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Taxable Years Beginning in 1945

Sec. 113. (b) (2) Substituted basis.

Same as 1944.

Taxable Years Beginning in 1944

amount of distributions previously made which, under the law applicable to the year in which the distribution was made, either were tax-free or were applicable in reduction of basis (not including distributions made by a corporation, which was classified as a personal service corporation under the provisions of the Revenue Act of 1918, Feb. 24, 1919, c. 18, 40 Stat. 1057, or the Revenue Act of 1921, Nov. 23, 1921, c. 136, 42 Stat. 227, out of its earnings or profits which were taxable in accordance with the provisions of section 218 of the Revenue Act of 1918 or 1921);

(E) to the extent provided in section 337 (f) in the case of the stock of United States shareholders in a foreign personal holding company; and

(F) to the extent provided in section 28 (h) in the case of amounts specified in a shareholder's consent made under section 28.

(G) in the case of property pledged to the Commodity Credit Corporation, to the extent of the amount received as a loan from the Commodity Credit Corporation and treated by the taxpayer as income for the year in which received pursuant to section 123 of this chapter, and to the extent of any deficiency on such loan with respect to which the taxpayer has been relieved from liability.

(H) in the case of any bond (as defined in section 125) the interest on which is wholly exempt from the tax imposed by this chapter, to the extent of the amortizable bond premium disallowable as a deduction pursuant to section 125 (a) (2), and in the case of any other bond (as defined in such section) to the extent of the deductions allowable pursuant to section 125 (a) (1) with respect thereto.

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Taxable Years Beginning before 1944

Sec. 113. (b) (2) Substituted basis.

Section originated 1932 as
Sec. 113 (b) (2), R. A. of 1932.
For any amendments prior to
1944, see-

Eighth Edition, p. 174,
Ninth Edition, p. 262.

Taxable Years
Beginning in 1949

(B) by reference to other property held at any time by the person for whom the basis is to be determined.

Whenever it appears that the basis of property in the hands of the taxpayer is a substituted basis, then the adjustments provided in paragraph (1) of this subsection shall be made after first making in respect of such substituted basis proper adjustments of a similar nature in respect of the period during which the property was held by the transferor, donor, or grantor, or during which the other property was held by the person for whom the basis is to be determined. A similar rule shall be applied in the case of a series of substituted bases.

Taxable Years
Beginning in 1948

Same as 1944.

Sec. 113. (b) (3) Discharge of Sec. 113. (b) (3) Discharge of indebtedness.-Where in the case indebtedness. of a corporation any amount is exIcluded from gross income under section 22 (b) (9) on account of the discharge of indebtedness the whole or a part of the amount so excluded from gross income shall be applied in reduction of the basis of any property held (whether before or after the time of the discharge) by the taxpayer during any portion of the taxable year in which such discharge occurred. The amount to be so applied (not in excess of the amount so excluded from gross income, reduced by the amount of any deduction disallowed under section 22 (b) (9)) and the particular properties to which the reduction shall be allocated, shall be determined under regulations (prescribed by the Commissioner with the approval of the Secretary) in effect at the time of the filing of the consent by the taxpayer referred to in section 22 (b) (9). The reduction shall be made as of the first day of the taxable year in which the discharge occurred except in the case of property not held by the taxpayer on such first day, in which case it shall take effect as of the time the holding of the taxpayer began.

Sec. 113. (b) (4) Adjustment of capital structure prior to September 22, 1938.-Where a plan of reorganization of a corporation, approved by the court in a proceed

Taxable Years Beginning in 1946 and 1947

Sec. 113. (b) (3) Discharge of indebtedness.

Same as 1944.

Sec. 113. (b) (4) Adjustment of Sec. 113. (b) (4) Adjustment of capital structure prior to Sep-capital structure prior to September 22, 1938. tember 22, 1938.

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Taxable Years Beginning in 1945

Sec. 113. (b) (3) Discharge of indebtedness.

Same as 1944.

Sec. 113. (b) (4) Adjustment of capital structure prior to September 22, 1938.

Same as 1944.

Taxable Years Beginning in 1944

(B) by reference to other property held at any time by the person for whom the basis is to be determined.

Whenever it appears that the basis of property in the hands of the taxpayer is a substituted basis, then the adjustments provided in paragraph (1) of this subsection shall be made after first making in respect of such substituted basis proper adjustments of a similar nature in respect of the period during which the property was held by the transferor, donor, grantor, or during which the other property was held by the person for whom the basis is to be determined. A similar rule shall be applied in the case of a series of substituted bases.

or

Sec. 113. (b) (3) Discharge of indebtedness.-Where in the case of a corporation any amount is excluded from gross income under section 22 (b) (9) on account of the discharge of indebtedness the whole or a part of the amount so excluded from gross income shall be applied in reduction of the basis of any property held (whether before or after the time of the discharge) by the taxpayer during any portion of the taxable year in which such discharge occurred. The amount to be so applied (not in excess of the amount so excluded from gross income, reduced by the amount of any deduction disallowed under section 22 (b) (9)) and the particular properties to which the reduction shall be allocated, shall be determined under regulations (prescribed by the Commissioner with the approval of the Secretary) in effect at the time of the filing of the consent by the taxpayer referred to in section 22 (b) (9). The reduction shall be made as of the first day of the taxable year in which the discharge occurred except in the case of property not held by the taxpayer on such first day, in which case it shall take effect as of the time the holding of the taxpayer began.

Sec. 113. (b) (4) Adjustment of capital structure prior to September 22, 1938.-Where a plan of reorganization of a corporation, approved by the court in a proceed

Taxable Years Beginning before 1944

Sec. 113. (b) (3) Discharge of indebtedness.

Section originated 1939 as
Sec. 113 (b) (3), I. R. C.
For any amendments prior to
1944, see-

Ninth Edition, p. 262.

Taxable Years
Beginning in 1949

ing under section 77B of the National Bankruptcy Act, as amended, is consummated by adjustment of the capital or debt structure of such corporation without the transfer of its assets to another corporation, and a final judgment or decree in such proceeding has been entered prior to September 22, 1938, then the provisions of section 270 of the National Bankruptcy Act, as amended, shall not apply in respect of the property of such corporation. For the purposes of this paragraph the term "reorganization" shall not be limited by the definition of such term in section 112 (g).

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Same as 1944.

Sec. 113. (c) Property on Sec. 113. (c) Property on which lessee has made improve- which lessee has made improvements.-Neither the basis nor the ments. adjusted basis of any portion of real property shall in the case of the lessor of such property, be increased or diminished on account of income derived by the lessor in respect of such property and excludible from gross income under section 22 (b) (11). If an amount representing any part of the value of real property attributable to buildings erected or other improvements made by a lessee in respect of such property was included in gross income of the lessor for any taxable year beginning before January 1, 1942, the basis of each portion of such property shall be properly adjusted for the amount so included in gross income.

Sec. 114. Basis for depreciation and depletion.

Sec. 114. (a) Basis for depreciation.—The basis upon which exhaustion, wear and tear, and obsolescence are to be allowed in respect of any property shall be the

Sec. 114. Basis for depreciation and depletion.

Sec. 114. (a) Basis for depreciation.

Same as 1944.

Sec. 113. (c) Property on which lessee has made improvements.

Same as 1944.

Sec. 114. Basis for depreciation and depletion.

Sec. 114. (a) Basis for depreciation.

Same as 1944.

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ing under section 77B of the National Bankruptcy Act, as amended, is consummated by adjustment of the capital or debt structure of such corporation without the transfer of its assets to another corporation, and a final judgment or decree in such proceeding has been entered prior to September 22, 1938, then the provisions of section 270 of the National Bankruptcy Act, as amended, shall not apply in respect of the property of such corporation. For the purposes of this paragraph the term "reorganization" shall not be limited by the definition of such term in section 112 (g).

Sec. 113 (b) (4), I. R. C., supra, added to I. R. C. by Sec. 122 (a), R. A. of 1943.

Retroactivity

Sec. 122 (b) of said Act provides that a provision having the effect of the amendment made by Sec. 122 (a), R. A. of 1943, shall be deemed to be inIcluded in the revenue laws, respectively, applicable to taxable years beginning after Dec. 31, 1935.

Taxable Years Beginning before 1944

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Sec. 113. (c) Property which lessee has made improvements.-Neither the basis nor the adjusted basis of any portion of real property shall in the case of the lessor of such property, be increased or diminished on account of income derived by the lessor in respect of such property and excludible from gross income under section 22 (b) (11). If an amount representing any part of the value of real property attributable to buildings erected or other improvements made by a lessee in respect of such property was included in gross income of the lessor for any taxable year beginning before January 1, 1942, the basis of each portion of such property shall be properly adjusted for the amount so included in gross income.

Sec. 114. Basis for depreciation and depletion.

Sec. 114. (a) Basis for depreciation. The basis upon which exhaustion, wear and tear, and obsolescence are to be allowed in respect of any property shall be the

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