PUBLIC LAW 94-455—OCT. 4, 1976
90 STAT. 1546
(2) CLERICAL AMENDMENT.—The tables of sections for such part VI is amended by striking out the last item and inserting in lieu thereof the following: "Sec. 1056. Basis limitation for player contracts transferred in connection with the sale of a franchise. "Sec. 1057. Cross references." (3) EFFECTIVE DATE.—The amendments made by this subsection apply to sales or exchanges of franchises after December 31, 1975, in taxable years ending after such date.
26 USC 1056 note.
(b) RECAPTURE.—
(1) IN GENERAL.—Section 1245(a) (relating to gain from disposition of certain depreciable property) is amended by a d d i n g at the end thereof the following new paragraph:
26 USC 1245.
" (4) SPECIAL RULE FOR PLAYER CONTRACTS,—
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"Previously unrecaptured depreciation."
" (A) IN GENERAL.—For purposes of this section, if a franchise to conduct any sports enterprise is sold or exchanged, and if, in connection with such sale or exchange, there is a transfer of any player contracts, the recomputed basis of such player contracts in the hands of the transferor shall be the adjusted basis of such contracts increased by the greater of— " (i) the previously unrecaptured depreciation with respect to player contracts acquired hj the transferor at the time of acquisition of such franchise, or " ( i i) the previously unrecaptured depreciation with respect to the player contracts involved in such transfer. "(B) PREVIOUSLY UNRECAPTURED DEPRECIATION W I T H RESPECT TO INITIAL CONTRACTS.—For purposes of subpara-
g r a p h (A)(i), the term 'previously unrecaptured depreciation' means the excess (if any) of— " (i) the sum of the deduction allowed or allowable to the taxpayer transferor for the depreciation of any player contracts acquired by him a t the time of acquisition of such franchise, plus the deduction allowed or allowable for losses with respect to such player contracts acquired at the time of such acquisition, over " (ii) the aggregate of the amounts treated as ordinary income by reason of this section with respect to prior dispositions of such player contracts acquired upon acquisition of the franchise. "(C)
"Previously unrecaptured depreciation."
"Player contract."
PREVIOUSLY
UNRECAPTURED
DEPRECIATION
WITH
RESPECT TO CONTRACTS TRANSFERRED.—For purposes of Subparagraph (A) ( i i), the term 'previously unrecaptured depreciation' means— " (i) the amount of any deduction allowed or allowable to the taxpayer transferor for the depreciation of any contracts involved in such transfer, over " (ii) the aggregate of the amounts treated as ordinary income by reason of this section with respect to prior dispositions of such player contracts acquired upon acquisition of the franchise. "(D)
PLAYER CONTRACT.—For purposes of this paragraph,
the term 'player contract' means any contract for the services of an athlete which, in the hands of the taxpayer, is of a character subject to the allowance for depreciation provided in section 167."
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