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TITLE 26-INTERNAL REVENUE CODE applies, rules consistent with the preceding sentence shall be applied under regulations prescribed by the Secretary. (E) Additional depreciation with respect to prop- erty disposed of In the case of any transaction described in section 1031 or 1033, the additional depreci- ation in respect of the section 1250 property acquired which is attributable to the section 1250 property disposed of shall be an amount equal to the amount of the gain which was not taken into account under subsection (a) by reason of the application of this paragraph. (5) Section 1071 and 1081 transactions Under regulations prescribed by the Secre- tary, rules consistent with paragraphs (3) and (4) of this subsection and with subsections (e) and (f) shall apply in the case of transactions described in section 1071 (relating to gain from sale or exchange to effectuate policies of FCC) or section 1081 (relating to ex- changes in obedience to SEC orders). (6) Property distributed by a partnership to a part. ner (A) In general For purposes of this section, the basis of section 1250 property distributed by a part- nership to a partner shall be deemed to be determined by reference to the adjusted basis of such property to the partnership. (B) Additional depreciation In respect of any property described in subparagraph (A), the additional depreci- ation attributable to periods before the dis- tribution by the partnership shall be- (i) the amount of the gain to which sub- section (a) would have applied if such property had been sold by the partner- ship immediately before the distribution at its fair market value at such time and the applicable percentage for the proper- ty had been 100 percent, reduced by (it) if section 751(b) applied to any part of such gain, the amount of such gain to which section 751(b) would have applied if the applicable percentage for the prop- erty had been 100 percent. (7) Disposition of principal residence Subsection (a) shall not apply to a disposi- tion of- (A) property to the extent used by the taxpayer as his principal residence (within the meaning of section 1034, relating to sale or exchange of residence), and (B) property in respect of which the tax- payer meets the age and ownership require- ments of section 121 (relating to gains from sale or exchange of residence of individual who has attained the age of 65) but only to the extent that he meets the use require- ments of such section in respect of such property. (8) Disposition of qualified low-income housing If section 1250 property is disposed of and gain (determined without regard to this sec- tion) is not recognized in whole or in part under section 1039, then- (A) Recognition limit The amount of gain recognized by the transferor under subsection (a) shall not exceed the greater of- (i) the amount of gain recognized on the disposition (determined without regard to this section), or (it) the amount determined under sub- paragraph (B). (B) Adjustment where insufficient section 1250 property is acquired With respect to any transaction, the amount determined under this subpara- graph shall be the excess of- (I) the amount of gain which would (but for this paragraph) be taken into account under subsection (a), over (it) the cost of the section 1250 property acquired in the transaction. (C) Basis of property acquired The basis of property acquired by the tax- payer, determined under section 1039(d), shall be allocated- (i) first to the section 1250 property de- scribed in subparagraph (E(i), in the amount determined under such subpara- graph, reduced by the amount of gain not recognized attributable to the section 1250 property disposed of, (it) then to any property (other than section 1250 property) to which section 1039 applies, in the amount of its cost, re- duced by the amount of gain not recog- nized except tc the extent taken into ac- count under clause (i), and (iii) then to the section 1250 property described in subparagraph (E)(ii), in the amount determined thereunder, reduced by the amount of gain not recognized except to the extent taken into account under classes (i) and (ii). (D) Additional depreciation with respect to prop- erty disposed of The additional depreciation with respect to any property acquired shall include the additional depreciation with respect to the corresponding section 1250 property dis- posed of, reduced by the amount of gain recognized attributable to such property. (E) Property consisting of more than one ele- ment There shall be treated as a separate ele- ment of section 1250 property- (I) that portion of the section 1250 prop- erty acquired the cost of which does not exceed the net amount realized (as de- fined in section 1039(b)) attributable to the section 1250 property disposed of, re- duced by the amount of gain recognized (if any) attributable to such property, and (it) that portion of the section 1250 property acquired the cost of which ex- ceeds the net amount realized (as defined in section 1039(b)) attributable to the sec- tion 1250 property disposed of. (F) Allocation rules For purposes of this paragraph- (i) the amount of gain recognized attrib- utable to the section 1250 property dis- posed of shall be the net amount realized Page 708 § 1250