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TITLE 26-INTERNAL REVENUE CODE section 1034), the original use of which com- mences with the taxpayer, and includes, with- out being limited to, a single family structure, a residential unit in a condominium or coop- erative housing project, and a mobile home. (2) Purchase price The term "purchase price" means the ad- justed basis of the new principal residence on the date of the acquisition thereof. (3) Purchase The term "purchase" means any acquisition of property, but only if- (A) the property is not acquired from a person whose relationship to the person ac- quiring it would result in the disallowance of losses under section 267 or 707(b) (but, in applying section 267(b) and (c) for purposes of this section, paragraph (4) of section 267(c) shall be treated as providing that the family of an individual shall include only his spouse, ancestors, and lineal descen- dants), and (B) the basis of the property in the hands of the person acquiring it is not deter- mined- (I) in whole or in part by reference to the adjusted basis of such property in the hands of the person from whom acquired, or (it) under section 1014(a) (relating to property acquired from a decedent). (d) Recapture for certain dispositions (1) In general Except as provided in paragraphs (2) and (3), if the taxpayer disposes of property with respect to the purchase of which a credit was allowed under subsection (a) at any time within 36 months after the date on which he acquired it (or, in the case of construction by the taxpayer, on the day on which he first oc- cupied it) as his principal residence, then the tax imposed under this chapter for the tax- able year in which terminates the replace- ment period under paragraph (2) with respect to the disposition is increased by an amount equal to the amount allowed as a credit for the purchase of such property. (2) Acquisition of new residence If, in connection with a disposition de- scribed in paragraph (1) and within the appli- cable period prescribed in section 1034, the taxpayer purchases or constructs a new prin- cipal residence, then the provisions of para- graph (1) shall not apply and the tax imposed by this chapter for the taxable year following the taxable year during which disposition occurs is increased by an amount which bears the same ratio to the amount allowed as a credit for the purchase of the old residence as (A) the adjusted sales price of the old resi- dence (within the meaning of section 1034), reduced (but not below zero) by the taxpay- er's cost of purchasing the new residence (within the meaning of such section) bears to (B) the adjusted sales price of the old resi- dence. (3) Death of owner; casualty loss; involuntary con- version; etc. The provisions of paragraph (1) do not apply to- (A) a disposition of a residence made on account of the death of any individual having a legal or equitable interest therein occurring during the 36 month period to which reference is made under such para- graph, (B) a disposition of the old residence if it is substantially or completely destroyed by a casualty described in section 165(c)(3) or compulsorily and involuntary converted (within the meaning of section 1033(a)), or (C) a disposition pursuant to a settlement in a divorce or legal separation proceeding where the other spouse retains the resi- dence as principal residence. (e) Property to which section applies (1) In general The provisions of this section apply to a new principal residence- (A) the construction of which began before March 26, 1975, (B) which is acquired and occupied by the taxpayer after March 12, 1975, and before January 1, 1977, and (C) if not constructed by the taxpayer, which was acquired by the taxpayer under a binding contract entered into by the tax- payer before January 1, 1976. (2) Self-constructed property begun before March 13, 1975 In the case of property the construction of which was begun by the taxpayer before March 13, 1975, only that portion of the basis of such property properly allocable to con- struction after March 12, 1975, shall be taken into account in determining the amount of the credit allowable under subsection (a). (3) Binding contract For purposes of this subsection, a contract for the purchase of a residence which is con- ditioned upon the purchaser's obtaining a loan for the purchase of the residence (in- cluding conditions as to the amount or inter- est rate of such loan) is not considered non- binding on account of that condition. (4) Certification must be attached to return This section does not apply to any residence (other than a residence constructed by the taxpayer) unless there is attached to the return of tax on which the credit is claimed a written certification (which may be in any form) signed by the seller of such residence that- (A) construction of the residence began before March 26, 1975, and (B) the purchase price of the residence is the lowest price at which the residence was offered for sale after February 28, 1975. For purposes of this paragraph, a written cer- tification filed by a taxpayer is sufficient whether or not it is on a form prescribed by the Secretary so long as such certification is signed by the seller and contains the informa- tion required under this paragraph. (Added Pub. L. 94-12, title II, § 208(a), Mar. 29, 1975, 89 Stat. 32; and amended Pub. L. 94-45, title IV, § 401(a), June 30, 1975, 89 Stat. 243; Pub. L. 94-455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.) Page 49