§ 15 — Exchange of property

New York § 15

• Jurisdiction: New York
• Law GCM: General City Model 772/66
• Part 3: Financial Corporation Tax
• Subpart 1: Tax On State Banks, Trust Companies, Financial Corporations and Savings and Loan Associations

Text

§ 15. Exchange of property.--Upon the sale or exchange of property the\nentire amount of the gain or loss, determined under section fourteen,\nshall be recognized, except as hereinafter provided in this section:\n 1. No gain or loss shall be recognized if common stock in a\ncorporation is exchanged solely for common stock in the same\ncorporation, or if preferred stock in a corporation is exchanged solely\nfor preferred stock in the same corporation;\n 2. No gain or loss shall be recognized if stock or securities in a\ncorporation a party to a reorganization are, in pursuance of the plan of\nreorganization, exchanged solely for stock or securities in such\ncorporation or in another corporation a party to the reorganization;\n 3. No gain or loss shall be recognized if a taxpayer, a party to a\nreorganization, exchanges property, in pursuance of the plan of\nreorganization, solely for stock or securities in another corporation a\nparty to the reorganization; and\n 4. No gain or loss shall be recognized if property is transferred to a\ncorporation by a taxpayer solely in exchange for stock or securities in\nsuch corporation, and immediately after the exchange such taxpayer is in\ncontrol of the corporation; but in the case of an exchange by a taxpayer\nand one or more other corporations or persons this subdivision shall\napply only if the amount of the stock and securities received by each is\nsubstantially in proportion to its interest in the property prior to the\nexchange.\n 5. If property (as a result of its destruction in whole or in part,\ntheft or seizure, or an exercise of the power of requisition or\ncondemnation, or the threat of imminence thereof) is compulsorily or\ninvoluntarily converted into property similar or related in service or\nuse to the property so converted, or into money which is forthwith in\ngood faith, under regulations prescribed by the director of finance,\nexpended in the acquisition of other property similar or related in\nservice or use to the property so converted, or in the acquisition of\ncontrol of a corporation owning such other property, or in the\nestablishment of a replacement fund, no gain or loss shall be\nrecognized. If any part of the money is not so expended, the gain, if\nany, shall be recognized, but in an amount not in excess of the money\nwhich is not so expended.\n 6. If there is distributed, in pursuance of a plan of reorganization,\nto a taxpayer shareholder in a corporation a party to the\nreorganization, stock or securities in such corporation or in another\ncorporation a party to the reorganization, without the surrender by such\ntaxpayer shareholder of stock or securities in such a corporation, no\ngain to the distributee from the receipt of such stock or securities\nshall be recognized.\n 7. If an exchange would be within the provisions of subdivision one,\ntwo, or four of this section if it were not for the fact that the\nproperty received in exchange consists not only of property permitted by\nsuch subdivision to be received without the recognition of gain, but\nalso of other property or money, then the gain, if any, to the recipient\nshall be recognized, but in an amount not in excess of the sum of such\nmoney and the fair market value of such other property.\n 8. If an exchange would be within the provisions of subdivision three\nof this section if it were not for the fact that the property received\nin exchange consists not only of stock or securities permitted by such\nsubdivision to be received without the recognition of gain, but also of\nother property or money, then--\n (a) If the taxpayer receiving such other property or money distributes\nit in pursuance of the plan of reorganization, no gain to the taxpayer\nshall be recognized from the exchange, but\n (b) If the taxpayer receiving such other property or money does not\ndistribute it in pursuance of the plan of reorganization, the gain, if\nany, to the taxpayer shall be recognized, but in an amount not in excess\nof the sum of such money and the fair market value of such other\nproperty so received, which is not so distributed.\n 9. If an exchange would be within the provisions of subdivision one,\ntwo, three, or four of this section if it were not for the fact that the\nproperty received in exchange consists not only of property permitted by\nsuch subdivision to be received without the recognition of gain or loss,\nbut also of other property or money, then no loss from the exchange\nshall be recognized.\n 10. As used in this section:\n The term "reorganization" means (a) a merger or consolidation\n(including the acquisition by one corporation of at least a majority of\nthe voting stock and at least a majority of the total number of shares\nof all other classes of stock of another corporation, or substantially\nall the properties of another corporation), or (b) a transfer by a\ncorporation of all or a part of its assets to another corporation if\nimmediately after the transfer the transferor or its stockholders or\nboth are in control of the corporation to which the assets are\ntransferred, or (c) a recapitalization, or (d) a mere change in\nidentity, form or place of organization, however effected;\n The term "a party to a reorganization" includes a corporation\nresulting from a reorganization and includes both corporations in the\ncase of an acquisition by one corporation of at least a majority of the\nvoting stock and at least a majority of the total number of shares of\nall other classes of stock of another corporation; and\n The term "control" means the ownership of at least eighty per centum\nof the voting stock and at least eighty per centum of the total number\nof shares of all other classes of stock of the corporation.\n 11. No gain or loss shall be recognized upon the receipt by a taxpayer\nof property distributed in complete liquidation of a corporation. For\nthe purposes of this paragraph a distribution shall be considered to be\nin complete liquidation only if--\n (a) the taxpayer receiving such property was, on the date of the\nadoption of the plan of liquidation, and has continued to be at all\ntimes until the receipt of the property, the owner of stock (in such\ncorporation) possessing at least eighty per centum of the total combined\nvoting power of all classes of stock entitled to vote and the owner of\nat least eighty per centum of the total number of shares of all other\nclasses of stock (except nonvoting stock which is limited and preferred\nas to dividends), and was at no time on or after the date of the\nadoption of the plan of liquidation and until the receipt of the\nproperty the owner of a greater percentage of any class of stock than\nthe percentage of such class owned at the time of the receipt of the\nproperty; and either\n (b) the distribution is by such corporation in complete cancellation\nor redemption of all its stock, and the transfer of all the property\noccurs within the base year; in such case the adoption by the\nshareholders of the resolution under which is authorized the\ndistribution of all the assets of the corporation in complete\ncancellation or redemption of all its stock, shall be considered an\nadoption of a plan of liquidation, even though no time for the\ncompletion of the transfer of the property is specified in such\nresolution; or\n (c) such distribution is one of a series of distributions by such\ncorporation in complete cancellation or redemption of all its stock in\naccordance with a plan of liquidation under which the transfer of all\nthe property under the liquidation is to be completed within three years\nfrom the close of the year during which is made the first of the series\nof distributions under the plan, except that if such transfer is not\ncompleted within such period, or if the taxpayer does not continue\nqualified under paragraph (a) until the completion of such transfer, no\ndistribution under the plan shall be considered a distribution in\ncomplete liquidation.\n If such transfer of all the property does not occur within the year,\nthe director of finance may require of the taxpayer such bond, or waiver\nof the statute of limitations on assessment and collection, or both, as\nhe may deem necessary to insure, if the transfer of the property is not\ncompleted within such three year period, or if the taxpayer does not\ncontinue qualified under paragraph (a) until the completion of such\ntransfer, the assessment and collection of all taxes then imposed under\nthis subpart for such year or subsequent years, to the extent\nattributable to property so received. A distribution otherwise\nconstituting a distribution in complete liquidation within the meaning\nof this paragraph shall not be considered as not constituting such a\ndistribution merely because it does not constitute a distribution or\nliquidation within the meaning of the corporate law under which the\ndistribution is made; and for the purposes of this paragraph a transfer\nof property of such corporation to the taxpayer shall not be considered\nas not constituting a distribution (or one of a series of distributions)\nin complete cancellation or redemption of all the stock of such\ncorporation, merely because the carrying out of the plan involves (1)\nthe transfer under the plan to the taxpayer by such corporation of\nproperty, not attributable to shares owned by the taxpayer, upon an\nexchange described in subdivision three of this section, and (2) the\ncomplete cancellation or redemption under the plan, as a result of\nexchanges described in subdivision two of this section, of the shares\nnot owned by the taxpayers.\n