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TITLE 26-INTERNAL REVENUE CODE agreement in writing specifically dealing with the useful life and rate of depreciation of any property, the rate so agreed upon shall be bind- ing on both the taxpayer and the Secretary in the absence of facts or circumstances not taken into consideration in the adoption of such agreement. The responsibility of establishing the existence of such facts and circumstances shall rest with the party initiating the modifi- cation. Any change in the agreed rate and useful life specified in the agreement shall not be effective for taxable years before the tax- able year in which notice in writing by certified mail or registered mail is served by the party to the agreement initiating such change. (e) Change in method (1) Change from declining balance method In the absence of an agreement under sub- section (d) containing a provision to the con- trary, a taxpayer may at any time elect in ac- cordance with regulations prescribed by the Secretary to change from the method of de- preciation described in subsection (b)(2) to the method described in subsection (b)(1). (2) Change with respect to section 1245 property A taxpayer may, on or before the last day prescribed by law (including extensions there- of) for filing his return for his first taxable year beginning after December 31, 1962, and in such manner as the Secretary shall by reg- ulations prescribe, elect to change his method of depreciation in respect of section 1245 property (as defined in section 1245(a)(3)) from any declining balance or sum of the years-digits method to the straight line method. An election may be made under this paragraph notwithstanding any provision to the contrary in an agreement under subsec- tion (d). (3) Change with respect to section 1250 property A taxpayer may, on or before the last day prescribed by law (including extensions there- of) for filing his return for his first taxable year beginning after December 31, 1975, and in such manner as the Secretary shall by reg- ulation prescribe, elect to change his method of depreciation in respect of section 1250 property (as defined in section 1250(c)) from any declining balance or sum of the years- digits method to the straight line method. An election may be made under this paragraph notwithstanding any provision to the con- trary in an agreement under subsection (d). (f) Salvage value (1) General rule Under regulations prescribed by the Secre- tary, a taxpayer may, for purposes of comput- ing the allowance under subsection (a) with respect to personal property, reduce the amount taken into account as salvage value by an amount which does not exceed 10 per- cent of the basis of such property (as deter- mined under subsection (g) as of the time as of which such salvage value is required to be determined). (2) Personal property defined For purposes of this subsection, the term "personal property" means depreciable per- sonal property (other than livestock) with a useful life of 3 years or more acquired after October 16, 1962. (g) Basis for depreciation The basis on which exhaustion, wear and tear, and obsolescence are to be allowed in re- spect of any property shall be the adjusted basis provided in section 1011 for the purpose of determining the gain on the sale or other disposition of such property. (h) Life tenants and beneficiaries of trusts and es- tates In the case of property held by one person for life with remainder to another person, the de- duction shall be computed as if the life tenant were the absolute owner of the property and shall be allowed to the life tenant. In the case of property held in trust, the allowable deduc- tion shall be apportioned between the income beneficiaries and the trustee in accordance with the pertinent provisions of the instrument cre- ating the trust, or, In the absence of such provi- sions, on the basis of the trust income allocable to each. In the case of an estate, the allowable deduction shall be apportioned between the estate and the heirs, legatees, and devisees on the basis of the income of the estate allocable to each. (I) Limitation in case of property constructed or ac- quired during the suspension period (1) In general Under regulations prescribed by the Secre- tary, paragraphs (2), (3), and (4) of subsection (b) shall not apply in the case of real proper- ty which is not section 38 property (as de- fined in section 48(a)) if the physical con- struction, reconstruction, or erection of such property by any person begins during the sus- pension period, or begins, pursuant to an order placed during such period, before May 24, 1967. Under regulations prescribed by the Secretary, rules similar to the rules provided by paragraphs (3), (4), (7), (8), (9), and (10) of section 48(h) shall be applied for purposes of the preceding sentence. In applyng this para- graph to any property, there shall be taken into account only that portion of the basis which is properly attributable to construc- tion, reconstruction, or erection before May 24, 1967. (2) Exception Paragraph (1) shall not apply to any item of real property selected by the taxpayer if the cost of such property (when added to the cost of all other items of real property select- ed by the taxpayer under this paragraph) does not exceed $50,000. Under regulations prescribed by the Secretary, rules similar to the rules provided by paragraph (2) of section 48(c) shall be applied for purposes of this paragraph. (3) Suspension period For purposes of this subsection, the term "suspension period" means the period begin- ning on October 10, 1966, and ending on March 9, 1967. (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, sub- Page 153 § 167