If any interest of the taxpayer in or with respect to property was determined to be
worthless and was treated as a war loss under section 127(a)(3) of the Internal Revenue Code of 1939 (see 26 CFR (1939) 29.127(a)–4) (Regulations 111), or if the taxpayer retained an interest in a corporation with
respect to which he sustained a war loss under section 127(e) of the Internal Revenue Code of 1939, and if the interest in the hands of the taxpayer is restored in value, in whole
or in part, by reason of a recovery with respect to the underlying assets treated
as war loss property, then such restoration in value is a recovery by the taxpayer
for the purposes of section 1331. In the application of section 1333, such restoration shall be treated as a recovery of the same interest considered
as destroyed or seized. War loss property is considered as not being in existence from the date of the loss
to the date of its recovery.
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