§ 25 — Ascertainment of gain or loss; exchange of property

§ 25. Ascertainment of gain or loss; exchange of property. 1. For the\npurpose of ascertaining the gain derived or loss sustained from the sale\nor other disposition of property, real, personal or mixed, the basis\nshall be the cost thereof, or the inventoried value if the inventory is\nmade in accordance with section twenty-six of this part.\n 2. Notwithstanding subdivision one of this section, with respect to\ngain derived from the sale or other disposition of any property acquired\nprior to January first, nineteen hundred sixty-six, except stock in\ntrade of the taxpayer or other property of a kind which would properly\nbe included in the inventory of the taxpayer if on hand at the close of\nthe taxable year, or property held by the taxpayer primarily for sale to\ncustomers in the ordinary course of its trade or business, and accounts\nor notes receivable acquired in the ordinary course of trade or business\nfrom the sale of such stock in trade or property, or for services\nrendered, net income shall not include\n (a) That portion of the gain included in determining net income\npursuant to subdivision one of this section with respect to each such\nproperty, which exceeds\n (b) The amount of gain, if any, that would be included in determining\nnet income pursuant to subdivision one of this section with respect to\neach such property if the basis of such property on the date of sale or\nother disposition were equal to its fair market value on January first,\nnineteen hundred sixty-six, plus or minus all adjustments to basis made\nwith respect to each such property in computing net income for periods\non or after January first, nineteen hundred sixty-six;\nprovided that the total adjustment to net income provided by this\nsubdivision shall not exceed the amount of the taxpayer's net gain from\nthe sale or other disposition of all such property, as determined\npursuant to subdivision one of this section.\n 3. Upon the sale or exchange of property the amount of the gain or\nloss shall be determined in the manner prescribed by section fifteen of\nthis part and the basis of such property shall be determined in the\nmanner prescribed by section sixteen of this part.\n 4. In the case of any bond, with respect to which a deduction for\namortizable bond premium is allowable under paragraph (i) of subdivision\none of section twenty-nine of this part, the basis for determining gain\nor loss shall be reduced by the total amount of such deductions so\nallowable.\n