CHAPTER 369

An Act to amend the Code of Virginia by adding a new section numbered
58-86.1:8, relating to gain or loss, for income tax purposes, on certain
transfers of property to a newly organized corporation controlled by
transferor or transferors.

(S 347]

Approved March 31, 1964

Be it enacted by the General Assembly of Virginia:
1. That the Code of Virginia be amended by adding a new section num-
bered 58-86.1:3, as follows:

§ 58-86.1:3. Gain or loss on certain transfers to a newly organized
corporation controlled by transferor or transferors. — No gain or loss
shall be recognized if property is transferred to a newly organized cor-
poration by one or more individuals solely in exchange for stock in such
corporation and immediately after the exchange such individual or in-
dividuals are in control of the corporation. For purposes of this section,
stock issued for services shall not be considered as issued in return of
property.

The term “control”, as used in this section, means the ownership of
stock possessing at least eighty percent of the total combined voting
power of all classes of stock entitled to vote and at least eighty percent
of the total number of all other classes of stock of the corporation.

The basis of property received by a corporation in an exchange to
which this section applies shall be the same as the basis in the hands of
the transferor, and the basis of the stock received by an individual in
an exchange to which this section applies shall be the same as the basis
of the property he transferred to the corporation in exchange for the
stock.
Pie section shall not apply to any transfer of property to a mutual
fund.
This section shall be in force with respect to taxable years beginning
after December thirty-first, nineteen hundred sixty-three.