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TITLE 26-INTERNAL REVENUE CODE (2) Recomputed basis For purposes of this section, the term "re- computed basis" means- (A) with respect to any property referred to in paragraph (3)(A) or (B), its adjusted basis recomputed by adding thereto all ad- Justments, attributable to periods after De- cember 31, 1961, (B) with respect to any property referred to in paragraph (3)(C), its adjusted basis re- computed by adding thereto all adjust- ments, attributable to periods after June 30, 1963, (C) with respect to livestock, its adjusted basis recomputed by adding thereto all ad- justments attributable to periods after De- cember 31, 1969, or (D) with respect to any property referred to in paragraph (3)(D), its adjusted basis re- computed by adding thereto all adjustments attributable to periods beginning with the first month for which a deduction for amor- tization is allowed under section 169, 185, 190, or 191 reflected in such adjusted basis on account of deductions (whether in respect of the same or other property) allowed or allowable to the taxpayer or to any other person for depreci- ation, or for amortization under section 168 (as in effect before its repeal by the Tax Reform Act of 1976), 169, 184, 185, 188, 190 or 191. For purposes of the preceding sentence, If the taxpayer can establish by adequate re- cords or other sufficient evidence that the amount allowed for depreciation, or for amor- tization under section 168 (as in effect before its repeal by the Tax Reform Act of 1976), 169, 184, 185, 188, 190 or 191 for any period was less than the amount allowable, the amount added for such period shall be the amount allowed. For purposes of this section, any deduction allowable under section 190 shall be treated as if it were a deduction al- lowable for amortization. (3) Section 1245 property For purposes of this section, the term "sec- tion 1245 property" means any property which Is or has been property of a character subject to the allowance for depreciation pro- vided in section 167 (or subject to the allowance of amortization provided in section 185) and Is either- (A) personal property, (B) other property (not including a build- ing or its structural components) but only if such other property Is tangible and has an adjusted basis in which there are reflected adjustments described in paragraph (2) for a period in which such property (or other property)- (i) was used as an integral part of manu- facturing, production, or extraction or of furnishing transportation, communica- tions, electrical energy, gas, water, or sewage disposal services, (ii) constituted a research facility used in connection with any of the activities re- ferred to in clause (i), or (iII) constituted a facility used in con- nection with any of the activities referred to in clause (1) for the bulk storage of fun- gible commodities (including commodities in a liquid or gaseous state), (C) an elevator or an escalator, or (D) so much of any real property (other than any property described in subpara- graph (B)) which has an adjusted basis in which there are reflected adjustments for amortization under section 169, 185, 188, 190 or 191. (4) Special rule for player contracts (A) In general For purposes of this section, if a franchise to conduct any sports enterprise is sold or exchanged, and if, in connection with such sale or exchange, there is a transfer of any player contracts, the recomputed basis of such player contracts in the hands of the transferor shall be the adjusted basis of such contracts increased by the greater of- (i) the previously unrecaptured depreci- ation with respect to player contracts ac- quired by the transferor at the time of ac- quisition of such franchise, or (ii) the previously unrecaptured depreci- ation with respect to the player contracts involved in such transfer. (B) Previously unrecaptured depreciation with respect to initial contracts For purposes of subparagraph (A)(i), the term "previously unrecaptured depreci- ation" means the excess (if any) of- (i) the sum of the deduction allowed or allowable to the taxpayer transferor for the depreciation of any player contracts acquired by him at the time of acquisition of such franchise, plus the deduction al- lowed or allowable for losses with respect to such player contracts acquired at the time of such acquisition, over (ii) the aggregate of the amounts treat- ed as ordinary income by reason of this section with respect to prior dispositions of such player contracts acquired upon ac- quisition of the franchise. (C) Previously unrecaptured depreciation with respect to contracts transferred For purposes of subparagraph (A)(ii), the term "previously unrecaptured depreci- ation" means- (I) the amount of any deduction allowed or allowable to the taxpayer transferor for the depreciation of any contracts in- volved in such transfer, over (it) the aggregate of the amounts treat- ed as ordinary income by reason of this section with respect to prior dispositions of such player contracts acquired upon ac- quisition of the franchise. (D) Player contract For purposes of this paragraph, the term "player contract" means any contract for the services of an athlete which, in the hands of the taxpayer, is of a character sub- ject to the allowance for depreciation pro- vided in section 167. § 1245 Page 696