TREATMENT OF ABANDONMENT OF LESSOR IMPROVEMENTS AT TERMINATION OF LEASE.

SEC. 1121. TREATMENT OF ABANDONMENT OF LESSOR IMPROVEMENTS AT TERMINATION OF LEASE. (a) In General.— Paragraph (8) of section 168(i) is amended to read as follows: “(8) Treatment of leasehold improvements.— “(A) In general.— In the case of any building erected (or improvements made) on leased property, if such building or improvement is property to which this section applies, the depreciation deduction shall be determined under the provisions of this section. “(B) Treatment of lessor improvements which are abandoned at termination of lease.— An improvement— “(i) which is made by the lessor of leased property for the lessee of such property, and “(ii) which is irrevocably disposed of or abandoned by the lessor at the termination of the lease by such lessee, shall be treated for purposes of determining gain or loss under this title as disposed of by the lessor when so disposed of or abandoned.”. (b) Effective Date.— Subparagraph (B) of section 168(i)(8) of the Internal Revenue Code of 1986, as added by the amendment made by subsection (a), shall apply to improvements disposed of or abandoned after June 12, 1996.