56 STAT.] 77TH CONG. , 2D SESS.-CH. 619-OCT. 21 , 1942 (c) HOLDING PERIOD OF PROPERTY ACQUIRED IN EXCHANGE FOR PROPERTY INVOLUNTARILY CONVERTED. - (1) IN GENERAL.-Section 117 (h) (1) is amended by inserting after the period at the end thereof the following new sentence: "For the purposes of this paragraph, an involuntary conversion described in section 112 (f) shall be considered an exchange of the property converted for the property acquired." (2) TAXABLE YEARS TO WHICH APPLICABLE. - The amendment made by paragraph (1) shall be applicable with respect to tax- able years beginning after December 31, 1938. (d) RECOGNITION OF Loss ON INVOLUNTARY CONvERSIoNs. -Sec- tion 112 (f) (relating to the nonrecognition of gain and loss on involuntary conversions) is amended by striking out "no gain or loss shall be recognized" and inserting in lieu thereof "no gain shall be recognized, but loss shall be recognized". (e) PARTIAL FAILURE TO REPLACE PROPERTY.-The last sentence of section 112 (f) is amended to read as follows: "If any part of the money is not so expended, the gain, if any, shall be recognized to the extent of the money which is not so expended (regardless of whether such money is received in one or more taxable years and regardless of whether or not the money which is not so expended constitutes gain)." SEC. 152. HOLDING PERIOD OF STOCK ACQUIRED THROUGH EXER- CISE OF RIGHTS. Section 117 (h) (relating to the holding period of capital assets) is amended by inserting at the end thereof the following new paragraph: "p6) In determining the period for which the taxpayer has held stock or securities acquired from a corporation by the exer- cise of rights to acquire such stock or securities, there shall be included only the period beginning with the date upon which the right to acquire was exercised." SEC. 153. TWO-YEAR CARRY-BACK OF NET OPERATING LOSSES. (a) DETERMINATION OF CARRY-BACK.-Section 122 (b) (relating to the amount of the net operating loss carry-over), is amended to read as follows: "(b) AMOUNT OF CARRY-BACK AND CARRY-OVER.- "(1) NET OPERATING LOSS CARRY-BACK.- If for any taxable year beginning after December 31, 1941, the taxpayer has a net operat- ing loss, such net operating loss shall be a net operating loss carry-back for each of the two preceding taxable years, except that the carry-back in the case of the first preceding taxable year shall be the excess, if any, of the amount of such net operating loss over the net income for the second preceding taxable year computed (A) with the exceptions, additions, and limitations provided in subsection (d) (1), (2), (4), and (6), and (B) by determining the net operating loss deduction for such second preceding taxable year without regard to such net operating loss. "(2) NrE OPERATING LOSS CARRY-OVER.-If for any taxable year the taxpayer has a net operating loss, such net operating loss shall be a net operating loss carry-over for each of the two succeeding taxable years, except that the carry-over in the case of the second succeeding taxable year shall be the excess, if any, of the amount of such net operating loss over the net income for the intervening taxable year computed (A) with the exceptions, additions, and limitations provided in subsection (d) (1), (2)', 53 Stat. 52 . 26U.S.0.. 117(h) (1). 53 Stat. 39 . 26U.S.C.§ 112(. Infra. . 53 Stat. 39. 26U. .C.§112(0. 53 Stat. 52 . 26U.8. . 117 (h). 53 Stat. 867. 26U.S.C. 1122 (b). 847
�
