104
26^scr*i23"'
PUBLIC LAW 88-272~FEB. 26, 1964
[78 STAT.
(3), then the amount taken into account under subsection (a)(1) in respect of such section 1250 property as gain from the sale or exchange of property which is neither a capital asset nor prop^^^y described in section 1231 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 amount determined by multiplying— " (A) 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 bears to the sum of the additional depreciation for all elements, by " (B) the applicable percentage for such element. For purposes o f 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 Ante, p. 101.
26 USC 1016.
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, imits 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 ]>ercent 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 amoiuit 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 'impi*ovement' means, in the case of any section 1260 property, any addition to capital
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