80 STAT.]
PUBLIC LAW 89-384-APR. 8, 1966
101
conversion of property as a result of its destruction or seizure and shall be recognized or not recognized as provided in section 1033. " (f) BASIS or RECOVERED PROPERTY.—The basis of property (other than money) received as a recovery of a foreign expropriation loss to which this section applies shall be an amount equal to its fair market value on the date of receipt, reduced by such part of the gain under subsection (e) which is not recognized as provided in section 1033. " (g) RESTORATION or VALUE OF INVESTMENTS.—For purposes of this section, if the value of any interest in, or with respect to, property (including any interest represented by a security, as defined in section 165(g)(2))"(1) which became worthless by reason of the expropriation, intervention, seizure, or similar taking of such property by the government of any foreign country, any political subdivision thereof, or any agency or instrumentality of the foregoing, and "(2) which was taken into account as a loss from the sale or exchange of a capital asset or with respect to which a deduction for a loss was allowed under section 165 or a deduction for a bad ^^^ ^*^*- " ^ ^ debt was allowed under section 166, is restored in whole or in part by reason of any recovery of money or other property in respect of the property which became worthless, the value so restored shall be treated as property received as a recovery in respect of such loss or such bad debt. "(h)
SPECIAL RULE FOR EVIDENCES OF INDEBTEDNESS.—Bonds
or
other evidences of indebtedness received as a recovery of a foreign expropriation loss to which this section applies shall not be considered to have any original issue discount within the meaning of section 1232(a)(2). "(i) ADJUSTMENTS FOR SUCCEEDING YEARS.—For purposes of this subtitle, proper adjustment shall be made, under regulations prescribed by the Secretary or his delegate, in— " (1) the credit under section 33 (relating to foreign tax credit), " (2) the credit under section 38 (relating to investment credit), ^^ ^*^*- ^^2"(3) the net operating loss deduction under section 172, or the operations loss deduction under section 812, "(4) the capital loss carryover under section 1212(a), and 78 Stat. seo. " (5) such other items as may be specified by such regulations, for the taxable year of a recovery of a foreign expropriation loss to which this section applies, and for succeeding taxable years, to take into account items changed in making the computations under subsection (d) for taxable years prior to the taxable year of such recovery." (b)(1) Part II of subchapter B of chapter 1 of the Internal Revenue Code of 1954 (relating to items specifically included in gross income) is amended by adding at the end thereof the following new section: "SEC. 80. RESTORATION OF VALUE OF CERTAIN SECURITIES. " (a) GENERAL RULE. — I n the case of a domestic corporation subject to the tax imposed by section 11 or 802, if the value of any security (as ^ J|^^*^*; ^^^' 73 Stat. 115. defined in section 165(g)(2)) — "(1) which became worthless by reason of the expropriation, intervention, seizure, or similar taking by the government of any foreign country, any political subdivision thereof, or any agency or instrumentality of the foregoing of property to which such security was related, and "(2) which was taken into account as a loss from the sale or exchange of a capital asset or with respect to which a deduction for a loss was allowed under section 165, is restored in whole or in part during any taxable year by reason of any recovery of money or other property in respect of the property to
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