HARRY W. NICE, GOVERNOR. 39

solidation of a corporation a taxpayer receives in place of
stock or securities owned by Mm, new stock or securities of
the reorganized, merged or consolidated corporation, no gain
or loss shall be deemed to occur from the. exchange until the
new stock or securities are sold or realized upon and the gain
or loss is definitely ascertained, until which time the new
stock or securities received shall be treated as taking the
place of the stock and securities exchanged; provided such
reorganization, merger or consolidation is a "reorganization"
within the meaning of the term "reorganization" as denned in
Section 112 (g) (1) of the Federal Revenue Act of 1936.

222. ACCOUNTING PERIOD AND CHANGES THEREIN, (1) The in-
come of the taxpayer shall be computed upon the basis of the
taxpayer's annual accounting period (fiscal year or calendar
year, as the case may be) in accordance with the method of
accounting regularly employed in keeping the books of such
taxpayer, but if no such method of accounting has been em-
ployed or if the method employed does not clearly reflect the
true income of the taxpayer, computation shall be made upon
the basis and in such manner, as in the opinion of the Comp-
troller does clearly reflect the true income. If the taxpayer's
annual accounting period is other than a fiscal year, as de-
nned in this sub-title, or if the taxpayer has no annual account-
ing period, or does not keep books, the net income shall be
computed on the basis of the calendar year.

(2) If the taxpayer makes a Federal income tax return, his
income shall be computed for the purposes of this sub-title, on
the basis of the same calendar or fiscal year as in such Federal
income tax return.

(3) If the taxpayer with the approval of the Comptroller
changes his accounting period from a fiscal year to a calendar
year, from calendar to fiscal year, or from one fiscal year to
another, the income shall be computed on the basis of such new
accounting period, subject to the following provisions:

(a) If the taxpayer changes the basis of computing net in-
come from fiscal year to calendar year, a separate return
shall be made for the period between the close of the last fiscal
year for which return was made and the following December
31st. If the change is made from calendar year to fiscal year, a
separate return shall be made for the period between the close
of the last calendar year for which return was made and the
first succeeding date designated as the close of the fiscal year.
If the change is made from one fiscal year to another fiscal
year, a separate return shall be made for the period between
the close of the former fiscal year and the first succeeding date
designated as the close of the new fiscal year.