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TITLE 26-INTERNAL REVENUE CODE which cost was or is claimed as basis, and wiIch either- (A) Retired before acquisition by taxpayer Was retired before the acquisition of the retirement-straight line property by the taxpayer, but only if a deduction was al- lowed in computing net income by reason of such retirement, and such deduction was computed on the basis of cost without ad- justment for depreciation sustained before March 1, 1913. In the case of any such prop- erty retired during any taxable year begin- ning after December 31, 1929, the adjust- ment under this subparagraph shall not exceed that portion of the amount attribut- able to depreciation sustained before March 1, 1913, which resulted (by reason of the de- duction so allowed) in a reduction in taxes under this subtitle or prior income, war- profits, or excess-profits tax laws. (B) Acquired by taxpayer Was acquired by the taxpayer. The adjustment determined under this para- graph shall be allocated (in the manner pre- scribed by the Secretary) among all retire- ment-straight line property held by the tax- payer on his adjustment date. Such adjust- ment shall apply to all periods on and after the adjustment date. (2) Retirement-straight line property defined For purposes of this subsection, the term "retirement-straight line property" means any property of a kind or class with respect to which (A) the corporation transferring such property to the taxpayer was using (at the time of transfer) the retirement method of computing the allowance of deductions for depreciation, and (B) the acquiring corpora- tion has adopted any other method of com- puting such allowance. (3) Other definitions For purposes of this subsection: (A) Depreciation The term "depreciation" means exhaus- tion, wear and tear, and obsolescence. (B) Adjustment date In the case of any kind or class of proper- ty, the term "adjustment date" means whichever of the following is the later: (I) the first day of the taxpayer's first taxable year beginning after December 31, 1955, or (ii) the first day of the first taxable year in which the taxpayer uses a method of computing the allowance of deductions for depreciation other than the retire- ment method. (c) Stock or security holder For basis of stock or securities acquired under section 371(b), see section 358. (Aug. 16, 1954, ch. 736, 68A Stat. 122; Sept. 2, 1958, Pub. L. 85-866, title I, §95(a), 72 Stat. 1671; Oct. 4, 1976, Pub. L. 94-455, title XIX, §§ 1901(a)(51), (b)(14)(A), 1906(b)(13)(A), 90 Stat. 1773, 1795, 1834.) AMENDMENTS 1976-Subsec. (a)(3). Pub. L. 94-455. § 1901(a)(51), strucK out "54 Stat. 709;" before "11 U.S.C. 670), the basis". Subsec. (b)(1). Pub. L. 94-455, §§ 1901(b)(14)(A), 1906(b)(13)A), struck out in provisions preceding subpar. (A) "373(b) or" before "314ib), and if any" and in provisiors following subpar. (B) "or his delegate" following , cretary". 1958-Subsec. (b). Pub. L. 85-866 added subsec. (b) and redesignated former subsec. (b) as (c). Subsec. (c). Pub. L. 85-866 redesignated former subsec. (b) as (C). EFFECTIVE DATE OF 1976 AMLi, LENT Amendment of subsecs. (a)(3) and (b)(l) by section 1901(a)(51) and (b)14)(A) of Pub. L. 94-455 effective for taxable years beginning after Dec. 31, 1976, see sec- tion 1901(d) of Pub. L. 94-455, set out as ar. Effective Date of 1976 Amendment note under section 2 of this title. EFFECTIVE DATE OF 1958 AMENDMENT Section 95(b) of Pub. L. 85-866 provided that: "(1) In general.-The amendments made by subsec- tion (a) [to subsecs. (b) and (c) of this section] shall apply only to taxable years beginning after December 31, 1955. "(2) Exception.-The amendments made by subsec- tion (a) shall not apply with respect to any taxpayer if, before the date of the enactment of this Act [Sept. 2, 19581, there has been a determination, for any tax- able year, of the adjusted basis of retirement-straight line property of the taxpayer of the type described in section 372(b) of the Internal Revenue Code of 1954 (as added by subsection (a)) [section 372(b) of this title] by the Tax Court of the United States, or by any other court of competent jurisdiction, in any proceed- ing in which the decision of the court became final after December 31, 1955, and which established the right of the taxpayer to use the straight line depreci- ation method of computing the annual depreciation allowance with respect to such property for Federal tax purposes for any year." SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in section 617 of this title. [§ 373. Repealed. Pub. L. 94-455, title XIX, § 1901(a)(52), Oct. 4, 1976, 90 Stat. 1773] Section, acts Aug. 16, 1954, ch. 736, 68A Stat. 123; June 29, 1956, c. 463, § 3, 70 Stat. 403, related td loss not recognized in certain railroad reorganizations. EFFECTIVE DATE OF REPEAL Repeal of section effective for taxable years begin- ning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94-455, set out as an Effective Date of 1976 Amend- ment note under section 2 of this title. § 374. Gain or loss not recognized in certain railroad reorganizations (a) Exchanges by corporations (I) Nonrecognition of gain or loss No gain or loss shall be recognized if prop- erty of a railroad corporation, as defined in section 77(m) of the Bankruptcy Act (11 U.S.C. 205), is transferred after July 31, 1955, in pursuance of an order of the court having jurisdiction of such corporation- (A) in a receivership proceeding, or (B) in a proceeding under section 77 of the Bankruptcy Act, to another railroad corporation (as defined in section 77(m) of the Bankruptcy Act) orga- nized or made use of to effectuate a plan of § 374 Page 271