Internal Revenue Code:Sec. 1250. Gain from dispositions of certain depreciable realty
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Location in Internal Revenue Code
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter P - Capital Gains and Losses
PART IV - SPECIAL RULES FOR DETERMINING CAPITAL GAINS AND LOSSES
Statute
Sec. 1250. Gain from dispositions of certain depreciable realty
(a) General rule
Except as otherwise provided in this section -
(1) Additional depreciation after December 31, 1975
(A) In general
If section 1250 property is disposed of after December 31,
1975, then the applicable percentage of the lower of -
(i) that portion of the additional depreciation (as defined
in subsection (b)(1) or (4)) attributable to periods after
December 31, 1975, in respect of the property, or
(ii) the excess of the amount realized (in the case of a
sale, exchange, or involuntary conversion), or the fair
market value of such property (in the case of any other
disposition), over the adjusted basis of such property,
shall be treated as gain which is ordinary income. Such gain
shall be recognized notwithstanding any other provision of this
subtitle.
(B) Applicable percentage
For purposes of subparagraph (A), the term ''applicable
percentage'' means -
(i) in the case of section 1250 property with respect to
which a mortgage is insured under section 221(d)(3) or 236 of
the National Housing Act, or housing financed or assisted by
direct loan or tax abatement under similar provisions of
State or local laws and with respect to which the owner is
subject to the restrictions described in section
1039(b)(1)(B) (as in effect on the day before the date of the
enactment of the Revenue Reconciliation Act of 1990), 100
percent minus 1 percentage point for each full month the
property was held after the date the property was held 100
full months;
(ii) in the case of dwelling units which, on the average,
were held for occupancy by families or individuals eligible
to receive subsidies under section 8 of the United States
Housing Act of 1937, as amended, or under the provisions of
State or local law authorizing similar levels of subsidy for
lower-income families, 100 percent minus 1 percentage point
for each full month the property was held after the date the
property was held 100 full months;
(iii) in the case of section 1250 property with respect to
which a depreciation deduction for rehabilitation
expenditures was allowed under section 167(k), 100 percent
minus 1 percentage point for each full month in excess of 100
full months after the date on which such property was placed
in service;
(iv) in the case of section 1250 property with respect to
which a loan is made or insured under title V of the Housing
Act of 1949, 100 percent minus 1 percentage point for each
full month the property was held after the date the property
was held 100 full months; and
(v) in the case of all other section 1250 property, 100
percent.
In the case of a building (or a portion of a building devoted
to dwelling units), if, on the average, 85 percent or more of
the dwelling units contained in such building (or portion
thereof) are units described in clause (ii), such building (or
portion thereof) shall be treated as property described in
clause (ii). Clauses (i), (ii), and (iv) shall not apply with
respect to the additional depreciation described in subsection
(b)(4) which was allowed under section 167(k).
(2) Additional depreciation after December 31, 1969, and before
January 1, 1976
(A) In general
If section 1250 property is disposed of after December 31,
1969, and the amount determined under paragraph (1)(A)(ii)
exceeds the amount determined under paragraph (1)(A)(i), then
the applicable percentage of the lower of -
(i) that portion of the additional depreciation
attributable to periods after December 31, 1969, and before
January 1, 1976, in respect of the property, or
(ii) the excess of the amount determined under paragraph
(1)(A)(ii) over the amount determined under paragraph
(1)(A)(i),
shall also be treated as gain which is ordinary income. Such
gain shall be recognized notwithstanding any other provision of
this subtitle.
(B) Applicable percentage
For purposes of subparagraph (A), the term ''applicable
percentage'' means -
(i) in the case of section 1250 property disposed of
pursuant to a written contract which was, on July 24, 1969,
and at all times thereafter, binding on the owner of the
property, 100 percent minus 1 percentage point for each full
month the property was held after the date the property was
held 20 full months;
(ii) in the case of section 1250 property with respect to
which a mortgage is insured under section 221(d)(3) or 236 of
the National Housing Act, or housing financed or assisted by
direct loan or tax abatement under similar provisions of
State or local laws, and with respect to which the owner is
subject to the restrictions described in section
1039(b)(1)(B) (as in effect on the day before the date of the
enactment of the Revenue Reconciliation Act of 1990), 100
percent minus 1 percentage point for each full month the
property was held after the date the property was held 20
full months;
(iii) in the case of residential rental property (as
defined in section 167(j)(2)(B)) other than that covered by
clauses (i) and (ii), 100 percent minus 1 percentage point
for each full month the property was held after the date the
property was held 100 full months;
(iv) in the case of section 1250 property with respect to
which a depreciation deduction for rehabilitation
expenditures was allowed under section 167(k), 100 percent
minus 1 percentage point for each full month in excess of 100
full months after the date on which such property was placed
in service; and
(v) in the case of all other section 1250 property, 100
percent.
Clauses (i), (ii), and (iii) shall not apply with respect to
the additional depreciation described in subsection (b)(4).
(3) Additional depreciation before January 1, 1970
(A) In general
If section 1250 property is disposed of after December 31,
1963, and the amount determined under paragraph (1)(A)(ii)
exceeds the sum of the amounts determined under paragraphs
(1)(A)(i) and (2)(A)(i), then the applicable percentage of the
lower of -
(i) that portion of the additional depreciation
attributable to periods before January 1, 1970, in respect of
the property, or
(ii) the excess of the amount determined under paragraph
(1)(A)(ii) over the sum of the amounts determined under
paragraphs (1)(A)(i) and (2)(A)(i),
shall also be treated as gain which is ordinary income. Such
gain shall be recognized notwithstanding any other provision of
this subtitle.
(B) Applicable percentage
For purposes of subparagraph (A), the term ''applicable
percentage'' means 100 percent minus 1 percentage point for
each full month the property was held after the date on which
the property was held for 20 full months.
(4) Special rule
For purposes of this subsection, any reference to section
167(k) or 167(j)(2)(B) shall be treated as a reference to such
section as in effect on the day before the date of the enactment
of the Revenue Reconciliation Act of 1990.
(5) Cross reference
For reduction in the case of corporations on capital gain
treatment under this section, see section 291(a)(1).
(b) Additional depreciation defined
For purposes of this section -
(1) In general
The term ''additional depreciation'' means, in the case of any
property, the depreciation adjustments in respect of such
property; except that, in the case 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.
(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 by more than 2/3 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 December
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 (as in
effect before its repeal by the Tax Reform Act of 1976), 169, 185
(as in effect before its repeal by the Tax Reform Act of 1986),
188 (as in effect before its repeal by the Revenue Reconciliation
Act of 1990), 190, or 193). 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.
(4) Additional depreciation attributable to rehabilitation
expenditures
The term ''additional depreciation'' also means, in the case of
section 1250 property with respect to which a depreciation or
amortization deduction for rehabilitation expenditures was
allowed under section 167(k) (as in effect on the day before the
date of the enactment of the Revenue Reconciliation Act of 1990)
or 191 (as in effect before its repeal by the Economic Recovery
Tax Act of 1981), the depreciation or amortization adjustments
allowed under such section to the extent attributable to such
property, except that, in the case of such property held for more
than one year after the rehabilitation expenditures so allowed
were incurred, 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 under
the straight line method of adjustment without regard to the
useful life permitted under section 167(k) (as in effect on the
day before the date of the enactment of the Revenue
Reconciliation Act of 1990) or 191 (as in effect before its
repeal by the Economic Recovery Tax Act of 1981).
(5) Method of computing straight line adjustments
For purposes of paragraph (1), the depreciation adjustments
which would have resulted for any taxable year under the straight
line method shall be determined -
(A) in the case of property to which section 168 applies, by
determining the adjustments which would have resulted for such
year if the taxpayer had elected the straight line method for
such year using the recovery period applicable to such
property, and
(B) in the case any property to which section 168 does not
apply, if a useful life (or salvage value) was used in
determining the amount allowable as a deduction for any taxable
year, by using such life (or value).
(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 depreciation provided in
section 167.
(d) Exceptions and limitations
(1) Gifts
Subsection (a) shall not apply to a disposition by gift.
(2) Transfers at death
Except as provided in section 691 (relating to income in
respect of a decedent), subsection (a) shall not apply to a
transfer at death.
(3) Certain tax-free transactions
If the basis of property in the hands of a transferee is
determined by reference to its basis in the hands of the
transferor by reason of the application of section 332, 351, 361,
721, or 731, then the amount of gain taken into account by the
transferor under subsection (a) shall not exceed the amount of
gain recognized to the transferor on the transfer of such
property (determined without regard to this section). Except as
provided in paragraph (9), this paragraph shall not apply to a
disposition to an organization (other than a cooperative
described in section 521) which is exempt from the tax imposed by
this chapter.
(4) Like kind exchanges; involuntary conversions, etc.
(A) Recognition limit
If property is disposed of and gain (determined without
regard to this section) is not recognized in whole or in part
under section 1031 or 1033, then the amount of gain taken into
account by the transferor under subsection (a) shall not exceed
the greater of the following:
(i) the amount of gain recognized on the disposition
(determined without regard to this section), increased as
provided in subparagraph (B), or
(ii) the amount determined under subparagraph (C).
(B) Increase for certain stock
With respect to any transaction, the increase provided by
this subparagraph is the amount equal to the fair market value
of any stock purchased in a corporation which (but for this
paragraph) would result in nonrecognition of gain under section
1033(a)(2)(A).
(C) Adjustment where insufficient section 1250 property is
acquired
With respect to any transaction, the amount determined under
this subparagraph shall be the excess of -
(i) the amount of gain which would (but for this paragraph)
be taken into account under subsection (a), over
(ii) the fair market value (or cost in the case of a
transaction described in section 1033(a)(2)) of the section
1250 property acquired in the transaction.
(D) Basis of property acquired
In the case of property purchased by the taxpayer in a
transaction described in section 1033(a)(2), in applying
section 1033(b)(2), such sentence shall be applied -
(i) first solely to section 1250 properties and to the
amount of gain not taken into account under subsection (a) by
reason of this paragraph, and
(ii) then to all purchased properties to which such
sentence applies and to the remaining gain not recognized on
the transaction as if the cost of the section 1250 properties
were the basis of such properties computed under clause (i).
In the case of property acquired in any other transaction to
which this paragraph applies, rules consistent with the
preceding sentence shall be applied under regulations
prescribed by the Secretary.
(E) Additional depreciation with respect to property disposed
of
In the case of any transaction described in section 1031 or
1033, the additional depreciation in respect of the section
1250 property acquired which is attributable to the section
1250 property disposed of shall be an amount equal to the
amount of the gain which was not taken into account under
subsection (a) by reason of the application of this paragraph.
(5) Property distributed by a partnership to a partner
(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.
(6) Transfers to tax-exempt organization where property will be
used in unrelated business
(A) In general
The second sentence of paragraph (3) shall not apply to a
disposition of section 1250 property to an organization
described in section 511(a)(2) or 511(b)(2) if, immediately
after such disposition, such organization uses such property in
an unrelated trade or business (as defined in section 513).
(B) Later change in use
If any property with respect to the disposition of which gain
is not recognized by reason of subparagraph (A) ceases to be
used in an unrelated trade or business of the organization
acquiring such property, such organization shall be treated for
purposes of this section as having disposed of such property on
the date of such cessation.
(7) Foreclosure dispositions
If any section 1250 property is disposed of by the taxpayer
pursuant to a bid for such property at foreclosure or by
operation of an agreement or of process of law after there was a
default on indebtedness which such property secured, the
applicable percentage referred to in paragraph (1)(B), (2)(B), or
(3)(B) of subsection (a), as the case may be, shall be determined
as if the taxpayer ceased to hold such property on the date of
the beginning of the proceedings pursuant to which the
disposition occurred, or, in the event there are no proceedings,
such percentage shall be determined as if the taxpayer ceased to
hold such property on the date, determined under regulations
prescribed by the Secretary, on which such operation of an
agreement or process of law, pursuant to which the disposition
occurred, began.
(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) or (3) 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.
(f) Special rules for property which is substantially improved
(1) Amount treated as ordinary income
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 (3), then the amount taken into account under
subsection (a) in respect of such section 1250 property as
ordinary income shall be the sum of the amounts determined under
paragraph (2).
(2) Ordinary income attributable to an element
For purposes of paragraph (1), the amount taken into account
for any element shall be the sum of a series of amounts
determined for the periods set forth in subsection (a), with the
amount for any such period being determined by multiplying -
(A) the amount which bears the same ratio to the lower of the
amounts specified in clause (i) or (ii) of subsection
(a)(1)(A), in clause (i) or (ii) of subsection (a)(2)(A), or in
clause (i) or (ii) of subsection (a)(3)(A), as the case may be,
for the section 1250 property as the additional depreciation
for such element attributable to such period bears to the sum
of the additional depreciation for all elements attributable to
such period, by
(B) the applicable percentage for such element for such
period.
For purposes of this paragraph, determinations with respect to
any element shall be made as if it were a separate property.
(3) Property consisting of more than one element
In applying this subsection in the case of any section 1250
property, there shall be treated as a separate element -
(A) each separate improvement,
(B) if, before completion of section 1250 property, units
thereof (as distinguished from improvements) were placed in
service, each such unit of section 1250 property, and
(C) the remaining property which is not taken into account
under subparagraphs (A) and (B).
(4) Property which is substantially improved
For purposes of this subsection -
(A) In general
The term ''separate improvement'' means each improvement
added during the 36-month period ending on the last day of any
taxable year to the capital account for the property, but only
if the sum of the amounts added to such account during such
period exceeds the greatest of -
(i) 25 percent of the adjusted basis of the property,
(ii) 10 percent of the adjusted basis of the property,
determined without regard to the adjustments provided in
paragraphs (2) and (3) of section 1016(a), or
(iii) $5,000.
For purposes of clauses (i) and (ii), the adjusted basis of the
property shall be determined as of the beginning of the first
day of such 36-month period, or of the holding period of the
property (within the meaning of subsection (e)), whichever is
the later.
(B) Exception
Improvements in any taxable year shall be taken into account
for purposes of subparagraph (A) only if the sum of the amounts
added to the capital account for the property for such taxable
year exceeds the greater of -
(i) $2,000, or
(ii) one percent of the adjusted basis referred to in
subparagraph (A)(ii), determined, however, as of the
beginning of such taxable year.
For purposes of this section, if the amount added to the
capital account for any separate improvement does not exceed
the greater of clause (i) or (ii), such improvement shall be
treated as placed in service on the first day, of a calendar
month, which is closest to the middle of the taxable year.
(C) Improvement
The term ''improvement'' means, in the case of any section
1250 property, any addition to capital account for such
property after the initial acquisition or after completion of
the property.
(g) Adjustments to basis
The Secretary shall prescribe such regulations as he may deem
necessary to provide for adjustments to the basis of property to
reflect gain recognized under subsection (a).
(h) Application of section
This section shall apply notwithstanding any other provision of
this subtitle.
Sources
(Added Pub. L. 88-272, title II, Sec. 231(a), Feb. 26, 1964, 78
Stat. 100; amended Pub. L. 91-172, title V, Sec. 521(b), (c), (e),
title VII, Sec. 704(b)(5), title IX, Sec. 910(b), Dec. 30, 1969, 83
Stat. 652, 653, 670, 720; Pub. L. 92-178, title III, Sec.
303(c)(3), Dec. 10, 1971, 85 Stat. 522; Pub. L. 93-625, Sec. 5(c),
Jan. 3, 1975, 88 Stat. 2112; Pub. L. 94-81, Sec. 2(b), Aug. 9,
1975, 89 Stat. 417; Pub. L. 94-455, title II, Sec. 202(a)-(c)(1),
(2), title XIX, Sec. 1901(b)(3)(K), (31)(A), (B), (E),
1906(b)(13)(A), 1951(c)(2)(C), title XXI, Sec. 2122(b)(4),
2124(a)(3)(D), Oct. 4, 1976, 90 Stat. 1527, 1529, 1530, 1793, 1799,
1800, 1834, 1840, 1915, 1918; Pub. L. 95-600, title IV, Sec.
404(c)(7), 405(c)(4), title VII, Sec. 701(f)(3)(C), (E), Nov. 6,
1978, 92 Stat. 2870, 2871, 2901; Pub. L. 96-222, title I, Sec.
107(a)(1)(D), Apr. 1, 1980, 94 Stat. 222; Pub. L. 96-223, title II,
Sec. 251(a)(2)(D), Apr. 2, 1980, 94 Stat. 287; Pub. L. 97-34, title
II, Sec. 204(e), 212(d)(2)(F), Aug. 13, 1981, 95 Stat. 223, 239;
Pub. L. 97-448, title I, Sec. 102(a)(7), Jan. 12, 1983, 96 Stat.
2368; Pub. L. 98-369, div. A, title VII, Sec. 712(a)(1)(B), July
18, 1984, 98 Stat. 946; Pub. L. 99-514, title II, Sec. 242(b)(2),
Oct. 22, 1986, 100 Stat. 2181; Pub. L. 100-647, title I, Sec.
1002(a)(1), Nov. 10, 1988, 102 Stat. 3352; Pub. L. 101-239, title
VII, Sec. 7831(b), Dec. 19, 1989, 103 Stat. 2426; Pub. L. 101-508,
title XI, Sec. 11801(c)(6)(F), (8)(I), (15), 11812(b)(11), (12),
Nov. 5, 1990, 104 Stat. 1388-524, 1388-527, 1388-536; Pub. L.
104-7, Sec. 2(b), Apr. 11, 1995, 109 Stat. 93; Pub. L. 104-188,
title I, Sec. 1702(h)(18), Aug. 20, 1996, 110 Stat. 1874; Pub. L.
105-34, title III, Sec. 312(d)(10), Aug. 5, 1997, 111 Stat. 840;
Pub. L. 105-206, title VI, Sec. 6023(12), July 22, 1998, 112 Stat.
825.)
References in Text
REFERENCES IN TEXT
Sections 221 and 236 of the National Housing Act, referred to in
subsec. (a)(1)(B)(i), (2)(B)(ii), are classified to sections 1715l
and 1715z-1, respectively, of Title 12, Banks and Banking.
The date of the enactment of the Revenue Reconciliation Act of
1990, referred to in subsecs. (a)(1)(B)(i), (2)(B)(ii), (4) and
(b)(4), is the date of enactment of Pub. L. 101-508, which was
approved Nov. 5, 1990.
Section 8 of the United States Housing Act of 1937, referred to
in subsec. (a)(1)(B)(ii), is classified to section 1437f of Title
42, The Public Health and Welfare.
The Housing Act of 1949, referred to in subsec. (a)(1)(B)(iv), is
act July 15, 1949, ch. 338, 63 Stat. 413, as amended. Title V of
the Housing Act of 1949 is classified generally to subchapter III
(Sec. 1471 et seq.) of chapter 8A of Title 42. For complete
classification of this Act to the Code, see Short Title note set
out under section 1441 of Title 42 and Tables.
The Tax Reform Act of 1976, referred to in subsec. (b)(3), is
Pub. L. 94-455, Oct. 4, 1976, 90 Stat. 1520, as amended. Section
1951(a)(4)(A) of the Act repealed section 168 of this title. For
complete classification of this Act to the Code, see Tables.
The Tax Reform Act of 1986, referred to in subsec. (b)(3), is
Pub. L. 99-514, Oct. 22, 1986, 100 Stat. 2085. Section 242(a) of
the Act repealed section 185 of this title. For complete
classification of this Act to the Code, see Tables.
The Revenue Reconciliation Act of 1990, referred to in subsec.
(b)(3), is title XI of Pub. L. 101-508, Nov. 5, 1990, 104 Stat.
1388-400. Section 11801(a)(13) of the Act repealed section 188 of
this title. For complete classification of this Act to the Code,
see Short Title note set out under section 1 of this title and
Tables.
The Economic Recovery Tax Act of 1981, referred to in subsec.
(b)(4), is Pub. L. 97-34, Aug. 13, 1981, 95 Stat. 172, as amended.
Section 191 of this title was repealed by section 212(d)(1) of Pub.
L. 97-34. For complete classification of this Act to the Code, see
Tables.
Miscellaneous
AMENDMENTS
2005 - Sec.1331(b)(3), Energy Policy Act of 2005, amended
Sec. 1250(b)(3) to make reference to the new IRC Sec. 179D.
The amendments made by this section shall apply to property
placed in service after December 31, 2005.
1998 - Subsec. (d)(4)(D). Pub. L. 105-206 substituted ''section
1033(b)(2)'' for ''the last sentence of section 1033(b)'' in
introductory provisions.
1997 - Subsec. (d)(7) to (10). Pub. L. 105-34, Sec.
312(d)(10)(A), redesignated pars. (9) and (10) as (7) and (8),
respectively, and struck out heading and text of former par. (7).
Text read as follows: ''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 rollover of gain on sale of principal residence), and
''(B) property in respect of which the taxpayer meets the age
and ownership requirements of section 121 (relating to one-time
exclusion of gain from sale of principal residence by individual
who has attained age 55) but only to the extent that he meets the
use requirements of such section in respect of such property.''
Subsec. (e)(3). Pub. L. 105-34, Sec. 312(d)(10)(B), struck out
heading and text of par. (3). Text read as follows: ''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.''
1996 - Subsec. (e)(4). Pub. L. 104-188 struck out par. (4) which
read as follows:
''(4) Qualified low-income housing. - The holding period of any
section 1250 property acquired which is described in subsection
(d)(8)(E)(i) shall include the holding period of the corresponding
element of section 1250 property disposed of.''
1995 - Subsec. (d)(5). Pub. L. 104-7 struck out ''1071 and''
before ''1081 transactions'' in heading and ''section 1071
(relating to gain from sale or exchange to effectuate policies of
FCC) or'' before ''section 1081'' in text.
1990 - Subsec. (a)(1)(B)(i), (2)(B)(ii). Pub. L. 101-508, Sec.
11801(c)(15)(A), which directed the insertion of ''(as in effect on
the day before the date of the enactment of the Revenue
Reconciliation Act of 1990)'' after ''section 1039(b)(1)(B)'' in
pars. (1)(A)(i) and (2)(B)(ii) of subsec. (a), was executed to
pars. (1)(B)(i) and (2)(B)(ii) to reflect the probable intent of
Congress.
Subsec. (a)(4), (5). Pub. L. 101-508, Sec. 11812(b)(11), added
par. (4) and redesignated former par. (4) as (5).
Subsec. (b)(3). Pub. L. 101-508, Sec. 11801(c)(6)(F), substituted
''188 (as in effect before its repeal by the Revenue Reconciliation
Act of 1990),'' for ''188,''.
Subsec. (b)(4). Pub. L. 101-508, Sec. 11812(b)(12), substituted
''section 167(k) (as in effect on the day before the date of the
enactment of the Revenue Reconciliation Act of 1990)'' for
''section 167(k)'' in two places.
Subsec. (d)(3). Pub. L. 101-508, Sec. 11801(c)(8)(I), struck out
''371(a), 374(a),'' after ''332, 351, 361,''.
Subsec. (d)(8). Pub. L. 101-508, Sec. 11801(c)(15)(B), struck out
par. (8) which related to the treatment of gain from the
disposition of qualified low-income housing.
Subsecs. (g) to (i). Pub. L. 101-508, Sec. 11801(c)(15)(C),
redesignated subsecs. (h) and (i) as (g) and (h), respectively, and
struck out former subsec. (g) which provided special rules for
qualified low-income housing.
1989 - Subsec. (b)(5)(A). Pub. L. 101-239, Sec. 7831(b)(1),
substituted ''of property to which section 168 applies'' for ''of
recovery property''.
Subsec. (b)(5)(B). Pub. L. 101-239, Sec. 7831(b)(2), substituted
''to which section 168 does not apply'' for ''which is not recovery
property''.
1988 - Subsec. (d)(11). Pub. L. 100-647 struck out par. (11)
which related to section 1245 recovery property.
1986 - Subsec. (b)(3). Pub. L. 99-514 inserted ''(as in effect
before its repeal by the Tax Reform Act of 1986)'' after ''185''.
1984 - Subsec. (a)(4). Pub. L. 98-369 added par. (4).
1983 - Subsec. (b)(1). Pub. L. 97-448, Sec. 102(a)(7)(B), struck
out last sentence providing that, for purposes of defining
''additional depreciation'', 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) was to be used in determining
the depreciation adjustments which would have resulted for such
year under the straight line method.
Subsec. (b)(5). Pub. L. 97-448, Sec. 102(a)(7)(A), added par.
(5).
1981 - Subsec. (b)(4). Pub. L. 97-34, Sec. 212(d)(2)(F), inserted
''(as in effect before its repeal by the Economic Recovery Tax Act
of 1981)'' after ''section 167(k) or 191'' in two places.
Subsec. (d)(11). Pub. L. 97-34, Sec. 204(e), added par. (11).
1980 - Subsec. (a)(1)(B). Pub. L. 96-222 inserted ''which was
allowed under section 167(k)'' at end of last sentence.
Subsec. (b)(3). Pub. L. 96-223 inserted reference to section 193.
1978 - Subsec. (b)(3). Pub. L. 95-600, Sec. 701(f)(3)(C), struck
out reference to section 191.
Subsec. (b)(4). Pub. L. 95-600, Sec. 701(f)(3)(E), inserted
reference to amortization deduction, amortization adjustments, and
to section 191 in two places.
Subsec. (d)(7)(A). Pub. L. 95-600, Sec. 405(c)(4), substituted
''relating to rollover of gain on sale of principal residence'' for
''relating to sale or exchange of residence''.
Subsec. (d)(7)(B). Pub. L. 95-600, Sec. 404(c)(7), inserted
provisions relating to a one-time exclusion and principal residence
and substituted ''55'' for ''65''.
1976 - Subsec. (a). Pub. L. 94-455, Sec. 202(a), in revising text
generally, made the following changes:
(1) Added par. (1).
(2) Redesignated as pars. (2) and (3) existing pars. (1) and (2).
(3) Made the following changes in par. (2): inserted in heading
'', and before January 1, 1976''; designated introductory text as
subpar. ''(A) In general''; inserted therein ''and the amount
determined under paragraph (1)(A)(ii) exceeds the amount determined
under paragraph (1)(A)(i), then''; redesignated as cl. (i) existing
subpar. (A); substituted therein ''attributable to periods after
December 31, 1969, and before January 1, 1976'' for ''(as defined
in subsection (b)(1) or (4) attributable to periods after December
31, 1969''; substituted cl. (ii) and concluding text for subpar.
(B) and concluding text which read:
''(B) the excess of -
''(i) the amount realized (in the case of a sale, exchange, or
involuntary conversion), or the fair market value of such
property (in the case of any other disposition), over
''(ii) the adjusted basis of such property,
shall be treated as gain from the sale or exchange of property
which is neither a capital asset nor property described in section
1231. Such gain shall be recognized notwithstanding any other
provision of this subtitle.''; redesignated as subpar. (B) existing
subpar. (C); substituted therein introductory ''subparagraph (A)''
for ''paragraph (1)''; and deleted from cl. (ii) ''constructed,
reconstructed, or acquired by the taxpayer before January 1,
1976,'' after ''section 1250 property'' and ''is'' before
''financed'', and substituted ''1'' for ''one''.
(4) Made the following changes in par. (3): substituted in
subpar. (A) ''determined under paragraph (1)(A)(ii) exceeds the sum
of the amounts determined under paragraphs (1)(A)(i) and
(2)(A)(i)'' for ''determined under paragraph (1)(B) exceeds the
amount determined under paragraph (1)(A)''; and substituted subpar.
(A)(ii) and concluding text for par. (2)(A)(ii), and concluding
text which read:
''(ii) the excess of the amount determined under paragraph
(1)(B) over the amount determined under paragraph (1)(A),
shall also be treated as gain from the sale or exchange of property
which is neither a capital asset nor property described in section
1231. Such gain shall be recognized notwithstanding any other
provisions of this subtitle.''
Subsec. (b)(3). Pub. L. 94-455, Sec. 1951(c)(2)(C), 2122(b)(4),
2124(a)(3)(D), inserted ''(as in effect before its repeal by the
Tax Reform Act of 1976)'' after ''section 168'' and reference to
sections 190 and 191.
Subsec. (d)(4)(B). Pub. L. 94-455, Sec. 1901(b)(31)(A),
substituted reference to section ''1033(a)(2)(A)'' for
''1033(a)(3)(A)''.
Subsec. (d)(4)(C). Pub. L. 94-455, Sec. 1901(b)(31)(B),
substituted reference to section ''1033(a)(2)'' for ''1033(a)(3)''.
Subsec. (d)(4)(D). Pub. L. 94-455, Sec. 1901(b)(31)(B), (E),
substituted reference to sections ''1033(a)(2)'' and ''1033(b)''
for ''1033(a)(3)'' and ''1033(c)'' Sec. 1906(b)(13)(A), struck out
''or his delegate'' after ''Secretary''.
Subsec. (d)(5), (8)(F)(ii). Pub. L. 94-455, Sec. 1906(b)(13)(A),
struck out ''or his delegate'' after ''Secretary''.
Subsec. (d)(10). Pub. L. 94-455, Sec. 202(b), added par. (10).
Subsec. (f)(1). Pub. L. 94-455, Sec. 1901(b)(3)(K), substituted
''ordinary income'' for ''gain from the sale or exchange of
property which is neither a capital asset nor property described in
section 1231''.
Subsec. (f)(2). Pub. L. 94-455, Sec. 202(c)(1), substituted
introductory text ''the sum of a series of amounts determined for
the periods set forth in subsection (a), with the amount for any
such period being determined by multiplying'' for ''the sum of -
(A) the amount (if any) determined by multiplying''; substituted
subpar. (A) as combined text for prior subpars. (A)(i) and (B)(i)
reading ''(i) the amount which bears the same ratio to the lower of
the amounts specified in subparagraph (A) or (B) of subsection
(a)(1) for the section 1250 property as the additional depreciation
for such element attributable to periods after December 31, 1969,
bears to the sum of the additional depreciation for all elements
attributable to periods after December 31, 1969, by'' and ''(i) the
amount which bears the same ratio to the lower of the amounts
specified in subsection (a)(2)(A)(i) or (ii) for the section 1250
property as the additional depreciation for such element
attributable to periods before January 1, 1970, bears to the sum of
the additional depreciation for all elements attributable to
periods before January 1, 1970, by''; and substituted subpar. (B)
as combined text for prior subpars. (A)(ii) and (B)(ii), inserting
therein ''for such period'' after ''for such element''.
Subsec. (g)(1). Pub. L. 94-455, Sec. 1901(b)(3)(K), substituted
''ordinary income'' for ''gain from the sale or exchange of
property which is neither a capital asset nor property described in
section 1231''.
Subsec. (g)(2). Pub. L. 94-455, Sec. 202(c)(2), substituted
''shall be determined in a manner similar to that provided by
subsection (f)(2).'' for ''shall be the amount determined by
multiplying -
''(A) the amount which bears the same ratio to the lower of the
additional depreciation or the gain recognized for the section
1250 property disposed of as the additional depreciation for such
element bears to the sum of the additional depreciation for all
elements disposed of, by
''(B) the applicable percentage for such element.
For purposes of this paragraph, determinations with respect to any
element shall be made as if it were a separate property.''
Subsec. (h). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out ''or
his delegate'' after ''Secretary''.
1975 - Subsec. (a)(1)(C)(ii). Pub. L. 93-625 substituted
''January 1, 1976'' for ''January 1, 1975''.
Subsec. (d)(3), (9). Pub. L. 94-81, Sec. 2(b), inserted reference
to par. (9) in par. (3), and added par. (9).
1971 - Subsec. (b)(3). Pub. L. 92-178 inserted reference to
section 188.
1969 - Subsec. (a). Pub. L. 91-172, Sec. 521(b), modified the
recapture rules pertaining to residential housing by allowing a 1
percent per month reduction in the amount to be recaptured as
ordinary income after the property has been held for 100 full
months, with other real property remaining subject to full
recapture, applied the existing recapture rules where the sale of
property was subject to a binding contract in existence prior to
July 25, 1969, provided that changes in the recapture rules are not
to apply in federally assisted projects (such as programs under
section 221(d)(3) or 236 of the National Housing Act) or to other
publicly assisted housing programs under which the return to the
investor is limited on a comparable basis, thereby rendering these
projects subject to a recapture of the depreciation in full if the
sale occurs in the first 12 months and for a phaseout of the
recapture of the excess of accelerated over straight-line
depreciation after 20 months, the recapture being reduced at the
rate of 1 percent per month until 120 months after which no
recapture applies, with such recapture rules to continue to apply
only with respect to such property constructed, reconstructed, or
acquired before Jan. 1, 1975, and applied new recapture rules to
depreciation attributable to periods after Dec. 31, 1969.
Subsec. (b)(4). Pub. L. 91-172, Sec. 512(c), added par. (4).
Subsec. (b)(3). Pub. L. 91-172, Sec. 704(b)(5), inserted
reference to sections 169 and 185.
Subsec. (d). Pub. L. 91-172, Sec. 521(e)(1), 910(b)(1),
substituted ''subsection (a)'' for ''subsection (a)(1)'' wherever
it appears and added par. (8).
Subsec. (e)(4). Pub. L. 91-172, Sec. 910(b)(2), added par. (4).
Subsec. (f)(1). Pub. L. 91-172, Sec. 521(e)(2)(A), substituted
''subsection (a)'' for ''subsection (a)(1)''.
Subsec. (f)(2). Pub. L. 91-172, Sec. 521(e)(2)(B), redesignated
subpars. (A) and (B) as cls. (i) and (ii), respectively, of subpar.
(A) and, in cls. (i) and (ii) as so redesignated, inserted
reference to depreciation attributable to periods after Dec. 31,
1969, and added subpar. (B).
Subsecs. (g) to (i). Pub. L. 91-172, Sec. 910(b)(3), added
subsec. (g) and redesignated former subsecs. (g) and (h) as (h) and
(i), respectively.
EFFECTIVE DATE OF 1997 AMENDMENT
Amendment by Pub. L. 105-34 applicable to sales and exchanges
after May 6, 1997, with certain exceptions, see section 312(d) of
Pub. L. 105-34, set out as a note under section 121 of this title.
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by Pub. L. 104-188 effective, except as otherwise
expressly provided, as if included in the provision of the Revenue
Reconciliation Act of 1990, Pub. L. 101-508, title XI, to which
such amendment relates, see section 1702(i) of Pub. L. 104-188, set
out as a note under section 38 of this title.
EFFECTIVE DATE OF 1995 AMENDMENT
Amendment by Pub. L. 104-7 applicable to sales and exchanges on
or after January 17, 1995, and to sales and exchanges before such
date if FCC tax certificate with respect to such sale or exchange
was issued on or after such date, but not applicable with respect
to certain binding contracts, see section 2(d) of Pub. L. 104-7,
set out as an Effective Date of Repeal note under section 1071 of
this title.
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by section 11812(b)(11), (12) of Pub. L. 101-508
applicable to property placed in service after Nov. 5, 1990, but
not applicable to any property to which section 168 of this title
does not apply by reason of subsec. (f)(5) of section 168, and not
applicable to rehabilitation expenditures described in section
252(f)(5) of Pub. L. 99-514, see section 11812(c) of Pub. L.
101-508, set out as a note under section 42 of this title.
EFFECTIVE DATE OF 1989 AMENDMENT
Amendment by Pub. L. 101-239 effective as if included in the
provision of the Tax Reform Act of 1986, Pub. L. 99-514, to which
such amendment relates, see section 7831(g) of Pub. L. 101-239, set
out as a note under section 1 of this title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section
1019(a) of Pub. L. 100-647, set out as a note under section 1 of
this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by Pub. L. 99-514 applicable to that portion of the
basis of any property which is attributable to expenditures paid or
incurred after Dec. 31, 1986, except as otherwise provided, see
section 242(c) of Pub. L. 99-514, set out as an Effective Date of
Repeal note under former section 185 of this title.
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by Pub. L. 98-369 effective as if included in the
provision of the Tax Equity and Fiscal Responsibility Act of 1982,
Pub. L. 97-248, to which such amendment relates, see section 715 of
Pub. L. 98-369, set out as a note under section 31 of this title.
EFFECTIVE DATE OF 1983 AMENDMENT
Amendment by Pub. L. 97-448 effective, except as otherwise
provided, as if it had been included in the provision of the
Economic Recovery Tax Act of 1981, Pub. L. 97-34, to which such
amendment relates, see section 109 of Pub. L. 97-448, set out as a
note under section 1 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Amendment by section 204(e) of Pub. L. 97-34 applicable to
property placed in service after Dec. 31, 1980, in taxable years
ending after that date, see section 209(a) of Pub. L. 97-34, set
out as an Effective Date note under section 168 of this title.
Amendment by section 212(d)(2)(F) of Pub. L. 97-34 applicable to
expenditures incurred after Dec. 31, 1981, in taxable years ending
after such date, see section 212(e) of Pub. L. 97-34, set out as a
note under section 46 of this title.
EFFECTIVE DATE OF 1980 AMENDMENTS
Amendment by Pub. L. 96-223 applicable to taxable years beginning
after Dec. 31, 1979, see section 251(b) of Pub. L. 96-223, set out
as an Effective Date note under section 193 of this title.
Amendment by Pub. L. 96-222 effective, except as otherwise
provided, as if it had been included in the provisions of the
Revenue Act of 1978, Pub. L. 95-600, to which such amendment
relates, see section 201 of Pub. L. 96-222, set out as a note under
section 32 of this title.
EFFECTIVE DATE OF 1978 AMENDMENT
Amendment by section 404(c)(7) of Pub. L. 95-600 applicable to
sales or exchanges after July 26, 1978, in taxable years ending
after such date, see section 404(d)(1) of Pub. L. 95-600, set out
as a note under section 121 of this title.
Amendment by section 405(c)(4) of Pub. L. 95-600 applicable to
sales and exchanges of residences after July 26, 1978, in taxable
years ending after such date, see section 405(d) of Pub. L. 95-600,
set out as a note under section 1038 of this title.
Amendment by section 701(f)(3)(C), (E) of Pub. L. 95-600
effective as if included within the amendment of subsec. (b)(3) and
(4) by section 2124 of Pub. L. 94-455, see section 701(f)(8) of
Pub. L. 95-600, set out as an Effective and Termination Dates of
1978 Amendments note under section 167 of this title.
EFFECTIVE DATE OF 1976 AMENDMENT
Section 202(d) of Pub. L. 94-455, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ''The
amendments made by this section (other than subsection (b))
(amending this section and section 167 of this title) shall apply
for taxable years ending after December 31, 1975. The amendment
made by subsection (b) (amending this section) shall apply with
respect to proceedings (and to operations of law) referred to in
section 1250(d)(10) of the Internal Revenue Code of 1986 (formerly
I.R.C. 1954) which begin after December 31, 1975.''
Amendment by section 1901(b)(3)(K), (31)(A), (B), (E) of Pub. L.
94-455 effective for taxable years beginning after Dec. 31, 1976,
see section 1901(d) of Pub. L. 94-455, set out as a note under
section 2 of this title.
Amendment by section 1951(c)(2)(C) of Pub. L. 94-455 applicable
to taxable years beginning after Dec. 31, 1976, see section 1951(d)
of Pub. L. 94-455, set out as a note under section 72 of this
title.
Amendment by section 2122(b)(4) of Pub. L. 94-455 applicable to
taxable years beginning after Dec. 31, 1976, and before Jan. 1,
1983, see section 2122(c) of Pub. L. 94-455, as amended by Pub. L.
96-167, 9(c), Dec. 29, 1979, 93 Stat. 1278, set out as a note under
section 190 of this title.
Amendment by section 2124(a)(3)(D) of Pub. L. 94-455 applicable
with respect to additions to capital accounts made after June 14,
1976 and before June 15, 1981, see section 2124(a)(4) of Pub. L.
94-455, set out as an Effective Date note under section 642 of this
title.
EFFECTIVE DATE OF 1975 AMENDMENTS
Section 2(c) of Pub. L. 94-81 provided that:
''(1) In general. - Except as provided in paragraph (2) the
amendments made by this section (amending this section and section
1245 of this title) shall apply to dispositions after December 31,
1969, in taxable years ending after such date.
''(2) Election for past transactions. - In the case of any
disposition occurring before the date of the enactment of this Act
(Aug. 9, 1975), the amendments made by this section shall apply
only if the organization acquiring the property elects (in the
manner provided by regulations prescribed by the Secretary of the
Treasury or his delegate) within 1 year after the date of the
enactment of this Act to have such amendments apply with respect to
such property.''
Amendment by Pub. L. 93-625 applicable with respect to property
placed in service after Dec. 31, 1973, see section 5(d) of Pub. L.
93-625, set out as a note under section 167 of this title.
EFFECTIVE DATE OF 1971 AMENDMENT
Amendment by Pub. L. 92-178 applicable to taxable years ending
after Dec. 31, 1971, see section 303(d) of Pub. L. 92-178, set out
as a note under section 642 of this title.
EFFECTIVE DATE OF 1969 AMENDMENT
Amendment by section 521(b), (c), (e) of Pub. L. 91-172
applicable with respect to taxable years ending after July 24,
1969, see section 521(g) of Pub. L. 91-172, set out as a note under
section 167 of this title.
Amendment by section 704(b)(5) of Pub. L. 91-172 applicable to
taxable years ending after Dec. 31, 1968, see section 704(c) of
Pub. L. 91-172, set out as an Effective Date note under section 169
of this title.
Section 910(d) of Pub. L. 91-172, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ''The
amendments made by this section (enacting section 1039 of this
title and amending this section) shall apply to approved
dispositions of qualified housing projects (within the meaning of
section 1039 of the Internal Revenue Code of 1986 (formerly I.R.C.
1954) as added by subsection (a)) after October 9, 1969.''
EFFECTIVE DATE
Section 231(c) of Pub. L. 88-272 provided that: ''The amendments
made by this section (enacting this section and amending sections
170, 301, 312, 341, 453, 751, and the analysis preceding section
1231 of this title) shall apply to dispositions after December 31,
1963, in taxable years ending after such date.''
SAVINGS PROVISION
For provisions that nothing in amendment by Pub. L. 101-508 be
construed to affect treatment of certain transactions occurring,
property acquired, or items of income, loss, deduction, or credit
taken into account prior to Nov. 5, 1990, for purposes of
determining liability for tax for periods ending after Nov. 5,
1990, see section 11821(b) of Pub. L. 101-508, set out as a note
under section 29 of this title.
References
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 1, 50, 55, 56, 121, 168,
170, 267, 291, 341, 453, 467, 751, 1017, 1400B, 1400I, 7701 of this
title.
