I.R.C. § 1055(a) Character —
For purposes of this subtitle—
I.R.C. § 1055(a)(1) —
a redeemable ground rent shall be treated as being in the nature of a mortgage,
and
I.R.C. § 1055(a)(2) —
real property held subject to liabilities under a redeemable ground rent shall be
treated as held subject to liabilities under a mortgage.
I.R.C. § 1055(b) Application Of Subsection (a)
I.R.C. § 1055(b)(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.
I.R.C. § 1055(b)(2) Basis Of Holder —
In determining the basis of real property held subject to liabilities under a redeemable
ground rent, subsection (a) shall apply whether such real property was acquired before
or after the enactment of this section.
I.R.C. § 1055(b)(3) Basis Of Reserved Redeemable Ground Rent —
In the case of a redeemable ground rent reserved 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 subject to liabilities under such ground rent, the basis of such ground
rent after such date in the hands of the person who reserved or created the ground
rent shall be the amount taken into account in respect of such ground rent for Federal
income tax purposes as consideration 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.
I.R.C. § 1055(c) Redeemable Ground Rent Defined —
For purposes of this subtitle, the term “redeemable ground rent” means only a ground
rent with respect to which—
I.R.C. § 1055(c)(1) —
there is a lease of land which is assignable 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,
I.R.C. § 1055(c)(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
I.R.C. § 1055(c)(3) —
the lessor's interest in the land is primarily a security interest to protect the
rental payments to which the lessor is entitled under the lease.
I.R.C. § 1055(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.)
BACKGROUND NOTES
EFFECTIVE DATE
Section 2 of Pub. L. 88-9 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.”
PRIOR PROVISIONS
A prior section 1055 was renumbered section 1061 of this title.
