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and P.” He argues that section 1011 does not refer to an
adjusted basis specified in other “internal revenue laws”, and
the language in section 1.1011-1, Income Tax Regs., “does not
provide for alternatives to � 1012 itself; it provides for some
mechanism of basis adjustments as an alternative to �� 1016, 1017
and 1018.”7
We read section 1.1011-1, Income Tax Regs., to incorporate
rules for determining adjusted basis in property which are
“specifically provided for under applicable provisions of
internal revenue laws.” We do not read the regulation to mean
that the section and subchapters enumerated in section 1011 are
the exclusive means of determining adjusted basis in property.8
This interpretation is more consistent with the application of
7Respondent also argues:
Even if Treas. Reg. � 1.1011-1 can be read, as
petitioner apparently wants to read it, so as to permit
some other “internal revenue act” to supplant the cost
basis of � 1012 (or the others permitted by � 1011),
such alternative “internal revenue act” would then be
outside of � 1011. * * *
We do not construe respondent’s argument to suggest that sec.
1.1011-1, Income Tax Regs., may be an invalid interpretation of
sec. 1011.
8We point out that the Deficit Reduction Act of 1984
(DEFRA), Pub. L. 98-369, sec. 177(d)(2), 98 Stat. 711, was
enacted after sec. 1011 was added to the Code and amended in the
Tax Reform Act of 1969, Pub. L. 91-172, sec. 201(f), 83 Stat.
564. Sec. 1.1011-1, Income Tax Regs., was promulgated on Nov. 6,
1957, and has not been changed. DEFRA sec. 177(d)(2) has not
been codified.
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