§ 1255. Gain from disposition of section 126 property
(a)
General rule
(1)
Ordinary income
Except as otherwise provided in this section, if section
126 property is disposed of, the lower of—
(A)
the applicable percentage of the aggregate payments, with respect to such property, excluded from gross income under section
126, or
(B)
the excess of—
(i)
the amount realized (in the case of a sale, exchange, or involuntary conversion), or the fair market value of such section
126 property (in the case of any other disposition), over
shall be treated as ordinary income. Such gain shall be recognized notwithstanding any other provision of this subtitle, except that this section shall not apply to the extent such gain is recognized as ordinary income under any other provision of this part.
(3)
Applicable percentage
For purposes of this section, if section
126 property is disposed of less than 10 years after the date of receipt of payments excluded from gross income under section
126, the applicable percentage is 100 percent. If section
126 property is disposed of more than 10 years after such date, the applicable percentage is 100 percent reduced (but not below zero) by 10 percent for each year or part thereof in excess of 10 years such property was held after the date of receipt of the payments.
(b)
Special rules
Under regulations prescribed by the Secretary—
(1)
rules similar to the rules applicable under section
1245 shall be applied for purposes of this section, and
[1] So in original. The comma probably should not appear.