Internal Revenue Code – Section 1255

    Sec. 1255. Gain from disposition of section 126 property

 -STATUTE-

    (a) General rule

      (1) Ordinary income

        Except as otherwise provided in this section, if section 126

      property is disposed of, the lower of -

          (A) the applicable percentage of the aggregate payments, with

        respect to such property, excluded from gross income under

        section 126, or

          (B) the excess of -

            (i) the amount realized (in the case of a sale, exchange,

          or involuntary conversion), or the fair market value of such

          section 126 property (in the case of any other disposition),

          over

            (ii) the adjusted basis of such property,

 

        shall be treated as ordinary income. Such gain shall be

        recognized notwithstanding any other provision of this

        subtitle, except that this section shall not apply to the

        extent such gain is recognized as ordinary income under any

        other provision of this part.

      (2) Section 126 property

        For purposes of this section, "section 126 property" means any

      property acquired, improved, or otherwise modified by the

      application of payments excluded from gross income under section

      126.

      (3) Applicable percentage

        For purposes of this section, if section 126 property is

      disposed of less than 10 years after the date of receipt of

      payments excluded from gross income under section 126, the

      applicable percentage is 100 percent. If section 126 property is

      disposed of more than 10 years after such date, the applicable

      percentage is 100 percent reduced (but not below zero) by 10

      percent for each year or part thereof in excess of 10 years such

      property was held after the date of receipt of the payments.

    (b) Special rules

      Under regulations prescribed by the Secretary -

        (1) rules similar to the rules applicable under section 1245

      shall be applied for purposes of this section, and

        (2) for purposes of sections 170(e),(!1) and 751(c), amounts

      treated as ordinary income under this section shall be treated in

      the same manner as amounts treated as ordinary income under

      section 1245.

 

 

-SOURCE-

    (Added Pub. L. 95-600, title V, Sec. 543(c)(1), Nov. 6, 1978, 92

    Stat. 2890; amended Pub. L. 96-222, title I, Sec. 105(a)(7)(B),

    (D), Apr. 1, 1980, 94 Stat. 221; Pub. L. 96-471, Sec. 2(b)(6), Oct.

    19, 1980, 94 Stat. 2254; Pub. L. 99-514, title V, Sec.

    511(d)(2)(A), title VI, Sec. 631(e)(14), Oct. 22, 1986, 100 Stat.

    2248, 2275; Pub. L. 100-647, title I, Sec. 1005(c)(10), Nov. 10,

    1988, 102 Stat. 3392; Pub. L. 108-27, title III, Sec.

    302(e)(4)(B)(ii), May 28, 2003, 117 Stat. 764.)

 

 

-STATAMEND-

                           AMENDMENT OF SECTION                      

      For termination of amendment by section 303 of Pub. L. 108-27,

    see Effective and Termination Dates of 2003 Amendment note below.

 

 

-MISC1-

                                AMENDMENTS                           

      2003 - Subsec. (b)(2). Pub. L. 108-27, Secs. 302(e)(4)(B)(ii),

    303, temporarily struck out ", 341(e)(12)," after "170(e)". See

    Effective and Termination Dates of 2003 Amendment note below.

      1988 - Subsec. (b)(2). Pub. L. 100-647 amended Pub. L. 99-514,

    Sec. 511(d)(2)(A), see 1986 Amendment note below.

      1986 - Subsec. (b)(2). Pub. L. 99-514, Sec. 511(d)(2)(A), as

    amended by Pub. L. 100-647, struck out "163(d)," after "sections".

      Pub. L. 99-514, Sec. 631(e)(14), struck out "453B(d)(2)" after

    "341(e)(12),".

      1980 - Subsec. (a)(1)(B). Pub. L. 96-222, Sec. 105(a)(7)(B),

    inserted following cl. (ii) provisions requiring that such gain be

    recognized notwithstanding any other provision of this subtitle,

    except that this section shall not apply to the extent such gain is

    recognized as ordinary income under any other provision of this

    part.

      Subsec. (b)(2). Pub. L. 96-471 substituted "453B(d)(2)" for

    "453(d)(4)(B)".

      Pub. L. 96-222, Sec. 105(a)(7)(D), inserted "for purposes of

    sections 163(d), 170(e), 341(e)(12), 453(d)(4)(B), and 751(c)"

    before "amounts treated as".

 

             EFFECTIVE AND TERMINATION DATES OF 2003 AMENDMENT        

      Amendment by Pub. L. 108-27 applicable, except as otherwise

    provided, to taxable years beginning after Dec. 31, 2002, see

    section 302(f) of Pub. L. 108-27, set out as a note under section 1

    of this title.

      Amendment by Pub. L. 108-27 inapplicable to taxable years

    beginning after Dec. 31, 2012, and the Internal Revenue Code of

    1986 to be applied and administered to such years as if such

    amendment had never been enacted, see section 303 of Pub. L. 108-

    27, as amended, set out as a note under section 1 of this title.

 

                     EFFECTIVE DATE OF 1988 AMENDMENT                

      Amendment by Pub. L. 100-647 effective, except as otherwise

    provided, as if included in the provision of the Tax Reform Act of

    1986, Pub. L. 99-514, to which such amendment relates, see section

    1019(a) of Pub. L. 100-647, set out as a note under section 1 of

    this title.

 

                     EFFECTIVE DATE OF 1986 AMENDMENT                 

      Amendment by section 511(d)(2)(A) of Pub. L. 99-514 applicable to

    taxable years beginning after Dec. 31, 1986, see section 511(e) of

    Pub. L. 99-514, set out as a note under section 163 of this title.

      Amendment by section 631(e)(14) of Pub. L. 99-514 applicable to

    any distribution in complete liquidation, and any sale or exchange,

    made by a corporation after July 31, 1986, unless such corporation

    is completely liquidated before Jan. 1, 1987, any transaction

    described in section 338 of this title for which the acquisition

    date occurs after Dec. 31, 1986, and any distribution, not in

    complete liquidation, made after Dec. 31, 1986, with exceptions and

    special and transitional rules, see section 633 of Pub. L. 99-514,

    set out as an Effective Date note under section 336 of this title.

 

                     EFFECTIVE DATE OF 1980 AMENDMENTS                

      For effective date of amendment by Pub. L. 96-471, see section

    6(a)(1) of Pub. L. 96-471, set out as an Effective Date note under

    section 453 of this title.

      Amendment by Pub. L. 96-222 effective, except as otherwise

    provided, as if it had been included in the provisions of the

    Revenue Act of 1978, Pub. L. 95-600, to which such amendment

    relates, see section 201 of Pub. L. 96-222, set out as a note under

    section 32 of this title.

 

                              EFFECTIVE DATE                         

      Section effective with respect to grants made under the programs

    after Sept. 30, 1979, see section 543(d) of Pub. L. 95-600, set out

    as a note under section 126 of this title.

 

-FOOTNOTE-

    (!1) So in original. The comma probably should not appear.

 

 

-End-