trust (other than by a transfer in trust (other than by a transfer in trust by a bequest or devise) the trust by a bequest or devise) the basis shall be the same as it would basis shall be the same as it would be in the hands of the grantor, in- be in the hands of the grantor, increased in the amount of gain or creased in the amount of gain or decreased in the amount of loss decreased in the amount of loss recrecognized to the grantor upon such ognized to the grantor upon such transfer under the law applicable transfer under the law applicable to the year in which the transfer was made. to the year in which the transfer was made. Taxable Years Beginning before 1939 Sec. 113. (a) (4) Gift or trans Sec. 113. (a) (4) Gift or transin trust before January Sec. 113. (a) (4) Gift or transfer in trust before January 1, fer in trust before January 1, 1921. fer 1921.-If the property was ac-If the property was acquired by 1, 1921. quired by gift or transfer in trust gift or transfer in trust on or beon or before December 31, 1920, fore December 31, 1920, the basis the basis shall be the fair market shall be the fair market value of value of such property at the time such property at the time of such of such acquisition. acquisition. Sec. 113. (a) (5) Property trans- Sec. 113. (a) (5) Property transmitted at death. If the property mitted at death. If the property was acquired by bequest, devise, or was acquired by bequest, devise, or inheritance, or by the decedent's es- inheritance, or by the decedent's estate from the decedent, the basis tate from the decedent, the basis shall be the fair market value of shall be the fair market value of such property at the time of such such property at the time of such acquisition. In the case of property acquisition. In the case of property transferred in trust to pay the in- transferred in trust to pay the income for life to or upon the order come for life to or upon the order or direction of the grantor, with the or direction of the grantor, with the right reserved to the grantor at all right reserved to the grantor at all times prior to his death to revoke times prior to his death to revoke the trust, the basis of such property the trust, the basis of such property in the hands of the persons entitled in the hands of the persons entitled under the terms of the trust instru- under the terms of the trust instrument to the property after the ment to the property after the grantor's death shall, after such grantor's death shall, after such death, be the same as if the trust death, be the same as if the trust instrument had been a will executed instrument had been a will executed on the day of the grantor's death. on the day of the grantor's death. For the purpose of this paragraph For the purpose of this paragraph property passing without full and property passing without full and adequate consideration under a adequate consideration under general power of appointment ex- general power of appointment exercised by will shall be deemed to ercised by will shall be deemed to be be property passing from the indi- property passing from the individvidual exercising such power by de- ual exercising such power by bequest or devise. If the property quest or devise. If the property was acquired by bequest, devise, or was acquired by bequest, devise, or inheritance, or by the decedent's es- inheritance, or by the decedent's es tate from the decedent, and if the tate from the decedent, and if the decedent died after August 26, decedent died after August 26, 1937, and if the property consists 1937, and if the property consists of stock or securities of a foreign of stock or securities of a foreign corporation, which with respect to corporation, which with respect to its taxable year next preceding the its taxable year next preceding the date of the decedent's death was, date of the decedent's death was, a See p. 156, Eighth Edition. Taxable Years under the law applicable to such year, a foreign personal holding company, then the basis shall be the fair market value of such property at the time of such acquisition or the basis in the hands of the decedent, whichever is lower. In the case of an election made by the executor under section 811 (j), the time of acquisition of the property shall, for the purpose of this paragraph, be the applicable valuation date of the property prescribed by such section in determining the value of the gross estate. Sec. 113 (a) (5), I. R. C., supra, amended by Sec. 144 (a), R. A. of 1942, by adding last sentence. Sec. 144 (b) of said Act makes amendment applicable only with respect to property includible in the gross estates of decedents dying after Oct. 21, 1942. under the law applicable to such under the law applicable to such Sec. 113 (a) (5), I. R. C., supra, amended by Sec. 144 (a), R. A. of 1942, by adding last sentence. Sec. 144 (b) of said Act makes amendment applicable only with respect to property includible in the gross estate of a decedent dying after Oct. 21, 1942. Sec. 113. (a) (6) Tax-free ex- Sec. 113. (a) (6) Tax-free ex- Sec. 113. (a) (6) Tax-free exchanges generally. If the property changes generally. If the property changes generally. If the property was acquired, after February 28, was acquired, after February 28, was acquired, after February 28, 1913, upon an exchange described 1913, upon an exchange described 1913, upon an exchange described in section 112 (b) to (e), inclusive, in section 112 (b) to (e), inclusive, in section 112 (b) to (e), inclusive, the basis (except as provided in the basis (except as provided in the basis (except as provided in paragraphs (15) (17), or (18) of paragraphs (15) (17), or (18) of paragraphs (15) (17), or (18) of this subsection) shall be the same this subsection) shall be the same this subsection) shall be the same as in the case of the property ex- as in the case of the property ex- as in the case of the property exchanged, decreased in the amount of changed, decreased in the amount of changed, decreased in the amount of any money received by the taxpayer any money received by the taxpayer any money received by the taxpayer and increased in the amount of gain and increased in the amount of gain and increased in the amount of gain or decreased in the amount of loss or decreased in the amount of loss or decreased in the amount of loss to the taxpayer that was recognized to the taxpayer that was recognized to the taxpayer that was recognized upon such exchange under the law upon such exchange under the law upon such exchange under the law applicable to the year in which the applicable to the year in which the applicable to the year in which the exchange was made. If the prop- exchange was made. If the prop-exchange was made. If the property so acquired consisted in part erty so acquired consisted in part erty so acquired consisted in part of the type of property permitted of the type of property permitted of the type of property permitted by section 112 (b) to be received by section 112 (b) to be received by section 112 (b) to be received without the recognition of gain or without the recognition of gain or without the recognition of gain or loss, and in part of other property, loss, and in part of other property, loss, and in part of other property, the basis provided in this the basis provided in this para- the basis provided in this paragraph shall be allocated between graph shall be allocated between graph shall be allocated between the properties (other than money) the properties (other than money) the properties (other than money) received, and for the purpose of received, and for the purpose of received, and for the purpose of the allocation there shall be as- the allocation there shall be as- the allocation there shall be assigned to such other property an signed to such other property an signed to such other property an amount equivalent to its fair mar- amount equivalent to its fair mar- amount equivalent to its fair market value at the date of the ex-ket value at the date of the ex-ket value at the date of the exchange. Where as part of the con- change. Where as part of the con- change. Where as part of the consideration to the taxpayer another sideration to the taxpayer another sideration to the taxpayer another party to the exchange assumed a party to the exchange assumed a party to the exchange assumed a liability of the taxpayer or acquired liability of the taxpayer or acquired liability of the taxpayer or acquired from the taxpayer property subject from the taxpayer property subject from the taxpayer property subject to a liability, such assumption or to a liability, such assumption or to a liability, such assumption or acquisition (in the amount of the acquisition (in the amount of the acquisition (in the amount of the liability) shall, for the purposes of liability) shall, for the purposes of liability) shall, for the purposes of this paragraph, be considered as this paragraph, be considered as this paragraph, be considered as money received by the taxpayer money received by the taxpayer money received by the taxpayer upon the exchange. This paragraph upon the exchange. This paragraph upon the exchange. This paragraph para under the law applicable to such under the law applicable to such Taxable Years Beginning before 1939 Sec. 113. (a) (6) Tax-free ex Sec. 113. (a) (6) Tax-free exchanges generally. If the property changes generally. If the property was acquired, after February 28, was acquired, after February 28, 1913, upon an exchange described 1913, upon an exchange described in section 112 (b) to (e), inclusive, in section 112 (b) to (e), inclusive, the basis (except as provided in the basis (except as provided in paragraphs (15) (17), or (18) of paragraphs (15) (17), or (18) of this subsection) shall be the same this subsection) shall be the same as in the case of the property ex- as in the case of the property exchanged, decreased in the amount of changed, decreased in the amount of any money received by the taxpayer any money received by the taxpayer and increased in the amount of gain and increased in the amount of gain or decreased in the amount of loss or decreased in the amount of loss to the taxpayer that was recognized to the taxpayer that was recognized upon such exchange under the law upon such exchange under the law applicable to the year in which the applicable to the year in which the exchange was made. If the prop- exchange was made. If the property so acquired consisted in part erty so acquired consisted in part of the type of property permitted of the type of property permitted by section 112 (b) to be received by section 112 (b) to be received without the recognition of gain or without the recognition of gain or loss, and in part of other property, loss, and in part of other property, the basis provided in this para- the basis provided in this paragraph shall be allocated between graph shall be allocated between the properties (other than money) the properties (other than money) received, and for the purpose of received, and for the purpose of the allocation there shall be as- the allocation there shall be assigned to such other property an signed to such other property an amount equivalent to its fair mar- amount equivalent to its fair market value at the date of the ex- ket value at the date of the exchange. Where as part of the con- change. Where as part of the consideration to the taxpayer another sideration to the taxpayer another party to the exchange assumed a party to the exchange assumed a liability of the taxpayer or acquired liability of the taxpayer or acquired from the taxpayer property subject from the taxpayer property subject to a liability, such assumption or to a liability, such assumption or acquisition (in the amount of the acquisition (in the amount of the liability) shall, for the purposes of liability) shall, for the purposes of this paragraph, be considered as this paragraph, be considered as money received by the taxpayer money received by the taxpayer upon the exchange. This paragraph upon the exchange. This paragraph Sec. 113. (a) (6) Tax-free exchanges generally. See p. 160, Eighth Edition. Taxable Years shall not apply to property acquired by a corporation by the issuance of its stock or securities as the consideration in whole or in part for the transfer of the property to it. Sec. 113 (a) (6), I. R. C., supra, amended by Sec. 213 (d), R. A. of 1939, to read as above. Sec. 213 (e) of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1938. For Sec. 113 (a) (6) before amendment, see explanation under Sec. 113 (a) (6) in 1939 column. Sec. 113. (a) (7) Transfers to corporation. If the property was acquired (A) after December 31, 1917, and in a taxable year beginning before January 1, 1936, by a corporation in connection with a reorganization, and immediately after the transfer an interest or control in such property of 50 per centum or more remained in the same persons or any of them, or shall not apply to property ac- shall not apply to property ac Sec. 113 (a) (6), I. R. C., Sec. 113. (a) (7) Transfers to (A) after December 31, 1917, and in a taxable year beginning before January 1, 1936, by a corpora tion in connection with a reorganization, and immediately after the transfer an interest or control in such property of 50 per centum or more remained in the same persons or any of them, or (B) in a taxable year beginning (B) in a taxable year beginning after December 31, 1935, by a cor- after December 31, 1935, by a corporation in connection with a reor-poration in connection with a reorganization, ganization, Sec. 113 (a) (6), I. R. C., supra, amended by Sec. 213 (d), R. A. of 1939, to read as above. Sec. 213 (e) of said Act makes amendment applicable to taxable years beginning after Dec. 31. 1938. For Sec. 113 (a) (6) before amendment, see explanation under Sec. 113 (a) (6) in 1939 column. Sec. 113. (a) (7) Transfers to corporation.-If the property was acquired (A) after December 31, 1917, and in a taxable year beginning before January 1, 1936, by a corporation in connection with a reorganization, and immediately after the transfer an interest or control in such property of 50 per centum or more remained in the same persons or any of them, or (B) in a taxable year beginning after December 31, 1935, by a corporation in connection with a reorganization, then the basis shall be the same as then the basis shall be the same as then the basis shall be the same as it would be in the hands of the it would be in the hands of the it would be in the hands of the transferor, increased in the amount transferor, increased in the amount transferor, increased in the amount of gain or decreased in the amount of gain or decreased in the amount of gain or decreased in the amount of loss recognized to the transferor of loss recognized to the transferor of loss recognized to the transferor upon such transfer under the law upon such transfer under the law upon such transfer under the law applicable to the year in which the applicable to the year in which the applicable to the year in which the transfer was made. This paragraph transfer was made. This paragraph transfer was made. This paragraph shall not apply if the property acshall not apply if the property ac- shall not apply if the property ac quired consists of stock or securities quired consists of stock or securities quired consists of stock or securities in a corporation a party to the rein a corporation a party to the re- in a corporation a party to the reorganization, unless acquired by the organization, unless acquired by the organization, unless acquired by the issuance of stock or securities of issuance of stock or securities of issuance of stock or securities of the the transferee as the consideration the transferee as the consideration transferee as the consideration in in whole or in part for the transfer. in whole or in part for the transfer. Sec. 113. (a) (8) Property ac- Sec. 113. (a) (8) Property acquired by issuance of stock or as quired by issuance of stock or as paid-in surplus. If the property paid-in surplus. If the property was acquired after December 31, 1920, by a corporation was acquired after December 31, (A) by the issuance of its stock (A) by the issuance of its stock or securities in connection with a or securities in connection with a transaction described in section 112 transaction described in section 112 14 Sec. 213 (i), R. A. of 1939, reads as follows: Sec. 213. (i) Basis under prior acts.— (1) Section 113 (a) (6) of the Revenue Acts of 1938, 1936, 1934, 1932, and 1928, and section 204 (a) (6) of the Revenue Acts of 1926 and 1924 are amended by inserting before the last sentence thereof the following: "Where as part of the consideration to the taxpayer another party to the exchange assumed a liability of whole or in part for the transfer. Sec. 113. (a) (8) Property ac quired by issuance of stock or as paid-in surplus.-If the property was acquired after December 31, 1920, by a corporation (A) by the issuance of its stock or securities in connection with a transaction described in section 112 the taxpayer or acquired from the taxpayer property subject to a liability, such assumption or acquisition (in the amount of the liability) shall, for the purposes of this paragraph, be considered as money received by the taxpayer upon the exchange." (2) The amendments made by paragraph (1) to the respective Acts amended shall be effective as to each of such Acts as of the date of enactment of such Act. Taxable Years hall not apply to property acquired by a corporation by the isuance of its stock or securities as he consideration in whole or in part for the transfer of the property to it. Sec. 113 (a) (6), I. R. C., supra, amended by Sec. 213 (d), R. A. of 1939, to read as above. Sec. 213 (e) of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1938. For Sec. 113 (a) (6) before amendment, see explanation under Sec. 118 (a) (6) in 1939 column. Taxable Years shall not apply to property ac- Sec. 113 (a) (6), I. R. C., Sec. 113. (a) (7) Transfers to Sec. 113. (a) (7) Transfers to corporation.-If the property was corporation. If the property was acquired (A) after December 31, 1917, and in a taxable year beginning before January 1, 1936, by a corporation in connection with a reorganization, and immediately after the transfer an interest or control in such property of 50 per centum or more remained in the same persons or any of them, or (B) in a taxable year beginning after December 31, 1935, by a corporation in connection with a reorganization, acquired (A) after December 31, 1917, and in a taxable year beginning before January 1, 1936, by a corporation in connection with a reorganization, and immediately after the transfer an interest or control in such property of 50 per centum or more remained in the same persons or any of them, or (B) in a taxable year beginning after December 31, 1935, by a corporation in connection with a reorganization, then the basis shall be the same as then the basis shall be the same as it would be in the hands of the it would be in the hands of the transferor, increased in the amount transferor, increased in the amount of gain or decreased in the amount of gain or decreased in the amount of loss recognized to the transferor of loss recognized to the transferor upon such transfer under the law upon such transfer under the law applicable to the year in which the applicable to the year in which the transfer was made. This paragraph transfer was made. This paragraph shall not apply if the property ac- shall not apply if the property acquired consists of stock or securities quired consists of stock or securities in a corporation a party to the re- in a corporation a party to the reorganization, unless acquired by the organization, unless acquired by the issuance of stock or securities of the issuance of stock or securities of the transferee as the consideration in transferee as the consideration in whole or in part for the transfer. whole or in part for the transfer. Sec. 113. (a) (8) Property ac- Sec. 113. (a) (8) Property acquired by issuance of stock or as quired by issuance of stock or as paid-in surplus. If the property paid-in surplus. If the property was acquired after December 31, was acquired after December 31, 1920, by a corporation1920, by a corporation (A) by the issuance of its stock (A) by the issuance of its stock or securities in connection with a or securities in connection with a transaction described in section 112 transaction described in section 112 Taxable Years Beginning before 1939 Retroactivity See fn. 14 for retroactive amendment of Sec. 113 (a) (6), R. A. of 1938 and prior Acts, made by Sec. 213 (i), R. A. of 1939. Sec. 113. (a) (7) Transfers to corporation. See p. 160, Eighth Edition. Sec. 113. (a) (8) Property acquired by issuance of stock or as paid in surplus. See p. 162, Eighth Edition. |