§1250 — Gain from dispositions of certain depreciable realty
55 cases·7 followed·6 distinguished·1 criticized·41 cited—13% support
Statute Text — 26 U.S.C. §1250
Except as otherwise provided in this section—
If section 1250 property is disposed of after
December 31, 1975
, then the applicable percentage of the lower of—
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
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.
For purposes of subparagraph (A), the term “applicable percentage” means—
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) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990), 100 percent minus 1 percentage point for each full month the property was held after the date the property was held 100 full months;
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;
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;
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
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 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) which was allowed under section 167(k).
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—
that portion of the additional depreciation attributable to periods after
December 31, 1969
, and before
January 1, 1976
, in respect of the property, or
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.
For purposes of subparagraph (A), the term “applicable percentage” means—
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;
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) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990), 100 percent minus 1 percentage point for each full month the property was held after the date the property was held 20 full months;
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;
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
in the case of all other section 1250 property, 100 percent.
Clauses (i), (ii), and (iii) shall not apply with respect to the additional depreciation described in subsection (b)(4).
If section 1250 property is disposed of after
December 31, 1963
, and the amount determined under paragraph (1)(A)(ii) exceeds the sum of the amounts determined under paragraphs (1)(A)(i) and (2)(A)(i), then the applicable percentage of the lower of—
that portion of the additional depreciation attributable to periods before
January 1, 1970
, in respect of the property, or
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)(i),
shall also be treated as gain which is ordinary income. Such gain shall be recognized notwithstanding any other provision of this subtitle.
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.
For purposes of this subsection, any reference to section 167(k) or 167(j)(2)(B) shall be treated as a reference to such section as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990.
For reduction in the case of corporations on capital gain treatment under this section, see section 291(a)(1).
For purposes of this section—
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.
In the case of a lessee, in determining the depreciation adjustments which would have resulted in respect of any building erected (or other improvement made) on the leased property, or in respect of any cost of acquiring the lease, the lease period shall be treated as including all renewal periods. For purposes of the preceding sentence—
the term “renewal period” means any period for which the lease may be renewed, extended, or continued pursuant to an option exercisable by the lessee, but
the inclusion of renewal periods shall not extend the period taken into account by more than ⅔ of the period on the basis of which the depreciation adjustments were allowed.
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 (as in effect before its repeal by the Tax Reform Act of 1976), 169, 185 (as in effect before its repeal by the Tax Reform Act of 1986), 188 (as in effect before its repeal by the Revenue Reconciliation Act of 1990), 190, or 193). 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.
The term “additional depreciation” also means, in the case of section 1250 property with respect to which a depreciation or amortization deduction for rehabilitation expenditures was allowed under section 167(k) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) or 191 (as in effect before its repeal by the Economic Recovery Tax Act of 1981), the depreciation or amortization 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) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) or 191 (as in effect before its repeal by the Economic Recovery Tax Act of 1981).
For purposes of paragraph (1), the depreciation adjustments which would have resulted for any taxable year under the straight line method shall be determined—
in the case of property to which section 168 applies, by determining the adjustments which would have resulted for such year if the taxpayer had elected the straight line method for such year using the recovery period applicable to such property, and
in the case any property to which section 168 does not apply, if a useful life (or salvage value) was used in determining the amount allowable as a deduction for any taxable year, by using such life (or value).
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.
Subsection (a) shall not apply to a disposition by gift.
Except as provided in section 691 (relating to income in respect of a decedent), subsection (a) shall not apply to a transfer at death.
If the basis of property in the hands of a transferee is determined by reference to its basis in the hands of the transferor by reason of the application of section 332, 351, 361, 721, or 731, then the amount of gain taken into account by the transferor under subsection (a) shall not exceed the amount of gain recognized to the transferor on the transfer of such property (determined without regard to this section). Except as provided in paragraph (6), this paragraph shall not apply to a disposition to an organization (other than a cooperative described in section 521) which is exempt from the tax imposed by this chapter.
If property is disposed of and gain (determined without regard to this section) is not recognized in whole or in part under section 1031 or 1033, then the amount of gain taken into account by the transferor under subsection (a) shall not exceed the greater of the following:
the amount of gain recognized on the disposition (determined without regard to this section), increased as provided in subparagraph (B), or
the amount determined under subparagraph (C).
With respect to any transaction, the increase provided by this subparagraph is the amount equal to the fair market value of any stock purchased in a corporation which (but for this paragraph) would result in nonrecognition of gain under section 1033(a)(2)(A).
With respect to any transaction, the amount determined under this subparagraph shall be the excess of—
the amount of gain which would (but for this paragraph) be taken into account under subsection (a), over
the fair market value (or cost in the case of a transaction described in section 1033(a)(2)) of the section 1250 property acquired in the transaction.
In the case of property purchased by the taxpayer in a transaction described in section 1033(a)(2), in applying section 1033(b)(2), such sentence
1
1 See References in Text note below.
shall be applied—
first solely to section 1250 properties and to the amount of gain not taken into account under subsection (a) by reason of this paragraph, and
then to all purchased properties to which such sentence applies and to the remaining gain not recognized on the transaction as if the cost of the section 1250 properties were the basis of such properties computed under clause (i).
In the case of property acquired in any other transaction to which this paragraph applies, rules consistent with the preceding sentence shall be applied under regulations prescribed by the Secretary.
In the case of any transaction described in section 1031 or 1033, the additional depreciation in respect of the section 1250 property acquired which is attributable to the section 1250 property disposed of shall be an amount equal to the amount of the gain which was not taken into account under subsection (a) by reason of the application of this paragraph.
For purposes of this section, the basis of section 1250 property distributed by a partnership to a partner shall be deemed to be determined by reference to the adjusted basis of such property to the partnership.
In respect of any property described in subparagraph (A), the additional depreciation attributable to periods before the distribution by the partnership shall be—
the amount of the gain to which subsection (a) would have applied if such property had been sold by the partnership immediately before the distribution at its fair market value at such time and the applicable percentage for the property had been 100 percent, reduced by
if section 751(b) applied to any part of such gain, the amount of such gain to which section 751(b) would have applied if the applicable percentage for the property had been 100 percent.
The second sentence of paragraph (3) shall not apply to a disposition of section 1250 property to an organization described in section 511(a)(2) or 511(b)(2) if, immediately after such disposition, such organization uses such property in an unrelated trade or business (as defined in section 513).
If any property with respect to the disposition of which gain is not recognized by reason of subparagraph (A) ceases to be used in an unrelated trade or business of the organization acquiring such property, such organization shall be treated for purposes of this section as having disposed of such property on the date of such cessation.
If any section 1250 property is disposed of by the taxpayer pursuant to a bid for such property at foreclosure or by operation of an agreement or of process of law after there was a default on indebtedness which such property secured, the applicable percentage referred to in paragraph (1)(B), (2)(B), or (3)(B) of subsection (a), as the case may be, shall be determined as if the taxpayer ceased to hold such property on the date of the beginning of the proceedings pursuant to which the disposition occurred, or, in the event there are no proceedings, such percentage shall be determined as if the taxpayer ceased to hold such property on the date, determined under regulations prescribed by the Secretary, on which such operation of an agreement or process of law, pursuant to which the disposition occurred, began.
For purposes of determining the applicable percentage under this section, the provisions of section 1223 shall not apply, and the holding period of section 1250 property shall be determined under the following rules:
The holding period of section 1250 property shall be deemed to begin—
in the case of property acquired by the taxpayer, on the day after the date of acquisition, or
in the case of property constructed, reconstructed, or erected by the taxpayer, on the first day of the month during which the property is placed in service.
If the basis of property acquired in a transaction described in paragraph (1), (2), or (3) of subsection (d) is determined by reference to its basis in the hands of the transferor, then the holding period of the property in the hands of the transferee shall include the holding period of the property in the hands of the transferor.
If, in the case of a disposition of section 1250 property, the property is treated as consisting of more than one element by reason of paragraph (3), then the amount taken into account under subsection (a) in respect of such section 1250 property as ordinary income shall be the sum of the amounts determined under paragraph (2).
For purposes of paragraph (1), the amount taken into account for any element shall be the sum of a series of amounts determined for the periods set forth in subsection (a), with the amount for any such period being determined by multiplying—
the amount which bears the same ratio to the lower of the amounts specified in clause (i) or (ii) of subsection (a)(1)(A), in clause (i) or (ii) of subsection (a)(2)(A), or in clause (i) or (ii) of subsection (a)(3)(A), as the case may be, for the section 1250 property as the additional depreciation for such element attributable to such period bears to the sum of the additional depreciation for all elements attributable to such period, by
the applicable percentage for such element for such period.
For purposes of this paragraph, determinations with respect to any element shall be made as if it were a separate property.
In applying this subsection in the case of any section 1250 property, there shall be treated as a separate element—
each separate improvement,
if, before completion of section 1250 property, units thereof (as distinguished from improvements) were placed in service, each such unit of section 1250 property, and
the remaining property which is not taken into account under subparagraphs (A) and (B).
For purposes of this subsection—
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—
25 percent of the adjusted basis of the property,
10 percent of the adjusted basis of the property, determined without regard to the adjustments provided in paragraphs (2) and (3) of section 1016(a), or
$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.
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—
$2,000, or
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 amount 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.
The term “improvement” means, in the case of any section 1250 property, any addition to capital account for such property after the initial acquisition or after completion of the property.
The Secretary shall prescribe such regulations as he may deem necessary to provide for adjustments to the basis of property to reflect gain recognized under subsection (a).
This section shall apply notwithstanding any other provision of this subtitle.
Treasury Regulations
- Treas. Reg. §Treas. Reg. §1.1250-1 Gain from dispositions of certain depreciable realty
- Treas. Reg. §Treas. Reg. §1.1250-1(a) §1.1250-1(a)
- Treas. Reg. §Treas. Reg. §1.1250-1(b) In the case of property constructed, reconstructed, or acquired by the taxpayer before January 1, 1975, with respect to which a mortgage is insured under section 221(d)(3) or 236 of the National Housing Act, or housing is 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) (relating to approved dispositions of certain Government-assisted housing
- Treas. Reg. §Treas. Reg. §1.1250-1(c) In the case of residential rental property (as defined in section 167(j)(2)(B)) other than that covered by (a) and (b) of this subdivision, 100 percent minus 1 percentage point for each full month of the taxpayer's holding period for the property (determined under § 1.
- Treas. Reg. §Treas. Reg. §1.1250-1(d) In the case of property with respect to which a deduction was allowed under section 167(k) (relating to the depreciation of expenditures to rehabilitate low-income rental housing), 100 percent minus 1 percentage point for each full month of the taxpayer's holding period (determined under § 1.
- Treas. Reg. §Treas. Reg. §1.1250-1(e) Section 1250 property—(1) Definition.
- Treas. Reg. §Treas. Reg. §1.1250-1(f) Treatment of partnerships and partners.
- Treas. Reg. §Treas. Reg. §1.1250-1(g) Examples.
- Treas. Reg. §Treas. Reg. §1.1250-1(i) §1.1250-1(i)
- Treas. Reg. §Treas. Reg. §1.1250-2 Additional depreciation defined
- Treas. Reg. §Treas. Reg. §1.1250-2(a) In general—(1) Definition for purposes of section 1250(b)(1).
- Treas. Reg. §Treas. Reg. §1.1250-2(b) Computation of depreciation adjustments in excess of straight line—(1) General rule.
- Treas. Reg. §Treas. Reg. §1.1250-2(c) Property held by lessee—(1) Amount depreciation would have been.
- Treas. Reg. §Treas. Reg. §1.1250-2(d) Depreciation adjustments—(1) General.
- Treas. Reg. §Treas. Reg. §1.1250-2(e) Additional depreciation immediately after certain acquisitions—(1) Zero.
- Treas. Reg. §Treas. Reg. §1.1250-2(f) Records to be kept and information to be filed—(1) Records to be kept.
- Treas. Reg. §Treas. Reg. §1.1250-2(i) §1.1250-2(i)
- Treas. Reg. §Treas. Reg. §1.1250-3 Exceptions and limitations
- Treas. Reg. §Treas. Reg. §1.1250-3(a) §1.1250-3(a)
- Treas. Reg. §Treas. Reg. §1.1250-3(b) The excess, if any, of the amount of gain which would, but for section 1250(d)(8)(A), be taken into account under section 1250(a), over the cost of the section 1250 property acquired in the transaction.
- Treas. Reg. §Treas. Reg. §1.1250-3(c) Any gain not applied under (a) of this subdivision shall be applied to the amount by which the basis of the nonsection 1250 property was reduced.
- Treas. Reg. §Treas. Reg. §1.1250-3(d) For purposes of applying (c) of this subdivision, the fair market value of acquired property shall be taken into account only once and in such manner as the taxpayer determines.
- Treas. Reg. §Treas. Reg. §1.1250-3(e) Sections 1071 and 1081 transactions—(1) General.
- Treas. Reg. §Treas. Reg. §1.1250-3(f) Property distributed by a partnership to a partner—(1) General.
- Treas. Reg. §Treas. Reg. §1.1250-3(g) Disposition of principal residence—(1) In general.
55 Citing Cases
Petitioners’ claim is made without a clear understanding of section 1(h) and its interaction with section 1250. For the 1997 tax year, the maximum capital gains rate is generally 20 percent on the gain from the disposition of a capital asset held more than 18 months and sold after July 28, 1997. However, the 20-percent rate does not apply to unrecaptured section 1250 gain, which is subject to a 25-percent tax rate.
We disagree with Peco that Hosp.
Accordingly, we hold that petitioners must recognize gain with respect to the business percentage of the sale of the easement, treating the property as section 1231 property.
Section 1250 applies to real property depreciable under section 167 (i.e., used in a trade or business) other than section 1245 property.
itioners utilized the proper recovery classes or periods in calculating their claimed depreciation deductions for those taxable years, we must decide (1) whether the tests developed under prior law for purposes of the investment tax credit are applicable, and, if so (2) whether the respective properties constitute section 1245 personal property or section 1250 real property pursuant to those tests.
itioners utilized the proper recovery classes or periods in calculating their claimed depreciation deductions for those taxable years, we must decide (1) whether the tests developed under prior law for purposes of the investment tax credit are applicable, and, if so (2) whether the respective properties constitute section 1245 personal property or section 1250 real property pursuant to those tests.
itioners utilized the proper recovery classes or periods in calculating their claimed depreciation deductions for those taxable years, we must decide (1) whether the tests developed under prior law for purposes of the investment tax credit are applicable, and, if so (2) whether the respective properties constitute section 1245 personal property or section 1250 real property pursuant to those tests.
745, 762, includes section 1250 property; and (2) if ADR class 57.0 does include section 1250 property, whether that class differentiates between items of section 1250 property that are structural and nonstructural components of a building.
31, 1984, petitioner reported a gain of $16,221,675 from the sale of the Lamont gas plant. This gain comprised the following components: Amount realized in excess of cost basis $12,852,544 Sec. 1245 recapture 3,287,803 Straight-line depreciation on sec. 1250 property 81,328 Total reported gain 16,221,675 - 60 - Petitioner reported the entire gain from the sale of the Lamont gas plant as ordinary patronage income. In the subject notice of deficiency, respondent reclassifies the portion of the ga
TERNAL REVENUE, Respondent* Docket No. 6634-92. Filed August 13, 1996. P, engaged in the retail pharmacy and restaurant business, made substantial improvements to certain leased premises. The leasehold improvements constituted property described in sec. 1250, I.R.C., which P seeks to depreciate under asset depreciation range Class 57.0, Distributive Trades and Services, prescribed in Rev. Proc. 83-35, 1983-1 C.B. 745, 762, and R seeks to include under Class 65.0, Building Services, Rev. Proc. 72
87-56 is filled with references to section 1245 property and section 1250 property.
One antichurning rule says that section 1250 property acquired by the taxpayer after December 31, 1986, does not qualify for MACRS if it was acquired in an exchange described in section 1031, 1033, 1038, or 1039.
The residential rental real properties at which the HVAC units were installed are section 1250 class property because they are real property, depreciable, and do not meet the requirements of section 1245(a) (3) (C) .
We are satisfied that the kennel petitioner had constructed in his backyard for his police dog was not a building as defined in section 1250 but rather was depreciable personal .
We are satisfied that the kennel petitioner had constructed in his backyard for his police dog was not a building as defined in section 1250 but rather was depreciable personal .
554 (2000) ; (6) la change in depreciation method resulting from a change from section 1250 property to section 1245 property, Standard Oil Co .~ ( Indiana) v.
554 (2000); (6) a change in depreciation method resulting from a change from section 1250 property to section 1245 property, Standard Oil Co.
at 677, asset class 00.3, Land Improvements: Includes improvements directly to or added to land, whether such improvements are section 1245 property or section 1250 property, provided such improvements are depreciable.
Nonresidential real property is defined as “section 1250 property which is not-- (i) residential rental property, or (ii) property with a class life of less than 27.5 years.” Sec.
at 677, asset class 00.3, Land, Improvements: Includes improvements directly to or added to land, whether such improvements are section 1245 property or section 1250 property, provided such improvements are depreciable.
Asset class 57.1, entitled “Distributive Trades and Services–- Billboard, Service Station Buildings and Petroleum Marketing Land Improvements”, assigns a 15-year recovery period to “section 1250 assets, including * * * depreciable land improvements, whether section 1245 property or section 1250 property, used in the marketing of petroleum and petroleum products”.
D-1, line 9 69,322 Line 11. Gain from Form 4797, Part I * * * [1]12,751 Line 14. Long-term capital loss carryover (141,621) Line 16. Net long-term capital gain or (loss) (63,149) 1 This gain resulted from petitioners’ sale of a condominium that was sec. 1250 property and, therefore, was not included as an item of investment income. See sec. 163(d)(4)(D). - 4 - Petitioners also reported an overall capital loss of $14,132 as follows: Net long-term capital loss ($63,149) Net short-term capital gai
nly in the period for depreciation but also potentially in the method 2 There were some exceptions, see, e.g., former sec. 167(c) (accelerated depreciation is available only for property with a useful life of 3 years of more); former sec. 167(j)(5) (sec. 1250 property that is used residential real property qualifies for a 125 percent declining balance method if the property has a useful life of 20 years or more). - 16 - for calculating depreciation. On the other hand, to accept respondent’s posi
rd to the sale of the Longport (continued...) - 9 - gain is not subject to the section 1221 capital gain preference as a result of the application of section 1221(2), petitioner’s gain does receive preferential treatment under section 1231. But see sec. 1250. As a final matter, petitioner claims that he received the sales proceeds on account of the Longport property and certain personal property, such as appliances purchased for the rental unit. We find petitioner’s claim credible. We therefore
677, provides the following asset guideline classes: 00.3 Land Improvements: Includes improvements directly to or added to land, whether such improvements are section 1245 property or section 1250 property, provided such improvements are depreciable.
The classes at issue are as follows: Asset Class 00.3--Land Improvements: Includes improvements directly to or added to land, whether such improvements are section 1245 property or section 1250 property, provided such improvements are depreciable.
The classes at issue are as follows: Asset class 00.3 — Land Improvements: Includes improvements directly to or added to land, whether such improvements are section 1245 property or section 1250 property, provided such improvements are depreciable.
allowance for depreciation under section 167; (4) at the time of the distribution the fair market value of the property was $2,000 and its basis to the distributing corporation was $1,000; (5) there was no recapture income to X under section 1245 or section 1250 on the distribution of the property; and (6) prior to the distribution the property was used by X in a trade or business acquired within 5 years of the distribution in a taxable transaction.