PUBLIC LAW 94-455—OCT. 4, 1976
90 STAT. 1529
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), 100 percent minus 1 percentage point for each full month the property was held after the date the property was held 20 full months; " ( i i i) in the case of residential rental property (as defined in section 167(j)(2)(B)) other than that covered by clauses (i) and ( i i), 100 percent minus 1 percentage point for each full month the property was held after the date the property was held 100 full months; " ( i v) in the case of section 1250 property with respect to which a depreciation deduction for rehabilitation expenditures was allowed under section 1 6 7 (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), ( i i), and (iii) shall not apply with respect to the additional depreciation described in subsection (b)(4). " (3) ADDITIONAL DEPRECIATION BEFORE JANUARY i, i070.—
" (A) IN GENERAL.—If section 1250 property is disposcd of after December 31, 1963, and the amount determined under paragraph (1)(A) (ii) exceeds the sum of the amounts determined under paragraph s (l)(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 " ( i i) the excess of the amount determined under paragraph (l)(A) ( i i) over the sum of the amounts determined under paragraph s (l)(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 s u b p a r a -
"Applicable
g r a p h (A), the term 'applicable percentage' means 100 per- percentage." cent 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.'* (b)
PROPERTY DISPOSED OF PURSUANT TO FORECI-OSURE PROCEED-
INGS.—Subsection (d) of section 1250 (relating to exceptions and 26 USC 1250. limitations) is amended by adding at the end thereof the following new paragraph: " ( 1 0) FORECLOSURE DISPOSITIONS.—If any section 1250 property
is disposed of by the taxpayer pursuant to a bid for such property a t 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 n o 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
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