Page:United States Statutes at Large Volume 68A.djvu/158

 118

INTERNAL REVENUE CODE OF 1954

much of section 356 as relates to section 355) applies shall be treated as an exchange, and for such purposes the stock and securities of the distributing corporation which are retained shall be treated as surrendered, and received back, in the exchange. (d) ASSUMPTION OF LIABILITY.—Where, as part of the consideration to the taxpayer, another party to the exchange assumed a liability of the taxpayer or acquired from the taxpayer property subject to a liability, such assumption or acquisition (in the amount of the liability) shall, for purposes of this section, be treated as money received by the taxpayer on the exchange. (e) EXCEPTION.—This section shall not apply to property acquired by a corporation by the issuance of its stock or securities as consideration in whole or in part for the transfer of the property to it. Subpart C—Effects on Corporation Sec. 361. Nonrecognition of gain or loss to corporations. Sec. 362. Basis to corporations. ..-,,' Sec. 363. Effect on earnings and profits. . -i-?iil. ' } SEC. 361. NONRECOGNITION OF GAIN OR LOSS TO CORPORATIONS. (a) GENERAL RULE. — N o gain or loss shall be recognized if a

corporation a party to a reorganization exchanges property, in pursuance of the plan of reorganization, solely for stock or securities in another corporation a party to the reorganization. (b) EXCHANGES N O T SOLELY IN K I N D. —

(1) GAIN.—If subsection (a) would apply to an exchange but for the fact that the property received in exchange consists not only of stock or securities permitted by subsection (a) to be received without the recognition of gain, but also of other property or money, then— (A) if the corporation receiving such other property or money distributes it in pursuance of the plan of reorganization, no gain to the corporation shall be recognized from the exchange, but (B) if the corporation receiving such other property or money does not distribute it in pursuance of the plan of reorganization, the gain, if any, to the corporation shall be recognized, but in an amount not in excess of the sum of such money and the fair market value of such other property so received, which is not so distributed. (2) Loss.—If subsection (a) would apply to an exchange b u t for the fact that the property received in exchange consists not only of property permitted by subsection (a) to be received without the recognition of gain or loss, but also of other property or money, then no loss from the exchange shall be recognized. SEC. 362. BASIS TO CORPORATIONS. (a) PROPERTY ACQUIRED BY ISSUANCE OF STOCK OR AS P A I D - I N

SURPLUS.—If property was acquired on or after June 22, 1954, by a corporation— (1) in connection with a transaction to which section 351 (relating to transfer of property to corporation controlled by transferor) applies, or (2) as paid-in surplus or as a contribution to capital, § 358(c)

�