54 STAT.] 76TH CONG. , 3D SESS.-CH. 757-OCT. 8, 1940 "(B) Plus an amount which bears the same ratio to the excess over $500,000 of the sum of the amounts computed under subparagraph (A) with respect to each transferor, as the amount computed under subparagraph (A) with respect to such transferor bears to the sum of the amounts computed under such subparagraph with respect to each transferor. "(c) HIGHEST BRACKET AMOUNT OF TRANSFEREE. - "(1) TAXABLE YEAR OF EXCHANGE INVOLVING CONTROL.-In the case of a transferee upon an exchange after the beginning of the first taxable year under this subchapter of a transferor upon such exchange the transferee's highest bracket amount for the taxable year in which the exchange takes place shall be the sum of- "(A) Its highest bracket amount immediately preceding the exchange multiplied by the number of days in the taxable year up to and including the day of the exchange, plus "(B) Its highest bracket amount for the taxable year after the exchange multiplied by the number of days in the taxable year remaining after the day of the exchange, divided by the number of days in the taxable year. For the purposes of this paragraph and subsection (d) of this section 'exchange' includes a liquidation described in paragraph (5) of this subsection, and such exchange shall be deemed to have taken place on the day such liquidation was completed. "(2) TAXABLE YEARS AFTER EXCHANGE INVOLVING CONTROL.-In the case of a transferee upon an exchange after the beginning of the first taxable year under this subchapter of a transferor upon such exchange, if immediately after the exchange any transferor upon such exchange or its shareholders, or both, are in control of the transferee, the transferee's highest bracket amount for any taxable year after the exchange shall be an amount which is a percentage of such transferor's highest bracket amount immedi- ately preceding the exchange equal to the percentage which the excess of the transferee's daily invested capital for the day after the exchange over its daily invested capital for the day of the exchange is of such transferor's daily invested capital for the day of the exchange. " (3) TAXABLE YEARS AFTER EXCIANGE NOT INVOLVING CONTROL.- In the case of a transferee upon an exchange (other than a trans- feree described in paragraph (4) of this subsection) after the beginning of the first taxable year under this subchapter of a transferor upon such exchange, if immediately after the exchange no transferor or its shareholders, or both, are in control of the transferee, and if the shareholders of the transferee immediately preceding the exchange are not in control of the transferee immediately after the exchange, the transferee's highest bracket amount for any taxable year after the exchange shall be an amount equal to (A) the sum of the transferor's highest bracket amount immediately preceding the exchange and the transferee's highest bracket amount immediately preceding the exchange, or (B) $500,000, whichever is the smaller. "(4) TAXABLE YEARS AFTER CERTAIN EXCHANGES UNDER SECTION 112 (b) (5). -In the case of an exchange described in subsection (b) (4) of this section, the highest bracket amount of the trans- feree upon such exchange for any taxable year after the exchange shall be an amount equal (A) to the sum of the amounts com- puted under subparagraph (A) of such subsection with respect to each transferor or (B) $500,000, whichever is the smaller. 997 Highest bracket amount of transferee. Taxable year of ex- change involving con- trol. Taxable years after exchange involving control. Not involving con- trol. Taxable years after certain exchanges, etc. 63 Stat. 37 . 26 U. 8. 0., Supp. V, § 112 (b) (5).
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