Page:United States Statutes at Large Volume 68A.djvu/157

 CH. 1—NORMAL TAXES AND SURTAXES

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(2) B U R D E N OF PROOF.—In any suit or proceeding where the burden is on the taxpayer to prove such assumption or acquisition is not to be treated as money received by the taxpayer, such burden shall not be considered as sustained unless the taxpayer sustains such burden by the clear preponderance of the evidence. (c) LIABILITIES IN E X C E S S OF B A S I S. —

(1) IN GENERAL.—In the case of an exchange— (A) to which section 351 applies, or (B) to which section 361 applies by reason of a plan of reorganization within the meaning of section 368(a)(1)(D), if the sum of the amount of the liabilities assumed, plus the amount - of the liabilities to which the property is subject, exceeds the total of the adjusted basis of the property transferred pursuant to such exchange, then such excess shall be considered as a gain from the sale or exchange of a capital asset or of property which is not a capital asset, as the case may be. (2) EXCEPTIONS.—Paragraph (1) shall not apply to any exchange to which— (A) subsection (b)(1) of this section applies, or (B) section 371 applies. SEC. 358. BASIS TO DISTRIBUTEES. (a) GENERAL RULE. — I n the case of an exchange to which section 351, 354, 355, 356, 361, or 371 (b) applies— (1) NoNRECOGNiTiON PROPERTY.—The basis of the property permitted to be received under such section without the recognition of gain or loss shall be the same as that of the property exchanged— (A) decreased by— (i) the fair market value of any other property (except money) received by the taxpayer, and (ii) the amount of any money received by the taxpayer, and (B) increased by— (i) the amount which was treated as a dividend, and (ii) the amount of gain to the taxpayer which was recognized on such exchange (not including any portion of such gain which was treated as a dividend). (2) OTHER PROPERTY.—The basis of any other property (except money) received by the taxpayer shall be its fair market value.

(b)

ALLOCATION OF B A S I S. —

(1) IN GENERAL.—Under regulations prescribed by the Secretary or his delegate, the basis determined under subsection (a)(1) shall be allocated among the properties permitted to be received without the recognition of gain or loss. (2) SPECIAL RULE FOR SECTION 355.—In the case of an exchange to which section 355 (or so much of section 356 as relates to section 355) applies, then in making the allocation under paragraph (1) of this subsection, there shall be taken into account not only the property so permitted to be received without the recognition of gain or loss, but also the stock or securities (if any) of the distributing corporation which are retained, and the allocation of basis shall be made among all such properties. (c) SECTION 355

TRANSACTIONS W H I C H A R E N O T EXCHANGES.—

For purposes of this section, a distribution to which section 355 (or so § 358(c)

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