Page:United States Statutes at Large Volume 56 Part 1.djvu/960

 PUBLIC LAWS--CH. 619-OCT. 21, 1942 64 Stat. 975. 26U.s. c.. 710- 752; Supp. I, §S710- 743. Ane, p. 89. Su ( SEC. 230. INVESTED CAPITAL IN CONNECTION WITH CERTAIN EX- CHANGES AND LIQUIDATIONS. (a) EXCHANGES AND LIQUIDATIONS.-Chapter 2E is amended by inserting at the end thereof the following new Supplement: "Supplement C-Invested Capital in Connection With Certain Exchanges and Liquidations "SEC. 760. EXCHANGES. "(a) DEFINITIONS, ETC. - For the purposes of this section- "(1) 'EXCHANGE', 'TRANSFEROR', AND 'TRANSFEREE'.- The term 'exchange' means a transaction by which one corporation (herein- after called 'transferee') receives property of another corpora- tion (hereinafter called 'transferor') and the basis of the property received, in the hands of the transferee, for the purposes of section 6 U.S. . §718 (a); 718 (a) is determined by reference to the basis in the hands of pp. I, § 718 (a). the transferor. An*e,p.O91L "(2) DETERMINATION OF BASIS OF PROPERTY RCEIVED.-The basis, in the hands of the transferee, of the property of the trans- feror received by-the transferee upon the exchange shall be de- termined in accordance with section 718 (a). "(b) RrLE. - In the application of section 718 (a) to a transferee upon an exchange in determining the amount paid in for stock of the transferee, or as paid-in surplus or as a contribution to capital of the transferee, in connection with such exchange, only an amount shall be deemed to have been so paid in equal to the excess of the basis in the hands of the transferee of the property of the transferor received by the transferee upon the exchange over the sum of- "(1) The amount of any liability of the transferor assumed upon the exchange and of any liability subject to which such property was so received, plus "(2) The amount of any liability of the transferee (not arising out of any liability described in paragraph (1)) constituting consideration for the property so received, plus "(3) The aggregate of the amount of any money and the fair market value of any other property (other than such stock and other than property described in paragraphs (1) and (2)) trans- ferred to the transferor. "(c) REDUCTION IN DAILY INVESTED CAPrrAL. -In the application bU.. o. 717. of section 717 to a transferee upon an exchange, the daily invested capital for any day after such exchange shall be reduced by an amount equal to the amount by which the sum of the amounts specified in paragraphs (1), (2), and (3) of subsection (b) exceeds the basis in the hands of the transferee of the property of the transferor received upon the exchange. "SEC. 761. INVESTED CAPITAL ADJUSTMENT AT THE TIME OF TAX- FREE INTERCORPORATE LIQUIDATIONS. "(a) DEFINITION OF INTERCORPORATE LIQUIDATION.-As used in this section, the term 'intercorporate liquidation' means the receipt (whether or not after December 31, 1941) by a corporation (herein- after called the 'transferee') of property in complete liquidation of another corporation (hereinafter called the'transferor') to which aU.S8 .o 2(b) "(1) the provisions of section 112 (b) (6), or the correspond- ' ing provision of a prior revenue law. is applicable or (2) a provision of law is applicable prescribing the non- recognition of gain or loss in whole or in part upon such receipt 932 [56 STAT.

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