500 
INCOME TAXES 
or loss, but also of other property or money, then no loss 
from the exchange shall be recognized. 
Stock distri (g) The distribution, in pursuance of a plan of reor- 
ation mot econ- ganization, by or on behalf of a corporation a party to the 
ede” ©" reorganization, of its stock or securities or stock or securi- 
Reorganization. ties in a corporation a party to the reorganization, shall not 
be considered a distribution of earnings or profits within 
the meaning of subdivision (b) of section 201 for the 
purpose of determining the taxability of subsequent dis- 
;ributions by the corporation. 
(h) As used in this section and sections 201 and 204— 
(1) The term “reorganization” means (A) a merger 
or consolidation (including the acquisition by one cor- 
soration of at least a majority of the voting stock and 
at least a majority of the total number of shares of all 
other classes of stock of another corporation, or sub- 
stantially all the properties of another corporation), or 
(B) a transfer by a corporation of all or a part of its 
assets to another corporation if immediately after the 
transfer the transferor or its stockholders or both are 
in control of the corporation to which the assets are 
transferred, or (C) a recapitalization, or (D) a mere 
shange in identity, form, or place of organization, how- 
aver effected. 
_ Corporation fn (2) The term “a party to a reorganization ” includes 
party to g reor- & corporation resulting from a reorganization and in- 
ganization. cludes both corporations in the case of an acquisition by 
one corporation of at least a majority of the voting stock 
and at least a majority of the total number of shares of 
all other classes of stock of another corporation. 
(i) As used in this section the term “control” means 
the ownership of at least 80 per centum of the voting 
stock and at least 80 per centum of the total number of 
shares of all other classes of stock of the corporation. 
Determining BASIS FOR DETERMINING GAIN OR LOSS, DEPLETION, AND DE. 
Zain or loss. PRECIATION 
On cost vale Spe. 204. (a) The basis for determining the gain or 
property acquired loss from the sale or other disposition of property ac- 
since Feb. 28, gyiired after February 28, 1913, shall be the cost of such 
Exceptions. property; except that— 
Inventory value. © (1) Tf the property should have been included in the 
last inventory, the basis shall be the last inventory value 
thereof; 
(2) If the property was acquired by gift after De- 
cember 31, 1920, the basis shall be the same as it would 
be in the hands of the donor or the last preceding owner 
by whom it was not acquired by gift. If the facts nec- 
Ascertainment. essary to determine such basis are unknown to the donee, 
‘he Commissioner shall, if possible, obtain such facts 
from such donor or last preceding owner, or any other 
person cognizant thereof. If the Commissioner finds it