Page:United States Statutes at Large Volume 78.djvu/145

 78 STAT. ]

PUBLIC LAW 88-272-FEB. 26, 1964

103

policies of F C C) or section 1081 (relating to exchanges in 26^scr*io8\^" obedience to S E C orders). "(6)

PROPERTY DISTRIBUTED BY A PARTNERsmr TO A P A R T N E R, —

" (A) IN GENERAL,.—For purposes of this section, the basis of section 1250 property distributed by a partnership to a partner shall be deemed to be determined by reference to the adjusted basis of such property to the partnership. " (B) ADDITIONAL DEPRECIATION.—In respect of any property described in subparagraph (A), the additional depreciation attributable to periods before the distribution by the partnership shall be— " (i) the amount of the gain to which subsection (a) would have applied if such property had been sold by the partnership immediately before the distribution at its fair market value at such time and the applicable percentage for the property had been 100 percent, reduced by " (ii) if section 751(b) applied to any part of such gain, the amount of such gain to which section 751(b) would have applied if the applicable percentage for the property had been 100 percent. "(7) DISPOSITION OF PRINCIPAL RESIDENCE.—Subsection (a) shall not apply to a disposition of— " (A) property to the extent used by the taxpayer as his principal residence (within the meaning of section 1034, relating to sale or exchange of residence), and " (B) property in respect of which the taxpayer meets the age and ownership requirements of section 121 (relating to gains from sale or exchange of residence of individual who has attained the age of 65) but only to the extent that he meets the use requirements of such section in respect of such property. "(e) HOLDING PERIOD,—For purposes of determining the applicable percentage under this section, the provisions of section 1223 shall not apply, and the holding period of section 1250 property shall be determined under the following rules: "(1) BEGINNING OF HOLDING PERIOD.—The holding period of section 1250 property shall be deemed to begin— " (A) in the case of property acquired by the taxpayer, on the day after the date of acquisition, or " (B) in the case of property constructed, reconstructed, or erected by the taxpayer, on the first day of the month during which the property is placed in service. "(2) PROPERTY WITH TRANSFERRED BASIS.—If the basis of property acquired in a transaction described in paragraph (1), (2), (3), or (5) of subsection (d) is determined by reference to its basis in the hands of the transferor, then the holding period of the property in the hands of the transferee shall include the holding period of the property in the hands of the transferor. "(3) PRINCIPAL RESIDENCE.—If the basis of property acquired in a transaction described in paragraph (7) of subsection (d) is determined by reference to the basis in the hands of the taxpayer of other property, then the holding period of the property acquired shall include the holding period of such other property. " (f) SPECIAL RULES FOR PROPERTY W H I C H I s SUBSTANTIALLY IMPROVED.— "(1) AMOUNT TREATED AS ORDINARY IXCO^IE.—If, in the case

of a disposition of section 1250 property, the property is treated as consisting of more than one element by reason of paragraph 31-667 0-65—10

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26 USC 1034. Ante, p. 38.

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