Page:United States Statutes at Large Volume 47 Part 1.djvu/224

200 INCOME TAX Stockissuesexcepted . Property acquired by issuance of stock or as paid-in surplus . By a corporation after 1920. Issuance of stock controlled by trans- feror . Ante, p .190. Paid-in surplu s, etc . Tax - free distribu- tions . Stock distributed on reorganization after De- cember 81, 1923 . Ante, p.197 . If acquired by in- volu nta ry con ver sio n. Wash sales of stock on which loss not al- lowed . Post, p . 208. Basis. Property acquired during affiliation . Adjustment and de- termination of basis . "Period of affilia- tion" deftned . 72d CONGRESS . SESS. I. CH. 209. JU NE 6, 1932 . - or decreased in the amount of loss recognized to the transferor upon such transfer under the law applicable to the year in which the transfer was made . This paragraph shall not apply if the property acquired consists of stock or securities in a corporation a party to the reorganization, unless acquired by the issuance - of stock or se curities of the transferee as th e consideration in whole or in part for the transfer . (8) PROPERTY ACQUIRED BY ISSUANCE OF ST OCK OR AS PAID-IN SUR- PLUS .-If the property was acquired after December 31, 1920, by a corporation- (A) by the issuance of its stock or securities in connection with a transaction described in section 112(b) (5) (including, also, cases where part of the consideration for the transfer of such property to the corporation was property or money, in addition to such stock or securities) or (B) as paid-in surplus or as a contribution to capital, then the basis shall be the same as it would be in the hands of the transferor, increased in the amount of gain or decreased in the amount of loss recognized to the transferor upon such transfer under the law applicable to the year in which the transfer was made. (9) TAX-FREE DISTRIBUTIONS .-If the property consists of stock or securities distributed after December 31, 1923, to a taxpayer in connection with a transaction described in section 112( g ), the basis in the case of the stock in respect of which the distribution was made shall be: apportioned, under rules and regulations prescribed by the Commissioner with the approval of the Secretary, between such stock and the stock or securities distributed . (10) INVOLUNTARY CONVERSION .--If the property was acquired as the result of a compulsory or involuntary conversion described in section 112(f), the basis shall be the same as in the case of the property so converted, decreased in the amount of any money received by the taxpayer which was not expended in accordance with t he provi sions of law (ap plicable to the year in which su ch conversion was made) determining the taxable status of the gain or loss upon such conversion, and increased in the amount of gain or decreased in the amount of loss to the taxpayer recognized upon su ch conversion under the law applicable to, the year in which such conversion was made . (11) WASH SALES of sToOK.-If the property consists of stock or securities the acquisition of which (or the contract or option to acquire which) resulted in the nondeductibility (under section 118 of this Act or corresponding provisions of prior income tax laws, -rel atin g to wash sale s) of the loss from the sale or o ther dispo sitio n of substantially identical stock or securities, then the basis shall be the basis of the stock or securities so sold or disposed of, increased or decreased, as the case may be, by the difference, if any, between the price at which the property was acquired and the price at which such substantia lly identical sto ck or securities were sold or otherwise disposed of. (12) PROPERTY ACQU IRED DURING AFFUAATION .-I n the c ase of property acquired by a c orporation, durin g a period of af filiation, from a corporation with which it was affiliated, the basis of such property, afterr such period of affiliation, shall be determined, in accordance with regulations prescribed by the Commissioner with the approval of the Secretary without regard to inter-company transactions in respect of which gain or loss was not recognized . For the purposes of this paragraph, the term " period of affilia- tion " means the period during which such corporations were affili-