
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC1082]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
          Subchapter O--Gain or Loss on Disposition of Property
 
            PART VI--EXCHANGES IN OBEDIENCE TO S.E.C. ORDERS
 
Sec. 1082. Basis for determining gain or loss


(a) Exchanges generally

     (1) Exchanges subject to the provisions of section 1081(a) 
                                   or (e)

        If the property was acquired on an exchange subject to the 
    provisions of section 1081(a) or (e), or the corresponding 
    provisions of prior internal revenue laws, the basis shall be the 
    same as in the case 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 on such exchange under the law applicable to the 
    year in which the exchange was made. If the property so acquired 
    consisted in part of the type of property permitted by section 
    1081(a) to be received without the recognition of gain or loss, and 
    in part of nonexempt property, the basis provided in this subsection 
    shall be allocated between the properties (other than money) 
    received, and for the purpose of the allocation there shall be 
    assigned to such nonexempt property (other than money) an amount 
    equivalent to its fair market value at the date of the exchange. 
    This subsection shall not apply to property acquired by a 
    corporation by the issuance of its stock or securities as the 
    consideration in whole or in part for the transfer of the property 
    to it.

     (2) Exchanges subject to the provisions of section 1081(b)

        The gain not recognized on a transfer by reason of section 
    1081(b) or the corresponding provisions of prior internal revenue 
    laws shall be applied to reduce the basis for determining gain or 
    loss on sale or exchange of the following categories of property in 
    the hands of the transferor immediately after the transfer, and 
    property acquired within 24 months after such transfer by an 
    expenditure or investment to which section 1081(b) relates on 
    account of the acquisition of which gain is not recognized under 
    such subsection, in the following order:
            (A) property of a character subject to the allowance for 
        depreciation under section 167;
            (B) property (not described in subparagraph (A)) with 
        respect to which a deduction for amortization is allowable under 
        section 169;
            (C) property with respect to which a deduction for depletion 
        is allowable under section 611 but not allowable under section 
        613;
            (D) stock and securities of corporations not members of the 
        system group of which the transferor is a member (other than 
        stock or securities of a corporation of which the transferor is 
        a subsidiary);
            (E) securities (other than stock) of corporations which are 
        members of the system group of which the transferor is a member 
        (other than securities of the transferor or of a corporation of 
        which the transferor is a subsidiary);
            (F) stock of corporations which are members of the system 
        group of which the transferor is a member (other than stock of 
        the transferor or of a corporation of which the transferor is a 
        subsidiary);
            (G) all other remaining property of the transferor (other 
        than stock or securities of the transferor or of a corporation 
        of which the transferor is a subsidiary).

    The manner and amount of the reduction to be applied to particular 
    property within any of the categories described in subparagraphs (A) 
    to (G), inclusive, shall be determined under regulations prescribed 
    by the Secretary.

              (3) Basis in case of pre-1942 acquisition

        Notwithstanding the provisions of paragraph (1) or (2), if the 
    property was acquired in a taxable year beginning before January 1, 
    1942, in any manner described in section 372 of the Internal Revenue 
    Code of 1939 before its amendment by the Revenue Act of 1942, the 
    basis shall be that prescribed in such section (before its amendment 
    by such Act) with respect to such property.

(b) Transfers to corporations

    If, in connection with a transfer subject to the provisions of 
section 1081(a), (b), or (e) or the corresponding provisions of prior 
internal revenue laws, the property was acquired by a corporation, 
either as paid-in surplus or as a contribution to capital, or in 
consideration for stock or securities issued by the corporation 
receiving the property (including cases where part of the consideration 
for the transfer of such property to the corporation consisted of 
property or money in addition to such stock or securities), then the 
basis shall be the same as it would be in the hands of the transferor, 
increased in the amount of gain or decreased in the amount of loss 
recognized to the transferor on such transfer under the law applicable 
to the year in which the transfer was made.

(c) Distributions of stock or securities

    If the stock or securities were received in a distribution subject 
to the provisions of section 1081(c) or the corresponding provisions of 
prior internal revenue laws, then the basis in the case of the stock in 
respect of which the distribution was made shall be apportioned, under 
regulations prescribed by the Secretary, between such stock and the 
stock or securities distributed.

(d) Transfers within system group

    If the property was acquired by a corporation which is a member of a 
system group on a transfer or distribution described in section 
1081(d)(1), then the basis shall be the same as it would be in the hands 
of the transferor; except that if such property is stock or securities 
issued by the corporation from which such stock or securities were 
received and they were issued--
        (1) as the sole consideration for the property transferred to 
    such corporation, then the basis of such stock or securities shall 
    be either--
            (A) the same as in the case of the property transferred 
        therefor, or
            (B) the fair market value of such stock or securities at the 
        time of their receipt, whichever is the lower; or

        (2) as part consideration for the property transferred to such 
    corporation, then the basis of such stock or securities shall be 
    either--
            (A) an amount which bears the same ratio to the basis of the 
        property transferred as the fair market value of such stock or 
        securities at the time of their receipt bears to the total fair 
        market value of the entire consideration received, or
            (B) the fair market value of such stock or securities at the 
        time of their receipt, whichever is the lower.

(Aug. 16, 1954, ch. 736, 68A Stat. 315; Pub. L. 91-172, title VII, 
Sec. 704(b)(3), Dec. 30, 1969, 83 Stat. 669; Pub. L. 92-178, title III, 
Sec. 303(c)(5), Dec. 10, 1971, 85 Stat. 522; Pub. L. 94-455, title XIX, 
Secs. 1901(b)(11)(C), 1906(b)(13)(A), 1951(c)(2)(B), title XXI, 
Sec. 2124(a)(3)(C), Oct. 4, 1976, 90 Stat. 1795, 1834, 1840, 1917; Pub. 
L. 97-34, title II, Sec. 212(d)(2)(E), Aug. 13, 1981, 95 Stat. 239; Pub. 
L. 99-514, title II, Sec. 242(b)(1), Oct. 22, 1986, 100 Stat. 2181; Pub. 
L. 101-508, title XI, Sec. 11801(c)(6)(D), Nov. 5, 1990, 104 Stat. 1388-
524.)

                       References in Text

    Section 372 of the Internal Revenue Code of 1939 before its 
amendment by the Revenue Act of 1942, referred to in subsec. (a)(3), was 
classified to section 372 of former Title 26, Internal Revenue Code. 
Section 372 was repealed by section 7851(a)(1)(A) of this title. For 
table of comparisons of the 1939 Code to the 1986 Code, see Table I 
preceding section 1 of this title. See, also, section 7851(e) of this 
title for provision that references in the 1986 Code to a provision of 
the 1939 Code, not then applicable, shall be deemed a reference to the 
corresponding provision of the 1986 Code, which is then applicable.
    The Revenue Act of 1942, referred to in subsec. (a)(3), is act Oct. 
21, 1942, ch. 619, 56 Stat. 836. For complete classification of this Act 
to the Code, see Tables.


                               Amendments

    1990--Subsec. (a)(2)(B). Pub. L. 101-508, which directed the 
substitution of ``169'' for ``169, 184, or 188'', was executed by 
substituting ``169'' for ``169, 184 or 188'' to reflect the probable 
intent of Congress. See 1986 Amendment note below.
    1986--Subsec. (a)(2)(B). Pub. L. 99-514 struck out ``, 185,'' after 
``184''.
    1981--Subsec. (a)(2)(B). Pub. L. 97-34 substituted ``or 188'' for 
``188, or 191''.
    1976--Subsec. (a)(2). Pub. L. 94-455, Secs. 1901 (b)(11)(C), 
1906(b)(13)(A), 1951(c)(2)(B), 2124(a)(3)(C), struck out in subpar. (B) 
``168'' before ``169'', ``187'' after ``185'', and substituted ``188, or 
191'' for ``or 188'' and in provisions following subpar. (G) struck out 
``or his delegate'' after ``Secretary''.
    Subsec. (c). Pub. L. Sec. 1906(b)(13)(A), struck out ``or his 
delegate'' after ``Secretary''.
    1971--Subsec. (a)(2)(B). Pub. L. 92-178 inserted reference to 
section 188.
    1969--Subsec. (a)(2)(B). Pub. L. 91-172 inserted reference to 
sections 184, 185, and 187.


                    Effective Date of 1986 Amendment

    Amendment by Pub. L. 99-514 applicable to that portion of the basis 
of any property which is attributable to expenditures paid or incurred 
after Dec. 31, 1986, except as otherwise provided, see section 242(c) of 
Pub. L. 99-514, set out as an Effective Date of Repeal note under former 
section 185 of this title.


                    Effective Date of 1981 Amendment

    Amendment by Pub. L. 97-34 applicable to expenditures incurred after 
Dec. 31, 1981, in taxable years ending after such date, see section 
212(e) of Pub. L. 97-34, set out as a note under section 46 of this 
title.


                    Effective Date of 1976 Amendment

    Amendment by section 1901(b)(11)(C) 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 a note under section 2 of this title.
    Amendment by section 1951(c)(2)(B) of Pub. L. 94-455 applicable with 
respect to taxable years beginning after Dec. 31, 1976, see section 
1951(d) of Pub. L. 94-455, set out as a note under section 72 of this 
title.
    Amendment by section 2124(a)(3)(C) of Pub. L. 94-455 applicable with 
respect to additions to capital accounts made after June 14, 1976 and 
before June 15, 1981, see section 2124(a)(4) of Pub. L. 94-455, set out 
as an Effective Date note under section 642 of this title.


                    Effective Date of 1971 Amendment

    Amendment by Pub. L. 92-178 applicable to taxable years ending after 
Dec. 31, 1971, see section 303(d) of Pub. L. 92-178, set out as a note 
under section 642 of this title.


                    Effective Date of 1969 Amendment

    Amendment by Pub. L. 91-172 applicable to taxable years ending after 
Dec. 31, 1968, see section 704(c) of Pub. L. 91-172, set out as a note 
under section 169 of this title.


                            Savings Provision

    For provisions that nothing in amendment by Pub. L. 101-508 be 
construed to affect treatment of certain transactions occurring, 
property acquired, or items of income, loss, deduction, or credit taken 
into account prior to Nov. 5, 1990, for purposes of determining 
liability for tax for periods ending after Nov. 5, 1990, see section 
11821(b) of Pub. L. 101-508, set out as a note under section 29 of this 
title.

                  Section Referred to in Other Sections

    This section is referred to in section 1081 of this title.
