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TITLE 26-INTERNAL REVENUE CODE (b) Substituted basis Whenever it appears that the basis of proper- ty in the hands of the taxpayer is a substituted basis, then the adjustments provided in subsec- tion (a) shall be made after first making in re- spect of such substituted basis proper adjust- ments 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. The term "substitut- ed basis" as used in this section means a basis determined under any provision of this sub- chapter and subchapters C (relating to corpo- rate distributions and adjustments), K (relating to partners and partnerships), and P (relating to capital gains and losses), or under any corre- sponding provision of a prior income tax law, providing that the basis shall be determined- (1) by reference to the basis in the hands of a transferor, donor, or grantor, or (2) by reference to other property held at any time by the person for whom the basis is to be determined. (M) Cross references (1) For treatment of certain expenses incident to the purchase of a residence which were deducted as moving expenses by the taxpayer or his spouse under bection 217(a), see section 217(e). (2) For treatment of separate mineral interests as one property, see section 614. (Aug. 16, 1954, ch. 736, 68A Stat. 299; Jume 29, 1956, ch. 464, § 4(c), 70 Stat. 407; Sept. 2, 1958, Pub. L. 85-866, title I, §§ 2(b), 64(d)(2), 72 Stat. 1607, 1656; June 25, 1959, Pub. L. 86-69, § 3(d), 73 Stat. 139; Oct. 16, 1962, Pub. L. 87-834, §§ 2(f), 8(g)(2), 12(b)(4), 76 Stat. 972, 998, 1031; Feb. 26, 1964, Pub. L. 88-272, title II, §§ 203(a)(3)(C), 225(j)(2), 227(b)(5), 78 Stat. 34, 93, 98; Dec. 30, 1969, Pub. L. 91-172, title II, § 231(c)(3), title V, §§ 504(c)(4), 516(c)(2)(B), 83 Stat. 580, 633, 648; Oct. 4, 1976, Pub. L. 94-455, title XIX, § 1901(a)(123), (b)(1)(F)(ii). (21)(G), (29)(A), (30)(A), title XX, § 2005(a)(3), 90 Stat. 1784, 1790, 1798, 1799, 1876.) REFERENCES IN TEXT Section 1020, referred to in subsec. (a)(2), was re- pealed by Pub. L. 94-455, title XIX, § 1901(a)(125), Oct. 4. 1976, 90 Stat. 1784. The Tax Reform Act of 1976, referred to in subsec. (a)(2), is Pub. L. 94-455, Oct. 4, 1976, 90 Stat. 1520, which was enacted Oct. 4, 1976. For complete classifi- cation of this Act to the Code, see Tables volume. The Revenue Act of 1918 (40 Stat. 1057), referred to in subsec. (a)(4), is act Feb. 24, 1919, ch. 18, 40 Stat. 1057. The Revenue Act of 1921 (42 Stat. 227), referred to in subsec. (a)(4), is act Nov. 23, 1921, ch. 136, 42 Stat. 227. Section 218 of the Revenue Act of 1918 or 1921, re- ferred to in subsec. (a)(4), was not classified to the Code. Section 28 of the Internal Revenue Code of 1939, re- ferred to in subsec. (a)(12), was classified to section 28 of former Title 26, Internal Revenue Code. Section 28 was repealed by section 7851(a)(1)(A) of this title. For table of comparisons of the 1939 Code to the 1954 Code, see Table I preceding section 1 of this title. See, also, section 7851(e) of this title for provision that ref- erences in the 1954 Code to a provision of the 1939 Code, not then applicable, shall be deemed a reference to the corresponding provision of the 1954 Code, which Is then applicable. AMEDMErrs 1976-Subsec. (a)(2). Pub. L. 94-455, § 1901(b)(29)(A), added "(as in effect before the date of the enactment of the Tax Reform Act of 1976)" following "under sec- tion 1020". Subsec. (a)(10). Pub. L. 94-455, § 1901(b)(21)(0), struck out subsec. (a)(10) which related to adjustment for the amounts allowed as deductions as deferred ex. penses under section 615(b) of this title. Subsec. (a)(13). Pub. L. 94-455, § 1901(b)(1)(F)(ii), substituted "section 551(e)" for "section 551(f)". Subsec. (a)(19). Pub. L. 94-455, § 1901(a)(123), (b)(30)(A), redesignated former subsec. (a)(20) as (a)(19). Former subsec. (a)(19), which related to ad- Justment of section 38 property to the extent provided in sections 48(g) and 203 of this title, was struck out. Subsec. (a)(20). Pub. L. 94-455, § 1901(b)(30)(A), re- designated former subsec. (a)(22) as (a)(20). Former subsec. (a)(20) redesignated (a)(19). Subsec. (a)(21). Pub. L. 94-455, § 1901(b)(30)(A) struck out subsec. (a)(21) which related to property adjustment to the extent provided in section 1022 of this title. Subsec. (a)(22). Pub. L. 94-455, § 1901(b)(30)(A), re- designated subsec. (a)(22) as (a)(20). Subsec. (a)(23). Pub. L. 94-455, § 2005(a)(3), added subsec. (a)(23). 1969-Subsec. (a). Pub. L. 91-172, § 516(c)(2)(B), added par. (22). Subsec. (a)(10). Pub. L. 91-172, § 504(c)(4), limited exploration expenditures referred to in this par. to pre-1970 exploration expenditures. Subsec. (c). Pub. L. 91-172, § 231(0)(3) redesignated existing provisions as par. (2) and added par. (1). 1964--Subsec. (a)(15). Pub. L. 88-272, § 227(b)(5), in- serted "or domestic iron ore" in par. (15). Subsec. (a)(19). Pub. L. 88-272, § 203(a)(3)(C), insert- ed "and in section 203(a)(2) of the Revenue Act of 1964". Subsec. (a)(21). Pub. L. 88-272, § 225(j)(2), added subsec. (a)(21). 1962-Subsec. (a)(3)(D). Pub. L. 87-834, § 8(g)(2), added subsec. (a)(3)(D). Subsee. (a)(19). Pub. L. 87-834, § 2(f), added subsec. (a)(19). Subsec. (a)(20). Pub. L. 87-834, § 12(b)(4), added subsec. (a)(20). 1959-Subsec. (a)(3)(C). Pub. L. 86-69, § 3(d)(1), added subsec. (a)(3)(C). Subsec. (a)(17). Pub. L. 86-69, § 3(d)(2), added subsec. (a)(17). 1958-Subsec. (a)(6). Pub. L. 85-866, § 2(b), eliminat- ed "short-term" preceding "municipal bond". Subsec. (a)(18). Pub. L. 85-866, § 64(d)(2), added subsec. (a)(18). 1956-Subsec. (a)(16). Act June 29, 1956, added subsec. (a)(16). EFFECTIVE DATE OF 1976 AMENDMENT Amendment of subsecs. (a)(2), (10), (13), (19) by sec- tion 1901(a)(123), (b)(1)(F)(li), (21)(G), (29)(A), of Pub. L. 94-455 applicable with respect to taxable years be- ginning 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. Section 1901(b)(30)(B) of Pub. L. 94-455 provided that: "The amendment made by subparagraph (A)(i) [repealing subsec. (a)(21) of this section] shall apply with respect to stock or securities acquired from a de- cedent dying after the date of the enactment of this Act [Oct. 4, 1976]." Amendment of subsec. (a)(23) by section 2005(a)(3) of Pub. L. 94-455 applicable in respect of decedents dying after Dec. 31, 1976, see section 2005(f) of Pub. L. 94-455 set out as an Effective Date note under section 1023 of this title. § 1016 Page 639