Page:United States Statutes at Large Volume 68A.djvu/152

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INTERNAL REVENUE CODE OF 1954

of the stock which it receives in the exchange to its shareholders shall not be taken into account. (d)

CROSS R E F E R E N C E S. —

(1) For special rule where another party to the exchange assumes a liability, or acquires property subject to a liability, see section 357. (2) For the basis of stock, securities, or property received in an exchange to which this section applies, see sections 358 and 362. (3) For special rule in the case of an exchange described in this section but which results in a gift, see section 2501 and following. (4) For special rule in the case of an exchange described in this section but which has the effect of the payment of compensation by the corporation or by a transferor, see section 61(a)(1).

Subpart B^—Eflfects on Shareholders and Security Holders SEC. 354. Exchanges of stock and securities in certain reorganizations. SEC. 355. Distribution of stock and securities of a controlled corporation. SEC. 356. Receipt of additional consideration. SEC. 357. Assumption of liability. SEC. 358. Basis to distributees. SEC. 354. EXCHANGES OF STOCK AND SECURITIES IN CERTAIN REORGANIZATIONS. (a)

GENERAL RULE. —

(1) IN GENERAL.—No gain or loss shall be recognized if stock or securities in a corporation a party to a reorganization are, in pursuance of the plan of reorganization, exchanged solely for stock or securities in such corporation or in another corporation a party to the reorganization. (2) LIMITATION.—Paragraph'(1) shall not apply if— (A) the principal amount of any such securities received exceeds the principal amount of any such securities surrendered, or (B) any such securities are received and no such securities are surrendered. (3)

CROSS

REFERENCE.—

For treatment of the exchange if any property is received which is not permitted to be received under this subsection (including an excess principal amount of securities received over securities surrendered), see section 356. (b)

EXCEPTION.—

(1) IN GENERAL.—Subsection (a) shall not apply to an exchange in pursuance of a plan of reorganization within the meaning of section 368(a)(1)(D), unless— (A) the corporation to which the assets are transferred acquires substantially all of the assets of the transferor of such assets; and (B) the stock, securities, and other properties received by such transferor, as well as the other properties of such transferor, are distributed in pursuance of the plan of reorganization. (2)

CROSS R E F E R E N C E. —

For special rules for certain exchanges in pursuance of plans of reorganization within the meaning of section 368(a)(1)(D), see section 355. (c) CERTAIN RAILROAD REORGANIZATIONS.—Notwithstanding any

other provision of this subchapter, subsection (a)(1) (and so much of § 351(c)

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