Page:United States Statutes at Large Volume 90 Part 2.djvu/58

 90 STAT. 1526

PUBLIC LAW 94-455—OCT. 4, 1976 " (2) RULES FOR SALES AND EXCHAKGES.—For purposes of p a r a -

graph

(l)— (A) PROPORTION OF PERCENTAGE ALLOWED.—For the amor-

tization year in which the property is sold or exchanged, a proportionate part of the percentage allowable for such year (determined without regard to the sale or exchange) shall be allowable. I f the real property is subject to a n allowance for depreciation, the proportion shall be determined in accordance with the convention used for depreciation purposes with respect to such property. I n the case of all other real property, under regulations prescribed by the Secretary, the proportion shall be based on that proportion of the amortization year which elapsed before the sale or exchange. " (B) UNAMORTIZED BALANCE.—In the case of a sale or ex-

26 USC 1016.

change of the property, the portion of the amount not allowable shall be treated as an adjustment to basis under section 1016 for purposes of determining gain or loss. " (C) CERTAIN EXCHANGES.—An exchange or transfer after

which the property received has a basis determined i n whole or i n part by reference to the basis of the property to which the amortizable construction period interest and taxes relate, shall not be treated as an exchange. " (d) CERTAIN RESIDENTIAL PROPERTY EXCLUDED.—This section shall

not apply to any real property acquired, constructed, or carried if such property is not, and cannot reasonably be expected to be, held in a trade or Dusiness or in an activity conducted for profit. " (e) DEFINITIONS. — For purposes of this section— " (1) CONSTRUCTION PERIOD INTEREST AND TAXES.—The term 'con-

struction period interest and taxes' means all.— " (A) interest paid or accrued on indebtedness incurred or continued to acquire, construct, or carry real property, and " (B) real property taxes, to the extent such interest and taxes are attributable to the construction period for such property and would be allowable as a deduction under this chapter for the taxable year in which paid or accrued (determined without regard to this section). "(2)

CONSTRUCTION PERIOD.—The term 'construction

period',

when used with respect to any real property, means the period— " (A) beginning on the date on which construction of the building or other improvement begins, and " (B) ending on the date on which the item of property is ready to be placed in service or is ready to be held for sale. "(3)

NONRESIDENTIAL

REAL

PROPERTY.—The

term

'nonresi-

dential real property' means real property which is neither residential real property nor low-income housing. " (4) RESIDENTIAL REAL PROPERTY.—The term 'residential real

property' means property which is or can reasonably be expected to be— " (A) residential rental property as defined in section 167 (j)(2)(B),or " (B) real property described in section 1221(1) held for sale as dwelling units (within the meaning of section 167(k) (3)(C)). "(5)

Post, p. 1527.

LOW-INCOME HOUSING.—The term 'low-income housing '

means property described in clause (i), ( i i), ( i i i), or (iv) of section 1250(a)(1)(B).

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