Page:United States Statutes at Large Volume 68A.djvu/387

 CH. 1—NORMAL TAXES AND SURTAXES

347

paragraph (1) for any period before the expiration of 6 months following the date of the making of such election by the taxpayer. SEC. 1336. BASIS OF RECOVERED PROPERTY.

(a) IN GENERAL.—The unadjusted basis of property recovered in respect of property considered as destroyed or seized under section 127 (a) of the Internal Revenue Code of 1939 shall be determined under this section. Such basis shall be an amount equal to the fair market value of such property, determined as of the date of the recovery, reduced by an amount equal to the excess of the aggregate of such fair market value and the amounts of previous recoveries of money or property in respect of property considered under such section 127(a) as destroyed or seized over the aggregate of the allowable deductions in prior taxable years on account of the destruction or seizure of property described in such section 127(a), and increased by that portion of the amount of the recovery which under section 1332 is treated as a recognized gain from the involuntary conversion of property. On application of the taxpayer, the aggregate of the bases (determined under the preceding sentence) of any properties recovered in respect of properties considered under such section 127 (a) as destroyed or seized may be allocated among the properties so recovered in such manner as the Secretary or his delegate may determine under regulations prescribed by the Secretary or his delegate, and the amounts so allocated to any such property so recovered shall be the unadjusted basis of such property in lieu of the unadjusted basis of such property determined under the preceding sentence. (b) PROPERTY RECOVERED IN TAXABLE Y E A R TO W H I C H SECTION

1333 APPLIES.—In the case of a taxpayer who has made an election under section 1335, the basis of property recovered shall be an amount equal to the value a t which such property is included in the amount of the recovery under section 1333(1) (determined without regard to the last sentence thereof), reduced by such part of the gain under section 1333(3) which is not recognized as provided in section 1033. SEC. 1337. APPLICABLE RULES. (a) DETERMINATION OF T A X B E N E F I T S. — The determination as to

whether and to what extent an allowable deduction on account of the destruction or seizure of property described in section 127(a) of the Internal Revenue Code of 1939 did or did not result in a reduction of any tax of the taxpayer under chapter 1 or 2 of such code shall be made in accordance with regulations prescribed by the Secretary or his delegate. (b) PARTIAL WORTHLESSNESS OF CERTAIN INVESTMENTS T R E A T E D AS W A R LOSSES U N D E R 1939 C O D E. — The part of the stock or other

interest of the taxpayer treated under subsection (e) of such section 127 as property described in subsection (a)(3) of such section shall be treated in the same manner for purposes of this part.

§ 1337(b)

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