Page:United States Statutes at Large Volume 70.djvu/459

 70 S T A T. ]

PUBLIC LAW 62&-JUNE 29, 1956

403

" (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. "(3) Loss 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 such paragraph 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. " (b) BASIS.—If the property of a railroad corporation (as defined in section 77(m) of the Bankruptcy Act) was acquired after July 31, 1955, in pursuance of an order of the court having jurisdiction of such corporation— "(1) in a receivership proceeding, or "(2) in a proceeding under section 77 of the Bankruptcy Act, and the acquiring corporation is a railroad corporation (as defined in section 77(m) of the Bankruptcy Act) organized or made use of to effectuate a plan of reorganization approved by the court in such proceeding, the basis shall be the same as it would be in the hands of the railroad corporation whose property was so acquired, increased in the amount of gain recognized under subsection (a)(2) to the transferor on such transfer. "(c) ASSUMPTION OF LIABILITIES.—In 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." 26^icf*3sV.^'' SEC. 2. Section 357 of such Code is hereby amended— (1) by deleting "or 371" wherever appearing in subsections (a) and (b) thereof, and inserting in lieu thereof "371, or 374", and (2) by deleting from subsection (c)(2)(B) "371" and inserting in lieu thereof "371 or 374". SEC. 3. Section 373 is hereby amended— f I1jicf*37i''* (1) by deleting from subsection (a) "transferred in pursuance" and inserting in lieu thereof "transferred before August 1, 1955, in pursuance", and (2) by deleting "December 31, 1938", and inserting in lieu thereof "December 31, 1938, and before August 1, 1955,". SEC. 4. The table of sections for part IV of subchapter C of chapter 1 of the Internal Revenue Code of 1954 is hereby amended by adding at the end thereof the following: "Sec. 374. Gain or loss not recognized in certain railroad reorganizations."

SEC. 5. Section 108(b) of the Internal Revenue Code of 1954 (relating to income of a railroad corporation from discharge of indebtedness) is hereby amended by striking out "December 31, 1955" and inserting in lieu thereof "December 31, 1957". Approved June 29, 1956.

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