52 STAT.] 75TH CONG. , 3D SESS.-CH. 289-MAY 28, 1938 (1) If the corporation receiving such other property or money Ifditributed on re- distributes it in pursuance of the plan of reorganization, no gain to the corporation shall be recognized from the exchange, but (2) If the corporation receiving such other property or money I not distributed. 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 value of such other property so received, which is not so distributed. (e) Loss FROM EXCHANGES NOT SOLELY IN KIND. -If an exchange notssfrom exeanges would be within the provisions of subsection (b) (1) to (5), inclusive, of this section if it were not for the fact that the property received in exchange consists not only of property permitted by such para- graph 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. In (f) INVOLUNTARY CONVERSIONS. -If property (as a result of its siolnstcver destruction in whole or in part, theft or seizure, or an exercise of the power of requisition or condemnation, or the threat or imminence thereof) is compulsorily or involuntarily converted into property simi- lar or related in service or use to the property so converted, or into money which is forthwith in good faith, under regulations prescribed by the Commissioner with the approval of the Secretary, expended in the acquisition of other property similar or related 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 recognized. 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 Definitions. section 113- (1) The term "reorganization" means (A) a statutory merger Reorganzation. 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 transfer the transferor or its shareholders 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 cor- gaato Treor. poration resulting from a reorganization and includes both cor- porations in the case of a reorganization resulting from the acquisition by one corporation of stock or properties of another. (h) DEFINITION OF CONTROL. - As used in this section the term "Control." "control" means the ownership of stock possessing at least 80 per centum of the total combined voting power of all classes of stock entitled to vote 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 tFreign corpora gain shall be recognized in the case of any of the exchanges described Ante, PP. 485, 4 S . in subsection (b) (3), (4), (5), or (6), or described in so much of subsection (c) as refers to subsection (b) (3) or (5), or described in subsection (d), a foreign corporation shall not be considered as a corporation unless, prior to such exchange, it has been established 489
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