[Code of Federal Regulations]
[Title 26, Volume 4]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.362-1]

[Page 246]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.362-1  Basis to corporations.

    (a) In general. Section 362 provides, as a general rule, that if 
property was acquired on or after June 22, 1954, by a corporation (1) in 
connection with a transaction to which section 351 (relating to transfer 
of property to corporation controlled by transferor) applies, (2) as 
paid-in surplus or as a contribution to capital, or (3) in connection 
with a reorganization to which part III, subchapter C, chapter 1 of the 
Code applies, then the basis shall be the same as it would be in the 
hands of the transferor, increased in the amount of gain recognized to 
the transferor on such transfer. (See also Sec. 1.362-2.) See Sec. 
1.460-4(k)(3)(iv)(B)(2) for rules relating to adjustments to the basis 
of certain contracts accounted for using a long-term contract method of 
accounting that are acquired in certain transfers described in section 
351 and certain reorganizations described in section 368(a).
    (b) Exceptions. (1) In the case of a plan of reorganization adopted 
after October 22, 1968, section 362 does not apply if the property 
acquired in connection with such reorganization consists of stock or 
securities in a corporation a party to the reorganization, unless 
acquired by the exchange of stock or securities of the transferee (or of 
a corporation which is in control of the transferee) as the 
consideration in whole or in part for the transfer.
    (2) In the case of a plan of reorganization adopted before October 
23, 1968, section 362 does not apply if the property acquired in 
connection with such reorganization consists of stock or securities in a 
corporation a party to the reorganization, unless acquired by the 
issuance of stock or securities of the transferee (or, in the case of 
transactions occurring after December 31, 1963, of a corporation which 
is in control of the transferee) as the consideration in whole or in 
part for the transfer. The term issuance of stock or securities includes 
any transfer of stock or securities, including stock or securities which 
were purchased or were acquired as a contribution to capital.

[T.D. 7422, 41 FR 26569, June 28, 1976, as amended by T.D. 8995, 67 FR 
34605, May 15, 2002]