Federal Register / Vol. 62, No. 161 / Wednesday, August 20, 1997 / Rules and Regulations 44211

Note 4: Information concerning the

existence of approved alternative methods of

compliance with this AD, if any, may be

obtained from the Los Angeles ACO.

(f) Special flight permits may be issued in

accordance with sections 21.197 and 21.199

of the Federal Aviation Regulations (14 CFR

21.197 and 21.199) to operate the airplane to

a location where the requirements of this AD

can be accomplished.

(g) The actions shall be done in accordance

with McDonnell Douglas MD–80 Service

Bulletin 57–184, Revision 1, dated December

22, 1994. This incorporation by reference was

approved previously by the Director of the

Federal Register in accordance with 5 U.S.C.

552(a) and 1 CFR part 51, as of December 19,

1996 (61 FR 58323, November 14, 1996).

Copies may be obtained from McDonnell

Douglas Corporation, 3855 Lakewood

Boulevard, Long Beach, California 90846,

Attention: Technical Publications Business

Administration, Department C1–L51 (2–60).

Copies may be inspected at the FAA,

Transport Airplane Directorate, 1601 Lind

Avenue, SW., Renton, Washington; or at the

FAA, Los Angeles Aircraft Certification

Office, 3960 Paramount Boulevard,

Lakewood, California; or at the Office of the

Federal Register, 800 North Capitol Street,

NW., suite 700, Washington, DC.

(h) This amendment becomes effective on

September 4, 1997.

Issued in Renton, Washington, on August

13, 1997.

Darrell M. Pederson,

Acting Manager, Transport Airplane

Directorate, Aircraft Certification Service.

[FR Doc. 97–22042 Filed 8–19–97; 8:45 am]

BILLING CODE 4910–13–U

DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Part 134

[T.D. 97–72]

RIN 1515–AB82

Country of Origin Marking

AGENCY: Customs Service, Department

of the Treasury.

ACTION: Final rule.

SUMMARY: This document amends the

Customs Regulations to ease the

requirement that whenever words

appear on imported articles indicating

the name of a geographic location other

than the true country of origin of the

article, the country of origin marking

always must appear in close proximity

and in comparable size lettering to those

words preceded by the words ‘‘Made

in,’’ ‘‘Product of,’’ or other words of

similar meaning. Customs believes that,

consistent with the statutory

requirements of 19 U.S.C. 1304, the

country of origin marking only needs to

satisfy these requirements if the name of

the other geographic location may

mislead or deceive the ultimate

purchaser as to the actual country of

origin.

EFFECTIVE DATE: September 19, 1997.

FOR FURTHER INFORMATION CONTACT:

Craig Walker, Office of Regulations and

Rulings, 202–482–6980.

SUPPLEMENTARY INFORMATION:

Background

Section 304 of the Tariff Act of 1930,

as amended (19 U.S.C. 1304) provides

that, unless excepted, every article of

foreign origin imported into the United

States shall be marked in a conspicuous

place as legibly, indelibly, and

permanently as the nature of the article

(or container) will permit, in such a

manner as to indicate to the ultimate

purchaser in the United States the

English name of the country of origin of

the article. Congressional intent in

enacting 19 U.S.C. 1304 was that the

ultimate purchaser should be able to

know by an inspection of the marking

on the imported goods the country of

which the goods are a product. Part 134,

Customs Regulations (19 CFR part 134),

implements the country of origin

marking requirements and exceptions to

19 U.S.C. 1304.

Section 134.46, Customs Regulations

(19 CFR 134.46) provides that in any

case in which the words ‘‘United

States’’ or ‘‘American,’’ the letters

‘‘U.S.A.,’’ any variation of such words or

letters, or the name of any city or

locality in the United States, or the

name of any foreign country or locality

other than the country or locality in

which the article was manufactured or

produced, appear on an imported article

or its container, there shall appear,

legibly and permanently, in close

proximity to such words, letters or

name, and in at least a comparable size,

the name of the country of origin

preceded by ‘‘Made in,’’ ‘‘Product of,’’

or other words of similar meaning.

Section 134.46 was promulgated

pursuant to the statutory authority of 19

U.S.C. 1304(a)(2), which provides that

the Secretary of the Treasury may by

regulations require the addition of any

words or symbols which may be

appropriate to prevent deception or

mistake as to the origin of the article or

as to the origin of any other article with

which such imported article is usually

combined subsequent to importation but

before delivery to an ultimate purchaser.

A strict application of § 134.46 would

require that in any case in which a nonorigin locality reference appears on an

imported article or its container, the

actual country of origin of the article

must appear in close proximity and in

comparable size lettering to the locality

reference preceded by the words ‘‘Made

in,’’ ‘‘Product of,’’ or other words of

similar meaning.

Because Customs believes that the

strict requirements of § 134.46 are not

always necessary to ‘‘prevent deception

or mistake as to the origin of the article’’

in accordance with 19 U.S.C. 1304,

Customs proposed to modify § 134.46 in

a Notice of Proposed Rulemaking

published in the Federal Register (60

FR 57559) on November 16, 1995.

In that document, Customs also

proposed to remove § 134.36(b), which

provides that an exception from

marking shall not apply to any article or

retail container bearing any words,

letters, names or symbols described in

§ 134.46 or § 134.47 which imply that an

article was made or produced in a

country other than the actual country of

origin. Since the special marking

requirements of § 134.46, as proposed to

be amended, would be triggered only

when the the marking appearing on an

imported article or its container is

capable of misleading or deceiving an

ultimate purchaser as to the actual

country of origin of the article,

§ 134.36(b), which serves the same

purpose, would be redundant and no

longer needed.

The proposal to modify § 134.46

reflected Customs practice in applying

the regulation. Customs has applied a

less stringent standard in determining

whether the country of origin marking

appearing on an imported article or its

container is acceptable. That is,

Customs takes into account the question

of whether the presence of words or

symbols on an imported article or its

container can mislead or deceive the

ultimate purchaser as to the actual

country of origin of the article.

Consequently, if a non-origin locality

reference appears on an imported article

or its container, Customs applies the

special marking requirements of

§ 134.46 only if it finds that the

reference may mislead or deceive the

ultimate purchaser as to the actual

country of origin of the imported article.

If Customs concludes that the nonorigin locality reference would not

mislead or deceive an ultimate

purchaser as to the actual country of

origin of the imported article, Customs’

policy is that the special marking

requirements of § 134.46 are not

triggered, and the origin marking only

needs to satisfy the general

requirements of permanency, legibility

and conspicuousness under 19 U.S.C.

1304 and 19 CFR part 134. This less

stringent application is evidenced in
44212 Federal Register / Vol. 62, No. 161 / Wednesday, August 20, 1997 / Rules and Regulations

numerous Customs headquarters ruling

letters.

Analysis of Comments

A total of 17 entities responded to the

proposal. Fourteen respondents

supported the proposal, although some

suggested certain changes. Three

commenters opposed the amendment.

Comments Supporting Customs

Proposal

Comments: One commenter stated

that the proposed amendment to

§ 134.46 would provide additional

flexibility in accommodating the

country of origin marking on the labels

of its food products, many of which

have very limited surface areas available

for labelling because of their size (e.g.,

small bags of candy, snacks, candy bars,

gum).

Two commenters stated that

references to places other than the

country of origin are not necessarily

misleading. The context must be

considered. These two commenters

believe that the proposed amendment

would bring the country of origin

marking regulations into closer

conformity with the purpose and

congressional intent of section 1304 and

would serve the goal of informed

compliance by bringing the country of

origin marking regulations into closer

conformity with positions taken in

certain Customs rulings.

Two other commenters stated that if

the proposed amendment is adopted, all

rulings which require proximity even

when there is no realistic possibility of

confusion should be revoked. They

specifically mentioned T. D. 86–129 of

June 26, 1996, which currently requires

that the country of origin statement on

footwear and its packaging must appear

in close proximity to any non-origin

reference, even in circumstances where

the non-origin reference would not be

misleading or deceptive to the

consumer. These commenters asked

why shoe boxes, for example, should be

held to a higher standard of compliance

than other products, such as wearing

apparel, where a design/decoration

exception can be used for not applying

the stricter marking requirements of

§ 134.46.

Another respondent believes that the

proposal will enhance harmonization

between the United States Customs

Service and the Bureau of Alcohol,

Tobacco and Firearms (ATF) regarding

country of origin labelling requirements

of imported foreign origin alcoholic

beverages. ATF labelling specialists are

aware of the general Customs

requirement that country of origin

markings should be located on all labels

of imported foreign alcoholic beverages

and that these markings should meet the

general requirements of permanency,

legibility and conspicuousness.

However, ATF labelling specialists are

not usually aware of the specifics of

Customs regulations or Customs rulings

which interpret Customs regulations.

Therefore, ATF labelling specialists may

approve a label for ATF purposes which

is not in strict accordance with Customs

requirements.

Finally, one commenter noted its

belief that the Customs proposal is

consistent with the World Trade

Organization Rules, Article 4.5.1. of the

Codex Standard for the labelling of

prepackaged foods (Codes STAN 1–

1985, Rev. 1–1995). This rule provides

that the ‘‘country of origin shall be

declared if its omission would mislead

or deceive the consumer’’. According to

the Codex standard, it is not required

that the country of origin be marked in

close proximity to the words indicating

a geographic non-origin location.

Response: Customs agrees with the

above comments. Any recipient of a

prior ruling which may be inconsistent

with this final rule should request

reconsideration of such ruling in the

context of the amended § 134.46.

Comments Supporting Customs

Proposal With Suggested Changes

Comment: One commenter supports

Customs proposal but suggests that

§ 134.46 be amended to read that a

country of origin mark must appear in

close proximity to a non-origin

geographical reference only if the

reference ‘‘will mislead or deceive the

ultimate purchaser’’. This commenter

states that the words ‘‘may mislead or

deceive’’ used in the proposed

regulation will lead to subjective and

differing interpretations. He suggests

that one way of remedying this problem

is to permit an importer to submit

statistically significant studies

concerning consumer perception of a

particular non-origin geographical

reference in order to demonstrate that

the reference does not mislead or

deceive the average consumer.

Another respondent supporting the

proposal suggests that the word ‘‘may’’

be replaced by ‘‘is likely to’’ in the final

rule if adopted. This will insure that the

§ 134.46 stricter marking requirements

will be imposed not when there is a

mere possibility, but rather a likelihood,

of misleading or deceiving the ultimate

purchaser.

Response: Customs does not agree

that the word ‘‘may’’ as proposed in the

amendment to § 134.46 should be

changed to ‘‘will’’ or ‘‘is likely to.’’

Customs believes that the ultimate

purchaser is provided with the greatest

assurance and protection against being

misled or deceived by non-origin marks

by granting Customs the discretion to

decide on a case-by-case basis whether

a mark ‘‘may mislead or deceive an

ultimate purchaser as to the actual

country of origin.’’ As a result, Customs

is able to be more flexible in deciding

not to apply the stricter marking

requirements of § 134.46 in every

instance where a mark has a non-origin

type reference. The word ‘‘will’’ or the

phrase ‘‘is likely to’’ could inhibit

accomplishment of these goals.

Therefore, Customs does not believe

that a change in the wording of the

proposed amendment is necessary.

Comment: One commenter supports

Customs proposal, but suggests that if

Customs adopts the proposal, it should

also provide an exception for manhole

covers, rings, frames and assemblies

thereof covered by 19 U.S.C. 1304(e).

This commenter believes that in the

absence of such an exclusion from the

scope of this regulation, it possibly

could be interpreted as ignoring the

statutory requirements of section

1304(e).

Response: Section 1304(e) of title 19

United States Code provides that:

No exception may be made under

subsection (a)(3) of this section with respect

to manhole rings or frames, covers, and

assemblies thereof each of which shall be

marked on the top surface with the English

name of the country of origin by means of die

stamping, cast-in-mold lettering, etching,

engraving, or an equally permanent method

of marking.

Since the special country of origin

marking requirements for these articles

in 19 U.S.C. 1304(e) are statutory, rather

than regulatory as the requirements of

§ 134.46 are, the proposed change, if

adopted, would have no effect on these

statutory requirements. The amendment

of § 134.46 will not implement any of

the marking exceptions under 19 U.S.C.

1304(a)(3), and therefore will have no

impact upon the general marking

requirements of § 1304(e). If the

proposed amendment to § 134.46 is

adopted, these articles still must satisfy

the statutory marking requirements of

§ 1304(e), regardless of § 134.46

marking. Therefore, Customs does not

agree with the suggestion.

Comment: One commenter supports

Customs proposal but also encourages

Customs to extend this initiative to

situations arising under § 134.47

(displaying the name of a place other

than the true country of origin as part

of a trademark, trade name or souvenir).

The commenter states that Customs

practice in considering whether to apply

§ 134.47 also involves an analysis of
Federal Register / Vol. 62, No. 161 / Wednesday, August 20, 1997 / Rules and Regulations 44213

potential consumer confusion arising

from the use of a trademark displaying

the name of a place other than the

country of origin. Thus the proposed

amendment would seem logically

applicable to § 134.47. Furthermore,

since Customs in its Notice views

§ 134.36(b) as aimed essentially at

combating confusing, misleading, or

deceptive marking, and as section

134.36(b) in turn identifies as equally

confusing, misleading or deceptive

those types of markings defined both by

§§ 134.46 and 134.47, it would seem

that § 134.47 is as good a candidate for

the proposed amendment as is § 134.46.

Both are equally aimed at avoiding

confusion to the ultimate purchaser.

Response: Customs agrees with the

commenter that Customs proposal of

applying the stricter marking

requirements of § 134.46 only if the nonorigin reference ‘‘may mislead or

deceive the ultimate purchaser as to the

actual country or origin’’ should be

applied to trademarks, trade names or

souvenir markings which depict nonorigin references. However, Customs

does not agree that this change can be

made under the existing proposal, but

that a new proposal is required.

Therefore, Customs will issue a new

notice of proposed rulemaking

proposing to either amend § 134.47

consistent with the determination in

this document or to remove § 134.47

since § 134.46, as amended, will

effectively apply to any non-origin type

reference, including those which are

part of a trademark, trade name or

souvenir marking.

Comment: One commenter suggests

that Customs in its final rule set forth

some examples of cases where the nonorigin reference would likely mislead or

deceive the ultimate purchaser as to the

actual country of origin of the article.

Response: Customs agrees that

samples of cases where the non-origin

type reference ‘‘may mislead or deceive

the ultimate purchaser as to the actual

country of origin of the article’’ would

assist the importing community in

better understanding the proper use of

§ 134.46. Therefore Customs offers the

following examples of non-origin

markings which Customs consistently

has ruled to be misleading or deceiving

to an ultimate purchaser, thus triggering

the requirements of § 134.46 that the

country of origin appear in close

proximity and in comparable size

lettering to the non-origin marking

preceded by the words ‘‘Made in,’’

‘‘Product of,’’ or other words of similar

meaning. In each of these examples, the

country of origin of the imported article

is foreign.

Example 1. ‘‘A product of ABC Corp.,

Chicago, Illinois.’’

Example 2. ‘‘Manufactured by ABC Corp.,

California, U.S.A.’’

Example 3. ‘‘Manufactured and Distributed

by ABC, Inc., Denver, Colorado.’’

Example 4. ‘‘Packed for ABC Corp.,

Greenville, South Carolina.’’

Comments Opposing Customs Proposed

Regulation

Comment: One commenter who

opposed Customs proposed regulation

believes that finalization of the

proposed amendments would be illadvised. This commenter urges Customs

either to withdraw the proposed

amendment in its entirety or to modify

the amendment to maintain the existing

proximity and lettering comparability

requirements in cases where the

reference to the U.S. is made in the

context of a statement relating to any

aspect of the production or distribution

of the product (e.g., ‘‘Designed in

U.S.A.,’’ ‘‘Made for XYZ Corp.,

California, U.S.A.,’’ or ‘‘Distributed by

ABC, Inc., Colorado, U.S.A.’’).

Specifically, the commenter is

concerned that the FTC’s stringent

policy of generally limiting the use of

‘‘Made in U.S.A.’’ claims to those

products that are ‘‘all or virtually all’’ of

U.S. content effectively prohibits U.S.

firms which add a substantial

percentage of a product’s value in the

U.S. from labelling it as U.S. origin. At

the same time, importers are regularly

permitted by Customs to label wholly

foreign-made products with

inconspicuous statements of the foreign

origin, although these products may be

festooned with American flags, brand

names which expressly refer to the U.S.,

or statements (e.g., ‘‘Designed in

U.S.A.,’’ ‘‘Made for [U.S. importer’s

name and address]’’), which could

mislead the consumer into assuming

that the article was produced in the U.S.

The only way to ensure that such

statements regarding operations

performed in the U.S. do not mislead

consumers is to insist that they be

coupled with the required country of

origin marking in accordance with

§ 134.46. Furthermore, if Customs

decides to proceed with the proposal or

some variation of it, Customs should do

so only after the conclusion of the FTC’s

workshop and the FTC’s larger review

proceeding, so that relevant information

concerning consumer perception

gathered in the FTC proceeding can be

considered by Customs in connection

with the proposed amendment to

§ 134.46.

Response: Customs agrees that

references to the U.S. made in the

context of a statement relating to any

aspect of the production or distribution

of the products, such as ‘‘Designed in

U.S.A.,’’ ‘‘Made for XYZ Corp.,

California, U.S.A.,’’ or ‘‘Distributed by

ABC Inc., Colorado, U.S.A.,’’ are

misleading to the ultimate purchaser

and would still require country of origin

marking in accordance with § 134.46,

even as amended by the proposal.

Therefore, Customs disagrees with the

idea that these types of markings would

be allowed under the proposed

amendment to § 134.46. In the prior

comment analysis, these types of

statements have been cited as examples

of misleading and deceptive statements

triggering the special marking

requirements of § 134.46. Also, Customs

does not agree that it is necessary to

consider the FTC’s review of consumer

perception gathered during the FTC’s

‘‘Made in USA’’ workshop in making its

decision as to the issuance of the final

rule amending § 134.46. Customs

believes that determining whether a

non-origin type reference ‘‘may mislead

or deceive an ultimate purchaser as to

the actual origin of the article’’ should

be limited to the mark itself and its

effect on the ultimate purchaser, not

based upon extrinsic evidence of

consumer perception. If Customs were

required to review information about

consumer perception when making a

determination as to whether the nonorigin reference may be misleading or

deceiving to the ultimate purchaser,

rather than just reviewing the mark

itself as is Customs present practice, this

could result in long delays in

merchandise being released.

Comment: One commenter opposing

Customs proposal believes that Customs

should tighten the enforcement of the

country of origin marking regulations,

rather than make them more lenient.

Response: Customs does not agree

that adopting the proposed amendment

would make the marking requirements

for imported foreign articles more

lenient. Customs has consistently

applied the standard of ‘‘whether the

non-origin reference may mislead or

deceive an ultimate purchaser as to the

actual origin’’ in practice and in its

rulings when determining whether a

non-origin type reference triggers the

special marking requirements of

§ 134.46. As a general rule, whenever

§ 134.46 is applicable, the article

already contains at least one country of

origin marking. This section has

triggered additional markings on an

automatic basis. The only difference

adopting the proposed amendment will

make is that the standard that Customs

has been applying will be codified so

the public will be informed and have

knowledge of it. The intent of the

marking statute is to indicate to the
44214 Federal Register / Vol. 62, No. 161 / Wednesday, August 20, 1997 / Rules and Regulations

ultimate purchaser the country of origin

of a foreign article and at the same time

protect an ultimate purchaser from

misleading or deceptive non-origin type

references. The proposed amendment to

§ 134.46 effectively accomplishes these

goals. It also gives the Customs field

offices discretion as to whether the

stringent marking requirements of

§ 134.46 should be applied in situations

where non-origin type references

appearing on the article or its container

are clearly not misleading or deceiving

as to the actual origin of the imported

article.

Comment: Another commenter

opposes Customs proposed regulation

because he believes that the proposed

change would open the door to

litigation due to differing opinions as to

what is ‘‘misleading or deceiving.’’ This

commenter observes that every time

Customs sends out a Notice of

Redelivery for a marking violation for

merchandise which is marked with a

country or locality other than the

country or locality in which the

merchandise was manufactured or

produced, the recipient of that Notice

will respond that the marking ‘‘will’’ not

mislead or deceive the ultimate

purchaser in the U.S.

Response: Customs disagrees that the

proposal would open the door to

litigation due to the differing opinions

as to what is ‘‘misleading or deceiving.’’

The proposed amendment applies a

standard based on whether the nonorigin type reference ‘‘may mislead or

deceive an ultimate purchaser as to the

actual country of origin of the article’’

rather than ‘‘will’’ as the commenter

mistakenly states, so that every case

does not become a question of fact, as

the commenter suggests.

Conclusion

In accordance with the analysis of

comments above and after further

consideration, Customs concludes that

the proposed amendments to

§§ 134.36(b) and 134.46 should be

adopted as proposed. It is noted that

certain editorial changes are made to

§ 134.46 which are not substantive in

effect. It is also noted that Customs

intends to issues a new Notice of

Proposed Rulemaking regarding

§ 134.47, as discussed earlier.

Regulatory Reflexibility Act and

Executive Order 12866

Pursuant to the provisions of the

Regulatory Flexibility Act (5 U.S.C. 601

et seq.), because this regulation eases

the country of origin marking

requirements and thus reduces the

regulatory burden, it is certified that the

regulations will not have a significant

economic impact on a substantial

number of small entities. Accordingly,

the regulations are not subject to the

regulatory analysis or other

requirements of 5 U.S.C. 603 and 604.

This document does not meet the

criteria for a ‘‘significant regulatory

action’’ as specified in Executive Order

12866.

Drafting Information: The principal

author of this document was Janet L.

Johnson, Regulations Branch. However,

personnel from other offices

participated in its development.

List of Subjects in Part 134

Customs duties and inspection,

Labeling, Packaging and containers.

Amendment to the Regulations

For the reasons set forth in the

preamble, part 134 of the Customs

Regulations (19 CFR Part 134) is

amended as set forth below.

PART 134—COUNTRY OF ORIGIN

MARKING

1. The general authority citation for

part 134 continues to read as follows:

Authority: 5 U.S.C. 301; 19 U.S.C. 66, 1202

(General Note 20, Harmonized Tariff

Schedule of the United States), 1304, 1624.

§ 134.36 [Amended]

2. Section 134.36 is amended by

revising its heading to read

‘‘Inapplicablity of Marking Exception

for Articles Processed by Importer’’,

removing the designation and heading

of paragraph (a) and removing

paragraph (b).

3. Section 134.46 is revised to read as

follows:

§ 134.46 Marking when name of country or

locality other than country of origin

appears.

In any case in which the words

‘‘United States,’’ or ‘‘American,’’ the

letters ‘‘U.S.A.,’’ any variation of such

words or letters, or the name of any city

or location in the United States, or the

name of any foreign country or locality

other than the country or locality in

which the article was manufactured or

produced appear on an imported article

or its container, and those words, letters

or names may mislead or deceive the

ultimate purchaser as to the actual

country of origin of the article, there

shall appear legibly and permanently in

close proximity to such words, letters or

name, and in at least a comparable size,

the name of the country of origin

preceded by ‘‘Made in,’’ ‘‘Product of,’’

or other words of similar meaning.

George J. Weise,

Commissioner of Customs.

Approved: July 1, 1997.

John P. Simpson,

Deputy Assistant Secretary of the Treasury.

[FR Doc. 97–22034 Filed 8–19–97; 8:45 am]

BILLING CODE 4820–02–U

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 8730]

RIN 1545–AT32

Allocations of Depreciation Recapture

Among Partners in a Partnership

AGENCY: Internal Revenue Service (IRS),

Treasury.

ACTION: Final regulations.

SUMMARY: This document contains final

regulations relating to the allocation of

depreciation recapture among partners

in a partnership. The final regulations

amend existing regulations to require

that gain characterized as depreciation

recapture be allocated, to the extent

possible, to the partners who took the

depreciation or amortization

deductions. The final regulations affect

partnerships (and their partners) that

sell or dispose of certain depreciable or

amortizable property.

DATES: These regulations are effective

August 20, 1997. For dates of

applicability of these regulations, see

§§ 1.704–3(f) and 1.1245–1(e)(2)(iv).

FOR FURTHER INFORMATION CONTACT:

Daniel J. Coburn, (202) 622–3050 (not a

toll-free number).

SUPPLEMENTARY INFORMATION:

Background

This document amends the Income

Tax Regulations (26 CFR part 1) relating

to the characterization and allocation of

depreciation recapture among partners

in a partnership. Section 1245 of the

Internal Revenue Code requires

taxpayers to recharacterize as ordinary

income some or all of the gain on the

disposition of certain types of business

properties. The amount recharacterized

as ordinary income (depreciation

recapture) is the lesser of (1) the gain

realized on the disposition, or (2) the

total deductions allowed or allowable

for depreciation or amortization from

the property.

On December 12, 1996, the IRS

published in the Federal Register (61