102 CODIFICATION OF INTERNAL REVENUE LAWS poration from which such stock or securities were received and they were issued (1) as the sole consideration for the property transferred to such corporation, then the basis of such stock or securities shall be either (A) the same as in the case of the property transferred therefor, or (B) the fair market value of such stock or securities at the time of their receipt, whichever is the lower; or (2) as part con- sideration for the property transferred to such corporation, then the basis of such stock or securities shall be either (A) an amount which bears the same ratio to the basis of the property transferred as the fair market value of such stock or securities at the time of their receipt bears to the total fair market value of the entire consideration received, or (B) the fair market value of such stock or securities at the time of their receipt, whichever is the lower. SEC. 373. DEFINITIONS. As used in this supplement- (a) The term "order of the Securities and Exchange Commission" means an order (1) issued after May 28, 1938, and prior to January 1, 1940, by the Securities and Exchange Commission to effectuate the provisions of section 11 (b) of the Public Utility Holding Com- pany Act of 1935, 49 Stat. 820 (U. S . C ., Supp. III, Title 15, § 79 (b)), or (2) issued by the Commission subsequent to December 31, 1939 in which it is expressly stated that an order of the character specified in clause (1) is amended or supplemented, and (3) which has become final in accordance with law. (b) The terms "registered holding company", "holding-company system", and "associate company" shall have the meanings assigned to them by section 2 of the Public Utility Holding Company Act of 1935, 49 Stat. 804 (U. S . C., Supp. III, Title 15, § 79 (b), (c)). (c) The term "majority-owned subsidiary company" of a regis- tered holding company means a corporation, stock of which, repre- senting in the aggregate more than 50 per centum of the total combined voting power of all classes of stock of such corporation entitled to vote (not including stock which is entitled to vote only upon default or nonpayment of dividends or other special circum- stances) is owned wholly by such registered holding company, or partly by such registered holding company and partly by one or more majority-owned subsidiary companies thereof, or by one or more majority-owned subsidiary companies of such registered holding company. (d) The term "system group" means one or more chains of corpo- rations connected through stock ownership with a common parent corporation if- (1) At least 90 per centum of each class of the stock (other than stock which is preferred as to both dividends and assets) of each of the corporations (except the common parent corporation) is owned directly by one or more of the other corporations; and (2) The common parent corporation owns directly at least 90 per centum of each class of the stock (other than stock which is preferred as to both dividends and assets) of at least one of the other corporations; and (3) Each of the corporations is either a registered holding com- pany or a majority-owned subsidiary company. (e) The term "nonexempt property" means- (1) Any consideration in the form of a cancellation or assump- tion of debts or other liabilities (including a continuance of en- cumbrances subject to which the property was transferred); (2) Short-term obligations (including notes, drafts, bills of exchange, and bankers' acceptances) having a maturity at the time of issuance of not exceeding twenty-four months, exclusive of days of grace;
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