Section 11-625. Ascertainment of gain or loss; exchange of property

1. For
  the purpose of ascertaining the gain derived or loss sustained from  the
  sale  or  other  disposition  of  property, real, personal or mixed, the
  basis shall be the  cost  thereof,  or  the  inventoried  value  if  the
  inventory is made in accordance with section 11-626 of this part.
    2.  Notwithstanding  subdivision  one of this section, with respect to
  gain derived from the sale or other disposition of any property acquired
  prior to January first, nineteen  hundred  sixty-six,  except  stock  in
  trade  of  the taxpayer or other property of a kind which would properly
  be included in the inventory of the taxpayer if on hand at the close  of
  the taxable year, or property held by the taxpayer primarily for sale to
  customers  in  the ordinary course of its trade or business and accounts
  or notes receivable acquired in the ordinary course of trade or business
  from the sale of such stock  in  trade  or  property,  or  for  services
  rendered, net income shall not include:
    (a)  That  portion  of  the  gain  included  in determining net income
  pursuant to subdivision one of this section with respect  to  each  such
  property which exceeds:
    (b)  The amount of gain, if any, that would be included in determining
  net income pursuant to subdivision one of this section with  respect  to
  each  such property if the basis of such property on the date of sale or
  other disposition were equal to its fair market value on January  first,
  nineteen  hundred sixty-six, plus or minus all adjustments to basis made
  with respect to each such property in computing net income  for  periods
  on or after January first, nineteen hundred sixty-six; provided that the
  total  adjustment  to  net income provided by this subdivision shall not
  exceed the amount of the taxpayer's net gain  from  the  sale  or  other
  disposition  of all such property, as determined pursuant to subdivision
  one of this section.
    3. Upon the sale or exchange of property the amount  of  the  gain  or
  loss  shall  be determined in the manner prescribed by section 11-615 of
  this subchapter and the basis of such property shall  be  determined  in
  the manner prescribed by section 11-616 of this subchapter.
    4.  In  the  case  of  any bond, with respect to which a deduction for
  amortizable bond premium is allowable under paragraph (i) of subdivision
  one of section 11-629 of this part, the basis for  determining  gain  or
  loss  shall  be  reduced  by  the  total  amount  of  such deductions so
  allowable.