Page:United States Statutes at Large Volume 65.djvu/528

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PUBLIC LAW 183—OCT. 20, 1951 "(23)

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[65 STAT.

TAX-FREE DISTRIBUTIONS.—If the property consists of

stock distributed after the date of the enactment of the Revenue Act of 1951 to a taxpayer in connection with a transaction described in section 112(b) (11) (hereinafter in this paragraph called 'new stock'), or consists of stock in respect of which such distribution was made (hereinafter in this paragraph called 'old stock'), then the basis of the new stock and of the old stock, respectively, shall, in the shareholder's hands, be determined by allocating between the old stock and the new stock the adjusted basis of the old stock; such allocation to be made under regulations prescribed by the Secretary." (c) EFFECTIVE DATE.—The amendments made by this section shall be applicable with respect to taxable years ending after the date of the enactment of this Act, but shall apply only with respect to distributions of stock made after such date. SEC. 318. GAIN FROM SALE OR EXCHANGE OF TAXPAYER'S RESIDENCE. (a) NoNREcoGNinoN OF GAIN I N CERTAIN CASES.—Section 112 (relating to recognition of gain or loss) is hereby amended by adding at the end thereof the following new subsection: " (n) G A I N FROM SALE OR EXCHANGE OF RESIDENCE.— "(1) NONRECOGNITION OF GAIN.—If property (hereinafter

in this subsection called 'old residence') used by the taxpayer as his principal residence is sold by him and, within a period beginning one year prior to the date of such sale and ending one year after such date, property (hereinafter in this subsection called 'new residence') is purchased and used by the taxpayer as his principal residence, gain (if any) from such sale shall be recognized only to the extent that the taxpayer's selling price of the old residence exceeds the taxpayer's cost of purchasing the new residence. " (2) RULES FOR APPLICATION OF SUBSECTION.—For the purposes

of this subsection: " (A) A n exchange by the taxpayer of his residence for other property shall be considered as a sale of such residence, and the acquisition of a residence upon the exchange of property shall be considered as a purchase of such residence. " (B) I f the taxpayer's residence (as a result of its destruction in whole or in part, theft, or seizure) is compulsorily or involuntarily converted into property or into money, such destruction, theft, or seizure shall be considered as a sale of the residence; and if the residence is so converted into property which is used by the taxpayer as his residence, such conversion shall be considered as a purchase of such property by the taxpayer. " (C) I n the case of an exchange or conversion described in subparagraph (A) or (B), in determining the extent to which the selling price of the old residence exceeds the taxpayer's - :•.^-cost of purchasing the new residence, the amount realized, by the taxpayer upon such exchange or conversion shall be considered the selling price of the old residence. " (D) A residence any part of which was constructed or reconstructed by the taxpayer shall be considered as purchased by the taxpayer. I n determining the taxpayer's cost of purchasing a residence, there shall b e included only so much of his cost as is attributable to the acquisition, construction, reconstruction, and improvements made which are properly chargeable to capital account, during the period specified in paragraph (1). ^ ^

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