198
72d CONGRESS . SESS. I. CH. 209. JU NE 6, 1932 . INCOME TAX
no gain to the distributee from the receipt . of such stock or secu- rities was recognized by law, shall not be considered a distribution Pool, p . 2W. of earnings or profits withinn the meaning of section 115(b) for the purpose of d etermining the t axability of sub sequent distribut ions by the corporation . Reorganization .
(i) DEFINITION OF REORG ANIZA TION .-As used in this section and sections 113 and 115-- Acts constituting . (1) The term "reorganization" means (A) a merger or con- solidation (including the acquisition by one corporation of at least a majority of th e voting stock a nd at least a ma jority of the tot al numbe r of sha res of a ll other classes of stoc k of ano ther corporation, or substantially all the properties of another corpo- Tran oa • ration ), or (B) a tran sfer by a corpor ation of all or a part of its assets to another corp oration if immed iately after the transfer the transfero r or its stockh olders or both a re in control of the corpo- ration to which the assets are transferred, or (C) a recapitalization, or (D) a mere change in identity, form, or place of organization, however effected . "Party to areorgani • vation." (2) The term " a party to a reorganization " includes a corpo- ration resulting from a reorganization and includes both corpora- tions in the case of an acquisition by one corporation of at least a majority of the voting stock and at least a majority of the total number of shares of all other classes of stock of another corpo- ration. Ownership " of stock (j) DEFINITION OF CONTROL .-As used in this section the term constituting control ." "contr ol" m eans the ow nersh ip of at least 80 per centu m of the voting stoc k and at least 80 per centu m of the t otal n umber of Foreigneorporationse
shares of all other classes of stock of the corporation . p Not rerogniaed ii (k) FORE IGN CORPORATIONS .-In determining the extent to which Federa, income uses e gain shall be recognized in the case of any of the exchanges or dis- tri bu tio ns (m ade after the d ate of the enactment of t his Act) described in subsection (b) (3), (4), or (5) or described in so much of subsection (c) as refers to subsection (b) (3) or (5), or described in subsection (d) or (g), a fore ign corp oration shall no t be con - sidered as a corporation unless, prior to such exchange or distribu- tion, it has been established to the satisfaction of the Commissioner that such exchange or distribution is not in pursuance of a pl an having as one of its principal purposes the avoidance of Federal income taxes. Basis for determining SEC . 113. ADJUSTED BASIS FOR DETERMINING GAIN OR LOSS . gain or loss . Cost value ; excep- (a) BASIS (UNADJUSTED) OF PR OPERTY .- T he basis of property tions .
shall be the cost of such property ; except that- Inventory value . (1) INVENTORY vALUE.-If the property should have been included in the last inventory, the basis shall be the last inventory Gifts alter December
value thereof . 31, 1920 . (2) GIFTS Al°1ER DECEMBER 31, 1920 .-If the pro perty was acquired by gift after December 31, 1920, the basis shall be the same as i t would be in t he hands of the donor or the last preceding Determination . owner by whom it was not acquired by gift . If the facts necessary to determine such basis are unknown to the donee, the' Commis- sioner shall, if possible, obtain such facts from such donor or last Fair market value . preceding owner, or any other person cognizant thereof . If the Commissioner finds it impossible to obtain such facts, the basis' shall be the fair market value of such property as found by the C ommi ssio ner as of the da te or ap prox imat e da te at wh ich, acc ording t o the be st infor mation t hat the Commissi oner is able to obtain , such property was acquired by such donor or la st preced- ing owner.
