PUBLIC LAWS-CH. 619-OCT. 21, 1942 53 Stat. 869. 26U. S. . C 0S (d). Ante, p. 844. 53 Stat. 6. 26U. .C.§ 12(c). Ante. p . 843. 53 Stat. 50 . 26U. S .C., Supp.I, i 117 (a) (1). Ante p. 844 53 Stat. 14 . sU.S.C.23(). Aite, p. 819. (i) CAPITAL LOSSES OF PERSONAL HOLDING COMPANIES.-Section 505 (d) is amended to read as follows: "(d) 1941 CAPITAL Loss CARRY-OVER DENIED.- The net income shall be computed without regard to section 117 (e) (2)." (j) CRoss REFERENCE.-Section 12 (c) is amended to read as follows: "(c) TAX IN CASE OF CAPITAL GAINS OR LOSSEs.-For rate and computation of alternative tax in lieu of normal tax and surtax in the case of a capital gain or loss from the sale or exchange of capital assets held for more than 6 months, see section 117 (c)." SEC. 151. REAL PROPERTY; INVOLUNTARY CONVERSIONS; ETC. (a) REAL PROPERTY NOT TREATED AS CAPITAL ASSET.- Section 117 (a) (1) (relating to the definition of "capital assets") is amended by inserting immediately before the semicolon at the end thereof a comma and the following: "or real property used in the trade or business of the taxpayer". (b) GAINS AND LOSSES FROM INVOLUNTARY CONVERSION AND FROM THE SALE OR EXCHANGE OF CERTAIN PROPERTY USED IN THE TRADE OR BUSINESS. -Section 117 (relating to capital gains and losses) is amended by inserting at the end thereof the following new sub- section: "(j) GAINS AND LOSSES FROM INVOLUNTARY CONVERSION AND FROM THE SALE OR EXCHANGE OF CERTAIN PROPERTY USED IN iHE TRADE OR BUSINESS. - "(1) DEFINITION OF PROPETY USED IN THE TRADE OR BUSINESS.- For the purposes of this subsection, the term 'property used in the trade or business' means property used in the trade or business, of a character which is subject to the allowance for depreciation provided in section 23 (1), held for more than 6 months, and real property used in the trade or business, held for more than 6 months, which is not (A) property of a kind which would properly be includible in the inventory of the taxpayer if on hand at the close of the taxable year, or (B) property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business. "(2) GENERAL RULE. -If, during the taxable year, the recog- nized gains upon sales or exchanges of property used in the trade or business, plus the recognized gains from the compulsory or involuntary conversion (as a result of destruction in whole or in part, theft or seizure, or an exercise of lhe power of requisi- tion or condemnation or the threat or imminence thereof) of property used in the trade or business and capital assets held for more than 6 months into other property or money, exceed the recognized losses from such sales, exchanges, and conversions, such gains and losses shall be considered as gains and losses from sales or exchanges of capital assets held for more than 6 months. If such gains do not exceed such losses, such gains and losses shall not be considered as gains and losses from sales or exchanges of capital assets. For the purposes of this paragraph: "(A) In determining under this paragraph whether gains exceed losses, the gains and losses described therein shall be included only if and to the extent taken into account in com- puting net income, except that subsections (b) and (d) shall not apply. "(B) Losses upon the destruction, in whole or in part. theft or seizure, or requisition or condemnation of property used in the trade or business or capital assets held for more than 6 months shall be considered losses from a compulsory or involuntary conversion." 846 [56 STAT.
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