52 STAT.] 75TH CONG. , 3D SESS.-CH. 289-MAY 28, 1938 (c) RECOGNITION OF GAIN OR Loss.- In the case of a sale or exchange, the extent to which the gain or loss determined under this section shall be recognized for the purposes of this title, shall be determined under the provisions of section 112. (d) INSTALLMENT SALES. -Nothing in this section shall be con- strued to prevent (in the case of property sold under contract providing for payment in installments) the taxation of that portion of any installment payment representing gain or profit in the year in which such payment is received. SEC. 112. RECOGNITION OF GAIN OR LOSS. (a) GENERAL RULE.-Upon the sale or exchange of property the entire amount of the gain or loss, determined under section 111, shall be recognized, except as hereinafter provided in this section. (b) EXCHANGES SOLELY IN KIND.- (1) PROPERTY HELD FOR PRODUCTIVE USE OR INVESTMENT.-NO gain or loss shall be recognized if property held for productive use in trade or business or for investment (not including stock in trade or other property held primarily for sale, nor stocks, bonds, notes, choses in action, certificates of trust or beneficial interest, or other securities or evidences of indebtedness or inter- est) is exchanged solely for property of a like kind to be held either for productive use in trade or business or for investment. (2) STOCK FOR STOCK OF SAME CORPORATION. -No gain or loss shall be recognized if common stock in a corporation is exchanged solely for common stock in the same corporation, or if preferred stock in a corporation is exchanged solely for preferred stock in the same corporation. (3) STOCK FOR STOCK ON REORGANIZATION.-No gain or loss shall be recognized if stock or securities in a corporation a party to a reorganization are, in pursuance of the plan of reorganiza- tion, exchanged solely for stock or securities in such corporation or in another corporation a party to the reorganization. (4) SAME-GAIN OF CORPORATION. -No gain or loss shall be recognized if a corporation a party to a reorganization exchanges property, in pursuance of the plan of reorganization, solely for stock or securities in another corporation a party to the reorganization. (5) TRANSFER TO CORPORATION CONTROLLED BY TRANSFEROR.-NO gain or loss shall be recognized if property is transferred to a corporation by one or more persons solely in exchange for stock or securities in such corporation, and immediately after the exchange such person or persons are in control of the corpora- tion; but in the case of an exchange by two or more persons this paragraph shall apply only if the amount of the stock and securities received by each is substantially in proportion to his interest in the property prior to the exchange. (6) PROPERTY RECEIVED BY CORPORATION ON COMPLETE LIQUIDA- TION OF ANOTHER.- No gain or loss shall be recognized upon the receipt by a corporation of property distributed in complete liquidation of another corporation. For the purposes of this paragraph a distribution shall be considered to be in complete liquidation only if- (A) the corporation receiving such property was, on the date of the adoption of the plan of liquidation, and has con- tinued to be at all times until the receipt of the property, the owner of stock (in such other corporation) possessing at least 80 per centum of the total combined voting power of all classes of stock entitled to vote and the owner of at least 80 485 Recognition cf gain or loss. Installment sales. Recognition of gain or loss. General rule. Exchanges solely in kind. Property held for productive use or in- vestment. Stock for stock of same corporation. Stock for stock on reorganization. Property for stock of party to reorganiza- tion. Transfer to corpora- tion controlled by transferor. Limitation. Property received by corporation on complete liquidation of another. Conditions pre- scribed.
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