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TITLE 26-INTERNAL REVENUE CODE (2) Basis of holder In determining the basis of real property held subject to liabilities under a redeemable ground rent, subsection (a) shall apply whether such real property was acquired before or after the enactment of this section. (3) Basis of reLerved redeemable ground rent In the case of a redeemable ground rent re- served or created on or before the date of the enactment of this section in connection with a transfer of the right to hold real property subject to liabilities under such ground rent, the basis of such ground rent after such date in the hands of the person who reserved or created the ground rent shall be the amount taken into account in respect of suchtground rent for Federal income tax purposes as con- sideration for the disposition of such real property. If no such amount was taken into account, such basis shall be determined as if this section had not been enacted. (c) Redeemable ground rent defined For purposes of this subtitle, the term "re- deemable ground rent" means only a ground rent with respect to which- (1) there is a lease of land which is assign- able by the lessee without the consent of the lessor and which (together with periods for which the lease may be renewed at the option of the lessee) is for a term in excess of 15 years, (2) the leaseholder has a present or future right to terminate, and to acquire the entire interest of of the lessor in the land, by pay- ment of a determined or determinable amount, which right exists by virtue of State or local law and not because of any private agreement or privately created condition, and (3) the lessor's interest in the land is pri- marily a security interest to protect the rental payments to which the lessor is enti- tled under the lease. (d) Cross reference For treatment of rentals under redeemable ground rents as Interest, see section 163(c). (Added Pub. L. 88-9, § 1(b), Apr. 10, 1963, 77 Stat. 7.) REFERENCES IN TEXT Date of the enactment of this section, referred to in subsecs. (b)(1), (3), means Apr. 10, 1963, the date of ap- proval of Pub. L. 88-9. PRIOR PROVISIONS A prior section 1055, act Aug. 16, 1954, ch. 736, § 1055, 68A Stat. 311, which related to cross references, was renumbered section 1058 of this title. EFFECTIVE DATE Section 2 of Pub. L. 88-9 provided that: "The amend- ments made by subsection (a) of the first section of this Act [to section 163 of this title] shall take effect as of January 1, 1962, and shall apply with respect to taxable years ending on or after such date. The amendments made by subsection (b) of the first sec- tion of this Act [adding this section] shall take effect on the day after the date of the enactment of this Act [Apr. 10, 1963] and shall apply with respect to taxable years ending after such date of enactment [Apr. 10, 1963]." SECTION REFERRED TO IN OTHER SECTIONS This section is referred to In sections 163, 7701 of this title. § 1056. Basis limitation for player contracts trans. ferred In connection with the sale of a franchise (a) General rule If a franchise to conduct any sports enter- prise is sold or exchanged, and if, in connection with such sale or exchange, there is a transfer of a contract for the services of an athlete, the basis of such contract in the hands of the trans- feree shall not exceed the sum of- (1) the adjusted basis of such contract in the hands of the transferor immediately before the transfer, plus (2) the gain (if any) recognized by the transferor on the transfer of such contract. For purposes of this section, gain realized by the transferor on the transfer of such contract, but not recognized by reason of section 337(a), shall be treated as recognized to the extent rec- ognized by the transferor's shareholders. (b) Exceptions Subsection (a) shall not apply- (1) to an exchange described in section 1031 (relating to exchange of property held for productive use or investment), and (2) to property in the hands of a person ac- quiring the property from a decedent or to whom the property passed from a decedent (within the meaning of section 1014(a)). (c) Transferor required to furnish certain Informa- tion Under regulations prescribed by the Secre- tary, the transfer shall, at the times and in the manner provided in such regulations, furnish to the Secretary and to the transferee the follow- ing information: (1) the amount which the transferor be- lieves to be the adjusted basis referred to in paragraph (1) of subsection (a), (2) the amount which the transferor be- lieves to be the gain referred to in paragraph (2) of subsection (a), and (3) any subsequent modification of either such amount. To the extent provided in such regulations, the amounts furnished pursuant to the preceding sentence shall be binding on the transferor and on the transferee. (d) Presumption as to amount allocable to player contracts In the case of any sale or exchange described in subsection (a), it shall be presumed that not more than 50 percent of the consideration is al- locable to contracts for the services of athletes unless it is established to the satisfaction of the Secretary that a specified auaount in excess of 50 percent is properly allocable to such con- tracts. Nothing in the preceding sentence shall give rise to a presumption that an allocation of less than 50 percent of the consideration to contracts for the services of athletes is a proper allocation. (Added Pub. L. 94-455, title II, § 212(a)(1), Oct. 4, 1976, 90 Stat. 1545.) PRIOR PROVISIONS A prior section 1056, act Aug. 16, 1954, ch. 736, § 1056, 68A Stat. 311, which related to cross references, was renumbered section 1058 of this title. Page 657 § 1056