So if I understand this right, this might be a good example:
Moscow is nearly surrounded by Axis forces. USSR has 20 inf, 1 fighter, 1 tac and 2 AA guns on Russia. USSR also has 15 IPCs on hand.
So, rather than get invaded by a wall of German tanks, USSR decides to surrender.
Of the 20 infantry and 2 AA guns, 10 infantry and 1 AA gun gets turned over to Germany, 10 infantry and 1 AA gun gets turned over to USA or UK. (WHere are these units placed?)
The USSR fighter and tac gets moved to the nearest Allied territory, which would be UK controlled Persia perhaps? So you exchange the Soviet units for British units, right?
The 15 IPCs on hand gets divided between USA and UK.
Russia and any remaining Soviet territories are immediately taken over by German, Italy and/or Japan.
Does this sound about right?
Basically it sounds like a way for Allied powers to screw Axis out of plundering the capital for unspent IPCs. Although, it also gives a valuable victory city to the Axis without a fight (two if Volgograd happens to be one of the remaining Soviet territories) So if Italy has Cairo and Germany still has Leningrad and Paris, this basically just gives the Axis the game.
Personally, I just don’t care for this rule. Then again, my group usually plays games out to the bitter end, fighting and slaughtering troops for every piece of territory until there are no more enemy units on the board.