An Act relating to the income tax treatment of gain realized on an involuntary conversion of property
PL 82-251 (H.R.3590), enacted 10/31/1951

65 STAT.] 
PUBLIC LAW 251—OCT. 31, 1951 
733 
member of an organization of Government employees that asserts 
the right to strike against the Government of the United States, or 
who advocates, or who is a member of an organization that advocates, 
the overthrow of the Government of the United States by force or 
violence and accepts employment the salary or wages for which are 
paid from any appropriation or fund contained in this Act shall be 
guilty of a felony and, upon conviction, shall be fined not more than 
$1,000 or imprisoned for not more than one year, or both: 
Provided 
further^ That the above penalty clause shall be in addition to, and not 
in substitution for, any other provisions of existing law. 
SEC. 4. This Act may be cited as the "Mutual Security Appropria-
tion Act, 1952". 
Approved October 31, 1951. 
Short title. 
Public Law 250 
CHAPTER 660 
AN ACT 
For the relief of the Fort Pierce Port District. 
October 31,1951 
[H. R. 2176] 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled^ That the Secretary 
of the Treasury is authorized and directed to pay, out of any money 
in the Treasury not otlierwise appropriated, to the Fort Pierce Port 
District, Fort Pierce, Florida, the sum of $235,286.08, in full satisfac-
tion of its claim against the United States for compensation for the 
use by the Navy Department during the period January 3, 1943, to 
March 1, 1946, of the Fort Pierce harbor, port, and channel, which 
were developed at the expense of the taxpayers residing within the 
taxing jurisdiction of the Fort Pierce Port District: Provided^ That 
no part of the amount appropriated in this Act in excess of 10 per 
centum thereof shall be paid or delivered to or received by any agent 
or attorney on account of services rendered in connection with this 
claim, and the same shall be unlawful, any contract to the contrary 
notwithstanding. Any person violating the provisions of this Act 
shall be deemed guilty of a misdemeanor and upon conviction thereof 
shall be fined in any sum not exceeding $1,000. 
Approved October 31, 1951. 
Public Law 251 
CHAPTER 661 
AN ACT 
Relating to the income-tax treatment of gain realized on an involuntary 
conversion of property. 
October 31,1951 
[H. R. 3590] 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled^ That (a) section 112 
(f) of the Internal Revenue Code (relating to involuntary conver-
sions) is hereby amended to read as follows: 
"(f) 
INVOLUNTARY CONVERSION.—If property (as a result of its 
destruction in whole or in part, theft, seizure, or requisition or con-
demnation or threat or imminence thereof) is compulsorily or involun-
tarily converted— 
" (1) CONVERSION INTO SIMILAR PROPERTY.—^Into property similar 
or related in service or use to the property so converted, no gain 
shall be recognized. 
Internal Revenue 
Code, amendments. 
53 Stat. 39. 
26 U. S. C. § 112 (0. 
734 
PUBLIC LAW 251—OCT. 31, 1951 
[65 STAT. 
"(2) 
CONVERSION 
INTO MONEY WHERE DISPOSITION OCCURRED 
PRIOR TO 1951.—Into money, and the disposition of the converted 
property occurred before Januai-y 1, 1951, no gain shall be recog-
nized if such money is forthwith in good faith, under regulations 
prescribed by the Secretary, 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. If any part of the money is not so expended, the gain shall 
be recognized to the extent of the money which is not so expended 
(regardless of whether such money is received in one or more 
taxable years and regardless of whether or not the money which 
is not so expended constitutes gain). For the purposes of this 
paragraph and paragraph (3), the term 'disposition of the con-
verted property' means the destruction, theft, seizure, requisition, 
or condemnation of the converted property, or the sale or exchange 
of such property under threat or imminence of requisition or 
condemnation. 
"(3) 
CONVERSION INTO MONEY WHERE DISPOSITION OCCURRED 
AFTER 1950.—Into money or into property not similar or related 
in service or use to the converted property, and the disposition of 
the converted property (as defined in paragraph (2)) occurred 
after December 31, 1950, the gain (if any) shall be recognized 
except to the extent hereinafter provided in this paragraph: 
" (A) Nonrecognition of Gain.—If the taxpayer during the 
period specified in subparagraph (B), for the purpose of 
replacing the property so converted, purchases other property 
similar or related in service or use to the property so con-
verted, or purchases stock in the acquisition of control of a 
corporation owning such other property, at the election of 
the taxpayer the gain shall be recognized only to the extent 
that the amount realized upon such conversion (regardless 
of whether such amount is received in one or more taxable 
years) exceeds the cost of such other property or such stock. 
Such election shall be made at such time and in such manner 
as the Secretary may by regulations prescribe. For the pur-
poses of this paragraph— 
"(i) no property or stock acquired before the disposi-
tion of the converted property shall be considered to have 
been acquired for the purpose of replacing such converted 
property unless held by the taxpayer on the date of such 
disposition; and 
"(ii) the taxpayer shall be considered to have pur-
chased property or stock only if, but for the provisions 
53 Stat. 42. 
of sectiou 113 (a) (9), the unadjusted basis of such prop-
(9? ^' ^' ^' * "^ ^
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^ 
erty or stock would be its cost within the meaning of 
section 113 (a). 
"(B) Period Within Which Property Must Be Replaced.— 
The period referred to in subparagraph (A) shall be the 
period beginning with the date of the disposition of the con-
verted property, or the earliest date of the threat or immi-
nence of requisition or condemnation of the converted prop-
erty, whichever is the earlier, and ending— 
"(i) one year after the close of the first taxable year 
in which any part of the gain upon the conversion is 
realized, or 
"(ii) subject to such terms and conditions as may be 
specified by the Secretary, at the close of such later 
date as the Secretary may designate upon application by 
26 U. S. C. § 272 (f). 
65 STAT.] 
PUBLIC LAW 251—OCT. 31, 1951 
7 3 5 
the taxpayer. Such application shall be made at such 
time and in such manner as the Secretary may by regula-
tions prescribe. 
"(C) Time for Assessment of Deficiency Attributable to 
Gain Upon Conversion.—^If a taxpayer has made the election 
provided in subparagraph (A), then (i) the statutory period 
for the assessment of any deficiency, for any taxable year in 
which any part of the gain upon such conversion is realized, 
attributable to such gain shall not expire prior to the expira-
tion of three years from the date the Secretary is notified by 
the taxpayer (in such manner as the Secretary may by regula-
tions prescribe) of the replacement of the converted property 
or of an intention not to replace^ and (ii) such deficiency may 
be assessed prior to the expiration of such threeryear period 
notwithstanding the provisions of section 272 (f) or the pro- 
f^n^s o, 
visions of any other law or rule of law which would otherwise 
prevent such assessment. 
"(D) Time for Assessment of Other Deficiencies Attrib-
utable to Election.—If the election provided in subparagraph 
(A) is made by the taxpayer and such other property or such 
stock was purchased prior to the beginning of the last taxable 
year in which any part of the gain upon such conversion is 
realized, any deficiency, to the extent resulting from such 
election, for any taxable year ending before such last taxable 
year may be assessed (notwithstanding the provisions of 
section 272 (f) or 275 or the provisions of any other law or 
rule of law which would otherwise prevent such assessment) 
at any time before the expiration of the period within which 
a deficiency for such last taxable year may be assessed. 
This subsection shall not apply, in the case of property used by 
the taxpayer as his principal residence, if the destruction, theft, 
seizure, requisition, or condemnation of residence, or the sale or 
exchange of such residence under threat or imminence thereof, 
occurred after December 31,1950." 
(b) Section 276 of the Internal Revenue Code (relating to period of 
^ u^s.^c! s 276. 
limitation upon assessment and collection) is hereby amended by 
adding at the end thereof the following: 
"(f) INVOLUNTARY CONVERSION.—In the case of a deficiency described 
in section 112 (f) (3) (C) or (D), such deficiency may be assessed 
^»<«.P-733. 
at any time prior to the expiration of the time therein provided." 
SEC. 2. Paragraph (9) of section 113 (a) of the Int-ernal Revenue 
^u^s.^c 
Code (relating to unadjusted basis of property acquired as the result (s)-
of an involuntary conversion) is hereby amended by striking out 
"section 112 (f)" and inserting in lieu thereof "section 112 (f) (1) or 
(2)", and by adding at the end of such paragraph the following new 
sentence: "In the case of property purchased by the taxpayer which 
resulted, under the provisions of section 112 (f) (3), in the nonrecog-
nition of any part of the gain realized as the result of a compulsory 
or involuntary conversion, the basis shall be the cost of such property 
decreased in the amount of the gain not so recognized; and if the 
property purchased consists of more than one piece of property, the 
basis determined under this sentence shall be allocated to the purchased 
properties in proportion to their respective costs." 
SEO. 3. The amendments made by the first two sections of this Act ig^SStiras**^**^^' 
shall be applicable only with respect to taxable years ending after 
December 31, 1950, except that the provisions of section 112 (f) (3), 
and the provisions of section 113 (a) (9), of the Internal Revenue 
Code as amended by this Act shall also be applicable to any taxable 
year ending prior to January 1, 1951, in which (a) any gain was real-
76100 O - 52 (PT. I) - 49 
U. S. C. § n3 (a) 
736 
Ante, p. 537. 
PUBLIC LAW 252—NOV. 1, 1951 
[65 STAT. 
ized upon the conversion of property and the disposition of such 
converted property occurred (within the meaning of such section 
112 (f) (3)) after December 31, 1950, or (b) the basis of property 
is affected by an election made under the provisions of section 112 (f) 
(3) of such code. 
SEC. 4. Notwithstanding the provisions of section 490 of the Revenue 
Act of 1951, the effective date of so much of the amendment made by 
section 485 of such Act to section 3406 (a) (3) of the Internal Revenue 
Code as relates to electric heating pads shall be April 1, 1952. 
Approved October 31, 1951. 
Public Law 252 
CHAPTER 663 
November 1,1961 
[H. R. 4288] 
AN ACT 
Granting the consent of the. Congress to the negotiation of a compact relating 
to the waters of the Sabine River by the States of Texas and Louisiana. 
Be it enacted hy the Senate and House of Representatives 
of the 
corisentorcongress ^^*^^<^ States of America in Congress assembled, That the consent of 
to interstate compact, the Congress is hereby given to the States of Texas and Louisiana to 
negotiate and enter into a compact, providing for an equitable appor-
tionment among the said States of the waters of the Sabine River and 
its tributaries, upon the condition that one suitable person, not a 
resident of, not living in, and having no interests in, either Texas, or 
Louisiana, who shall be appointed by the President of the United 
States, shall participate in said negotiations as the representative of 
the United States and shall make a report to the Congress of the 
proceedings and of any compact entered into. 
Said compact shall 
not be binding or obligatory upon any of the parties thereto unless 
and until the same shall have been ratified by the legislature of each 
of the States aforesaid and approved by the Congress of the United 
States. 
Approved November 1, 1951. 
November 1,1951 
[H. R. 5215] 
Public Law 253 
CHAPTER 664 
AN ACT 
Making supplemental appropriations for the fiscal year ending June 30, 1952, 
and for other purposes. 
Be it enacted hy the Senate and House of Representatives 
of the 
TO^riatlra A
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c
t 1962' ^^*^^^ States of America in Congress assembled, That the following 
propria ion c, 
. gyj^j^gg^pg j^ppj.Qpj,j^^g,(j^Q^^^f g^j^y jjjQj^gy jj^^j^g'Pj.g^sury notOtherwise 
appropriated, to .supply supplemental appropriations for the fiscal 
year ending June 30, 1952, and for other purposes, namely: 
CHAPTER I 
DISTRICT OF COLUMBIA 
(Out of revenues of the District of Columbia) 
REGULATORY AGENCIES 
OFFICE OF ADMINISTRATOR OF RENT CONTROL 
SALARIES AND EXPENSES 
For necessary expenses for "Office of Administrator of Rent Con-
trol", $136,650.