PUBLIC LAWS-CH. 247-JUNE 29, 1939 corporation to which the assets are transferred, or (D) a recapi- talization, or (E) a mere change in identity, form, or place of organization, however effected." Effectivedate. (2) The amendments made by paragraph (1) to the respective Acts amended shall be effective as to each of such Acts as of the date of enactment of such Act. poSrtionateinteres (h) SUBSTANTIALLY PROPORTIONATE INTERESTS UNDER PRIOR ACTS.- under priorAs. 1) Section 112 (b) (5) of the Revenue Acts of 1938, 1936, 1934, 1679; 48 Stat. 704; 47 1932, and 1928, and section 203 (b) (4) of the Revenue Acts of 1926 4Stat. 16; 453Stat. 856 and 1924 are amended by inserting at the end thereof the following: Assumptionoftrans- "Where the transferee assumes a liability of a transferor, or where the feror's liability by transferee; property property of a transferor is transferred subject to a liability, then for transferdstbject to the purpose only of determining whether the amount of stock or securities received by each of the transferors is in the proportion re- quired by this paragraph, the amount of such liability (if under section 213 of the Revenue Act of 1939 it is not considered as 'other property or money') shall be considered as stock or securities re- ceived by such transferor. If, as the result of a determination of the tax liability of the taxpayer for the taxable year in which the ex- change 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 the enactment of the Revenue Act of 1939, or by a closing agreement, the treatment of the amount of such liability was different from the treatment which would result from the application of the preceding sentence, such sentence shall not apply and the result of such deter- mination shall be deemed proper. ffective date. (2) The amendments made by paragraph (1) to the respective Acts amended shall be effective as to each of such Acts as of the date of enactment of such Act. Basis under prior i) BASIS UNDE PRIOR AcT. - Acts. 52Stat. 491;49 Stat. (1) Section 113 (a) (6) of the Revenue Acts of 1938, 1936, 1934 1682; 48 Stat. 706; 47 Stat. 199; 45 Stat. 819; 1932, and 1928, and section 204 (a) (6) of the Revenue Acts of 44Wtat.er1; 43Staty. 1926 and 1924 are amended by inserting before the last sentence liability assumed by thereof the following: "Where as part of the consideration to the transeree, etc. taxpayer another party to the exchange assumed a liability of the taxpayer or acquired from the taxpayer property subject to a lia- bility, such assumption or acquisition (in the amount of the liability) shall, for the purposes of this paragraph, be considered as money received by the taxpayer upon the exchange." fective date. (2) The amendments made by paragraph (1) to the respective Acts amended shall be effective as to each of such Acts as of the date of enactment of such Act. SEC. 214 . BASIS OF STOCK DIVIDENDS AND STOCK RIGHTS. ppadjusted basis of (a) BASIs UNDER INTERNA REVENUE CoDE.-Section 113 (a) of the property. Antf" (40. Internal Revenue Code (relating to the unadjusted basis of property) is amended by inserting at the end thereof the following new paragraph: Allocations of stock. "(19) (A) If the property was acquired by a shareholder in a corporation and consists of stock in such corporation, or rights to acquire such stock, acquired by him after February 28, 1913, in a distribution by such corporation (hereinafter in this para- graph called 'new stock'), or consists of stock in respect of which such distribution was made (hereinafter in this paragraph called 'old stock') and "(i) the new stock was acquired in a taxable year begin- ning before January 1, 1936; or "(ii) the new stock was acquired in a taxable year begin- ning after December 31, 1935, and its distribution did not 872 [53 STAT.
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