Page:United States Statutes at Large Volume 43 Part 1.djvu/286

SIXTY-EIGHTH CONGRESS. Sess. 1. on. 234. 1924. 255 earnings and profits accumulated after February 28, 1913, have Cogjlggglf Mxbeen distributed, but an such tax-free distribution shall be applied ` against and reduce the basis of the stock provided in Section 204. (c) Amounts distributed in complete liquidation of a corporation ]i(£,§8§,j,§1*’“**°° in shall be treated as in full payment in exchange for the stock, and ` amounts distributed in partial liquidation o a corporation shall be treated as in part or full payment in exchange for the stock. D t . i The gain or loss to the distributes resulting from such exchange shall gSx¤°0:i$S`f°° °° °‘ be determined under section 202, but shall be recognized only to the P ti H. id no extent provided in section 203. In the case of amounts distributed um§°ii>¤i¤¤i°° ° D in partial liquidation (other than a distribution within the provisions of subdivision (g) of section 203 of stock or securities in connection with a reorganization) the part of such distribution which is properly chargeable to capital account shall not be considered a distribution of earnings or pronts within the meanin of subdivision (b) of this section for the purpose ofdetermining Sie taxability of subsequent distributions by the corporation. (d) If any distribution (not in partial or complete liquidation) ,,§’,f,&*§}‘,§,,‘;§ made by a corporation to its shareholders is not out of increase in Bgiocrgtbgm I1- 13;% value of propertty accrued before March 1, 1913, and is not out of mum. earnirggs or pro ts, then the amount of such d1stribution shall be appli against and reduce the basis of the stock provided in section 204, and if in excess of such basis such excess shall be taxable in the same manner as a gain from the sale or exchange of property. The provisions of this para ph shall also apply to distributions D°*’l°“°° °'m*”°* from depletion reserves asegbii the discovery value of mines. Ex m ti { dig (e) Any distribution made by a corporation, which was classified tribuieeg eiépmimxy as a personal service corporation under the provisions of the Revenue §§§"°,§,’},F“g,,P"°,${,*;,“,§ Act of 1918 or the Revenue Act of 1921, out of its earnings or profits ¢i<g;6] ,0 mm V 1 which were taxable in accordance with the provisions of section 218 42, 11.245: p' ’ °' of the Revenue Act of 1918 or section 218 of the Revenue Act of 1921, shall be exempt from tax to the distributees. Sm dividends mt (f) A_ stock dividend shall not be subject to tax, but if before anna. or after the distribution of any such dividend the corporation pro- ,§§,°‘§§2’,,‘,¥§,§‘g,“§,°,‘§ ceeds to cancel or redeem its stock at such time and in such manner ¤ivi¤¤¤¤¤· as to make the distribution and cancellation or redemption in whole or in part essentially uivalent to the distribution of a taxable dividend, the amount sogdistributed in redemption or cancellation of the stock, to the extent that it represents a distribution of earnings or profits accumulated after February 28, 1913, shall be treated as a taxable dividend. _ _ _ M _ _ u , n 0, (g) As used in this section the term " amounts distributed in ··¤mm¤ ¤smi»¤•»g_ partial liquidation " means a_distr1bution by a corporation in com- """'““‘ “"“"*°“°“· plete cancellation or redemption of a part of its stock, or one of a series of distributions in complete cancellation or redemption of all or a portion of its stock. nmmzumA·r1oN or AMOUNT or cam on mss. °““‘°"°“‘ Sm, 202. (a) Except as hereinafter provided in this section, the ¤¤Bdgigi4for¤¤p¤w!.' gain from the sale or other disposition of property shall be the excess of the amount realized therefrom over the basis provided in subdivision (a) or (b) of section 204, andthe loss shall be the excess of such basis over the amount realized. _ A _ t hm i_ (b) In computing the amount of gam or low nmder subdivision up 2,,°'},$°€¤,.,., 1.,2,, (a) proper adjustment shall be made for (1) any expenditurexprop- g§WP*f“°°·°”··°*P”* erly chargeable to capital account, and (2) any item of loss, e austion, wear and tear, obsolescence, amortization, or depletion, previously allowed with respect to such property. 45822°-251‘——19 ~