73 S T A T. ]
PUBLIC LAW 86-34e-SEPT. 22, 1969
"SEC. 1037. CERTAIN EXCHANGES OF UNITED STATES OBLIGATIONS. " (a) GENERAL RULE.—When so provided by regulations promulgated by the Secretary in connection with the issue of obligations of the United States, no gain or loss shall be recognized on the surrender to the United States of obligations of the United States issued under the Second Liberty Bond Act in exchange solely for other obligations issued under such Act. " (b) APPLICATION OF SECTION 1232.— "(1)
EXCHANGES INVOLVING OBLIGATIONS ISSUED AT A DIS-
COUNT.—In any case in which gain has been realized but not recognized because of the provisions of subsection (a) (or so much of section 1031(b) as relates to subsection (a) of this section), to the extent such gain is later recognized by reason of a disposition or redemption of an obligation received in an exchange subject to such provisions, the first sentence of section 1232(a)(2)(A) shall apply to such gain as though the obligation disposed of or redeemed were the obligation surrendered to the Government in the exchange rather than the obligation actually disposed of or redeemed. For purposes of this paragraph and section 1232, if the obligation surrendered in the exchange is a nontransferable obligation described in subsection (a) or (c) of section 454— " (A) the aggregate amount considered, with respect to the obligation surrendered, as gain from the sale or exchange of property which is not a capital asset shall not exceed the difference between the issue price and the stated redemption price which applies at the time of the exchange, and " (B) the issue price of the obligation received in the exchange shall be considered to be the stated redemption price of the obligation surrendered in the exchange, increased by the amount of other consideration (if any) paid to the United States as a part of the exchange. "(2)
EXCHANGES OF TRANSFERABLE OBLIGATIONS ISSUED AT NOT
LESS THAN PAR.—In any case in which subsection (a) (or so much of section 1031(b) or (c) as relates to subsection (a) of this section) has applied to the exchange of a transferable obligation which was issued at not less than par for another transferable obligation, the issue price of the obligation received fix>m the Government in the exchange shall be considered for purposes of applying section 1232 to be the same as the issue price of the obligation surrendered to the Government in the exchange, increased by the amount of other consideration (if any) paid to the United States as a part of the exchange. " (c) CROSS EEFERENCES.—
"(1) For rules relating to the recognition of gain or loss in a case where subsection (a) would apply except for the fact that the exchange was not made solely for other obligations of the United States, see subsections (b) and (c) of section 1031. "(2) For rules relating to the basis of obligations of the United States acquired in an exchange for other obligations described in subsection (a), see subsection (d) of section 1031." (b) The table of sections for part III of subchapter 0 of chapter 1 of the Internal Revenue Code of 1954 is amended by adding at the end thereof the following: "Sec 10S7. Certain exchanges of United States obligations."
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^o Stat. 288.
31 USC 774(2).
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