A bill to provide tax treatment for exchanges under the final system plan for ConRail.
PL 94-253 (H.R.12490), enacted 03/31/1976

PUBLIC LAW 94-253—MAR. 31, 1976 
90 STAT. 295 
Public Law 94-253 
94th Congress 
An Act 
To provide tax treatment for exchanges under the final system plan for ConRail. 
Mar, ol, 1976 
Be it enacted hy the Sen-ate and House of Representatwes 
of the 
United States of America in Congress 
assembled^ 
SECTION 1. TAX TREATMENT OF EXCHANGES UNDER THE FINAL 
SYSTEM PLAN FOR CONRAIL. 
(a) I x GEXERAL.—Section 374 of the Internal Revenue Code of 
1954 (relating to gain or loss not recognized in certain railroad 
reorganizations) is amended by redesignating subsection (c) as sub-
section (d) and by inserting after subsection (b) the following new 
subsection: 
"(c) ExCHAXGES UXDER THE FiNAL SYSTEM PLAN FOR CONRAIL.— 
"(1) I x GEXERAL.—No gain or loss shall be recognized if, in 
order to carry out the final system plan, rail properties of a trans-
feror railroad corporation are transferred to the Consolidated Rail 
Corporation (or any subsidiary thereof) pursuant to an order of 
the special court under section 303 or 305(d) of the Regional Rail 
Reorganization Act of 1973 in exchange solely for stock of the 
Consolidated Rail Corporation, securities of such Corporation, 
certificates of value of the United States Railway Association, or 
any combination thereof. 
" (2) ExciiAXGES xoT SOLELY IX Kixi).—If paragraph (1) would 
apply to an exchange if it were not for the fact that the property 
received in exchange consists not only of property permitted by 
paragraph (1) to l)e received without the recognition of gain or 
loss, but also of other property or money, then rules similar to the 
rules set forth in paragraph (2) or (3) of subsection (a) (which-
ever is appropriate) shall be applied. 
" (3) BASIS.—The basis of the property transferred to the Con-
solidated Rail Corporation (or any subsidiary thereof) in an 
exchange to which paragraph (1) or (2) applies shall be deter-
mined under rules similar to the rules set forth in subsection (b). 
"(4) DEXIAL OF XET OPERATIXG LOSS CARRYOVERS TO COXRAIL.— 
Xeither the Consolidated Rail Corporation nor any subsidiary 
thereof shall succeed to any net operating loss carryover of any 
transferor railroad corporation. 
"(5) DEFIXITIOXS.—For purposes of this subsection— 
"(A) RAIL PROPERTIES.—The term 'rail properties' means 
rail properties wdthin the meaning of paragraph (12) of 
section 102 of the Regional Rail Reorganization Act of 1973. 
" ( B ) TRAXSFEROR RAILROAD CORPORATIOX.—The term 'trans-
feror railroad corporation' means a corporation which, on 
March 11, 1976, was— 
l^j,,^^ 
"(i) a railroad in reorganization (within the meaning 
of paragraph (14) of section 102 of the Regional Rafl 
Reorganization Act of 1973) in the region (within the 
meaning of paragraph (15) of such section 102), or 
"(ii) a corporation leased, operated, or controlled by 
such a railroad in reorganization. 
[H.R. 12490] 
ConRail 
exchanges. 
Tax treatment. 
26 use 374. 
45 use 743. 
Ante, p. 100 
45 use 745. 
45 use 702. 
90 STAT. 296 
PUBLIC LAW 94-253—MAR. 31, 1976 
"(C) 
FINAL SYSTEM PLAN.—The term 'final system plan' 
means the final system plan (within the meaning of para-
45 use 702. 
, graph (6) of section 102 of such Act). Such term includes 
Ante, p. 100. 
supplemental transactions under section 305 of such Act. 
45 use 745. 
" ( D ) SUBSIDIARY.—The term'subsidiary'means any corpo-
{h>i 
ration 100 percent of whose total combined voting shares are, 
^j-> i. !.Ai\ • 
directly or indirectly, owned or controlled by the Consoli-
' 
dated Rail Corporation." 
(b) BASIS AMENDMENTS.— 
(1) BASIS 
OF PROPERTY 
RECEIVED BY TRANSFEROR 
RAILROAD 
26 use 358. 
CORPORATIONS.—Section 358(a) of such Code (relating to basis to 
distributees) is amended by striking out "or 371 ( b ) " and inserting 
f ; J . . -.- 
in lieu thereof "371 (b), or 374". 
(2) ALLOCATION OF BASIS.— Subsection (b) of section 358 of such 
Code (relating to allocation of basis) is amended by adding at the 
end thereof the following new paragraph: 
"(3) 
CERTAIN EXCHANGES INVOLVING CONRAIL.—To the extent 
provided in regulations prescribed by the Secretary or his dele-
gate, in the case of an exchange to which section 354(d) (or so 
much of section 356 as relates to section 354(d)) or section 374(c) 
applies, for purposes of allocating basis under paragraph (1), 
stock of the Consolidated Rail Corporation and the certificate of 
value of the United States Railway Association which relates to 
such stock shall, so long as they are held by the same person, be 
treated as one property." 
(c) EFFECTS ON SHAREHOLDERS AND SECURITY HOLDERS.—Section 354 
26 use 354. 
of such Code (relating to exchanges of stock and securities in certain 
reorganizations) is amended by adding at the end thereof the following 
new subsection: 
"(d) 
EXCHANGES ITNDER THE F I N A L SYSTEM PLAN FOR CONRAIL.— 
Xo gain or loss shall be recognized if stock or securities in a corporation 
are, in pursuance of an exchange to which paragraph (1) or (2) of 
section 374(c) applies, exchanged solely for stock of the Consolidated 
Rail Corporation, securities of such Corporation, certificates of value 
of the ignited States Railway Association, or any combination 
thereof." 
26 use 356. 
Clause (i) of section 356(d) (2) (B) of such Code (relating to receipt 
of additional consideration) is amended by striking out "subsection 
(c) thereof" and inserting in lieu thereof "subsection (c) or (d) 
thereof". 
(d) I^sE OF EXPIRED N E T OPERATING Loss CARRYOVERS T O OFFSET 
INCOME ARISING FROM CERTAIN RAILROAD REORGANIZATION PROCEED-
26 use 374. 
iNGs.—^Section 374 of such Code (relating to gain or loss not recog-
nized in certain railroad reorganizations) is amended by adding at 
the end thereof the following new subsection: 
J;th .; 
:- 
«^g^ jjgp 
^p 
EXPIRED 
N E T OPERATING 
Loss 
CARRYOVERS 
To 
OFFSET INCOME ARISING FROM CERTAIN RAILROAD REORGANIZATION 
PROCEEDTNGS.— 
"(1) I N GENERAL.—If— 
" ( A ) any corporation receives or accnies any amount 
• ' " 
pursuant to— 
"(i) an award in (or settlement of) a proceeding 
11 use 205. 
; 
under section 77 of the Bankruptcy Act, 
' " " 
"(ii) a^n aAvard in (or settlement of) a proceeding 
• 
before the special court to carry out section 303(c), 305, 
45 use 743. 
^ 
or 306 of the Regional Rail Reorganization Act of 1973. 
Antt, p. 100, 
104. 
45 use 745, 
746. 
PUBLIC LAW 94-253—MAR. 31, 1976 
90 STAT. 297 
"(iii) an award in (or settlement of) a proceeding 
in the Court of Claims under section 1491 of title 28 of 
the United States Code, to the extent such proceeding 
involves a claim arising under the Kegional Rail Reorga-
nization Act of 1973, or 
45 use 701 note. 
"(iv) a redemption of a certificate of value of the 
United States Railway Association issued to such corpo-
ration under section 306 of such Act, 
Ante, p. 104. 
"(B) any portion of such amount is includible in the gross ^ ^^^ ^^-
income of such corporation for the taxable year in which suoh 
portion is received or accrued, and suoh taxable year begins 
not more than 5 years after the date of such award, settle- 
; 
ment, or redemption, and 
|; % 
"(C) the net operating loss of such corporation for any 
., 
, ,,j^ 
taxable year— 
"(i) was a net operating loss carryover to, or arose in, 
the first taxable year of such corporation ending after 
3 
March 31, 1976 (or, in the case of a proceeding referred 
to in subparagraph (A) (i) which began after March 31, 
1976, ending after the beginning of such proceeding), but 
"(ii) solely by reason of the lapse of time, is not a net 
i 
operating loss carryover to the taxable year referred to 
in subparagraph (B), 
, 
then such net operating loss shall be a net operating loss carry-
over to the taxable year described in subparagraph (B) but only 
for use (to the extent not theretofore used under this subsection 
to offset other amounts) to offset the portion referred to in 
subparagraph (B). 
"(2) SPECIAL RULE.—For purposes of paragraph (1) (C) (i), a 
corporation which was a regulated transportation corporation 
(within the meaning of section 172(j)) for its last taxable year 26 USC 172. 
ending on or before March 31, 1976, shall be treated as such a 
regulated transportation corporation for its first taxable year 
ending after such date.". 
SEC. 2. EFFECTIVE DATE. 
26 USC 374 note. 
The amendments made by section 1 shall apply to taxable years 
ending after March 31, 1976. 
Approved March 31, 1976. 
LEGISLATIVE HISTORY: 
HOUSE REPORT No. 94-940 (Comm. on Ways and Means). 
CONGRESSIONAL RECORD, Vol. 122 (1976): 
Mar. 24, considered and passed House. 
Mar 25, considered and passed Senate.