Page:United States Statutes at Large Volume 72 Part 1.djvu/1683

 72 S T A T. ]

PUBLIC LAW 8 5 - 8 6 6 - S E P T. 2, 1958

each, the amount of gift tax paid with respect to such gift under chapter 12 shall be the sum of the amounts of tax paid with respect to each half of such gift (computed in the manner provided in paragraph (2)). "(4) TREATMENT AS ADJUSTMENT TO BASIS.—For purposes of section 1016(b), an increase in basis under paragraph (1) shall be treated as an adjustment under section 1016(a). "(5) APPLICATION TO GIFTS BEFORE 1955.—With respect to any property acquired by gift before 1955, references in this subsection to any provision of this title shall be deemed to refer to the corresponding provision of the Internal Revenue Code of 1939 or prior revenue laws which was effective for the year in which such gift was made." (b) CROSS REFERENCE.—Section 2501(b) is amended to read as follows: "(b)

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26 USC loie.

26 USC 2soi.

CROSS REFERENCES.—

"(1) For increase in basis of property acquired by gift for gift tax paid, see section 1015(d). "(2) For exclusion of transfers of property outside the United States by a nonresident who is not a citizen of the United States, see section 2511(a)." SEC. 44. PROPERTY ACQUIRED IN TAX-FREE EXCHANGE. (a) BASIS.—The first sentence of section 1031(d) (relating to basis 26 USC 1031. of property acquired in certain tax-free exchanges) is amended to read as follows: "If property was acquired on an exchange described in this section, section 1035(a), or section 1036(a), then the basis shall be 1036."^ ^ ^°^^' the same as that of the property exchanged, decreased in the amount of any money received by the taxpayer and increased in the amount of gam or decreased in the amount of loss to the taxpayer that was recognized on such exchange." (b) CLERICAL AMENDMENT.—The second sentence of section 1031 (d) is amended by striking out "paragraph" and inserting in lieu thereof "subsection". SEC. 45. INVOLUNTARY CONVERSIONS. Section 1033(a)(2) (relating to involuntary conversions) is 26 USC 1033. amended by adding at the end thereof the following new sentence: "For purposes of this paragraph and paragraph (3), the term 'control' means the ownership of stock possessing at least 80 percent of the total combined voting power of all classes of stock entitled to vote and at least 80 percent of the total number of shares of all other classes of stock of the corporation." SEC. 46. CONDEMNATION OF REAL PROPERTY HELD FOR PRODUCTIVE USE IN TRADE OR BUSINESS OR FOR INVESTMENT. (a)

CONVERSION INTO OR PURCHASE OP L I K E PROPERTY.—Section

1033 (relating to involuntary conversions) is amended by redesignating subsection (g) as (h), and by inserting after subsection (f) the following new subsection: " (g) CONDEMNATION OF REAL PROPERTY HELD FOR PRODUCTIVE U S E IN TRADE OR BUSINESS OR FOR INVESTMENT.— "(1) SPECIAL RULE.—For purposes of subsection (a), if real

property (not including stock in trade or other property held primarily for sale) held for productive use in trade or business or for investment is (as the result of its seizure, requisition, or condemnation, or threat or imminence thereof) compulsorily or involuntarily converted, property of a like kind to be held either for productive use in trade or business or for investment shall be treated as property similar or related in service or use to the property so converted.

26 USC 1033.

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