692 



(S) Additional depreciation before January 1, 1970. 



(A) In general. — If section 1250 property is 

 disposed of after December 31, 1963, and the 

 amount determined imder paragraph (1) (A) (11) 

 exceeds the sum of the amounts determined 

 under paragraphs (1) (A) (i) and (2) (A) (1) , then 

 the applicable percentage of the lower of — 



(I) that portion of the additional deprecia- 

 tion 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 imder paragraphs 

 (1) (A)(1) and (2)(A)(i), 



shall also be treated as gain which is ordinary 

 Income. Such gain shall be recognized notwith- 

 standing any other provision of this subtitle. 



(B) Applicable percentage. — Foe purposes of 

 subparagraph (A) , the term 'applicable percent- 

 age' means 100 percent pinus 1 percentage point 

 for each full month the property was held after 

 the date on which the property was held for 20 

 full months. 



(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 adjust- 

 ments 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 ad- 

 justments which would have resulted if such ad- 

 justments 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 deter- 

 mining the depreciation adjustments which would 

 have resulted for such year under the straight line 

 method. 



(3) Depreciation adjustments. 



The term "depreciation adjustments" means, in 

 respect of any property, all adjustments attribut- 

 able to periods after December 31, 1963, reflected 

 in the adjusted basis of such property on accomit 

 of deductions (whether in respect of the same or 

 other property) allowed or allowable to the tax- 

 payer or to any other person for exhaustion, 

 wear and tear, obsolescence, or amortization (other 

 than amortization under section 168, 169, 185, 

 188, 190, or 191). For purposes of the preceding 

 sentence, if the taxpayer can establish by ade- 

 quate records or other sufficient evidence that 

 the amoimt allowed as a deduction for any period 

 was less than the amount allowable, the amoimt 

 taken into account for such period shall be the 

 amount allowed. 



(4) Additional depreciation attributable to rehabili- 

 tation expenditures. 

 The term "additional depreciation" also means, 

 in the case of section 1250 property with respect to 

 which a depreciation deduction for rehabilitation 

 expenditures was allowed under section 167(k). 

 the depreciation 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 expen- 

 ditures 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 ad- 

 justment without regard to the useful Mfe per- 

 mitted under section 167(k) . 



(c) Section 1250 property. 



For purposes of this section, the term "section 1250 

 property" means any real property (other than sec- 

 tion 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 sec- 

 tion 167. 



Amendments 



1976 — Subsec. (a). Pub. L. 94-455, i 202, substantially 

 revised this subsection. 



1971 — Subsec, (bM3) , Pub. L. 92-178 included retererice 

 to section 188. 



1969 — Subsec. (a). Pub. L. 91-172, §521(bl, 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 prop- 

 erty remaining subject to full recapture, applied the exist- 

 ing recapture rules where the sale of property was sub- 

 ject 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 com- 

 parable 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). Pub. L. 91-172, § 512(c), added par. (4). 



Subsec. (b)(3). Pub. L. 91-172, § 704(b) (5), Inserted 

 reference to sections 169 and 185 of this title. 



Subsec (d). Pub. L. 91-172, §§521(e)(l). 910(b)(1). 

 substituted "subsection (a)" for "subsection (a)(1)" 

 wherever it appears and added par. (8). 



Subsec. (e). Pub. L. 91-172, § 910(b) (2), added par. (4). 



Subsec. (f)(1). Pub. L. 91-172. § 521 (e) (2) ( A) , sub- 

 stituted "subsection (a)" for "subsection (a)(1)". 



Subsec. (f ) (2). Pub. L. 91-172, § 521 (e) (2) (Bl , redesig- 

 nated subpars. (A) and (B) as els. (1) and (ii) of subpar. 

 (A), respectively, and, in such els. (i) and (11) as so 

 redesignated, added reference to depreciation attributable 

 to periods after Dec. 31, 1969, and added subpar. (B). 



Subsec. (g) . Pub. L. 91-172, § 910(bl (3) , added subsec. 

 (g) . Former subsec. (g) redesignated (h). 



Subsec (h). Pub. L. 91-172, § 910(b) (3), redesignated 

 former subsec. (g) as (h). Former subsec. (h) redesig- 

 nated (i). 



Subsec. (1). Pub. L. 91-172, § 910(b) (3), redesignated 

 former subsec. (h) as (1) . 



