[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: 26CFR1.362-2]

[Page 246-247]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.362-2  Certain contributions to capital.

    The following regulations shall be used in the application of 
section 362(c):
    (a) Property deemed to be acquired with contributed money shall be 
that property, if any, the acquisition of which was the purpose 
motivating the contribution;

[[Page 247]]

    (b) In the case of an excess of the amount of money contributed over 
the cost of the property deemed to be acquired with such money (as 
defined in paragraph (a) of this section) such excess shall be applied 
to the reduction of the basis (but not below zero) of other properties 
held by the corporation, on the last day of the 12-month period 
beginning on the day the contribution is received, in the following 
order--
    (1) All property of a character subject to an allowance for 
depreciation (not including any properties as to which a deduction for 
amortization is allowable),
    (2) Property with respect to which a deduction for amortization is 
allowable,
    (3) Property with respect to which a deduction for depletion is 
allowable under section 611 but not under section 613, and
    (4) All other remaining properties.

The reduction of the basis of each of the properties within each of the 
above categories shall be made in proportion to the relative bases of 
such properties.
    (c) With the consent of the Commissioner, the taxpayer may, however, 
have the basis of the various units of property within a particular 
category adjusted in a manner different from the general rule set forth 
in paragraph (b) of this section. Variations from such rule may, for 
example, involve adjusting the basis of only certain units of the 
taxpayer's property within a given category. A request for variations 
from the general rule should be filed by the taxpayer with its return 
for the taxable year for which the transfer of the property has 
occurred.