Investment Credit Recapture Exceptions

§ 50. Other special rules(a) Recapture in case of dispositions, etc.Under regulations prescribed by the Secretary—(1) Early disposition, etc.(A) General ruleIf, during any taxable year, investment credit property is disposed of, or otherwise ceases to be investment credit property with respect to the taxpayer, before the close of the recapture period, then the tax under this chapter for such taxable year shall be increased by the recapture percentage of the aggregate decrease in the credits allowed under section 38 for all prior taxable years which would have resulted solely from reducing to zero any credit determined under this subpart with respect to such property. (B) Recapture percentageFor purposes of subparagraph (A), the recapture percentage shall be determined in accordance with the following table: If the property ceases to be investment credit property within—The recapturepercentage is: (i) One full year after placed in service100    (ii) One full year after the close of the period described in clause (i)80    (iii) One full year after the close of the period described in clause (ii)60    (iv) One full year after the close of the period described in clause (iii)40    (v) One full year after the close of the period described in clause (iv)20    (2) Property ceases to qualify for progress expenditures(A) In generalIf during any taxable year any building to which section 47(d) applied ceases (by reason of sale or other disposition, cancellation or abandonment of contract, or otherwise) to be, with respect to the taxpayer, property which, when placed in service, will be a qualified rehabilitated building, then the tax under this chapter for such taxable year shall be increased by an amount equal to the aggregate decrease in the credits allowed under section 38 for all prior taxable years which would have resulted solely from reducing to zero the credit determined under this subpart with respect to such building. (B) Certain excess credit recapturedAny amount which would have been applied as a reduction under paragraph (2) of section 47(b) but for the fact that a reduction under such paragraph cannot reduce the amount taken into account under section 47(b)(1) below zero shall be treated as an amount required to be recaptured under subparagraph (A) for the taxable year during which the building is placed in service. (C) Certain sales and leasebacksUnder regulations prescribed by the Secretary, a sale by, and leaseback to, a taxpayer who, when the property is placed in service, will be a lessee to whom the rules referred to in subsection (d)(5) apply shall not be treated as a cessation described in subparagraph (A) to the extent that the amount which will be passed through to the lessee under such rules with respect to such property is not less than the qualified rehabilitation expenditures properly taken into account by the lessee under section 47(d) with respect to such property.