Page:United States Statutes at Large Volume 56 Part 1.djvu/963

 56 STAT.] 77TH CONG. , 2D SESS.-CH. 619-OCT. 21, 1942 of any property in such intercorporate liquidation, a basis deter- mined to be a cost basis, the earnings and profits or deficit in earnings and profits of the transferee shall be computed as if on the day following the completion of such intercorporate liquida- tion the transferee had realized a recognized gain equal to the amount of the plus adjustment in respect of such share, or had sustained a recognized loss equal to the amount of the minus adjustment in respect of such share; "(2) with respect to any share of stock in the transferor hav- ing in the hands of the transferee, immediately prior to the receipt of any property in such intercorporate liquidation, a basis determined to be a basis other than a cost basis, there shall be treated as an amount includible in the sum specified in section 718 (a) the amount of the plus adjustment with respect to such share, or as an amount includible in the sum specified in section 718 (b) the amount of the minus adjustment with respect to such share. "(e) INVESTED CAPITAL BASIS. -The adjusted basis which property received by the transferee in an intercorporate liquidation is con- sidered to have under the provisions of subsection (c) at the time of its receipt shall be thereafter treated as the adjusted basis, in lieu of the adjusted basis otherwise prescribed, in computing any amount, determined by reference to the basis of such property in the hands of the transferee, entering into the computation of the invested capital of the transferee, or of any other corporation the computation of the invested capital of which is determined by reference to the basis of such property in the hands of the transferee. "(f) STATUTORY MERGERS AND CONSOLIDATIONS. -If a corporation owns stock in another corporation and such corporations are merged or consolidated in a statutory merger or consolidation, then for the purposes of this section and section 718 such stock shall be considered to have been acquired (in such statutory merger or consolidation) by the corporation resulting from the statutory merger or consoli- dation, and the properties of such other corporation attributable to such stock to have been received by such resulting corporation as a transferee from such other corporation as a transferor in an inter- corporate liquidation. "(g) DETERMINATIONS.- "(1) REGULATIONS.-Any determination which is required to be made under this section (including determinations in apply- ing this section in cases where there is a series of transferees of the property and cases where the stock of the transferor is acquired by the transferee from another corporation, and the determinations of the basis and adjusted basis which property or items thereof have or are considered to have) shall be made in accordance with regulations which shall be prescribed by the Commissioner with the approval of the Secretary. If the trans- feror or the transferee is a foreign corporation, the provisions of this section shall apply to such extent and under such conditions and limitations as may be provided in such regulations. "(2) APPIICATION TO LIQUIDATION EXTENDING OVER LONG PERIOD.- The Commissioner is authorized to prescribe rules similar to those provided in this section with respect to the days within the period beginning with the date on which the first property is received in the intercorporate liquidation and ending with the day of its completion; and the extent to which, and the condi- tions and limitations under which, such rules are to be applicable." 935 54 Stat. 982, 983. 26 U.S.C. § 718 (a), (b); Supp. I, § 718 (a). Ante, p. 911. 4 Stat. 982. 26U.8.C. 718; Supp. I . 718. Ante, pp. 902, 911, 912. Post, p. 936.

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