Page:United States Statutes at Large Volume 78.djvu/143

 78 STAT. ]

PUBLIC LAW 88-272-FEB. 26, 1964

one percentage point for each full month the property was held after the date on which the property was held 20 full months, "^b) ADDmoNAL DEPRECIATION DEFINED.—For purposes of this section— " (1) I N OBNER.VL,.—The term 'additional depreciation' means, in the case of any property, the depreciation adjustments in respect of such property; except that, in the cjise of property held more than one year, it means such adjustments only to the extent that they exceed the amount of the depreciation adjustments which would have resulted if such adjustments had been determined for each taxable year under the straight line method of adjustment. For purposes of the preceding sentence, if a useful life (or salvage value) was used in determining the amount allowed as a deduction for any taxable year, such life (or value) shall be used in determining the depreciation adjustments which would have resulted for such year under the straight line method. " (2) PROPERTY HELD BY LESSEE.—In the case of a lessee, in determining the depreciation adjustments which would have resulted in respect of any building erected (or other improvement made) on the leased property, or in respect of any cost of acquiring the lease, the lease period shall be treated as including all renewal periods. For purposes of the preceding sentence-— " (A) the term 'renewal period' means any period for which the lease may be renewed, extended, or continued pursuant to an option exercisable by the lessee, but " (B) the inclusion of renewal periods shall not extend the period taken into account b ^ more than % of the period on the basis of which the depreciation adjustments were allowed. "(3) DEPRECIATION ADJUSTMENTS.—The term 'depreciation adjustments' means, in respect of any property, all adjustments attributable to periods after Decemlier 31, 1963, reflected in the adjusted basis of such property on account of deductions (whether in respect of the same or other property) allowed or allowable to the taxpayer or to any other person for exhaustion, wear and tear, obsolescence, or amortization (other than amortization under section 168). For purposes of the preceding sentence, if the taxpayer can establish by adequate records or other sufficient evidence that the amount allowed as a deduction for any period was less than the amount allowable, the amount taken into account for such period shall be the amount allowed. " (c) SECTION 1250 PROPERTY.—For purposes of this section, the term 'section 1250 property' means any real property (other than section 1245 property, as defined in section 1245(a)(3)) which is or has been property of a character subject to the allowance for depi'eciation provided in section 167.

101

26 USC r*i6'8!'

76 Stat. 1032. 26 USC 1245.

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" (d) ExcaiTONs AND LIMITATIONS.—

"(1) GIFTS.—Subsection (a) shall not apply to a disposition by

gift. "(2) TRANSFERS AT DEATH.—Except as provided in section 691 ^e use 691.. (relating to income in respect of a decedent), subsection (a) shall not apply to a transfer at death. " (3) CERTAIN TAX-FREE TILVNSACTIONS.—If the basis of property in the hands of a transferee is determined by reference to its tmsis in the hands of the transferor by reason of the application of section 332, 351, 361, 371 (a), 374(a), 721, or 731, then the amount Jf ^^c 332,351, of gain taken into account by the transferor mider subsection 721,' 731! (a)(1) shall not exceed the amount of gain recognized to the transferor on the transfer of such property (determined without regard to this section). This paragraph shall not apply to a disposition

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