AMENDMENTS TO 1954 CODE WITH RESPECT TO PROPERTY ACQUIRED FROM RETIREMENT METHOD CORPORATION.

SEC. 95. AMENDMENTS TO 1954 CODE WITH RESPECT TO PROPERTY ACQUIRED FROM RETIREMENT METHOD CORPORATION. (a) General Rule.—Section 372 of the Internal Revenue Code of 1954 (relating to basis in connection with certain receivership and bankruptcy proceedings) is amended by redesignating subsection (b) as subsection (c) and by inserting after subsection (a) the following new subsection: “(b) Adjustment for Depreciation Sustained Before March 1, 1913, in Certain Cases of Property Acquired From Retirement Method Corporations.— “(1) In general.— If the taxpayer has acquired property in a transaction described in section 373 (b) or 374 (b), and if any such property constitutes retirement-straight line property, then, in determining the adjusted basis of all retirement-straight line property held by the taxpayer on his adjustment date, adjustment shall be made (in lieu of the adjustment provided in section 1016 (a) (3) (A)) for depreciation sustained before March 1, 1913, on retirement-straight line property which was held on such date for which cost was or is claimed as basis, and which either— “(A) Retired before acquisition by taxpayer.—Was retired before the acquisition of the retirement-straight line property by the taxpayer, but only if a deduction was allowed in computing net income by reason of such retirement, and such deduction was computed on the basis of cost without adjustment for depreciation sustained before March 1, 1913. In the case of any such property retired during any taxable year beginning after December 31, 1929, the adjustment under this subparagraph shall not exceed that portion of the amount attributable to depreciation sustained before March 1, 1913, which resulted (by reason of the deduction so allowed) in a reduction in taxes under this subtitle or prior income, war-profits, or excess-profits tax laws. “(B) Acquired by taxpayer.—Was acquired by the taxpayer. The adjustment determined under this paragraph shall be allocated (in the manner prescribed by the Secretary or his delegate) among all retirement-straight line property held by the taxpayer on his adjustment date. Such adjustment shall apply to all periods on and after the adjustment date. “(2) Retirement-straight line property defined.—For purposes of this subsection, the term ‘retirement-straight line property’ means any property of a kind or class with respect to which (A) the corporation transferring such property to the taxpayer was using (at the time of transfer) the retirement method of computing the allowance of deductions for depreciation, and (B) the acquiring corporation has adopted any other method of computing such allowance. 72 Stat. 1672 “(3) Other definitions.— For purposes of this subsection: “(A) Depreciation.—The term ‘depreciation’ means exhaustion, wear and tear, and obsolescence. “(B) Adjustment date.— In the case of any kind or class of property, the term ‘adjustment date’ means whichever of the following is the later: “(i) the first day of the taxpayer’s first taxable year beginning after December 31, 1955, or “(ii) the first day of the first taxable year in which the taxpayer uses a method of computing the allowance of deductions for depreciation other than the retirement method.” (b) Effective Date.— (1) In general.—The amendments made by subsection (a) shall apply only to taxable years beginning after December 31, 1955. (2) Exception.—The amendments made by subsection (a) shall not apply with respect to any taxpayer if, before the date of the enactment of this Act, there has been a determination, for any taxable year, of the adjusted basis of retirement-straight line property of the taxpayer of the type described in section 372 (b) of the Internal Revenue Code of 1954 (as added by subsection (a)) by the Tax Court of the United States, or by any other court of competent jurisdiction, in any proceeding in which the decision of the court became final after December 31, 1955, and which established the right of the taxpayer to use the straight line depreciation method of computing the annual depreciation allowance with respect to such property for Federal tax purposes for any year.