Page:United States Statutes at Large Volume 68A.djvu/355

 CH. 1

NORMAL TAXES AND SURTAXES

315

amount of the gain recognized under such paragraph as is not in excess of his ratable share of the undistributed earnings and profits of the corporation accumulated after February 28, 1913. The remainder, if any, of the gain recognized under paragraph (1) shall be taxed as a gain from the exchange of property. (f) CONDITIONS FOR APPLICATION OF SECTION.—Except in the case of a distribution described in subsection (c)(2), the provisions of this section shall not apply to an exchange, expenditure, investment, distribution, or sale unless— (1) the order of the Securities and Exchange Commission in io obedience to which such exchange, expenditure, investment, dislu tribution, or sale was made recites that such exchange, expenditure, investment, distribution, or sale is necessary or appropriate to effectuate the provisions of section 11(b) of the Public Utility Holding Company Act of 1935 (49 Stat. 820; 15 U.S.C. 79k (b)), (2) such order specifies and itemizes the stock and securities and other property which are ordered to be acquired, transferred, i{ received, or sold on such exchange, acquisition, expenditure, distribution, or sale, and, in the case of an investment, the in vestsi ment to be made, and le (3) such exchange, acquisition, expenditure, investment, disic tribution, or sale was made in obedience to such order, and was completed within the time prescribed therefor. m (g) NONAPPLICATION OF OTHER PROVISIONS.—If a distribution described in subsection (c)(2), or an exchange or distribution made in obedience to an order of the Securities and Exchange Commission, is within any of the provisions of this part and may also be considered to be within any of the other provisions of this subchapter or subchapter C (sec. 301 and following, relating to corporate distributions and adjustments), then the provisions of this part only shall apply. SEC. 1082. BASIS FOR DETERMINING GAIN OR LOSS. "^

(a) EXCHANGES GENERAL L Y. — (1) EXCHANGES SUBJECT TO THE PROVISIONS OF SECTION IO81 (a)

OR (e).—If the property was acquired on an exchange subject to ^" the provisions of section 1081(a) or (e), or the corresponding provisions of prior internal revenue laws, the basis shall be the same as in the case of the property exchanged, decreased in the amount of any money received by the taxpayer, and increased in the amount of gain or decreased in the amount of loss to the taxpayer that was recognized on such exchange under the law applicable to the year in which the exchange was made. If the property so acquired consisted in part of the type of property permitted by section 1081 (a) to be received without the recognition of gain or loss, and in part of nonexempt property, the basis provided in this subsection shall be allocated between the properties (other than money) received, and for the purpose of the allocation there shall be assigned to such nonexempt property (other than money) an amount equivalent to its fair market value at the date of the exchange. This subsection shall not apply to property acquired by a corporation by the issuance of its stock or securities as the consideration in whole or in part for the transfer of the property to it. (2)

EXCHANGES SUBJECT TO THE PROVISIONS OF SECTION IO81 (b).—

The gain not recognized on a transfer by reason of section 1081(b) § 1082(a)(2)

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