lar facilities, or of transportation, power, or communication facilities, which are incidental to use of the site as an industrial park, but, except wth respect to such facilities, does not include the provision of structures or buildings.

*

(Aug. 16, 1954, ch. 736, 68A Stat. 29; June 28, 1968, Pub. L. 90-364, title I, § 107(a), 82 Stat. 266; Oct. 24, 1968, Pub. L. 90-634, title IV, § 401(a), 82 Stat. 1349; Dec. 30, 1969, Pub. L. 91-172, title VI, § 601(a), 83 Stat. 656.)

(As amended Dec. 10, 1971, Pub. L. 92-178, title III, § 315 (a), (b), 85 Stat. 529; Pub. L. 94-455, §§ 1901 (17), 2105 (a), Oct. 4, 1976, 90 Stat. 1765, 1902.)

AMENDMENTS

1971-Subsec. (c) (4) (E). Pub. L. 92-178. § 315(a)(1). substituted "energy or gas," for "energy, gas, or water or". Subsec. (c) (4) (F). Pub. L. 92-178. § 315(a) (2), substituted ", or" for a period.

Subsec. (c) (4) (G). Pub. L. 92-178. § 315(a) (3), added subpar. (G).

1969 Subsec. (d). Pub. L. 91-172 added subsec. (d). Former subsec. (d) redesignated (e).

Subsec. (e). Pub. L. 91-172 redesignated former subsec. (d) as (e).

1968 Subsec. (c). Pub. L. 90-364 added subsec. (c). Former subsec. (c) redesignated (d).

Subsec. (c) (6) (D)—(H). Pub. L. 90-634 added subsec. (c) (6) (D) (H).

Subsec. (d). Pub. L. 90-364 redesignated former subsec. (c) as (d).

amounts.

(3) Deposits.

(c) Transfers from Trust Fund to general fund.

§ 1221. Payments to State and local governments. Except as otherwise provided in this chapter, the Secretary shall, for each entitlement period, pay out of the Trust Fund to

(1) each State government a total amount equal to the entitlement of such State government determined under section 1226 of this title for such period, and

(2) each unit of local government a total amount equal to the entitlement of such unit determined under section 1227 of this title for such period.

In the case of entitlement periods ending after October 20, 1972, such payments shall be made in installments, but not less often than once for each quarter, and, in the case of quarters ending after September 30, 1972, shall be paid not later than 5 days after the close of each quarter. Such payments for any entitlement period may be initially made on the basis of estimates. Proper adjustment shall be made in the amount of any payment to a State government or a unit of local government to the extent that the payments previously made to such government under this subchapter were in excess of or less than the amounts required to be paid. (Pub. L. 92512, title I, § 102, Oct. 20, 1972, 86 Stat. 919.)

§ 1222. Repealed. Pub. L. 94-488, § 3(a), Oct. 13, 1976, 90 Stat. 2341.

§ 1223. Repealed. Pub. L. 94-488, § 4(a), Oct. 13, 1976, 90 Stat. 2341.

§ 1224. Creation of Trust Fund; appropriations; authorizations for entitlements.

(a) Trust Fund.

(1) In general.

There is hereby established on the books of the Treasury of the United States a trust fund to be known as the "State and Local Government Fiscal Assistance Trust Fund" (referred to in this subchapter as the "Trust Fund"). The Trust Fund shall remain available without fiscal year limitation and shall consist of such amounts as may be appropriated to it and deposited in it as provided in subsection (b) or (c) of this section. Except as provided in this chapter, amounts in the Trust Fund may be used only for the payments to State and local governments provided by this subchapter.

(2) Trustee.

The Secretary of the Treasury shall be the trustee of the Trust Fund and shall report to the Congress not later than June 1 of each year on the operation and status of the Trust Fund during the preceding fiscal year. (b) Appropriations. (1) In general.

There is appropriated to the Trust Fund, out of amounts in the general fund of the Treasury attributable to the collections of the Federal individual income taxes not otherwise appropriated

(A) for the period beginning January 1, 1972, and ending June 30, 1972, $2,650,000,000; (B) for the period beginning July 1, 1972, and ending December 31, 1972, $2,650,000,000;

(C) for the period beginning January 1, 1973, and ending June 30, 1973, $2,987,500,000;

(D) for the fiscal year beginning July 1, 1973, $6,050,000,000;

(E) for the fiscal year begining July 1, 1974, $6,200,000,000;

(F) for the fiscal year beginning July 1, 1975, $6,350,000,000; and

(G) for the period beginning July 1, 1976, and ending December 31, 1976, $3,325,000,000. (2) Noncontiguous States adjustment amounts.

There is appropriated to the Trust Fund, out of amounts in the general fund of the Treasury attributable to the collections of the Federal individual income taxes not otherwise appropriated—

(A) for the period beginning January 1, 1972, and ending June 30, 1972, $2,390,000;

(B) for the period beginning July 1, 1972, and ending December 31, 1972, $2,390,000;

(C) for the period beginning January 1, 1973, and ending June 30, 1973, $2,390,000;

(D) for each of the fiscal years beginning July 1, 1973, July 1, 1974, and July 1, 1975, $4,780,000; and

(E) for the period beginning July 1, 1976, and ending December 31, 1976, $2,390,000. (3) Deposits.

Amounts appropriated by paragraph (1) or (2) for any fiscal year or other period shall be deposited in the Trust Fund on the later of (A) the first day of such year or period, or (B) October 21, 1972.

(c) Authorization of appropriations for entitlements. (1) In general.

In the case of any entitlement period described in paragraph (3), there are authorized to be appropriated to the Trust Fund to pay the entitlements hereinafter provided for such entitlement period an amount equal to $6,650,000,000 times a fraction

(A) The numerator of which is the amount of the Federal individual income taxes collected in the last calendar year ending more than one year before the end of such entitlement period, and

(B) the denominator of which is the amount of the Federal individual income taxes collected in the calendar year 1975. The amount determined under this paragraph is not to exceed $6,850,000,000.

(2) Noncontiguous States adjustment amounts.

In the case of any entitlement period described in paragraph (3), there are authorized to be appropriated to the Trust Fund to pay the entitlements hereinafter provided for such entitlement period an amount equal to $4,780,000 times a fraction

(A) the numerator of which is the amount

of the Federal individual income taxes collected in the last calendar year ending more than one year before the end of such entitlement period, and

(B) the denominator of which is the amount of the Federal individual income taxes collected in the calendar year 1975. The amount determined under this paragraph is not to exceed $4,923,759.

(3) Entitlement periods.

The following entitlement periods are described in this paragraph:

(A) The entitlement period beginning January 1, 1977, and ending September 30, 1977; (B) The entitlement period beginning October 1, 1977, and ending September 30, 1978; (C) The entitlement period beginning October 1, 1978, and ending September 30, 1979; and

(D) The entitlement period beginning October 1, 1979, and ending September 30, 1980. (4) Short entitlement period.

In the case of an entitlement period of 9 months which follows an entitlement period of 6 months

(A) the amount determined under paragraph (1) for such 9-month period shall be reduced by one-half the amount appropriated for such 6-month period under subsection (b) (1), and

(B) the amount determined under paragraph (2) for such entitlement period shall be reduced by one-half the amount appropriated for such 6-month entitlement period under subsection (b) (2).

(d) Transfers from Trust Fund to general fund.

The Secretary shall from time to time transfer from the Trust Fund to the general fund of the Treasury any moneys in the Trust Fund which he determines will not be needed to make payments to State governments and units of local government under this subchapter. (Pub. L. 92-512, title I, § 105, Oct. 20, 1972, 86 Stat. 920; amended Pub. L. 94-273, § 12(2), Apr. 21, 1976, 90 Stat. 378; Pub. L. 94-488, § 5, Oct. 13, 1976, 90 Stat. 2341.)

AMENDMENTS

1976-Subsec. (a) (1). Pub. L. 94-488, § 5(a) (1) added "or (c)" following "as provided in subsection (b). Subsec. (a) (2). Pub. L. 94-273, § 12(a) deleted "March" and substituted "June."

Subsec. (c) and (d). Pub. L. 94-488, § 5(a) (2) and (3), redesignated subsec. (c) as subsec. (d) and added a new subsec. (c), respectively.

*

*

*

§ 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

(A) with respect to any property referred to in paragraph (3) (A) or (B), its adjusted basis recomputed by adding thereto all adjustments, attributable to periods after December 31, 1961,

(B) with respect to any property referred to in paragraph (3) (C), its adjusted basis recomputed by adding thereto all adjustments, attributable to periods after June 30, 1963,

(C) with respect to livestock, its adjusted basis recomputed by adding thereto all adjustments attributable to periods after December 31, 1969, or

(D) with respect to any property referred to in paragraph (3) (D), its adjusted basis recomputed by adding thereto all adjustments attributable to periods beginning with the first month for which a deduction for amortization is allowed under section 169, 185, 190, or 191, 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, 169, 184, 185, 187, 188 190, or 191. 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, 169, 184, 185, 187, 188, 190, or 191, for any period was less than the amount allowable, the amount added for such period shall be the amount allowed. For purposes of this section, any deduction allowable under section 190 shall be treated as if it were a deduction allowable for amortization.

(A) personal property.

(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,

(ii) constituted a research facility used in connection with any of the activities referred to in clause (i), or

(iii) constituted a facility used in connection with any of the activities referred to in clause (i) for the bulk storage of fungible commodities (including commodities in a liquid or gaseous state),

(C) an elevator or an escalator, or

(D) so much of any real property (other than any property described in subparagraph (B)) which has an adjusted basis in which there are reflected adjustments for amortization under section 169, 185, 188, 190, or 191.

(d) Application of section.

This section shall apply notwithstanding any other provision of this subtitle. (Added Pub. L. 87-834, § 13(a) (1), Oct. 16, 1962, 76 Stat. 1032, and amended Pub. L. 88-272, title II, § 203 (d), Feb. 26, 1964, 78 Stat. 35; Pub. L. 91-172, title II, § 212(a) (1), (2), title VII, § 704 (b) (4), Dec. 30, 1969, 83 Stat. 571, 670.)

(As amended Pub. L. 92-178, title I, § 104(a)(2), title III, § 303 (c) (1), (2), 85 Stat. 501, 522; amended Pub. L. 94-455, §§ 2122(3) and 2124(2), Oct. 4, 1976, 90 Stat. 1915, 1917.)

AMENDMENTS

1971-Subsec. (a)(2). Pub. L. 92-178, § 303 (c)(1), included reference to section 188 in two instances following subpar. (D) text.

Subsec. (a) (3) (B) (ii), (iii). Pub. L. 92-178. § 104 (a)(2), substituted "research facility" for "research or storage facility" in cl. (ii) and added cl. (iii).

Subsec. (a) (3) (D). Pub. L. 92–178, § 303 (c) (2), included

reference to section 188.

1969-Subsec. (a)(2). Pub. L. 91-172, §§ 212(a) (1), 704(b) (4) (A), (B), added subpar. (C) and inserted references to sections 169, 185, and 187, and added subpar. (D).

Subsec. (a) (3). Pub. L. 91-172, §§ 212 (a) (2), 704(b) (4) (C)-(F), struck out "(other than livestock)" following "means any property" and substituted "section 167 (or subject to the allowance of amortization provided in section 185)" for "section 167" and added subpar. (D). Pub. L. 88-272 re1964 Subsec. (a)(2), (3) (C). defined "recomputed basis" with respect to elevators or escalators in par. (2), and inserted subpar. (C) in par. (3),

§ 1250. Gain from dispositions of certain depreciable

realty.

(a) General rule.

Except as otherwise provided in this section

(1) Additional depreciation after December 31, 1975.

(A) IN GENERAL.-If section 1250 property is disposed of after December 31, 1975, then the applicable percentage of the lower of—

(i) that portion of the additional depreciation (as defined in subsection (b) (1) or (4)) attributable to periods after December 31, 1975, in respect of the property, or

(ii) the excess of the amount realized (in the case of a sale, exchange, or involuntary conversion), or the fair market value of such property (in the case of any other disposition), over the adjusted basis of such property, shall 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 subparagraph (A), the term "applicable percentage" means

(i) in the case of section 1250 property with respect to which a mortgage is insured under section 221 (d) (3) or 236 of the National Housing Act, or housing financed 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 100 full months;

(ii) in the case of dwelling units which, on the average, were held for occupancy by families or individuals eligible to receive subsidies under section 8 of the United States Housing Act of 1937, as amended, or under the provisions of State or local law authorizing similar levels of subsidy for lower-income families, 100 percent minus 1 percentage point for each full month the property was held after the date the property was held 100 full months;

(iii) in the case of section 1250 property with respect to which a depreciation deduction for rehabilitation expenditures was allowed under section 167(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;

(iv) in the case of section 1250 property with respect to which a loan is made or insured under title V of the Housing Act of 1949, 100 percent minus 1 percentage point for each full month the property was held after the date the property was held 100 full months; and

(v) in the case of all other section 1250 property, 100 percent.

In the case of a building (or a portion of a building devoted to dwelling units), if, on the average, 85 percent or more of the dwelling units

84-049 07746

contained in such building (or portion thereof) are units described in clause (ii), such building (or portion thereof) shall be treated as property described in clause (ii). Clauses (i), (ii), and (iv) shall not apply with respect to the additional depreciation described in subsection (b) (4). (2) Additional depreciation after December 31, 1969, and before January 1, 1976.

(A) IN GENERAL.-If section 1250 property is disposed of after December 31, 1969, and the amount determined under paragraph (1) (A) (ii) exceeds the amount determined under paragraph (1)(A) (i), then the applicable percentage of the lower of

(i) that portion of the additional depreciation attributable to periods after December 31, 1969, and before January 1, 1976, in respect of the property, or

(ii) the excess of the amount determined under paragraph (1)(A) (ii) over the amount determined under paragraph (1)(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 subparagraph (A), the term "applicable percentage" means

(i) in the case of section 1250 property disposed of pursuant to a written contract which was, on July 24, 1969, and at all times thereafter, binding on the owner of the property, 100 percent minus 1 percentage point for each full month the property was held after the date the property was held 20 full months;

(ii) in the case of section 1250 property with respect to which a mortgage is insured under section 221 (d) (3) or 236 of the National Housing Act, or housing financed 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;

(iii) in the case of residential rental property (as defined in section 167(j) (2) (B)) other than that covered by clauses (i) and (ii), 100 percent minus 1 percentage point for each full month the property was held after the date the property was held 100 full months;

(iv) in the case of section 1250 property with respect to which a depreciation deduction for rehabilitation expenditures was allowed under section 167(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 (1), (ii), and (iii) shall not apply with respect to the additional depreciation described in subsection (b) (4).

(3) Additional depreciation before January 1, 1970. (A) IN GENERAL.-If section 1250 property is disposed of after December 31, 1963, and the amount determined under paragraph (1) (A) (11) exceeds the sum of the amounts determined under paragraphs (1) (A) (i) and (2) (A) (i), then the applicable percentage of the lower of-

(1) that portion of the additional depreciation attributable to periods before January 1, 1970, in respect of the property, or

(ii) the excess of the amount determined under paragraph (1)(A)(ii) over the sum of the amounts determined under paragraphs (1) (A) (i) and (2) (A) (1),

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 subparagraph (A), the term ‘applicable percentage' means 100 percent 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) Additional depreciation defined. For purposes of this section

(1) In general.

The term "additional depreciation" means, in the case of any property, the depreciation adjustments in respect of such property; except that, in the case of property held more than one year, it means such adjustments only to the extent that they exceed the amount of the depreciation adjustments which would have resulted if such adjustments had been determined for each taxable year under the straight line method of adjustment. For purposes of the preceding sentence, if a useful life (or salvage value) was used in determining the amount allowed as a deduction for any taxable year, such life (or value) shall be used in determining the depreciation adjustments which would have resulted for such year under the straight line method.

(3) Depreciation adjustments.

The term "depreciation adjustments" means, in respect of any property, all adjustments attributable to periods after December 31, 1963, reflected in the adjusted basis of such property 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 exhaustion, wear and tear, obsolescence, or amortization (other than amortization under section 168, 169, 185, 188, 190, or 191). For purposes of the preceding sentence, if the taxpayer can establish by adequate records or other sufficient evidence that the amount allowed as a deduction for any period was less than the amount allowable, the amount taken into account for such period shall be the amount allowed.

(4) Additional depreciation attributable to rehabili tation expenditures.

The term "additional depreciation" also means, in the case of section 1250 property with respect to which a depreciation deduction for rehabilitation expenditures was allowed under section 167(k), the depreciation adjustments allowed under such section to the extent attributable to such property, except that, in the case of such property held for more than one year after the rehabilitation expenditures so allowed were incurred, it means such adjustments only to the extent that they exceed the amount of the depreciation adjustments which would have resulted if such adjustments had been determined under the straight line method of adjustment without regard to the useful life permitted under section 167(k).

(c) Section 1250 property.

For purposes of this section, the term "section 1250 property" means any real property (other than section 1245 property, as defined in section 1245(a) (3)) which is or has been property of a character subject to the allowance for depreciation provided in section 167.

AMENDMENTS

1976 Subsec. (a). Pub. L. 94-455, § 202, substantially revised this subsection.

1971-Subsec. (b) (3). Pub. L. 92-178 included reference to section 188.

1969-Subsec. (a). Pub. L. 91-172, § 521 (b), modified the recapture rules pertaining to residential housing by allowing a 1 percent per month reduction in the amount to be recaptured as ordinary income after the property has been held for 100 full months, with other real property remaining subject to full recapture, applied the existing recapture rules where the sale of property was subject to a binding contract in existence prior to July 25, 1969, provided that changes in the recapture rules are not to apply in federally assisted projects (such as programs under section 221(d) (3) or 236 of the National Housing Act) or to other publicly assisted housing programs under which the return to the investor is limited on a comparable basis, thereby rendering these projects subject to a recapture of the depreciation in full if the sale occurs in the first 12 months and for a phaseout of the recapture of the excess of accelerated over straight-line depreciation after 20 months, the recapture being reduced at the rate of 1 percent per month until 120 months after which no recapture applies, with such recapture rules to continue to apply only with respect to such property constructed, reconstructed, or acquired before Jan. 1, 1975, and applied new recapture rules to depreciation attributable to periods after Dec. 31, 1969.

Subsec. (b). Pub. L. 91-172, § 512(c), added par. (4). Subsec. (b)(3). Pub. L. 91-172, § 704(b) (5), inserted reference to sections 169 and 185 of this title.

Subsec. (d). Pub. L. 91-172, §§ 521 (e) (1), 910(b) (1), substituted "subsection (a)" for "subsection (a)(1)" wherever it appears and added par. (8).

Subsec. (e). Pub. L. 91-172, § 910(b) (2), added par. (4). Subsec. (1) (1). Pub. L. 91-172, § 521 (e) (2) (A), substituted "subsection (a)" for "subsection (a)(1)",

Subsec. (f) (2). Pub. L. 91-172, § 521 (e) (2) (B), redesignated subpars. (A) and (B) as cls. (1) and (11) of subpar. (A), respectively, and, in such cls. (1) and (11) as so redesignated, added reference to depreciation attributable to periods after Dec. 31, 1969, and added subpar. (B).

Subsec. (g). Pub. L. 91-172, § 910(b) (3), added subsec. (g). Former subsec. (g) redesignated (h).

Subsec. (h). Pub. L. 91-172, § 910(b) (3), redesignated former subsec. (g) as (h). Former subsec. (h) redesig

nated (1).

Subsec. (1). Pub. L. 91-172, § 910(b) (3), redesignated

former subsec. (h) as (1).