxable year beginning after December 31, 1935, by a corporation in connection with a 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 trans- fer under the law applicable to the year in which the transfer was made. This paragraph shall not apply if the property 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 transferee as the consideration in whole or in part for the transfer. (8) PROPERTY ACQUIRED BY ISSUANCE OF STOCK OR AS PAID-IN SURPLUS. -If the property was acquired after December 31, 1920, by a corporation- (A) by the issuance of its stock or securities in connection with a transaction described in section 112 (b) (5) (includ- ing, also, cases where part of the consideration for the trans- fer of such property to the corporation was property or money, in addition to such stock or securities), or (B) as paid-in surplus or as a contribution to capital, 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. (9) INVOLUNTARY CONVERSION.-If the property was acquired, after February 28, 1913, as a result of a compulsory or involun- tary conversion described in section 112 (f), the basis shall be 491 Tax-free exchanges generally. Property acquired upon an exchange. Ante, pp. 485 -489; post, p. 493. Partly by exchange and partly by other property. Ante, p. 485. Exception. Transfers to corpo- ration. Exception. Property acquired by issuance ofstock or as paid-in surplus. Ane, p. 485. Bais. Involuntary conver- sion. Ante, p. 489.

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