N.Y. General City Model 772/66 § 15: Exchange of property

§ 15. Exchange of property.--Upon the sale or exchange of property the

entire amount of the gain or loss, determined under section fourteen,

shall be recognized, except as hereinafter provided in this section:

1. No gain or loss shall be recognized if common stock in a

corporation is exchanged solely for common stock in the same

corporation, or if preferred stock in a corporation is exchanged solely

for preferred stock in the same corporation;

2. No gain or loss shall be recognized if stock or securities in a

corporation a party to a reorganization are, in pursuance of the plan of

reorganization, exchanged solely for stock or securities in such

corporation or in another corporation a party to the reorganization;

3. No gain or loss shall be recognized if a taxpayer, a party to a

reorganization, exchanges property, in pursuance of the plan of

reorganization, solely for stock or securities in another corporation a

party to the reorganization; and

4. No gain or loss shall be recognized if property is transferred to a

corporation by a taxpayer solely in exchange for stock or securities in

such corporation, and immediately after the exchange such taxpayer is in

control of the corporation; but in the case of an exchange by a taxpayer

and one or more other corporations or persons this subdivision shall

apply only if the amount of the stock and securities received by each is

substantially in proportion to its interest in the property prior to the

exchange.

5. If property (as a result of its destruction in whole or in part,

theft or seizure, or an exercise of the power of requisition or

condemnation, or the threat of imminence thereof) is compulsorily or

involuntarily converted into property similar or related in service or

use to the property so converted, or into money which is forthwith in

good faith, under regulations prescribed by the director of finance,

expended in the acquisition of other property similar or related in

service or use to the property so converted, or in the acquisition of

control of a corporation owning such other property, or in the

establishment of a replacement fund, no gain or loss shall be

recognized. If any part of the money is not so expended, the gain, if

any, shall be recognized, but in an amount not in excess of the money

which is not so expended.

6. If there is distributed, in pursuance of a plan of reorganization,

to a taxpayer shareholder in a corporation a party to the

reorganization, stock or securities in such corporation or in another

corporation a party to the reorganization, without the surrender by such

taxpayer shareholder of stock or securities in such a corporation, no

gain to the distributee from the receipt of such stock or securities

shall be recognized.

7. If an exchange would be within the provisions of subdivision one,

two, or four of this section if it were not for the fact that the

property received in exchange consists not only of property permitted by

such subdivision to be received without the recognition of gain, but

also of other property or money, then the gain, if any, to the recipient

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.

8. If an exchange would be within the provisions of subdivision three

of this section if it were not for the fact that the property received

in exchange consists not only of stock or securities permitted by such

subdivision to be received without the recognition of gain, but also of

other property or money, then--

(a) If the taxpayer receiving such other property or money distributes

it in pursuance of the plan of reorganization, no gain to the taxpayer

shall be recognized from the exchange, but

(b) If the taxpayer receiving such other property or money does not

distribute it in pursuance of the plan of reorganization, the gain, if

any, to the taxpayer 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 so received, which is not so distributed.

9. If an exchange would be within the provisions of subdivision one,

two, three, or four of this section if it were not for the fact that the

property received in exchange consists not only of property permitted by

such subdivision to be received without the recognition of gain or loss,

but also of other property or money, then no loss from the exchange

shall be recognized.

10. As used in this section:

The term "reorganization" means (a) a merger or consolidation

(including the 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, or substantially

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 change in

identity, form or place of organization, however effected;

The term "a party to a reorganization" includes a corporation

resulting from a reorganization and includes 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; and

The term "control" means the ownership of at least eighty per centum

of the voting stock and at least eighty per centum of the total number

of shares of all other classes of stock of the corporation.

11. No gain or loss shall be recognized upon the receipt by a taxpayer

of property distributed in complete liquidation of a corporation. For

the purposes of this paragraph a distribution shall be considered to be

in complete liquidation only if--

(a) the taxpayer receiving such property was, on the date of the

adoption of the plan of liquidation, and has continued to be at all

times until the receipt of the property, the owner of stock (in such

corporation) possessing at least eighty per centum of the total combined

voting power of all classes of stock entitled to vote and the owner of

at least eighty per centum of the total number of shares of all other

classes of stock (except nonvoting stock which is limited and preferred

as to dividends), and was at no time on or after the date of the

adoption of the plan of liquidation and until the receipt of the

property the owner of a greater percentage of any class of stock than

the percentage of such class owned at the time of the receipt of the

property; and either

(b) the distribution is by such corporation in complete cancellation

or redemption of all its stock, and the transfer of all the property

occurs within the base year; in such case the adoption by the

shareholders of the resolution under which is authorized the

distribution of all the assets of the corporation in complete

cancellation or redemption of all its stock, shall be considered an

adoption of a plan of liquidation, even though no time for the

completion of the transfer of the property is specified in such

resolution; or

(c) such distribution is one of a series of distributions by such

corporation in complete cancellation or redemption of all its stock in

accordance with a plan of liquidation under which the transfer of all

the property under the liquidation is to be completed within three years

from the close of the year during which is made the first of the series

of distributions under the plan, except that if such transfer is not

completed within such period, or if the taxpayer does not continue

qualified under paragraph (a) until the completion of such transfer, no

distribution under the plan shall be considered a distribution in

complete liquidation.

If such transfer of all the property does not occur within the year,

the director of finance may require of the taxpayer such bond, or waiver

of the statute of limitations on assessment and collection, or both, as

he may deem necessary to insure, if the transfer of the property is not

completed within such three year period, or if the taxpayer does not

continue qualified under paragraph (a) until the completion of such

transfer, the assessment and collection of all taxes then imposed under

this subpart for such year or subsequent years, to the extent

attributable to property so received. A distribution otherwise

constituting a distribution in complete liquidation within the meaning

of this paragraph shall not be considered as not constituting such a

distribution merely because it does not constitute a distribution or

liquidation within the meaning of the corporate law under which the

distribution is made; and for the purposes of this paragraph a transfer

of property of such corporation to the taxpayer shall not be considered

as not constituting a distribution (or one of a series of distributions)

in complete cancellation or redemption of all the stock of such

corporation, merely because the carrying out of the plan involves (1)

the transfer under the plan to the taxpayer by such corporation of

property, not attributable to shares owned by the taxpayer, upon an

exchange described in subdivision three of this section, and (2) the

complete cancellation or redemption under the plan, as a result of

exchanges described in subdivision two of this section, of the shares

not owned by the taxpayers.