1032
PUBLIC LAW 87-834-OCT. 16, 1962
[76 STAT.
SEC. 13. GAIN FROM DISPOSITIONS OF CERTAIN DEPRECIABLE PROPERTY. (a)
26 USC 1231'^^'**
IN GENERAL,—
(1) Part IV of subchapter P of chapter 1 (relating to special rules for determining capital gains and losses) is amended by adding at the end thereof the following new section: "SEC. 1245. GAIN FROM DISPOSITIONS OF CERTAIN DEPRECIABLE PROPERTY. "(a)
GENERAL RULE. — " (1) ORDINARY INCOME.—Except as otherwise provided in this
section, if section 1245 property is disposed of during a taxable year beginning after December 31, 1962, the amount by which the lower of— " (A) the recomputed basis*of the property, or " (B)(i) in the case of a sale, exchange, or involuntary conversion, the amount realized, or "(ii) in the case of any other disposition, the fair market value of such property, exceeds 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. "(2) RECOMPUTED BASIS.—For purposes of this section, the term 'recomputed basis' means, with respect to any property, its adjusted basis recomputed by adding thereto all adjustments, attributable to periods after December 31, 1961, reflected in such adjusted basis 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 depreciation, or for amortization under section 168. For purposes of the preceding sentence, if the taxpayer can establish by adequate records or other sufficient evidence that the amount allowed for depreciation, or for amortization under section 168, for any period was less than the amount allowable, the amount added for such period shall be the amount allowed. "(3) SECTION 1245 PROPERTY.—For purposes of this section, the term 'section 1245 property' means any property (other than livestock) which is or has been property of a character subject to the allowance for depreciation provided in section 167 and is eitlier— " (A) personal property, or " (B) other property (not including a building or its structural components) but only if such other property is tangible and has an adjusted basis in which there are reflected adjustments described in paragraph (2) for a period in which such property (or other property)— " (i) was used as an integral part of manufacturing, production, or extraction or of furnishing transportation, communications, electrical energy, gas, water, or sewage disposal services, or "(ii) constituted research or storage facilities used in connection with any of the activities referred to in clause (i).
"(b)
EXCEPTIONS AND LIMITATIONS.—
"(1) GIFTS.—Subsection (a) shall not apply to a disposition by gift.
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