298
INTERNAL REVENUE CODE OF 1954
thereof the property is required to be included in determining the value of the decedent's gross estate under chapter 11 of subtitle B or under the Internal Revenue Code of 1939. I n such case, if the property is acquired before the death of the decedent, the basis shall be the amount determined under subsection (a) reduced by the amount allowed to the taxpayer as deductions in computing taxable income under this subtitle or prior income tax laws for exhaustion, wear and tear, obsolescence, amortization, and depletion on such property before the death of the decedent. Such basis shall be applicable to the property commencing on the death of the decedent. This paragraph shall not apply to— (A) annuities described in section 72; (B) property to which paragraph (5) would apply if the property had been acquired by bequest; and (C) property described in any other paragraph of this subsection. (c) PROPERTY R E P R E S E N T I N G INCOME I N R E S P E C T
OF A D E -
CEDENT.—This section shall not apply to property which constitutes a right to receive an item of income in respect of a decedent under section 691. (d) EMPLOYEE STOCK OPTIONS.—This section shall not apply to restricted stock options described in section 421 which the employee has not exercised at death. SEC. 1015. BASIS OF PROPERTY ACQUIRED BY GIFTS AND TRANSFERS IN TRUST. (a) G I F T S A F T E R DECEMBER 31, 1920.—If the property was ac-
quired by gift after December 31, 1920, the basis shall be the same as it would be in the hands of the donor or the last preceding owner by whom it was not acquired by gift, except that if such basis (adjusted for the period before the date of the gift as provided in section 1016) is greater than the fair market value of the property at the time of the gift, then for the purpose of determining loss the basis shall be such fair market value. If the facts necessary to determine the basis in the hands of the donor or the last preceding owner are unknown to the donee, the Secretary or his delegate shall, if possible, obtain such facts from such donor or last preceding owner, or any other person cognizant thereof. If the Secretary or his delegate finds it impossible to obtain such facts, the basis in the hands of such donor or last preceding owner shall be the fair market value of such property as found by the Secretary or his delegate as of the date or approximate date a t which, according to the best information that the Secretary or his delegate is able to obtain, such property was acquired by such donor or last preceding owner. (b) TRANSFER IN T R U S T
A F T E R D E C E M B E R 31, 1920.—If
the
property was acquired after December 31, 1920, by a transfer in trust (other than by a transfer in trust by a gift, bequest, or devise),, the basis shall be the same as it would be in the hands of the grantor increased in the amount of gain or decreased in the amount of loss recognized to the grantor on such transfer under the law applicable to the year in which the transfer was made. (c) G I F T OR TRANSFER IN T R U S T B E FOR E JANUARY 1, 1921.—If
the property was acquired by gift or transfer in trust on or before § 1014(b)(9)
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