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TITLE 26--INTERNAL REVENUE CODE (C) the remaining property which is not taken into account under subparagraphs (A) and (B). (4) Property which is substantially improved For purposes of this subsection- (A) In general The term "separate improvement" means each improvement added during the 36- month period ending on the last day of any taxable year to the capital account for the property, but only if the sum of the amounts added to such account during such period exceeds the greatest of- (i) 25 percent of the adjusted basis of the property, (i) 10 percent of the adjusted basis of the property, determined without regard to the adjustments provided in para- graphs (2) and (3) of section 1016(a), or (i11) $5,000. For purposes of clauses (i) and (ii), the ad- justed basis of the property shall be deter- mined as of the beginning of the first day of such 36-month period, or of the holding period of the property (within the meaning of subsection (e)), whichever is the later. (B) Exception Improvements in any taxable year shall be taken into account for purposes of sub- paragraph (A) only if the sum of the amounts added to the capital account for the property for such taxable year exceeds the greater of- (i) $2,000, or (ii) one percent of the adjusted basis re- ferred to in subparagraph (A)(il), deter- mined, howevtr, as of the beginning of such taxable year. For purposes of this section, if the amount added to the capital account for any sepa- rate improvement does not exceed the greater of clause (1) or (it), such improve- ment shall be treated as placed in service on the first day, of a calendar month, which is closest to the middle of the taxable year. (C) Improvement The term "improvement" means, in the case of any section 1250 property, any addi- tion to capital account for such property after the initial acquisition or after comple- tion of the property. (g) Special rules for qualified low-income housing (1) Amount treated as ordinary income If, in the case of a disposition of section 1250 property, the property is treated as con- sisting of more than one element by reason of the application of subsection (d)(8)(E), and gain is recognized in whole or in part, then the amount taken into account under subsec- tion (a) as ordinary income shall be the sum of the amounts determined under paragraph (2). (2) Ordinary income attributable to an element For purposes of paragraph (1), the amount taken into account for any element shall be determined in a manner similar to that pro- vided by subsect!on (f)(2). (h) Adjustments to basis The Secretary shall prescribe such regula- tions as he may deem necessary to provide for adjustments to the basis of property to reflect gain recognized under subsection (a). (i) Application of section This section shall apply notwithstanding any other provision of this subtitle. (Added Pub. L. 88-.272, title II, § 231(a), Feb. 26, 1964, 78 Stat. 100, and amended Pub. L. 91-172, title V, § 521(b)(c), (e), title VII, § 704(b)(5), title IX, § 910(b), Dec. 30, 1969, 83 Stat. 652, 653, 670, 720; Pub. L. 92-178, title III, § 303(c)(3), Dec. 10, 1971, 85 Stat. 522; Pub. L. 93-625, § 5(c), Jan. 3, 1975, 88 Stat. 2112; Pub. L. 94-81, § 2(b), Aug. 9, 1975, 89 Stat. 417; Pub. L. 94-455, title II, § 202(a)-(c)(1), (2), title XIX, §§ 1901(b)(3)(K), (31)(A), (B), (E), 1906(b)(13)(A), 1951(c)(2)CC), title XXI, §§ 2122(b)(4), 2124(a)(3)(D), Oct. 4, 1976, 90 Stat. 1527, 1529, 1530, 1793, 1799, 1800, 1834, 1840, 1915, 1918.) RznzENCES IN TEXT Sections 221 and 236 of the National Housing Act, referred to in subsec. (a)(1)(B)(i), (2)(B)(ii), are classi- fied to sections 1715l and 1715z-1, respectively, of Title 12, Banks and Banking. Section 8 of the United States Housing Act of 1937, referred to in subsec. (a)(1)(B)(ii), is classified to sec- tion 1437f of Title 42, The Public Health and Welfare. The Housing Act of 1949, referred to in subsec. (a)(1)(B)(iv) is act July 15, 1949, ch. 338, 63 Stat. 413, as amended. Title V of the Housing act of 1949 is classified generally to subchapter III CQ 1471 et seq.) of chapter 8A of Title 42, The Public Health and Wel- fare. For complete classification of this Act to the Code, see Short Title note set out under section 1441 of Title 42 and Tables volume. The Tax Reform Act of 1976, referred to in subsec. (b)(3), is Pub. L. 94-455, Oct. 4, 1976, 90 Stat. 1520. Section 1951(a)(4)(A) of the Tax Reform Act of 1976 repealed section 168 of this title. For complete classifi- cation of this Act to the Code, see Tables volume. AMENDmENTS 1976--Subsec. Ca). Pub. L. 94-455, § 202(a), in revising the text generally, made the following changes: (1) Added par. (1). (2) Redesignated as pars. (2) and (3) existing pars. (1) and (2). (3) Made the following changes in par. (2): added to the heading", and before January 1, 1976"; designated introductory text as subpar. "(A) In general"; inserted therein "and the amount determined under paragraph (1)(A)(ii) exceeds the amount determined under para- graph (1)(A)Ci), then"; redesignated as cl. (I) existing subpar. (A); substituted therein "attributable to peri- ods after December 31, 1969, and before January 1, 1976" for "(as defined in subsection (b)(1) or (4) attrib- utable to periods after December 31, 1969"'; substitut. ed cl. (i) and concluding text for subpar. (B) and con. cluding text which read: "(B) the excess of- "(I) the amount realized (in the case of a sale, ex- change, or involuntary conversion), or the fair market value of such property (in the case of any other disposition), over "(ii) the adjusted basis of such property, § 1250 Ppge 710