recognized built-in gain
(2) Recognized built-in gain and loss (A) Recognized built-in gain The term “recognized built-in gain” means any gain recognized during the recognition period on the disposition of any asset to the extent the new loss corporation establishes that— (i) such asset was held by the old loss corporation immediately before the change date, and (ii) such gain does not exceed the excess of— (I) the fair market value of such asset on the change date, over (II) the adjusted basis of such asset on such date. (B) Recognized built-in loss The term “recognized built-in loss” means any loss recognized during the recognition period on the disposition of any asset except to the extent the new loss corporation establishes that— (i) such asset was not held by the old loss corporation immediately before the change date, or (ii) such loss exceeds the excess of— (I) the adjusted basis of such asset on the change date, over (II) the fair market value of such asset on such date. Such term includes any amount allowable as depreciation, amortization, or depletion for any period within the recognition period except to the extent the new loss corporation establishes that the amount so allowable is not attributable to the excess described in clause (ii).