recognized built-in gain
(1) Recognized built-in gain (A) In general The term “recognized built-in gain” means 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. (B) Treatment of certain income items Any item of income which is properly taken into account for any recognition period taxable year but which is attributable to periods before the acquisition date shall be treated as a recognized built-in gain for the taxable year in which it is properly taken into account and shall be taken into account in determining the amount of the net unrealized built-in gain. (C) Limitation The amount of the recognized built-in gains for any recognition period taxable year shall not exceed— (i) the net unrealized built-in gain, reduced by (ii) the recognized built-in gains for prior years ending in the recognition period which (but for this section) would have been offset by preacquisition losses.