### Question
How is the "recognized built-in gain" defined?


### Answer
The term **recognized built-in gain** is defined in *26 U.S.C. § 384* as follows -

> any gain recognized during the recognition period on the disposition of any asset except to the extent the gain corporation (or, in any case described in subsection (a)(1)(B), the acquiring corporation) establishes that—


(i) such asset was not held by the gain corporation on the acquisition date, or


(ii) such gain exceeds the excess (if any) of—


(I) the fair market value of such asset on the acquisition date, over


(II) the adjusted basis of such asset on such date

#### Citation:
  - *26 U.S.C. § 384*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter C-Corporate Distributions and Adjustments > PART V-CARRYOVERS**

