§ 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.