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TITLE 26-INTERNAL REVENUE CODE EnECTIVE DATE Section 2005(t) of Pub. L. 94-455 provided that: "(1) Except as provided in paragraph (2), the amend- ments made by this section [enacting sections 1010(a)(23), 1023, 1040, 6639A and 6694 of this title, amending sections 691(c)(2)(A), (C) and 1014(d) of this title, repealing section 1246(e) of this title, and renum- bering section 1023 as 1024 of this title] shall apply in respect of decedents dying after December 31, 1976. "(2) The amendment made by subsection (c) [enact- ing section 1015(d)(6) of this title] shall apply to gifts made after December 31, 1976." SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 382, 691, 1014, 1016, 2614, 6039A of this title. § 1024. Cross references (1) For certain distributions by a corporation which are applied in reduction of basis of stock, see section 301(c)(2). (2) For basis of property in case of certain reorganiza- tions and arrangements under the Bankruptcy Act, see sections 270, 396, and 522 of that Act, as amended (11 U.S.C. 670, 796, 922). (3) For basis in case of construction of new vessels, see section 511 of the Merchant Marine Act, 1936, as amend- ed (46 U.S.C. 1161). (Aug. 16, 1954, ch. 736, 68A Stat. 302, § 1022, re- numbered § 1023, Feb. 26, 1964, Pub. L. 88-272, title II, § 225(j)(1), 78 Stat. 92; renumbered § 1024, and amended Oct. 4, 1976, Pub. L. 94- 455, title XIX, § 1901(a)(127), title XX, § 2005(a)(2), 90 Stat. 1784, 1872.) AMENDMENTS 1976-Par. (4). Pub. L. 94-455, § 1901(a)(127). struck out par. (4) which referred to section 405 of the De- fense Production Act of 1950 for rules applicable in case of payments in violation of that Act. EFECTIVE DATE OF 1976 AMENDMENT Amendment of par. (4) by section 1901(a)(127) of Pub. L. 94-455 applicable with respect to 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. PART III-COMMON NONTAXABLE EXCHANGES Sec. 1031. Exchange of property held for productive use or investment. 1032. Exchange of stock for property. 1033. Involuntary conversions. 1034. Sale or exchange of residence. 1035. Certain exchanges of insurance policies. 1036. Stock for stock of same corporation. 1037. Certain exchanges of United States obligations. 1038. Certain reacquisitions of real property. 1039. Certain sales of low-income housing projects. 1040. Use of certain appreciated carryover basis prop- erty to satisfy pecuniary bequest. AMENDMENTS 1976-Pub. L. 94-455, title XX, § 2005(e)(2), Oct. 4, 1976, 90 Stat. 1878, added item 1040. 1969-Pub. L. 91-172, title IX, § 910(c), Dec. 30, 1969, 83 Stat. 722, added item 1039. 1964-Pub. L. 88-570, § 2(b), Sept. 2. 1964, 78 Stat. 856, added item 1038. 1959-Pub. L. 86-346, title II, § 201(b), Sept. 22, 1959, 73 Stat. 623, added Item 1037. § 1031. Exchange of property held for productive use or investment (a) Nonrecognition of gain or loss from exchanges solely in kind No gain or loss shall be recognized if property held for productive use in trade or business or for investment (not including stock in trade or other property held primarily for sale, nor stocks, bonds, notes, choses in action, certifi- cates of trust or beneficial Interest, or other se- curities or evidences of indebtedness or inter- est) is exchanged solely for property of a like kind to be held either for productive use in trade or business or for investment. (b) Gain from exchanges not solely in kind If an exchange would be within the provi- sions of subsection (a), of section 1035(a), of section 1036(a), or of section 1037(a), if It were not for the fact that the property received in exchange consists not only of property permit- ted by such provisions to be received withott the recognition of gain, but also of other prop- erty or money, then the gain, if any, to the re- cipient 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 excihange would be within the provi- sions of subsection (a), of section 1035(a), of section 1036(a), or of section 1037(a), if it were not for the fact that the property received In exchange consists not only of property permit- ted by such provisions to be receihed without the recognition of gain or loss, but also of other property or money, then no loss from the ex- change shall be recognized. (d) Basis If property was acquired on an exchange de- scribed in this section, section 1035(a), section 1036(a), or section 1037(a), then the basis shall be the same as that 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 or such ex- change. If the property so acquired ,imsisted in part of the type of property permitted by this section, section 1035(a), section 1036(a), or sec- tion 1037(a), to be received without the recogni- tion of gain or loss, and in part of other proper- ty, the basis provided in this subsection shall be allocated between the properties (other than money) received, and for the purpose of the al- location there shall be assigned to such other property an amount equivalent to its fair market value at the date of the exchange. For purposes of this section, section 1035(a), and section 1036(a), where as part of the consider- ation to the taxpayer another party to the ex- change 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 be considered as money received by the taxpayer on the ex- change. (e) Exchanges of livestock of different sexes For purposes of this section, livestock of dif- ferent sexes are not property of a like kind. (Aug. 16, 1954, ch. 736, 68A Stat. 302; Sept. 2, 1958, Pub. L. 85-866, title I, § 44, 72 Stat. 1641; 71-999 0 - '8 - 43 (Vol. 7) § 1031 Page 645