1 298 demnation of (A) property used in the trade or business 2 or (B) capital assets held for more than 12 months shall 3 4 be considered losses from a compulsory or involuntary conversion. 5 In the case of any involuntary conversion (subject to the pro6 visions of this subsection but for this sentence) arising from 7 fire, storm, shipwreck, or other casualty, or from theft, of any 8 property used in the trade or business or of any capital asset 9 held for more than 12 months and held for the production of 10 income, this subsection shall not apply to such conversion 11 (whether resulting in gain or loss) if, during the taxable 12 year, the recognized losses from such conversions exceed the 13 recognized gains from such conversions." 14 15 16 17 18 (c) TRANSFER OF FRANCHISES. (1) IN GENERAL.-Part IV of subchapter P of chapter 1 (relating to special rules for determining capital gains and losses) is amended by adding at the end thereof the following new section: 19 "SEC. 1252. TRANSFER OF FRANCHISES. 20 "(a) GENERAL RULE.-A transfer of a franchise shall 21 not be treated as a sale or exchange of a capital asset or of 22 property to which section 1231 applies, if the transferor re 23 tains any significant power, right, or continuing interest with 24 respect to the subject matter of the franchise. 25 "(b) DEFINITIONS.-For purposes of this section— 1 300 The amendment made by subsection (b) shall apply to 2 taxable years beginning after July 25, 1969. 3 Subtitle C-Real Estate Depreciation 4 SEC. 521. DEPRECIATION OF REAL ESTATE. 5 (a) SECTION 1250 PROPERTY AND REHABILITATION 6 PROPERTY.-Section 167 (relating to depreciation) is 7 amended by redesignating subsection (j) as subsection (n), 8 and by inserting after subsection (i) the following new 9 subsections: "(j) SPECIAL RULES FOR SECTION 1250 PROPERTY.— "(1) GENERAL RULE.-Except as provided in paragraphs (2) and (3), in the case of section 1250 property, subsection (b) shall not apply and the term 'reasonable allowance' as used in subsection (a) shall include an allowance computed in accordance with regulations prescribed by the Secretary or his delegate, under any of the following methods: "(A) the straight line method, "(B) the declining balance method, using a rate not exceeding 150 percent of the rate which would have been used had the annual allowance been computed under the method described in subparagraph (A), and "(C) any other consistent method productive of an annual allowance which, when added to all 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 301 allowances for the period commencing with the tax payer's use of the property and including the tax able year, does not, during the first two-thirds of the useful life of the property, exceed the total of such allowances which would have been used had such allowances been computed under the method described in subparagraph (B). Nothing in this paragraph shall be construed to limit or reduce an allowance otherwise allowable under subsection (a) except where allowable solely by reason of paragraph (2), (3), or (4) of subsection (b). "(2) HOUSING.-Paragraph (1) of this subsection shall not apply, and subsection (b) shall apply in any taxable year, to a building to a building or structure which is residen tial rental housing the original use of which commences with the taxpayer. For purposes of the preceding sentence, a building or structure shall be considered to be residential rental housing with respect to any taxable year if and only if 80 percent or more of the gross in 20 come from such building or structure for such year is derived from the use of dwelling units (within the mean ing of subsection (k) (3) (C)) in such building or structure to provide living accommodations on a rental basis. Any change in the computation of the allowance for depreciation for any taxable year, permitted or re 302 1 quired by reason of the application of this paragraph, shall not be considered a change in a method of ac counting. "(3) PROPERTY CONSTRUCTED, ETC., BEFORE JULY 25, 1969.-Paragraph (1) of this subsection shall not apply, and subsection (b) shall apply, in the case of property "(A) the construction, reconstruction or erection of which was begun before July 25, 1969, or "(B) for which a written contract entered into before July 25, 1969, with respect to any part of the construction, reconstruction, or erection or for the permanent financing thereof, was at all times thereafter binding on the taxpayer. Under regulations prescribed by the Secretary or his delegate, rules similar to the rules provided in para graphs (5), (9), (10), and (13) of section 48 (h) shall be applied for purposes of subparagraphs (A) and (B). "(4) USED SECTION 1250 PROPERTY.—In the case of section 1250 property acquired after July 24, 1969, the original use of which does not commence with the taxpayer, the allowance for depreciation under this section shall be limited to an amount computed under— "(A) the straight line method, or |