Today, the IRS issued temporary and proposed regulations on the income inclusion rules under section 50(d)(5) that apply to a lessee of investment credit property when the lessor elects to treat the lessee as having acquired the property under the section 48 regulations. Today’s regulations provide rules for income inclusion upon a lease termination, lease disposition by a lessee, or disposition of a partner’s or S corporation shareholder’s entire interest in a lessee partnership or S corporation outside of the recapture period. The rules coordinate with the basis adjustment rules under section 50(c) and require, in lieu of a basis adjustment, that a lessee must include the credit amount in gross income.