§146.  Unadjusted basis; tax free exchanges generally

A.  General rule.  The following rules apply to exchanges governed by R.S. 47:133 or 47:134.

(1)  Nonrecognition property.  The basis of the property permitted to be received under such Section without the recognition of gain or loss shall be the same as that of the property exchanged,

(a)  decreased by,

(i)  the fair market value of any other property (except money) received by the taxpayer, and

(ii)  the amount of any money received by the taxpayer, and

(b)  increased by,

(i)  the amount which was treated as a dividend, and

(ii)  the amount of gain to the taxpayer which was recognized on such exchange (not including any portion of such gain which was treated as a dividend).

(2)  Other property.  The basis of any other property (except money) received by the taxpayer shall be its fair market value.

B.  Allocation of basis.

(1)  In general.  Under regulations prescribed by the collector, the basis determined under Subsection A(1) of this Section shall be allocated among the properties permitted to be received without the recognition of gain or loss.

(2)  Special rule for R.S. 47:133 H.  In the case of an exchange to which R.S. 47:133 H (or so much of R.S. 47:134 as relates to R.S. 47:133 H) applies, then in making the allocation under Subsection A(1) of this Section, there shall be taken into account not only the property so permitted to be received without the recognition of gain or loss, but also the stock or securities (if any) of the distributing corporation which are retained, and the allocation of basis shall be made among all such properties.

C.  R.S. 47:133 H transactions which are not exchanges.  For purposes of this section, a distribution to which R.S. 47:133 H (or so much of R.S. 47:134 as relates to R.S. 47:133 H) applies shall be treated as an exchange, and for such purposes the stock and securities of the distributing corporation which are retained shall be treated as surrendered, and received back, in the exchange.

D.  Assumption of liability.  Where, as part of the consideration to the taxpayer, another party to the exchange 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, for purposes of this Section, be treated as money received by the taxpayer on the exchange.

E.  Exception.  This Section shall not apply to property acquired by a corporation by the issuance of its stock or securities as consideration in whole or in part for the transfer of the property to it.

Amended by Acts 1958, No. 443, §6.