PUBLIC LAW 100-647—NOV. 10, 1988
102 STAT. 3579
exchanges property, in pursuance of the plan of reorganization, solely for stock or securities in another corporation a party to the reoi^anization. "(b) EXCHANGES NOT SOLELY IN KIND.—
"(1) GAIN.—If subsection (a) would apply to an exchange but for the fact that the property received in exchai^e consists not only of stock or securities permitted by subsection (a) to be received without the recognition of gain, but also of other property or money, then— "(A) PROPERTY DISTRIBUTED.—If the corporation receiving
such other property or money distributes it in pursuance of the plan of reorganization, no gain to the corporation shall be recognized from the exchange, but "(B) PROPERTY NOT DISTRIBUTED.—If the
corporation
receiving such other property or money does not distribute it in pursuance of the plan of reorganization, the gain, if any, to the corporation shall be reco^iized. The amount of gain recogiazed under subparagraph (B) shall not exceed the sum of the money and the fair market value of the other property so received which is not so distributed. "(2) Loss.—U subsection (a) would apply to an exchange but for the fact that the property received in exchai^e consists not only of property permitted by subsection (a) to be received without the recognition of gain or loss, but also of other property or money, then no loss from the exchange shall be recognized. "(3) TREATMENT OF TRANSFERS TO CREDITORS.—For purposes of pars^aph (1), any transfer of the other property or money received in the exchange by the corporation to its creditors in connection with the reorganization shall be treated as a distribution in pursuance of the plan of reorganization. The Secretary may prescribe such r^ulations as may be necessary to prevent avoidance of tax through abuse of the preceding sentence or subsection (c)(3). "(c) TREATMENT OF DISTRIBUTIONS.—
"(1) IN GENERAL.—Except as provided in paragraph (2), no gain or loss shall be recognized to a corporation a party to a reorganization on the distribution to its shareholders of property in pursuance of the plan of reorganization. ' (2) DISTRIBUTIONS OF APPRECIATED PROPERTY.— "(A) IN GENERAL.—If—
"(i) in a distribution referred to in paragraph (1), the corporation distributes property other than qualified property, and "(ii) the fair market value of such property exceeds its adjusted basis (in the hands of the distributing corporation), then gain shall be recognized to the distributing corporation as if such property were sold to the distributee at its fair market value. "(B) QUALIFIED PROPERTY.—For purposes of this subsection, the term 'qualified property* means— "(i) any stock in (or right to acquire stock in) the distributuig corporation or obligation of the distributi i ^ corporation, or '(ii) any stock in (or right to acquire stock in) another corporation which is a party to the reorganization or
19-194 O—91—Part 4
20: QL 3
�
