73d C ONGRESS . SESS. II. CH. 277. MAY 10, 1934 .
705 only of stock or securities permitted by such paragraph to be received without the recognition of gain, but also of other property or money, then- (1) If the corporation receiving such other property or money distributes it in pursuance of the plan of reorganization, no gain to the corpor ation shall be rec ognize d from the ex change , but (2) 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 recognized but in an amount not in excess of the sum of such money and the fair market va lue of su ch other property so receiv ed, whic h is not so distri buted . (e) Loss FROM EXCHANGES NOT SOLELY IN KIND .-If an exchange would be within the provisions of subsection (b) (1) to (5), inclu- sive, of this section if it were not for the fact that the property received in exchange consists not only of property permitted by such paragraph to be received without the recognition of gain or loss, but also of other property or money, then no loss from the excha nge sh all be recog nized . (f) INVOLUNTARY CONVERSIONS .-If property (as a result of its destruction in whole or in part, theft or seizure, or an exercise of the power of requisition or condemnation, or the threat or immi- No gain or loss, if in- voluntarily converted nence thereof) is compulsorily or involuntarily converted into prop- into similar property, erty sim ilar or r elated in service or use t o the pro perty so converted , 'to- or into money which is forthwith in good faith, under regulations prescribed by the Commissioner with the approval of the Secretary, expend ed in the ac quisit ion of other proper ty sim ilar o r rela ted in service or use to the property so converted, or in the acquisition of control of a corporation owning such other property, or in the establishment of a replacement fund, no gain or loss shall be recog- p aai of ~ dgni zed on nized . If any part of the money is not so expended, the gain, if any, shall be recognized, but in an amount not in excess of the money which is not so expended . (g) DEFINITION OF REORGANIZATION .-As used in this section and section 113- (1) The term "reorganization" means (A) a statutory merger or consolidation, or (B) the acquisition by one corporation in exchange solely for all or a part of its voting stock : of at least 80 per centum of the voting stock and at least 80 per centum of the total number of shares of all other classes of stock of another corporation ; or of substantially all the properties of another corporation, or (C) a transfer by a corporation of all or a part of its assets to another corporation if immediately after the trans- fer the transferor or its stockholders or both are in control of the corporation to which the assets are transferred, or (D) a recapitalization, or (E) a mere change in identity, form, or place of organization, however effected . (2) The term " a party to a reorganization " includes a corpora- tion resulting from a reorganization and includes both corporations in the c ase of a reo rganiz ation result ing fro m the acquis ition by one corporation of stock or properties of another . (h) DEFINITION OF CONTROL .-As used in this section the term " control " means the ownership of at least 80 per centum of the voting stock and at least 80 per centum of the total number of shares of all other classes of stock of the corporation . (i) FOREIGN CoRPORATIONs .-In determining the extent to which gain shall be recognized in the case of any of the exchanges (made after the date of the enactment of this Act) described in subsection (b) (3), (4), or (5), or described in so much of subsection (c) as 86637'- : :4 45 INCOME TAX . COMPUTATION OF NET INCO ME- Contd . No gain if distributed on reorganization . Gain recognized . Loss from exchanges not solely in kind . Involuntary conver- sions. Reorganization . Defini tion of . "Party to a reorgani- zation" " Control " defined. Foreign corporations . Not recognized if purpose is to evade Federal income taxes .
