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Sec. 113. (a) (5) Property Sec. 113. (a) (5) Property transmitted at death. If the transmitted at death. -If the property was acquired by request, property was acquired by bequest, devise, or inheritance, or by the devise, or inheritance, or by the decedent's estate from the decedent, decedent's estate from the decedent, the basis shall be the fair market the basis shall be the fair market value of such property at the time value of such property at the time of such acquisition. In the case of of such acquisition. In the case of property transferred in trust to property transferred in trust to pay the income for life to or upon pay the income for life to or upon the order or direction of the gran- the order or direction of the grantor with the right reserved to the tor, with the right reserved to the grantor at all times prior to his grantor at all times prior to his death to revoke the trust, the basis death to revoke the trust, the basis of such property in the hands of of such property in the hands of the persons entitled under the the persons entitled under the terms of the trust instrument to terms of the trust instrument to the property after the grantor's the property after the grantor's death shall, after such death, be death shall, after such death, be the same as if the trust instrument the same as if the trust instrument had been a will executed on the day had been a will executed on the of the grantor's death. For the pur- day of the grantor's death. For the pose of this paragraph property purpose of this paragraph proppassing without full and adequate erty passing without full and adeconsideration under a general quate consideration under a general power of appointment exercised by power of appointment exercised by will shall be deemed to be property will shall be deemed to be property passing from the individual exer- passing from the individual exercising such power by bequest or cising such power by bequest or devise. If the property was ac- devise. If the property was acquired by bequest, devise, or inher-quired by bequest, devise, or inheritance, or by the decedent's estate itance, or by the decedent's estate from the decedent, and if the dece- from the decedent, and if the decedent died after August 26, 1937, dent died after August 26, 1937, and if the property consists of and if the property consists of stock or securities of a foreign cor- stock or securities of a foreign corporation, which with respect to its poration, which with respect to its taxable year next preceding the taxable year next preceding the date of the decedent's death was, date of the decedent's death was, under the law applicable to such under the law applicable to such year, a foreign personal holding year, a foreign personal holding company, then the basis shall be company, then the basis shall be the fair market value of such prop- the fair market value of such property at the time of such acquisition erty at the time of such acquisition or the basis in the hands of the or the basis in the hands of the decedent, whichever is lower. In decedent, whichever is lower. In the case of an election made by the the case of an election made by the executor under section 811 (j), the executor under section 811 (j), the time of acquisition of the property time of acquisition of the property shall, for the purpose of this para-shall, for the purpose of this paragraph, be the applicable valuation graph, be the applicable valuation date of the property prescribed by date of the property prescribed by such section in determining the such section in determining the

Sec. 113. (a) (5) Property transmitted at death.

Same as 1944.

Retroactivity
1948 column

See retroactive amendment of Sec. 113 (a) (5) in 1948 column.

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Sec. 113. (a) (5) Property transmitted at death.-If the property was acquired by bequest, devise, or inheritance, or by the decedent's estate from the decedent, the basis shall be the fair market value of such property at the time of such acquisition. In the case of property transferred in trust to pay the income for life to or upon the order or direction of the grantor, with the right reserved to the grantor at all times prior to his death to revoke the trust, the basis of such property in the hands of the persons entitled under the terms of the trust instrument to the property after the grantor's death shall, after such death, be the same as if the trust instrument had been a will executed on the day of the grantor's death. For the purpose of this paragraph property passing without full and adequate consideration under a general power of appointment exercised by will shall be deemed to be property passing from the individual exercising such power by bequest or devise. If the property was acquired by bequest, devise, or inheritance, or by the decedent's estate from the decedent, and if the decedent died after August 26, 1937, and if the property consists of stock or securities of a foreign corporation, which with respect to its taxable year next preceding the date of the decedent's death was, 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

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decedent and the surviving spouse
under the community property
laws of any State, Territory or
possession of the United States or
any foreign country shall be con-
sidered to be property "acquired by
bequest, devise, or inheritance"
from the decedent, if the death of
the decedent was after December
31, 1947, and if at least one-half
of the whole of the community in-
terest in such property was includ-
ible in determining the value of
the decedent's gross estate under
section 811. In the case of prop-
erty held by a decedent and his
surviving spouse under the com-

value of the gross estate. For the value of the gross estate. For the
purposes of this paragraph the sur-purposes of this paragraph the sur-
viving spouse's one-half share of viving spouse's one-half share of
community property held by the community property held by the
decedent and the surviving spouse
under the community property
laws of any State, Territory or pos-
session of the United States or any
foreign country shall be considered
to be property "acquired by be-
quest, devise, or inheritance" from
the decedent, if the death of the
decedent was after December 31,
1947, and if at least one-half of the
whole of the community interest in
such property was includible in de-
termining the value of the deced-
ent's gross estate under section 811.
In the case of property held by a
decedent and his surviving spouse
under the community property laws
of any State, Territory, or posses-munity property laws of any State,
sion of the United States or any
foreign country, if the value of any
part of the surviving spouse's one-
half share of such property was in-
cluded in determining the value of
the gross estate of the decedent and
a tax under chapter 3 was payable
upon the transfer of the net estate
of the decedent, then for the pur-
poses of this paragraph such part
of such one-half share of the sur-
viving spouse shall be considered to
be property "acquired by bequest,
devise, or inheritance" from the
decedent, if the death of the dece-
dent was after the date of the en-
actment of the Revenue Act of
1942 and on or before December
31, 1947; but nothing in this sen-
tence shall reduce basis below that
which would exist if the Revenue
Act of 1948 had not been enacted.

Sec. 113. (a) (6) Tax-free exchanges generally.-If the property was acquired, after February

Territory, or possession of the
United States or any foreign coun-
try, if the value of any part of the
surviving spouse's one-half share of
such property was included in de-
termining the value of the gross
estate of the decedent and a tax
under chapter 3 was payable upon
the transfer of the net estate of
the decedent, then for the purposes
of this paragraph such part of such
one-half share of the surviving
spouse shall be considered to be
property "acquired by bequest,
devise, or inheritance" from the
decedent, if the death of the dece-
dent was after the date of the en-
actment of the Revenue Act of
1942 and on or before December
31, 1947; but nothing in this sen-
tence shall reduce basis below that
which would exist if the Revenue
Act of 1948 had not been enacted.

Sec. 113 (a) (5), I. R. C.,
supra, amended by Sec. 366 (a),
R. A. of 1948, by adding lan-
guage in italics.

Retroactivity.

This amendment apparently is intended to be retroactive in view of express language of amendment and of Sec. 366 (b), R. A. of 1948, which is shown in fn. 7.

Sec. 113. (a) (6) Tax-free exchanges generally.

Same as 1944.

7 Sec. 366 (b), R. A. of 1948, reads: "If the allowance of a credit or refund of any overpayment of tax resulting from the application of this section is prevented on the date of the enactment of this Act, or within one year from such date, by the operation of any law or rule of law (other than section 3761 of the Internal Revenue Code, relating to compromises), credit or refund of such overpay

Taxable Years Beginning in 1946 and 1947

Sec. 113. (a) (6) Tax-free exchanges generally.

Same as 1944.

ment may, nevertheless, be allowed or made if claim therefor is filed within one year from the date of the enactment of this Act. No interest shall be paid on any overpayment resulting from the application of the last sentence of section 113 (a) (5) of such code, as amended by this section, if such overpayment is for a taxable year beginning before January 1. 1948."

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Taxable Years Beginning in 1949

28, 1913, upon an exchange described in section 112 (b) to (e), inclusive, or section 112 (1), the basis (except as provided in paragraphs (15) (17), or (18) of this subsection) shall be the same as in the case of the property exchanged, decreased in the amount of any money received by the taxpayer and increased in the amount of gain or decreased in the amount of loss to the taxpayer that was recognized upon such exchange under the law applicable to the year in which the exchange was made. If the property so acquired consisted in part of the type of property permitted by section 112 (b) or section 112 (1) to be received without the recognition of gain or loss, and in part of other property, the basis provided in this paragraph shall be allocated between the properties (other than money) received, and for the purpose of the allocation there shall be assigned to such other property an amount equivalent to its fair market value at the date of the exchange. Where as part of the consideration to the taxpayer another party to the exchange assumed a liability of 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. This paragraph 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.

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Sec. 113. (a) (7) Transfers to corporation.—If the property was corporation. acquired

(A) after December 31, 1917, and in a taxable year beginning |

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