26 U.S.C. § 1055 — Redeemable ground rents

Page 2294 TITLE 26—INTERNAL REVENUE CODE § 1054 mining the fair market value of stock in a cor- poration as of March 1, 1913, due regard shall be given to the fair market value of the assets of the corporation as of that date. (Aug. 16, 1954, ch. 736, 68A Stat. 311; Pub. L. 85–866, title I, § 47, Sept. 2, 1958, 72 Stat. 1642.) Editorial Notes AMENDMENTS 1958—Pub. L. 85–866 substituted ‘‘subtitle’’ for ‘‘part’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1958 AMENDMENT Amendment by Pub. L. 85–866 applicable to taxable years beginning after Dec. 31, 1953, and ending after Aug. 16, 1954, see section 1(c)(1) of Pub. L. 85–866, set out as a note under section 165 of this title. § 1054. Certain stock of Federal National Mort- gage Association In the case of a share of stock issued pursuant to section 303(c) of the Federal National Mort- gage Association Charter Act (12 U.S.C., sec. 1718), the basis of such share in the hands of the initial holder shall be an amount equal to the capital contributions evidenced by such share reduced by the amount (if any) required by sec- tion 162(d) to be treated (with respect to such share) as ordinary and necessary expenses paid or incurred in carrying on a trade or business. (Added Pub. L. 86–779, § 8(b), Sept. 14, 1960, 74 Stat. 1003.) Editorial Notes PRIOR PROVISIONS A prior section 1054 was renumbered section 1062 of this title. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section applicable with respect to taxable years be- ginning after Dec. 31, 1959, see section 8(d) of Pub. L. 86–779, set out as an Effective Date of 1960 Amendment note under section 162 of this title. § 1055. Redeemable ground rents (a) Character For purposes of this subtitle— (1) a redeemable ground rent shall be treated as being in the nature of a mortgage, and (2) real property held subject to liabilities under a redeemable ground rent shall be treat- ed as held subject to liabilities under a mort- gage. (b) Application of subsection (a) (1) In general Subsection (a) shall take effect on the day after the date of the enactment of this section and shall apply with respect to taxable years ending after such date of enactment. (2) Basis of holder In determining the basis of real property held subject to liabilities under a redeemable ground rent, subsection (a) shall apply wheth- er such real property was acquired before or after the enactment of this section. (3) Basis of reserved 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 sub- ject to liabilities under such ground rent, the basis of such ground rent after such date in the hands of the person who reserved or cre- ated the ground rent shall be the amount taken into account in respect of such ground 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 the lessor in the land, by payment 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 rent- al payments to which the lessor is entitled 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.) Editorial Notes REFERENCES IN TEXT Date of the enactment of this section, referred to in subsec. (b)(1), (3), means Apr. 10, 1963, the date of ap- proval of Pub. L. 88–9. PRIOR PROVISIONS A prior section 1055 was renumbered section 1062 of this title. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Pub. L. 88–9, § 2, Apr. 10, 1963, 77 Stat. 8, provided that: ‘‘The amendments made by subsection (a) of the first section of this Act [amending 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 section of this Act [enacting 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.’’ [§ 1056. Repealed. Pub. L. 108–357, title VIII, § 886(b)(1)(A), Oct. 22, 2004, 118 Stat. 1641] Section, added Pub. L. 94–455, title II, § 212(a)(1), Oct. 4, 1976, 90 Stat. 1545; amended Pub. L. 99–514, title VI,