Treasury Regulations (26 C.F.R.)
26 CFR § 1.1055-3
Basis of real property held subject to liabilities under a redeemable ground rent.
# (a) In general.
The provisions of section 1055(a) and paragraph (a) of § 1.1055-1 are applicable in determining the basis of real property held on or after April 11, 1963, in any case where the property at the time of acquisition was subject to liabilities under a redeemable ground rent. (See section 1055(b)(2).) Thus, if on or after April 11, 1963, a taxpayer holds real property which was subject to liabilities under a redeemable ground rent at the time he acquired it, the basis of such property in the hands of such taxpayer, regardless of when the property was acquired, will include the redeemable ground rent in the same manner as if it were a mortgage in an amount equal to the redemption price of such ground rent. Likewise, if on or after April 11, 1963, a taxpayer holds real property which was subject to liabilities under a redeemable ground rent at the time he acquired it and which has a substituted basis in his hands, the basis of the property in the hands of the taxpayer's predecessor in interest is to be determined by treating the redeemable ground rent in the same manner as a mortgage in an amount equal to the redemption price of such ground rent.
# (b) Illustrations.
The provisions of this section may be illustrated by the following examples:
Example 1.
On April 11, 1963, taxpayer A held residential property which he acquired on January 15, 1963, for a purchase price of $10,000 and which, at the time he acquired it, was subject to a ground rent redeemable for a redemption price of $1,600. A's basis for the property includes the purchase price ($10,000) plus the redeemable ground rent in the same manner as if it were a mortgage for $1,600.
Example 2.
In 1962, taxpayer X, a corporation, acquired real property subject to a redeemable ground rent in a transfer to which section 351 (relating to transfer of property to corporation controlled by transferor) applied and in which the basis of the property to X was the transferor's basis. X still held the property on April 11, 1963. The transferor's basis in the property is to be determined by treating the redeemable ground rent to which it was subject in the transferor's hands as if it were a mortgage.
[T.D. 6821, 30 FR 6217, May 4, 1965]
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In this part (40 sections)
- 1.1035-1 · Certain exchanges of insurance policies.
- 1.1036-1 · Stock for stock of the same corporation.
- 1.1037-1 · Certain exchanges of United States obligations.
- 1.1038-1 · Reacquisitions of real property in satisfaction of…
- 1.1038-2 · Reacquisition and resale of property used as a principal…
- 1.1038-3 · Election to have section 1038 apply for taxable years…
- 1.1039-1 · Certain sales of low-income housing projects.
- 1.1041-1T · Treatment of transfer of property between spouses or…
- 1.1041-2 · Redemptions of stock.
- 1.1042-1T · Questions and answers relating to the sales of stock to…
- 1.1044(a)-1 · (a)-1 Time and manner for making election under the…
- 1.1045-1 · Application to partnerships.
- 1.1051-1 · Basis of property acquired during affiliation.
- 1.1052-1 · Basis of property established by Revenue Act of 1932.
- 1.1052-2 · Basis of property established by Revenue Act of 1934.
- 1.1052-3 · Basis of property established by the Internal Revenue Code…
- 1.1053-1 · Property acquired before March 1, 1913.
- 1.1054-1 · Certain stock of Federal National Mortgage Association.
- 1.1055-1 · General rule with respect to redeemable ground rents.
- 1.1055-2 · Determination of amount realized on the transfer of the…
- 1.1055-3 · Basis of real property held subject to liabilities under a…
- 1.1055-4 · Basis of redeemable ground rent reserved or created in…
- 1.1059(e)-1 · (e)-1 Non-pro rata redemptions.
- 1.1059A-1 · Limitation on taxpayer's basis or inventory cost in…
- 1.1060-1 · Special allocation rules for certain asset acquisitions.
- 1.1061-0 · Table of contents.
- 1.1061-1 · Section 1061 definitions.
- 1.1061-2 · Applicable partnership interests and applicable trades or…
- 1.1061-3 · Exceptions to the definition of an API.
- 1.1061-4 · Section 1061 computations.
- 1.1061-5 · Section 1061(d) transfers to related persons.
- 1.1061-6 · Reporting rules.
- 1.1071-1 · Gain from sale or exchange to effectuate policies of Federal…
- 1.1071-2 · Nature and effect of election.
- 1.1071-3 · Reduction of basis of property pursuant to election under…
- 1.1071-4 · Manner of election.
- 1.1081-1 · Terms used.
- 1.1081-2 · Purpose and scope of exception.
- 1.1081-3 · Exchanges of stock or securities solely for stock or…
- 1.1081-4 · Exchanges of property for property by corporations.