Page:United States Statutes at Large Volume 68A.djvu/162

 122

INTERNAL REVENUE CODE OF 1954

(2) G A I N FEOM EXCHANGES NOT SOLELY IN KIND.—If an exchange would be within the provisions of paragraph (1) if it were not for the fact that the property received in exchange consists not only of stock or securities permitted by paragraph (1) 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. (b) EXCHANGES BY SECURITY H O L D E R S. —

(1) IN GENERAL.—No gain or loss shall be recognized on an exchange consisting of the relinquishment or extinguishment of stock or securities in a corporation the plan of reorganization of which is approved by the court in a proceeding described in subsection (a), in consideration of the acquisition solely of stock or securities in a corporation organized or made use of to effectuate such plan of reorganization. (2) G A I N FROM EXCHANGES NOT SOLELY IN KIND.—If an exchange would be within the provisions of paragraph (1) if it were not for the fact that the property received in exchange consists not only of property permitted by paragraph (1) to be received without the recognition of gain, b u t also of other property or money, then the gain, if any, to the recipient 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. (c) Loss FROM EXCHANGES N O T SOLELY IN K I N D. — I f an exchange would be within the provisions of subsection (a)(1) or (b)(1) if it were not for the fact that the property received in exchange consists not only of property permitted by subsection (a)(1) or (b)(1) 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. (d) ASSUMPTION OF L I A B I L I T I E S. — I n the case of a transaction involving an assumption of a liability or the acquisition of property subject to a liability, the rules provided in section 357 shall apply. SEC. 372. BASIS IN CONNECTION WITH CERTAIN RECEIVERSHIP AND BANKRUPTCY PROCEEDINGS.

(a) CORPORATION.—If property was acquired by a corporation in a transfer to which— (1) section 371(a) applies, (2) so much of section 371(c) as relates to section 371(a)(1) applies, or (3) the corresponding provisions of prior law apply, then notwithstanding the provisions of section 270 of the Bankruptcy Act (54 Stat„ 709; 11 U.S.C. 670), the basis in the hands of the acquiring corporation shall be the same as it would be in the hands of the corporation whose property was so acquired, increased in the §371 (a)(2)

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