53 STAT.]
76TH CONG. , 1sT SESS.-CH. 247-JUNE 29, 1939
(d) BASIS OF PROPERTY.- Section 113 (a) (6) of the Internal Rev-
enue Code (relating to basis of property) is amended by inserting
before the last sentence thereof the following: "Where as part of the
consideration to the taxpayer another party to the exchange assumed
a liability of the taxpayer or acquired from the taxpayer property
subject to a liability, such assumption or acquisition (in the amount
of the liability) shall, for the purposes of this paragraph, be con-
sidered as money received by the taxpayer upon the exchange."
(e) TAXABLE YEARS TO WHICH APPLICABLE.- The amendments made
by subsections (a), (b), (c), and (d) shall be applicable to taxable
years beginning after December 31, 1938.
(f) AssuMPrIoN OF LIABILITY NOT RECOGNIZED UNDER PRIOR ACTS.-
(1) Where upon an exchange occurring in a taxable year ending
after December 31, 1923, and beginning before January 1, 1939, the
taxpayer received as part of the consideration property which would
be permitted by subsection (b) (4) or (5) of section 112 of the Rev-
enue Act of 1938, or the corresponding provisions of the Revenue Act
of 1924 or subsequent revenue Acts, to be received without the recog-
nition of gain if it were the sole consideration, and as part of the
consideration another party to the exchange assumed a liability of the
taxpayer or acquired from the taxpayer property subject to a liability,
such assumption or acquisition shall not be considered as "other
property or money" received by the taxpayer within the meaning of
subsection (c), (d), or (e) of section 112 of the Revenue Act of 1938,
or the corresponding provisions of the Revenue Act of 1924 or subse-
quent revenue Acts, and shall not prevent the exchange from being
within the provisions of subsection (b) (4) or (5) of section 112 of the
Revenue Act of 1938, or the corresponding provisions of the Revenue
Act of 1924 or subsequent revenue Acts; except that if, in the deter-
mination of the tax liability of such taxpayer for the taxable year in
which the exchange occurred, by a decision of the Board of Tax
Appeals or of a court which became final before the ninetieth day
after the date of enactment of the Revenue Act of 1939, or by a clos-
ing agreement, gain was recognized to such taxpayer by reason of
such assumption or acquisition of property, then for the purposes
of section 112 of the Revenue Act of 1938, and corresponding provi-
sions of the Revenue Act of 1924 or subsequent revenue Acts, such
assumption or acquisition (in the amount of the liability considered
in computing the gain) shall be considered as money received by the
taxpayer upon the exchange.
(2) Paragraph (1) shall be effective with respect to the Revenue
Act of 1924 and subsequent revenue Acts as of the date of enactment
of each such Act.
(g) DEFINITION OF REORGANIZATION UNDER PRIOR ACTS.-
(1) Section 112 (g) (1) of the Revenue Acts of 1938, 1936, and
1934 are amended to read as follows:
"(1) The term 'reorganization' means (A) a statutory merger
or consolidation, or (B) the acquisition by one corporation, in
exchange solely for all or a part of its voting stock, of substan-
tially all the properties of another corporation, but in determin-
ing whether the exchange is solely for voting stock the assump-
tion by the acquiring corporation of a liability of the other,
or the fact that property acquired is subject to a liability, shall
be disregarded; or the acquisition by one corporation in exchange
solely for all or a part of its voting stock of at least 80 per
centum of the voting stock and at least 80 per centum of the
total number of shares of all other classes of stock of another
corporation, or (C) a transfer by a corporation of all or a part
of its assets to another corporation if immediately after the trans-
fer the transferor or its shareholders or both are in control of the
871
Basis of property.
Ante, p. 41.
I. B. C. §113 (a)(6).
Money received by
taxpayer upon the ex-
change.
Taxable years to
which applicable.
Assumption of lia-
bility not recognized
under prior Acts.
Post, p. 1402.
52 Stat. 485.
43 Stat. 256.
Ante, pp. 37, 870.
1R.C.§112(b)
(4) (5).
Acquisition not con-
sidered as "other prop-
erty or money" re-
ceived by taxpayer.
52 Stat. 488, 489; 43
Stat. 257.
Exception.
52 Stat. 4S5 .
43 Stat. 250 .
Ante, pqp. 37, 870.
I. I. (' §112.
Effective date of
paragraph.
Definition of reor-
ganization under prior
Acts.
52 Stat. 489; 49 Stat.
1681; 48 Stat. 705 .
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