Page:United States Statutes at Large Volume 53 Part 1.djvu/631

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CODIFICATION OF INTERNAL REVENUE LAWS in a proceeding under this chapter: Provided, however, That if it shall be made to appear that the arrangement had for one of its principal purposes the evasion of any income tax, the exemption provided by this section shall be disallowed. SEC. 396. In determining the basis of property for any purposes of any law of the United States or of a State imposing a tax upon income, the basis of the debtor's property (other than money) or of such property (other than money) as is transferred to any person required to use the debtor's basis in whole or in part shall be decreased by an amount equal to the amount by which the indebtedness of the debtor, not including accrued interest unpaid and not result- ing in a tax benefit on any income tax return, has been cancelled or reduced in a proceeding under this chapter. The Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury shall prescribe such regula- tions as he may deem necessary in order to reflect such decrease in basis for Federal income tax purposes and otherwise carry into effect the purposes of this section. SEC. 397. Any provision in this chapter to the contrary notwithstanding, all taxes which may be found to be owing to the United States or any State from a debtor within one year from the date of the filing of a petition under this chapter, and have not been assessed prior to the date of the confirmation of an arrangement under this chapter, and all taxes which may become owing to the United States or any State from a receiver or trustee of a debtor or from a debtor in possession, shall be assessed against, may be collected from, and shall be paid by the debtor or the corporation organized or made use of for effectuating an arrangement under this chapter: Provided, however, That the United States or any State may in writing accept the provisions of any arrange- ment dealing with the assumption, settlement, or payment of any such tax. ARTICLE XII--WHEN CHAPTE TAKE MFFEr SEC. 399. (1) On and after the effective date of this amendatory Act, this chapter shall apply to debtors and their creditors, whether their rights, claims, and interests of any nature whatsoever have been acquired or created before or after such date; (2) a petition may be filed under this chapter in a proceeding in bankruptcy which is pending on the effective date of this amendatory Act; (3) the provisions of sections 12, 73, and 74, as amended, of the Act entitled "An Act to establish a uniform system of bankruptcy throughout the United States", approved July 1, 1898, shall continue in full force and effect with re- spect to proceedings pending under those sections upon the effective date of this amendatory Act; and (4) sections 395 and 396 of this Act shall apply to compositions and exten- sions confirmed under sections 12 and 74 before the effective date of this amendatory Act and to compositions and extensions which may be confirmed under sections 12 and 74 on and after such effective date. CHAPTER XII-REAL PROPERTY ARRANGEMENTS BY PERSONS OTHER THAN CORPORATIONS ARTICLE I--CONSTRUCTION SEC. 401 . The provisions of this chapter shall apply exclusively to proceedings under this chapter. Swc. 402 . The provisions of chapters I to VII, inclusive, of this Act shall, in- sofar as they are not inconsistent or in conflict with the provisions of this chapter, apply to proceedings under this chapter: Provided, however, That sub- division n of section 57 shall not apply in such proceedings unless an order shall be entered directing that bankruptcy be proceeded with pursuant to the provisions of chapters I to VII, inclusive. For the purposes of such application, provisions relating to "bankrupts" shall be deemed to relate also to "debtors," and "bankruptcy proceedings" or "proceedings in bankruptcy" shall be deemed to include proceedings under this chapter. For the purposes of such application the date of the filing of the petition in bankruptcy shall be taken to be the date of the filing of an original petition under section 422 of this Act, and the date of adjudication shall be taken to be the date of the filing of the petition under section 421 or 422 of this Act. ARTICLE H--DEFINITIONS SEC. 406. For the purposes of this chapter, unless inconsistent with the context- (1) "arrangement" shall mean any plan which has for its primary purpose the alteration or modification of the rights of creditors or of any class of them, holding debts secured by real property or a chattel real of which the debtor is the legal or equitable owner; CXXVI