CH.
1—NORMAL TAXES AND SURTAXES
313
redemption (except a distribution having the effect of a dividend) £ of the whole or a part of the transferor's own stock (not acquired on the transfer) and a payment in complete or partial retirement or cancellation of securities representing indebtedness of the transferor or a complete or partial retirement or cancellation of such securities which is a part of the consideration for the transfer shall be con^^ sidered an expenditure for property other than nonexempt property, and if, on the transfer, a liability of the transferor is assumed, or w property of the transferor is transferred subject to a liability, the s amount of such liability shall be considered to be an expenditure by the transferor for property other than nonexempt property. (4) CONSENTS.—This subsection shall not apply unless the es transferor corporation consents, at such time and in such manner as the Secretary or his delegate may by regulations prescribe to the o* regulations prescribed under section 1082(a)(2) in effect at the time of filing its return for the taxable year in which the transfer occurs. (c) DISTRIBUTION OF STOCK OR SECURITIES O N L Y. —
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(1) IN GENERAL.—If there is distributed, in obedicnce to an Order of the Securities and Exchange Commission, to a shareholder in a corporation which is a registered holding company or a majorityowned subsidiary company, stock or securities (other than stock or securities which are nonexempt property), without the surrender by such shareholder of stock or securities in such corporation, no gain to the distributee from the receipt of the stock or securities so distributed shall be recognized. (2)
SPECIAL RULE.—If—
(A) there is distributed to a shareholder in a corporation rights to acquire common stock in a second corporation without the surrender by such shareholder of stock in the first corporation, (B) such distribution is in accordance with an arrangement forming a ground for an order of the Securities and Exchange Commission issued pursuant to section 3 of the Public Utility Holding Company Act of 1935 (49 Stat. 810; 15 U.S.C. 79c) that such corporation is exempt from any provision or provisions of such Act, and (C) before January 1, 1958, the first corporation disposes of all of the common stock in the second corporation which it owns, then no gain to the distributee from the receipt of the rights so distributed shall be recognized. If the first corporation does not, before January 1, 1958, dispose of all of the common stock which. it owns in the second corporation, then the periods of limitation provided in sections 6501 and 6502 on the making of an assessment or the collection by levy or a proceeding in court shall, with respect to any deficiency (including interest and additions to the tax) resulting solely from the receipt of such rights to acquire stock, include one year immediately following the date on which the first corporation notifies the Secretary or his delegate whether or not the requirements of subparagraph (C) of the preceding sentence have been met; and such assessment and collection may be made notwithstanding any provision of law or rule of law which would otherwise prevent such assessment and collection.
(IB ih</ § 1081(c)(2) 49012°—54
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