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TITLE 26-INTERNAL REVENUE CODE to another corporation organized or made use of to effectuate a plan of reorganization ap- proved by the court in such proceeding, in ex- change solely for stock or securities in such other corporation. (2) Gain from exchanges not solely in kind If an exchange would be within the provi- sions of paragraph (1) if it were not for the fact that the property received in exchange consists not only of stock or securities permit- ted by paragraph (1) to be received without the recognition of gain, but also of other property or money, then- (A) if the corporation receiving such other property or money distributes it in pursuance of the plan of reorganization, no gain to the corporation shall be recognized from the exchange, but (B) if the corporation receiving such other property or money does not distribute it in pursuance of the plan of reorganiza- tion, the gain, if any, to the corporation shall be recognized, but in an amount not in excess of the sum of such money and the fair market value of such other property so received, which is not so distributed. (b) Exchanges by security holders (1) In general No gain or loss shall be recognized on an ex- change consisting of the relinquishment or extinguishment of stock or securities in a cor- poration the plan of reorganization of which Is approved by the court in a proceeding de- scribed in subsection (a), in consideration of the acquisition solely of stock or securities in a corporation organized or made use of to ef- fectuate such plan of reorganization. (2) Gain from exchanges not solely in kind If an exchange would be within the provi- sions of paragraph (1) if it were not for the fact that the property received in exchange consists not only of property permitted by paragraph (1) to be received without the rec- ognition of gain, but also of other property or money, then the gain, if any, to the recipient shall be recognized, but in an amount not in excess of the sum of such money and the fair market value of such other property. (c) Loss from exchanges not solely In kind If an exchange would be within the provi- sions of subsection (a)(1) or (b)(1) if it were not for the fact that the property received in ex- change consists not only of property permitted by subsection (a)(1) or (b)(1) to be received without the recognition of gain or loss, but also of other property or money, then no loss from the exchange shall be recognized. (d) Assumption of liabilities In the case of a transaction involving an as- sumption of a liability or the acquisition of property subject to a liability, the rules pro- vided in section 357 shall apply. (Aug. 16, 1954, ch. 736, 68A Stat. 121; Oct. 4, 1976, Pub. L. 94-455, title XIX, § 1901(a)(50), 90 Stat. 1773.) REFERENCES IN TEXT The Bankruptcy Act, referred to in subsecs. (a)(1), (B), is act July 1, 1898, ch. 541, 30 Stat. 544, as amend- ed, which is classified generally to Title 11, Bankrupt- cy. Chapter X of the Bankruptcy Act, referred to in subsec. (a)(1)(B), is classified to chapter 10 (§ 501 et seq.) of Title 11. For complete classification of this Act to the Code, see Tables volume. AMENDMENTS 197-Subiec. (a)(1). Pub. L. 94-455, § 1901(a)(50)(A), struck out "49 Stat. 922;" before "11 U.S.C. 205)) is transferred". Subsec. (a)(1)(B). Pub. L. 94-455, § 1901(a)(50)(B), substituted "(11 U.S.C. 501 and following)" for "(52 Stat. 883-905: 11 U.S.C., chapter 10) or the correspond- ing provisions of prior law" ]?,FFECTIVE DATE OF 1976 AMENDMENT Amendment of subsec. (a)(1) by section 1901(a)(50) of Pub. L. 94-455 effective for taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94- 455, set out as an Effective Date of 1976 Amendment note under section 2 of this title. CROSS REFERENCES Assumption of liability, see section 357 of this title. Basis in connection with receivership and bankrupt- cy proceedings to which this section applies, see sec- tion 372 of this title. Basis to distributees, see section 358 of this title. Dividends paid on certain preferred stock of public utilities, transactions to which this section applies, see section 247 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 48, 49, 247. 341, 357, 358, 372, 1232, 1245, 1250, 1251 of this title. § 372. Basis in connection with certain receivership and bankruptcy proceedings (a) Corporation If property was acquired by a corporation in a transfer to which- (1) section 371(a) applies, (2) so much of section 371(c) as relates to section 371(a)(1) applies, or (3) the corresponding provisions of prior law apply, then notwithstanding the provisions of section 270 of the Bankruptcy Act (1" U:S,C. 670), the basis in the hands of the acquiring corporation shall be the same as it would be In the hands of the corporation whose property was so ac- quired, increased in the amount of gain recog- nized to the corporation whose property was so acquired under the law applicable to the year in which the acquisition occurred, and such basis shall not be adjusted under section 1017 by reason of a discharge of indebtedness in pursu- ance of the plan of reorganization under which such transfer was made. (b) Adjustment for depreciation sustained before March 1, 1913, in certain cases of property ac- quired from retirement method corporations (1) In general If the taxpayer has acquired property in a transaction described In section 374(b), and if any such property constitutes retirement- straight line property, then, in determining the adjusted basis of all retirement-straight line property held by the taxpayer on his ad- Justment date, adjustment shall be made (in lieu of the adjustment provided in section 1016(a)(3)(A)) for depreciation sustained before March 1, 1913, on retirement-straight line property whigh was held on such date for § 372 Page 270