Adjustment of basis upon sale or other disposition.

(1) In any taxable year when property, with respect to which an optional modification for depreciation has been allowed, is sold or otherwise disposed of, the basis of such property must be adjusted to reflect such modification and, if the basis as so adjusted is lower than the adjusted basis of the same property for Federal income tax purposes, there must be added to the taxpayer's Federal adjusted gross income the amount of the difference between such adjusted bases (see section 112.2[f] of this Part). For purposes of this subdivision, the New York State basis of property is the Federal original cost or other basis less the aggregate of the amounts allowed as optional depreciation of qualifying for all taxable years from the year of acquisition to and including the year of sale or other disposition.

(2) A sale or disposition of qualifying property includes any transfer or exchange without regard to whether gain or loss from the transaction is recognized for Federal income taxes purposes.