PUBLIC LAWS-CH. 619-OCT. 21, 1942 53 Stat. 10 . 26U.S.C.§22(b). Ante, p. 811. 47 Stat. 1481. 11U.S .C . 205(m). 47 Stat. 1474 . 11 U. S.C.§205 Supra. 63 Stat. 40. 26U. .C. 113; Supp. I, § 113. Supra. Supra. (b) RAILROAD CORPORATIONs-DIscHAEGE OF INDEBTEDNESS IN CER- TAIN JUDICIAL PROCEEDINGs.-Section 22 (b) (relating to exclusions from gross income) is amended by inserting at the end thereof the following new paragraph: "(10) INCOME FROM DISCHARGE OF INDEBTEDNESS OF A RAILROAD CORPoRATIoN.- The amount of any income attributable to the dis- charge, within the taxable year, of any indebtedness of a railroad corporation, as defined in section 77m of the National Bankruptcy Act, as amended, to the extent that such income is deemed to have been realized by reason of a modification in or cancellation in whole or in part of such indebtedness pursuant to an order of a court in a receivership proceeding or in a proceeding under section 77 of the National Bankruptcy Act, as amended. In such case the amount of any income of the taxpayer attributable to any unamortized premium (computed as of the first day of the taxable year in which such discharge occurred) with respect to such indebtedness shall not be included in gross income and the amount of the deduction attributable to any unamortized discount (com- puted as of the first day of the taxable year in which such 'dis- charge occurred) with respect to such indebtedness shall not be allowed as a deduction. Paragraph (9) shall not apply with respect to any discharge of indebtedness to which this para- graph applies. This paragraph shall not apply to any discharge occurring in a taxable year beginning after December 31, 1945." (c) TAXABLE YEAR TO WHICH AMENDMENT APPLICABLE. - The amendment made by subsection (b) shall be applicable to taxable years beginning after December 31, 1939. SEC. 115. IMPROVEMENTS BY LESSEE. (a) ExCLUSION OF INCOME FROM LESSEE'S IMPROVEMENTS. -Section 22 (b) (relating to exclusions from gross income) is amended by adding at the end thereof the following new paragraph: "(11) IMPROVEMENTS BY LESSEE ON LESSOR'S PROPERTY.-Income, other than rent, derived by a lessor of real property upon the termination of a lease, representing the value of such property attributable to buildings erected or other improvements made by the lessee." (b) BASIS OF REAL PROPERTY UPON WHICH IMPROVEMENTS HAVE BEEN MADE BY LESSEE.- Section 113 (relating to basis for determin- ing gain or loss) is amended by adding at the end thereof the following new subsection: "(c) PROPERTY ON WHICH LESSEE HAS MADE IMPROVEMENTS. - Neither the basis nor the adjusted basis of any portion of real prop- erty shall, in the case of the lessor of such property, be increased or diminished on account of income derived by the lessor in respect of such property and excludib]e from gross income under section 22 (b) (11). If an amount representing any part of the value of real pros- erty attributable to buildings erected or other improvements made by a lessee in respect of such property was included in gross income of the lessor for any taxable year beginning before January 1, 1942, the basis of each portion of such property shall be properly adjusted for the amount so included in gross income." SEC. 116. RECOVERY OF BAD DEBTS, PRIOR TAXES, AND DELIN- QUENCY AMOUNTS. (a) EXCLusION FROM INcoME. - Section 22 (b) (relating to exclu- sions from gross income) is amended by adding at the end thereof the following new paragraph: "(12) RECOVERY OF BAD DEBTS, PRIOR TAXES, AND DELINQUENCY AMoUNrs.- Income attributable to the recovery during the tax- [56 STAT.
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