Final Regulation

Federal Regsttr I Vo:. 59.
Federai-ald funding under titke 23,
United Stales Code.
fi) The Fcderd &are of any project

No. 24 1 1 Friday. December 16. 1994

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S o u a Inwrne.". first paragraph. l i n t 3.
b e language "5 1.8611-9T(S)(3:" is
correct4 to read "5 1.861-9T(g)[3)".

Rules and Regutations

64849

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Senrice: M a i l Stop 4800; 381 Elden
Street. tierndon, V ~ r g ~ n 2
l a2 0 7 M 8 1 7 .

telephone (703)787-10331Fax 1703)
787-1575,
&ligated w i h fun& allocated under
[bmctw
SUPPrEmEKFARr -MFORYhTlW: The MMS
t h i s p i o g m n shall bs & e w e ar the
2. On Page 51375.5 1.168Iikl.
is responsible for openlions in the
+dera\ share a p p b b \ e to the type of
w g r a p h (fl(2)(ii)in the f i t formula
Outer Continental Sheli (OCS).
An
'wnrk or p m i e ~ being
t
dsveloped ar the
~ y s t e n o n w h i c h & e p m i e ~ I s l & t d . 0nthePage.col~mn3.1i~es2and30r imponanilactarinensuringthatOCS
Funds allocated under this program
be rormula. h e ianguage "ated
and
oil and gas operations are carried out in
shall~mainav~ileblauntil~xpe~ded,A ~ ~ ~ f l i ~ n e d t o F ~ amamerwhichernphasireshesatety
* ; g n ~ ~ ~ ~ ~ ~ ~ ~
Total Allowed I h p d a t i o n De-" is
or operations nnd minimizes the risk of
[cl Funds will be sUocated to the
corrected to read "cated and
environmental damage is the lessees'
Sutes each fiscal year horn 1995
lncornd
Appuhoned !* Foreign
ernploynent or highly qualifiedand
through 1997 to lhs enent funds are
Total Allowed Depreciation De-".
h i n e d personnel to petlorn such
appropriated.
3. On page 51375. 5 1.168(i)-l.
opzmtions.
To ensure that key openting
IFR 1 3 0 ~94-30964Fdcd 12-15-94. 8.Q5amI
(0(3), in hesecond formula
personnel of lessees and contractors arc
-WIG
c n r rlt-4
~
o ~ ~ h e P a g e . w l u m n 2 - 1 i n 8 1 o f ~ e pr,per[y~~n&jnwell-contro[and
formuiar the word "Forlgn"iscomked
production safety systems. M M S has
(O read "Foreign".
developed and implemented training
DEPARTMENT OF THE TREASURY
. 4. On page 5 1 3 7 5 . 5 l.l68[i)-1.
mgulations since the l a t ~1970's.
pafagraph (013),
in the second romu18 Initially. training was required for key
Internal Revenue S e w b
On the page. column
3, line 3 of the
personnel in drilling well-control and
lormuia. the language "@goryTotal
production saIety devices. Ln the late
26 CFR Part 1
:,(
-) - j ;! 1'1.
Allowed Depreciation Deduc-" i s
1980'~.MMS proposed new training lor
comted to mad "W'rY Tuta"A1lowed well-corn pletion, well-workover. and
p -1
Depmlation Deduc-".
well-servicing operations md revised
FUN 1 5 4 S A W
Cynthim E. Gripby,
mgulations for drilling and p r d u a i o n
General Asset Accounts Under the
Chief Regulations Unlt. Assistant ChicJ
- safety systems. These training
Accelerated Cost R m v t r y Syst&'Zl;
iCofPDme).
regulation~30
250.210. 30 mfl
IFR Doc 94-30547 filed 12-15-94; 8:15 am1 250.211.30 CFR 250.212.30 CFR
Correction
250.213.30C!iR 250.214. and 3 0 CFR
mattoot ~ r - p
AGENCY: Internal Revenue Service
250.215-Subpart &Training. k a m e
Tmasury.
fully effective on February 25, 1993.
A W N : Comc~on
to Enal regulations.
Since the late seventies, MhfS
D E ~ A OF~ THE
E W ~T E A ~ O R
Headquaners prsonnel have been
SUWARY: T h i s document contains
Minerals Managemmt %mica
responsible for the day-teday operation
corrections to the final regulations (TD
ofthe training program. including t h e
8 % ~ )which w m published in !he
30 C F R - ~ ~ r256
l
review
of trainlng programs and
F&ral Register for Tuesday, October
implementation plans. and cbnduning
R9H IDleABZ1 '
11,1994I59m 51369). The final
of onsi te evaluations and audits.
regulations relate to the e\ection to
Oil a n d GPS aria Sulphur Operationc in Beginning with the efiecti.,e date of
maintain general asset accounts for
these technical amendmm~s,MMS
the Outer Continental Shelf; Training
deprrcialje assets.
re~ionalaffices will manage these dayBFECTlVE DATE: October 11. 1994.
AGEMY: Minerals Management Service,
tbdar
ions or the t ~ ~ .
FORFURTHER U ~ F M A ~ K ~-ACT:
~
Interior.
Headquaners will remain responsible
AmW: Technical amendmentsh t h l e e n R e d , (202) 622-3110 (not a
To1 program oversight and coordination.
roll-& number).
hCe~lttalizatiohof the LTP to h a
GUM*URT: The
Management
~
i
o n aoffices
l
i~ being performed to
SUPNEMKrART WFDFIMAflON:
Seivice (MMS)
i s transferring its
decrease the proiect management costs
Background
rnanapment of the day-!day
associatwl with implementing l b ~ s
operations of l b e lessee training
program and to pmvide W S ' s
Tbe final regulations h o t am the
progtam ILTP) hm
Hadq*wen customers with more ti rr.e Iy sen ice.
subject
Lhesecorrections am
to its regional offices. Therefore, MMS
Dated: Noverrtk~16, i99r
Mion 168 of the Internal Revenue
is amending iu reBulrtions on oil
M e .
N
w K.Hay-gas md sulphur aperati~ns
in the Outer
h n h e n t a ] Shelf to =fleet &at &ange. Acting Assistant Secretary. Inndnnd
N ~ e dlor Corntion
M'ncm'5
bnagement of the LTP in h e regional
As puhlishd, TD 8566contains
For the reason%set ou! in h e
otfims will improve customer service by
t!'pOgm~bim'e*n
in nrrd
MMS smplayer ifivDlved h h preamble. 30 CFR pan 2SO i s amended
of correnlon.
ar Iollo~~s:
approving h e schools' and
h r r e c t i o n o j Publication
organimtions' tmining p m p m s and
PART *=-IL
AND GAS AND
i~nplementationplans and conducting
Accordingty. the publication ofthe
SULPHUR OPERATIONS IH THE
onsib
evaluations
and
audits
i
n
close
finalregularjons
whirh is hesubied of proumity to the schools.
OUTER COHnNENTAt SHELF
FR Doc. 94-24449. i
s mrrected as
EFFECTlUE DATE: January 17.1995.
1. The authorily cllatlon fur part 250
follows:
c o n t i n ~ e sto read as loliows:
1. On page 51 370. column 2,in h e
FoFi FURTHER IHFORYAW -ACT:
preambie, follow ng h e paragraph
Levine, Chief. infomation and
hutbotiq: Sec. 204. PUC 1.95-372 32
heading "As5rts ihot Generals Foreign
Stai. 629 (43 U S C 1314)
Training Branch; Mineral Management

,

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m u r y , OfIica of Inlwmatia and
'- TRegulatory
AF+irs, Washington, DCp,%

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20503.

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li'-.cI&-~.<~r:~c:::.;~~,<.+.'

appropriate lo rUow tupnyem w t e r flexibility in determining what m will h i n c l u d e d i n r g e n a a l e ~ t . ,

1.

No. 195 1

Tucsdaj.. Cktbber 11. 1941 / Rules and Rtgu~atiom

The final regulations mvide r nht
auut Tbmfom. the p m p d rule
probibits p n m l u s a t a ~ ~ ~ u a t oooidinrting Ibe pcnern awel aaount
munent for investmtnt d
t property. rules walh the rules in 5 1.8611-9Tk3(33
relating to rlloafian end rpporticnment
has b n deleted. A m r d i q l y . under
of interest expense under the asset
the h a l rsgubtians. Igens& d
method. A general asset Mcount will be
@ a u n tmly ladude m y deprsciablo
~
umt Ior whidt a &it
or deduction is mated as r single ms& for p u p s e of
applying
the
mles
in
5
1
.
8
6
1
9
T
(
g
)
[
3)I .
f
~llowubla
A new rule, howrrmr, bas been added h e pneml asset mccoupt generates
inmme in mom !ban one sepiala
in tba fhd regulations to m u n t for
m y basis inmaw upon m p t u m . The - grouping [statutory and residurll. then
final reguhtiou provide that u p
the amount i s r multiple category asset,
h e lsset i s remwed h m tbt as defined in S 1.861-9T&1(3Hii).and
eccnuat as 01 the Mdry the income yield h r n the gureral asset
general
tqount mu4 be cclmputtd
if the
of the taxabk year in which the
recaDture event occw.la rdditioa.
account were r single multiple category

P

thrl

ssvt
depn&atiun &rvm of the aceauot mud
ba made. This rule was iomulated in
view of tbe limirsd types of property
cumntly eligibls lor the investment
atdit Tbe tRS. h o w o w . m a y coosider
other dlemativsc to taka into m u n t
the t d i inupon mptum if rhe
ccop of pmpsrty that qualifirr for the
investmtnt &it
is expanded.
h s d s U d in a Pemnal A t t i w .

5hs final regulations a h pruvids
rules for determining the source of
income from disposition of an .at2in
a end rssd rcccrunt. If the pneral

the

or otha income producing p m .
operation. kcility. plant. or other unit
loher h n by tnnsfer to I supplies.
scrap, or s i m i h amount). One .
commentator ccepmnded that the .
.
final regulations rhould provide m
example showing that h e alt otnn
mdividtd interest in mineral pmperty.
abng wilh the d a t e d operating
.
quipment. is a crutoilment of a
taxmver's businssr sod, thus.
cnrislitutes a qualifying dispdi tion. A
curtailment was intended b k limited
to a genuine business mntmctioa and
not to include transactions involving the

sulc of an undivided interest. othbr than
the twpaytr's t n t k interwt in assets.

To avoid any funber misinterpretation.

rsset r e e w n t includes assetr generating
both U n i t d States and foreign sourn
income. any m o u n t or ordinary
income, gain, OI loss m i z e d on the
dispodition must be apportioned
between United States and Iorrjgn
sou,b a d on &t allocation and

-

tbe rub of
apportionment of dtpndation allowed
pmpos~d~bgulatimsth.t 4 genml
for the general rsset e o u n t or for the
ms5ei account may not indude aa w&
disposed asset. ms applicable. If h e
i f r lwpayeruses the ~t b o t h h a
general w t acmunt includes assets
mde or business (or for the p d u d o n that generate foreign xrurr*s income in
o.'inmme] and in a personal &Ctirity at
more than one sepaate cattgory under
any time during the texable ytar in
$ectim904[d)[l) or another section of
which tbe uset is b
t placed in -kt
tbe hteml Revenue Code. or under r
by b e taxpayer. Consistent with the
United Stales income tax tmary that
retention of his rule in the fins1 rrquires ht forei* tax d i t limitahon
mpkrions. a new rule has k n added
to be determined separarel y for
providing that an met in r general asset specif~dtypes 01 income. h e n the
a c t o u t k m e s ineligible lor general
amount of ordinary income. gain. or loss
asset amount maunent il a taxpayer
mmgniztd on the disposition that is
uses tbe arset in 6 personal a d r - r t y in
trealed s~ foreign source income must
a texable yssr rher tbe taxable year h e
be ell-led end apportion4 ro the
asset is p h d in service. I f this change
appliable separale cafegoq or
in use m.the Final regulations
caregories.
Disposition of All Assets or ihc Last
provide that fhe taxpayer must ux the
mctbod pmr-ided in 5 1.168iiIAssct. One commentator questioned
whetbw the rule under the proposed
1(e)I3)Iiiil(C) for adjusting a general
asset account when an asset h m t 5
regulations thnt provided thal a general
sssel amount terminates on the
ineligible for genetal asset a w u n t
Lrearment.
& s p i t i o n of all of the 4ssct~in b e
Assets tbuf Cencmte Fomjgn Souice
mcwunt or tbe lsst as* in the account
hmme. A commentator r u w e d that
was mandatory. ln respon- to this
tbc pro@
rpgubtious k ammded to comment. the find mguhlions clarify
allow g e n t d ~t
a-unl
tFertment
thnt this rule i s nn optional rule for
lor a m t a generating l o ~ i g nsource
taxpayers that maintain records showing
inmmt.
the disposition of assets in r gentnl
In mponse to this commenr.the final asset rccwnt. Thc final regulations alx,
regulations aHow general asset aaount
provide that a taxpayer adopts the rule
tnatment for a r ~ t generating
s
foreign
by reporting the gain or loss on the
s~urceincome. If. bowever. h e
taxpayer's income tax mlum for the
indusion of these assets in 4 general
taxable year in which the disposition of
as-; taoufir results in a subnantial
all oltbe assets, or the last asset. i n the
distortion of income. the Cammissioner general asset rccount cam.
may w a r d the general aswt amount
Quolifi$ng Dlrposrtions. Under the
elmion and m J e m a l l ~ t i o n of
s
proposed mgulat~ons,a qualifying
inmme or erpensc 8s n e c e s q to
hsposition of an assei in a general asset
daxly r e a m income.
a&unt -curs when the a& is .

n
s Mregulaliom -in

disposed of ls r dI& mutt of.'
mssalion. ttmtinrtion. curt&irnent,w
disposition or a businesr. mmufwuring

tbe final regulations delete tbe term

" w i l m e n t . " The final mgulatians also
clarifythat 4 taxpayer adopts bt rule to
terminale genemi asset accwnl
tmatment for an rsset in a qualifying
disposition by reporting the gain. ha.
or 0th- dedunim on the trxpyw's
income tax return for the taxable year in
which the quali .in dipsition -us.
~ n l i - a b u sru
t e. t fMI regulations
add t * a m p l ~o l transadions subject to

PA

the anli-abuse ruie.
EIedion. Some commentators noted
that the proposed regulations do not
address whether tLe election is made by
the common pamnt wrpomtion or each
member of an affiliated gmup, by a
partnership or its partnerr. or by an S corpoa:ion or the S corporation
shareholders. The final q u l a t i o n s
clarifythat the election is made by each
member of an sfi11stJgroup. by the
pafinership. or by he S corporation.

rrSfifFrro"$
.d~*lionr
sed
provide & a t
theeldontoapplytbequh~ions
.
generally is binding on the taxpaver for
computing talabls income as well as
computrng rkernative minimum taxable
income. A wmmearmror suggested thn
b e final regulationsshould allow
taxpyers the option to maLe the
tlmlon for either h e regular income
tax. tht a l t e m ~ t i v eminimum tax. or
both. Tbis rule was not adopted because
of the sepante and parallel nrturr of the
regular tax md nltemtive minimum l a x
systems. Except as otham.iw provided
by slatute or regulst ions. all Code
procisions that apply in determining the
regular taxable income of a tpxpayer
also appty in determining the
atternative minlmum taxable income of
the taxpayer. The final q u l e ! ~ u n shave
not k n txpanded to include any
.
exceptions- Consequently, rn election to
apply section 168(i3(41 for determining
regular taxable income also a p p l i ~
for

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Fder@l R e t r / Vol. 59. No. 195 i Tuesdav, October 11. 19Q I Rules and Regulations

d ~ ~ r m i n i na gt t - t i ~ minimum
26
Part 602
turbl+ inwmd Th-Ion*
I ~ W P &porting and mordkeeping
v4u
-11 as dtsmative minimum -his
wujmments.
*am*" in the p p d d t i s
Ado~Go"~
~
m to d
m
dundant md has k e n deleled from
b e final mgulatioas
- Regulations
Efjeciivt Dote. For r w t s p b d in
A H ~ Y * 26
p u 1~and 602
perria after Dseember 31,1986, in
are amended as loHows:
taxable yaars eding befom h e effective
PART 14NCOUE TAXES
- .
date of the final mguhtions, one
mmmenta~otr a o m m w d d ch.1 h e '
pakyph
ThB
h a ] regulations should provide I
for
pan I is mended by adding .nentry,
lam.nivr
or, nItemativrly,
in numerial order to tesd as followis
prospective elscfion. Anotber
A u b n W 26 U-S.C7805 ' ' *. '
wmmentatoi also requested provision
a l l o w i n g a p r o ~ v s t ~ d o n . ~ ~ w i o n I.168Iibl also issued Ad&
final regulations main the rub of the
26 U.S.C 168(i)(4).
proposed regulations that. for prior
Par. 2.W a n 1.56Wl h a m e a d d
priods, a tnxplyer may use m y
by adding a mnttrm rt the end of
n.roruble method th.1 is mnsistently
paragraph b),in(roduaoy ien. to mad
epplied to h e laxpayer's general asset
0s follows:
-0lrrtlS.
$ rssw-1 ~ d j u s m
cu
~ m t ..mhga
'

-

I . . . m

Dntes

t

T h ~ P n ~ I n g u l a t i o n s a m e f t d v ~ ~(bl***kll.I~(itlII:lkrm
~~
whls
eltction to
p e d u u l aaouots.
prop*y pb& umia
*
*
*
.
yending on w h e r Oaobet 11.
Pu-3. Suctions 1.168(iHI and
1994.For pmprny plscbd Ln u m r 1.168(ij-I am ddrd to read as loll ow^:
after Der*rnbr 31.1986. in taxable
yars ending biota DO11.1994,
I ,.,U(I)-O
Tlb*
m(n(l
h.
the IRS will 8 1 1 0 ~m y mamuable
grnmlmsut-nrkr.
method thnt i s consistently applied lo
This h o n lists fhe major
the taxpayer'sgeneral abstt m u n k
p m p p b s containad in S 1.168(i)-1.
.
. Special Analyse
'

has been dettnnined that this
T-ury
decision is not a significant
regulatory a d o n as defined in EO
12&66. Thenfore. a regulatory
assessment is not rqW.It also b u
k n determined B a t seaion 553b)of
the hdministntive P d m Act (5

Cl.l6Eff)-l

It

U.5.C cbspter 5 ) and h e Regulatory
Flexibility Act (5 U.S.C chapter 6)do
not apply to these regulations, and,

M m t . E O o u n t f ,

(a) Scowb)bfinitions.

(3) Special rules.
~( i ) In general.
~
[ i i l Disposition of all -1s
remaining
in B genera! asset mecount.
liiil
.uH in a
unlifying disposition.
( i v Transections sub* to m i o n

9168[i)(7L

(v)

Anti-abuse rule.

(0 ASMS generating foreigu source.

thegeneml
=aunt(31 Adjusted deprsciable basis ofthe
geneml assst account,
(41 E x p e n d w?3-

.

income.

--

ingen general.
(2) S a m of wdinsry income, gain,,

or loss. *

. ,

determind b dlmtion
md app.nirmmmt o{depmciation

(i) So-

4llowed.
fordetem ining TOmig. .
souroe income, gain, or loss.
I31 -ion
Wid) separate mtqories.
(gl
rubpa to mpture.
lii)

-

(h'ChMfPi.urs.
'llConve*im
a pMna'
'519( 2 ) Other &angst in u*.
(i)Iden~afiwtionof disposed or
converted asset.
(j) ~
fofadjumehb
i
~
on
~
~
dispositions. .
FIElectioh
[I) Irrevocable election.
[Z) T i for making election.
(3) Manner of making election.
(I] E t f e v e dau.
) l .l68(i)-l

+

(I)Unadiwtd depreciable basis.
(1)Uaadju~hddepm3rble h i s of
,

-

.

provisions.

tvl Examples.

'

-

I

[iv) Coordination wth n o m i i o n

,

,

51371

Gsmd -set

m n w

Scope. T h i s section provides rules
for geneml as- amounts under e o n
1 6 8 ( i ) ( 4 ) .Thc provisions ot this d o n
epply only to a w t s for which an
e l a i o n has b e n made under paragraph
(k) of this &ion.
(a)

(b) DeJn~tions.For puof this
seaion. the fallowing definitions apply:
11) Unodjued depreciable h s i r is
herefore. a Regulatory Flexibility
( 1 1 Assets eligible lor geneni asset
tbt hasis of an a w t for purposss of
Analysis is not required Pursuant to
accounts.
section 1011 nlthcut regard to any
section 7805(fl of the internal Flwtnub
Code. the noticz of pro+
rulemalung
Iil
rules
adjustmtnts d w i b e d in mans
Iii)S p c i a r rules for assets generating 1016{a)(?)rind (3).
prectdrng these rrguia~ionswas
foreign source incoma.
( 2) Unadjusted depmibble h i s of
submitted to tbr Small Business
Adrninislratian for comment on its
(2)Groupingr~singeneralam
thcg~nem~osretocc~unii~thesumof
tht unadjusted depredable bases of all
impea on small bwintss.
OCCOU~IS.
Iil Ceneral rules.
assets included in tbe gencnl asset
Drrrfting InJormotion
[ii) Spsdsl ruler
account.
(d)
Determination
or
depreciation
(31 Ad1 uned depnciuble basis of the
The principal ruthor of tbess
allowmcp.
gencml
ossct onvlunt is h e unadluned
.
rpsrIationr is Kathleen R e d . Offm of
Fn enl.
depreciable basis of the general asset
hrsistent Chief Counsel (Passthroughs
and Special Industries).IRS.Hower.er.
IZ1
Swial
passenger
eocount less the adjustments to basis
automobller.
dmaibd in -ions lalC(a)Iz)and 13).
other pemnnel fmm the N and
(el
Disposition
o
l
an
asset
fmm
a
general
I4)Expensed con is he amount of
in
T~~~
~~~~~~t
their developmen!.
assel amount.
any allowable mdit or deduction
m t e d as r deduction allowable for
0 )Smp.
L i d of Subjects
(2) Ceneral rules for r disposition.
depredation or amortization for
Tr) No immedirrts recovery of baris,
purpwes of section 1 2 4 5 {for example,
26 P R Porf I
(i i ) Treatmen! of amount realized
s &it
allowable under m i o n 30 or a
hmmt taxes, Reporting and
(iiil E f f e of disp~jtjonon I general
deduction allowable under seaion 179.
rec;ordl;eeping rquiroments.
assel awounl. .
179A, of 1901.
(t)
Establishment of general
o cmunt S.

asset

51372

-

F d m l Rgister I Vot. 59. No.

Ic) Enobfrshment o , f @ ~ ats*l
d
oaounts--(ll Assets eligiblelor gcneml
asset occounrdi) Gneml a r k . &sets
tflrl mrt
10eitber the ge-l
.
depreciationsystem af section 16B(r) or
dmmativa d e p ~ n t i m
sjwm d

135 / Tuesday. Oxober I f . 1994 I Rules

aswt s t r o u t . hc)l
pcrreml

B&

mccounl must include only m f i s e t r ~lrat{ A )Hmve t h e wm= 4-t
class I I w
further puidanm.
Rev.Pmc.67-56.
19~7-2C 8 . 6 7 4 . and
$601. € i ~ l ( d ) [ 2 1 ( i i !01
[ bthis
) thaptetl:

~i0n1~8[g)me)'b8ccountedfotin ( B ) I ~ a v e * e ~ r n * a ~ ~ l i ~ b l e
de mciotion method.
or rnam general a*ret m a t t . ha
may ~
~ a g.n&
d
~
d &I H ava Lhr o m e ~pplicable nrovety
a-mt
only to tbs extent of the asset's perid:
(D)Have the m e spplicshle .
upadjuaed depmciaMe basis (for if. in 1995. r tarpsyer p b a ~ wnvention:and
in
a
mat wstr ~ 2 0 . 0 0 0
(ElAle plnad in service by h e
m*pa?m$ in Ih*-* t K d bYmt.
u d e r sation t 79 Lo erpenw
md
hi) S p ~ i a rules.
l
In addition to the S17.5W of h a t asset's
Ihs
6en"mi rules in ~ m p (c)(zHil
h
of
r n d j ~ dep-sble
d
basis of h e
'hi' senion- the folbaing
js ~ t . 5 m
and. Lbmfots. only IC~.,SDOQI
the -tmr
may included in,
when eskablishing ~ e n s r dI ~ S &
gaud
ramuntl. However. an
-unz("1 -S
wUithout an I- das*kt
-t
i s DOI to bs included in r general
h e fame d m d t r i f l b d d w - '
uset soeaunt iitbe esset is used bath in ~ 9 t h
r mdc or business lor tor the
in paragraphs Ic)lZ)lj)lBl. ICI. (Dl, and
p d a o n hmme)
,nd in p s r ~ ~ d of h i s on.
lVQu@ inlo
a general a m acCQunc
activity st m y timt duhng the taubb
in whjcb b e & fim p h d jn
(8)
ID
midquansr
convention may only hgouped into 8
mrvimbytbmtaxpa a
(ii) ~ ~ i o l n r l ~ $ - ~ n t ~ t iIFneml
~ ~ Mm u n l
p b d in senice in the =me qumer
jomign
i n c a m 4 A ) & d r tb.!
generate foreign mum income. bob
of
taxable
Unitud h i m r ~ bnip
d
sourn
(C) Amb)M lo the mid-montb
i oO ~ ~ Y ~ p e inlo
d a
incame. or mrnbinsd gross inmmt o i a ~ n v ~ tmay

&.

-

-

~ n Rqubtions
d

(con~--ion la ptmnel uw) of this

mion.
Ic) fitposition oion akwi tmm (I
g ~ n t mUSM
i
occounl-(l] Strop. 'fhir
prapaph 1s)pmvides mles applicable
10 d j s ~ s i t i o n of
s rsws induded in
pnw8l W m ~ tFor. p u r p of
~ ~

this pagraph (el. an n
m in a pneral
y r a t ~ ~ a i sm
dispard
l
of w h n
ohmstship d the a w l is t m n s f d or
when the w t Lr prmnntntly
~3 t hdraw n Ermm uss either in tha
taxpyer'r d o or business or in tlw
p d u c t i o n 01 incoma. A disposition
i n d u d e ths ~ a baxchange.
.
reliremenr.
p h y r i d abndonment. or d t ~ v u d i o nof
M bS38(. A &piiim alSO ocous w be0
an w- is transired to 8 su plies, .
-p.
or rimih e0~0unL BsPosiom
d w not i d u d a , bowtvet, Ihe
m~rerntntof r rvunursl component uf
reel mperty.
[ZfGenrml ruin a dirprrio&i)
No immdiute recowmy of h s i s .
Lmm&iately before r djspori~ianol any
uul ln a ~
nut*laccwnt. the
ryn i s bard u having an mdiund
&is of mra rot pqmses -ion
1011. ' f h e ~ f o m .no lo- k miittd u p o n
&=dirporitioa ofm mrst ftwn tht
general asset .mount. Simihrl?, where

FX(asde~insechon822).DISC ~ h e ~ l ~ * t ~ ~ u n t ~ i ~ * s c
a na ms ~~t its b i @ o f b y ~ s f e t ~ o a
[as d e w in h o n 9921d1. w
s ~ ~ ~ - d ~ ~ - i n t h e - m e m o nm
t bp p l i e s . ~ p , ~ ~ i m i l w ~ m ~ n t . ~ e
of the ~ u b l Year
e and
h s of the assor in the supphea, m p .
pwessionc oorpration [(as defined in
d o n 936) m d its t t l t e d supplier,
la)Pssstnm: auimobilw for which or
sccsuntmil] tern.
the depredabon allowatloe is limited
(ii) T m t m c n t ofomount m l i z e d .
may h included in a gentml a d
A n y amount m I i 4 on s dismitjon i s
requirements ofpangraph under secrion 280Fhl must be gmc&
l-unt
if
inlo a
gtnersl esset I ~ ~ O U - I ~ r e w i z e d r s ordinery income
[cy2)[i)or &ir man an s a i i s f d . If.
h ~ v ~ r r r t h . i s c l u s i c n o f t h - a s ~ ~ i n ( d ) h t e r m f n a t i o n o f d e ~ e i ~ t i o n not^-ithstanding~yothcrpmrisionof
e general ass(account wsults i n a
olloupncr---(>)in gmtml. &-*lion
sub:itle A of h lnttrnal Revenae G d e
subrrtantiml distorti rin of income, the
allowan- are determined for f m d ~
(Code))lo the ek-tent the sum of the
Ummixsioner may dirqrrd tbe
gencra! asset account by using the
unadjusted d e p d a b l e basis of tho .
genera) *sw rmunt election
make ~pplicablrdepretiation method.
gvneni e s d ewurrt and an! rme~,m.i
convention for the cos: (as defined in paragraph [ b ) [ ~of
)
my m l l w t i ~of
~income
~ f or expense * c o v e v period.
aswts in the account. T h aepreciatron
thls sectton) lor asserr in Ule e ~ ~ o u n t
n e w to clearly wfled incomt.
allowantxs are d e d in II
(6) A gsneral wut account shall b
e ~ m z dany
s amounts previously
depreciation resen'? aacunt for eadr
mated nsa single usst for purposes of
recognized as otdinory income upon the
g e n e d a w l MX;OUnt.Ths h l l 0 ~ 2 for
n ~ disposition 01 other 8
s in chrr
~
~
applying lbe Mes i n 5 1.861 - 9mII3)
depredntion under *is -ion
(dating to eUocation md
amount. The recopnitha end character
apponlonmtnt o f inrerest cxpenu
.
mnstiiutes the arnwnt o l depm'stion
of m y examount = l i d are .
aHow8b1t under m i o n 16713.
under the asset method]. h genenl
determined undar ather eppliable
(2) Special mlefor pas.wnper
account b t ~&eratesincome in more
provisions of the W e (otber than
~
uF* P m m
~ f i f a p p l ~ i n~g sections~1245 md 1250
- or provisions of
t h a ~one grouping or ~ n m (statutory
c
seaion 280F(a),I h e depm5uion
and midual) i s a multiple cstegory
the C o d e thrt treat p i n on disposition
4-ullt
asset (as defined in 5 l.B614Tlg){3)lii)). a l l o w m a for a general
as subied to d o n 1 2 4 5 or 12501.
m d t b c i n c m t y i e l d ~ m t h e g e n e n ~ rs~blishedfwpa~ngcrrutomobilr#is ( i i i ) & f l ~ o / d i . t p o ~ i t ' t i o n o n o , ~ n e m. /
limited Ior each taable vear to the
asset m
t must k determined by
asset occount. The unrdjusted
in Kction 280lTaJ
applying the mles for multiple mtegory arnount p-bed
depreciahlt bas15 and Ihe depnxhtion
s e t s LP tbt general asset amunt
multiplied by the oxof h e alrmlmr
-me
tht general rsst! m u n t m
of automobiles originally included in
were a -1e
asset,
not efimed as a mu11 a dsposition
i
(21 Gmpmg o w in pneml as&
the account over the numbr of
of an nswt born the general msel
occaunts--Iil Ceneml rule. If a
automobiles dispwcd of during th6
accoun I.
tmpyer m u the e l m o n under
taxshle year or in any prior taxable year
( i v ) Cmrdinotion II-I:~
r t o n m c q ~ i l i u ni
pawupit 1k1 of this W v n . u l s that in r tnn-ction described in p a m p p h
pmrisions- For purposes of daennining .
ere subjecl to t l ~ a
t l d o a are
(cli31Iiii)Idispo~itlmof ar! asset in e
the basis o l rn asset equiwd in a
into one w more general asset amounts. quallIying disposition), {e)[3)(iv]
uansaction described in paneraph
IS h a t uc eligible to be grouped
( t r a n u a i o n r s u b i ~to m i o n
(el(3l(iii)IBl(4ofthis section (rehring to
into a single general asset amount may
lmti H7)).(e)[3)(v] (anti-buse rule).k1 cenain nonrecogaition provisions), t h e
tK d i ~ i d o dinto rnom than one general
amount of ordinary income recognized
(assets subjea 10 recapture). or (h)(1)

I

mum

-

-_ -

.

/ Rulcs and Repulations

Federal Register I Val. 59

53373

1
ttI(2) is ~eattkdas
*underhi;
unoun! ol p i n q n i d on the

filed (indudingrxtcnsimsl income tax
return tor the cr*sbls y t u in which the
d i s p ~ iion
t WW. For p u p o w of
3;sposi lion.
' f [Y) f i a m p l t ~The
. Following e x o m p l ~ applyingprsgmph (e)[3)(iiilthrough (v)
ofthis section, see parsgraph (il of h i s
A u s t m t e the npplicat ion 01 (his
section for identifying Ibe unadjus~cd
de Rcirblt krir ol r d i s w *cset.
m p k 1- ti) A. calendar-ww

we

r,

Disposition o j d ! assets remaining
in o general asset occount--fAl
Optional terminntion oj a generef ossd
amount. Upon tht disposition of rllol
the as*&, ot the last wet, In r general
usset account, Iiaxpytr may epply this
paragtapti (el(3)(iilto m o v e r the
adjusted dspmiable basis of the gancral
111

nt bar m d c p m o t i m method o i Z l Y l

.

(iii)Disposition ofun asset in a
quoliJylng disposit ion-4 A1 Optional
determinati~oo j h amount ofgain,
lass, or other deduction. In Lhc t a s of
~
r qualifying d i s p t i o n d m ssfet
(*bed
in parags ph [tl(31[iii)(Bl of

this d o n ) , r twpeyar may apply this
pangraph (ei(3Hiii) tralhnr than having
parsgraph (el(21ol thir m i o n apply).
Under thi~
pwnpuph (e)ls)[iii), general .
asset r w u n t (ratbur than h o v i ~ g
rssel uxmt matmeat for the asset
parags b [e)[2) of this d o n rpply).
Undar t i i c psragmpb (el[3#ii), b e - - l m i n a t e ~as of thm 6 s t day of the
general m a a u n t terminal# and h a w a b l a y e u i n which Lht qualifying
dirgacltjm m,
and t b b amount 01
amount o i gain or I- for the genera)
gsia. 1OX othar dedudjm for the
rrrst ~ c c m mis
t d e t m h d under
assst if detennind by taking into
d o n 1001(b) by taking into oecount
locount the -1's
adjuslsd bsis.
the adjusted depmdsble ksis of the
djusted bsb of the * r s t t at O l e time 01
gtnenI rm acxx~unt~t tbu tims of the
Iba d i s p i t i o c l squk tbe wd)usted
dirpasitian. %s m t i m md
dcprrdabl* ksis d tho urat lew the
chvacteroithtgainwlossars
depndatiw allorred nr rikwable for
datermined under o h applicable tbt W,CPQLPULD~ by using the
provisions of the Coda. except that the
depreciallon mtthod, re~ovtryperiod.
amount 01gain m b w tu JCCtiuu 2245
. md anvention appliubk 10 the
lor d m 1250) is b i t & to tbe
of h e d e p e a t i m allowed or allowable genera1 rs3et m u n t in which the asm
was bduded. Tbt mmgnitlon and
. for the general &*OCOunt,indudmg
my r x p c n d cwt (or tbs exces ot the chencte? oftbc gain, loss, or alher
deduaioa are determined under other
~ddiliona)dcprsdetion alloWhdor .
allorr+ablsfor the general assel rmurrt). applicable provisions of the Code.
except that h e amounl ot gain subject
over any amountrc previously -+zed
lo sKtiWI 1245 for scction 1250) i s
es ordinary income under paragraph
Iimittd to the I t w r ofle#21 ofthis section.
(1) Tbe depreciation allo~vedor
lB1 E x m ~ l eThe
. following ewmpl t
,

.-.deprscimtion
i
r ~ ~ e r v e tho
of
is
*-.,
11lcs~o.m-srr)~ra~y2~
tii) On Februuy a, 19W. R M H S thr
m

t

S2.aoO

aucbine that C D SB.Za0
~
10 u unmhttd
fw19.W.Under -pb
[tHZ)(i) of
&is csctwn. thk d i n t h u r a rdjuctd
h i s 01 taa.
(iii] On its 1tu rrturn. R
rhc rmomt maiimd of 54,000
irrrnmebrowsNChuawnI~~

puasaph ItN2Xi) 01 tirrs s d o a . chw
-chinhaw mn mdjusted h i s of xrm.
liil On it3 1997 tax m m , R t r c ~ g n i r c s
Sr .W as odinaq i
m 1:hc uudiusrtd
depmiablt bsir o f 510.000. plua b e
npenscd w of SO, I- the amount of
S9,WC)pm,iwsly noognmd as wdinay
incamel. Tbc m a i t i ~ nand chvllocr of the
exress amount ttSized oi f m
1 S l . l ~ SI
- .orK)) are determined under
applrcpblt p v i r ! o n r of rh* W otbm h a
rsction 1245lmth IS W i o e 1231).

More0r.c~.tht unldluntd dcprttiabk basis
a n d dcptuiation rcscm of Lhc - t
ua
not a f f ~ r e dby the disporition of rhe-

+

,

illustrates e applicabon of this
paragraph ItrlCf)[iil.
Errmpk. (ij T.Icpltndar-yearcorponliorc.
mainbins I p m l ISM su;wn~fm I .MYI
calcularws The alcuhlors cost r toid 01
SW,000and w t r e p b u d inscmct i m IW.
Assume this gtmd arret ecmunt h l b I
,

dIowablt i w the assel, induding any

e x p e n d c ~ lor
t ht additional
depr&ation allowed or allowable for
the ssseth or
( 2 ) The e r m s orl J T h original unadjusted
basis of t h e general asset
account plus. in the W r ofd o n 1245

dep-able

dcpmiation m e t h e of Zm percent declining
n c o e pcricd
~
of 5 yean. and I
prppcrty origindty included in the
halFyca- mnvtaliou. f dms ao!m&t r
g t n e n l n s t t account. any expenrcd
-Ion
179 election lor any of the
WSI: over
calculators.In 19%- T sells Z W of rhc
(ir) The c u m u l a ~ v eamounls 01 gain
o l m l a r o r r to m n uerehted p p p for a fotd
prtviously recognized as ordinary
&lance.

ofS1O.OW uld rcmpirti me 510.000u
ordin- i n c m in w m d a n a w ~ t h
p.ragnpki Ie][Zl of this smztion.
mrcbines. Thus, the dcpmcimtioa mlb-ancc
lii)C h M a d 26. I 997. TseIls h c
fa.the rcmunl im 1997 IS 5f.93
temaining blculato~
in the gcntml asset
l l S l U . W - 55.2011)x404$)
rccrwrrr t o la uhtelaltd put! for 535,000. T
131 Sp~riulmidi1 In general. Tbis
chto apply pv;rgmpk It)ISWiilof *is
paragtapb (e)[31 provides *e rules for
s m i o h Ar r m u l t . the artaunt IemjnaIH
ltminating general a s e t account
md gain or loss 1s dcremrned lor the
ocmnt '
treatment upon cenain dispsitionr
(iji) On he Btt ofdjspsi~,on,tbc
1Yhrle the rules under p a r a p p h
~diurtcdbtpreciabie b s i r of the accounl is
Ie1I3)Iii) and [iii] of this Section sre
S23.MQ (unadjusted depreciable bar~sol
optional rules. Lhe rulw under
SbO.O[X) less
depmirtion r l l a ~ e dor
paragraphs Ie)(3l(iv] and ( v ) of his
allowable o f S 3 6 . W ) . Thus, it 1997. T
section am mandatory rules. A laxpayer mognias gnin 01 S11.960 [amount m a l l z ~ d
applies paragraph [e)(3)(iilor (iii]o t t b i ~ of SJS.IX1I1lers tbe ad~untddepnoablt b a s
&on
by reporting ths gain. l o s , or
o l 5 u . W 01 Thr gmin of 511.W IS subjrn 10
nber deduction on be taxpayer's timely swtion 1245 to the extcnt of thc dcpmciation

income under tither paragraph b1l21 a[
th~ssecfim or section 124 5 lor section
1150).
[B)Quolibinr! diswsitions. A

quaiifying disposition is a disposition
Lhal does not involve all he a w k or
the last rsser, remaining in a general
asset ncCwnt and that isI11A direct mulk of a fire. storm,
s h i p k m k . or oher casualrp. or from
theft;
(2).4 charitable contribution for
which a deduction i s allowrble under
section 170;
(3)A d i e d restilt o[ a ces~ation.
terminatinn. or dispositi~nof a

business, manufacturing or olher

-

51274.

Federal R@er

/ Vol. 59,

No. 195 1 Tutsday. Oclober

11, 19%

I Rules and Rqularions
.

income p d u c i n g proca9. opratioa.

.

-

krllowr. ASof w
k 31. I-.

tnawithctmding

the

b

t

w

p

b

f a c ~ i t y , p ~ ~ L , w o h t r ~ i t { M h c rdt h ~~ ~ ~ ~ ~ ~ ~ r '- 'Ic)l3Miii~A]oFtbis&oakm
w
~
b
t
*
&
~
by transfer to 0 ruppbs, m p ,
thmdim*tbs-p'urthS23-rOa
~ptiondrula)mndmu~mrkeths
Thura6 otb*t ' tw7ntbs
ud'rdiurt-tr
lo
wried r s m -n
si mil
u amount):0t
dtprstiabbt h i s a1th,m n t is d d
fr) A m c t ~ o nd. e r b a . .
s,BO,DMI
S13S.M[I (5180in p . m v p h IeH3)(iiil(CN?)
tmmaction -bed
in puagrspb . . ursldjuneddtprai& b
i
r OTQS.OOO
*mush ( 4 ) d t h k ~ j o n .
(B) Ahsivt tmnsucLiom. A
(e)(3](iv) of this ~
b (prtaini~g
n
to ,
th,h m rnuhinm). ~ n thc
d depmia~i~
,

trrn&ions

s&Wto section 168Iilt7)l.

rsrrrvt of the ac~m111
u

.:

- ...... .

7. .:-,%

-

-

,,

~~~i~
& ~hR
n C
W Ii s d b w in this

!eM3)(v)lBl if k e ! r s ~ c t i o n
towhi& a ~ ~ ~ m a g n i tstaionotthsion
S S J . t~ a~ s ~ ~ 1 s ~ ~ ~ k c r t h psnpph
u
depnciatioo rllowed ~r sllmble 01 523.4I10
Code appli- (determinedwilhout.
r e g a ~ t o ~ i s & o n ) , s u & a r s ~ a n- ~ r ~ b ~ ~ l n ~ ~ o f ~ b a r 3 1 .
I-).
Comlapnuy*t&depascirtlon
1031 or 1033.
'

c n ~ l / . d ~ ~ o p ~ j f i n g d i 5 ~ 5:'~~iiDl nRn n a a i a t h u m m t i n 1 9 9 7irS25.920

on u g c n e d asset account. If lhe
tarpayer applies Lhis p m g ~ p b
(en3)(iii]to a qualifpgdisposjtim of
an asset. tbtn(1) The rust is removed lrom tb8 .
genemi 8- m u m t u of the first day
ot the taxable y w r in which the
ition OW^

9 u a l i fving dis

mthcuna$&ddoprrcirblebuis
of the geneml assel hecount i s reduced
by the unsdjw'sd depr#iablebssis of .
the
d l h e first day of h e t u b k

-

( 1 ~ 1 3 s . m sm.too~
x row].
livl For t s 1997 n m . g a i n u locr fw
each of t h e Lhtst muhimu fit h s Ohio phnt
1, deemipbd rr lotkwr. T&rduprccktioo

-

dlowed ol dlowlbk b 1-7 for d
machine i n 5 1 . 4 4 0 ((If1s57.8001 M
40%) 1 21. fhw. h .dm4 b r i ~
af d

mrchise under m ~ i 1011
w
b SS.760 lfhr

a d r u t t d kprtambk h i e pl s7.m rmwrvsd

bmhe-t*I)udmL*n
''lUwod or*l'ornb'e 0fS'.4'0 in l W T L
I wit. the less m
i
d ia 1097 f o r d
rnachiac Ir S76[1I S 5 . W

rubw

m~~
,231.

- SS.tW),which is

-

d o n with r principal purpose d
dieporing of
hmsnetal
pneralassctamuntistsddbytha
f 6 8 f j ~ 7 ~ ~ * ~ a ~ 1 i n m g e a v h~l r~a .o u n l i n d e r k t o u t i l i ~ m
a-Un'
-sferred
in mwdon . -iring ntt openting loss orcndit.
depreciation dlowed or allowabk Tur
b e w-1
of ~e end of
t-ble
.
d e w in
16Bti)(7#8)
Tht fad that a taxpayer with a net
l ~ e m i ~ ~ g
oparating loas carryover.rrrr vtdit
ytat immediately p d i n g the year of
disposition. computed by using iho
certainnonrtmgnilion~s~dions),tbse a ~ o v t r t r a n s f c r s m * s m r o a t e l a t t d
dtp-aljm
method. e v e r y perid.
mmfe*r must remove m s f e m d
p t r s o n or transfers ~n asset pursuant te
and convention nppliable to art
as*c from the !Pmral
-unl
an arrmgemtnt wbcre tbe asscf
g e n c m ] ~ t - ~ t j n w h i & i h e a s ~ ~ f ~ e ~ ~ t d a ~ ~ f ~ ~ continusr~oboused(orisavailableIw
~ b l e Y e ~ i n ~
which tba t r i c i i a n a m .
In
usel by Lhe IPxpayer pursuant to a lease
was i n c l u d d and
addition. tb@ adjustmeah to ulr ~ e a t m l (or ?thmisa) indica~es.absent strong
(4) For puofdetermining the
aswt Q s O l l a i d @ d b djn paragraph
evidence to b e cmtnr)..
he
amount of p i n realized on rtrbxquent
IeIl31Iiii)lC)lM through (41 of Ifil5
tramattion is describd in this'
dispositia~hatis &pct to ordinary
m i o n rnua b made. The transfern is
~ p p [e)[3)(v]IB).
h
income treatment under paragraph
(e)(21(ii)pihifdan,&eamoun:of
boundbythetransleror'seleclionunder
l i ) & s t t ~ g e n e r ~ t i n ~ j o ~ ,i p ~ ~ ~ ~
p a a w p h (k) ofthis section with
incorn411 In general.fnis paragraph
c-1 m j b m.esm 10 the
any
respect 10 so much of;hemssel's basis
(f) provides the tulw Ior deitnnining
asset is dis
rded.
. t n n r I t m as d a
the mum ol m y inmmc. pain. a loss
(Dl
me provisions o f r h ~ i n L c bands of 4
not e u w d h e w e t ' s adjusted basis in
m i z e d . and the appmpriate settion
p m g t e p b (e)l3)(iii) m jllustratedbj
the bands cfthtr tr~ndemr-Lf all of the
W ( d ) separate Iimilation catego9 or
the following example.
a z, o,cndu,w carpada.
assets. or Lhr last u ~ t in. a gsnenl w t cuepin IOIan) torcign SOY^
account am ~ n s f ~ ; t e th*
d . tmnsfem's
income. gain. or Iws recognizd, on a
mamains ancenenl amaunt tor I Z
h i s in the as*
O r % s M mnsfernb k
disposition (within the meanins of
rna&iaa. m
b machintmtJ s l 5 . m
equal to dl- adjuded depreciabte basis
pamgtaph (t)(l)
d t h i s m i o n ) or an
r - d p l m d inPsrvicein 199S.Oftbc 1 2
rrarbincr. nincmarhintr t h r ~ rdma)d
nithe general asset rccounl as of the
w!in r general asser o u w c t ~ h s t
S 135.000 art usrd in 3's Kznhr*)' PI-L md beg inn in^ of bt txar;skmr's taxable year consists of -1s
genemling both bnited
Li;mro+chhne t b t
tgld of 5 4 S . m
in wh;&
mnsaaion wcurs,
Stat= and foreign SQUKElncorne. These
uwd Z's OhbPhL A-c
lbir ~ - l
d m s e d by be amounl of dep-ation
rules apply only to &spsilion to
**
dep-tiD'
=Ibod
sllocrble
to the transferor for the pear ~f which pragaph (e)lZI lgencral
Zw psrcent dedining bshnce, 4 mrtcxlr-e~
y u v 01
~ s )mn,
r kif-year C D ~ M P ~ ~ P ~the
. knns'er+
disposition rulesl,(e)U]{ii) (disp~sitioll
I v l A n l i d u s e r u l d A J lngpmeml. ii of all assets mmaining ~n a general r w c
z d m mt m&e R sectim 179 tieclion ior
any the mrchints. hr o f ) . n u ~1, 1997.
an
gmeral assel acuount is
account). [u)(;3){iii) [disposition nf an
disposed ol by a taxpayer in a
the 6 e p c i a t i o n r m t for h e acrnrlnl i s
asset i
n I qualif5ing disposition). or
S91.W
tnnwiond & M
in pagraph
(e1l;slIv)b n t i - a b w rule) of lhis -ion
Iii) Op May??. 1 ~ 9 72.x 1 1 s 1~ c n h
le)13)11-)(8) ofLhis W j m . general 3.~zuIwnrringp b t in Obi0 ma umlmu , acraunt lreatmenl for the aswt
a p g ~ ~ ofu ordinar).
m
inrome. p,n.
. ~ - T h e r a l e r ~ t w f f b d i o a t d t D d terminntw
~f
ss olthe firstday ofthe
or l o s 4 i ) S o u m deremtinrd b~
Ibr tbrr mscbinn at tbe Ohio plant i s
ullocurion and opporhonment of
taxable year in which k e dispoatioa
S5.m.
this -on
is
WCWS. Conseque~tly~
the taxpayer must d e p m i ~ l i o nallo~~td-Tht
amount of
q l i a i i e n dispsitim
~
under paragraph
determine the fUnOunt of gain, loss. or
any ordinary income. gain. or loss that
dc)i3Hiii)[B)(J) of &is -ioE.
z ch-a
lo
is mognized on the disposition of an
rpply p~tsgnph(e)[SUiii) 01this ttction . orher deduuion attributable to h a
I : IFo~
r 2 s !997 mum. Lht d t p m t l o n
disppsition in rhe mamer d e b e d in asset in a genenl asset s m u n l mua Im
. ~ l l - a ~ c e fm he-uht
i*compved w
paragraph (t)lSl(~ii)(A)or ~s M i o n
apponioned b l w e e n Uniied 51atw m d
lht d i s p i t i o n m:
(3)The depndation reserve 01the

year in

-

(iv) Tmnsactions subject to &'&

,,,

fiomT.

-

'

1

(3) S&n

W / d I epemtt cofqericj. incame lax trssty dmtquimBe-

Lf the arsets in J e genera1 ma .axrunt

genemm f d g n m u m incane in ~ U
than m e e p u l t a utepy mdcr
section gMIdI(l1 or maotherem of
fhe Code (kt ncampsc.
vtoted
as fortip c o r ~ a
u n bd m
SM@[XO)), w undtt United Statm

Ig) ~ ~ t s s u b j e to
c tmaprum. If the
in a p e r o l r~
account is in-&
as 8 m l t ot thr
mptura J m y allbwablma d i t or
deduction (for example. the h i s
Pdbstmenl JD? tht remph* e m w n t
under senion 301d)(21, 5b(cM3].
1?9(dKtol, ?79A(eN4)1,gumaf asset
+ aamunt m m e n t for the w t
terminates.s of the Erst day ofthe
taxable ywr in which rbe ~ o p n r n
bsir cf m

-

b

F

I

went ~ c e u r sConsequently. &
laxpayer must temovt Lb+ rgsl

the
general asjot ucouni * o l h t day and
must make tht djushenu lo h e
.
gcoeral assst *crsount u
k
d ia
-graph (t)(3Kiii)(CI(21 thmugh (41 of
chis saFtioe
b)(Zhon,ges in u s 4 11C o n m i o n to
. pasonu1 usc. An u s e l in Ip m l asset

k

I

-

-

a u n t baunx ineligible forgents1
rsset amaunt munmt if s ta*pe)rr
.
.
the kpel in a perxrnal dt-ity
, . I during r tl*able yes-. Upon a .
:I-- canversion to persod use, &a laxpapr
.' must remove tbe asset h m h e general
SZ
-:eaount as aftbcfimday oftha
, .,--.- - asset
taxableyearinwhicbtha~ip-

F

:-

I . .%+-

'

?--.;to

md must htbs adjustments
k h general user na:oun! dt?slritd in

appurtionud to tbeappUubk xpuate
limitation to k ,
megory orategbriss undet tbe formula
determined repuately far - 6 4
. in h i s psrrrpph (fM3l.For p
w of
typs* of intbe uaoplpt 01 " h i m this rormuk. tbe dowed &+tion
mum in-.
gain. or hss fmm h
daduaions WJW dsttrminsd for the
dispositian of on *rrst" IU
dstrrmiwd
under t b Tormula in pur~popbIl)lZNil)
of t h j 5 d o n ) muSibt a110~~bd
md
'

iwign t u &it

N

i d u d t d in a g
d as@ auaunt.
!Except as prwided ia purpaph
Ic)(l)(iil[Al. (e1l3). W. or FbMl) of tius
(21 Other c h u n g ~in use. IRtservedL
section. nn eelam made undm this
li) Identification o j djspsed or
conwncdasset A taxpryerrmy use my sedan is m w b i e 4wiII b
masonable mabod that is consistently biadbg on the rurplytr far computing
applied IU tbs w y e r ' s g e ~ e nwl t
tmble incoma iw tbe taxable ear Tor
which tba dadion i s m d e M lot all
a m u nts for pqmse ol determining
nrbstquent t w b h carr As e l d w
the unadjlrstd deprrcimbk bsis of r
undet h i s ampap F
l ismade
disposed or e c ~ l v u l s dasset in r
~ p m t e l yy sacb ptrson o d g afi
* r a d o n d d l d ia puagraph
ossei 10 which tbis -on
applies (for
[e)IJ)liiiI (dispodtion of an arrct in a
exampie. by each membr of a
- qualifying -tion).
[e)[3)liv)
cwlsolidsted p p . at b e prtnenhip
luonst3ions subw to e m
level [and DM by tbe p s r ~ l c rstpar~tely).
I G 8 ( i l ( 7 ) ) . (+)(3)[v) (anti-abustmlcl. (d
or at the S crrrparatian level (and not by
(assets subm to m p t u m ) , or [b)(l)
the shareholder ftpartly)).
(convmion to perrum1 w)of this
seaioa
12) TimcJor making e l d o n . The
election to apply this saction shall be
[j) Effect ofudjurtmmts on prior
made on Ibt iaxpyer's timely filed
disposi5bns. Tbe rdju#mtnk to a
genrral asset ~ u n under
t
paragraph
(including exrensions) incbme tax
return for tbe tmable year in w k c ! the
e 3 i i3
3
1 , or
assets jnelxted in he gmtml ssse!
1h)ll) olrhis section ham no eIFm on
eccount are p h d in servim b) Ibe
the recognition andcharacter o l prior
taxpayer.
dispositions sub)- to p m m p h (e)(z)
of !his section.
!3 Monntr ojmakhg eleaion. In b e
(k) E 1 ~ t i o d l hl r ~ o h l dtction.
c
year OI eledian. a taxpayer makes tha
If a taxpayer make an e l t a m under
eleclion undm this sedw by ryping or
lhis p r a p p h &I, the taxpayer c ~ n m t s lqibty printing ot the top of ths Form
to, and b p e s to apply, all oi the
4 569, "CENEKU ASSET A m U h T
provisions of this sectinn to the assets
EECTLON W E UNDER SECnOg

paragapb (el(3Wiiil(C)I21Chrol?gh ti1 of

ais w o n .

d

I

-,

1.

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~~Airr&~curn~tNU~&~~#-'~
;.--* -::;
1
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- LlHMR THE PAPERWORK --

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-,
RED
U . m A C T . ;-:
.'
'. -. &.r The autbwity citation far p r t ' .
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.
. j 602 &nttouer to mad u follon.~:,
I <..'A&"@
Z6US.C 7m5.
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