- 18 -
appreciation in the value of assets that had occurred in pre-1987
years when the organizations had not been subject to Federal
income tax. H. Conf. Rept. 99-841 (Vol. II), at II-350 (1986),
1986-3 C.B. (Vol. 4) 1, 350. The relevant statutory language of
the basis step-up provision as set forth in TRA 1986 section
1012(c)(3)(A)(ii), 100 Stat. 2394, provides as follows:
for purposes of determining gain or loss, the adjusted
basis of any asset held on the 1st day of * * * [the
1st taxable year beginning after Dec. 31, 1986], shall
be treated as equal to its fair market value as of such
day.
Respondent argues that because the above statutory language
fails to state expressly the kinds of losses to which the basis
step-up provision is intended to apply, the statutory language
should be regarded as ambiguous and the legislative history of
TRA 1986 section 1012(c)(3)(A)(ii) should be controlling. In the
legislative history, it is stated that the basis step-up
provision is limited to “sale or exchange” transactions. The
relevant language from the conference report is underscored
below:
the basis of assets of * * * [BCBS] organizations is
equal, for purposes of determining gain or loss, to the
amount of the assets’ fair market value on the first
day of the organization’s taxable year beginning after
December 31, 1986. Thus, for formerly tax-exempt
organizations utilizing a calendar period of accounting
and whose first taxable year commences January 1, 1987,
the basis of each asset of such organization is equal
to the amount of its fair market value on January 1,
Page: Previous 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 NextLast modified: May 25, 2011