I.R.C. § 168(a) General Rule —
Except as otherwise provided in this section, the depreciation deduction provided
by section 167(a) for any tangible property shall be determined by using—
I.R.C. § 168(a)(1) —
the applicable depreciation method,
I.R.C. § 168(a)(2) —
the applicable recovery period, and
I.R.C. § 168(a)(3) —
the applicable convention.
I.R.C. § 168(b) Applicable Depreciation Method —
For purposes of this section—
I.R.C. § 168(b)(1) In General —
Except as provided in paragraphs (2) and (3), the applicable depreciation method is—
I.R.C. § 168(b)(1)(A) —
the 200 percent declining balance method,
I.R.C. § 168(b)(1)(B) —
switching to the straight line method for the 1st taxable year for which using the
straight line method with respect to the adjusted basis as of the beginning of such
year will yield a larger allowance.
I.R.C. § 168(b)(2) 150 Percent Declining Balance Method In Certain Cases —
Paragraph (1) shall be applied by substituting
“150 percent” for “200 percent” in the case of—
I.R.C. § 168(b)(2)(A) —
any 15-year or 20-year property not referred to in paragraph (3),
I.R.C. § 168(b)(2)(B) —
any property (other than property described in paragraph (3))
which is a qualified smart electric meter or qualified smart electric grid system,
or
I.R.C. § 168(b)(2)(C) —
any property (other than property described in paragraph (3))
with respect to which the taxpayer elects under paragraph (5) to have the provisions of this paragraph apply.
I.R.C. § 168(b)(3) Property To Which Straight Line Method Applies —
The applicable depreciation method shall be the straight line method in the case
of the following property:
I.R.C. § 168(b)(3)(A) —
Nonresidential real property.
I.R.C. § 168(b)(3)(B) —
Residential rental property.
I.R.C. § 168(b)(3)(C) —
Any railroad grading or tunnel bore.
I.R.C. § 168(b)(3)(D) —
Property with respect to which the taxpayer elects under paragraph (5) to have the provisions of this paragraph apply.
I.R.C. § 168(b)(3)(E) —
Property described in subsection (e)(3)(D)(ii).
I.R.C. § 168(b)(3)(F) —
Water utility property described in subsection (e)(5).
I.R.C. § 168(b)(3)(G) —
Qualified improvement property described in subsection (e)(6).
I.R.C. § 168(b)(5) Election —
An election under paragraph (2)(D) or (3)(D) may be made with respect to 1 or more classes of property for any taxable year and
once made with respect to any class shall apply to all property in such class placed
in service during such taxable year. Such an election, once made, shall be irrevocable.
I.R.C. § 168(c) Applicable Recovery Period
For purposes of this section, the applicable recovery period shall be determined
in accordance with the following table:
In the case of: | The applicable recovery period is: |
3-year property | 3 years |
5-year property | 5 years |
7-year property | 7 years |
10-year property | 10 years |
15-year property. | 15 years |
20-year property | 20 years |
Water utility property | 25 years |
Residential rental property | 27.5 years |
Nonresidential real property | 39 years |
Any railroad grading or tunnel bore | 50 years |
I.R.C. § 168(d) Applicable Convention —
For purposes of this section—
I.R.C. § 168(d)(1) In General —
Except as otherwise provided in this subsection, the applicable convention is the
half-year convention.
I.R.C. § 168(d)(2) Real Property —
In the case of—
I.R.C. § 168(d)(2)(A) —
nonresidential real property,
I.R.C. § 168(d)(2)(B) —
residential rental property, and
I.R.C. § 168(d)(2)(C) —
any railroad grading or tunnel bore,
the applicable convention is the mid-month convention.
I.R.C. § 168(d)(3) Special Rule Where Substantial Property Placed In Service During Last 3 Months Of
Taxable Year
I.R.C. § 168(d)(3)(A) In General —
Except as provided in regulations, if during any taxable year—
I.R.C. § 168(d)(3)(A)(i) —
the aggregate bases of property to which this section applies placed in service during
the last 3 months of the taxable year, exceed
I.R.C. § 168(d)(3)(A)(ii) —
40 percent of the aggregate bases of property to which this section applies placed
in service during such taxable year,
the applicable convention for all property to which this section applies placed in
service during such taxable year shall be the mid-quarter convention.
I.R.C. § 168(d)(3)(B) Certain Property Not Taken Into Account —
For purposes of subparagraph (A), there shall not be taken into account—
I.R.C. § 168(d)(3)(B)(i) —
any nonresidential real property, residential rental property, and railroad grading
or tunnel bore, and
I.R.C. § 168(d)(3)(B)(ii) —
any other property placed in service and disposed of during the same taxable year.
I.R.C. § 168(d)(4) Definitions
I.R.C. § 168(d)(4)(A) Half-Year Convention —
The half-year convention is a convention which treats all property placed in service
during any taxable year (or disposed of during any taxable year) as placed in service
(or disposed of)
on the mid-point of such taxable year.
I.R.C. § 168(d)(4)(B) Mid-Month Convention —
The mid-month convention is a convention which treats all property placed in service
during any month (or disposed of during any month) as placed in service (or disposed
of) on the mid-point of such month.
I.R.C. § 168(d)(4)(C) Mid-Quarter Convention —
The mid-quarter convention is a convention which treats all property placed in service
during any quarter of a taxable year
(or disposed of during any quarter of a taxable year) as placed in service (or disposed
of) on the mid-point of such quarter.
I.R.C. § 168(e) Classification Of Property —
For purposes of this section—
I.R.C. § 168(e)(1) In General
Except as otherwise provided in this subsection, property shall be classified under
the following table:
Property shall be treated as: | If such property has a class life (in years) of: |
3-year property | 4 or less |
5-year property | More than 4 but less than 10 |
7-year property | 10 or more but less than 16 |
10-year property | 16 or more but less than 20 |
15-year property | 20 or more but less than 25 |
20-year property | 25 or more. |
I.R.C. § 168(e)(2) Residential Rental Or Nonresidential Real Property
I.R.C. § 168(e)(2)(A) Residential Rental Property
I.R.C. § 168(e)(2)(A)(i) Residential Rental Property —
The term “residential rental property”
means any building or structure if 80 percent or more of the gross rental income
from such building or structure for the taxable year is rental income from dwelling
units.
I.R.C. § 168(e)(2)(A)(ii) Definitions —
For purposes of clause (i)—
I.R.C. § 168(e)(2)(A)(ii)(I) —
the term “dwelling unit”
means a house or apartment used to provide living accommodations in a building or
structure, but does not include a unit in a hotel, motel, or other establishment
more than one-half of the units in
which are used on a transient basis, and
I.R.C. § 168(e)(2)(A)(ii)(II) —
if any portion of the building or structure is occupied by the taxpayer, the gross
rental income from such building or structure shall include the rental value of the
portion so occupied.
I.R.C. § 168(e)(2)(B) Nonresidential Real Property —
The term “nonresidential real property” means section 1250 property which is not—
I.R.C. § 168(e)(2)(B)(i) —
residential rental property, or
I.R.C. § 168(e)(2)(B)(ii) —
property with a class life of less than 27.5 years.
I.R.C. § 168(e)(3) Classification Of Certain Property
I.R.C. § 168(e)(3)(A) 3-Year Property —
The term “3-year property” includes—
I.R.C. § 168(e)(3)(A)(i) —
any race horse—
I.R.C. § 168(e)(3)(A)(i)(I) —
which is placed in service before January 1, 2022, and
I.R.C. § 168(e)(3)(A)(i)(II) —
which is placed in service after December 31, 2021, and which is more than 2 years
old at the time such horse is placed in service by such purchaser,
I.R.C. § 168(e)(3)(A)(ii) —
any horse other than a race horse which is more than 12 years old at the time it
is placed in service, and
I.R.C. § 168(e)(3)(A)(iii) —
any qualified rent-to-own property.
I.R.C. § 168(e)(3)(B) 5-Year Property —
The term
“5-year property” includes—
I.R.C. § 168(e)(3)(B)(i) —
any automobile or light general purpose truck,
I.R.C. § 168(e)(3)(B)(ii) —
any semi-conductor manufacturing equipment,
I.R.C. § 168(e)(3)(B)(iii) —
any computer-based telephone central office switching equipment,
I.R.C. § 168(e)(3)(B)(iv) —
any qualified technological equipment,
I.R.C. § 168(e)(3)(B)(v) —
any section 1245 property used in connection with research and experimentation,
I.R.C. § 168(e)(3)(B)(vi) —
any property which—
I.R.C. § 168(e)(3)(B)(vi)(I) —
is described in subparagraph (A) of section 48(a)(3) (or would be so described if “solar or wind energy” were substituted for “solar
energy” in clause (i) thereof and the last sentence of such section did not apply
to such subparagraph),
I.R.C. § 168(e)(3)(B)(vi)(II) —
is described in paragraph (15) of section 48(l) (as in effect on the day before the date of the enactment of the Revenue Reconciliation
Act of 1990) and has a power production capacity of not greater than 80 megawatts,
or
I.R.C. § 168(e)(3)(B)(vi)(III) —
is described in section 48(l)(3)(A)(ix) (as in effect on the day before the date of the enactment of the Revenue Reconciliation
Act of 1990), and
I.R.C. § 168(e)(3)(B)(vii) —
any machinery or equipment (other than any grain bin, cotton ginning asset, fence,
or other land improvement)
which is used in a farming business (as defined in section 263A(e)(4)), the original use of which commences with the taxpayer after December 31, 2017.
Nothing in any provision of law shall
be construed to treat property as not being described in subclause
(I) or (II) of clause (vi) by reason of being public utility property.
I.R.C. § 168(e)(3)(C) 7-Year Property —
The term “7-year property” includes—
I.R.C. § 168(e)(3)(C)(i) —
any railroad track,
I.R.C. § 168(e)(3)(C)(ii) —
any motorsports entertainment complex,
I.R.C. § 168(e)(3)(C)(iii) —
any Alaska natural gas pipeline,
I.R.C. § 168(e)(3)(C)(iv) —
any natural gas gathering line the original use of which commences with the taxpayer
after April 11, 2005, and
I.R.C. § 168(e)(3)(C)(v) —
any property which—
I.R.C. § 168(e)(3)(C)(v)(I) —
does not have a class life, and
I.R.C. § 168(e)(3)(C)(v)(II) —
is not otherwise classified under paragraph (2) or this paragraph.
I.R.C. § 168(e)(3)(D) 10-Year Property —
The term “10-year property” includes—
I.R.C. § 168(e)(3)(D)(i) —
any single purpose agricultural or horticultural structure (within the meaning of
subsection (i)(13)),
I.R.C. § 168(e)(3)(D)(ii) —
any tree or vine bearing fruit or nuts,
I.R.C. § 168(e)(3)(D)(iii) —
any qualified smart electric meter, and
I.R.C. § 168(e)(3)(D)(iv) —
any qualified smart electric grid system.
I.R.C. § 168(e)(3)(E) 15-Year Property —
The term “15-year property” includes—
I.R.C. § 168(e)(3)(E)(i) —
any municipal wastewater treatment plant,
I.R.C. § 168(e)(3)(E)(ii) —
any telephone distribution plant and comparable equipment used for 2-way exchange
of voice and data communications,
I.R.C. § 168(e)(3)(E)(iii) —
any section 1250 property which is a retail motor fuels outlet (whether or not food or other convenience
items are sold at the outlet),
I.R.C. § 168(e)(3)(E)(iv) —
initial clearing and grading land improvements with respect to gas utility property,
I.R.C. § 168(e)(3)(E)(v) —
any section 1245 property (as defined in section 1245(a)(3)) used in the
transmission at 69 or more kilovolts of electricity for sale and the original use
of which commences with the taxpayer after April 11, 2005,
I.R.C. § 168(e)(3)(E)(vi) —
any natural gas distribution line the original use of which commences with the taxpayer
after April 11, 2005, and which is placed in service before January 1, 2011, and
I.R.C. § 168(e)(3)(E)(vii) —
any qualified improvement property.
I.R.C. § 168(e)(3)(F) 20-Year Property —
The term “20-year property” means initial clearing and grading land improvements
with respect to any electric utility transmission and distribution plant.
I.R.C. § 168(e)(4) Railroad Grading Or Tunnel Bore —
The term “railroad grading or tunnel bore” means all improvements resulting from
excavations (including tunneling), construction of embankments, clearings, diversions
of roads and streams, sodding of slopes, and from similar work necessary to provide,
construct, reconstruct, alter, protect, improve, replace, or restore a roadbed or
right-of-way for railroad track.
I.R.C. § 168(e)(5) Water Utility Property —
The term “water utility property” means property—
I.R.C. § 168(e)(5)(A) —
which is an integral part of the gathering, treatment, or commercial distribution
of water, and which, without regard to this paragraph, would be 20-year property,
and
I.R.C. § 168(e)(5)(B) —
any municipal sewer.
I.R.C. § 168(e)(6) Qualified Improvement Property
I.R.C. § 168(e)(6)(A) In General —
The term “qualified improvement property”
means any improvement made by the taxpayer to an interior portion of a building which
is nonresidential real property if such improvement is placed in service after the
date such building was first placed in service.
I.R.C. § 168(e)(6)(B) Certain Improvements Not Included —
Such term shall not include any improvement for which the expenditure is attributable
to—
I.R.C. § 168(e)(6)(B)(i) —
the enlargement of the building,
I.R.C. § 168(e)(6)(B)(ii) —
any elevator or escalator, or
I.R.C. § 168(e)(6)(B)(iii) —
the internal structural framework of the building.
I.R.C. § 168(f) Property To Which Section Does Not Apply —
This section shall not apply to—
I.R.C. § 168(f)(1) Certain Methods Of Depreciation —
Any property if—
I.R.C. § 168(f)(1)(A) —
the taxpayer elects to exclude such property from the application of this section,
and
I.R.C. § 168(f)(1)(B) —
for the 1st taxable year for which a depreciation deduction would be allowable with
respect to such property in the hands of the taxpayer, .
the property is properly depreciated under the unit-of-production method or any method
of depreciation not expressed in a term of years (other than the retirement-replacement-betterment
method or similar method)
I.R.C. § 168(f)(2) Certain Public Utility Property —
Any public utility property (within the meaning of subsection (i)(10)) if the taxpayer does not use a normalization method of accounting.
I.R.C. § 168(f)(4) Sound Recordings —
Any works which result from the fixation of a series of musical, spoken, or other
sounds, regardless of the nature of the material (such as discs, tapes, or other
phonorecordings) in which such sounds are embodied.
I.R.C. § 168(f)(5) Certain Property Placed In Service In Churning Transactions
I.R.C. § 168(f)(5)(A) In General —
Property—
I.R.C. § 168(f)(5)(A)(i) —
described in paragraph (4) of section 168(e) (as in effect before the amendments
made by the Tax Reform Act of 1986), or
I.R.C. § 168(f)(5)(A)(ii) —
which would be described in such paragraph if such paragraph were applied by substituting
“1987” for “1981"
and “1986” for “1980” each place such terms appear.
I.R.C. § 168(f)(5)(B) Subparagraph (A)(ii) Not To Apply —
Clause (ii) of subparagraph (A) shall not apply to—
I.R.C. § 168(f)(5)(B)(i) —
any residential rental property or nonresidential real property,
I.R.C. § 168(f)(5)(B)(ii) —
any property if, for the 1st taxable year in which such property is placed in service—
I.R.C. § 168(f)(5)(B)(ii)(I) —
the amount allowable as a deduction under this section (as in effect before the
date of the enactment of this paragraph) with respect to such property is greater
than,
I.R.C. § 168(f)(5)(B)(ii)(II) —
the amount allowable as a deduction under this section (as in effect on or after
such date and using the half-year convention) for such taxable year, or
I.R.C. § 168(f)(5)(B)(iii) —
any property to which this section
(as amended by the Tax Reform Act of 1986) applied in the hands of the transferor.
I.R.C. § 168(f)(5)(C) Special Rule —
In the case of any property to which this section would apply but for this paragraph,
the depreciation deduction under section 167 shall be determined under the provisions of this section as in effect before the
amendments made by section 201 of the Tax Reform Act of 1986.
I.R.C. § 168(g) Alternative Depreciation System For Certain Property
I.R.C. § 168(g)(1) In General —
In the case of—
I.R.C. § 168(g)(1)(A) —
any tangible property which during the taxable year is used predominantly outside
the United States,
I.R.C. § 168(g)(1)(B) —
any tax-exempt use property,
I.R.C. § 168(g)(1)(C) —
any tax-exempt bond financed property,
I.R.C. § 168(g)(1)(D) —
any imported property covered by an Executive order under paragraph (6),
I.R.C. § 168(g)(1)(E) —
any property to which an election under paragraph (7) applies,
I.R.C. § 168(g)(1)(F) —
any property described in paragraph (8), and
I.R.C. § 168(g)(1)(G) —
any property with a recovery period of 10 years or more which is held by an electing
farming business (as defined in section 163(j)(7)(C)),
the depreciation deduction provided by section 167(a) shall be determined under the alternative depreciation system.
I.R.C. § 168(g)(2) Alternative Depreciation System —
For purposes of paragraph (1), the alternative depreciation system is depreciation determined by using—
I.R.C. § 168(g)(2)(A) —
the straight line method (without regard to salvage value),
I.R.C. § 168(g)(2)(B) —
the applicable convention determined under subsection (d), and
I.R.C. § 168(g)(2)(C)
a recovery period determined under the following table:
The recovery period shall be: | In the case of: |
(i) Property not described in clause (ii) or (iii) | The class life. |
(ii) Personal property with no class life | 12 years. |
(iii) Residential rental property | 30 years. |
(iv) Nonresidential real property | 40 years. |
(v) Any railroad grading or tunnel bore or water utility property | 50 years. |
I.R.C. § 168(g)(3) Special Rules For Determining Class Life
I.R.C. § 168(g)(3)(A) Tax-Exempt Use Property Subject To Lease —
In the case of any tax-exempt use property subject to a lease, the recovery period
used for purposes of paragraph (2) shall (notwithstanding any
other subparagraph of this paragraph) in no event be less than 125 percent of the
lease term.
I.R.C. § 168(g)(3)(B) Special Rule For Certain Property Assigned To Classes —
For purposes of paragraph (2), in the case of property described in any of the following subparagraphs of subsection
(e)(3), the class life shall be determined as follows:
If property is described in subparagraph: | The class life is: |
(A)(iii) | 4 |
(B)(ii) | 5 |
(B)(iii) | 9.5 |
(B)(vii) | 10 |
(C)(i) | 10 |
(C)(iii) | 22 |
(C)(iv) | 14 |
(D)(i) | 15 |
(D)(ii) | 20 |
(E)(i) | 24 |
(E)(ii) | 24 |
(E)(iii) | 20 |
(E)(iv) | 20 |
(E)(v) | 30 |
(E)(vi) | 35 |
(E)(vii) | 20 |
(F) | 25 |
I.R.C. § 168(g)(3)(C) Qualified Technological Equipment —
In the case of any qualified technological equipment, the recovery period used for
purposes of paragraph (2) shall be 5 years.
I.R.C. § 168(g)(3)(D) Automobiles, Etc. —
In the case of any automobile or light general purpose truck, the recovery period
used for purposes of paragraph (2) shall be 5 years.
I.R.C. § 168(g)(3)(E) Certain Real Property —
In the case of any section 1245 property which is real property with no class life, the recovery period used for
purposes of paragraph (2) shall be 40 years.
I.R.C. § 168(g)(4) Exception For Certain Property Used Outside United States —
Subparagraph (A) of paragraph (1) shall not apply to—
I.R.C. § 168(g)(4)(A) —
any aircraft which is registered by the Administrator of the Federal Aviation Agency
and which is operated to and from the United States or is operated under contract
with the United States;
I.R.C. § 168(g)(4)(B) —
rolling stock which is used within and without the United States and which is—
I.R.C. § 168(g)(4)(B)(i) —
of a rail carrier subject to part A of subtitle IV of title 49, or
I.R.C. § 168(g)(4)(B)(ii) —
of a United States person (other than a corporation described in clause (i))
but only if the rolling stock is not leased to one or more foreign persons for periods
aggregating more than 12 months in any 24-month period;
I.R.C. § 168(g)(4)(C) —
any vessel documented under the laws of the United
States which is operated in the foreign or domestic commerce of the United States;
I.R.C. § 168(g)(4)(D) —
any motor vehicle of a United States person (as defined in section 7701(a)(30))
which is operated to and from the United States;
I.R.C. § 168(g)(4)(E) —
any container of a United States person which is used in the transportation of property
to and from the United States;
I.R.C. § 168(g)(4)(F) —
any property (other than a vessel or an aircraft) of a United States person which
is used for the purpose of exploring for, developing, removing, or transporting resources
from the outer Continental Shelf (within the meaning of section 2 of the Outer Continental Shelf Lands Act, as amended and supplemented; (43 U.S.C. 1331));
I.R.C. § 168(g)(4)(G) —
any property which is owned by a domestic corporation or by a United States citizen
(other than a citizen entitled to the benefits of section 931 or 933) and which is used predominantly in a possession of the United States by such a
corporation or such a citizen, or by a corporation created or organized in, or under
the
law of, a possession of the United States;
I.R.C. § 168(g)(4)(H) —
any communications satellite (as defined in section 103(3) of the Communications Satellite Act of 1962, 47 U.S.C. 702(3)), or any interest therein, of a United States person;
I.R.C. § 168(g)(4)(I) —
any cable, or any interest therein, of a domestic corporation engaged in furnishing
telephone service to which section 168(i)(10)(C) applies
(or of a wholly owned domestic subsidiary of such a corporation), if such cable
is part of a submarine cable system which constitutes part of a communication link
exclusively between the United States and one or more foreign countries;
I.R.C. § 168(g)(4)(J) —
any property (other than a vessel or an aircraft) of a United States person which
is used in international or territorial waters within the northern portion of the
Western Hemisphere for the purpose of exploring for, developing, removing, or transporting
resources from ocean waters or deposits under such waters;
I.R.C. § 168(g)(4)(K) —
any property described in section 48(l)(3)(A)(ix) (as in effect on the day before the date of the enactment of the Revenue Reconciliation
Act of 1990) which is owned by a United States person and which is used in international
or territorial waters to generate energy for use in the United States; and
I.R.C. § 168(g)(4)(L) —
any satellite (not described in subparagraph (H)) or other spacecraft (or any interest therein) held by a United States person if
such satellite or other spacecraft was launched from within the United States.
For purposes of subparagraph (J), the term “northern portion of the Western Hemisphere”
means the area lying west of the 30th meridian west of Greenwich, east of the international
dateline, and north of the Equator, but not including any foreign country which is
a country of South America.
I.R.C. § 168(g)(5) Tax-Exempt Bond Financed Property —
For purposes of this subsection—
I.R.C. § 168(g)(5)(A) In General —
Except as otherwise provided in this paragraph, the term “tax-exempt bond financed
property” means any property to the extent such property is financed (directly or
indirectly) by an obligation the interest on which is exempt from tax under section
103(a).
I.R.C. § 168(g)(5)(B) Allocation Of Bond Proceeds —
For purposes of subparagraph (A), the proceeds of any obligation shall be treated as used to finance property acquired
in connection with the issuance of such obligation in the order in which such property
is placed in service.
I.R.C. § 168(g)(5)(C) Qualified Residential Rental Projects —
The term “tax-exempt bond financed property” shall not include any qualified residential
rental project (within the meaning of section 142(a)(7)).
I.R.C. § 168(g)(6) Imported Property
I.R.C. § 168(g)(6)(A) Countries Maintaining Trade Restrictions Or Engaging In Discriminatory Acts —
If the President determines that a foreign country—
I.R.C. § 168(g)(6)(A)(i) —
maintains nontariff trade restrictions, including variable import fees, which substantially
burden United States commerce in a manner inconsistent with provisions of trade agreements,
or
I.R.C. § 168(g)(6)(A)(ii) —
engages in discriminatory or other acts (including tolerance of international cartels)
or policies unjustifiably restricting United States commerce,
the President may by Executive order provide for the application of paragraph (1)(D) to any article or class of articles manufactured or produced in such foreign country
for such period as may be provided by such Executive order. Any period specified
in the preceding sentence shall not apply to any property ordered before (or the
construction, reconstruction, or erection of which began before) the date of the
Executive order unless the
President determines an earlier date to be in the public interest and specifies such
date in the Executive order.
I.R.C. § 168(g)(6)(B) Imported Property —
For purposes of this subsection, the term “imported property” means any property
if—
I.R.C. § 168(g)(6)(B)(i) —
such property was completed outside the United States, or
I.R.C. § 168(g)(6)(B)(ii) —
less than 50 percent of the basis of such property is attributable to value added
within the United States.
For purposes of this subparagraph, the term “United
States” includes the Commonwealth of Puerto Rico and the possessions of the United
States.
I.R.C. § 168(g)(7) Election To Use Alternative Depreciation System
I.R.C. § 168(g)(7)(A) In General —
If the taxpayer makes an election under this paragraph with respect to any class
of property for any taxable year, the alternative depreciation system under this
subsection shall apply to all property in such class placed in service during such
taxable year. Notwithstanding the preceding sentence, in the case of nonresidential
real property or residential rental property, such election may be made separately
with respect to each property.
I.R.C. § 168(g)(7)(B) Election Irrevocable —
An election under subparagraph (A), once made, shall be irrevocable.
I.R.C. § 168(g)(8) Electing Real Property Trade Or Business —
The property described in this paragraph shall consist of any nonresidential real
property, residential rental property, and qualified improvement property held by
an electing real property trade or business (as defined in 163(j)(7)(B)).
I.R.C. § 168(h) Tax-Exempt Use Property
I.R.C. § 168(h)(1) In General —
For purposes of this section—
I.R.C. § 168(h)(1)(A) Property Other Than Nonresidential Real Property —
Except as otherwise provided in this subsection, the term “tax-exempt use property”
means that portion of any tangible property (other than nonresidential real property)
leased to a tax-exempt entity.
I.R.C. § 168(h)(1)(B) Nonresidential Real Property
I.R.C. § 168(h)(1)(B)(i) In General —
In the case of nonresidential real property, the term
“tax-exempt use property” means that portion of the property leased to a tax-exempt
entity in a disqualified lease.
I.R.C. § 168(h)(1)(B)(ii) Disqualified Lease —
For purposes of this subparagraph, the term “disqualified lease” means any lease
of the property to a tax-exempt entity, but only if—
I.R.C. § 168(h)(1)(B)(ii)(I) —
part or all of the property was financed
(directly or indirectly) by an obligation the interest on which is exempt from tax
under section 103(a)
and such entity (or a related entity) participated in such financing,
I.R.C. § 168(h)(1)(B)(ii)(II) —
under such lease there is a fixed or determinable price purchase or sale option
which involves such entity (or a related entity) or there is the equivalent of such
an option,
I.R.C. § 168(h)(1)(B)(ii)(III) —
such lease has a lease term in excess of 20 years, or
I.R.C. § 168(h)(1)(B)(ii)(IV) —
such lease occurs after a sale (or other transfer) of the property by, or lease
of the property from, such entity (or a related entity) and such property has been
used by such entity (or a related entity) before such sale (or other transfer)
or lease.
I.R.C. § 168(h)(1)(B)(iii) 35-Percent Threshold Test —
Clause (i) shall apply to any property only if the portion of such property leased to tax-exempt
entities in disqualified leases is more than 35 percent of the property.
I.R.C. § 168(h)(1)(B)(iv) Treatment Of Improvements —
For purposes of this subparagraph, improvements to a property (other than land)
shall not be treated as a separate property.
I.R.C. § 168(h)(1)(B)(v) Leasebacks During 1st 3 Months Of Use Not Taken Into Account —
Subclause (IV) of clause (ii) shall not apply to any property which is leased within 3 months after the date such
property is first used by the tax-exempt entity (or a related entity).
I.R.C. § 168(h)(1)(C) Exception For Short-Term Leases
I.R.C. § 168(h)(1)(C)(i) In General —
Property shall not be treated as tax-exempt use property merely by reason of a short-term
lease.
I.R.C. § 168(h)(1)(C)(ii) Short-Term Lease —
For purposes of clause (i), the term “short-term lease” means any lease the term of which is—
I.R.C. § 168(h)(1)(C)(ii)(I) —
less than 3 years, and
I.R.C. § 168(h)(1)(C)(ii)(II) —
less than the greater of 1 year or 30 percent of the property's present class life.
In the case of nonresidential real property and property
with no present class life, subclause (II) shall not apply.
I.R.C. § 168(h)(1)(D) Exception Where Property Used In Unrelated Trade Or Business —
The term “tax-exempt use property” shall not include any portion of a property if
such portion is predominantly used by the tax-exempt entity (directly or through
a partnership of which such entity is a partner) in an unrelated trade or business
the income of which is subject to tax under section 511. For purposes of subparagraph (B)(iii), any portion of a property so used shall not be treated as leased to a tax-exempt
entity in a disqualified lease.
I.R.C. § 168(h)(1)(E) Nonresidential Real Property Defined —
For purposes of this paragraph, the term “nonresidential real property” includes
residential rental property.
I.R.C. § 168(h)(2) Tax-Exempt Entity
I.R.C. § 168(h)(2)(A) In General —
For purposes of this subsection, the term “tax-exempt entity” means—
I.R.C. § 168(h)(2)(A)(i) —
the United States, any State or political subdivision thereof, any possession of
the United States, or any agency or instrumentality of any of the foregoing,
I.R.C. § 168(h)(2)(A)(ii) —
an organization (other than a cooperative described in section 521)
which is exempt from tax imposed by this chapter,
I.R.C. § 168(h)(2)(A)(iii) —
any foreign person or entity, and
I.R.C. § 168(h)(2)(A)(iv) —
any Indian tribal government described in section 7701(a)(40).
For purposes of applying this subsection, any Indian tribal government referred to
in clause (iv) shall be treated in the same manner as a State.
I.R.C. § 168(h)(2)(B) Exception For Certain Property Subject To United States Tax And Used By Foreign Person
Or Entity —
Clause (iii) of subparagraph (A) shall not apply with respect to any property if more than 50 percent of the gross
income for the taxable year derived by the foreign person or entity from the use
of such property is—
I.R.C. § 168(h)(2)(B)(i) —
subject to tax under this chapter, or
I.R.C. § 168(h)(2)(B)(ii) —
included under section 951 in the gross income of a United States shareholder for the taxable year with or
within which ends the taxable year of the controlled foreign corporation in which
such income was derived.
For purposes of the preceding sentence, any exclusion or exemption shall not apply
for purposes of determining the amount of the gross income so derived, but shall
apply for purposes of determining the portion of such gross income subject to tax
under this chapter.
I.R.C. § 168(h)(2)(C) Foreign Person Or Entity —
For purposes of this paragraph, the term “foreign person or entity” means—
I.R.C. § 168(h)(2)(C)(i) —
any foreign government, any international organization, or any agency or instrumentality
of any of the foregoing, and
I.R.C. § 168(h)(2)(C)(ii) —
any person who is not a United States person.
Such term does not include any foreign partnership or
other foreign pass-thru entity.
I.R.C. § 168(h)(2)(D) Treatment Of Certain Taxable Instrumentalities —
For purposes of this subsection, a corporation shall not be treated as an instrumentality
of the United States or of any State or political subdivision thereof if—
I.R.C. § 168(h)(2)(D)(i) —
all of the activities of such corporation are subject to tax under this chapter,
and
I.R.C. § 168(h)(2)(D)(ii) —
a majority of the board of directors of such corporation is not selected by the
United States or any State or political subdivision thereof.
I.R.C. § 168(h)(2)(E) Certain Previously Tax-Exempt Organizations
I.R.C. § 168(h)(2)(E)(i) In General —
For purposes of this subsection, an organization shall be treated as an organization
described in subparagraph (A)(ii) with respect to any
property (other than property held by such organization) if such
organization was an organization (other than a cooperative described in section 521)
exempt from tax imposed by this chapter at any time during the 5-year period ending
on the date such property was first used by such organization. The preceding sentence
and subparagraph (D)(ii) shall not apply to the Federal Home Loan Mortgage Corporation.
I.R.C. § 168(h)(2)(E)(ii) Election Not To Have Clause (i) Apply
I.R.C. § 168(h)(2)(E)(ii)(I) In General —
In the case of an organization formerly exempt from tax under section 501(a)
as an organization described in section 501(c)(12), clause (i) shall not apply to such organization with respect to any property if such organization
elects not to be exempt from tax under section 501(a) during the tax-exempt use period with respect to such property.
I.R.C. § 168(h)(2)(E)(ii)(II) Tax-Exempt Use Period —
For purposes of subclause (I), the term “tax-exempt use period” means the period beginning with the taxable year
in which the property described in subclause (I) is first used by the organization and ending with the close of the 15th taxable
year following the last taxable year of the applicable recovery period of such property.
I.R.C. § 168(h)(2)(E)(ii)(III) Election —
Any election under subclause (I), once made, shall be irrevocable.
I.R.C. § 168(h)(2)(E)(iii) Treatment Of Successor Organizations —
Any organization which is engaged in activities substantially similar to those engaged
in by a predecessor organization shall succeed to the treatment under this subparagraph
of such predecessor organization.
I.R.C. § 168(h)(2)(E)(iv) First Used —
For purposes of this subparagraph, property shall be treated as first used by the
organization—
I.R.C. § 168(h)(2)(E)(iv)(I) —
when the property is first placed in service under a lease to such organization,
or
I.R.C. § 168(h)(2)(E)(iv)(II) —
in the case of property leased to
(or held by) a partnership (or other pass-thru entity) in which the organization
is a member, the later of when such property is first used by such partnership or
pass-thru entity or when such organization is first a member of such partnership
or pass-thru entity.
I.R.C. § 168(h)(3) Special Rules For Certain High Technology Equipment
I.R.C. § 168(h)(3)(A) Exemption Where Lease Term Is 5 Years Or Less —
For purposes of this section, the term “tax-exempt use property” shall not include
any qualified technological equipment if the lease to the tax-exempt entity has a
lease term of 5 years or less. Notwithstanding subsection (i)(3)(A)(i), in determining a lease term for purposes of the preceding sentence, there shall
not be taken into account any option of the lessee to renew at the fair market value
rent determined at the time of renewal; except that the aggregate period not taken
into account by reason of this sentence shall not exceed 24 months.
I.R.C. § 168(h)(3)(B) Exception For Certain Property
I.R.C. § 168(h)(3)(B)(i) In General —
For purposes of subparagraph (A), the term “qualified technological equipment” shall not include any property leased
to a tax-exempt entity if—
I.R.C. § 168(h)(3)(B)(i)(I) —
part or all of the property was financed
(directly or indirectly) by an obligation the interest on which is exempt from tax
under section 103(a),
I.R.C. § 168(h)(3)(B)(i)(II) —
such lease occurs after a sale (or other transfer) of the property by, or lease
of such property from, such entity (or related entity) and such property has been
used by such entity (or a related entity) before such sale (or other transfer)
or lease, or
I.R.C. § 168(h)(3)(B)(i)(III) —
such tax-exempt entity is the United States or any agency or instrumentality of
the United States.
I.R.C. § 168(h)(3)(B)(ii) Leasebacks During 1st 3 Months Of Use Not Taken Into Account —
Subclause (II) of clause (i) shall not apply to any property which is leased within 3 months after the date such
property is first used by the tax-exempt entity (or a related entity).
I.R.C. § 168(h)(4) Related Entities —
For purposes of this subsection—
I.R.C. § 168(h)(4)(A)
I.R.C. § 168(h)(4)(A)(i) —
Each governmental unit and each agency or instrumentality of a governmental unit
is related to each other such unit, agency, or instrumentality which directly or
indirectly derives its powers, rights, and duties in whole or in part from the same
sovereign authority.
I.R.C. § 168(h)(4)(A)(ii) —
For purposes of clause (i), the United States, each State, and each possession of the United States shall be
treated as a separate sovereign authority.
I.R.C. § 168(h)(4)(B) —
Any entity not described in subparagraph (A)(i) is related to any other entity if the 2 entities have—
I.R.C. § 168(h)(4)(B)(i) —
significant common purposes and substantial common membership, or
I.R.C. § 168(h)(4)(B)(ii) —
directly or indirectly substantial common direction or control.
I.R.C. § 168(h)(4)(C)
I.R.C. § 168(h)(4)(C)(i) —
An entity is related to another entity if either entity owns (directly or through
1 or more entities) a 50 percent or greater interest in the capital or profits of
the other entity.
I.R.C. § 168(h)(4)(C)(ii) —
For purposes of clause (i), entities treated as related under subparagraph (A)
or (B) shall be treated as 1 entity.
I.R.C. § 168(h)(4)(D) —
An entity is related to another entity with respect to a transaction if such transaction
is part of an attempt by such entities to avoid the application of this subsection.
I.R.C. § 168(h)(5) Tax-Exempt Use Of Property Leased To Partnerships, Etc., Determined At Partner Level —
For purposes of this subsection—
I.R.C. § 168(h)(5)(A) In General —
In the case of any property which is leased to a partnership, the determination
of whether any portion of such property is tax-exempt use property shall be made
by treating each tax-exempt entity partner's
proportionate share (determined under paragraph (6)(C)) of such property as being leased to such partner.
I.R.C. § 168(h)(5)(B) Other Pass-Thru Entities; Tiered Entities —
Rules similar to the rules of subparagraph (A) shall also apply in the case of any pass-thru entity other than a partnership and
in the case of tiered partnerships and other entities.
I.R.C. § 168(h)(5)(C) Presumption With Respect To Foreign Entities —
Unless it is otherwise established to the satisfaction of the Secretary, it shall
be presumed that the partners of a foreign partnership (and the beneficiaries of
any other foreign pass-thru entity) are persons who are not United States persons.
I.R.C. § 168(h)(6) Treatment Of Property Owned By Partnerships, Etc.
I.R.C. § 168(h)(6)(A) In General —
For purposes of this subsection, if—
I.R.C. § 168(h)(6)(A)(i) —
any property which (but for this subparagraph)
is not tax-exempt use property is owned by a partnership which has both a tax-exempt
entity and a person who is not a tax-exempt entity as partners, and
I.R.C. § 168(h)(6)(A)(ii) —
any allocation to the tax-exempt entity of partnership items is not a qualified
allocation, an amount equal to such tax-exempt entity's proportionate share of such
property shall (except as provided in paragraph (1)(D)) be treated as tax-exempt use property.
I.R.C. § 168(h)(6)(B) Qualified Allocation —
For purposes of subparagraph (A), the term “qualified allocation"
means any allocation to a tax-exempt entity which—
I.R.C. § 168(h)(6)(B)(i) —
is consistent with such entity's being allocated the same distributive share of
each item of income, gain, loss, deduction, credit, and basis and such share remains
the same during the entire period the entity is a partner in the partnership, and
I.R.C. § 168(h)(6)(B)(ii) —
has substantial economic effect within the meaning of section 704(b)(2).
For purposes of this subparagraph, items allocated under
section 704(c) shall not be taken into account.
I.R.C. § 168(h)(6)(C) Determination Of Proportionate Share
I.R.C. § 168(h)(6)(C)(i) In General —
For purposes of subparagraph (A), a tax-exempt entity's proportionate share of any property owned by a partnership
shall be determined on the basis of such entity's share of partnership items of income
or gain (excluding gain allocated under section 704(c)), whichever results in the largest proportionate share.
I.R.C. § 168(h)(6)(C)(ii) Determination Where Allocations Vary —
For purposes of clause (i), if a tax-exempt entity's share of partnership items of income or gain (excluding
gain allocated under section 704(c))
may vary during the period such entity is a partner in the partnership,
such share shall be the highest share such entity may receive.
I.R.C. § 168(h)(6)(D) Determination Of Whether Property Used In Unrelated Trade Or Business —
For purposes of this subsection, in the case of any property which is owned by a
partnership which has both a tax-exempt entity and a person who is not a tax-exempt
entity as partners, the determination of whether such property is used in an unrelated
trade or business of such an entity shall be made without regard to section 514.
I.R.C. § 168(h)(6)(E) Other Pass-Thru Entities; Tiered Entities —
Rules similar to the rules of subparagraphs (A), (B), (C), and (D) shall also apply in the case of any pass-thru entity other than a partnership and
in the case of tiered partnerships and other entities.
I.R.C. § 168(h)(6)(F) Treatment Of Certain Taxable Entities
I.R.C. § 168(h)(6)(F)(i) In General —
For purposes of this paragraph and paragraph (5), except as otherwise provided
in this subparagraph, any tax-exempt controlled entity shall be treated as a tax-exempt
entity.
I.R.C. § 168(h)(6)(F)(ii) Election —
If a tax-exempt controlled entity makes an election under this clause—
I.R.C. § 168(h)(6)(F)(ii)(I) —
such entity shall not be treated as a tax-exempt entity for purposes of this paragraph
and paragraph (5), and
I.R.C. § 168(h)(6)(F)(ii)(II) —
any gain recognized by a tax-exempt entity on any disposition of an interest in
such entity (and any dividend or interest received or accrued by a tax-exempt entity
from such tax-exempt controlled entity) shall be treated as unrelated business taxable
income for purposes of section 511.
Any such election shall be irrevocable and shall bind
all tax-exempt entities holding interests in such tax-exempt controlled
entity. For purposes of subclause (II), there shall only be taken into account dividends which are properly allocable to
income of the tax-exempt controlled entity which was not subject to tax under this
chapter.
I.R.C. § 168(h)(6)(F)(iii) Tax-Exempt Controlled Entity
I.R.C. § 168(h)(6)(F)(iii)(I) In General —
The term “tax-exempt controlled entity” means any corporation
(which is not a tax-exempt entity determined without regard to this subparagraph
and paragraph (2)(E))
if 50 percent or more (in value) of the stock in such corporation is held by 1 or
more tax-exempt entities (other than a foreign person or entity).
I.R.C. § 168(h)(6)(F)(iii)(II) Only 5-Percent Shareholders Taken Into Account In Case Of Publicly Traded Stock —
For purposes of subclause (I), in the case of a corporation the stock of which is publicly traded on an established
securities market, stock held by a tax-exempt entity shall not be taken into account
unless such entity holds at least 5 percent (in value) of the stock in such corporation.
For purposes of this subclause, related entities (within the meaning of paragraph
(4)) shall be treated as 1 entity.
I.R.C. § 168(h)(6)(F)(iii)(III) Section 318 To Apply —
For purposes of this clause, a tax-exempt entity shall be treated as holding stock
which it holds through application of section 318 (determined
without regard to the 50-percent limitation contained in subsection
(a)(2)(C) thereof).
I.R.C. § 168(h)(6)(G) Regulations —
For purposes of determining whether there is a qualified allocation under subparagraph
(B), the regulations prescribed under paragraph (8) for purposes of this paragraph—
I.R.C. § 168(h)(6)(G)(i) —
shall set forth the proper treatment for partnership guaranteed payments, and
I.R.C. § 168(h)(6)(G)(ii) —
may provide for the exclusion or segregation of items.
I.R.C. § 168(h)(7) Lease —
For purposes of this subsection, the term “lease” includes any grant of a right
to use property.
I.R.C. § 168(h)(8) Regulations —
The Secretary shall prescribe such regulations as may be necessary or appropriate
to carry out the purposes of this subsection.
I.R.C. § 168(i) Definitions And Special Rules —
For purposes of this section—
I.R.C. § 168(i)(1) Class Life —
Except as provided in this section, the term “class life” means the class life (if
any) which would be applicable with respect to any property as of January 1, 1986,
under subsection (m) of section 167 (determined without regard to paragraph (4) and as if the taxpayer had made an election under such subsection). The Secretary,
through an office established in the Treasury, shall monitor and analyze actual experience
with respect to all depreciable assets. The reference in this paragraph to subsection
(m) of section 167 shall be treated as a reference to such subsection as in effect on the day before
the date of the enactment of the Revenue Reconciliation Act of 1990.
I.R.C. § 168(i)(2) Qualified Technological Equipment
I.R.C. § 168(i)(2)(A) In General —
The term “qualified technological equipment” means—
I.R.C. § 168(i)(2)(A)(i) —
any computer or peripheral equipment,
I.R.C. § 168(i)(2)(A)(ii) —
any high technology telephone station equipment installed on the customer's premises,
and
I.R.C. § 168(i)(2)(A)(iii) —
any high technology medical equipment.
I.R.C. § 168(i)(2)(B) Computer Or Peripheral Equipment Defined —
For purposes of this paragraph—
I.R.C. § 168(i)(2)(B)(i) In General —
The term “computer or peripheral equipment” means—
I.R.C. § 168(i)(2)(B)(i)(I) —
any computer, and
I.R.C. § 168(i)(2)(B)(i)(II) —
any related peripheral equipment.
I.R.C. § 168(i)(2)(B)(ii) Computer —
The term “computer” means a programmable electronically activated device which—
I.R.C. § 168(i)(2)(B)(ii)(I) —
is capable of accepting information, applying prescribed processes to the information,
and supplying the results of these processes with or without human intervention,
and
I.R.C. § 168(i)(2)(B)(ii)(II) —
consists of a central processing unit containing extensive storage, logic, arithmetic,
and control capabilities.
I.R.C. § 168(i)(2)(B)(iii) Related Peripheral Equipment —
The term “related peripheral equipment” means any auxiliary machine (whether on-line
or off-line) which is designed to be placed under the control of the central processing
unit of a computer.
I.R.C. § 168(i)(2)(B)(iv) Exceptions —
The term “computer or peripheral equipment” shall not include—
I.R.C. § 168(i)(2)(B)(iv)(I) —
any equipment which is an integral part of other property which is not a computer,
I.R.C. § 168(i)(2)(B)(iv)(II) —
typewriters, calculators, adding and accounting machines, copiers, duplicating equipment,
and similar equipment, and
I.R.C. § 168(i)(2)(B)(iv)(III) —
equipment of a kind used primarily for amusement or entertainment of the user.
I.R.C. § 168(i)(2)(C) High Technology Medical Equipment —
For purposes of this paragraph, the term “high technology medical equipment” means
any electronic, electromechanical, or computer-based high technology equipment used
in the screening, monitoring, observation, diagnosis, or treatment of patients in
a laboratory, medical, or hospital environment.
I.R.C. § 168(i)(3) Lease Term
I.R.C. § 168(i)(3)(A) In General —
In determining a lease term—
I.R.C. § 168(i)(3)(A)(i) —
there shall be taken into account options to renew,
I.R.C. § 168(i)(3)(A)(ii) —
the term of a lease shall include the term of any service contract or similar arrangement
(whether or not treated as a lease under section 7701(e))--
I.R.C. § 168(i)(3)(A)(ii)(I) —
which is part of the same transaction
(or series of related transactions) which includes the lease, and
I.R.C. § 168(i)(3)(A)(ii)(II) —
which is with respect to the property subject to the lease or substantially similar
property, and
I.R.C. § 168(i)(3)(A)(iii) —
2 or more successive leases which are part of the same transaction (or a series
of related transactions)
with respect to the same or substantially similar property shall be treated as 1
lease.
I.R.C. § 168(i)(3)(B) Special Rule For Fair Rental Options On Nonresidential Real Property Or Residential
Rental Property —
For purposes of clause (i) of subparagraph (A), in the case of nonresidential
real property or residential rental property, there shall not be taken into account
any option to renew at fair market value, determined at the time of renewal.
I.R.C. § 168(i)(4) General Asset Accounts —
Under regulations, a taxpayer may maintain 1 or more general asset accounts for
any property to which this section applies. Except as provided in regulations, all
proceeds realized on any disposition of property in a general asset account shall
be included in income as ordinary income.
I.R.C. § 168(i)(5) Changes In Use —
The Secretary shall, by regulations, provide for the method of determining the deduction
allowable under section 167(a) with respect to any tangible
property for any taxable year (and the succeeding taxable years)
during which such property changes status under this section but continues to be
held by the same person.
I.R.C. § 168(i)(6) Treatments Of Additions Or Improvements To Property —
In the case of any addition to (or improvement of)
any property—
I.R.C. § 168(i)(6)(A) —
any deduction under subsection (a) for such addition or improvement shall be computed in the same manner as the deduction
for such property would be computed if such property had been placed in service at
the same time as such addition or improvement, and
I.R.C. § 168(i)(6)(B) —
the applicable recovery period for such addition or improvement shall begin on the
later of—
I.R.C. § 168(i)(6)(B)(i) —
the date on which such addition (or improvement) is placed in service, or
I.R.C. § 168(i)(6)(B)(ii) —
the date on which the property with respect to which such addition (or improvement)
was made is placed in service.
I.R.C. § 168(i)(7) Treatment Of Certain Transferees
I.R.C. § 168(i)(7)(A) In General —
In the case of any property transferred in a transaction described in subparagraph
(B), the transferee shall be treated as the transferor for purposes of computing the
depreciation deduction determined under this section with respect to so much of the
basis in the hands of the transferee as does not exceed the adjusted basis in the
hands of the transferor. In any case where this section as in effect before the
amendments made by section 201 of the Tax Reform Act of 1986 applied to the property in the hands of the transferor,
the reference in the preceding sentence to this section shall be treated as a reference
to this section as so in effect.
I.R.C. § 168(i)(7)(B) Transactions Covered —
The transactions described in this subparagraph are—
I.R.C. § 168(i)(7)(B)(i) —
any transaction described in section 332, 351, 361, 721, or 731, and
I.R.C. § 168(i)(7)(B)(ii) —
any transaction between members of the same affiliated group during any taxable
year for which a consolidated return is made by such group.
I.R.C. § 168(i)(7)(C) Property Reacquired By The Taxpayer —
Under regulations, property which is disposed of and then reacquired by the taxpayer
shall be treated for purposes of computing the deduction allowable under subsection
(a) as if such property had not been disposed of.
I.R.C. § 168(i)(7)(D) —
[Repealed]
I.R.C. § 168(i)(8) Treatment Of Leasehold Improvements
I.R.C. § 168(i)(8)(A) In General —
In the case of any building erected (or improvements made) on leased property, if
such building or improvement is property to which this section applies, the depreciation
deduction shall be determined under the provisions of this section.
I.R.C. § 168(i)(8)(B) Treatment Of Lessor Improvements Which Are Abandoned At Termination Of Lease —
An improvement—
I.R.C. § 168(i)(8)(B)(i) —
which is made by the lessor of leased property for the lessee of such property,
and
I.R.C. § 168(i)(8)(B)(ii) —
which is irrevocably disposed of or abandoned by the lessor at the termination of
the lease by such lessee,
shall be treated for purposes of
determining gain or loss under this title as disposed of by the lessor
when so disposed of or abandoned.
I.R.C. § 168(i)(8)(C) Cross Reference —
For treatment of qualified long-term real property constructed or improved in connection
with cash or rent reduction from lessor to lessee, see section 110(b).
I.R.C. § 168(i)(9) Normalization Rules
I.R.C. § 168(i)(9)(A) In General —
In order to use a normalization method of accounting with respect to any public
utility property for purposes of subsection (f)(2)—
I.R.C. § 168(i)(9)(A)(i) —
the taxpayer must, in computing its tax expense for purposes of establishing its
cost of service for ratemaking purposes and reflecting operating results in its regulated
books of account, use a method of depreciation with respect to such property that
is the same as, and a depreciation period for such property that is no shorter than,
the method and period used to compute its depreciation expense for such purposes;
and
I.R.C. § 168(i)(9)(A)(ii) —
if the amount allowable as a deduction under this section with respect to such property
(respecting all elections made by the taxpayer under this section) differs from the
amount that would be allowable as a deduction under section 167 using the method (including the period, first and last year convention, and salvage
value) used to compute regulated tax expense under clause (i), the taxpayer must make adjustments to a reserve to reflect the deferral of taxes
resulting from such difference.
I.R.C. § 168(i)(9)(B) Use Of Inconsistent Estimates And Projections, Etc.
I.R.C. § 168(i)(9)(B)(i) In General —
One way in which the requirements of subparagraph (A) are not met is if the taxpayer, for ratemaking purposes, uses a procedure or adjustment
which is
inconsistent with the requirements of subparagraph (A).
I.R.C. § 168(i)(9)(B)(ii) Use Of Inconsistent Estimates And Projections —
The procedures and adjustments which are to be treated as inconsistent for purposes
of clause (i) shall include any procedure or adjustment for ratemaking purposes which uses an
estimate or projection of the taxpayer's tax expense, depreciation expense, or reserve
for deferred taxes under subparagraph (A)(ii) unless such estimate or projection is also used, for ratemaking purposes, with respect
to the other 2 such items and with respect to the rate base.
I.R.C. § 168(i)(9)(B)(iii) Regulatory Authority —
The Secretary may by regulations prescribe procedures and adjustments (in addition
to those specified in clause (ii)) which are to be treated as inconsistent for purposes of clause (i).
I.R.C. § 168(i)(9)(C) Public Utility Property Which Does Not Meet Normalization Rules —
In the case of any public utility property to which this section does not apply
by reason of subsection (f)(2), the allowance for depreciation under section 167(a) shall be an amount computed using the method and period referred to in subparagraph
(A)(i).
I.R.C. § 168(i)(10) Public Utility Property —
The term “public utility property” means property used predominantly in the trade
or business of the furnishing or sale of—
I.R.C. § 168(i)(10)(A) —
electrical energy, water, or sewage disposal services,
I.R.C. § 168(i)(10)(B) —
gas or steam through a local distribution system,
I.R.C. § 168(i)(10)(C) —
telephone services, or other communication services if furnished or sold by the
Communications Satellite Corporation for purposes authorized by the Communications
Satellite Act of 1962
(47 U.S.C. 701), or
I.R.C. § 168(i)(10)(D) —
transportation of gas or steam by pipeline,
if the rates for such furnishing or sale, as the case may be, have been established
or approved by a State or political subdivision thereof, by any agency or instrumentality
of the United States, or by a public service or public utility commission or other
similar body of any State or political subdivision thereof.
I.R.C. § 168(i)(11) Research And Experimentation —
The term “research and experimentation” has the same meaning as the term research
and experimental has under section 174.
I.R.C. § 168(i)(12) Section 1245 And 1250 Property —
The terms “section 1245 property"
and “section 1250 property"
have the meanings given such terms by sections 1245(a)(3) and 1250(c), respectively.
I.R.C. § 168(i)(13) Single Purpose Agricultural Or Horticultural Structure
I.R.C. § 168(i)(13)(A) In General —
The term ”single purpose agricultural or horticultural structure” means—
I.R.C. § 168(i)(13)(A)(i) —
a single purpose livestock structure, and
I.R.C. § 168(i)(13)(A)(ii) —
a single purpose horticultural structure.
I.R.C. § 168(i)(13)(B) Definitions —
For purposes of this paragraph—
I.R.C. § 168(i)(13)(B)(i) Single Purpose Livestock Structure —
The term “single purpose livestock structure”
means any enclosure or structure specifically designed, constructed, and used—
I.R.C. § 168(i)(13)(B)(i)(I) —
for housing, raising, and feeding a particular type of livestock and their produce,
and
I.R.C. § 168(i)(13)(B)(i)(II) —
for housing the equipment (including any replacements) necessary for the housing,
raising, and feeding referred to in subclause (I).
I.R.C. § 168(i)(13)(B)(ii) Single Purpose Horticultural Structure —
The term “single purpose horticultural structure”
means—
I.R.C. § 168(i)(13)(B)(ii)(I) —
a greenhouse specifically designed, constructed, and used for the commercial production
of plants, and
I.R.C. § 168(i)(13)(B)(ii)(II) —
a structure specifically designed, constructed, and used for the commercial production
of mushrooms.
I.R.C. § 168(i)(13)(B)(iii) Structures Which Include Work Space —
An enclosure or structure which provides work space shall be treated as a single
purpose agricultural or horticultural structure only if such work space is solely
for—
I.R.C. § 168(i)(13)(B)(iii)(I) —
the stocking, caring for, or collecting of livestock or plants (as the case may
be) or their produce,
I.R.C. § 168(i)(13)(B)(iii)(II) —
the maintenance of the enclosure or structure, and
I.R.C. § 168(i)(13)(B)(iii)(III) —
the maintenance or replacement of the equipment or stock enclosed or housed therein.
I.R.C. § 168(i)(14) Qualified Rent-To-Own Property
I.R.C. § 168(i)(14)(A) In General —
The term “qualified rent-to-own property”
means property held by a rent-to-own dealer for purposes of being subject to a rent-to-own
contract.
I.R.C. § 168(i)(14)(B) Rent-To-Own Dealer —
The term “rent-to-own dealer” means a person that, in the ordinary course of business,
regularly enters into rent-to-own contracts with customers for the use of consumer
property, if a substantial portion of those contracts terminate and the property
is returned to such person before the receipt of all payments required to transfer
ownership of the property from such person to the customer.
I.R.C. § 168(i)(14)(C) Consumer Property —
The term “consumer property” means tangible personal property of a type generally
used within the home for personal use.
I.R.C. § 168(i)(14)(D) Rent-To-Own Contract —
The term “rent-to-own contract” means any lease for the use of consumer property
between a rent-to-own dealer and a customer who is an individual which—
I.R.C. § 168(i)(14)(D)(i) —
is titled “Rent-to-Own Agreement”
or “Lease Agreement with Ownership Option,” or uses other similar language,
I.R.C. § 168(i)(14)(D)(ii) —
provides for level (or decreasing where no payment is less than 40 percent of the
largest payment), regular periodic payments (for a payment period which is a week
or month),
I.R.C. § 168(i)(14)(D)(iii) —
provides that legal title to such property remains with the rent-to-own dealer until
the customer makes all the payments described in clause (ii) or early purchase payments required under the contract to acquire legal title to
the item of property,
I.R.C. § 168(i)(14)(D)(iv) —
provides a beginning date and a maximum period of time for which the contract may
be in effect that does not exceed 156 weeks or 36 months from such beginning date
(including renewals or options to extend),
I.R.C. § 168(i)(14)(D)(v) —
provides for payments within the 156-week or 36-month period that, in the aggregate,
generally exceed the normal retail price of the consumer property plus interest,
I.R.C. § 168(i)(14)(D)(vi) —
provides for payments under the contract that, in the aggregate, do not exceed $10,000
per item of consumer property,
I.R.C. § 168(i)(14)(D)(vii) —
provides that the customer does not have any legal obligation to make all the payments
referred to in clause (ii) set forth under the contract, and that at the end of each payment period the customer
may either continue to use the consumer property by making the payment for the next
payment period or return such property to the rent-to-own dealer in good working
order, in which case the customer does not incur any further obligations under the
contract and is not entitled to a return of any payments previously made under the
contract, and
I.R.C. § 168(i)(14)(D)(viii) —
provides that the customer has no right to sell, sublease, mortgage, pawn, pledge,
encumber, or otherwise dispose of the consumer property until all the payments stated
in the contract have been made.
I.R.C. § 168(i)(15) Motorsports Entertainment Complex
I.R.C. § 168(i)(15)(A) In General —
The term “motorsports entertainment complex”
means a racing track facility which—
I.R.C. § 168(i)(15)(A)(i) —
is permanently situated on land, and
I.R.C. § 168(i)(15)(A)(ii) —
during the 36-month period following the first day of the month in which the asset
is placed in service, hosts 1 or more racing events for automobiles (of any type),
trucks, or motorcycles which are open to the public for the price of admission.
I.R.C. § 168(i)(15)(B) Ancillary And Support Facilities —
Such term shall include, if owned by the taxpayer who owns the complex and provided
for the benefit of patrons of the complex—
I.R.C. § 168(i)(15)(B)(i) —
ancillary facilities and land improvements in support of the complex's activities
(including parking lots, sidewalks, waterways, bridges, fences, and landscaping),
I.R.C. § 168(i)(15)(B)(ii) —
support facilities (including food and beverage retailing, souvenir vending, and
other nonlodging accommodations), and
I.R.C. § 168(i)(15)(B)(iii) —
appurtenances associated with such facilities and related attractions and amusements
(including ticket booths, race track surfaces, suites and hospitality facilities,
grandstands and viewing structures, props, walls, facilities that support the delivery
of entertainment services, other special purpose structures, facades, shop interiors,
and buildings).
I.R.C. § 168(i)(15)(C) Exception —
Such term shall not include any transportation equipment,
administrative services assets, warehouses, administrative buildings, hotels, or motels.
I.R.C. § 168(i)(15)(D) Termination —
Such term shall not include any property placed in service after December 31, 2025.
I.R.C. § 168(i)(16) Alaska Natural Gas Pipeline —
The term “Alaska natural gas pipeline”
means the natural gas pipeline system located in the State of Alaska which—
I.R.C. § 168(i)(16)(A) —
has a capacity of more than 500,000,000,000 Btu of natural gas per day, and
I.R.C. § 168(i)(16)(B) —
is—
I.R.C. § 168(i)(16)(B)(i) —
placed in service after December 31, 2013, or
I.R.C. § 168(i)(16)(B)(ii) —
treated as placed in service on January 1, 2014, if the taxpayer who places such
system in service before January 1, 2014, elects such treatment.
Such term includes the pipe, trunk
lines, related equipment, and appurtenances used to carry natural
gas, but does not include any gas processing plant.
I.R.C. § 168(i)(17) Natural Gas Gathering Line —
The term “natural gas gathering line” means—
I.R.C. § 168(i)(17)(A) —
the pipe, equipment, and appurtenances determined to be a gathering line by the
Federal Energy Regulatory Commission, and
I.R.C. § 168(i)(17)(B) —
the pipe, equipment, and appurtenances used to deliver natural gas from the wellhead
or a commonpoint to
the point at which such gas first reaches—
I.R.C. § 168(i)(17)(B)(i) —
a gas processing plant,
I.R.C. § 168(i)(17)(B)(ii) —
an interconnection with a transmission pipeline for which a certificate as an interstate
transmission pipeline has been issued by the Federal Energy Regulatory Commission,
I.R.C. § 168(i)(17)(B)(iii) —
an interconnection with an intrastate transmission pipeline, or
I.R.C. § 168(i)(17)(B)(iv) —
a direct interconnection with a local distribution company, a gas storage facility,
or an industrial
consumer.
I.R.C. § 168(i)(18) Qualified Smart Electric Meters
I.R.C. § 168(i)(18)(A) In General —
The term “qualified smart electric meter”
means any smart electric meter which—
I.R.C. § 168(i)(18)(A)(i) —
is placed in service by a taxpayer who is a supplier of electric energy or a provider
of electric energy services, and
I.R.C. § 168(i)(18)(A)(ii) —
does not have a class life (determined without regard to subsection (e))
of less than 16 years.
I.R.C. § 168(i)(18)(B) Smart Electric Meter —
For purposes of subparagraph (A), the term “smart electric meter” means any time-based meter and related communication
equipment which is capable of being used by the taxpayer as part of a system that—
I.R.C. § 168(i)(18)(B)(i) —
measures and records electricity usage data on a time-differentiated basis in at least
24 separate time segments per day,
I.R.C. § 168(i)(18)(B)(ii) —
provides for the exchange of information between supplier or provider and the customer's
electric meter in support of time-based rates or other forms of demand response,
I.R.C. § 168(i)(18)(B)(iii) —
provides data to such supplier or provider so that the supplier or provider can provide
energy usage information to customers electronically, and
I.R.C. § 168(i)(18)(B)(iv) —
provides net metering.
I.R.C. § 168(i)(19) Qualified Smart Electric Grid Systems
I.R.C. § 168(i)(19)(A) In General —
The term “qualified smart electric grid system”
means any smart grid property which—
I.R.C. § 168(i)(19)(A)(i) —
is used as part of a system for electric distribution grid communications, monitoring,
and management placed in service by a taxpayer who is a supplier of electric energy
or a provider of electric energy services, and
I.R.C. § 168(i)(19)(A)(ii) —
does not have a class life (determined without regard to subsection (e))
of less than 16 years.
I.R.C. § 168(i)(19)(B) Smart Grid Property —
For the purposes of subparagraph (A), the term “smart grid property” means electronics and related equipment that is capable
of—
I.R.C. § 168(i)(19)(B)(i) —
sensing, collecting, and monitoring data of or from all portions of a utility's electric
distribution grid,
I.R.C. § 168(i)(19)(B)(ii) —
providing real-time, two-way communications to monitor or manage such grid, and
I.R.C. § 168(i)(19)(B)(iii) —
providing real time analysis of and event prediction based upon collected data that
can be used to improve electric distribution system reliability, quality, and performance.
I.R.C. § 168(j) Property On Indian Reservations
I.R.C. § 168(j)(1) In General —
For purposes of subsection (a), the applicable recovery period for qualified Indian reservation property shall
be determined in accordance with the table contained in paragraph (2) in lieu of the table contained in subsection (c).
I.R.C. § 168(j)(2) Applicable Recovery Period For Indian Reservation Property —
For purposes of paragraph (1)—
In the case of: | The applicable recovery period is: |
3-year property | 2 years |
5-year property | 3 years |
7-year property | 4 years |
10-year property | 6 years |
15-year property | 9 years |
20-year property | 12 years |
Nonresidential real property | 22 years. |
In the case of: | The applicable recovery period is: |
3-year property | 2 years |
5-year property | 3 years |
7-year property | 4 years |
10-year property | 6 years |
15-year property | 9 years |
20-year property | 12 years |
Nonresidential real property | 22 years. |
I.R.C. § 168(j)(3) Deduction Allowed In Computing Minimum Tax —
For purposes of determining alternative minimum taxable income under section 56, the deduction under subsection (a) for qualified Indian reservation property shall be determined under this section
without regard to any adjustment under section 55.
I.R.C. § 168(j)(4) Qualified Indian Reservation Property Defined —
For purposes of this subsection—
I.R.C. § 168(j)(4)(A) In General —
The term “qualified Indian reservation property”
means property which is property described in the table in paragraph (2) and which is—
I.R.C. § 168(j)(4)(A)(i) —
used by the taxpayer predominantly in the active conduct of a trade or business
within an Indian reservation,
I.R.C. § 168(j)(4)(A)(ii) —
not used or located outside the Indian reservation on a regular basis,
I.R.C. § 168(j)(4)(A)(iii) —
not acquired (directly or indirectly)
by the taxpayer from a person who is related to the taxpayer (within the meaning
of section 465(b)(3)(C)),
and
I.R.C. § 168(j)(4)(A)(iv) —
not property (or any portion thereof)
placed in service for purposes of conducting or housing class I, II, or III gaming
(as defined in section 4
of the Indian Regulatory Act (25 U.S.C. 2703)).
I.R.C. § 168(j)(4)(B) Exception For Alternative Depreciation Property —
The term “qualified Indian reservation property”
does not include any property to which the alternative depreciation system under
subsection (g) applies,
determined—
I.R.C. § 168(j)(4)(B)(i) —
without regard to subsection (g)(7) (relating to election to use alternative depreciation system), and
I.R.C. § 168(j)(4)(B)(ii) —
after the application of section 280F(b) (relating to listed property with limited business use).
I.R.C. § 168(j)(4)(C) Special Rule For Reservation Infrastructure Investment
I.R.C. § 168(j)(4)(C)(i) In General —
Subparagraph (A)(ii) shall not apply to qualified infrastructure property located outside of the Indian
reservation if the purpose of such property is to connect with qualified infrastructure
property located within the Indian
reservation.
I.R.C. § 168(j)(4)(C)(ii) Qualified Infrastructure Property —
For purposes of this subparagraph, the term “qualified infrastructure property”
means qualified Indian reservation property (determined without regard to subparagraph
(A)(ii)) which—
I.R.C. § 168(j)(4)(C)(ii)(I) —
benefits the tribal infrastructure,
I.R.C. § 168(j)(4)(C)(ii)(II) —
is available to the general public, and
I.R.C. § 168(j)(4)(C)(ii)(III) —
is placed in service in connection with the taxpayer's active conduct of a trade
or business within an Indian reservation.
Such term includes, but is not limited to, roads, power lines, water systems, railroad
spurs, and communications facilities.
I.R.C. § 168(j)(5) Real Estate Rentals —
For purposes of this subsection, the rental to others of real property located within
an Indian reservation shall be treated as the active conduct of a trade or business
within an Indian reservation.
I.R.C. § 168(j)(6) Indian Reservation Defined —
For purposes of this subsection, the term “Indian reservation” means a reservation,
as defined in—
I.R.C. § 168(j)(6)(A) —
section 3(d) of the Indian Financing Act of 1974 (25 U.S.C. 1452(d)),
or
I.R.C. § 168(j)(6)(B) —
section 4(10) of the Indian Child Welfare Act of 1978 (25 U.S.C. 1903(10)).
For purposes of the preceding sentence, such section
3(d) shall be applied by treating the term “former Indian reservations in Oklahoma”
as including only lands which are within the jurisdictional area of an Oklahoma Indian
tribe (as determined by the Secretary of the Interior) and are recognized by such
Secretary as eligible for trust land status under 25 CFR Part 151 (as in effect on the date of the enactment of this sentence).
I.R.C. § 168(j)(7) Coordination With Nonrevenue Laws —
Any reference in this subsection to a provision not contained in this title shall
be treated for purposes of this subsection as a reference to such provision as in
effect on the date of the enactment of this paragraph.
I.R.C. § 168(j)(8) Election Out —
If a taxpayer makes an election under this paragraph with respect to any class of
property for any taxable year, paragraph
(1) shall not apply to all property in such class placed in service during such taxable
year. Such election, once made, shall be irrevocable.
I.R.C. § 168(j)(9) Termination —
This subsection shall not apply to property placed in service after December 31,
2021.
I.R.C. § 168(k) Special Allowance For Certain Property
I.R.C. § 168(k)(1) Additional Allowance —
In the case of any qualified property—
I.R.C. § 168(k)(1)(A) —
the depreciation deduction provided by section 167(a)
for the taxable year in which such property is placed in service shall
include an allowance equal to the applicable percentage of the adjusted basis of the
qualified property, and
I.R.C. § 168(k)(1)(B) —
the adjusted basis of the qualified property shall be reduced by the amount of such
deduction before computing the amount otherwise allowable as a depreciation deduction
under this chapter for such taxable year and any subsequent taxable
year.
I.R.C. § 168(k)(2) Qualified Property —
For purposes of this subsection—
I.R.C. § 168(k)(2)(A) In General —
The term “qualified property”
means property—
I.R.C. § 168(k)(2)(A)(i)
I.R.C. § 168(k)(2)(A)(i)(I) —
to which this section applies which has a recovery period of 20 years or less,
I.R.C. § 168(k)(2)(A)(i)(II) —
which is computer software (as defined in section 167(f)(1)(B))
for which a deduction is allowable under section 167(a) without regard to this subsection,
I.R.C. § 168(k)(2)(A)(i)(III) —
which is water utility property, or
I.R.C. § 168(k)(2)(A)(i)(IV) —
which is a qualified film or television production (as defined in subsection (d) of
section 181) for which a deduction would have been allowable under section 181 without regard to subsections (a)(2) and (g) of such section or this subsection,
or
I.R.C. § 168(k)(2)(A)(i)(V) —
which is a qualified live theatrical production (as defined in subsection (e) of section
181) for which a deduction would have been allowable under section 181 without regard to subsections (a)(2) and (g) of such section or this subsection,
I.R.C. § 168(k)(2)(A)(ii) —
the original use of which begins with the taxpayer or the acquisition of which by
the taxpayer meets the requirements of clause (ii) of subparagraph (E), and
I.R.C. § 168(k)(2)(A)(iii) —
which is placed in service by the taxpayer before January 1, 2027.
I.R.C. § 168(k)(2)(B) Certain Property Having Longer Production Periods Treated As Qualified Property
I.R.C. § 168(k)(2)(B)(i) In General —
The term “qualified property” includes any property if such property—
I.R.C. § 168(k)(2)(B)(i)(I) —
meets the requirements of clauses (i) and (ii) of subparagraph (A),
I.R.C. § 168(k)(2)(B)(i)(II) —
is placed in service by the taxpayer before January 1, 2028,
I.R.C. § 168(k)(2)(B)(i)(III) —
is acquired by the taxpayer (or acquired pursuant to a written binding contract entered
into) before January 1, 2027,
I.R.C. § 168(k)(2)(B)(i)(IV) —
has a recovery period of at least 10 years or is transportation property,
I.R.C. § 168(k)(2)(B)(i)(V) —
is subject to section 263A, and
I.R.C. § 168(k)(2)(B)(i)(VI) —
meets the requirements of clause (iii) of section 263A(f)(1)(B) (determined as if such clause also applies to property which has a long useful life
(within the meaning of section 263A(f))).
I.R.C. § 168(k)(2)(B)(ii) Only Pre-January 1, 2027 Basis Eligible For Additional Allowance —
In the case of property which is qualified property solely by reason of clause (i), paragraph (1) shall apply only to the extent of the adjusted basis thereof attributable to manufacture,
construction, or production before January 1, 2027.
I.R.C. § 168(k)(2)(B)(iii) Transportation Property —
For purposes of this subparagraph, the term “transportation property” means tangible
personal property used in the trade or business of transporting persons or property.
I.R.C. § 168(k)(2)(B)(iv) Application Of Subparagraph —
This subparagraph shall not apply to any property which is described in subparagraph
(C).
I.R.C. § 168(k)(2)(C) Certain Aircraft —
The term “qualified property” includes property—
I.R.C. § 168(k)(2)(C)(i) —
which meets the requirements of subparagraph (A)(ii) and subclauses (II) and (III) of subparagraph (B)(i),
I.R.C. § 168(k)(2)(C)(ii) —
which is an aircraft which is not a transportation property (as defined in subparagraph
(B)(iii)) other than for agricultural or firefighting purposes,
I.R.C. § 168(k)(2)(C)(iii) —
which is purchased and on which such purchaser, at the time of the contract for
purchase, has made a nonrefundable deposit of the lesser of—
I.R.C. § 168(k)(2)(C)(iii)(I) —
10 percent of the cost, or
I.R.C. § 168(k)(2)(C)(iii)(II) —
$100,000, and
I.R.C. § 168(k)(2)(C)(iv) —
which has—
I.R.C. § 168(k)(2)(C)(iv)(I) —
an estimated production period exceeding 4 months, and
I.R.C. § 168(k)(2)(C)(iv)(II) —
a cost exceeding $200,000.
I.R.C. § 168(k)(2)(D) Exception For Alternative Depreciation Property —
The term “qualified property” shall not include any property to which the alternative
depreciation system under subsection (g) applies, determined—
I.R.C. § 168(k)(2)(D)(i) —
without regard to paragraph (7) of subsection (g) (relating to election to have system apply), and
I.R.C. § 168(k)(2)(D)(ii) —
after application of section 280F(b) (relating to listed property with limited business use).
I.R.C. § 168(k)(2)(E) Special Rules —
I.R.C. § 168(k)(2)(E)(i) Self-Constructed Property —
In the case of a taxpayer manufacturing, constructing, or producing property for
the taxpayer's own use, the requirements of subclause (III) of
subparagraph (B)(ii) shall be treated as met if the taxpayer begins manufacturing, constructing, or producing
the property before January 1, 2027.
I.R.C. § 168(k)(2)(E)(ii) Acquisition Requirements —
An acquisition of property meets the requirements of this clause if—
I.R.C. § 168(k)(2)(E)(ii)(I) —
such property was not used by the taxpayer at any time prior to such acquisition,
and
I.R.C. § 168(k)(2)(E)(ii)(II) —
the acquisition of such property meets the requirements of paragraphs (2)(A), (2)(B),
(2)(C), and (3) of section 179(d).
I.R.C. § 168(k)(2)(E)(iii) Syndication —
For purposes of subparagraph (A)(ii), if—
I.R.C. § 168(k)(2)(E)(iii)(I) —
property is used by a lessor of such property and such use is the lessor's first use
of such property,
I.R.C. § 168(k)(2)(E)(iii)(II) —
such property is sold by such lessor or any subsequent purchaser within 3 months
after the date such property was originally placed in service (or, in the case of
multiple units of property subject to the same lease, within 3 months after the
date the final unit is placed in service, so long as the period between the time
the first unit is placed in service and the time the last unit is placed in service
does not exceed 12 months), and
I.R.C. § 168(k)(2)(E)(iii)(III) —
the user of such property after the last sale during such 3-month period remains
the same as when such property was originally placed in service,
such property shall be treated as originally placed in service not earlier than the
date of such last sale.
I.R.C. § 168(k)(2)(F) Coordination With Section 280F —
For purposes of section 280F—
I.R.C. § 168(k)(2)(F)(i) Automobiles —
In the case of a passenger automobile (as defined in section 280F(d)(5))
which is qualified property, the Secretary shall increase the limitation
under section 280F(a)(1)(A)(i) by
$8,000.
I.R.C. § 168(k)(2)(F)(ii) Listed Property —
The deduction allowable under paragraph (1) shall be taken into account in computing any recapture amount under section 280F(b)(2).
I.R.C. § 168(k)(2)(F)(iii) Phase Down —
In the case of a passenger automobile acquired by the taxpayer before September 28,
2017, and placed in service by the taxpayer after September 27, 2017, clause (i) shall be applied by substituting for “$8,000”—
I.R.C. § 168(k)(2)(F)(iii)(I) —
in the case of an automobile placed in service during 2018, $6,400, and
I.R.C. § 168(k)(2)(F)(iii)(II) —
in the case of an automobile placed in service during 2019, $4,800.
I.R.C. § 168(k)(2)(G) Deduction Allowed In Computing Minimum Tax —
For purposes of determining alternative minimum taxable income under section 55, the deduction under section 167 for qualified property shall be determined without regard to any adjustment under
section 56.
I.R.C. § 168(k)(2)(H) Production Placed In Service —
For purposes of subparagraph (A)—
I.R.C. § 168(k)(2)(H)(i) —
a qualified film or television production shall be considered to be placed in service
at the time of initial release or broadcast, and
I.R.C. § 168(k)(2)(H)(ii) —
a qualified live theatrical production shall be considered to be placed in service
at the time of the initial live staged performance.
I.R.C. § 168(k)(3) —
[Repealed. Pub. L. 115-97, Sec. 13204(a)(4)(B)(ii).]
I.R.C. § 168(k)(4) —
[Repealed. Pub. L. 115-97, Sec. 12001(b)(13).]
I.R.C. § 168(k)(5) Special Rules For Certain Plants Bearing Fruits And Nuts
I.R.C. § 168(k)(5)(A) In General —
In the case of any specified plant which is planted before January 1, 2027, or is
grafted before such date to a plant that has already been planted, by the taxpayer
in the ordinary course of the taxpayer's farming business (as defined in section 263A(e)(4)) during a taxable year for which the taxpayer has elected the application of this
paragraph—
I.R.C. § 168(k)(5)(A)(i) —
a depreciation deduction equal to the applicable percentage of the adjusted basis
of such specified plant shall be allowed under section 167(a) for the taxable year in which such specified plant is so planted or grafted, and
I.R.C. § 168(k)(5)(A)(ii) —
the adjusted basis of such specified plant shall be reduced by the amount of such
deduction.
I.R.C. § 168(k)(5)(B) Specified Plant —
For purposes of this paragraph, the term “specified plant” means—
I.R.C. § 168(k)(5)(B)(i) —
any tree or vine which bears fruits or nuts, and
I.R.C. § 168(k)(5)(B)(ii) —
any other plant which will have more than one crop or yield of fruits or nuts and
which generally has a pre-productive period of more than 2 years from the time of
planting or grafting to the time at which such plant begins bearing a marketable crop
or yield of fruits or nuts.
Such term shall not include any property which is planted or grafted outside of the
United States.
I.R.C. § 168(k)(5)(C) Election Revocable Only With Consent —
An election under this paragraph may be revoked only with the consent of the Secretary.
I.R.C. § 168(k)(5)(D) Additional Depreciation May Be Claimed Only Once —
If this paragraph applies to any specified plant, such specified plant shall not be
treated as qualified property in the taxable year in which placed in service.
I.R.C. § 168(k)(5)(E) Deduction Allowed In Computing Minimum Tax —
Rules similar to the rules of paragraph (2)(G) shall apply for purposes of this paragraph.
I.R.C. § 168(k)(6) Applicable Percentage —
For purposes of this subsection—
I.R.C. § 168(k)(6)(A) In General —
Except as otherwise provided in this paragraph, the term “applicable percentage” means—
I.R.C. § 168(k)(6)(A)(i) —
in the case of property placed in service after September 27, 2017, and before January
1, 2023, 100 percent,
I.R.C. § 168(k)(6)(A)(ii) —
in the case of property placed in service after December 31, 2022, and before January
1, 2024, 80 percent,
I.R.C. § 168(k)(6)(A)(iii) —
in the case of property placed in service after December 31, 2023, and before January
1, 2025, 60 percent,
I.R.C. § 168(k)(6)(A)(iv) —
in the case of property placed in service after December 31, 2024, and before January
1, 2026, 40 percent, and
I.R.C. § 168(k)(6)(A)(v) —
in the case of property placed in service after December 31, 2025, and before January
1, 2027, 20 percent.
I.R.C. § 168(k)(6)(B) Rule For Property With Longer Production Periods —
In the case of property described in subparagraph (B)
or (C) of paragraph (2), the term “applicable percentage”
means—
I.R.C. § 168(k)(6)(B)(i) —
in the case of property placed in service after September 27, 2017, and before January
1, 2024, 100 percent,
I.R.C. § 168(k)(6)(B)(ii) —
in the case of property placed in service after December 31, 2023, and before January
1, 2025, 80 percent,
I.R.C. § 168(k)(6)(B)(iii) —
in the case of property placed in service after December 31, 2024, and before January
1, 2026, 60 percent,
I.R.C. § 168(k)(6)(B)(iv) —
in the case of property placed in service after December 31, 2025, and before January
1, 2027, 40 percent, and
I.R.C. § 168(k)(6)(B)(v) —
in the case of property placed in service after December 31, 2026, and before January
1, 2028, 20 percent.
I.R.C. § 168(k)(6)(C) Rule For Plants Bearing Fruits And Nuts —
In the case of a specified plant described in paragraph
(5), the term “applicable percentage” means—
I.R.C. § 168(k)(6)(C)(i) —
in the case of a plant which is planted or grafted after September 27, 2017, and before
January 1, 2023, 100 percent,
I.R.C. § 168(k)(6)(C)(ii) —
in the case of a plant which is planted or grafted after December 31, 2022, and before
January 1, 2024, 80 percent,
I.R.C. § 168(k)(6)(C)(iii) —
in the case of a plant which is planted or grafted after December 31, 2023, and
before January 1, 2025, 60 percent,
I.R.C. § 168(k)(6)(C)(iv) —
in the case of a plant which is planted or grafted after December 31, 2024, and before
January 1, 2026, 40 percent, and
I.R.C. § 168(k)(6)(C)(v) —
in the case of a plant which is planted or grafted after December 31, 2025, and before
January 1, 2027, 20 percent.
I.R.C. § 168(k)(7) Election Out —
If a taxpayer makes an election under this paragraph with respect to any class of
property for any taxable year, paragraphs
(1) and (2)(F) shall not apply to any qualified property in such class placed in service
during such taxable year. An election under this paragraph may be revoked only with
the consent of the Secretary.
I.R.C. § 168(k)(8) Phase Down —
In the case of qualified property acquired by the taxpayer before September 28, 2017,
and placed in service by the taxpayer after September 27, 2017, paragraph (6) shall
be applied by substituting for each percentage therein—
I.R.C. § 168(k)(8)(A) —
“50 percent” in the case of—
I.R.C. § 168(k)(8)(A)(i) —
property placed in service before January 1, 2018, and
I.R.C. § 168(k)(8)(A)(ii) —
property described in subparagraph (B)
or (C) of paragraph (2) which is placed in service in 2018,
I.R.C. § 168(k)(8)(B) —
“40 percent” in the case of—
I.R.C. § 168(k)(8)(B)(i) —
property placed in service in 2018 (other than property described in subparagraph
(B) or (C) of paragraph (2)), and
I.R.C. § 168(k)(8)(B)(ii) —
property described in subparagraph (B)
or (C) of paragraph (2) which is placed in service in 2019,
I.R.C. § 168(k)(8)(C) —
“30 percent” in the case of—
I.R.C. § 168(k)(8)(C)(i) —
property placed in service in 2019 (other than property described in subparagraph
(B) or (C) of paragraph (2)), and
I.R.C. § 168(k)(8)(C)(ii) —
property described in subparagraph (B)
or (C) of paragraph (2) which is placed in service in 2020, and
I.R.C. § 168(k)(8)(D) —
“0 percent” in the case of—
I.R.C. § 168(k)(8)(D)(i) —
property placed in service after 2019
(other than property described in subparagraph (B) or (C) of paragraph
(2)), and
I.R.C. § 168(k)(8)(D)(ii) —
property described in subparagraph (B)
or (C) of paragraph (2) which is placed in service after 2020.
I.R.C. § 168(k)(9) Exception For Certain Property —
The term “qualified property” shall not include—
I.R.C. § 168(k)(9)(A) —
any property which is primarily used in a trade or business described in clause (iv)
of section 163(j)(7)(A), or
I.R.C. § 168(k)(9)(B) —
any property used in a trade or business that has had floor plan financing indebtedness
(as defined in paragraph
(9) of section 163(j)), if the floor plan financing interest related to such indebtedness was taken into
account under paragraph (1)(C) of such section.
I.R.C. § 168(k)(10) Special Rule For Property Placed In Service During Certain Periods
I.R.C. § 168(k)(10)(A) In General —
In the case of qualified property placed in service by the taxpayer during the first
taxable year ending after September 27, 2017, if the taxpayer elects to have this
paragraph apply for such taxable year, paragraphs (1)(A) and (5)(A)(i) shall be applied
by substituting “50 percent” for “the applicable percentage”.
I.R.C. § 168(k)(10)(B) Form Of Election —
Any election under this paragraph shall be made at such time and in such form and
manner as the Secretary may prescribe.
I.R.C. § 168(l) Special Allowance For Second Generation Biofuel Plant Property
I.R.C. § 168(l)(1) Additional Allowance —
In the case of any qualified second generation biofuel plant property—
I.R.C. § 168(l)(1)(A) —
the depreciation deduction provided by section 167(a) for the taxable year in which such property is placed in service shall include an
allowance equal to 50 percent of the adjusted basis of such property, and
I.R.C. § 168(l)(1)(B) —
the adjusted basis of such property shall be reduced by the amount of such deduction
before computing the amount otherwise allowable as a depreciation deduction under
this chapter for such taxable year and any subsequent taxable year.
I.R.C. § 168(l)(2) Qualified Second Generation Biofuel Plant Property —
The term “qualified second generation biofuel plant property” means property of a
character subject to the allowance for depreciation—
I.R.C. § 168(l)(2)(A) —
which is used in the United States solely to produce second generation biofuel (as
defined in section 40(b)(6)(E)),
I.R.C. § 168(l)(2)(B) —
the original use of which commences with the taxpayer after the date of the enactment
of this subsection,
I.R.C. § 168(l)(2)(C) —
which is acquired by the taxpayer by purchase (as defined in section 179(d))
after the date of the enactment of this subsection, but only if no
written binding contract for the acquisition was in effect on or
before the date of the enactment of this subsection, and
I.R.C. § 168(l)(2)(D) —
which is placed in service by the taxpayer before January 1, 2021.
I.R.C. § 168(l)(3) Exceptions
I.R.C. § 168(l)(3)(A) Bonus Depreciation Property Under Subsection (k) —
Such term shall not include any property to which subsection (k) applies.
I.R.C. § 168(l)(3)(B) Alternative Depreciation Property —
Such term shall not include any property described in subsection (k)(2)(D).
I.R.C. § 168(l)(3)(C) Tax-Exempt Bond-Financed Property —
Such term shall not include any property any portion of which is financed with the
proceeds of any obligation the interest on which is exempt from tax under section
103.
I.R.C. § 168(l)(3)(D) Election Out —
If a taxpayer makes an election under this subparagraph with respect to any class
of property for any taxable year, this subsection shall not apply to all property
in such class placed in service during such taxable year.
I.R.C. § 168(l)(4) Special Rules —
For purposes of this subsection, rules similar to the rules of subsection (k)(2)(E)
shall apply.
I.R.C. § 168(l)(5) Allowance Against Alternative Minimum Tax —
For purposes of this subsection, rules similar to the rules of subsection (k)(2)(G) shall apply.
I.R.C. § 168(l)(6) Recapture —
For purposes of this subsection, rules similar to the rules under section 179(d)(10) shall apply with respect to any qualified second generation biofuel plant property
which ceases to be qualified second generation biofuel plant property.
I.R.C. § 168(l)(7) Denial Of Double Benefit —
Paragraph (1) shall not apply to any qualified second generation biofuel plant property
with respect to which an election has been made under section 179C (relating to election to expense certain refineries).
I.R.C. § 168(m) Special Allowance For Certain Reuse And Recycling Property
I.R.C. § 168(m)(1) In General —
In the case of any qualified reuse and recycling property—
I.R.C. § 168(m)(1)(A) —
the depreciation deduction provided by section 167(a) for the taxable year in which such property is placed in service shall include an
allowance equal to 50 percent of the adjusted basis of the qualified reuse and recycling
property, and
I.R.C. § 168(m)(1)(B) —
the adjusted basis of the qualified reuse and recycling property shall be reduced
by the amount of such deduction before computing the amount otherwise allowable as
a depreciation deduction under this chapter for such taxable year and any subsequent
taxable year.
I.R.C. § 168(m)(2) Qualified Reuse And Recycling Property —
For purposes of this subsection—
I.R.C. § 168(m)(2)(A) In General —
The term “qualified reuse and recycling property”
means any reuse and recycling property—
I.R.C. § 168(m)(2)(A)(i) —
to which this section applies,
I.R.C. § 168(m)(2)(A)(ii) —
which has a useful life of at least 5 years,
I.R.C. § 168(m)(2)(A)(iii) —
the original use of which commences with the taxpayer after August 31, 2008, and
I.R.C. § 168(m)(2)(A)(iv) —
which is—
I.R.C. § 168(m)(2)(A)(iv)(I) —
acquired by purchase (as defined in section 179(d)(2)) by the taxpayer after August 31, 2008, but only if no written binding contract for
the acquisition was in effect before September 1, 2008, or
I.R.C. § 168(m)(2)(A)(iv)(II) —
acquired by the taxpayer pursuant to a written binding contract which was entered
into after August 31, 2008.
I.R.C. § 168(m)(2)(B) Exceptions
I.R.C. § 168(m)(2)(B)(i) Bonus Depreciation Property Under Subsection (k) —
The term “qualified reuse and recycling property”
shall not include any property to which subsection (k) (determined without regard to paragraph (4) thereof) applies.
I.R.C. § 168(m)(2)(B)(ii) Alternative Depreciation Property —
The term “qualified reuse and recycling property”
shall not include any property to which the alternative depreciation system under
subsection (g) applies, determined without regard to paragraph (7) of subsection (g)
(relating to election to have system apply).
I.R.C. § 168(m)(2)(B)(iii) Election Out —
If a taxpayer makes an election under this clause with respect to any class of property
for any taxable year, this subsection shall not apply to all property in such class
placed in service during such taxable year.
I.R.C. § 168(m)(2)(C) Special Rule For Self-Constructed Property —
In the case of a taxpayer manufacturing, constructing, or producing property for the
taxpayer's own use, the requirements of clause (iv) of subparagraph (A) shall be treated
as met if the taxpayer begins manufacturing, constructing, or producing the property
after August 31, 2008.
I.R.C. § 168(m)(2)(D) Deduction Allowed In Computing Minimum Tax —
For purposes of determining alternative minimum taxable income under section 55, the deduction under subsection (a) for qualified reuse and recycling property shall
be determined under this section without regard to any adjustment under section 56.
I.R.C. § 168(m)(3) Definitions —
For purposes of this subsection—
I.R.C. § 168(m)(3)(A) Reuse And Recycling Property
I.R.C. § 168(m)(3)(A)(i) In General —
The term “reuse and recycling property” means any machinery and equipment (not including
buildings or real estate), along with all appurtenances thereto, including software
necessary to operate such equipment, which is used exclusively to collect, distribute,
or recycle qualified reuse and recyclable materials.
I.R.C. § 168(m)(3)(A)(ii) Exclusion —
Such term does not include rolling stock or other equipment used to transport reuse
and recyclable materials.
I.R.C. § 168(m)(3)(B) Qualified Reuse and Recyclable Materials
I.R.C. § 168(m)(3)(B)(i) In General —
The term “qualified reuse and recyclable materials”
means scrap plastic, scrap glass, scrap textiles, scrap rubber, scrap packaging, recovered
fiber, scrap ferrous and nonferrous metals, or electronic scrap generated by an individual
or business.
I.R.C. § 168(m)(3)(B)(ii) Electronic Scrap —
For purposes of clause (i), the term “electronic scrap” means—
I.R.C. § 168(m)(3)(B)(ii)(I) —
any cathode ray tube, flat panel screen, or similar video display device with a screen
size greater than 4 inches measured diagonally, or
I.R.C. § 168(m)(3)(B)(ii)(II) —
any central processing unit.
I.R.C. § 168(m)(3)(C) Recycling Or Recycle —
The term “recycling” or “recycle”
means that process (including sorting) by which worn or superfluous materials are
manufactured or processed into specification grade commodities that are suitable for
use as a replacement or substitute for virgin materials in manufacturing tangible
consumer and commercial products, including packaging.
(Added by Pub. L. 97-34, title II, Sec. 201(a), Aug. 13, 1981, 95 Stat. 203, and amended by Pub. L. 97-248, title II, Sec. 206, 208(a)(1), (2)(A), (b), 209(a), (b), 216(a), 224(c)(1), (2),
Sept. 3, 1982, 96 Stat. 431, 432, 435, 442, 445, 470, 489; Pub. L. 97-354, Sec. 5(a)(19),
(20), Oct. 19, 1982, 96 Stat. 1693, 1694; Pub. L. 97-424, title V, Sec. 541(a)(1), Jan. 6, 1983, 96 Stat. 2192; Pub. L. 97-448, title I, Sec. 102(a)(1)-(5), (8)-(10)(A), (f)(4), Jan. 12, 1983, 96 Stat. 2367, 2368, 2371; Pub. L. 98-369, div. A, title I, Sec. 12(a)(3), 31(a), (d), 32(a), 111(a)-(e)(4), (9), 113(a)(2),
(b)(1), (2)(A), title IV, Sec. 474(r)(7), title VI, Sec. 612(e)(4), (5), 628(b),
July 18, 1984, 98 Stat. 503, 509, 518, 530, 631-633, 636, 637, 840, 912, 931; Pub. L. 99-121, title I, Sec. 103(a), (b)(1)(A),
(2)-(4), Oct. 11, 1985, 99 Stat. 509;
Pub. L. 99-514, title II, Sec. 201(a), title XVIII, Sec. 1802(a)(1)-(2)(E)(i), (G), (3), (4)(A),
(B), (7), (b)(1), 1809(a)(1)-(2)(C)(i), (4)(A), (B), (b)(1), (2), Oct. 22, 1986,
100 Stat. 2121, 2786-2789, 2791, 2818-2821; Pub. L. 100-647, title I, Sec. 1002(a)(5)-(8), (11), (16)(B), (21), (23)(A), (i)(2)(A)-(G), 1018(b)(2),
title VI, Sec. 6027(a), (b), 6028(a), 6029(a)-(c), 6253, Nov. 10, 1988, 102 Stat. 3353-3356, 3370, 3371, 3577, 3693, 3694, 3753; Pub. L. 101-239, title VII, Sec. 7816(e), (f), (w), Dec. 19, 1989, 103 Stat. 2421, 2423;
Pub. L. 101-508, title XI, Sec. 11801(c)(8)(B), 11812(b)(2), 11813(b)(9), Nov. 5, 1990, 104 Stat. 1388-524, 1388-534, 1388-552; Pub. L. 103-66, title XIII, Sec. 13151(a), 13321(a), Aug. 10, 1993; Pub. L. 104-88, title III, Sec. 304, Dec. 29, 1995, 109 Stat. 943; Pub. L. 104-188, title I, Sec. 1120, 1121(a), 1613(b), 1702(h)(1), 1704(t)(54), Aug. 20, 1996, 110 Stat. 1755; Pub. L. 105-34, title X, XII, XVI, Sec. 1086(b), 1213(c), 1604(c), Aug. 5, 1997, 111 Stat 788; Pub. L. 105-206, title VI, Sec. 6006(b), July 22, 1998, 112 Stat 685; Pub. L. 107-147, title I, VI, Sec. 101(a), 613(b), Mar. 9, 2002, 116 Stat. 21; Pub. L. 108-27, title II, Sec. 201, May 28, 2003, 117 Stat. 752; Pub. L. 108-311, title III, IV, Sec. 316, 403(a), 408(a), Oct. 4, 2004, 118 Stat. 1166; Pub. L. 108-357, title II, III, VII, VIII, IX, Sec. 211, 336, 337, 704, 706, 847, 901; Oct. 22,
2004, 118 Stat. 1418; Pub. L. 109-58, title XIII, Sec. 1301(f)(5), 1308, 1325, 1326, Aug. 8, 2005, 119 Stat. 594; Pub. L. 109-135, title IV, Sec. 403(j), 405(a)(1), 410(a), 412(s), Dec. 21, 2005, 119 Stat. 2577; Pub. L. 109-432, div. A, title I, II, Sec. 112(a), 113(a), 209(a), Dec. 20, 2006, 120 Stat. 432; Pub. L. 110-172, Sec. 11(b)(1), Dec. 29, 2007, 121 Stat. 2473; Pub. L. 110-185, Sec. 103, Feb. 13, 2008, 122 Stat. 613; Pub. L. 110-246, title XV, Sec. 15344(a), June 18, 2008, 122 Stat. 1651; Pub. L. 110-289, div. A, title III, Sec. 3081, July 30, 2008, 122 Stat. 2654; Pub. L. 110-343, div. B, title II, Sec. 201, title III, Sec. 306, 308(a), div. C, title III, Sec.
305, 315, 317, title V, Sec. 505, title VII, 710(a), Oct. 3, 2008, 122 Stat. 3765; Pub. L. 111-5, div. B, title I, Sec. 1201, Feb. 17, 2009, 123 Stat. 115; Pub. L. 111-240, title II, Sec. 2022, Sept. 27, 2010, 124 Stat. 2504; Pub. L. 111-312, title IV, VII, Sec. 401, 737, 738, 739, Dec. 17, 2010, 124 Stat. 3296; Pub. L. 112-240, title III, IV, Sec. 311, 312, 313, 331, 410, Jan. 2, 2013, 126 Stat. 2313; Pub. L. 113-295, Div. A, title I, Sec. 121(a), 122(a), 123(a), 124(a), 125(a), 125(c), 125(d), 157(a),
title II, Sec. 202(e), 210(c), 210(d), 210(g)(2), 211(b), 212(b), 214(b), Dec. 19,
2014, 128 Stat. 4010; Pub. L. 114-113, Div. Q, title I, Sec. 123, 143, 165, 166(a), 167, 189, Dec. 18, 2015; Pub. L. 115-97, Secs. 12001, 13201, 13203, 13204(a), 13205(a), 13504(b), Dec. 22, 2017, 131 Stat. 2054; Pub. L. 115-123, Div. D, title I, Secs. 40304(a), 40305(a), 40306(a), 40412(a), Feb. 9, 2018, 132 Stat. 64; Pub. L. 115-141, Div. U, title I, Sec. 101(d), (e), title III, Sec. 302(a), title IV, Sec. 401(a)(49),
(50), 401(b)(13)(A), 401(d)(1)(D)(iv), Mar. 23, 2018, 132 Stat. 348; Pub. L. 116-94, Div. Q, title I, Secs. 114(a), 115(a), 116(a), 130(a), Dec. 20, 2019; Pub. L. 116-136, Div. A, title II, Sec. 2307, Mar. 27, 2020; Pub. L. 116-260, Div. EE, title I, Sec. 115(a), 137(a), 138(a), Dec. 27, 2020, 134 Stat. 1182.)
BACKGROUND NOTES
AMENDMENTS
2020 — Subsec. (e)(3)(A)(i)(I). Pub. L. 116-260, Div. EE, Sec. 137(a)(1), amended subclause (I) by substituting “January 1, 2022”
for “January 1, 2021”.
Subsec. (e)(3)(A)(i)(II). Pub. L. 116-260, Div. EE, Sec. 137(a)(2), amended subclause (II)
by substituting “December 31, 2021” for “December 31, 2020”.
Subsec. (i)(15)(D). Pub. L. 116-260, Div. EE, Sec. 115(a), amended subpar. (D) by substituting “December 31, 2025” for
“December 31, 2020”.
Subsec. (j)(9). Pub. L. 116-260, Div. EE, Sec. 138(a), amended par. (9) by substituting “December 31, 2021” for “December
31, 2020”.
Subsec. (e)(3)(E)(v). Pub. L. 116-136, Sec. 2307(a)(1)(A), amended clause (v) by striking “and” at the end.
Subsec. (e)(3)(E)(vi). Pub. L. 116-136, Sec. 2307(a)(1)(A), amended clause (vi) by substituting “, and” for the period at the end.
Subsec. (e)(3)(E)(vii). Pub. L. 116-136, Sec. 2307(a)(1)(A), amended subpar. (E) by adding clause (vii).
Subsec. (e)(6)(A). Pub. L. 116-136, Sec. 2307(a)(1)(B), amended subpar. (A) by inserting “made by the taxpayer”
after “any improvement”.
Subsec. (g)(3)(B). Pub. L. 116-136, Sec. 2307(a)(2)(A), amended the table in subpar. (B) by striking the item relating to subpar. (D)(v).
Subsec. (g)(3)(B). Pub. L. 116-136, Sec. 2307(a)(2)(B), amended the table in subpar. (B) by adding the following new item after the item
relating to subpar. (E)(vi):
“(E)(vii) .......................................................................................
20”
2019 — Subsec. (e)(3)(A)(i)(I). Pub. L. 116-94, Sec. 114(a)(1), amended subclause (I) by substituting “January 1, 2021”
for “January 1, 2018”.
Subsec. (e)(3)(A)(i)(II). Pub. L. 116-94, Sec. 114(a)(2), amended subclause (II) by substituting “December 31, 2020”
for “December 31, 2017”.
Subsec. (i)(15)(D). Pub. L. 116-94, Sec. 115(a), amended subpar. (D) by substituting “December 31, 2020” for “December 31, 2017”.
Subsec. (j)(9). Pub. L. 116-94, Sec. 116(a), amended par. (9) by substituting “December 31, 2020” for “December 31, 2017”.
Subsec. (l)(2)(D). Pub. L. 116-94, Sec. 130(a), amended subpar. (D) by substituting “January 1, 2021” for “January 1, 2018”.
2018 -
Subsec. (d)(3)(B)(i). Pub. L. 115-141, Div. U, Sec. 401(a)(49), amended clause (i) by inserting a comma after “real property”.
Subsec. (e)(3)(B). Pub. L. 115-141, Div. U, Sec. 302(a)(2), amended subpar. (B)
by substituting “clause (vi)(I) (or the corresponding provisions of prior law) by
reason of being public utility property (within the meaning of section 48(a)(3)).”
for “subclause (I)
or (II) of clause (vi) by reason of being a public utility property.”
Subsec. (e)(3)(B)(vi)(II). Pub. L. 115-141, Div. U, Sec. 302(a)(1), amended subclause (II)
by substituting “has a power production capacity of not greater than 80 megawatts,
or” for “is a qualifying small power production facility within the meaning of section
3(17)(C) of the Federal Power Act (16 U.S.C. 796(17)(C)), as in effect on September 1, 1986, or”.
Subsec. (e)(3)(C)(i). Pub. L. 115-141, Div. U, Sec. 401(a)(50), amended clause (i)
by striking “and”.
Subsec. (g)(4)(G). Pub. L. 115-141, Div. U, Sec. 401(d)(1)(D)(iv), amended subpar.
(G) by striking “(other than a corporation which has an election in effect under
section 936)”.
Subsec. (k)(2)(b)(i)(III). Pub. L. 115-141, Div. U, Sec. 101(d)(1), amended subclause (III)
by inserting “binding” before “contract”.
Subsec. (k)(5)(B)(ii). Pub. L. 115-141, Div. U, Sec. 101(d)(2), amended clause (ii)
by inserting “crop or” after “more than one”
and by inserting “a marketable crop or yield of” after “begins bearing”.
Subsec. (j)(3). Pub. L. 115-141, Div. U, Sec. 101(e)(1), amended par. (3) by substituting “qualified Indian reservation
property” for “property to which paragraph (1) applies”.
Subsec. (j)(8). Pub. L. 115-141, Div. U, Sec. 101(e)(2), amended par. (8) by substituting “paragraph (1)” for “this
subsection”.
Subsec. (n). Pub. L. 115-141, Div. U, Sec. 401(b)(13)(A), struck subsec. (n). Before being struck, it read as
follows:
“(n) Special Allowance For Qualified Disaster Assistance Property
“(1) In General.—In the case of any qualified disaster assistance property—
“(A) the depreciation deduction provided by section 167(a) for the taxable year
in which such property is placed in service shall include an allowance equal to 50
percent of the adjusted basis of the qualified disaster assistance property, and
“(B) the adjusted basis of the qualified disaster assistance property shall be reduced
by the amount of such deduction before computing the amount otherwise allowable as
a depreciation deduction under this chapter for such taxable year and any subsequent
taxable year.
“(2) Qualified Disaster Assistance Property.—For purposes of this subsection—
“(A) In General.—The term “qualified disaster assistance property” means any property—
“(i)(I) which is described in subsection
(k)(2)(A)(i), or
“(II) which is nonresidential real property or residential rental property,
“(ii) substantially all of the use of which is—
“(I) in a disaster area with respect to a federally declared disaster occurring
before January 1, 2010, and
“(II) in the active conduct of a trade or business by the taxpayer in such disaster
area,
“(iii) which—
“(I) rehabilitates property damaged, or replaces property destroyed or condemned,
as a result of such federally declared disaster, except that, for purposes of this
clause, property shall be treated as replacing property destroyed or condemned if,
as part of an integrated plan, such property replaces property which is included in
a continuous area which includes real property destroyed or condemned, and
“(II) is similar in nature to, and located in the same county as, the property being
rehabilitated or replaced,
“(iv) the original use of which in such disaster area commences with an eligible
taxpayer on or after the applicable disaster date,
“(v) which is acquired by such eligible taxpayer by purchase (as defined in section
179(d)) on or after the applicable disaster date, but only if no written binding contract
for the acquisition was in effect before such date, and
“(vi) which is placed in service by such eligible taxpayer on or before the date
which is the last day of the third calendar year following the applicable disaster
date (the fourth calendar year in the case of nonresidential real property and residential
rental property).
“(B) Exceptions
“(i) Other Bonus Depreciation Property.—The term “qualified disaster assistance property”
shall not include—
“(I) any property to which subsection (k)
(determined without regard to paragraph (4)), (l), or (m) applies,
“(II) any property to which section 1400N(d)
applies, and
“(III) any property described in section 1400N(p)(3).
“(ii) Alternative Depreciation Property.—The term “qualified disaster assistance property”
shall not include any property to which the alternative depreciation system under
subsection (g) applies, determined without regard to paragraph
(7) of subsection (g) (relating to election to have system apply).
“(iii) Tax-Exempt Bond Financed Property.—Such term shall not include any property
any portion of which is financed with the proceeds of any obligation the interest
on which is exempt from tax under section 103.
“(iv) Qualified Revitalization Buildings.—Such term shall not include any qualified
revitalization building with respect to which the taxpayer has elected the application
of paragraph
(1) or (2) of section 1400I(a).
“(v) Election Out.—If a taxpayer makes an election under this clause with respect
to any class of property for any taxable year, this subsection shall not apply to
all property in such class placed in service during such taxable year.
“(C) Special Rules.—For purposes of this subsection, rules similar to the rules of
subparagraph (E) of subsection (k)(2) shall apply, except that such subparagraph shall
be applied—
“(i) by substituting “the applicable disaster date” for “December 31, 2007”
“(ii) without regard to “and before January 1, 2015” in clause (i) thereof, and
“(iii) by substituting “qualified disaster assistance property” for “qualified property”
in clause (iv) thereof.
“(D) Allowance Against Alternative Minimum Tax.—For purposes of this subsection, rules
similar to the rules of subsection (k)(2)(G) shall apply.
“(3) Other Definitions.—For purposes of this subsection—
“(A) Applicable Disaster Date.—The term “applicable disaster date” means, with respect
to any federally declared disaster, the date on which such federally declared disaster
occurs.
“(B) Federally Declared Disaster.—The term “federally declared disaster” has the meaning
given such term under section 165(h)(3)(C)(i).
“(C) Disaster Area.—The term “disaster area” has the meaning given such term under
section 165(h)(3)(C)(ii).
“(D) Eligible Taxpayer.—The term “eligible taxpayer” means a taxpayer who has suffered
an economic loss attributable to a federally declared disaster.
“(4) Recapture.—For purposes of this subsection, rules similar to the rules under
section 179(d)(10) shall apply with respect to any qualified disaster assistance property
which ceases to be qualified disaster assistance property.”
Subsec. (e)(3)(A)(i). Pub. L. 115-123, Div. D, Sec. 40304(a), amended clause (i) by substituting “January 1, 2018” for
“January 1, 2017”
in subclause (I), and substituting “December 31, 2017”
for “December 31, 2016” in subclause (II).
Subsec. (i)(15)(D). Pub. L. 115-123, Div. D, Sec. 40305(a), amended subpar. (D) by substituting “December 31, 2017”
for “December 31, 2016”.
Subsec. (j)(9). Pub. L. 115-123, Div. D, Sec. 40306(a), amended par. (9) by substituting “December 31, 2017” for
“December 31, 2016”.
Subsec. (l)(2)(D). Pub. L. 115-123, Div. D, Sec. 40412(a), amended subpar. (D) by substituting “January 1, 2018” for
“January 1, 2017”.
2017 - Subsec. (b)(2)(B)-(D). Pub. L. 115-97, Sec. 13203(b), amended par. (2) by striking subpar. (B) and by redesignating subpar.
(C) and (D) as subpar. (B) and (C), respectively. Before being struck, subpar. (B)
read as follows:
“(B) any property used in a farming business
(within the meaning of section 263A(e)(4)),”.
Subsec. (b)(3)(G)-(I). Pub. L. 115-97, Sec. 13204(a)(2)(A), amended par. (3) by striking subpar. (G), (H), and (I) and by adding a new subpar.
(G). Before being struck, they read as follows:
“(G) Qualified leasehold improvement property described in subsection (e)(6).”
“(H) Qualified restaurant property described in subsection (e)(7).”
“(I) Qualified retail improvement property described in subsection (e)(8).”
Subsec. (e)(3)(B)(vii). Pub. L. 115-97, Sec. 13203(a), amended clause (vii) by substituting “after December 31, 2017”
for “after December 31, 2008, and which is placed in service before January 1, 2010”.
Subsec. (e)(3)(E)(iv)-(ix). Pub. L. 115-97, Sec. 13204(a)(1)(A), amended subpar. (E) by striking clauses (iv), (v), and (ix), by inserting “and”
at the end of clause (vii), by substituting a period for “, and” at the end of clause
(viii), and by redesignating clauses
(vi), (vii), and (viii) as clauses (iv), (v), and (vi), respectively. Before being
struck, clauses (iv), (v) and (ix) read as follows:
“(iv) any qualified leasehold improvement property,”.
“(v) any qualified restaurant property,”.
“(ix) any qualified retail improvement property.”.
Subsec. (e)(6)-(8). Pub. L. 115-97, Sec. 13204(a)(1)(B), struck par. (6), (7), and (8). Before being struck, they read as follows:
“(6) Qualified Leasehold Improvement Property.—For purposes of this subsection—
“(A) In General.—The term “qualified leasehold improvement property” means any improvement
to an interior portion of a building which is nonresidential real property if—
“(i) such improvement is made under or pursuant to a lease (as defined in subsection
(h)(7))—
“(I) by the lessee (or any sublessee) of such portion, or
“(II) by the lessor of such portion,
“(ii) such portion is to be occupied exclusively by the lessee (or any sublessee)
of such portion, and
“(iii) such improvement is placed in service more than 3 years after the date the
building was first placed in service.
“(B) Certain Improvements Not Included.—Such term shall not include any improvement
for which the expenditure is attributable to—
“(i) the enlargement of the building,
“(ii) any elevator or escalator,
“(iii) any structural component benefitting a common area, or
“(iv) the internal structural framework of the building.
“(C) Definitions And Special Rules.—For purposes of this paragraph—
“(i) Commitment To Lease Treated As Lease.—A commitment to enter into a lease shall
be treated as a lease, and the parties to such commitment shall be treated as lessor
and lessee, respectively.
“(ii) Related Persons.—A lease between related persons shall not be considered a lease.
For purposes of the preceding sentence, the term “related persons” means—
“(I) members of an affiliated group (as defined in section 1504), and
“(II) persons having a relationship described in subsection (b) of section 267;
except that, for purposes of this clause, the phrase “80 percent or more” shall be
substituted for the phrase “more than 50 percent” each place it appears in such subsection.
“(D) Improvements Made By Lessor.—In the case of an improvement made by the person
who was the lessor of such improvement when such improvement was placed in service,
such improvement shall be qualified leasehold improvement property (if at all) only
so long as such improvement is held by such person.
“(E) Exception For Changes In Form Of Business.—Property shall not cease to be qualified
leasehold improvement property under subparagraph (D) by reason of—
“(i) death,
“(ii) a transaction to which section 381(a)
applies,
“(iii) a mere change in the form of conducting the trade or business so long as
the property is retained in such trade or business as qualified leasehold improvement
property and the taxpayer retains a substantial interest in such trade or business,
“(iv) the acquisition of such property in an exchange described in section 1031,
1033, or 1038 to the extent that the basis of such property includes an amount representing
the adjusted basis of other property owned by the taxpayer or a related person, or
“(v) the acquisition of such property by the taxpayer in a transaction described
in section 332, 351, 361, 721, or 731 (or the acquisition of such property by the
taxpayer from the transferee or acquiring corporation in a transaction described in
such section), to the extent that the basis of the property in the hands of the taxpayer
is determined by reference to its basis in the hands of the transferor or distributor.”
“(7) Qualified Restaurant Property
“(A) In General.—The term “qualified restaurant property” means any section 1250 property
which is—
“(i) a building, or
“(ii) an improvement to a building,
“ if more than 50 percent of the building's square footage is devoted to preparation
of, and seating for on-premises consumption of, prepared meals.
“(B) Exclusion From Bonus Depreciation.—Property described in this paragraph which
is not qualified improvement property shall not be considered qualified property for
purposes of subsection
(k).”
“(8) Qualified Retail Improvement Property
“(A) In General.—The term “qualified retail improvement property” means any improvement
to an interior portion of a building which is nonresidential real property if—
“(i) such portion is open to the general public and is used in the retail trade
or business of selling tangible personal property to the general public, and
“(ii) such improvement is placed in service more than 3 years after the date the
building was first placed in service.
“(B) Improvements Made By Owner.—In the case of an improvement made by the owner of
such improvement, such improvement shall be qualified retail improvement property
(if at all) only so long as such improvement is held by such owner. Rules similar
to the rules under paragraph (6)(B) shall apply for purposes of the preceding sentence.
“(C) Certain Improvements Not Included.—Such term shall not include any improvement
for which the expenditure is attributable to—
“(i) the enlargement of the building,
“(ii) any elevator or escalator,
“(iii) any structural component benefitting a common area, or
“(iv) the internal structural framework of the building.”
Subsec. (e)(6). Pub. L. 115-97, Sec. 13204(a)(4)(B)(i), added new par. (6).
Subsec. (g)(1)(D)-(F). Pub. L. 115-97, Sec. 13204(a)(3)(A)(i), amended par. (1) by striking “and” at the end of subpar.
(D), by adding “and” at the end of subpar. (E), and by adding subpar. (F).
Subsec. (g)(1)(E)-(G). Pub. L. 115-97, Sec. 13205(a), amended par. (1) by striking “and” at the end of subpar.
(E), by adding “and” at the end of subpar. (F), and by adding subpar. (G).
Subsec. (g)(2)(C). Pub. L. 115-97, Sec. 13204(a)(3)(C), amended the table in subpar. (C) by substituting clauses (iii) through
(v) for clauses (iii) and (iv). Before being amended, the items read as follows:
“(iii) Nonresidential real and residential rental property................. 40 years.
‘(iv) Any railroad grading or tunnel bore or water utility property........ 50 years.”
Subsec. (g)(3)(B). Pub. L. 115-97, Sec. 13205(a)(3)(B), amended the table in subpar. (B) by substituting the items for (E)(iv)
through (E)(vi) for the items for (E)(iv) through (E)(ix). Before being struck, items
(E)(iv) through (E)(ix) read as follows:
“(E)(iv)....................................... 39
“(E)(v)........................................ 39
“(E)(vi)....................................... 20
“(E)(vii)...................................... 30
“(E)(viii)..................................... 35
“(E)(ix)....................................... 39”
Subsec. (g)(8). Pub. L. 115-97, Sec. 13204(a)(3)(A)(ii), amended subsec. (g) by adding par. (8).
Subsec. (i)(7)(B). Pub. L. 115-97, Sec. 13504(b)(1), amended subpar. (B) by striking the second sentence. Before being struck, it read
as follows:
“Subparagraph (A) shall not apply in the case of a termination of a partnership under
section 708(b)(1)(B).”
Subsec. (k). Pub. L. 115-97, Sec. 13201(b)(2)(B), amended the heading of subsec.
(k) by removing “Acquired After December 31, 2007, And Before January 1, 2020”.
Subsec. (k)(1)(A). Pub. L. 115-97, Sec. 13201(a)(1)(A), amended subpar. (A) by substituting “the applicable percentage”
for “50 percent”.
Subsec. (k)(2)(A)(i)(II)-(V). Pub. L. 115-97, Sec. 13201(g)(1), amended clause (i) by striking “or” in subclause (II), by adding “or” after the
comma in subclause (III), and by adding subclause (IV) and (V).
Subsec. (k)(2)(A)(i)(II)-(IV). Pub. L. 115-97, Sec. 13204(a)(4)(A), amended clause (i) by inserting “or” after the comma in subclause (II), by striking
“or” at the end of subclause
(III), and by striking (IV). Before being struck, subclause (IV) read as follows:
“(IV) which is qualified improvement property,”.
Subsec. (k)(2)(A)(ii). Pub. L. 115-97, Sec. 13201(c)(1), amended clause (ii). Before amendment, it read as follows:
“(ii) the original use of which commences with the taxpayer, and”.
Subsec. (k)(2)(A)(iii). Pub. L. 115-97, Sec. 13201(b)(1)(A)(i), amended clause (iii) by substituting “January 1, 2027”
for “January 1, 2020” each place it appeared.
Subsec. (k)(2)(B)(i)(II). Pub. L. 115-97, Sec. 13201(b)(1)(A)(ii)(I), amended subclause (II) by substituting “January 1, 2028”
for “January 1, 2021”.
Subsec. (k)(2)(B)(i)(III). Pub. L. 115-97, Sec. 13201(b)(1)(A)(i), amended subclause (III) by substituting “January 1, 2027”
for “January 1, 2020” each place it appeared.
Subsec. (k)(2)(B)(ii). Pub. L. 115-97, Sec. 13201(b)(1)(A)(ii)(II), amended the heading of clause (ii) by substituting “Pre-January 1, 2027” for “Pre-January
1, 2020”.
Subsec. (k)(2)(B)(ii). Pub. L. 115-97, Sec. 13201(b)(1)(A)(i), amended clause (ii) by substituting “January 1, 2027”
for “January 1, 2020” each place it appeared.
Subsec. (k)(2)(E)(i). Pub. L. 115-97, Sec. 13201(b)(1)(A)(i), amended clause (i) by substituting “January 1, 2027” for “January 1, 2020” each
place it appeared.
Subsec. (k)(2)(E)(ii). Pub. L. 115-97, Sec. 13201(c)(2), amended clause (ii). Before amendment, it read as follows:
“(ii) Sale-Leasebacks.—For purposes of clause (iii) and subparagraph (A)(ii), if property
is—
“(I) originally placed in service by a person, and
“(II) sold and leased back by such person within 3 months after the date such property
was originally placed in service,
“such property shall be treated as originally placed in service not earlier than the
date on which such property is used under the leaseback referred to in subclause (II).”
Subsec. (k)(2)(E)(iii)(I). Pub. L. 115-97, Sec. 13201(c)(3), amended subclause (I). Before amendment, it read as follows:
“(I) property is originally placed in service by the lessor of such property,”.
Subsec. (k)(2)(F)(iii). Pub. L. 115-97, Sec. 13201(f), amended clause (iii) by substituting “acquired by the taxpayer before September
28, 2017, and placed in service by the taxpayer after September 27, 2017” for “placed
in service by the taxpayer after December 31, 2017”.
“(I) property is originally placed in service by the lessor of such property,”.
Subsec. (k)(2)(H). Pub. L. 115-97, Sec. 13201(g)(2), amended par. (2) by adding subpar. (H).
Subsec. (k)(3). Pub. L. 115-97, Sec. 13204(a)(4)(B)(ii), amended subsec. (k) by striking par. (3). Before being struck, it read as follows:
“(3) Qualified Improvement Property.—For purposes of this subsection—
“(A) In General.—The term “qualified improvement property” means any improvement to
an interior portion of a building which is nonresidential real property if such improvement
is placed in service after the date such building was first placed in service.
“(B) Certain Improvements Not Included.—Such term shall not include any improvement
for which the expenditure is attributable to—
“(i) the enlargement of the building,
“(ii) any elevator or escalator, or
“(iii) the internal structural framework of the building.”
Subsec. (k)(4). Pub. L. 115-97, Sec. 12001(b)(13), amended subsec. (k) by striking par. (4). Before being struck, it read as follows:
“(4) Election To Accelerate AMT Credits In Lieu Of Bonus Depreciation
“(A) In General.—If a corporation elects to have this paragraph apply for any taxable
year—
“(i) paragraphs (1) and (2)(F) shall not apply to any qualified property placed
in service during such taxable year,
“(ii) the applicable depreciation method used under this section with respect to
such property shall be the straight line method, and
“(iii) the limitation imposed by section 53(c) for such taxable year shall be increased
by the bonus depreciation amount which is determined for such taxable year under subparagraph
(B).
“(B) Bonus Depreciation Amount.—For purposes of this paragraph—
“(i) In General.—The bonus depreciation amount for any taxable year is an amount equal
to 20 percent of the excess (if any) of—
“(I) the aggregate amount of depreciation which would be allowed under this section
for qualified property placed in service by the taxpayer during such taxable year
if paragraph (1)
applied to all such property (and, in the case of any such property which is a passenger
automobile (as defined in section 280F(d)(5)), if paragraph (2)(F) applied to such
automobile), over
“(II) the aggregate amount of depreciation which would be allowed under this section
for qualified property placed in service by the taxpayer during such taxable year
if paragraphs
(1) and (2)(F) did not apply to any such property.
“The aggregate amounts determined under subclauses
(I) and (II) shall be determined without regard to any election made under subparagraph
(A) or subsection (b)(2)(D), (b)(3)(D), or (g)(7).
“(ii) Limitation.—The bonus depreciation amount for any taxable year shall not exceed
the lesser of—
“(I) 50 percent of the minimum tax credit under section 53(b) for the first taxable
year ending after December 31, 2015, or
“(II) The minimum tax credit under section 53(b) for such taxable year determined
by taking into account only the adjusted net minimum tax for taxable years ending
before January 1, 2016 (determined by treating credits as allowed on a first-in, first-out
basis).
“(iii) Aggregation Rule.—All corporations which are treated as a single employer under
section 52(a) shall be treated—
“(I) as 1 taxpayer for purposes of this paragraph, and
“(II) as having elected the application of this paragraph if any such corporation
so elects.
“(C) Credit Refundable.—For purposes of section 6401(b), the aggregate increase in
the credits allowable under part IV of subchapter A for any taxable year resulting
from the application of this paragraph shall be treated as allowed under subpart C
of such part (and not any other subpart).
“(D) Other Rules.—
“(i) Election.—Any election under this paragraph may be revoked only with the consent
of the Secretary.
“(ii) Partnerships With Electing Partners.—In the case of a corporation which is a
partner in a partnership and which makes an election under subparagraph (A) for the
taxable year, for purposes of determining such corporation's distributive share of
partnership items under section 702 for such taxable year—
“(I) paragraphs (1) and (2)(F) shall not apply to any qualified property placed
in service during such taxable year, and
“(II) the applicable depreciation method used under this section with respect to
such property shall be the straight line method.
“(iii) Certain Partnerships.—In the case of a partnership in which more than 50 percent
of the capital and profits interests are owned (directly or indirectly) at all times
during the taxable year by 1 corporation (or by corporations treated as 1 taxpayer
under subparagraph (B)(iii)), each partner shall compute its bonus depreciation amount
under clause (i) of subparagraph (B)
by taking into account its distributive share of the amounts determined by the partnership
under subclauses (I) and (II) of such clause for the taxable year of the partnership
ending with or within the taxable year of the partner.”
Subsec. (k)(5)(A). Pub. L. 115-97, Sec. 13201(b)(1)(B), amended subpar. (A) by substituting “January 1, 2027”
for “January 1, 2020”.
Subsec. (k)(5)(A)(i). Pub. L. 115-97, Sec. 13201(a)(1)(B), amended clause (i) by substituting “the applicable percentage”
for “50 percent”.
Subsec. (k)(5)(F). Pub. L. 115-97, Sec. 13201(a)(3)(A), amended par. (5) by striking subpar. (F). Before being struck, it read as follows:
“(F) Phase Down.—In the case of a specified plant which is planted after December
31, 2017 (or is grafted to a plant that has already been planted before such date),
subparagraph
(A)(i) shall be applied by substituting for ‘50 percent'—
“(i) in the case of a plant which is planted
(or so grafted) in 2018, ‘40 percent', and
“(ii) in the case of a plant which is planted
(or so grafted) during 2019, ‘30 percent'.”
Subsec. (k)(6). Pub. L. 115-97, Sec. 13201(a)(2), amended par. (6). Before amendment, it read as follows:
“(6) Phase Down.—In the case of qualified property placed in service by the taxpayer
after December 31, 2017, paragraph (1)(A) shall be applied by substituting for ‘50
percent'—
“(A) in the case of property placed in service in 2018 (or in the case of property
placed in service in 2019 and described in paragraph (2)(B) or (C) (determined by
substituting ‘2019'
for ‘2020' in paragraphs (2)(B)(i)(III) and (ii) and paragraph
(2)(E)(i)), ‘40 percent',
“(B) in the case of property placed in service in 2019 (or in the case of property
placed in service in 2020 and described in paragraph (2)(B) or (C), ‘30 percent'.”
Subsec. (k)(8). Pub. L. 115-97, Sec. 13201(a)(3)(B), amended subsec. (k) by adding par. (8).
Subsec. (k)(9). Pub. L. 115-97, Sec. 13201(d), amended subsec. (k) by adding par. (9).
Subsec. (k)(10). Pub. L. 115-97, Sec. 13201(e), amended subsec. (k) by adding par. (10).
2015 - Subsec. (e)(3)(A)(i)(I). Pub. L. 114-113, Div. Q, Sec. 165(a)(1), amended subclause (I) by substituting “January 1, 2017”
for “January 1, 2015”.
Subsec. (e)(3)(A)(i)(II). Pub. L. 114-113, Div. Q, Sec. 165(a)(2), amended subclause (II)
by substituting “December 31, 2016” for “December 31, 2014”
Subsec. (e)(3)(E)(iv). Pub. L. 114-113, Div. Q, Sec. 123(a), amended clause (iv) by striking “placed in service before January
1, 2015”.
Subsec. (e)(3)(E)(v). Pub. L. 114-113, Div. Q, Sec. 123(a), amended clause (v) by striking “placed in service before January
1, 2015”.
Subsec. (e)(3)(E)(ix). Pub. L. 114-113, Div. Q, Sec. 123(b), amended clause (ix) by striking “placed in service after December
31, 2008, and before January 1, 2015”.
Subsec. (e)(6). Pub. L. 114-113, Div. Q, Sec. 143(b)(6)(A), amended par. (6)
by redesignating subpar. (A) and (B) as subpar. (D) and (E), respectively, by striking
all that precedes subpar. (D), as redesignated, and inserting the language preceding
subpar. (D). Before being struck, the language preceding subpar. (D), as redesignated,
read as follows:
“(6) Qualified Leasehold Improvement Property.—The term “qualified leasehold improvement
property” has the meaning given such term in section 168(k)(3) except that the following
special rules shall apply:”.
Subsec. (e)(7)(B). Pub. L. 114-113, Div. Q, Sec. 143(b)(6)(B), amended subpar. (B)
by substituting “qualified improvement property” for “qualified leasehold improvement
property”.
Subsec. (e)(8)(D). Pub. L. 114-113, Div. Q, Sec. 143(b)(6)(C), amended par. (8)
by striking subpar. (D). Before being struck, it read as follows:
“(D) Exclusion From Bonus Depreciation.—Property described in this paragraph which
is not qualified leasehold improvement property shall not be considered qualified
property for purposes of subsection (k).”
Subsec. (i)(15)(D). Pub. L. 114-113, Div. Q, Sec. 166(a), amended subpar. (D) by substituting “December 31, 2016” for
“December 31, 2014”.
Subsec. (j)(8). Pub. L. 114-113, Div. Q, Sec. 167(a), amended par. (8) by substituting “December 31, 2016” for “December
31, 2014”.
Subsec. (j)(8)-(9). Pub. L. 114-113, Div. Q, Sec. 167(b), redesignated par. (8) as par. (9) and added a new par. (8).
Subsec. (k). Pub. L. 114-113, Div. Q, Sec. 143(a)(4)(A), amended the heading of subsec. (k) by substituting “January
1, 2016” for “January 1, 2015”.
Subsec.
(k). Pub. L. 114-113, Div. Q, Sec. 143(b)(6)(J), amended the heading of subsec. (k) by substituting “And
Before January 1, 2020” for “And Before January 1, 2016”.
Subsec. (k)(2). Pub. L. 114-113, Div. Q, Sec. 143(a)(1)(B), amended par. (2)
by substituting “January 1, 2016” for “January 1, 2015” each place it appeared.
Subsec. (k)(2). Pub. L. 114-113, Div. Q, Sec. 143(b)(1), amended par. (2). Before amendment, it read as follows:
“(2) Qualified Property.—For purposes of this subsection—
“(A) In General.—The term “qualified property” means property—
“(i)(I) to which this section applies which has a recovery period of 20 years or
less,
“(II) which is computer software (as defined in section 167(f)(1)(B)) for which
a deduction is allowable under section 167(a) without regard to this subsection,
“(III) which is water utility property, or
“(IV) which is qualified leasehold improvement property,
“(ii) the original use of which commences with the taxpayer after December 31, 2007,
“(iii) which is—
“(I) acquired by the taxpayer after December 31, 2007, and before January 1, 2016,
but only if no written binding contract for the acquisition was in effect before January
1, 2008, or
“(II) acquired by the taxpayer pursuant to a written binding contract which was
entered into after December 31, 2007, and before January 1, 2016, and
“(iv) which is placed in service by the taxpayer before January 1, 2016, or, in
the case of property described in subparagraph (B) or (C), before January 1, 2017.
“(B) Certain Property Having Longer Production Periods Treated As Qualified Property
“(i) In General.—The term “qualified property” includes any property if such property—
“(I) meets the requirements of clauses
(i), (ii), (iii), and (iv) of subparagraph (A),
“(II) has a recovery period of at least 10 years or is transportation property,
and
“(III) is subject to section 263A, and
“(IV) meets the requirements of clause
(iii) of section 263A(f)(1)(B) (determined as if such clause also applies to property
which has a long useful life (within the meaning of section 263A(f)))).
“(ii) Only Pre-January 1, 2016, Basis Eligible For Additional Allowance.—In the case
of property which is qualified property solely by reason of clause (i), paragraph
(1) shall apply only to the extent of the adjusted basis thereof attributable to manufacture,
construction, or production before January 1, 2016.
“(iii) Transportation Property.—For purposes of this subparagraph, the term “transportation
property”
means tangible personal property used in the trade or business of transporting persons
or property.
“(iv) Application Of Subparagraph.—This subparagraph shall not apply to any property
which is described in subparagraph (C).
“(C) Certain Aircraft.—The term “qualified property” includes property—
“(i) which meets the requirements of clauses
(ii), (iii), and (iv) of subparagraph (A),
“(ii) which is an aircraft which is not a transportation property (as defined in
subparagraph (B)(iii)) other than for agricultural or firefighting purposes,
“(iii) which is purchased and on which such purchaser, at the time of the contract
for purchase, has made a nonrefundable deposit of the lesser of—
“(I) 10 percent of the cost, or
“(II) $100,000, and
“(iv) which has—
“(I) an estimated production period exceeding 4 months, and
“(II) a cost exceeding $200,000.
“(D) Exceptions.—
“(i) Alternative Depreciation Property.—The term “qualified property” shall not include
any property to which the alternative depreciation system under subsection (g)
applies, determined—
“(I) without regard to paragraph (7) of subsection (g) (relating to election to
have system apply), and
“(II) after application of section 280F(b)
(relating to listed property with limited business use).
“(ii) Qualified New York Liberty Zone Leasehold Improvement Property.—The term “qualified
property”
shall not include any qualified New York Liberty Zone leasehold improvement property
(as defined in section 1400L(c)(2)).
“(iii) Election Out.—If a taxpayer makes an election under this clause with respect
to any class of property for any taxable year, this subsection shall not apply to
all property in such class placed in service during such taxable year.
“(E) Special Rules.—
“(i) Self-Constructed Property.—In the case of a taxpayer manufacturing, constructing,
or producing property for the taxpayer's own use, the requirements of clause (iii)
of subparagraph
(A) shall be treated as met if the taxpayer begins manufacturing, constructing, or
producing the property after December 31, 2007, and before January 1, 2016.
“(ii) Sale-Leasebacks.—For purposes of clause (iii) and subparagraph (A)(ii), if property
is—
“(I) originally placed in service after December 31, 2007, by a person, and
“(II) sold and leased back by such person within 3 months after the date such property
was originally placed in service,
“such property shall be treated as originally placed in service not earlier than the
date on which such property is used under the leaseback referred to in subclause (II).
“(iii) Syndication.—For purposes of subparagraph (A)(ii), if—
“(I) property is originally placed in service after December 31, 2007, by the lessor
of such property,
“(II) such property is sold by such lessor or any subsequent purchaser within 3
months after the date such property was originally placed in service (or, in the case
of multiple units of property subject to the same lease, within 3 months after the
date the final unit is placed in service, so long as the period between the time the
first unit is placed in service and the time the last unit is placed in service does
not exceed 12 months), and
“(III) the user of such property after the last sale during such 3-month period
remains the same as when such property was originally placed in service,
“such property shall be treated as originally placed in service not earlier than the
date of such last sale.
“(iv) Limitations Related To Users And Related Parties.—The term “qualified property”
shall not include any property if—
“(I) the user of such property (as of the date on which such property is originally
placed in service) or a person which is related (within the meaning of section 267(b)
or 707(b))
to such user or to the taxpayer had a written binding contract in effect for the acquisition
of such property at any time on or before December 31, 2007, or
“(II) in the case of property manufactured, constructed, or produced for such user's
or person's own use, the manufacture, construction, or production of such property
began at any time on or before December 31, 2007.
“(F) Coordination With Section 280F.—For purposes of section 280F—
“(i) Automobiles.—In the case of a passenger automobile (as defined in section 280F(d)(5))
which is qualified property, the Secretary shall increase the limitation under section
280F(a)(1)(A)(i) by $8,000.
“(ii) Listed Property.—The deduction allowable under paragraph (1) shall be taken
into account in computing any recapture amount under section 280F(b)(2).
“(G) Deduction Allowed In Computing Minimum Tax For purposes of determining alternative
minimum taxable income under section 55, the deduction under subsection (a) for qualified
property shall be determined under this section without regard to any adjustment under
section 56.”
Subsec. (k)(2)(A)(iv). Pub. L. 114-113, Div. Q, Sec. 143(a)(1)(A), amended clause (iv)
by substituting “January 1, 2017” for “January 1, 2016”.
Subsec. (k)(2)(B)(ii). Pub. L. 114-113, Div. Q, Sec. 143(a)(4)(B), amended the heading of clause (ii) by substituting “pre-January
1, 2016” for “pre-January 1, 2015”.
Subsec. (k)(3). Pub. L. 114-113, Div. Q, Sec. 143(b)(2), amended par. (3). Before being amended, it read as follows:
“(3) Qualified Leasehold Improvement Property.—For purposes of this subsection—
“(A) In General.—The term “qualified leasehold improvement property” means any improvement
to an interior portion of a building which is nonresidential real property if—
“(i) such improvement is made under or pursuant to a lease (as defined in subsection
(h)(7))—
“(I) by the lessee (or any sublessee) of such portion, or
“(II) by the lessor of such portion,
“(ii) such portion is to be occupied exclusively by the lessee (or any sublessee)
of such portion, and
“(iii) such improvement is placed in service more than 3 years after the date the
building was first placed in service.
“(B) Certain Improvements Not Included.—Such term shall not include any improvement
for which the expenditure is attributable to—
“(i) the enlargement of the building,
“(ii) any elevator or escalator,
“(iii) any structural component benefiting a common area, and
“(iv) the internal structural framework of the building.
“(C) Definitions And Special Rules.—For purposes of this paragraph—
“(i) Commitment To Lease Treated As Lease.—A commitment to enter into a lease shall
be treated as a lease, and the parties to such commitment shall be treated as lessor
and lessee, respectively.
“(ii) Related Persons.—A lease between related persons shall not be considered a lease.
“For purposes of the preceding sentence, the term “related persons” means—
“(I) members of an affiliated group (as defined in section 1504), and
“(II) persons having a relationship described in subsection (b) of section 267;
except that, for purposes of this clause, the phrase ‘80 percent or more’ shall be
substituted for the phrase “more than 50 percent” each place it appears in such subsection.”
Subsec. (k)(4)(D)(iii)(II). Pub. L. 114-113, Div. Q, Sec. 143(a)(3)(A), amended subclause
(II) by substituting “January 1, 2016” for “January 1, 2015”.
Subsec. (k)(4)(L). Pub. L. 114-113, Div. Q, Sec. 143(a)(3)(B), added subpar. (L).
Subsec. (k)(4). Pub. L. 114-113, Div. Q, Sec. 143(b)(3), amended par. (4) (as amended by Act Sec. 143(a)). Before
amendment, it read as follows:
“(4) Election To Accelerate The AMT And Research Credits In Lieu Of Bonus Depreciation
“(A) In General.—If a corporation elects to have this paragraph apply for the first
taxable year of the taxpayer ending after March 31, 2008, in the case of such taxable
year and each subsequent taxable year—
“(i) paragraph (1) shall not apply to any eligible qualified property placed in
service by the taxpayer,
“(ii) the applicable depreciation method used under this section with respect to
such property shall be the straight line method, and
“(iii) each of the limitations described in subparagraph (B) for any such taxable
year shall be increased by the bonus depreciation amount which is—
“(I) determined for such taxable year under subparagraph (C), and
“(II) allocated to such limitation under subparagraph (E).
“(B) Limitations To Be Increased.—The limitations described in this subparagraph are—
“(i) the limitation imposed by section 38(c), and
“(ii) the limitation imposed by section 53(c).
“(C) Bonus Depreciation Amount.—For purposes of this paragraph—
“(i) In General.—The bonus depreciation amount for any taxable year is an amount equal
to 20 percent of the excess (if any) of—
“(I) the aggregate amount of depreciation which would be allowed under this section
for eligible qualified property placed in service by the taxpayer during such taxable
year if paragraph
(1) applied to all such property, over
“(II) the aggregate amount of depreciation which would be allowed under this section
for eligible qualified property placed in service by the taxpayer during such taxable
year if paragraph
(1) did not apply to any such property.
“The aggregate amounts determined under subclauses
(I) and (II) shall be determined without regard to any election made under subsection
(b)(2)(D), (b)(3)(D), or (g)(7) and without regard to subparagraph (A)(ii).
“(ii) Maximum Amount.—The bonus depreciation amount for any taxable year shall not
exceed the maximum increase amount under clause (iii), reduced (but not below zero)
by the sum of the bonus depreciation amounts for all preceding taxable years.
“(iii) Maximum Increase Amount.—For purposes of clause (ii), the term ‘maximum increase
amount’
means, with respect to any corporation, the lesser of—
“(I) $30,000,000, or
“(II) 6 percent of the sum of the business credit increase amount, and the AMT credit
increase amount, determined with respect to such corporation under subparagraph (E).
“(iv) Aggregation Rule.—All corporations which are treated as a single employer under
section 52(a) shall be treated—
“(I) as 1 taxpayer for purposes of this paragraph, and
“(II) as having elected the application of this paragraph if any such corporation
so elects.
“(D) Eligible Qualified Property.—For purposes of this paragraph, the term “eligible
qualified property”
means qualified property under paragraph (2), except that in applying paragraph (2)
for purposes of this paragraph—
“(i) “March 31, 2008” shall be substituted for “December 31, 2007” each place it
appears in subparagraph (A) and clauses (i) and (ii) of subparagraph (E) thereof,
“(ii) “April 1, 2008” shall be substituted for “January 1, 2008” in subparagraph
(A)(iii)(I)
thereof, and
“(iii) only adjusted basis attributable to manufacture, construction, or production—
“(I) after March 31, 2008, and before January 1, 2010, and
“(II) after December 31, 2010, and before January 1, 2016, shall be taken into account
under subparagraph (B)(ii)
thereof.
“(E) Allocation Of Bonus Depreciation Amounts.—
“(i) In General.—Subject to clauses
(ii) and (iii), the taxpayer shall, at such time and in such manner as the Secretary
may prescribe, specify the portion (if any) of the bonus depreciation amount for the
taxable year which is to be allocated to each of the limitations described in subparagraph
(B) for such taxable year.
“(ii) Limitation On Allocations.—The portion of the bonus depreciation amount which
may be allocated under clause (i) to the limitations described in subparagraph (B)
for any taxable year shall not exceed—
“(I) in the case of the limitation described in subparagraph (B)(i), the excess
of the business credit increase amount over the bonus depreciation amount allocated
to such limitation for all preceding taxable years, and
“(II) in the case of the limitation described in subparagraph (B)(ii), the excess
of the AMT credit increase amount over the bonus depreciation amount allocated to
such limitation for all preceding taxable years.
“(iii) Business Credit Increase Amount.—For purposes of this paragraph, the term “business
credit increase amount” means the amount equal to the portion of the credit allowable
under section 38 (determined without regard to subsection
(c) thereof) for the first taxable year ending after March 31, 2008, which is allocable
to business credit carryforwards to such taxable year which are—
“(I) from taxable years beginning before January 1, 2006, and
“(II) properly allocable (determined under the rules of section 38(d)) to the research
credit determined under section 41(a).
“(iv) AMT Credit Increase Amount For purposes of this paragraph, the term “AMT credit
increase amount”
means the amount equal to the portion of the minimum tax credit under section 53(b)
for the first taxable year ending after March 31, 2008, determined by taking into
account only the adjusted net minimum tax for taxable years beginning before January
1, 2006. For purposes of the preceding sentence, credits shall be treated as allowed
on a first-in, first-out basis.
“(F) Credit Refundable.—For purposes of section 6401(b), the aggregate increase in
the credits allowable under part IV of subchapter A for any taxable year resulting
from the application of this paragraph shall be treated as allowed under subpart C
of such part (and not any other subpart).
“(G) Other Rules.—
“(i) Election.—Any election under this paragraph (including any allocation under subparagraph
(E)) may be revoked only with the consent of the Secretary.
“(ii) Partnerships With Electing Partners.—In the case of a corporation making an
election under subparagraph (A)
and which is a partner in a partnership, for purposes of determining such corporation's
distributive share of partnership items under section 702—
“(I) paragraph (1) shall not apply to any eligible qualified property, and
“(II) the applicable depreciation method used under this section with respect to
such property shall be the straight line method.
“(iii) Special Rule For Passenger Aircraft.—In the case of any passenger aircraft,
the written binding contract limitation under paragraph (2)(A)(iii)(I) shall not apply
for purposes of subparagraphs
(C)(i)(I) and (D).
“(H) Special Rules For Extension Property.—
“(i) Taxpayers Previously Electing Acceleration.—In the case of a taxpayer who made
the election under subparagraph (A)
for its first taxable year ending after March 31, 2008—
“(I) the taxpayer may elect not to have this paragraph apply to extension property,
but
“(II) if the taxpayer does not make the election under subclause (I), in applying
this paragraph to the taxpayer a separate bonus depreciation amount, maximum amount,
and maximum increase amount shall be computed and applied to eligible qualified property
which is extension property and to eligible qualified property which is not extension
property.
“(ii) Taxpayers Not Previously Electing Acceleration.—In the case of a taxpayer who
did not make the election under subparagraph
(A) for its first taxable year ending after March 31, 2008—
“(I) the taxpayer may elect to have this paragraph apply to its first taxable year
ending after December 31, 2008, and each subsequent taxable year, and
168(k)(4)(H)(ii)(II) if the taxpayer makes the election under subclause (I), this
paragraph shall only apply to eligible qualified property which is extension property.
“(iii) Extension Property.—For purposes of this subparagraph, the term “extension
property” means property which is eligible qualified property solely by reason of
the extension of the application of the special allowance under paragraph
(1) pursuant to the amendments made by section 1201(a) of the American Recovery and
Reinvestment Tax Act of 2009 (and the application of such extension to this paragraph
pursuant to the amendment made by section 1201(b)(1) of such Act).
“(I) Special Rules For Round 2 Extension Property.—
“(i) In General.—In the case of round 2 extension property, this paragraph shall be
applied without regard to—
“(I) the limitation described in subparagraph
(B)(i) thereof, and
“(II) the business credit increase amount under subparagraph (E)(iii) thereof.
“(ii) Taxpayers Previously Electing Acceleration.—In the case of a taxpayer who made
the election under subparagraph (A)
for its first taxable year ending after March 31, 2008, or a taxpayer who made the
election under subparagraph (H)(ii) for its first taxable year ending after December
31, 2008—
“(I) the taxpayer may elect not to have this paragraph apply to round 2 extension
property, but
“(II) if the taxpayer does not make the election under subclause (I), in applying
this paragraph to the taxpayer the bonus depreciation amount, maximum amount, and
maximum increase amount shall be computed and applied to eligible qualified property
which is round 2 extension property.
“The amounts described in subclause (II)
shall be computed separately from any amounts computed with respect to eligible qualified
property which is not round 2 extension property.
“(iii) Taxpayers Not Previously Electing Acceleration.—In the case of a taxpayer who
neither made the election under subparagraph (A) for its first taxable year ending
after March 31, 2008, nor made the election under subparagraph (H)(ii)
for its first taxable year ending after December 31, 2008—
“(I) the taxpayer may elect to have this paragraph apply to its first taxable year
ending after December 31, 2010, and each subsequent taxable year, and
“(II) if the taxpayer makes the election under subclause (I), this paragraph shall
only apply to eligible qualified property which is round 2 extension property.
“(iv) Round 2 Extension Property.—For purposes of this subparagraph, the term “round
2 extension property”
means property which is eligible qualified property solely by reason of the extension
of the application of the special allowance under paragraph (1) pursuant to the amendments
made by section 401(a) of the Tax Relief, Unemployment Insurance Reauthorization,
and Job Creation Act of 2010 (and the application of such extension to this paragraph
pursuant to the amendment made by section 401(c)(1) of such Act).
“(J) Special Rules For Round 3 Extension Property.—
“(i) In General.—In the case of round 3 extension property, this paragraph shall be
applied without regard to—
“(I) the limitation described in subparagraph
(B)(i) thereof, and
“(II) the business credit increase amount under subparagraph (E)(iii) thereof.
“(ii) Taxpayers Previously Electing Acceleration.—In the case of a taxpayer who made
the election under subparagraph (A)
for its first taxable year ending after March 31, 2008, a taxpayer who made the election
under subparagraph (H)(ii) for its first taxable year ending after December 31, 2008,
or a taxpayer who made the election under subparagraph (I)(iii) for its first taxable
year ending after December 31, 2010—
“(I) the taxpayer may elect not to have this paragraph apply to round 3 extension
property, but
“(II) if the taxpayer does not make the election under subclause (I), in applying
this paragraph to the taxpayer the bonus depreciation amount, maximum amount, and
maximum increase amount shall be computed and applied to eligible qualified property
which is round 3 extension property.
“The amounts described in subclause (II)
shall be computed separately from any amounts computed with respect to eligible qualified
property which is not round 3 extension property.
“(iii) Taxpayers Not Previously Electing Acceleration.—In the case of a taxpayer who
neither made the election under subparagraph (A) for its first taxable year ending
after March 31, 2008, nor made the election under subparagraph (H)(ii)
for its first taxable year ending after December 31, 2008, nor made the election under
subparagraph (I)(iii) for its first taxable year ending after December 31, 2010—
“(I) the taxpayer may elect to have this paragraph apply to its first taxable year
ending after December 31, 2012, and each subsequent taxable year, and
“(II) if the taxpayer makes the election under subclause (I), this paragraph shall
only apply to eligible qualified property which is round 3 extension property.
“(iv) Round 3 Extension Property.—For purposes of this subparagraph, the term ‘round
3 extension property’
means property which is eligible qualified property solely by reason of the extension
of the application of the special allowance under paragraph (1) pursuant to the amendments
made by section 331(a) of the American Taxpayer Relief Act of 2012 (and the application
of such extension to this paragraph pursuant to the amendment made by section 331(c)(1)
of such Act).
“(K) Special Rules For Round 4 Extension Property.—
“(i) In General.—In the case of round 4 extension property, in applying this paragraph
to any taxpayer—
“(I) the limitation described in subparagraph
(B)(i) and the business credit increase amount under subparagraph
(E)(iii) thereof shall not apply, and
“(II) the bonus depreciation amount, maximum amount, and maximum increase amount
shall be computed separately from amounts computed with respect to eligible qualified
property which is not round 4 extension property.
“(ii) Election.—
“(I) A taxpayer who has an election in effect under this paragraph for round 3 extension
property shall be treated as having an election in effect for round 4 extension property
unless the taxpayer elects to not have this paragraph apply to round 4 extension property.
“(II) A taxpayer who does not have an election in effect under this paragraph for
round 3 extension property may elect to have this paragraph apply to round 4 extension
property.
“(iii) Round 4 Extension Property.—For purposes of this subparagraph, the term “round
4 extension property”
means property which is eligible qualified property solely by reason of the extension
of the application of the special allowance under paragraph (1) pursuant to the amendments
made by section 125(a) of the Tax Increase Prevention Act of 2014 (and the application
of such extension to this paragraph pursuant to the amendment made by section 125(c)
of such Act).
“(L) Special Rules For Round 5 Extension Property.—
“(i) In General.—In the case of round 5 extension property, in applying this paragraph
to any taxpayer—
“(I) the limitation described in subparagraph
(B)(i) and the business credit increase amount under subparagraph
(E)(iii) thereof shall not apply, and
“(II) the bonus depreciation amount, maximum amount, and maximum increase amount shall
be computed separately from amounts computed with respect to eligible qualified property
which is not round 5 extension property.
“(ii) Election.—
“(I) A taxpayer who has an election in effect under this paragraph for round 4 extension
property shall be treated as having an election in effect for round 5 extension property
unless the taxpayer elects to not have this paragraph apply to round 5 extension property.
“(II) A taxpayer who does not have an election in effect under this paragraph for
round 4 extension property may elect to have this paragraph apply to round 5 extension
property.
“(iii) Round 5 Extension Property.—For purposes of this subparagraph, the term ‘round
5 extension property’
means property which is eligible qualified property solely by reason of the extension
of the application of the special allowance under paragraph (1) pursuant to the amendments
made by section 143(a)(1)
of the Protecting Americans from Tax Hikes Act of 2015 (and the application of such
extension to this paragraph pursuant to the amendment made by section 143(a)(3) of
such Act).”
Subsec. (k)(5). Pub. L. 114-113, Div. Q, Sec. 143(b)(4)(A), struck par. (5). Before being struck, it read as follows:
“(5) Special Rule For Property Acquired During Certain Pre-2012 Periods.—In the case
of qualified property acquired by the taxpayer (under rules similar to the rules of
clauses
(ii) and (iii) of paragraph (2)(A)) after September 8, 2010, and before January 1,
2012, and which is placed in service by the taxpayer before January 1, 2012 (January
1, 2013, in the case of property described in subparagraph (2)(B) or (2)(C)), paragraph
(1)(A) shall be applied by substituting “100 percent” for “50 percent”.”
Subsec. (k)(5). Pub. L. 114-113, Div. Q, Sec. 143(b)(4)(B), added a new par.
(5).
Subsec. (k)(6). Pub. L. 114-113, Div. Q, Sec. 143(b)(5), added par. (6).
Subsec. (k)(7). Pub. L. 114-113, Div. Q, Sec. 143(b)(6)(D), added par. (7).
Subsec. (l)(2)(D). Pub. L. 114-113, Div. Q, Sec. 189(a), amended subpar. (D)
Subsec. (l)(3)(A). Pub. L. 114-113, Div. Q, Sec. 143(b)(6)(E)(i), amended subpar.
(A) by substituting “subsection “(k)” for “section 168(k)”.
Subsec. (l)(3)(B). Pub. L. 114-113, Div. Q, Sec. 143(b)(6)(E)(ii), amended subpar.
(B) by substituting “subsection (k)(2)(D)” for “section 168(k)(2)(D)(i)”.
Subsec. (l)(4). Pub. L. 114-113, Div. Q, Sec. 143(b)(6)(F), amended par. (4)
by substituting “subsection (k)(2)(E) shall apply.” for “subparagraph
(E) of section 168(k)(2) shall apply, except that such subparagraph shall be applied—(A)
by substituting “the date of the enactment of subsection (l)” for “December 31, 2007”
each place it appears therein, and (B) by substituting “qualified second generation
biofuel plant property” for “qualified property” in clause (iv) thereof.”
Subsec. (l)(5). Pub. L. 114-113, Div. Q, Sec. 143(b)(6)(G), amended par. (5)
by substituting “subsection (k)(2)(G)” for “section 168(k)(2)(G)”.
2014 - Subsec. (b)(5). Pub. L. 113-295, Div. A, Sec. 210(g)(2)(A), amended par. (5) by substituting “(2)(D)” for “(2)(C)”.
Subsec. (e)(3)(A)(i)(I). Pub. L. 113-295, Div. A, Sec. 121(a)(1), amended subclause (I)
by substituting “January 1, 2015” for “January 1, 2014”.
Subsec. (e)(3)(A)(i)(II). Pub. L. 113-295, Div. A, Sec. 121(a)(2), amended subclause (II)
by substituting “December 31, 2014” for “December 31, 2013”.
Subsec. (e)(3)(E)(iv). Pub. L. 113-295, Div. A, Sec. 122(a), amended clause (iv) by substituting “January 1, 2015” for “January
1, 2014”.
Subsec. (e)(3)(E)(v). Pub. L. 113-295, Div. A, Sec. 122(a), amended clause (v) by substituting “January 1, 2015” for “January
1, 2014”.
Subsec. (e)(3)(E)(ix). Pub. L. 113-295, Div. A, Sec. 122(a), amended clause (ix) by substituting “January 1, 2015” for “January
1, 2014”.
Subsec. (e)(7)(B). Pub. L. 113-295, Div. A, Sec. 211(b), amended subpar. (B) by inserting ‘which is not qualified leasehold
improvement property”
after “Property described in this paragraph”.
Subsec. (e)(8)(D). Pub. L. 113-295, Div. A, Sec. 211(b), amended subpar. (D) by inserting ‘which is not qualified leasehold
improvement property”
after “Property described in this paragraph”.
Subsec. (i)(15)(D). Pub. L. 113-295, Div. A, Sec. 123(a), amended subpar. (D) by substituting “December 31, 2014” for
“December 31, 2013”.
Subsec. (i)(18)(A)(ii). Pub.. L. 113-295, Div. A, Sec. 210(c)(1), amended clause (ii)
by substituting “16 years”
for “10 years”.
Subsec. (i)(19)(A)(ii). Pub. L. 113-295, Div. A, Sec. 210(c)(2), amended clause (ii)
by substituting “16 years” for “10 years”.
Subsec. (j)(8). Pub. L. 113-295, Div. A, Sec. 124(a), amended par. (8) by substituting “December 31, 2014” for “December
31, 2013”.
Subsec. (k). Pub. L. 113-295, Div. A, Sec. 125(d)(1), amended the heading of subsec. (k) by substituting “January
1, 2015” for “January 1, 2014”.
Subsec. (k)(2). Pub. L. 113-295, Div. A, Sec. 125(a)(2), amended par. (2) by substituting “January 1, 2015” for “January
1, 2014”
each place it appeared.
Subsec. (k)(2)(A)(iv). Pub. L. 113-295, Div. A, Sec. 125(a)(1), amended clause (iv)
by substituting “January 1, 2016” for “January 1, 2015”.
Subsec. (k)(2)(B)(i)(IV). Pub. L. 113-295, Div. A, Sec. 214(b), amended subclause (IV)
by substituting “clause also applies” for “clauses also apply”.
Subsec. (k)(2)(B)(ii). Pub. L. 113-295, Div. A, Sec. 125(d)(2), amended the heading of clause (ii) by substituting “Pre-January
1, 2015” for “Pre-January 1, 2014”.
Subsec. (k)(4)(C)(i). Pub. L. 113-295, Div. A, Sec. 210(g)(2)(B), amended clause (i)
by substituting “(b)(2)(D)” for “(b)(2)(C)”.
Subsec. (k)(4)(D)(iii)(II). Pub. L. 113-295, Div. A, Sec. 125(c)(1), amended subclause (II)
by substituting “January 1, 2015” for “January 1, 2014”.
Subsec. (k)(4)(E)(iv). Pub. L. 113-295, Div. A, Sec. 212(b), amended clause (iv) by substituting “adjusted net minimum tax”
for “adjusted minimum tax”.
Subsec. (k)(4)(J)(iii). Pub. L. 113-295, Div. A, Sec. 202(e), amended clause (iii) by substituitng “its first taxable year”
for “any taxable year”.
Subsec. (k)(4)(K). Pub. L. 113-295, Div. A, Sec. 125(c)(2), amended par. (4) by adding subsec. (K).
Subsec. (l)(2)(D). Pub. L. 113-295, Div. A, Sec. 157(a), amended subpar. (D) by substituting “January 1, 2015” for “January
1, 2014”.
Subsec. (m)(2)(B)(i). Pub. L. 113-295, Div. A, Sec. 210(d), amended clause (i) by substituting “subsection
(k) (determined without regard to paragraph (4) thereof” for “section 168(k)”.
Subsec. (n)(2)(C). Pub. L. 113-295, Div. A, Sec. 125(d)(3), amended subpar. (C)
by substituting “January 1, 2015” for “January 1, 2014'.
2013 - Subsec. (e)(3)(E)(iv). Pub. L. 112-240, Sec. 311(a), amended clause (iv) by substituting “January 1, 2014” for “January 1, 2012”.
Subsec.
(e)(3)(E)(v). Pub. L. 112-240, Sec. 311(a), amended clause (v) by substituting “January 1, 2014” for “January 1, 2012”.
Subsec.
(e)(3)(E)(ix). Pub. L. 112-240, Sec. 311(a), amended clause (ix) by substituting “January 1, 2014” for “January 1, 2012”.
Subsec. (i)(9)(A)(ii). Pub. L. 112-240, Sec. 331(d), amended clause (ii) by inserting “(respecting all elections made by the taxpayer
under this section)” after “such property”.
Subsec. (i)(15)(D). Pub. L. 112-240, Sec. 312(a), amended subpar (D) by substituting “December 31, 2013” for “December 31, 2011”.
Subsec. (j)(8). Pub. L. 112-240, Sec. 313(a), amended par. (8) by substituting “December 31, 2013” for “December 31, 2011”.
Subsec. (k). Pub. L. 112-240, Sec. 331(e)(1), amended the heading for subsec.
(k) by substituting “January 1, 2014” for “January 1, 2013”.
Subsec. (k)(2). Pub. L. 112-240, Sec. 331(a)(2), amended par. (2) by substituting “January 1, 2014” for “January 1, 2013” each place
it appeared.
Subsec. (k)(2)(A)(iv). Pub. L. 112-240, Sec. 331(a)(1), amended clause (iv) by substituting “January 1, 2015”
for “January 1, 2014”.
Subsec. (k)(2)(B)(ii). Pub. L. 112-240, Sec. 331(e)(2), amended the heading for clause (ii) by substituting “Pre-January 1, 2014” for “Pre-January
1, 2013”.
Subsec. (k)(4)(D)(iii)(II). Pub. L. 112-240, Sec. 331(c)(1), amended subclause (II) by substituting “2014” for “2013”.
Subsec. (k)(4)(J). Pub. L. 112-240, Sec. 331(c)(2), added subpar. (J).
Subsec. (l). Pub.L. 112-240, Sec. 410(b)(2)(C). amended the heading for subsec.
(l) by substituting “Second Generation” for “Cellulosic”.
Subsec. (l). Pub. L. 112-240, Sec. 410(b)(2)(A), amended subsec. (l) by substituting “second generation biofuel” for “cellulosic
biofuel” each place it appeared.
Subsec. (l)(2). Pub. L. 112-240, Sec. 410(b)(2)(D), amended the heading for par. (2) by substituting “Second Generation”
for “Cellulosic”.
Subsec. (l)(2)(A). Pub. L. 112-240, Sec. 410(b)(1), amended subpar. (A) by substituting “solely to produce second generation biofuel
(as defined in section 40(b)(6)(E))” for “solely to produce cellulosic biofuel”.
Subsec. (l)(2)(D). Pub. L. 112-240, Sec. 410(a)(1), amended subpar. (D) by substituting “January 1, 2014”
for “January 1, 2013”.
Subsec. (l)(3). Pub. L. 112-240, Sec. 410(b)(2)(B), struck par. (3). Before being struck, it read as follows:
“(3) Cellulosic Biofuel.—The term “cellulosic biofuel” means any liquid fuel which
is produced from any lignocellulosic or hemicellulosic matter that is available on
a renewable or recurring basis.”
Subsec. (l)(4)-(8). Pub. L. 112-240, Sec. 410(b)(2)(B), amended subsec. (l) by redesignating par. (4)-(8) as par. (3)-(7), respectively.
Subsec. (n)(2)(C). Pub. L. 112-240, Sec. 331(e)(3), amended par. (2) by substituting “January 1, 2014” for “January 1, 2013”.
2010 - Subsec. (e)(3)(E)(iv). Pub. L. 111-312, Sec. 737(a), amended clause (iv) by substituting “January 1, 2012” for “January 1, 2010”.
Subsec. (e)(3)(E)(v). Pub. L. 111-312, Sec. 737(a), amended clause (v) by substituting “January 1, 2012” for “January 1, 2010”.
Subsec. (e)(3)(E)(ix). Pub. L. 111-312, Sec. 737(a), amended clause (ix) by substituting “January 1, 2012” for “January 1, 2010”.
Subsec. (e)(7)(A)(i). Pub. L. 111-312, Sec. 737(b)(1), amended clause (i) by striking “if such building is placed in service after December
31, 2008, and before January 1, 2010,”
after “building,”.
Subsec. (e)(8)(E). Pub. L. 111-312, Sec. 737(b)(2), amended par. (8) by striking subpar. (E). Before being struck, it read as follows:
“(E) Termination.—Such term shall not include any improvement placed in service after
December 31, 2009.”
Subsec. (i)(15)(D). Pub. L. 111-312, Sec. 738(a), amended subpar. (D) by substituting “December 31, 2011” for “December 31, 2009”.
Subsec. (j)(8). Pub. L. 111-312, Sec. 739(a), amended par. (8) by substituting “December 31, 2011” for “December 31, 2009”.
Subsec. (k). Pub. L. 111-312, Sec. 401(d)(1), amended the heading of subsec.
(k) by substituting “January 1, 2013” for “January 1, 2011”.
Subsec. (k)(2). Pub. L. 111-312, Sec. 401(a)(2), amended par. (2) by substituting “January 1, 2013” for “January 1, 2011” each place
it appeared.
Subsec. (k)(2)(A)(iv). Pub. L. 111-312, Sec. 401(a)(1), amended clause (iv) by substituting “January 1, 2014”
for “January 1, 2012”.
Subsec. (k)(2)(B)(ii). Pub. L. 111-312, Sec. 401(d)(2), amended the heading for clause (ii) by substituting “Pre-January 1, 2013” for “Pre-January
1, 2011”.
Subsec. (k)(4)(D)(ii). Pub. L. 111-312, Sec. 401(d)(3)(B), amended clause (ii) by inserting “and” at the end.
Subsec. (k)(4)(D)(iii). Pub. L. 111-312, Sec. 401(c)(1), amended clause (iii) by substituting “or production—”
for “or production after March 31, 2008, and before January 1, 2010, shall be taken
into account under subparagraph (B)(ii) thereof.”
Subsec. (k)(4)(D)(iii). Pub. L. 111-312, Sec. 401(d)(3)(C), amended clause (iii) by substituting a period for the comma at the end.
Subsec. (k)(4)(D)(iv)-(v). Pub. L. 111-312, Sec. 401(d)(3)(A), amended subpar. (D) by striking clauses (iv) and (v). Before being struck, they
read as follows:
“(iv) “January 1, 2011” shall be substituted for “January 1, 2012” in subparagraph
(A)(iv)
thereof, and
“(v) “January 1, 2010” shall be substituted for “January 1, 2011” each place it appears
in subparagraph (A) thereof.”
Subsec. (k)(4)(I). Pub. L. 111-312, Sec. 401(c)(2), amended par. (4) by adding subpar. (I).
Subsec. (k)(5). Pub. L. 111-312, Sec. 401(b), amended subsec. (k) by adding par.
(5).
Subsec. (l)(5)(A)-(C). Pub. L. 111-312, Sec. 401(d)(4), amended par. (5) by inserting “and” at the end of subpar.
(A); by striking subpar. (B); and by redesignating subpar. (C) as subpar. (B). Before
being struck, subpar. (B) read as follows:
“(B) by substituting “January 1, 2013"
for “January 1, 2011” in clause (i) thereof, and”.
Subsec. (n)(2)(C). Pub. L. 111-312, Sec. 401(d)(5), amended subpar. (C) by substituting “January 1, 2013”
for “January 1, 2011”.
Subsec. (k). Pub. L. 111-240, Sec. 2022(b)(1), amended the heading of subsec.
(k) by substituting “January 1, 2011” for “January 1, 2010”.
Subsec. (k)(2). Pub. L. 111-240, Sec. 2022(a)(2), amended par. (2) by substituting “January 1, 2011” for “January 1, 2010” each place
it appeared.
Subsec. (k)(2)(A)(iv). Pub. L. 111-240, Sec. 2022(a)(1), amended par. (2) by substituting “January 1, 2012” for “January 1, 2011”.
Subsec.
(k)(2)(B)(ii). Pub. L. 111-240, Sec. 2022(b)(2), amended the heading of clause (ii) by substituting “Pre-January 1, 2011” for “Pre-January
1, 2010”.
Subsec. (k)(4)(D)(ii)-(v). Pub. L. 111-240, Sec. 2022(b)(3), amended subpar. (D) by striking “and” at the end of clause
(ii), by substituting “and” for the period at the end of clause (iii), and by adding
new clauses (iv) and (v).
Subsec.
(l)(5)(B). Pub. L. 111-240, Sec. 2022(b)(4), amended subpar. (B) by substituting “January 1, 2011” for “January 1, 2010”.
Subsec.
(n)(2)(C). Pub. L. 111-240, Sec. 2022(b)(5), amended subpar. (C) by substituting “January 1, 2011” for “January 1, 2010”.
2009 - Subsec. (k). Pub. L. 111-5, Div. B, Sec. 1201(a)(2)(A), amended the heading of subsec. (k) by substituting “January
1, 2010” for “January 1, 2009”.
Subsec. (k)(2). Pub. L. 111-5, Div. B, Sec. 1201(a)(1), amended par. (2) by substituting “January 1, 2011” for
“January 1, 2010” and by substituting “January 1, 2010” for “January 1, 2009” each
place it appeared.
Subsec. (k)(2)(B)(ii). Pub. L. 111-5, Div. B, Sec. 1201(a)(2)(B), amended the heading of clause (ii) by substituting “Pre-January
1, 2010” for “Pre-January 1, 2009”.
Subsec. (k)(4)(D)(i)-(iii). Pub. L. 111-5, Div. B, Sec. 1201(a)(3)(A)(i), amended subpar.
(D) by striking “and” at the end of clause (i), by redesignating clause (ii) as clause
(iii), and by adding a new clause (ii).
Subsec. (k)(4)(D)(iii). Pub. L. 111-5, Div. B, Sec. 1201(b)(1)(A), amended clause (iii), as redesignated, by substituting
“2010” for “2009”.
Subsec. (k)(4)(H). Pub. L. 111-5, Div. B, Sec. 1201(b)(1)(B), amended par. (4) by adding subpar. (H).
Subsec. (l)(5)(B). Pub. L. 111-5, Div. B, Sec. 1201(a)(2)(C), amended subpar. (B)
by substituting “January 1, 2010” for “January 1, 2009”.
Subsec. (n)(2)(C). Pub. L. 111-5, Div. B, Sec. 1201(a)(2)(D), amended subpar. (C)
by substituting “January 1, 2010” for “January 1, 2009”.
2008 - Subsec. (b)(2)(B)-(D). Pub. L. 110-343, Div. B, Sec. 306(c), amended par. (2) by striking “and” at the end of subpar. (B),
by redesignating subpar. (C) as subpar. (D), and by adding subpar.
(C).
Subsec. (b)(3)(I). Pub. L. 110-343, Div. C, Sec. 305(c)(3), amended par. (3) by adding subpar. (I).
Subsec. (e)(3)(B)(v). Pub. L. 110-343, Div. C, Sec. 505(a), amended clause (v) by striking “and”
at the end.
Subsec. (e)(3)(B)(vi)(III). Pub. L. 110-343, Div. C, Sec. 505(a), amended subclause (III)
by substituting “, and” for the period at the end.
Subsec. (e)(3)(B)(vii). Pub. L. 110-343, Div. C, Sec. 505(a), amended subpar. (B) by adding clause (vii).
Subsec. (e)(3)(D)(i)-(iv). Pub. L. 110-343, Div. B, Sec. 306(a), amended subpar. (D) by striking “and” at the end of clause
(i), by substituting a comma for the period at the end of clause (ii), and by adding
clause
(iii) and (iv)
Subsec. (e)(3)(E)(iv)-(v). Pub. L. 110-343, Div. C, Sec. 305(a)(1), amended clauses (iv)
and (v) by substituting “January 1, 2010” for “January 1, 2008”.
Subsec. (e)(3)(E)(vii)-(ix). Pub. L. 110-343, Div. C, Sec. 305(c)(1), amended subpar. (E) by striking “and” at the end of clause
(vii), by substituting “, and” for the period at the end of clause (viii), and by
adding clause (ix).
Subsec. (e)(7). Pub. L. 110-343, Div. C, Sec. 305(b)(1), amended par. (7). Before amendment, it read as follows:
“(7) Qualified Restaurant Property.—
The term “qualified restaurant property” means any section 1250 property which is
an improvement to a building if--
“(A) such improvement is placed in service more than 3 years after the date such
building was first placed in service, and
“(B) more than 50 percent of the building's square footage is devoted to preparation
of, and seating for on-premises consumption of, prepared meals.”
Subsec. (e)(8). Pub. L. 110-343, Div. C, Sec. 305(c)(2), amended subsec. (e)
by adding par. (8).
Subsec. (g)(3)(B). Pub. L. 110-343, Div. C, Sec. 305(c)(4), amended subpar. (B)
by inserting the entry for “(E)(ix)”.
Subsec. (g)(3)(B). Pub. L. 110-343, Div. C, Sec. 505(b), amended subpar. (B) by inserting the entry for “(B)(vii)”.
Subsec. (i)(15)(D). Pub. L. 110-343, Div. C, Sec. 317(a), amended subpar. (D) by substituting “December 31, 2009” for
“December 31, 2007”.
Subsec. (i)(18). Pub. L. 110-343, Div. B, Sec. 306(b), amended subsec. (i) by adding par. (18).
Subsec. (i)(19). Pub. L. 110-343, Div. B, Sec. 306(b), amended subsec. (i) by adding par. (19).
Subsec. (j)(8). Pub. L. 110-343, Div. C, Sec. 315(a), amended par. (8) by substituting “2009”
for “2007”.
Subsec. (l). Pub. L. 110-343, Div. B, Sec. 201(b)(1)-(3), amended subsec. (l)
by substituting “cellulosic biofuel” for “cellulosic biomass ethanol” each place it
appeared, including the headings for sec. (l) and sec. (l)(2).
Subsec. (l)(3). Pub. L. 110-343, Div. B, Sec. 201(a), amended par. (3). Before amendment it read as follows:
“(3) Cellulosic Biomass Ethanol.—For purposes of this subsection, the term “cellulosic
biofuel ethanol"
means ethanol produced by hydrolysis of any lignocellulosic or hemicellulosic matter
that is available on a renewable or recurring basis.”
Subsec. (m). Pub. L. 110-343, Div. B, Sec. 308(a), added subsec. (m).
Subsec. (n). Pub. L. 110-343, Div. C, Sec. 710(a), added subsec. (n).
Subsec. (k)(4). Pub. L. 110-289, Sec. 3081(a), amended subsec. (k) by adding par. (4).
Subsec. (e)(3)(A)(i). Pub. L. 110-246, Sec. 15344(a), amended clause (i). Prior to amendment it read as follows:
“(i) any race horse which is more than 2 years old at the time it is placed in service,”.
Subsec. (k). Pub. L. 110-185, Sec. 103(c)(11), amended the heading for subsec.
(k) by substituting “December 31, 2007” for “September 10, 2001” and by substituting
“January 1, 2009”
for “January 1, 2005”.
Subsec. (k). Pub. L. 110-185, Sec. 103(a), amended subsec. (k) by substituting “December 31, 2007” for “September 10, 2001”,
“January 1, 2008” for “September 11, 2001”, “January 1, 2009” for “January 1, 2005”
and “January 1, 2010” for “January 1, 2006”, each place they appeared.
Subsec. (k)(1)(A). Pub. L. 110-185, Sec. 103(b), amended subpar. (A) by substituting “50 percent” for “30 percent”.
Subsec. (k)(2)(B)(i)(I). Pub. L. 110-185, Sec. 103(c)(1), amended subclause (I) by substituting “(iii), and (iv)”
for “and (iii)”.
Subsec. (k)(2)(B)(i)(IV). Pub. L. 110-185, Sec. 103(c)(2), amended subclause (II) by substituting “clause (iii)”
for “clauses (ii) and (iii)”. Note that it appears that the legislative language should
have instructed that “clause
(ii) or (iii)” be stricken and replaced with “clause (iii)”.
Subsec. (k)(2)(B)(ii). Pub. L. 110-185, Sec. 103(c)(12), amended the heading of clause (ii) by substituting “Pre-January 1, 2009” for “Pre-January
1, 2005”.
Subsec. (k)(2)(C)(i). Pub. L. 110-185, Sec. 103(c)(3), amended clause (i) by substituting “, (iii), and (iv)”
for “and (iii)”.
Subsec. (k)(2)(D)(iii). Pub. L. 110-185, Sec. 103(c)(5)(B), amended clause (iii) by striking the last sentence. Before being struck, it read
as follows: “The preceding sentence shall be applied separately with respect to property
treated as qualified property by paragraph (4) and other qualified property.”
Subsec. (k)(2)(F)(i). Pub. L. 110-185, Sec. 103(c)(4), amended clause (i) by substituting “$8,000” for “$4, 600”.
Subsec. (k)(4). Pub. L. 110-185, Sec. 103(c)(5)(A), struck par. (4). Before being struck, it read as follows:
“(4) 50-Percent Bonus Depreciation For Certain Property—
“(A) In General— In the case of 50-percent bonus depreciation property--
“(i) paragraph (1)(A) shall be applied by substituting “50 percent” for “30 percent”,
and
“(ii) except as provided in paragraph (2)(D), such property shall be treated as
qualified property for purposes of this subsection.
“(B) 50-Percent Bonus Depreciation Property—
For purposes of this subsection, the term 50-percent bonus depreciation
property” means property described in paragraph (2)(A)(i)--
“(i) the original use of which commences with the taxpayer after May 5, 2003,
“(ii) which is--
“(I) acquired by the taxpayer after May 5, 2003, and before January 1, 2005, but only
if no written binding contract for the acquisition was in effect before May 6, 2003,
or
“(II) acquired by the taxpayer pursuant to a written binding contract which was entered
into after May 5, 2003, and before January 1, 2005, and
“(iii) which is placed in service by the taxpayer before January 1, 2005, or, in
the case of property described in paragraph (2)(B) (as modified by subparagraph (C)
of this paragraph)
or paragraph (2)(C) (as so modified), before January 1, 2006.
“(C) Special Rules— Rules similar to the rules of subparagraphs (B), (C), and (E)
of paragraph (2)
shall apply for purposes of this paragraph; except that references to September 10,
2001, shall be treated as references to May 5,
2003.
“(D) Automobiles—Paragraph (2)(F)
shall be applied by substituting $7,650 for $4,600 in the case of
50-percent bonus depreciation property.
“(E) Election Of 30-Percent Bonus—
If a taxpayer makes an election under this subparagraph with respect to any class
of property for any taxable year, subparagraph (A)(i)
shall not apply to all property in such class placed in service during such taxable
year.”
Subsec. (l)(4)(A)-(C). Pub. L. 110-185, Sec. 103(c)(6), amended par. (4) by redesignating subpar. (A)-(C) as subpar. (B)-(D), respectively,
and by adding a new subpar. (A).
Subsec. (l)(5)(A). Pub. L. 110-185, Sec. 103(c)(7)(A), amended subpar. (A) by substituting “December 31, 2007”
for “September 10, 2001”.
Subsec. (l)(5)(B). Pub. L. 110-185, Sec. 103(c)(7)(B), amended subpar. (B) by substituting “January 1, 2009”
for “January 1, 2005”.
2007 - Subsec. (l)(3). Pub. L. 110-172, Sec. 11(b)(1), amended par. (3) by striking “enzymatic” before “hydrolysis”.
2006 - Subsec. (e)(3)(E)(iv),
(v). Pub. L. 109-432, Sec. 113(a), amended clauses (iv) and (v) by substituting “2008” for “2006”.
Subsec. (j)(8). Pub. L. 109-432, Sec. 112(a), amended par. (8) by substituting
“2007” for “2005”.
Subsec. (l). Pub. L. 109-432, Sec. 209(a), added subsec. (l).
2005 - Subsec. (e)(3)(B)(vi)(I). Pub. L. 109-135, Sec. 410(a), amended subclause (I) by substituting “if “solar and wind” were substituted for
“solar” in clause (i) thereof” for “if “solar or wind energy"
were substituted for “solar energy” in clause (i) thereof”.
Subsec. (i)(15)(D). Pub. L. 109-135, Sec. 412(s), amended subpar. (D) by substituting
“Such term shall not include” for “This paragraph shall not apply to”.
Subsec. (k)(2)(A)(iv). Pub. L. 109-135, Sec. 403(j)(1), amended clause (iv) by substituting “subparagraph (B) or (C)” for
“subparagraphs (B) and (C)”.
Subsec. (k)(4)(B)(ii). Pub. L. 109-135, Sec. 405(a)(1), amended clause (ii). Before amendment, it read as follows:
“(ii) which is acquired by the taxpayer after May 5, 2003, and before January 1, 2005,
but only if no written binding contract for the acquisition was in effect before May
6, 2003, and”.
Subsec. (k)(4)(B)(iii). Pub. L. 109-135, Sec. 403(j)(2), amended clause (iii) by substituting “or paragraph (2)(C) (as so modified)"
for “and paragraph (2)(C)”.
Subsec. (e)(3)(B)(vi)(I). Pub. L. 109-58, Sec. 1301(f)(5), amended subclause (I). Before amendment, it read as follows:
“(I) is described in subparagraph (A) of section 48(a)(3) (or would be so described
if “solar and wind” were substituted for “solar” in clause (i) thereof,”.
Subsec. (e)(3)(C)(iii)-(v). Pub. L. 109-58, Sec. 1326(a), amended subpar. (C) by striking “and” at the end of clause (iii); by redesignating
clause (iv) as clause (v); and by adding clause (iv).
Subsec. (e)(3)(E)(v)-(vii). Pub. L. 109-58, Sec. 1308(a), amended subpar. (E) by striking “and” at the end of clause (v); by substituting
“, and” for the period at the end of clause (vi); and by adding clause
(vii).
Subsec. (e)(3)(E)(vi)-(viii). Pub. L. 109-58, Sec. 1325(a), amended subpar. (E) by striking “and” at the end of clause (vi); by substituting
“, and” for the period at the end of clause (vii); and by adding clause
(viii).
Subsec. (g)(3)(B). Pub. L. 109-58, Sec. 1308(b), amended subpar. (B) by inserting the item after the item relating to subparagraph
(E)(vi).
Subsec. (g)(3)(B). Pub. L. 109-58, Sec. 1325(b), amended subpar. (B) by inserting the item after the item relating to subparagraph
(E)(vii).
Subsec. (g)(3)(B). Pub. L. 109-58, Sec. 1326(c), amended subpar. (B) by inserting the item after the item relating to subparagraph
(C)(iii).
Subsec. (i)(17). Pub. L. 109-58, Sec. 1326(b), added par. (17).
2004 - Subsec. (b)(2)(A). Pub. L. 108-357, Sec. 211(d)(2), amended subpar. (A) by inserting “not referred to in paragraph (3)"
before the comma.
Subsec. (b)(3)(G)-(H). Pub. L. 108-357, Sec. 211(d)(1), amended par. (3) by adding subpar. (G) and (H).
Subsec. (e)(3)(C)(ii). Pub. L. 108-357, Sec. 704(a), amended subpar. (C) by redesignating clause (ii) as clause (iii) and by adding clause
(ii).
Subsec. (e)(3)(C)(ii)-(iii). Pub. L. 108-357, Sec. 706(a), amended subpar. (C) by striking “and” at the end of clause (ii); by redesignating
clause (iii) as clause (iv); and by adding clause (iii).
Subsec. (e)(3)(E)(ii)-(v). Pub. L. 108-357, Sec. 211(a), amended subpar. (E) by striking “and” at the end of clause (ii); by substituting
“, and” for the period at the end of clause (iii); and by adding clause
(iv) and (v).
Subsec. (e)(3)(E)(iv)-(vi). Pub. L. 108-357, Sec. 901(a), amended subpar. (E) by striking “and” at the end of clause (iv); by substituting
“, and” for the period at the end of clause (v); and by adding clause
(vi).
Subsec. (e)(3)(F). Pub. L. 108-357, Sec. 901(b), amended par. (3) by adding subpar.
(F).
Subsec. (e)(6). Pub. L. 108-357, Sec. 211(b), amended subsec. (e) by adding par.
(6).
Subsec. (e)(7). Pub. L. 108-357, Sec. 211(c), amended subsec. (e) by adding par.
(7).
Subsec. (g)(3)(A). Pub. L. 108-357, Sec. 847(a), amended subpar. (A) by inserting
“(notwithstanding any other subparagraph of this paragraph)” after
“shall”.
Subsec. (g)(3)(B). Pub. L. 108-357, Sec. 211(e), amended subpar. (B) by adding two items relating to subpar. (E)(iv) and (v) the
table.
Subsec. (g)(3)(B). Pub. L. 108-357, Sec. 706(c), amended subpar. (B) by adding the item relating to subpar. (C)(iii) to the table.
Subsec. (g)(3)(B). Pub. L. 108-357, Sec. 901(c), amended subpar. (B) by adding the two items after the item relating to subpar. (E)(v)
to the table.
Subsec. (h)(2)(A)(ii)-(iv). Pub. L. 108-357, Sec. 847(e), amended subpar. (A) by striking “and” at the end of clause (ii); by substituting
“, and” for the period at the end of clause (iii); and by adding clause
(iv) and the material following clause (iv).
Subsec. (h)(3)(A). Pub. L. 108-357, Sec. 847(d), amended subpar. (A) by adding the sentence at the end.
Subsec. (i)(3)(A)(i)-(ii). Pub. L. 108-357, Sec. 847(c), amended subpar. (A) by striking “and” at the end of clause (i); by redesignating
clause (ii) as clause (iii); and by adding clause (ii).
Subsec. (i)(15). Pub. L. 108-357, Sec. 704(b), amended subsec. (i) by adding par.
(15).
Subsec. (i)(16). Pub. L. 108-357, Sec. 706(b), amended subsec. (i) by adding par.
(16).
Subsec. (k)(2)(A)(iv). Pub. L. 108-357, Sec. 336(a)(2), amended clause (iv) by substituting “subparagraphs (B) and (C)” for
“subparagraph (B)”.
Subsec. (k)(2)(B)(iv). Pub. L. 108-357, Sec. 336(b)(1), amended subpar. (B) by adding clause (iv).
Subsec. (k)(2)(C)-(F). Pub. L. 108-357, Sec. 336(a)(1), amended par. (2) by redesignating subpar. (C) through (F) as subpar.
(D) through (G) and added subpar. (C).
Subsec. (k)(2)(E)(iii)(II). Pub. L. 108-357, Sec. 337(a), amended clause (II) by inserting the parenthetical text before the comma at the
end.
Subsec. (k)(4)(A)(ii). Pub. L. 108-357, Sec. 336(b)(2), amended clause (ii) by substituting “paragraph (D)” for “paragraph
(C)”.
Subsec. (k)(4)(B)(iii). Pub. L. 108-357, Sec. 336(b)(3), amended clause (iii) by inserting “and paragraph (2)(C)” after “of this paragraph)”.
Subsec. (k)(4)(C). Pub. L. 108-357, Sec. 336(b)(4), amended subpar. (C) by substituting “subparagraphs (B), (C), and (E)"
for “subparagraphs (B) and (D)”.
Subsec. (k)(4)(D). Pub. L. 108-357, Sec. 336(b)(5), amended subpar. (D) by substituting “Paragraph (2)(F)” for “Paragraph
(2)(E)”.
Subsec. (j)(8). Pub. L. 108-311, Sec. 316, amended par. (8) by substituting “December 31, 2005” for “December 31, 2004”.
Subsec. (k)(2)(B)(i). Pub. L. 108-311, Sec. 403(a)(1), amended clause (i). Before amendment it read as follows:
“(i) IN GENERAL.--
“The term ‘qualified property’ includes property--
“(I) which meets the requirements of clauses (i),
(ii), and (iii) of subparagraph (A),
“(II) which has a recovery period of at least 10 years or is transportation property,
and
“(III) which is subject to section 263A by reason of clause (ii) or (iii) of subsection
(f)(1)(B) thereof.”
Subsec. (k)(2)(D)(ii). Pub. L. 108-311, Sec. 403(a)(2)(B), amended clause (ii) by inserting “clause (iii) and” before “subparagraph
(A)(ii)”.
Subsec. (k)(2)(D)(ii). Pub. L. 108-311, Sec. 408(a)(6), amended clause (ii) by inserting “is” after “if property” and by striking
“is” at the beginning of clause (I).
Subsec. (k)(2)(D)(iii)-(iv). Pub. L. 108-311, Sec. 403(a)(2)(A), amended subpar. (D) by adding clauses (iii) and (iv).
Subsec. (k)(2)(F). Pub. L. 108-311, Sec. 408(a)(8), amended the heading of subpar. (F) by substituting “MININUM” for “MINIUMUM”.
2003 - Subsec. (k). Pub. L. 108-27, Sec. 201(c)(1), amended the heading of subsec. (k) by substituting “JANUARY 1, 2005"
for “SEPTEMBER 11, 2004”.
Subsec. (k)(2)(A)(iii). Pub. L. 108-27, Sec. 201(b)(2), amended clause (iii) by substituting “January 1, 2005” for “September 11, 2004”
each place it appeared.
Subsec. (k)(2)(B)(ii). Pub. L. 108-27, Sec. 201(b)(1), amended clause (ii) by substituting “January 1, 2005” for “September 11, 2004” each
place it appeared.
Subsec. (k)(2)(C)(iii). Pub. L. 108-27, Sec. 201(b)(3), amended clause (iii) by adding the sentence at the end.
Subsec. (k)(2)(D)(i). Pub. L. 108-27, Sec. 201(b)(1), amended clause (i) by substituting “January 1, 2005” for “September 11, 2004”.
Subsec. (k)(4). Pub. L. 108-27, Sec. 201(a), added par. (4).
2002 - Subsec. (j)(8). Pub. L. 107-147, Sec. 613(b), amended par. (8) by substituting “December 31, 2004” for “December 31, 2003”.
Subsec. (k). Pub. L. 107-147, Sec. 101(a), added subsec. (k).
1998 - Subsec. (c)(1). Pub. L. 105-206, Sec. 6006(b)(2), amended subsec. (c) by substituting the above for the text that preceded the table
in par. (1). Prior to amendment it read as follows:
“(c) Applicable recovery period
For purposes of this section--
“(1) In general
Except as provided in paragraph (2), the applicable recovery period shall be determined
in accordance with the following table:”
Subsec. (c)(2). Pub. L. 105-206, Sec. 6006(b)(1), struck par. (2). Prior to being struck it read as follows:
“(2) Property for which 150 percent method elected
In the case of property to which an election under subsection (b)(2)(C) applies, the
applicable recovery period shall be determined under the table contained in subsection
(g)(2)(C).”
1997 - Subsec. (e)(3)(A). Pub. L. 105-34, Sec. 1086(b)(1), amended clause (i) by striking “and”; amended clause (ii) by substituting
“, and” for “.”; and added clause (iii).
Subsec. (g)(3)(B). Pub. L. 105-34, Sec. 1086(b)(2), amended the table in subpar. (B) by inserting “(A)(iii)............4"
before the first item.
Subsec. (i)(8)(C). Pub. L. 105-34, Sec. 1213(c), added subpar. (C).
Subsec. (i)(14). Pub. L. 105-34, Sec. 1086(b)(3), added par. (14).
Subsec. (j)(6). Pub. L. 105-34, Sec. 1604(c)(1), amended par. (6) by adding a flush sentence at the end.
1996 - Subsec. (b)(3)(F). Pub. L. 104-188, Sec. 1613(b)(1) added new subpar. (F).
Subsec. (c)(1). Pub. L. 104-188, Sec. 1613(b)(2) added to the table the item regarding water utility property.
Subsec. (e)(3)(B). Pub. L. 104-188, Sec. 1702(h)(1)(B) added a new flush sentence to the end of subpar. (B).
Subsec. (e)(3)(B). Pub. L. 104-188, Sec. 1702(h)(1)(A) amended clause (vi) by striking ‘or’ at the end of subclause (I), by striking the
period and inserting ‘,or’ at the end of subclause (II), and adding new subclause
(III).
Subsec. (e)(3)(E). Pub. L. 104-188, Sec. 1120(a) struck ‘and’ at the end of clause
(i), substituted ‘, and’ for the period at the end of clause (ii), and added a new
clause (iii).
Subsec. (e)(3)(F). Pub. L. 104-188, Sec. 1613(b)(3)(B)(i) struck subpar. (F), which prior to being stricken read as follows:
‘(F) 20-year property
‘The term “20-year property” includes any municipal sewers. ‘
Subsec. (e)(5). Pub. L. 104-188, Sec. 1613(b)(3)(A) added new par. (5).
Subsec. (g)(2)(C)(iv). Pub. L. 104-188, Sec. 1613(b)(4) added the words “or water utility property” after “tunnel bore”.
Subsec. (g)(3). Pub. L. 104-188, Sec. 1613(b)(3)(B)(ii) struck from the table the following: ‘(F)...........................................
50’.
Subsec. (g)(3)(B). Pub. L. 104-188, Sec. 1120(b) inserted the item following the item related to subpar. (E)(ii).
Subsec. (g)(4)(K). Pub. L. 104-188, Sec. 1702(h)(1)(C) substituted
‘section 48(l)(3)(A)(ix) (as in effect on the day before the date of the enactment
of the Revenue Reconciliation Act of 1990)’ for ‘section 48(a)(3)(A)(iii)’.
Subsec. (i)(8). Pub. L. 104-188, Sec. 1121(a) generally revised par. (8), which prior to amendment read as follows:
‘(8) Treatment of leasehold improvements
‘In the case of any building erected (or improvements made) on leased property, if
such building or improvement is property to which this section applies, the depreciation
deduction shall be determined under the provisions of this section.’
Subsec. (g)(3)(B). Pub. L. 104-188, Sec. 1704(t)(54), provided that ‘clause (i) of section 11813(b)(13) of the Revenue Reconciliation
Act of 1990 shall be applied as if a comma appeared after ‘(3)(A)(ix)’
in the material proposed to be stricken.'
1995 - Subsec. (g)(4)(B)(i). Pub. L. 104-88, Sec. 304(a) substituted
‘domestic railroad corporation providing transportation subject to subchapter I of
chapter 105’ with ‘rail carrier subject to part A of subtitle IV’.
1993 - Subsec. (c)(1). Pub. L. 103-66, Sec. 13151(a), amended par. (1) by substituting “Nonresidential real property................
31.5 years” for “Nonresidential real property.................39 years”.
Subsec. (j). Pub. L. 103-66, Sec. 13321(a), added subsec. (j).
1990 - Subsec. (e)(2)(A). Pub. L. 101-508, Sec. 11812(b)(2)(A), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows:
‘The term ‘residential rental property’ has the meaning given such term by section
167(j)(2)(B).'
Subsec. (e)(3)(B)(vi)(I). Pub. L. 101-508, Sec. 11813(b)(9)(A)(i), as amended by Pub. L. 104-188, Sec. 1704(t)(54), substituted ‘subparagraph (A) of section 48(a)(3) (or would be so described if ‘solar
and wind’ were substituted for ‘solar’ in clause (i) thereof)' for ‘paragraph (3)(A)(viii),
(3)(A)(ix), or (4) of section 48(l)’.
Subsec. (e)(3)(B)(vi)(II). Pub. L. 101-508, Sec. 11813(b)(9)(A)(ii), inserted ‘(as in effect on the day before the date of the enactment of the Revenue
Reconciliation Act of 1990)’ after ‘48(l)’.
Subsec. (e)(3)(D)(i). Pub. L. 101-508, Sec. 11813(b)(9)(B)(i), substituted ‘subsection (i)(13)’ for ‘section 48(p)’.
Subsec. (f)(2). Pub. L. 101-508, Sec. 11812(b)(2)(C), substituted ‘subsection (i)(10)’ for ‘section 167(l)(3)(A).’
Subsec. (g)(4). Pub. L. 101-508, Sec. 11813(b)(9)(C), substituted heading for one which read: ‘Property used predominantly outside the
United States’ and amended text generally. Prior to amendment, text read as follows:
‘For purposes of this subsection, rules similar to the rules under section 48(a)(2)
(including the exceptions contained in subparagraph (B) thereof) shall apply in determining
whether property is used predominantly outside the United States. In addition to the
exceptions contained in such subparagraph (B), there shall be excepted any satellite
or other spacecraft (or any interest therein) held by a United States person if such
satellite or spacecraft was launched from within the United States.’
Subsec. (i)(1). Pub. L. 101-508, Sec. 11812(b)(2)(D), inserted at end ‘The reference in this paragraph to subsection (m)
of section 167 shall be treated as a reference to such subsection as in effect on
the day before the date of the enactment of the Revenue Reconciliation Act of 1990.’
Subsec. (i)(7)(B)(i). Pub. L. 101-508, Sec. 11801(c)(8)(B), struck out, ‘371(a), 374(a),’ after ‘361,’.
Subsec. (i)(9)(A)(ii). Pub. L. 101-508, Sec. 11812(b)(2)(E), struck out ‘(determined without regard to section 167(l))’ after ‘section 167’.
Subsec. (i)(10). Pub. L. 101-508, Sec. 11812(b)(2)(B), amended par. (10) generally. Prior to amendment, par. (10) read as follows: ‘The
term ‘public utility property’ has the meaning given such term by section 167(l)(3)(A).'
Subsec. (i)(13). Pub. L. 101-508, Sec. 11813(b)(9)(B)(ii), added par. (13).
1989 - Subsec. (b)(3)(D),
(E). Pub. L. 101-239, Sec. 7816(f), redesignated subpar. (D), relating to property described in subsec.
(e)(3)(D)(ii), as (E).
Subsec. (b)(5). Pub. L. 101-239, Sec. 7816(e)(1), substituted ‘paragraph (2)(C)’
for ‘paragraph (2)(B)’.
Subsec. (c)(2). Pub. L. 101-239, Sec. 7816(e)(2), substituted ‘subsection (b)(2)(C)’
for ‘subsection (b)(2)(B)’.
Subsec. (i)(1). Pub. L. 101-239, Sec. 7816(w), made clarifying amendment to directory language of Pub. L. 100-647, Sec. 6253, see 1988 Amendment note below.
1988 - Subsec. (b)(2). Pub. L. 100-647, Sec. 1002(a)(11)(A), substituted ‘150 percent declining balance method in certain cases’
for ‘15-year and 20-year property’ in heading and amended text generally. Prior to
amendment, text read as follows: ‘In the case of 15-year and 20-year property, paragraph
(1) shall be applied by substituting
‘150 percent’ for ‘200 percent’.'
Subsec. (b)(2)(B), (C). Pub. L. 100-647, Sec. 6028(a), added subpar. (B) and redesignated former subpar. (B) as (C).
Subsec. (b)(3)(C). Pub. L. 100-647, Sec. 1002(i)(2)(B)(i), added subpar. (C). Former subpar. (C) redesignated (D).
Subsec. (b)(3)(D). Pub. L. 100-647, Sec. 6029(b), added subpar. (D) relating to property described in subsec. (e)(3)(D)(ii).
Pub. L. 100-647, Sec. 1002(i)(2)(B)(i), redesignated subpar.
(C), relating to property with respect to which the taxpayer elects under par. (5),
as (D).
Subsec. (b)(5). Pub. L. 100-647, Sec. 1002(i)(2)(B)(ii), substituted ‘paragraph (3)(D)’ for ‘paragraph (3)(C)’.
Pub. L. 100-647, Sec. 1002(a)(11)(B), substituted ‘paragraph (2)
(B) or (3)(C)’ for ‘paragraph (3)(C)’.
Subsec. (c). Pub. L. 100-647, Sec. 1002(a)(11)(C), amended subsec. (c) generally, designating existing provisions as par. (1) and adding
par. (2).
Subsec. (c)(1). Pub. L. 100-647, Sec. 1002(i)(2)(A), inserted table item relating to any railroad grading or tunnel bore.
Subsec. (d)(2)(C). Pub. L. 100-647, Sec. 1002(i)(2)(D), added subpar. (C).
Subsec. (d)(3)(A)(i). Pub. L. 100-647, Sec. 1002(a)(5), struck out ‘and which are’ after ‘this section applies’.
Subsec. (d)(3)(B). Pub. L. 100-647, Sec. 1002(a)(23)(A), struck out ‘real’ after ‘Certain’ in heading and amended text generally. Prior to
amendment, text read as follows: ‘For purposes of subparagraph
(A), nonresidential real property and residential rental property shall not be taken
into account.’
Subsec. (d)(3)(B)(i). Pub. L. 100-647, Sec. 1002(i)(2)(E), substituted ‘residential rental property, and railroad grading or tunnel bore’ for
‘and residential rental property’.
Subsec. (e)(3)(B)(v). Pub. L. 100-647, Sec. 1002(a)(21), substituted ‘any section 1245 property’ for ‘any property’.
Subsec. (e)(3)(C). Pub. L. 100-647, Sec. 6027(b)(1)(C), redesignated cl. (iii) as (ii), and struck out former cl. (ii) which read as follows:
‘any single-purpose agricultural or horticultural structure (within the meaning of
section 48(p)), and’.
Subsec. (e)(3)(D). Pub. L. 100-647, Sec. 6029(a), amended subpar. (D) generally. Prior to amendment, subpar. (D) read as follows:
‘The term ‘10-year property’ includes any single purpose agricultural or horticultural
structure (within the meaning of section 48(p)).'
Pub. L. 100-647, Sec. 6027(a), added subpar. (D). Former subpar. (D) redesignated
(E).
Subsec. (e)(3)(E), (F). Pub. L. 100-647, Sec. 6027(a), redesignated former subpars. (D) and (E) as (E) and (F), respectively.
Subsec. (e)(4). Pub. L. 100-647, Sec. 1002(i)(2)(C), added par. (4).
Subsec. (f)(4). Pub. L. 100-647, Sec. 1002(a)(16)(B), amended par. (4) generally. Prior to amendment, par. (4) read as follows:
‘Any sound recording described in section 48(r)(5).’
Subsec. (f)(5)(B)(ii). Pub. L. 100-647, Sec. 1002(a)(6)(A)(i), substituted ‘1st taxable year’ for ‘1st full taxable year’.
Subsec. (f)(5)(B)(iii). Pub. L. 100-647, Sec. 1002(a)(6)(A)(ii), added cl. (iii).
Subsec. (f)(5)(C). Pub. L. 100-647, Sec. 100-647, Sec. 1002(a)(6)(B), added subpar.
(C).
Subsec. (g)(2)(C). Pub. L. 100-647, Sec. 1002(i)(2)(F), added item (iv) in table.
Subsec. (g)(3)(B). Pub. L. 100-647, Sec. 6029(c), substituted ‘(D)(i)’ for ‘(D)’
and added item for ‘(D)(ii)’ in table.
Pub. L. 100-647, Sec. 6027(b)(2), substituted ‘(D)’ for ‘(C)(ii)’, ‘(E)(i)’
for ‘(D)(i)’, ‘(E)(ii)’ for ‘(D)(ii)’, and ‘(F)’ for ‘(E)’ in table.
Subsec. (h)(2)(B). Pub. L. 100-647, Sec. 1002(a)(8), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows:
‘(i) Income from property subject to United States tax. - Clause (iii) of subparagraph
(A) shall not apply with respect to any property if more than 50 percent of the gross
income for the taxable year derived by the foreign person or entity from the use of
such property is -
‘(I) subject to tax under this chapter, or
‘(II) included under section 951 in the gross income of a United States shareholder
for the taxable year with or within which ends the taxable year of the controlled
foreign corporation in which such income was derived.
For purposes of the preceding sentence, any exclusion or exemption shall not apply
for purposes of determining the amount of the gross income so derived, but shall apply
for purposes of determining the portion of such gross income subject to tax under
this chapter.
‘(ii) Movies and sound recordings. - Clause (iii)
of subparagraph (A) shall not apply with respect to any qualified film (as defined
in section 48(k)(1)(B)) or any sound recording (as defined in section 48(r)(5)).’
Subsec. (i)(1). Pub. L. 100-647, Sec. 6253, as amended by Pub. L. 101-239, Sec. 7816(w), amended par. (1) generally, substituting a single par. relating to class life for
former subpar. (A) relating to class life generally,
(B) relating to Secretarial authority, (C) relating to effect of modification,
(D) prohibiting modification of assigned property before January 1, 1992, and (E)
relating to assigned property and item.
Subsec. (i)(1)(E)(iii). Pub. L. 100-647, Sec. 1002(i)(2)(G), added cl. (iii), which provided: ‘Special rule for railroad grading or tunnel bores.
- In the case of any property which is a railroad grading or tunnel bore -
‘(I) such property shall be treated as an assigned property,
‘(II) the recovery period applicable to such property shall be treated as an assigned
item, and
‘(III) clause (ii) of subparagraph (D) shall not apply.’
Subsec. (i)(7)(A). Pub. L. 100-647, Sec. 1002(a)(7)(A), inserted at end ‘In any case where this section as in effect before the amendments
made by section 201 of the Tax Reform Act of 1986 applied to the property in the hands
of the transferor, the reference in the preceding sentence to this section shall be
treated as a reference to this section as so in effect.’
Subsec. (i)(7)(B). Pub. L. 100-647, Sec. 1002(a)(7)(B), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows:
‘The transactions described in this subparagraph are any transaction described in
section 332, 351, 361, 371(a), 374(a), 721, or 731. Subparagraph (A) shall not apply
in the case of a termination of a partnership under section 708(b)(1)(B).’
Subsec. (i)(7)(D). Pub. L. 100-647, Sec. 1002(a)(7)(C), struck out subpar. (D) which read as follows: ‘This paragraph shall not apply to
any transaction to which subsection (f)(5) applies (relating to churning transactions).’
Subsec. (j)(9)(E). Pub. L. 100-647, Sec. 1018(b)(2), amended subpar. (E), as amended by section 1802(a)(2) of Pub. L. 99-514 and as in effect before the general amendment by section 201(a) of Pub. L. 99-514, by substituting ‘this paragraph and paragraph
(8)’ for ‘this paragraph’ in cls. (i) and (ii)(I) and by striking out cl. (iii) and
inserting a new cl. (iii) which read as follows:
‘Tax-exempt controlled entity. -
‘(I) In general. - The term ‘tax-exempt controlled entity’ means any corporation (which
is not a tax-exempt entity determined without regard to this subparagraph and paragraph
(4)(E)) if 50 percent or more (in value) of the stock in such corporation is held
by 1 or more tax-exempt entities (other than a foreign person or entity).
‘(II) Only 5-percent shareholders taken into account in case of publicly traded stock.
- For purposes of subclause (I), in the case of a corporation the stock of which is
publicly traded on an established securities market, stock held by a tax-exempt entity
shall not be taken into account unless such entity holds at least 5 percent (in value)
of the stock in such corporation. For purposes of this subclause, related entities
(within the meaning of paragraph
(7)) shall be treated as 1 entity.
‘(III) Section 318 to apply. - For purposes of this clause, a tax-exempt entity shall
be treated as holding stock which it holds through application of section 318 (determined
without regard to the 50-percent limitation contained in subsection (a)(2)(C)
thereof).’
1986 - Pub. L. 99-514, Sec. 201(a), amended section generally, applicable, with exceptions enumerated in sections 203,
204, and 251(d) of Pub. L. 99-514 (set out as notes below and under section 46 of this title), to property placed in
service after Dec. 31, 1986, modifying existing accelerated cost recovery system by
substituting new subsecs. (a) to (i) for former subsecs. (a) to (k). See following
paragraphs of 1986 Amendment note for amendments to former text by sections 1802 and
1809 of Pub. L. 99-514.
Subsec. (b)(2)(A). Pub. L. 99-514, Sec. 1809(a)(2)(A)(i)(I), struck out closing provisions relating to determination, in the case of 19-year
real property, of applicable percentage in taxable year in which the property is placed
in service.
Subsec. (b)(2)(B). Pub. L. 99-514, Sec. 1809(a)(2)(A)(i)(II), substituted ‘Mid-month convention for 19-year real property’ for ‘Special rule for
year of disposition’ in heading and amended text generally, substituting ‘In the case
of 19-year real property, the amount of the deduction determined under any provision
of this section (or for purposes of section 57(a)(12)(B) or 312(k)) for any taxable
year shall be determined on the basis of the number of months (using a mid-month convention)
in which the property is in service.’ for prior provisions.
Subsec. (b)(3)(A). Pub. L. 99-514, Sec. 1809(a)(1)(A), which directed that the table be amended by striking ‘and low-income housing’ in
last item, was executed by striking ‘and low-income housing’
after ‘19-year real property’ in next-to-the-last item, to reflect the probable intent
of Congress, because that phrase did not appear in last item.
Pub. L. 99-514, Sec. 1809(a)(1)(B), inserted at the end item for low-income housing with recovery periods of 15, 35,
or 45 years.
Subsec. (b)(4)(B). Pub. L. 99-514, Sec. 1809(a)(2)(B), substituted ‘Monthly convention’ for ‘Special rule for year of disposition’
in heading and amended text generally, substituting ‘In the case of low-income housing,
the amount of the deduction determined under any provision of this section (or for
purposes of section 57(a)(12)(B)
or 312(k)) for any taxable year shall be determined on the basis of the number of
months (treating all property placed in service or disposed of during any month as
placed in service or disposed of on the first day of such month) in which the property
is in service.’ for prior provisions.
Subsec. (f)(2)(B). Pub. L. 99-514, Sec. 1809(a)(2)(A)(ii), redesignated existing provisions as entire subpar. (B), struck out
‘(i) In general’, redesignated subcls. (I) and (II) as cls. (i) and
(ii), and in cl. (ii) struck out ‘(taking into account the next to the last sentence
of subsection (b)(2)(A))’ after ‘assign percentages’
and struck out heading, ‘(ii) Special rule for disposition’ and text,
‘In the case of a disposition of 19-year real property or low-income housing described
in clause (i), subsection (b)(2)(B) shall apply.’
Subsec. (f)(10)(A). Pub. L. 99-514, Sec. 1809(b)(1), amended subpar. (A) generally, substituting ‘In the case of recovery property transferred
in a transaction described in subparagraph (B), for purposes of computing the deduction
allowable under subsection
(a) with respect to so much of the basis in the hands of the transferee as does not
exceed the adjusted basis in the hands of the transferor
-
‘(i) if the transaction is described in subparagraph (B)(i), the transferee shall
be treated in the same manner as the transferor, or
‘(ii) if the transaction is described in clause (ii) or (iii) of subparagraph (B)
and the transferor made an election with respect to such property under subsection
(b)(3)
or (f)(2)(C), the transferee shall be treated as having made the same election (or
its equivalent).’ for prior provisions.
Subsec. (f)(10)(B). Pub. L. 99-514, Sec. 1809(b)(2), inserted at end ‘Clause (i) shall not apply in the case of the termination of a
partnership under section 708(b)(1)(B).’
Subsec. (f)(12)(B)(ii). Pub. L. 99-514, Sec. 1809(a)(4)(A), amended cl. (ii) generally, substituting ‘In the case of 19-year real property,
the amount of the deduction allowed shall be determined by using the straight-line
method (without regard to salvage value)
and a recovery period of 19 years.’ for prior provisions.
Subsec. (f)(12)(C). Pub. L. 99-514, Sec. 1809(a)(4)(B), substituted ‘Exception for low- and moderate-income housing’ for ‘Exception for
projects for residential rental property’ in heading and amended text generally, substituting
‘Subparagraph (A) shall not apply to
-
‘(i) any low-income housing, and
‘(ii) any other recovery property which is placed in service in connection with projects
for residential rental property financed by the proceeds of obligations described
in section 103(b)(4)(A).’ for prior provisions.
Subsec. (f)(14), (15). Pub. L. 99-514, Sec. 1802(b)(1), redesignated the par. (13) relating to motor vehicle operating leases as (14) and
redesignated former par. (14) as (15).
Subsec. (j)(2)(B)(ii). Pub. L. 99-514, Sec. 1809(a)(2)(C)(i), substituted ‘Cross reference’ for ‘19-year real property’ in heading and amended
text generally, substituting ‘For other applicable conventions, see paragraphs (2)
(B) and (4)(B) of subsection (b).’ for prior provisions.
Subsec. (j)(3)(D). Pub. L. 99-514, Sec. 1802(a)(1), inserted at end ‘For purposes of subparagraph (B)(iii), any portion of a property
so used shall not be treated as leased to a tax-exempt entity in a disqualified lease.’
Subsec. (j)(4)(E)(i). Pub. L. 99-514, Sec. 1802(a)(2)(A),
(G), substituted ‘any property (other than property held by such organization)’
for ‘any property of which such organization is the lessee’, ‘first used by’ for ‘first
leased to’, and ‘preceding sentence and subparagraph
(D)(ii)’ for ‘preceding sentence’.
Subsec. (j)(4)(E)(ii). Pub. L. 99-514, Sec. 1802(a)(2)(B),
(C), struck out ‘of which such organization is the lessee’ after ‘respect to any property’
in subcl. (I) and substituted ‘is first used by the organization’ for ‘is placed in
service under the lease’ in subcl.
(II).
Subsec. (j)(4)(E)(iv). Pub. L. 99-514, Sec. 1802(a)(2)(D), added cl. (iv), first used, which read as follows: ‘For purposes of this subparagraph,
property shall be treated as first used by the organization -
‘(I) when the property is first placed in service under a lease to such organization,
or
‘(II) in the case of property leased to (or held by) a partnership (or other pass-thru
entity) in which the organization is a member, the later of when such property is
first used by such partnership or pass-thru entity or when such organization is first
a member of such partnership or pass-thru entity.’
Subsec. (j)(5)(C)(iv). Pub. L. 99-514, Sec. 1802(a)(3), struck out cl. (iv), relating to exclusion of property not subject to rapid obsolescence.
Subsec. (j)(8), (9)(A). Pub. L. 99-514, Sec. 1802(a)(4)(A),
(B)(i), struck out ‘and paragraphs (4) and (5) of section 48(a)’ after
‘For purposes of this subsection’ in introductory provisions.
Subsec. (j)(9)(B)(i). Pub. L. 99-514, Sec. 1802(a)(4)(B)(ii), inserted a comma between ‘loss’ and ‘deduction’.
Subsec. (j)(9)(D). Pub. L. 99-514, Sec. 1802(a)(7)(A), added subpar. (D), determination of whether property used in unrelated trade or
business, which read as follows: ‘For purposes of this subsection, in the case of
any property which is owned by a partnership which has both a tax-exempt entity and
a person who is not a tax-exempt entity as partners, the determination of whether
such property is used in an unrelated trade or business of such an entity shall be
made without regard to section 514.’ Former subpar. (D) was redesignated
(E).
Subsec. (j)(9)(E). Pub. L. 99-514, Sec. 1802(a)(7), redesignated former subpar. (D) as (E) and substituted ‘(C), and (D)’
for ‘and (C)’. Former subpar. (E), was redesignated (F).
Pub. L. 99-514, Sec. 1802(a)(2)(E)(i), added subpar. (E), treatment of certain taxable entities, consisting of cl. (i),
in general, which read: ‘For purposes of this paragraph, except as otherwise provided
in this subparagraph, any tax-exempt controlled entity shall be treated as a tax-exempt
entity.’, cl. (ii), election, which read: ‘If a tax-exempt controlled entity makes
an election under this clause -
‘(I) such entity shall not be treated as a tax-exempt entity for purposes of this
paragraph, and
‘(II) any gain recognized by a tax-exempt entity on any disposition of an interest
in such entity
(and any dividend or interest received or accrued by a tax-exempt entity from such
tax-exempt controlled entity) shall be treated as unrelated business taxable income
for purposes of section 511.
Any such election shall be irrevocable and shall bind all tax-exempt entities holding
interests in such tax-exempt controlled entity. For purposes of subclause (II), there
shall only be taken into account dividends which are properly allocable to income
of the tax-exempt controlled entity which was not subject to tax under this chapter.',
and cl. (iii), tax-exempt controlled entity, which read ‘The term ‘tax-exempt controlled
entity’ means any corporation
(which is not a tax-exempt entity determined without regard to this subparagraph and
paragraph (4)(E)) if 50 percent or more (by value)
of the stock in such corporation is held (directly or through the application of section
318 determined without regard to the 50-percent limitation contained in subsection
(a)(2)(C) thereof) by 1 or more tax-exempt entities.' Former subpar. (E) was redesignated
(F).
Subsec. (j)(9)(F). Pub. L. 99-514, Sec. 1802(a)(7)(A), redesignated former subpar. (E) as (F). Former subpar. (F) redesignated
(G).
Pub. L. 99-514, Sec. 1802(a)(2)(E)(i), redesignated former subpar.
(E) as (F).
Subsec. (j)(9)(G). Pub. L. 99-514, Sec. 1802(a)(7)(A), redesignated former subpar. (F) as (G).
1985 - Subsec. (b)(2). Pub. L. 99-121, Sec. 103(b)(1)(A), substituted ‘19-year real property’ for ‘18-year real property’ in heading and wherever
appearing in text.
Subsec. (b)(2)(A)(i). Pub. L. 99-121, Sec. 103(a), substituted ‘19-year recovery period’
for ‘18-year recovery period’.
Subsec.(b)(3)(A). Pub. L. 99-121, Sec. 103(b)(1)(A), substituted ‘19-year real property’ for ‘18-year real property’ in table.
Pub. L. 99-121, Sec. 103(b)(2), substituted ‘19, 35, or 45 years’ for ‘18, 35, or 45’ in table.
Subsec. (b)(3)(B)(ii), (iii). Pub. L. 99-121, Sec. 103(b)(1)(A), substituted ‘19-year real property’ for ‘18-year real property’ wherever appearing.
Subsec. (c)(2)(D). Pub. L. 99-121, Sec. 103(b)(1)(A), substituted ‘19-year real property’ for ‘18-year real property’ in heading and in
text.
Subsec. (d)(2)(B). Pub. L. 99-121, Sec. 103(b)(1)(A), substituted ‘19-year real property’ for ‘18-year real property’.
Subsec. (f)(1)(B)(ii). Pub. L. 99-121, Sec. 103(b)(3)(B), substituted ‘March 15, 1984, and before May, 9, 1985, the’ for ‘March 15, 1984,
the’.
Subsec. (f)(1)(B)(iii), (iv). Pub. L. 99-121, Sec. 103(b)(3)(A),
(C), added cl. (iii), redesignated former cl. (iii) as (iv), and in cl. (iv) substituted
‘, (ii), or (iii)’ for ‘or (ii)’.
Subsec. (f)(2), (5). Pub. L. 99-121, Sec. 103(b)(1)(A), substituted ‘19-year real property’ for ‘18-year real property’ wherever appearing.
Subsec. (f)(12)(B)(ii). Pub. L. 99-121, Sec. 103(b)(4), substituted ‘19-year real property’ for ‘15-year real property’ in heading and wherever
appearing in text, and substituted ‘19 years’
for ‘15 years’.
Subsec. (j). Pub. L. 99-121, Sec. 103(b)(1)(A), substituted ‘19-year real property’ for ‘18-year real property’ wherever appearing
in headings, table, and text.
1984 - Subsec. (b)(2). Pub. L. 98-369, Sec. 111(a)(1), substituted ‘18-year real property’ for ‘15-year real property’ in heading and wherever
appearing in text.
Pub. L. 98-369, Sec. 111(d), inserted in provision following cl. (ii) ‘(using a mid-month convention)’.
Subsec. (b)(2)(A). Pub. L. 98-369, Sec. 111(b)(3)(A), struck out in text following cl. (ii) provision that for purposes of this subparagraph
‘low-income housing’ means property described in section 1250(a)(1)(B)(i), (ii), (iii),
or (iv).
Subsec. (b)(2)(A)(i). Pub. L. 98-369, Sec. 111(a)(2), substituted ‘18-year recovery period’ for ‘15-year recovery period’.
Subsec. (b)(2)(A)(ii). Pub. L. 98-369, Sec. 111(a)(3), struck out ‘(200 percent declining balance method in the case of low-income housing)’
after ‘declining balance method’.
Subsec. (b)(2)(B). Pub. L. 98-369, Sec. 111(d), inserted ‘(using a mid-month convention)’.
Subsec. (b)(3)(A). Pub. L. 98-369, Sec. 111(e)(9)(A), substituted ‘under paragraph (1), (2), or (4)’ for ‘under paragraphs
(1) and (2)’.
Pub. L. 98-369, Sec. 111(e)(9)(B), substituted in table ‘18-year real property and low-income housing’ for ‘15-year
real property’ and ‘18’ for ‘15’
and struck out ‘years’ after ‘45’.
Subsec. (b)(3)(B)(ii). Pub. L. 98-369, Sec. 111(e)(2), substituted ‘18-year real property or low-income housing,’ for ‘15-year real property’.
Subsec. (b)(3)(B)(iii). Pub. L. 98-369, Sec. 111(e)(1), substituted ‘18-year real property or low-income housing’ for ‘15-year real property’.
Subsec. (b)(4). Pub. L. 98-369, Sec. 111(b)(1), added par. (4).
Subsec. (c)(2)(D). Pub. L. 98-369, Sec. 111(b)(3)(B), amended subpar. (D) generally, substituting ‘18-year real property’
for ‘15-year real property’ in heading and text and including within such definition
section 1250 property which is not low-income housing.
Subsec. (c)(2)(F), (G). Pub. L. 98-369, Sec. 111(b)(2), added subpar. (F) and redesignated former subpar. (F) as (G).
Subsec. (d)(2)(B). Pub. L. 98-369, Sec. 111(e)(3), substituted ‘18-year real property or low-income housing’ for ‘15-year real property’.
Subsec. (e). Pub. L. 98-369, Sec. 113(b)(2)(A), substituted ‘title’ for ‘section’
in provision preceding par. (1).
Subsec. (e)(5). Pub. L. 98-369, Sec. 113(b)(1), added par. (5).
Subsec. (f)(1)(B). Pub. L. 98-369, Sec. 111(c), designated existing provision as cl. (i), inserted heading, inserted ‘, and before
March 16, 1984,’
and struck out provision that for the purposes of the preceding sentence, the method
of computing the deduction allowable with respect to such first component be determined
as if it were a separate building, which provision is covered in cl. (iii), and added
cls. (ii) and (iii).
Subsec. (f)(2)(B). Pub. L. 98-369, Sec. 111(e)(1), substituted ‘18-year real property or low-income housing’ for ‘15-year real property’
wherever appearing.
Subsec. (f)(2)(C)(i). Pub. L. 98-369, Sec. 111(e)(4), substituted in table ‘18-year real property or low-income housing’
for ‘15-year real property’.
Subsec. (f)(2)(C)(ii)(II), (E), (5). Pub. L. 98-369, Sec. 111(e)(1), substituted ‘18-year real property or low-income housing’ for ‘15-year real property’.
Subsec. (f)(8)(B)(ii)(I). Pub. L. 98-369, Sec. 12(a)(3)(A), in par. (8) as amended by section 209(a) of Pub. L. 97-248, substituted ‘1990’ for ‘1986’.
Subsec. (f)(12)(C). Pub. L. 98-369, Sec. 628(b)(1), designated provisions preceding cl. (i) and cl. (i) as subpar. (C), and struck out
cls. (ii), (iii), and (iv) which dealt with the application of subpar. (A) to a sewage
or solid waste disposal facility, an air or water pollution control facility or a
facility which has received an urban development action grant under section 119 of
the Housing and Community Development Act of 1974.
Subsec. (f)(12)(D), (E). Pub. L. 98-369, Sec. 628(b)(2), redesignated subpar. (E) as (D) and struck out former subpar. (D)
which read as follows: ‘For purposes of this paragraph, the term ‘existing facility’
means a plant or property in operation before July 1, 1982.'
Subsec. (f)(13). Pub. L. 98-369, Sec. 32(a), added second par. (13) relating to motor vehicle operating leases.
Subsec. (f)(14). Pub. L. 98-369, Sec. 113(a)(2), added par. (14).
Subsec. (g)(2). Pub. L. 98-369, Sec. 31(d), inserted ‘If any property (other than section 1250 class property) does not have
a present class life within the meaning of the preceding sentence, the Secretary may
prescribe a present class life for such property which reasonably reflects the anticipated
useful life of such property to the industry or other group.’
Subsec. (i)(1)(D)(i). Pub. L. 98-369, Sec. 474(r)(7)(D), in subsec. (i) as amended by section 209(b) of Pub. L. 97-248, substituted ‘subparts A, B, and D of part IV’
for ‘subpart A of part IV’.
Pub. L. 98-369, Sec. 474(r)(7)(A), in subsec. (i) as added by section 208(a)(1)
of Pub. L. 97-248, substituted
‘subparts A, B, and D of part IV’ for ‘subpart A of part IV’.
Subsec. (i)(1)(D)(iii). Pub. L. 98-369, Sec. 612(e)(5), in subsec. (i) as amended by section 209(b) of Pub. L. 97-248, substituted ‘section 26(b)(2)’ for ‘section 25(b)(2)’.
Pub. L. 98-369, Sec. 612(e)(4), in subsec. (i) as added by section 208(a)(1)
of Pub. L. 97-248, substituted
‘section 26(b)(2)’ for ‘section 25(b)(2)’.
Pub. L. 98-369, Sec. 474(r)(7)(E), in subsec. (i) as amended by section 209(b) of Pub. L. 97-248, substituted
‘section 25(b)(2)’ for ‘the last sentence of section 53(a)’.
Pub. L. 98-369, Sec. 474(r)(7)(B), in subsec. (i) as added by section 208(a)(1)
of Pub. L. 97-248, substituted
‘section 25(b)(2)’ for ‘the last sentence of section 53(a)’.
Subsec. (i)(4)(A). Pub. L. 98-369, Sec. 12(a)(3)(B), in subsec. (i) as amended by section 209(b) of Pub. L. 97-248, substituted ‘1989’ for ‘1985’ in cls. (i) and
(ii).
Pub. L. 98-369, Sec. 474(r)(7)(C), in subsec. (i) as added by section 208(a)(1)
of Pub. L. 97-248, substituted
‘section 38’ for ‘subpart A of part IV of subchapter A of this chapter’.
Subsecs. (j), (k). Pub. L. 98-369, Sec. 31(a), added subsec. (j) and redesignated former subsec. (j) as (k).
1983 - Subsec. (b)(2)(A). Pub. L. 97-448, Sec. 102(a)(5), substituted ‘In the case of 15-year real property’ for ‘For purposes of this subparagraph’
in third sentence.
Subsec. (c)(2)(F). Pub. L. 97-448, Sec. 102(a)(8), added subpar. (F).
Subsec. (d)(2)(B). Pub. L. 97-448, Sec. 102(a)(2), substituted ‘paragraph (7) or
(10) of subsection (f)’ for ‘subsection (f)(7)’.
Subsec. (e)(3)(C), (D). Pub. L. 97-424, Sec. 541(a)(1), added subpar. (C). Former subpar. (C) redesignated (D).
Subsec. (e)(4)(D). Pub. L. 97-448, Sec. 102(a)(9)(A), inserted provision that, in the case of the acquisition of property by any partnership
which results from the termination of another partnership under section 708(b)(1)(B),
the determination of whether the acquiring partnership is related to the other partnership
shall be made immediately before the event resulting in such termination occurs.
Subsec. (e)(4)(H), (I). Pub. L. 97-448, Sec. 102(a)(9)(B), added subpars. (H) and (I).
Subsec. (f)(4)(B). Pub. L. 97-448, Sec. 102(f)(4), substituted ‘Election made on return’ for ‘Made on return’ as the subpar. (B) heading,
designated existing provisions as cl. (i), added heading for cl. (i), substituted
‘Except as provided in clause (ii), any election’ for ‘Any election’, in cl. (i) as
so designated, and added cl. (ii).
Subsec. (f)(5). Pub. L. 97-448, Sec. 102(a)(1), inserted provision that, in the case of 15-year real property, the first sentence
of this paragraph shall not apply to the taxable year in which the property is placed
in service or disposed of.
Subsec. (f)(8)(D). Pub. L. 97-448, Sec. 102(a)(10)(A), amended subpar. (D), as in effect before the amendments made by the Tax Equity and
Fiscal Responsibility Act of 1982 (Pub. L. 97-248), is amended by inserting at end thereof the following new sentence: ‘Under regulations
prescribed by the Secretary, public utility property shall not be treated as qualified
leased property unless the requirements of rules similar to the rules of subsection
(e)(3) of this section and section 46(f)
are met with respect to such property.’ See 1982 Amendment note below for subsec.
(f)(8)(D).
Subsec. (f)(13). Pub. L. 97-448, Sec. 102(a)(3), added par. (13).
Subsec. (g)(8)(A). Pub. L. 97-448, Sec. 102(a)(4)(B), substituted ‘Qualified coal utilization property’ for ‘In general’
in heading.
Subsec. (g)(8)(B). Pub. L. 97-448, Sec. 102(a)(4)(C), substituted ‘Coal utilization property’ for ‘In general’ in heading.
Subsec. (h)(4). Pub. L. 97-448, Sec. 102(a)(4)(A), substituted ‘coal utilization property which would otherwise be 15-year public utility
property’
for ‘coal utilization property which is not 3-year property, 5-year property, or 10-year
property (determined without regard to this paragraph)’.
1982 - Subsec. (b)(1). Pub. L. 97-248, Sec. 206(a), substituted
‘table’ for ‘tables’ in introductory provisions, struck out designation
‘(A)’ preceding the table and struck out subpar. (A) heading which had limited the
application of the table to property placed in service after Dec. 31, 1980, and before
Jan. 1, 1985, and struck out subpars.
(B) and (C), which had provided tables, respectively, for property placed in service
in 1985 and for property placed in service after Dec. 31, 1985.
Subsec. (e)(4). Pub. L. 97-248, Sec. 206(b), 224(c)(1), substituted ‘1981’ for
‘1986’ in heading, in subpar. (E) inserted provision that a similar rule shall apply
in the case of a deemed liquidation under section 338, and struck out former subpar.
(H) which had provided for special rules for property placed in service before certain
percentages took effect.
Subsec. (f)(8). Pub. L. 97-248, Sec. 209(a), amended par. (8) generally, substituting provisions relating to special rules for
finance leases for provisions relating to special rule for leases.
Subsec. (f)(8)(A). Pub. L. 97-248, Sec. 208(a)(2)(A), inserted ‘except as provided in subsection (i),’ before ‘for purposes of this subtitle’.
Subsec. (f)(8)(B)(i)(I). Pub. L. 97-354, Sec. 5(a)(19), substituted ‘an S corporation’ for ‘an electing small business corporation
(within the meaning of section 1371(b))’ in subsec. (f)(8)(B)(i)(I)
as in effect before the enactment of the Tax Equity and Fiscal Responsibility Act
of 1982 (Pub. L. 97-248).
Pub. L. 97-248, Sec. 208(b)(1), inserted ‘which is not a related person with respect to the lessee’.
Subsec. (f)(8)(B)(iii). Pub. L. 97-248, Sec. 208(b)(2), in subcl. (I) substituted ‘120 percent of the present class life of the property,
or’ for ‘90 percent of the useful life of such property for purposes of section 167,
or’, and in subcl. II substituted ‘the period equal to the recovery period determined
with respect to such property under subsection (i)(2)’ for ‘150 percent of the present
class life of such property’.
Subsec. (f)(8)(C)(i). Pub. L. 97-354, Sec. 5(a)(20), in par. (8) as amended by section 209(a) of Pub. L. 97-248, substituted ‘an S corporation’ for ‘an electing small business corporation within
the meaning of section 1371(b)’.
Subsec. (f)(8)(D). Pub. L. 97-248, Sec. 208(b)(3), amended subpar. (D) generally. Prior to amendment, subpar. (D) read as follows:
‘(D) Qualified leased property defined. - For purposes of subparagraph (A), the term
‘qualified leased property’ means recovery property (other than a qualified rehabilitated
building within the meaning of section 48(g)(1)) which is -
‘(i) new section 38 property
(as defined in section 48(b)) of the lessor which is leased within 3 months after
such property was placed in service and which, if acquired by the lessee, would have
been new section 38 property of the lessee,
‘(ii) property -
‘(I) which was new section 38 property of the lessee,
‘(II) which was leased within 3 months after such property was placed in service by
the lessee, and
‘(III) with respect to which the adjusted basis of the lessor does not exceed the
adjusted basis of the lessee at the time of the lease, or
‘(iii) property which is a qualified mass commuting vehicle (as defined in section
103(b)(9)) and which is financed in whole or in part by obligations the interest on
which is excludable from income under section 103(a).
For purposes of this title (other than this subparagraph), any property described
in clause (i) or (ii) to which subparagraph
(A) applies shall be deemed originally placed in service not earlier than the date
such property is used under the lease. In the case of property placed in service after
December 31, 1980, and before the date of the enactment of this subparagraph, this
subparagraph shall be applied by submitting ‘the date of the enactment of this subparagraph’
for ‘such property was placed in service’.' See 1983 Amendment note above for subsec.
(f)(8)(D).
Subsec. (f)(8)(H) to (K). Pub. L. 97-248, Sec. 208(b)(4), added subpars. (H) to (J) and redesignated former subpar. (H) as (K).
Subsec. (f)(10)(B)(i). Pub. L. 97-248, Sec. 224(c)(2), struck out ‘(other than a transaction with respect to which the basis is determined
under section 334(b)(2))’ after ‘section 332’.
Subsec. (f)(12). Pub. L. 97-248, Sec. 216(a), added par. (12).
Subsec. (i). Pub. L. 97-248, Sec. 209(b), amended subsec. (i) generally, substituting provisions concerning limitations relating
to leases of finance lease property for provisions concerning limitations relating
to lease of qualified leased property.
Pub. L. 97-248, Sec. 208(a)(1), added subsec. (i). Former subsec. (i) redesignated
(j).
Subsec. (j). Pub. L. 97-248, Sec. 208(a)(1), redesignated former subsec. (i)
as (j).
EFFECTIVE DATE OF 2020 AMENDMENTS
Amendment by Pub. L. 116-260, Div. EE, Sec. 115(a), effective for property placed in service after December 31,
2020.
Amendments by Pub. L. 116-260, Div. EE, Sec. 137(a), effective for property placed in service after December 31,
2020.
Amendment by Pub. L. 116-260, Div. EE, Sec. 138(a), effective for property placed in service after December 31,
2020.
Amendments by Pub. L. 116-136, Sec. 2307 effective as if included in Pub. L. 115-97, Sec. 13204. [Pub. L. 115-97, Sec. 13204(b) effective for taxable years beginning after December 31, 2017.]
EFFECTIVE DATE OF 2019 AMENDMENTS
Amendments by Pub. L. 116-94, Sec. 114(a) effective for property placed in service after Dec. 31, 2017.
Amendment by Pub. L. 116-94, Sec. 115(a), effective for property placed in service after Dec. 31, 2017.
Amendment by Pub. L. 116-94, Sec. 116(a), effective for property placed in service after Dec. 31, 2017.
Amendment by Pub. L. 116-94, Sec. 130(a), effective for property placed in service after Dec. 31, 2017.
EFFECTIVE DATE OF 2018 AMENDMENTS
Amendments by Pub. L. 115-141, Div. U, Sec. 101(d), effective as if included in the provision of the Protecting
Americans from Tax Hikes Act of 2015
(Sec. 143) to which it relates (effective for property placed in service after Dec.
31, 2014, in taxable years ending after such date).
Amendments by Pub. L. 115-141, Div. U, Sec. 101(e), effective as if included in the provision of the Protecting
Americans from Tax Hikes Act of 2015
(Sec. 167) to which it relates (effective for property placed in service after Dec.
31, 2014).
Amendments by Pub. L. 115-141, Div. U, Sec. 302(a), effective for property placed in service after the date of
the enactment of this Act [Enacted: Mar. 23, 2018].
Amendment by Pub. L. 115-141, Div. U, Sec. 401(a), (d), effective March 23, 2018.
Amendment by Pub. L. 115-141, Div. U, Sec. 401(b)(13)(A), effective March 23, 2018, except for property placed
in service before the date of the enactment of this Act [Enacted: March 23, 2018].
Sec. 401(e) of Pub. L. 115-141, Div. U, provided the following Savings Provision:
“(e) General Savings Provision With Respect To Deadwood Provisions.—If—
“(1) any provision amended or repealed by the amendments made by subsection (b) or
(d)
applied to—
“(A) any transaction occurring before the date of the enactment of this Act,
“(B) any property acquired before such date of enactment, or
“(C) any item of income, loss, deduction, or credit taken into account before such
date of enactment, and
“(2) the treatment of such transaction, property, or item under such provision would
(without regard to the amendments or repeals made by such subsection)
affect the liability for tax for periods ending after such date of enactment,
“nothing in the amendments or repeals made by this section shall be construed to affect
the treatment of such transaction, property, or item for purposes of determining liability
for tax for periods ending after such date of enactment.”
Amendment by Pub. L. 115-123, Sec. 40304(a), effective for property placed in service after December 31, 2016.
Amendment by Pub. L. 115-123, Sec. 40305(a), effective for property placed in service after December 31, 2016.
Amendment by Pub. L. 115-123, Sec. 40306(a), effective for property placed in service after December 31, 2016.
Amendment by Pub. L. 115-123, Sec. 40412(a), effective for property placed in service after December 31, 2016.
EFFECTIVE DATE OF 2017 AMENDMENTS
Amendment by Pub. L. 115-97, Sec. 12001(b)(13), effective for taxable years beginning after December 31, 2017.
Amendments by Pub. L. 115-97, Sec. 13201, effective for (1) property which
(A) is acquired after September 27, 2017, and (B) is placed in service after such
date, and (2) specified plants planted or grafted after September 27, 2017. Pub. L. 115-97, Sec. 13201(h)(1), provided that property shall not be treated as acquired after the date on which
a written binding contract is entered into for such acquisition.
Amendments by Pub. L. 115-97, Sec. 13203, effective for property placed in service after December 31, 2017, in taxable years
ending after such date.
Amendments by Pub. L. 115-97, Sec. 13204, effective for property placed in service after December 31, 2017, except that amendments
by Pub. L. 115-97, Sec. 13204(a)(3)(A) and
(C), are effective for taxable years beginning after December 31, 2017. Pub. L. 115-97. Sec. 13204(b)(3), as added by Pub. L. 116-260, Div. EE, Sec. 202, provided:
“(3)” CERTAIN RESIDENTIAL RENTAL PROPERTY.—In the case of any residential rental property—
‘‘(A) which was placed in service before January 1, 2018,
‘‘(B) which is held by an electing real property trade or business (as defined in
section 163(j)(7)(B) of the Internal Revenue Code of 1986), and
‘‘(C) for which subparagraph (A), (B),
(C), (D), or (E) of section 168(g)(1)
of the Internal Revenue Codeof 1986 did not apply prior to such date,
“the amendments made by subsection (a)(3)(C)
shall apply to taxable years beginning after December 31, 2017.’’
Amendments by Pub. L. 115-97, Sec. 13205(a), effective for taxable years beginning after December 31, 2017.
Amendment by Pub. L. 115-97, Sec. 13504(b)(1), effective for partnership taxable years beginning after December 31, 2017.
EFFECTIVE DATE OF 2015 AMENDMENTS
Amendments by Pub. L. 114-113, Div. Q, Sec. 123, effective for property placed in service after December 31, 2014.
Amendments by Pub. L. 114-113, Div. Q, Sec. 143(a)(3), effective taxable years ending after December 31, 2014.
Amendments by Pub. L. 114-113, Div. Q, Sec. 143(a)(1) and (4), effective for property placed in service after December
31, 2014, in taxable years ending after such date.
Amendments by Pub. L. 114-113, Div. Q, Sec. 143(b)(1), (2), (4)(A), (5) and (6), effective for property placed
in service after December 31, 2015, in taxable years ending after such date.
Amendment by Pub. L. 114-113, Div. Q, Sec. 143(b)(3), effective for taxable years ending after December 31, 2015,
except that in the case of any taxable year beginning before January 1, 2016, and
ending after December 31, 2015, the limitation under section 168(k)(4)(B)(ii) of the Internal Revenue Code of 1986 shall be the sum of—
“(i) the product of—
“(I) the maximum increase amount (within the meaning of section 168(k)(4)(C)(iii)
of such Code, as in effect before the amendments made by Act section 143(b)), multiplied
by
“(II) a fraction the numerator of which is the number of days in the taxable year
before January 1, 2016, and the denominator of which is the number of days in the
taxable year, plus
“(ii) the product of—
“(I) such limitation (determined without regard to this subparagraph), multiplied
by
“(II) a fraction the numerator of which is the number of days in the taxable year
after December 31, 2015, and the denominator of which is the number of days in the
taxable year.”
Amendment by Pub. L. 114-113, Div. Q, Sec. 143(b)(4)(B), effective for specified plants (as defined in section 168(k)(5)(B) of the Internal Revenue Code of 1986) planted or grafted after December 31, 2015.
Amendments by Pub. L. 114-113, Div. Q, Sec. 165, effective for property placed in service after December 31, 2014.
Amendment by Pub. L. 114-113, Div. Q, Sec. 166(a), effective for property placed in service after December 31,
2014.
Amendment by Pub. L. 114-113, Div. Q, Sec. 167(a), effective for property placed in service after December 31,
2014.
Amendment by Pub. L. 114-113, Div. Q, Sec. 167(b), effective for property placed in service after December 31,
2015.
Amendment by Pub. L. 114-113, Div. Q, Sec. 189(a), effective for property placed in service after December 31,
2014.
EFFECTIVE DATE OF 2014 AMENDMENTS
Amendments by Pub. L. 113-295, Div. A, Sec. 121, 122, 123, and 124 effective for property placed in service after
December 31, 2013.
Amendments by Pub. L. 113-295, Div. A, Sec. 125, effective for property placed in service after December 31, 2013,
in taxable years ending after such date.
Amendment by Pub. L. 113-295, Div. A, Sec. 157, effective for property placed in service after December 31, 2013.
Amendment by Pub. L. 113-295, Div. A, Sec. 202(e), effective as if included in the provisions of the American
Taxpayer Relief Act of 2012 [Pub. L. 112-240, Sec. 331] to which it relates [Effective for property placed in service after December 31,
2012, in taxable years ending after such date].
Amendments by Pub. L. 113-295, Div. A, Sec. 210(c), effective as if included in the provisions of the Energy Improvement
and Extension Act of 2008
[Pub. L. 110-343, Div. B, Sec. 306] to which they relate [Effective for property placed in service
after Oct. 3, 2008].
Amendments by Pub. L. 113-295, Div. A, Sec. 210(d), effective as if included in the provisions of the Energy Improvement
and Extension Act of 2008
[Pub. L. 110-343, Div. B, Sec. 308] to which they relate [Effective for property placed in service
after August 31, 2008].
Amendments by Pub. L. 113-295, Div. A, Sec. 210(g)(2), effective as if included in the provisions of the Energy
Improvement and Extension Act of 2008
[Pub. L. 110-343, Div. B, Sec. 306] to which they relate [Effective for property placed in service
after Oct. 3, 2008].
Amendments by Pub. L. 113-295, Div. A, Sec. 211(b), effective as if included in the provisions of the Tax Extenders
and Alternative Minimum Tax Relief Act of 2008 to which they relate.
Amendment by Pub. L. 113-295, Div. A, Sec. 212(b), effective as if included in the provision of the Housing Assistance
Tax Act of 2008 to which it relates.
Amendment by Pub. L. 113-295, Div. A, Sec. 214(b), effective as if included in the provision of the Economic Stimulus
Act of 2008 to which it relates.
EFFECTIVE DATE OF 2013 AMENDMENTS
Amendments by Sec. 311 of Pub. L. 112-240 effective for property placed in service after December 31, 2011.
Amendments by Sec. 312 of Pub. L. 112-240 effective for property placed in service after December 31, 2011.
Amendments by Sec. 331 of Pub. L. 112-240 effective for property placed in service after December 31, 2012, in taxable years
ending after such date.
Amendments by Sec. 410(a) of Pub. L. 112-240 effective for property placed in service after December 31, 2012.
Amendments by Sec. 410(b) of Pub. L. 112-240 effective for property placed in service after the date of the enactment of this
Act [Enacted: Jan. 2, 2013].
EFFECTIVE DATE OF 2010 AMENDMENTS
Amendments by Sec. 401(a), (c)-(d) of Pub. L. 111-312 effective for property placed in service after December 31, 2010, in taxable years
ending after such date.
Amendments by Sec. 401(b) of Pub. L. 111-312 effective for property placed in service after September 8, 2010, in taxable years
ending after such date.
Amendments by Sec. 737 of Pub. L. 111-312 effective for property placed in service after December 31, 2009.
Amendment by Sec. 738(a) of Pub. L. 111-312 effective for property placed in service after December 31, 2009.
Amendment by Sec. 739(a) of Pub. L. 111-312 effective for property placed in service after December 31, 2009.
Amendments by Sec. 2022 of Pub. L. 111-240 effective for property placed in service after December 31, 2009, in taxable years
ending after such date.
EFFECTIVE DATE OF 2009 AMENDMENTS
Amendments by Div. B, Sec. 1201 (except for subsections (a)(3) and (b)(2)), of Pub. L. 111-5 effective for property placed in service after December 31, 2008, in taxable years
ending after such date. Amendments made by subsections (a)(3) and (b)(2) are effective
for taxable years ending after March 31, 2008.
EFFECTIVE DATE OF 2008 AMENDMENTS
Amendments by Div. B, Sec. 201 of Pub. L. 110-343 effective for property placed in service after the date of the enactment of this
Act [Enacted:
Oct. 3, 2008], in taxable years ending after such date..
Amendments by Div. B, Sec. 306 of Pub. L. 110-343 effective for property placed in service after the date of the enactment of this
Act [Enacted:
Oct. 3, 2008].
Amendment by Div. B, Sec. 308(a) of Pub. L. 110-343 effective for property placed in service after August 31, 2008.
Amendments by Div. C, Sec. 305(a) of Pub. L. 110-343 effective for property placed in service after December 31, 2007.
Amendments by Div. C, Sec. 305(b) of Pub. L. 110-343 effective for property placed in service after December 31, 2008.
Amendments by Div. C, Sec. 305(c) of Pub. L. 110-343 effective for property placed in service after December 31, 2008.
Amendment by Div. C, Sec. 315(a) of Pub. L. 110-343 effective for property placed in service after December 31, 2007.
Amendment by Div. C, Sec. 317(a) of Pub. L. 110-343 effective for property placed in service after December 31, 2007.
Amendments by Div. C, Sec. 505 of Pub. L. 110-343 effective for property placed in service after December 31, 2008.
Amendment by Div. C, Sec. 710 of Pub. L. 110-343 effective for property placed in service after December 31, 2007, with respect to
disasters declared after such date.
Amendment by Sec. 3081(a) of Pub. L. 110-289 effective for taxable years ending after March 31, 2008. Sec. 3081(b) of Pub. L. 110-289 provided the following special rule:
“(b) APPLICATION TO CERTAIN AUTOMOTIVE PARTNERSHIPS
“(1) IN GENERAL.—If an applicable partnership elects the application of this subsection—
“(A) the partnership shall be treated as having made a payment against the tax imposed
by chapter 1 of the Internal Revenue Code of 1986 for any applicable taxable year of the partnership in the amount determined
under paragraph (3),
“(B) in the case of any eligible qualified property placed in service by the partnership
during any applicable taxable year—
“(i) section 168(k) of such Code shall not apply in determining the amount of the
deduction allowable with respect to such property under section 168 of such Code,
“(ii) the applicable depreciation method used with respect to such property shall
be the straight line method, and
“(C) the amount of the credit determined under section 41 of such Code for any applicable
taxable year with respect to the partnership shall be reduced by the amount of the
deemed payment under subparagraph (A) for the taxable year.
“(2) TREATMENT OF DEEMED PAYMENT.—
“(A) IN GENERAL.—Notwithstanding any other provision of the Internal Revenue Code
of 1986, the Secretary of the Treasury or his delegate shall not use the payment of
tax described in paragraph (1) as an offset or credit against any tax liability of
the applicable partnership or any partner but shall refund such payment to the applicable
partnership.
“(B) NO INTEREST.—The payment described in paragraph (1) shall not be taken into account
in determining any amount of interest under such Code.
“(3) AMOUNT OF DEEMED PAYMENT.—The amount determined under this paragraph for any
applicable taxable year shall be the least of the following:
“(A) The amount which would be determined for the taxable year under section 168(k)(4)(C)(i) of the Internal Revenue Code of 1986 (as added by the amendments made by this section) if an election under section
168(k)(4) of such Code were in effect with respect to the partnership.
“(B) The amount of the credit determined under section 41 of such Code for the taxable
year with respect to the partnership.
“(C) $30,000,000, reduced by the amount of any payment under this subsection for any
preceding taxable year.
“(4) DEFINITIONS.—For purposes of this subsection—
“(A) APPLICABLE PARTNERSHIP.—The term
“applicable partnership” means a domestic partnership that—
“(i) was formed effective on August 3, 2007, and
“(ii) will produce in excess of 675,000 automobiles during the period beginning on
January 1, 2008, and ending on June 30, 2008.
“(B) APPLICABLE TAXABLE YEAR.—The term
“applicable taxable year” means any taxable year during which eligible qualified property
is placed in service.
“(C) ELIGIBLE QUALIFIED PROPERTY.—
The term “eligible qualified property” has the meaning given such term by section 168(k)(4)(D) of the Internal Revenue Code of 1986 (as added by the amendments made by this section).”
Amendment by Sec. 15344(a) of Pub. L. 110-246 effective for property placed in service after December 31, 2008.
Amendments by Sec. 103 of Pub. L. 110-185 effective for property placed in service after December 31, 2007, in taxable years
ending after such date.
EFFECTIVE DATE OF 2007 AMENDMENTS
Amendment by Sec. 11(b)(1) of Pub. L. 110-172 effective as if included in the provision of the Tax Relief and Health Care Act of
2006 [Pub. L. 109-432, Div. A, Sec. 209] to which it relates.
EFFECTIVE DATE OF 2006 AMENDMENTS
Amendment by Sec. 112(a) of Pub. L. 109-432 effective for property placed in service after December 31, 2005.
Amendments by Sec. 113(a) of Pub. L. 109-432 effective for property placed in service after December 31, 2005.
Amendment by Sec. 209(a) of Pub. L. 109-432 effective for property placed in service after the date of the enactment of this
Act [Enacted: Dec. 20, 2006] in taxable years ending after such date.
EFFECTIVE DATE OF 2005 AMENDMENTS
Amendments by Sec. 403(j) of Pub. L. 109-135 effective as if included in the provisions of the American Jobs Creation Act of 2004
[Pub. L. 108-357, Sec. 336] to which they relate.
Amendment by Sec. 405(a)(1) of Pub. L. 109-135 effective as if included in the provisions of the Jobs Growth and Tax Relief Reconciliation
Act of 2003 [Pub. L. 108-27, Sec. 201]
to which it relates.
Amendment by Sec. 410(a) of Pub. L. 109-35 effective as if included in the provisions of the Omnibus Budget Reconciliation Act
of 1990 [Pub. 101-508, Sec. 11813] to which it relates.
Amendments by Sec. 412(s) of Pub. L. 109-135 effective on the date of the enactment of this Act [Enacted: Dec. 21, 2005].
Amendment by Sec. 1301(f)(5) of Pub. L. 109-58 effective as if included in the amendments made by section 710 of the American Jobs
Creation Act of 2004 [Pub. L. 108-357].
Amendments by Sec. 1308 of Pub. L. 109-58 effective for property placed in service after April 11, 2005, except for any property
with respect to which the taxpayer or a related party has entered into a binding
contract for the construction thereof on or before April 11, 2005, or, in the case
of self-constructed property, has started construction on or before such date.
Amendments by Sec. 1325 of Pub. L. 109-58 effective for property placed in service after April 11, 2005, except for any property
with respect to which the taxpayer or a related party has entered into a binding
contract for the construction thereof on or before April 11, 2005, or, in the case
of self-constructed property, has started construction on or before such date.
Amendments by Sec. 1326 of Pub. L. 109-58 effective for property placed in service after April 11, 2005, except for any property
with respect to which the taxpayer or a related party has entered into a binding
contract for the construction thereof on or before April 11, 2005, or, in the case
of self-constructed property, has started construction on or before such date.
EFFECTIVE DATE OF 2004 AMENDMENTS
Amendments by Sec. 211 of Pub. L. 108-357 effective for property placed in service after the date of the enactment of this
Act [Enacted: Oct. 22, 2004].
Amendments by Sec. 336 of Pub. L. 108-357 effective as if included in the amendments made by section 101 of the Job Creation
and Worker Assistance Act of 2002
[Effective date: property placed in service after September 10, 2001, in taxable years
ending after such date].
Amendments by Sec. 337 of Pub. L. 108-357 effective for property sold after June 4, 2004.
Amendments by Sec. 704 of Pub. L. 108-357 effective for property placed in service after the date of the enactment of this
Act [Enacted: Oct. 22, 2004]. Sec. 704(c)(2)-(3) provided the following special rules:
“(2) SPECIAL RULE FOR ASSET CLASS 80.0- In the case of race track facilities
placed in service after the date of the enactment of this Act, such facilities
shall not be treated as theme and amusement facilities classified under asset
class 80.0.
“(3) NO INFERENCE- Nothing in this section or the amendments made by this section
shall be construed to affect the treatment of property placed in service on or
before the date of the enactment of this Act.”
Amendments by Sec. 706 of Pub. L. 108-357 effective for property placed in service after December 31, 2004.
Pub. L. 108-357, Sec. 849(a), as amended by Pub. L. 109-135, Sec. 403(ff), provided that “Except as provided in this section, the amendments made by this
part [Sec. 847 and 848]
shall apply to leases entered into after March 12, 2004, and in the case of property
treated as tax-exempt use property other than by reason of a lease, to property aquired
after March 12, 2004."
Sec. 849(b) of Pub. L. 108-357 provided the following rules:
“(b) EXCEPTION-
“(1) IN GENERAL- The amendments made by this part shall not apply to qualified
transportation property.
“(2) QUALIFIED TRANSPORTATION PROPERTY- For purposes of paragraph (1), the term
‘qualified transportation property’
means domestic property subject to a lease with respect to which a formal application--
“(A) was submitted for approval to the Federal Transit Administration (an agency
of the Department of Transportation)
after June 30, 2003, and before March 13, 2004,
“(B) is approved by the Federal Transit Administration before January 1, 2006,
and
“(C) includes a description of such property and the value of such property.
“(3) EXCHANGES AND CONVERSION OF TAX-EXEMPT USE PROPERTY- Section 470(e)(4)
of the Internal Revenue Code of 1986, as added by section 848, shall apply to property exchanged or converted
after the date of the enactment of this Act.
“(4) INTANGIBLES AND INDIAN TRIBAL GOVERNMENTS-
The amendments made subsections (b)(2), (b)(3), and (e) of section 847, and the
treatment of property described in clauses (ii)
and (iii) of section 470(c)(2)(B)
of the Internal Revenue Codeof 1986 (as added by section 848) as tangible property, shall apply to leases
entered into after October 3, 2004.”
Amendments by Sec. 901 of Pub. L. 108-357 effective for property placed in service after the date of the enactment of this
Act [Enacted: Oct. 22, 2004].
Amendment by Sec. 316 of Pub. L. 108-311 effective on the date of the enactment of this Act [Enacted: Oct. 4, 2004].
Amendments by Sec. 403(a) of Pub. L. 108-311 effective as if included in the provisions of the Job Creation and Worker Assistance
Act of 2002 [Sec. 101] to which they relate [effective date: property placed in service
after Sept. 10, 2001, in taxable years ending after such date].
Amendments by Sec. 408(a) of Pub. L. 108-311 effective on the date of the enactment of this Act [Enacted: Oct. 4, 2004].
EFFECTIVE DATE OF 2003 AMENDMENTS
Amendment by Sec. 201 of Pub. L. 108-27 effective for taxable years ending after May 5, 2003.
EFFECTIVE DATE OF 2002 AMENDMENTS
Amendment by Sec. 101(a) of Pub. L. 107-147 effective for property placed in service after September 10, 2001, in taxable years
ending after such date.
Amendment by Sec. 613(b) of Pub. L. 107-147 effective on the date of the enactment of this Act [Enacted: Mar. 9, 2002].
EFFECTIVE DATE OF 1998 AMENDMENTS
Amendments by Sec. 6006(b) of Pub. L. 105-206 effective as if included in the provisions of the Taxpayer Relief Act of 1997 to
which they relate [Effective Date of Pub. L. 105-34, Sec. 402: Aug. 5, 1997].
EFFECTIVE DATE OF 1997 AMENDMENTS
Amendments by Sec. 1086(b) of Pub. L. 105-34 effective for property placed in service after the date of the enactment of this
Act [Aug. 5, 1997].
Amendment by Sec. 1213(c) of Pub. L. 105-34 effective for leases entered into after the date of the enactment of this Act [Aug.
5, 1997].
Amendment by Sec. 1604(c)(1) of Pub. L. 105-34 effective as if included in the amendments made by section 13321 of the Omnibus Budget
Reconciliation Act of 1993, except that such amendment shall not apply--
(A) with respect to property (with an applicable recovery period under section 168(j)
of the Internal Revenue Codeof 1986 of 6 years or less)
held by the taxpayer if the taxpayer claimed the benefits of section 168(j) of such
Code with respect to such property on a return filed before March 18, 1997, but only
if such return is the first return of tax filed for the taxable year in which such
property was placed in service, or
(B) with respect to wages for which the taxpayer claimed the benefits of section 45A
of such Code for a taxable year on a return filed before March 18, 1997, but only
if such return was the first return of tax filed for such taxable year [Aug. 5, 1997].
EFFECTIVE DATE OF 1996 AMENDMENTS
Section 1120(c) of Pub. L. 104-188 provided that: ‘The amendments made by this section shall apply to property which
is placed in service on or after the date of the enactment of this Act [Aug. 20, 1996]
and to which section 168 of the Internal Revenue Code of 1986 applies after the amendment made by section 201 of the Tax Reform Act of 1986.
A taxpayer may elect (in such form and manner as the Secretary of the Treasury may
prescribe) to have such amendments apply with respect to any property placed in service
before such date and to which such section so applies.'
Amendment by section 1121(a) of Pub. L. 104-188 applicable to improvements disposed of or abandoned after June 12, 1996.
Section 1613(b)(5) of Pub. L. 104-188 provided that: ‘The amendments made by this subsection shall apply to property placed
in service after June 12, 1996, other than property placed in service pursuant to
a binding contract in effect before June 10, 1996, and at all times thereafter before
the property is placed in service.’
Amendments by section 1702(i) of Pub. L. 104-188, except as otherwise expressly provided, effective as if included in the related
provision of the Revenue Reconciliation Act of 1990.
EFFECTIVE DATE OF 1995 AMENDMENTS
Amendment by section 304 of Pub. L. 104-88 effective January 1, 1996.
EFFECTIVE DATE OF 1993 AMENDMENTS
Amendment by section 13151(a) of Pub. L. 103-66 effective for property placed in service by the taxpayer on or after May 13, 1993.
Sec. 13151(b)(2)
provides:
“(2) Exception. --
“The amendments made by this section shall not apply to property placed in service
by the taxpayer before January 1, 1994, if --
“(A) the taxpayer or a qualified person entered into a binding written contract to
purchase or construct such property before May 13, 1993, or
“(B) the construction of such property was commenced by or for the taxpayer or a qualified
person before May 13, 1993.
“For purposes of this paragraph, the term “qualified person” means any person who
transfers his rights in such a contract or such property to the taxpayer but only
if the property is not placed in service by such person before such rights are transferred
to the taxpayer.”
Amendment by section 13321(a) of Pub. L. 103-66 effective for property placed in service after December 31, 1993.
EFFECTIVE DATE OF 1990 AMENDMENTS
Amendment by section 11812(b) (2) of Pub. L. 101-508 applicable to property placed in service after Nov. 5, 1990, but not applicable to
any property to which section 168 of this title does not apply by reason of subsec.
(f)(5) of section 168, and not applicable to rehabilitation expenditures described
in section 252(f)(5) of Pub. L. 99-514, see section 11812(c) of Pub. L. 101-508, set out as a note under section 42 of this title.
Amendment by section 11813(b)(9) of Pub. L. 101-508 applicable to property placed in service after Dec. 31, 1990, but not applicable
to any transition property (as defined in section 49(e) of this title), any property
with respect to which qualified progress expenditures were previously taken into account
under section 46(d) of this title, and any property described in section 46(b)(2)(C)
of this title, as such sections were in effect on Nov. 4, 1990, see section 11813(c)
of Pub. L. 101-508, set out as a note under section 29 of this title.
EFFECTIVE DATE OF 1989 AMENDMENTS
Amendment by Pub. L. 101-239 effective, except as otherwise provided, as if included in the provision of the Technical
and Miscellaneous Revenue Act of 1988, Pub. L. 100-647, to which such amendment relates, see section 7817 of Pub. L. 101-239, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1988 AMENDMENTS
Section 1002(a)(23)(B) of Pub. L. 100-647 provided that: ‘Clause (ii) of section 168(d)(3)(B)
of the 1986 Code (as added by subparagraph (A)) shall apply to taxable years beginning
after March 31, 1988, unless the taxpayer elects, at such time and in such manner
as the Secretary of the Treasury or his delegate may prescribe, to have such clause
apply to taxable years beginning on or before such date.’
Amendment by sections 1002(a)(5)-(8), (11), (16)(B),
(21), (i)(2)(A)-(G), and 1018(b)(2) of Pub. L. 100-647 effective, except as otherwise provided, as if included in the provision of the Tax
Reform Act of 1986, Pub. L. 99-514, to which such amendment relates, see section 1019(a) of Pub. L. 100-647, set out as a note under section 1 of this title.
Section 6027(c) of Pub. L. 100-647 provided that:
‘(1) In general. - Except as provided in paragraph
(2), the amendments made by this section (amending this section) shall apply to property
placed in service after December 31, 1988.
‘(2) Exception. - The amendments made by this section shall not apply to any property
if such property is placed in service before January 1, 1990, and if such property
-
‘(A) is constructed, reconstructed, or acquired by the taxpayer pursuant to a written
contract which was binding on July 14, 1988, or
‘(B) is constructed or reconstructed by the taxpayer and such construction or reconstruction
began by July 14, 1988.’
Section 6028(b) of Pub. L. 100-647 provided that:
‘(1) In general. - Except as provided in paragraph
(2), the amendments made by this section (amending this section) shall apply to property
placed in service after December 31, 1988.
‘(2) Exception. - The amendments made by this section shall not apply to any property
if such property is placed in service before July 1, 1989, and if such property -
‘(A) is constructed, reconstructed, or acquired by the taxpayer pursuant to a written
contract which was binding on July 14, 1988, or
‘(B) is constructed or reconstructed by the taxpayer and such construction or reconstruction
began by July 14, 1988.’
Section 6029(d) of Pub. L. 100-647 provided that: ‘The amendments made by this section
(amending this section) shall apply to property placed in service after December 31,
1988.’
EFFECTIVE DATE OF 1986 AMENDMENT; TRANSITIONAL RULES
Sections 203 and 204 of Pub. L. 99-514, as amended by Pub. L. 99-509, title VIII, Sec. 8071, Oct. 21, 1986, 100 Stat. 1964; Pub. L. 100-647, title I, Sec. 1002(c)(1), (2), (4)-(8), (d)(1)-(7)(A),
(8)-(35), Nov. 10, 1988, 102 Stat. 3358-3367, provided that: ‘SEC. 203. EFFECTIVE DATES; GENERAL TRANSITIONAL RULES.
‘(a) General Effective Dates. -
‘(1) Section 201. -
‘(A) In general. - Except as provided in this section, section 204, and section 251(d)
(set out as a note under section 46 of this title), the amendments made by section
201 (amending sections 46, 167, 168, 178, 179, 280F, 291, 312, 465, 467, 514, 751,
1245, 4162, 6111, and 7701 of this title)
shall apply to property placed in service after December 31, 1986, in taxable years
ending after such date.
‘(B) Election to have amendments made by section 201 apply. - A taxpayer may elect
(at such time and in such manner as the Secretary of the Treasury or his delegate
may prescribe) to have the amendments made by section 201 apply to any property placed
in service after July 31, 1986, and before January 1, 1987. No election may be made
under this subparagraph with respect to property to which section 168 of the Internal Revenue Code of 1986 would not apply by reason of section 168(f)(5) of such Code if such property
were placed in service after December 31, 1986.
‘(2) Section 202. -
‘(A) In general. - The amendments made by section 202 (amending section 179 of this
title) shall apply to property placed in service after December 31, 1986, in taxable
years ending after such date.
‘(B) Special rule for fiscal years including January 1, 1987.
- In the case of any taxable year (other than a calendar year) which includes January
1, 1987, for purposes of applying the amendments made by section 202 to property placed
in service during such taxable year and after December 31, 1986 -
‘(i) the limitation of section 179(b)(1) of the Internal Revenue Code of 1986 (as amended by section 202) shall be reduced by the aggregate deduction under
section 179 (as in effect on the day before the date of the enactment of the Tax Reform
Act of 1986 (Oct. 22, 1986)) for section 179 property placed in service during such
taxable year and before January 1, 1987,
‘(ii) the limitation of section 179(b)(2) of such Code (as so amended) shall be applied
by taking into account the cost of all section 179 property placed in service during
such taxable year, and
‘iii) the limitation of section 179(b)(3) of such Code shall be applied by taking
into account the taxable income for the entire taxable year reduced by the amount
of any deduction under section 179 of such Code for property placed in service during
such taxable year and before January 1, 1987.
‘(b) General Transitional Rule. -
‘(1) In general. - The amendments made by section 201 (amending sections 46, 167,
168, 178, 179, 280F, 291, 312, 465, 467, 514, 751, 1245, 4162, 6111, and 7701 of this
title)
shall not apply to
‘(A) any property which is constructed, reconstructed, or acquired by the taxpayer
pursuant to a written contract which was binding on March 1, 1986,
‘(B) property which is constructed or reconstructed by the taxpayer if -
‘(i) the lesser of (I) $1,000,000, or (II) 5 percent of the cost of such property
has been incurred or committed by March 1, 1986, and
‘(ii) the construction or reconstruction of such property began by such date, or
‘(C) an equipped building or plant facility if construction has commenced as of March
1, 1986, pursuant to a written specific plan and more than one-half of the cost of
such equipped building or facility has been incurred or committed by such date. For
purposes of this paragraph, all members of the same affiliated group of corporations
(within the meaning of section 1504 of the Internal Revenue Code of 1986) filing a consolidated return shall be treated as one taxpayer.
‘(2) Requirement that certain property be placed in service before certain date. -
‘(A) In general. - Paragraph
(1) and section 204(a) (other than paragraph (8) or (12) thereof)
shall not apply to any property unless such property has a class life of at least
7 years and is placed in service before the applicable date determined under the following
table: ---------------------------------------------------------------------
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‘In the case of property The applicable with a class life of: date is: At least 7 but less than 20 years January 1, 1989 20 years or more January 1, 1991. -------------------------------
‘(B) Residential rental and nonresidential real property. - In the case of residential
rental property and nonresidential real property, the applicable date is January 1,
1991.
‘(C) Class lives. - For purposes of subparagraph
(A) -
‘(i) the class life of property to which section 168(g)(3)(B)
of the Internal Revenue Code of 1986 (as added by section 201) applies shall be the class life in effect on January
1, 1986, except that computer-based telephone central office switching equipment described
in section 168(e)(3)(B)(iii) of such Code shall be treated as having a class life
of 6 years,
‘(ii) property described in section 204(a) shall be treated as having a class life
of 20 years, and
‘(iii) property with no class life shall be treated as having a class life of 12 years.
‘(D) Substitution of applicable dates. - If any provision of this Act (see Tables
for classification)
substitutes a date for an applicable date, this paragraph shall be applied by using
such date.
‘(3) Property qualifies if sold and leased back in 3 months. - Property shall be treated
as meeting the requirements of paragraphs (1) and (2) or section 204(a) with respect
to any taxpayer if such property is acquired by the taxpayer from a person -
‘(A) in whose hands such property met the requirements of paragraphs (1) and (2) or
section 204(a) (or would have met such requirements if placed in service by such person),
or
‘(B) who placed the property in service before January 1, 1987, and such property
is leased back by the taxpayer to such person, or is leased to such person, not later
than the earlier of the applicable date under paragraph (2) or the day which is 3
months after such property was placed in service.
‘(4) Plant facility. - For purposes of paragraph (1), the term ‘plant facility’ means
a facility which does not include any building (or with respect to which buildings
constitute an insignificant portion) and which is -
‘(A) a self-contained single operating unit or processing operation,
‘(B) located on a single site, and
‘(C) identified as a single unitary project as of March 1, 1986.
‘(c) Property Financed With Tax-Exempt Bonds. -
‘(1) In general. - Except as otherwise provided in this subsection or section 204,
subparagraph
(C) of section 168(g)(1) of the Internal Revenue Code of 1986 (as added by this Act) shall apply to property placed in service after December
31, 1986, in taxable years ending after such date, to the extent such property is
financed by the proceeds of an obligation (including a refunding obligation)
issued after March 1, 1986.
‘(2) Exceptions. -
‘(A) Construction or binding agreements. - Subparagraph (C) of section 168(g)(1) of
such Code (as so added) shall not apply to obligations with respect to a facility
-
‘(i)(I) the original use of which commences with the taxpayer, and the construction,
reconstruction, or rehabilitation of which began before March 2, 1986, and was completed
on or after such date,
‘(II) with respect to which a binding contract to incur significant expenditures for
construction, reconstruction, or rehabilitation was entered into before March 2, 1986,
and some of such expenditures are incurred on or after such date, or
‘(III) acquired on or after March 2, 1986, pursuant to a binding contract entered
into before such date, and
‘(ii) described in an inducement resolution or other comparable preliminary approval
adopted by the issuing authority (or by a voter referendum) before March 2, 1986.
‘(B) Refunding. -
‘(i) In general. - Except as provided in clause (ii), in the case of property placed
in service after December 31, 1986, which is financed by the proceeds of an obligation
which is issued solely to refund another obligation which was issued before March
2, 1986, subparagraph (C) of section 168(g)(1) of such Code (as so added) shall apply
only with respect to an amount equal to the basis in such property which has not been
recovered before the date such refunded obligation is issued.
‘(ii) Significant expenditures.
- In the case of facilities the original use of which commences with the taxpayer
and with respect to which significant expenditures are made before January 1, 1987,
subparagraph (C) of section 168(g)(1)
of such Code (as so added) shall not apply with respect to such facilities to the
extent such facilities are financed by the proceeds of an obligation issued solely
to refund another obligation which was issued before March 2, 1986.
‘(C) Facilities. - In the case of an inducement resolution or other comparable preliminary
approval adopted by an issuing authority before March 2, 1986, for purposes of subparagraphs
(A) and (B)(ii) with respect to obligations described in such resolution, the term
‘facilities’ means the facilities described in such resolution.
‘(D) Significant expenditures.
- For purposes of this paragraph, the term ‘significant expenditures’
means expenditures greater than 10 percent of the reasonably anticipated cost of the
construction, reconstruction, or rehabilitation of the facility involved.
‘(d) Mid-Quarter Convention. -
In the case of any taxable year beginning before October 1, 1987 in which property
to which the amendments made by section 201 (amending sections 46, 167, 168, 178,
179, 280F, 291, 312, 465, 467, 514, 751, 1245, 4162, 6111, and 7701 of this title)
do not apply is placed in service, such property shall be taken into account in determining
whether section 168(d)(3) of the Internal Revenue Code of 1986 (as added by section 201) applies for such taxable year to property to which
such amendments apply. The preceding sentence shall only apply to property which would
be taken into account if such amendments did apply.
‘(e) Normalization Requirements. -
‘(1) In general. - A normalization method of accounting shall not be treated as being
used with respect to any public utility property for purposes of section 167 or 168 of the Internal Revenue Code of 1986 if the taxpayer, in computing its cost of service for ratemaking purposes
and reflecting operating results in its regulated books of account, reduces the excess
tax reserve more rapidly or to a greater extent than such reserve would be reduced
under the average rate assumption method.
‘(2) Definitions. - For purposes of this subsection
-
‘(A) Excess tax reserve. - The term ‘excess tax reserve’ means the excess of -
‘(i) the reserve for deferred taxes (as described in section 167(l)(3)(G)(ii) or 168(e)(3)(B)(ii) of the Internal Revenue Code of 1954 as in effect on the day before the date of the enactment of this Act (Oct.
22, 1986)), over
‘(ii) the amount which would be the balance in such reserve if the amount of such
reserve were determined by assuming that the corporate rate reductions provided in
this Act (see Tables for classification) were in effect for all prior periods.
‘(B) Average rate assumption method. - The average rate assumption method is the method
under which the excess in the reserve for deferred taxes is reduced over the remaining
lives of the property as used in its regulated books of account which gave rise to
the reserve for deferred taxes. Under such method, if timing differences for the property
reverse, the amount of the adjustment to the reserve for the deferred taxes is calculated
by multiplying
-
‘(i) the ratio of the aggregate deferred taxes for the property to the aggregate timing
differences for the property as of the beginning of the period in question, by
‘(ii) the amount of the timing differences which reverse during such period.
‘SEC. 204. ADDITIONAL TRANSITIONAL RULES.
‘(a) Other Transitional Rules. -
‘(1) Urban renovation projects. -
‘(A) In general. - The amendments made by section 201 (amending sections 46, 167,
168, 178, 179, 280F, 291, 312, 465, 467, 514, 751, 1245, 4162, 6111, and 7701 of this
title)
shall not apply to any property which is an integral part of any qualified urban renovation
project.
‘(B) Qualified urban renovation project. - For purposes of subparagraph (A), the term
‘qualified urban renovation project’ means any project -
‘(i) described in subparagraph
(C), (D), (E), or (G) which before March 1, 1986, was publicly announced by a political
subdivision of a State for a renovation of an urban area within its jurisdiction,
‘(ii) described in subparagraph
(C), (D) or (G) which before March 1, 1986, was identified as a single unitary project
in the internal financing plans of the primary developer of the project,
‘(iii) described in subparagraph
(C) or (D), which is not substantially modified on or after March 1, 1986, and
‘(iv) described in subparagraph (F) or (H).
‘(C) Project where agreement on December 19, 1984. - A project is described in this
subparagraph if -
‘(i) a political subdivision granted on July 11, 1985, development rights to the primary
developer-purchaser of such project, and
‘(ii) such project was the subject of a development agreement between a political
subdivision and a bridge authority on December 19, 1984.
For purposes of this subparagraph, section 203(b)(2)
shall be applied by substituting ‘January 1, 1994’ for ‘January 1, 1991’ each place
it appears.
‘(D) Certain additional projects.
- A project is described in this subparagraph if it is described in any of the following
clauses of this subparagraph and the primary developer of all such projects is the
same person:
‘(i) A project is described in this clause if the development agreement with respect
thereto was entered into during April 1984 and the estimated cost of the project is
approximately $194,000,000.
‘(ii) A project is described in this clause if the development agreement with respect
thereto was entered into during May 1984 and the estimated cost of the project is
approximately $190,000,000.
‘(iii) A project is described in this clause if the project has an estimated cost
of approximately
$92,000,000 and at least $7,000,000 was spent before September 26, 1985, with respect
to such project.
‘(iv) A project is described in this clause if the estimated project cost is approximately
$39,000,000 and at least $2,000,000 of construction cost for such project were incurred
before September 26, 1985.
‘(v) A project is described in this clause if the development agreement with respect
thereto was entered into before September 26, 1985, and the estimated cost of the
project is approximately $150,000,000.
‘(vi) A project is described in this clause if the board of directors of the primary
developer approved such project in December 1982, and the estimated cost of such project
is approximately $107,000,000.
‘(vii) A project is described in this clause if the board of directors of the primary
developer approved such project in December 1982, and the estimated cost of such project
is approximately $59,000,000.
‘(viii) A project is described in this clause if the Board of Directors of the primary
developer approved such project in December 1983, following selection of the developer
by a city council on September 26, 1983, and the estimated cost of such project is
approximately $107,000,000.
‘(E) Project where plan confirmed on October 4, 1984. - A project is described in
this subparagraph if -
‘(i) a State or an agency, instrumentality, or political subdivision thereof approved
the filing of a general project plan on June 18, 1981, and on October 4, 1984, a State
or an agency, instrumentality, or political subdivision thereof confirmed such plan,
‘(ii) the project plan as confirmed on October 4, 1984, included construction or renovation
of office buildings, a hotel, a trade mart, theaters, and a subway complex, and
‘(iii) significant segments of such project were the subject of one or more conditional
designations granted by a State or an agency, instrumentality, or political subdivision
thereof to one or more developers before January 1, 1985. The preceding sentence shall
apply with respect to a property only to the extent that a building on such property
site was identified as part of the project plan before September 26, 1985, and only
to the extent that the size of the building on such property site was not substantially
increased by reason of a modification to the project plan with respect to such property
on or after such date. For purposes of this subparagraph, section 203(b)(2) shall
be applied by substituting ‘January 1, 1998’
for ‘January 1, 1991’ each place it appears.
‘(F) A project is described in this subparagraph if it is a sports and entertainment
facility which -
‘(i) is to be used by both a National Hockey League team and a National Basketball
Association team;
‘(ii) is to be constructed on a platform utilizing air rights over land acquired by
a State authority and identified as site B in a report dated May 30, 1984, prepared
for a State urban development corporation; and
‘(iii) is eligible for real property tax, and power and energy benefits pursuant to
the provisions of State legislation approved and effective July 7, 1982.A project
is also described in this subparagraph if it is a mixed-use development which is -
‘(I) to be constructed above a public railroad station utilized by the national railroad
passenger corporation and commuter railroads serving two States; and
‘(II) will include the reconstruction of such station so as to make it a more efficient
transportation center and to better integrate the station with the development above,
such reconstruction plans to be prepared in cooperation with a State transportation
authority.
For purposes of this subparagraph, section 203(b)(2)
shall be applied by substituting ‘January 1, 1998’ for the applicable date that would
otherwise apply.
‘(G) A project is described in this subparagraph if -
‘(i) an inducement resolution was passed on March 9, 1984, for the issuance of obligations
with respect to such project,
‘(ii) such resolution was extended by resolutions passed on August 14, 1984, April
2, 1985, August 13, 1985, and July 8, 1986,
‘(iii) an application was submitted on January 31, 1984, for an Urban Development
Action Grant with respect to such project, and
‘(iv) an Urban Development Action Grant was preliminarily approved for all or part
of such project on July 3, 1986.
‘(H) A project is described in this subparagraph if it is a redevelopment project,
with respect to which $10,000,000 in industrial revenue bonds were approved by a State
Development Finance Authority on January 15, 1986, a village transferred approximately
$4,000,000 of bond volume authority to the State in June 1986, and a binding Redevelopment
Agreement was executed between a city and the development team on June 30, 1986.
‘(2) Certain projects granted FERC licenses, etc. - The amendments made by section
201 (amending sections 46, 167, 168, 178, 179, 280F, 291, 312, 465, 467, 514, 751,
1245, 4162, 6111, and 7701 of this title) shall not apply to any property which is
part of a project -
‘(A) which is certified by the Federal Energy Regulatory Commission before March 2,
1986, as a qualifying facility for purposes of the Public Utility Regulatory Policies
Act of 1978 (see Short Title note set out under 16 U.S.C. 2601),
‘(B) which was granted before March 2, 1986, a hydroelectric license for such project
by the Federal Energy Regulatory Commission, or
‘(C) which is a hydroelectric project of less than 80 megawatts that filed an application
for a permit, exemption, or license with the Federal Energy Regulatory Commission
before March 2, 1986.
‘(3) Supply or service contracts.
- The amendments made by section 201 shall not apply to any property which is readily
identifiable with and necessary to carry out a written supply or service contract,
or agreement to lease, which was binding on March 1, 1986.
‘(4) Property treated under prior tax acts. - The amendments made by section 201 shall
not apply
-
‘(A) to property described in section 12(c)(2) (as amended by the Technical and Miscellaneous
Revenue Act of 1988), 31(g)(5), or 31(g)(17)(J) of the Tax Reform Act of 1984
(sections 12(c)(2) and 31(g)(5), (17)(J) of Pub. L. 98-369, set out as notes below),
‘(B) to property described in section 209(d)(1)(B) of the Tax Equity and Fiscal Responsibility
Act of 1982, as amended by the Tax Reform Act of 1984 (section 209(d)(1)(B)
of Pub. L. 97-248, as amended, set out as a note below), and
‘(C) to property described in section 216(b)(3) of the Tax Equity and Fiscal Responsibility
Act of 1982 (section 216(b)(3) of Pub. L. 97-248, set out as a note below).
‘(5) Special rules for property included in master plans of integrated projects. -
The amendments made by section 201 shall not apply to any property placed in service
pursuant to a master plan which is clearly identifiable as of March 1, 1986, for any
project described in any of the following subparagraphs of this paragraph:
‘(A) A project is described in this subparagraph if -
‘ (i) the project involves production platforms for offshore drilling, oil and gas
pipeline to shore, process and storage facilities, and a marine terminal, and
‘(ii) at least $900,000,000 of the costs of such project were incurred before September
26, 1985.
‘(B) A project is described in this subparagraph if -
‘(i) such project involves a fiber optic network of at least 20,000 miles, and
‘(ii) before September 26, 1985, construction commenced pursuant to the master plan
and at least $85,000,000 was spent on construction.
‘(C) A project is described in this subparagraph if -
‘(i) such project passes through at least 10 States and involves intercity communication
links (including one or more repeater sites, terminals and junction stations for microwave
transmissions, regenerators or fiber optics and other related equipment),
‘(ii) the lesser of $150,000,000 or 5 percent of the total project cost has been expended,
incurred, or committed before March 2, 1986, by one or more taxpayers each of which
is a member of the same affiliated group (as defined in section 1504(a) (of the Internal
Revenue Code of 1986)), and
‘(iii) such project consists of a comprehensive plan for meeting network capacity
requirements as encompassed within either:
‘(I) a November 5, 1985, presentation made to and accepted by the Chairman of the
Board and the president of the taxpayer, or
‘(II) the approvals by the Board of Directors of the parent company of the taxpayer
on May 3, 1985, and September 22, 1985, and of the executive committee of said board
on December 23, 1985.
‘(D) A project is described in this subparagraph if -
‘(i) such project is part of a flat rolled product modernization plan which was initially
presented to the Board of Directors of the taxpayer on July 8, 1983,
‘(ii) such program will be carried out at 3 locations, and
‘(iii) such project will involve a total estimated minimum capital cost of at least
$250,000,000.
‘(E) A project is described in this subparagraph if the project is being carried out
by a corporation engaged in the production of paint, chemicals, fiberglass, and glass,
and if -
‘(i) the project includes a production line which applies a thin coating to glass
in the manufacture of energy efficient residential products, if approved by the management
committee of the corporation on January 29, 1986,
‘(ii) the project is a turbogenerator which was approved by the president of such
corporation and at least
$1,000,000 of the cost of which was incurred or committed before such date,
‘(iii) the project is a waste-to-energy disposal system which was initially approved
by the management committee of the corporation on March 29, 1982, and at least $5,000,000
of the cost of which was incurred before September 26, 1985,
‘(iv) the project, which involves the expansion of an existing service facility and
the addition of new lab facilities needed to accommodate topcoat and undercoat production
needs of a nearby automotive assembly plant, was approved by the corporation's management
committee on March 5, 1986, or
‘(v) the project is part of a facility to consolidate and modernize the silica production
of such corporation and the project was approved by the president of such corporation
on August 19, 1985.
‘(F) A project is described in this subparagraph if -
‘(i) such project involves a port terminal and oil pipeline extending generally from
the area of Los Angeles, California, to the area of Midland, Texas, and
‘(ii) before September 26, 1985, there is a binding contract for dredging and channeling
with respect thereto and a management contract with a construction manager for such
project.
‘(G) A project is described in this subparagraph if -
‘(i) the project is a newspaper printing and distribution plant project with respect
to which a contract for the purchase of 8 printing press units and related equipment
to be installed in a single press line was entered into on January 8, 1985, and
‘(ii) the contract price for such units and equipment represents at least 50 percent
of the total cost of such project.
‘(H) A project is described in this subparagraph if it is the second phase of a project
involving direct current transmission lines spanning approximately 190 miles from
the United States-Canadian border to Ayer, Massachusetts, alternating current transmission
lines in Massachusetts from Ayers to Millbury to West Medway, DC-AC converted terminals
to Monroe, New Hampshire, and Ayer, Massachusetts, and other related equipment and
facilities.
‘(I) A project is described in this subparagraph if it involves not more than two
natural gas-fired combined cycle electric generating units each having a net electrical
capability of approximately 233 megawatts, and a sales contract for approximately
one-half of the output of the 1st unit was entered into in December 1985.
‘(J) A project is described in this subparagraph if -
‘(i) the project involves an automobile manufacturing facility (including equipment
and incidental appurtenances) to be located in the United States, and
‘(ii) either -
‘(I) the project was the subject of a memorandum of understanding between 2 automobile
manufacturers that was signed before September 25, 1985, the automobile manufacturing
facility (including equipment and incidental appurtenances) will involve a total estimated
cost of approximately $750,000,000, and will have an annual production capacity of
approximately 240,000 vehicles or
‘(II) the Board of Directors of an automobile manufacturer approved a written plan
for the conversion of existing facilities to produce new models of a vehicle not currently
produced in the United States, such facilities will be placed in service by July 1,
1987, and such Board action occurred in July 1985 with respect to a $602,000,000 expenditure,
a $438,000,000 expenditure, and a $321,000,000 expenditure.
‘(K) A project is described in this subparagraph if -
‘(i) the project involves a joint venture between a utility company and a paper company
for a supercalendered paper mill, and at least $50,000,000 was incurred or committed
with respect to such project before March 1, 1986, or
‘(ii) the project involves a paper mill for the manufacture of newsprint (including
a cogeneration facility) is generally based on a written design and feasibility study
that was completed on December 15, 1981, and will be placed in service before January
1, 1991, or
‘(iii) the project is undertaken by a Maine corporation and involves the modernization
of pulp and paper mills in Millinocket and/or East Millinocket, Maine, or
‘(iv) the project involves the installation of a paper machine for production of coated
publication papers, the modernization of a pulp mill, and the installation of machinery
and equipment with respect to related processes, as of December 31, 1985, in excess
of $50,000,000 was incurred for the project, as of July 1986, in excess of $150,000,000
was incurred for the project, and the project is located in Pine Bluff, Arkansas,
or
‘(v) the project involves property of a type described in ADR classes 26.1, 26.2,
25, 00.3 and 00.4 included in a paper plant which will manufacture and distribute
tissue, towel or napkin products; is located in Effingham County, Georgia; and is
generally based upon a written General Description which was submitted to the Georgia
Department of Revenue on or about June 13, 1985.
‘(L) A project is described in this subparagraph if -
‘(i) a letter of intent with respect to such project was executed on June 4, 1985,
and
‘(ii) a 5-percent downpayment was made in connection with such project for 2 10-unit
press lines and related equipment.
‘(M) A project is described in this subparagraph if -
‘(i) the project involves the retrofit of ammonia plants,
‘(ii) as of March 1, 1986, more than $390,000 had been expended for engineering and
equipment, and
‘(iii) more than $170,000 was expensed in 1985 as a portion of preliminary engineering
expense.
‘(N) A project is described in this subparagraph if the project involves bulkhead
intermodal flat cars which are placed in service before January 1, 1987, and either
-
‘(i) more than $2,290,000 of expenditures were made before March 1, 1986, with respect
to a project involving up to 300 platforms, or
‘(ii) more than $95,000 of expenditures were made before March 1, 1986, with respect
to a project involving up to 850 platforms.
‘(O) A project is described in this subparagraph if -
‘(i) the project involves the production and transportation of oil and gas from a
well located north of the Arctic Circle, and
‘(ii) more than $200,000,000 of cost had been incurred or committed before September
26, 1985.
‘(P) A project is described in this subparagraph if -
‘(i) a commitment letter was entered into with a financial institution on January
23, 1986, for the financing of the project,
‘(ii) the project involves intercity communication links (including microwave and
fiber optics communications systems and related property),
‘(iii) the project consists of communications links between -’ (I) Omaha, Nebraska,
and Council Bluffs, Iowa,
‘(II) Waterloo, Iowa and Sioux City, Iowa,
‘(III) Davenport, Iowa and Springfield, Illinois, and
‘(iv) the estimated cost of such project is approximately $13,000,000.
‘(Q) A project is described in this subparagraph if -
‘(i) such project is a mining modernization project involving mining, transport, and
milling operations,
‘(ii) before September 26, 1985, at least $20,000,000 was expended for engineering
studies which were approved by the Board of Directors of the taxpayer on January 27,
1983, and
‘(iii) such project will involve a total estimated minimum cost of $350,000,000.
‘(R) A project is described in this subparagraph if -
‘(i) such project is a dragline acquired in connection with a 3-stage program which
began in 1980 to increase production from a coal mine,
‘(ii) at least $35,000,000 was spent before September 26, 1985, on the 1st 2 stages
of the program, and
‘(iii) at least $4,000,000 was spent to prepare the mine site for the dragline.
‘(S) A project is described in this subparagraph if - it is a project consisting of
a mineral processing facility using a heap leaching system (including waste dumps,
low-grade dumps, a leaching area, and mine roads) and if -
‘(i) convertible subordinated debentures were issued in August 1985, to finance the
project,
‘(ii) construction of the project was authorized by the Board of Directors of the
taxpayer on or before December 31, 1985,
‘(iii) at least $750,000 was paid or incurred with respect to the project on or before
December 31, 1985, and
‘(iv) the project is placed in service on or before December 31, 1986.
‘(T) A project is described in this subparagraph if it is a plant facility on Alaska's
North Slope which is placed in service before January 1, 1988, and -
‘(i) the approximate cost of which is $675,000,000, of which approximately $400,000,000
was spent on off-site construction,
‘(ii) the approximate cost of which is $445,000,000, of which approximately $400,000,000
was spent on off-site construction and more than 50 percent of the project cost was
spent prior to December 31, 1985, or
‘(iii) the approximate cost of which is $375,000,000, of which approximately $260,000,000
was spent on off-site construction.
‘(U) A project is described in this subparagraph if it involves the connecting of
existing retail stores in the downtown area of a city to a new covered area, the total
project will be 250,000 square feet, a formal Memorandum of Understanding relating
to development of the project was executed with the city on July 2, 1986, and the
estimated cost of the project is $18,186,424.
‘(V) A project is described in this subparagraph if it includes a 200,000 square foot
office tower, a 200-room hotel, a 300,000 square foot retail center, an 800-space
parking facility, the total cost is projected to be $60,000,000, and
$1,250,000 was expended with respect to the site before August 25, 1986.
‘(W) A project is described in this subparagraph if it is a joint use and development
project including an integrated hotel, convention center, office, related retail facilities
and public mass transportation terminal, and vehicle parking facilities which satisfies
the following conditions:
‘(i) is developed within certain air space rights and upon real property exchanged
for such joint use and development project which is owned or acquired by a state department
of transportation, a regional mass transit district in a county with a population
of at least 5,000,000 and a community redevelopment agency;
‘(ii) such project affects an existing, approximately 40 acre public mass transportation
bus-way terminal facility located adjacent to an interstate highway;
‘(iii) a memorandum of understanding with respect to such joint use and development
project is executed by a state department of transportation, such a county regional
mass transit district and a community redevelopment agency on or before December 31,
1986, and
‘(iv) a major portion of such joint use and development project is placed in service
by December 31, 1990.
‘(X) A project is described in this subparagraph if -
‘(i) it is an $8,000,000 project to provide advanced control technology for adipic
acid at a plant, which was authorized by the company's Board of Directors in October
1985, at December 31, 1985, $1,400,000 was committed and $400,000 expended with respect
to such project, or
‘(ii) it is an $8,300,000 project to achieve compliance with State and Federal regulations
for particulates emissions, which was authorized by the company's Board of Directors
in December 1985, by March 31, 1986, $250,000 was committed and $250,000 was expended
with respect to such project, or
‘(iii) it is a $22,000,000 project for the retrofit of a plant that makes a raw material
for aspartame, which was approved in the company's December 1985 capital budget, if
approximately $3,000,000 of the $22,000,000 was spent before August 1, 1986.
‘(Y) A project is described in this subparagraph if such project passes through at
least 9 States and involves an intercity communication link (including multiple repeater
sites and junction stations for microwave transmissions and amplifiers for fiber optics);
the link from Buffalo to New York/Elizabeth was completed in 1984; the link from Buffalo
to Chicago was completed in 1985; and the link from New York to Washington is completed
in 1986.
‘(Z) A project is described in this subparagraph if -
‘(i) such project involves a fiber optic network of at least 475 miles, passing through
Minnesota and Wisconsin; and
‘(ii) before January 1, 1986, at least $15,000,000 was expended or committed for electronic
equipment or fiber optic cable to be used in constructing the network.
‘(6) Natural gas pipeline. -
The amendments made by section 201 (amending sections 46, 167, 168, 178, 179, 280F,
291, 312, 465, 467, 514, 751, 1245, 4162, 6111, and 7701 of this title) shall not
apply to any interstate natural gas pipeline (and related equipment) if -
‘(A) 3 applications for the construction of such pipeline were filed with the Federal
Energy Regulatory Commission before November 22, 1985 (and 2 of which were filed before
September 26, 1985), and
‘(B) such pipeline has 1 of its terminal points near Bakersfield, California.
‘(7) Certain leasehold improvements.
- The amendments made by section 201 shall not apply to any reasonable leasehold improvements,
equipment and furnishings placed in service by a lessee or its affiliates if -
‘(A) the lessee or an affiliate is the original lessee of each building in which such
property is to be used,
‘(B) such lessee is obligated to lease the building under an agreement to lease entered
into before September 26, 1985, and such property is provided for such building, and
‘(C) such buildings are to serve as world headquarters of the lessee and its affiliates.
For purposes of this paragraph, a corporation is an affiliate of another corporation
if both corporations are members of a controlled group of corporations within the
meaning of section 1563(a)
of the Internal Revenue Codeof 1954 without regard to section 1563(b)(2) of such Code. Such lessee shall include
a securities firm that meets the requirements of subparagraph (A), except the lessee
is obligated to lease the building under a lease entered into on June 18, 1986.
‘(8) Solid waste disposal facilities.
- The amendments made by section 201 (amending sections 46, 167, 168, 178, 179, 280F,
291, 312, 465, 467, 514, 751, 1245, 4162, 6111, and 7701 of this title) shall not
apply to the taxpayer who originally places in service any qualified solid waste disposal
facility (as defined in section 7701(e)(3)(B)
of the Internal Revenue Code of 1986) if before March 2, 1986 -
‘(A) there is a binding written contract between a service recipient and a service
provider with respect to the operation of such facility to pay for the services to
be provided by such facility,
‘(B) a service recipient or governmental unit (or any entity related to such recipient
or unit)
made a financial commitment of at least $200,000 for the financing or construction
of such facility,
‘(C) such facility is the Tri-Cities Solid Waste Recovery Project involving Fremont,
Newark, and Union City, California, and has received an authority to construct from
the Environmental Protection Agency or from a State or local agency authorized by
the Environmental Protection Agency to issue air quality permits under the Clean Air
Act (42 U.S.C. 7401 et seq.),
‘(D) a bond volume carryforward election was made for the facility and the facility
is for Chattanooga, Knoxville, or Kingsport, Tennessee, or
‘(E) such facility is to serve Haverhill, Massachusetts.
‘(9) Certain submersible drilling units. - In the case of a binding contract entered
into on October 30, 1984, for the purchase of 6 semi-submersible drilling units at
a cost of $425,000,000, such units shall be treated as having an applicable date under
subsection (section) 203(b)(2) of January 1, 1991.
‘(10) Wastewater or sewage treatment facility. - The amendments made by section 201
(amending sections 46, 167, 168, 178, 179, 280F, 291, 312, 465, 467, 514, 751, 1245,
4162, 6111, and 7701 of this title) shall not apply to any property which is part
of a wastewater or sewage treatment facility if -
‘(A) site preparation for such facility commenced before September 1985, and a parish
council approved a service agreement with respect to such facility on December 4,
1985;
‘(B) a city-parish advertised in September 1985, for bids for construction of secondary
treatment improvements for such facility, in May 1985, the city-parish received statements
from 16 firms interested in privatizing the wastewater treatment facilities, and the
metropolitan council selected a privatizer at its meeting on November 20, 1985, and
adopted a resolution authorizing the Mayor to enter into contractual negotiation with
the selected privatizer;
‘(C) the property is part of a wastewater treatment facility serving Greenville, South
Carolina with respect to which a binding service agreement between a privatizer and
the Western Carolina Regional Sewer Authority with respect to such facility was signed
before January 1, 1986; or
‘(D) such property is part of a wastewater treatment facility (located in Cameron
County, Texas, within one mile of the City of Harlingen), an application for a wastewater
discharge permit was filed with respect to such facility on December 4, 1985, and
a City Commission approved a letter of intent relating to a service agreement with
respect to such facility on August 7, 1986; or a wastewater facility (located in Harlingen,
Texas) which is a subject of such letter of intent and service agreement and the design
of which was contracted for in a letter of intent dated January 23, 1986.
‘(11) Certain aircraft. - The amendments made by section 201 (amending sections 46,
167, 168, 178, 179, 280F, 291, 312, 465, 467, 514, 751, 1245, 4162, 6111, and 7701
of this title) shall not apply to any new aircraft with 19 or fewer passenger seats
if
‘(A) the aircraft is manufactured in the United States. For purposes of this subparagraph,
an aircraft is ‘manufactured’ at the point of its final assembly,
‘(B) the aircraft was in inventory or in the planned production schedule of the final
assembly manufacturer, with orders placed for the engine(s) on or before August 16,
1986, and
‘(C) the aircraft is purchased or subject to a binding contract on or before December
31, 1986, and is delivered and placed in service by the purchaser, before July 1,
1987.
‘(12) Certain satellites. -
The amendments made by section 201 shall not apply to any satellite with respect to
which -
‘(A) on or before January 28, 1986, there was a binding contract to construct or acquire
a satellite, and
‘(i) an agreement to launch was in existence on that date, or
‘(ii) on or before August 5, 1983, the Federal Communications Commission had authorized
the construction and for which the authorized party has a specific although undesignated
agreement to launch in existence on January 28, 1986;
‘(B) by order adopted on July 25, 1985, the Federal Communications Commission granted
the taxpayer an orbital slot and authorized the taxpayer to launch and operate 2 satellites
with a cost of approximately $300,000,000; or
‘(C) the International Telecommunications Satellite Organization or the International
Maritime Satellite Organization entered into written binding contracts before May
1, 1985.
‘(13) Certain nonwire line cellular telephone systems. - The amendments made by section
201 shall not apply to property that is part of a nonwire line system in the Domestic
Public Cellular Radio Telecommunications Service for which the Federal Communications
Commission has issued a construction permit before September 26, 1985, but only if
such property is placed in service before January 1, 1987.
‘(14) Certain cogeneration facilities.
- The amendments made by section 201 shall not apply to projects consisting of 1 or
more facilities for the cogeneration and distribution of electricity and steam or
other forms of thermal energy if -
‘(A) at least $100,000 was paid or incurred with respect to the project before March
1, 1986, a memorandum of understanding was executed on September 13, 1985, and the
project is placed in service before January 1, 1989,
‘(B) at least $500,000 was paid or incurred with respect to the projects before May
6, 1986, the projects involve a 22-megawatt combined cycle gas turbine plant and a
45-megawatt coal waste plant, and applications for qualifying facility status were
filed with the Federal Energy Regulatory Commission on March 5, 1986,
‘(C) the project cost approximates
$125,000,000 to $140,000,000 and an application was made to the Federal Energy Regulatory
Commission in July 1985,
‘(D) an inducement resolution for such facility was adopted on September 10, 1985,
a development authority was given an inducement date of September 10, 1985, for a
loan not to exceed $80,000,000 with respect to such facility, and such facility is
expected to have a capacity of approximately 30 megawatts of electric power and 70,000
pounds of steam per hour,
‘(E) at least $1,000,000 was incurred with respect to the project before May 6, 1986,
the project involves a 52-megawatt combined cycle gas turbine plant and a petition
was filed with the Connecticut Department of Public Utility Control to approve a power
sales agreement with respect to the project on March 27, 1986,
‘(F) the project has a planned scheduled capacity of approximately 38,000 kilowatts,
the project property is placed in service before January 1, 1991, and the project
is operated, established, or constructed pursuant to certain agreements, the negotiation
of which began before 1986, with public or municipal utilities conducting business
in Massachusetts, or
‘(G) the Board of Regents of Oklahoma State University took official action on July
25, 1986, with respect to the project. In the case of the project described in subparagraph
(F), section 203(b)(2)(A) shall be applied by substituting ‘January 1, 1991’ for ‘January
1, 1989’.
‘(15) Certain electric generating stations. - The amendments made by section 201 shall
not apply to a project located in New Mexico consisting of a coal-fired electric generating
station (including multiple generating units, coal mine equipment, and transmission
facilities) if -
‘(A) a tax-exempt entity will own an equity interest in all property included in the
project (except the coal mine equipment), and
‘(B) at least $72,000,000 was expended in the acquisition of coal leases, land and
water rights, engineering studies, and other development costs before May 6, 1986.For
purposes of this paragraph, section 203(b)(2) shall be applied by substituting ‘January
1, 1996’ for ‘January 1, 1991’ each place it appears.
‘(16) Sports arenas. -
‘(A) Indoor sports facility.
- The amendments made by section 201 shall not apply to up to $20,000,000 of improvements
made by a lessee of any indoor sports facility pursuant to a lease from a State commission
granting the right to make limited and specified improvements (including planned seat
explanations), if architectural renderings of the project were commissioned and received
before December 22, 1985.
‘(B) Metropolitan sports arena.
- The amendments made by section 201 shall not apply to any property which is part
of an arena constructed for professional sports activities in a metropolitan area,
provided that such arena is capable of seating no less than 18,000 spectators and
a binding contract to incur significant expenditures for its construction was entered
into before June 1, 1986.
‘(17) Certain waste-to-energy facilities. - The amendments made by section 201 shall
not apply to 2 agricultural waste-to-energy powerplants (and required transmission
facilities), in connection with which a contract to sell 100 megawatts of electricity
to a city was executed in October 1984.
‘(18) Certain coal-fired plants.
- The amendments made by section 201 shall not apply to one of three 540 megawatt
coal-fired plants that are placed in service after a sale leaseback occurring after
January 1, 1986, if -
‘(A) the Board of Directors of an electric power cooperation authorized the investigation
of a sale leaseback of a nuclear generation facility by resolution dated January 22,
1985, and
‘(B) a loan was extended by the Rural Electrification Administration on February 20,
1986, which contained a covenant with respect to used property leasing from unit II.
‘(19) Certain rail systems.
-
‘(A) The amendments made by section 201 shall not apply to a light rail transit system,
the approximate cost of which is $235,000,000, if, with respect to which, the board
of directors of a corporation (formed in September 1984 for the purpose of developing,
financing, and operating the system) authorized a $300,000 expenditure for a feasibility
study in April 1985.
‘(B) The amendments made by section 201 shall not apply to any project for rehabilitation
of regional railroad rights of way and properties including grade crossings which
was authorized by the Board of Directors of such company prior to October 1985; and/or
was modified, altered or enlarged as a result of termination of company contracts,
but approved by said Board of Directors no later than January 30, 1986, and which
is in the public interest, and which is subject to binding contracts or substantive
commitments by December 31, 1987.
‘(20) Certain detergent manufacturing facility. - The amendments made by section 201
shall not apply to a laundry detergent manufacturing facility, the approximate cost
of which is $13,200,000, with respect to which a project agreement was fully executed
on March 17, 1986.
‘(21) Certain resource recovery facility. - The amendments made by section 201 shall
not apply to any of 3 resource recovery plants, the aggregate cost of which approximates
$300,000,000, if an industrial development authority adopted a bond resolution with
respect to such facilities on December 17, 1984, and the projects were approved by
the department of commerce of a Commonwealth on December 27, 1984.
‘(22) The amendments made by section 201 shall not apply to a computer and office
support center building in Minneapolis, with respect to which the first contract,
with an architecture firm, was signed on April 30, 1985, and a construction contract
was signed on March 12, 1986.
‘(23) Certain district heating and cooling facilities. - The amendments made by section
201 shall not apply to pipes, mains, and related equipment included in district heating
and cooling facilities, with respect to which the development authority of a State
approved the project through an inducement resolution adopted on October 8, 1985,
and in connection with which approximately
$11,000,000 of tax-exempt bonds are to be issued.
‘(24) Certain vessels. -
‘(A) Certain offshore vessels.
- The amendments made by section 201 shall not apply to any offshore vessel the construction
contract for which was signed on February 28, 1986, and the approximate cost of which
is $9,000,000.
‘(B) Certain inland river vessel.
- The amendments made by section 201 shall not apply to a project involving the reconstruction
of an inland river vessel docked on the Mississippi River at St. Louis, Missouri,
on July 14, 1986, and with respect to which:
‘(i) the estimated cost of reconstruction is approximately $39,000,000;
‘(ii) reconstruction was commenced prior to December 1, 1985;
‘(iii) at least $17,000,000 was expended before December 31, 1985; and
‘(C) Special automobile carrier vessels. - The amendments made by section 201 shall
not apply to two new automobile carrier vessels which will cost approximately $47,000,000
and will be constructed by a United States-flag carrier to operate, under the United
States-flag and with an American crew, to transport foreign automobiles to the United
States, in a case where negotiations for such transportation arrangements commenced
in April 1985, formal contract bids were submitted prior to the end of 1985, and definitive
transportation contracts were awarded in May 1986.
‘(D) The amendments made by section 201 shall not apply to a 562-foot passenger cruise
ship, which was purchased in 1980 for the purpose of returning the vessel to United
States service, the approximate cost of refurbishment of which is approximately $47,000,000.
‘(E) The amendments made by section 201 shall not apply to the Muskegon, Michigan,
Cross-Lake Ferry project having a projected cost of approximately $7,200,000.
‘(F) The amendments made by section 201 shall not apply to a new automobile carrier
vessel, the contract price for which is no greater than $28,000,000, and which will
be constructed for and placed in service by OSG Car Carriers, Inc., to transport,
under the United States flag and with an American crew, foreign automobiles to North
America in a case where negotiations for such transportation arrangements commenced
in 1985, and definitive transportation contracts were awarded before June 1986.
‘(25) Certain wood energy projects.
- The amendments made by section 201 shall not apply to two wood energy projects for
which applications with the Federal Energy Regulatory Commission were filed before
January 1, 1986, which are described as follows:
‘(A) a 26.5 megawatt plant in Fresno, California, and
‘(B) a 26.5 megawatt plant in Rocklin, California.
‘(26) The amendments made by section 201 shall not apply to property which is a geothermal
project of less than 20 megawatts that was certified by the Federal Energy Regulatory
Commission on July 14, 1986, as a qualifying small power production facility for purposes
of the Public Utility Regulatory Policies Act of 1978 (see Short Title note set out
under 16 U.S.C. 2601) pursuant to an application filed with the Federal Energy Regulatory Commission on
April 17, 1986.
‘(27) Certain economic development projects. - The amendments made by section 201
shall not apply to any of the following projects:
‘(A) A mixed use development on the East River the total cost of which is approximately
$400,000,000, with respect to which a letter of intent was executed on January 24,
1984, and with respect to which approximately $2.5 million had been spent by March
1, 1986.
‘(B) A 356-room hotel, banquet, and conference facility (including 540,000 square
feet of office space)
the approximate cost of which is $158,000,000, with respect to which a letter of intent
was executed on June 1, 1984, and with respect to which an inducement resolution and
bond resolution was adopted on August 20, 1985.
‘(C) Phase 1 of a 4-phase project involving the construction of laboratory space and
ground-floor retail space the estimated cost of which is $22,000,000 and with respect
to which a memoradum (sic) of understanding was made on August 29, 1983.
‘(D) A project involving the development of a 490,000 square foot mixed-use building
at 152 W. 57th Street, New York, New York, the estimated cost of which is $100,000,000,
and with respect to which a building permit application was filed in May 1986.
‘(E) A mixed-use project containing a 300 unit, 12-story hotel, garage, two multi-rise
office buildings, and also included a park, renovated riverboat, and barge with festival
marketplace, the capital outlays for which approximate $68,000,000.
‘(F) The construction of a three-story office building that will serve as the home
office for an insurance group and its affiliated companies, with respect to which
a city agreed to transfer its ownership of the land for the project in a Redevelopment
Agreement executed on September 18, 1985, once certain conditions are met.
‘(G) A commercial bank formed under the laws of the State of New York which entered
into an agreement on September 5, 1985, to construct its headquarters at 60 Wall Street,
New York, New York, with respect to such headquarters.
‘(H) Any property which is part of a commercial and residential project, the first
phase of which is currently under construction, to be developed on land which is the
subject of an ordinance passed on July 20, 1981, by the city council of the city in
which such land is located, designating such land and the improvements to be placed
thereon as a residential-business planned development, which development is being
financed in part by the proceeds of industrial development bonds in the amount of
$62,600,000 issued on December 4, 1985.
‘(I) A 600,000 square foot mixed use building known as Flushing Center with respect
to which a letter of intent was executed on March 26, 1986.In the case of the building
described in subparagraph (I), section 203(b)(2)(A) shall be applied by substituting
‘January 1, 1993’ for the applicable date which would otherwise apply.
‘(28) The amendments made by section 201 shall not apply to an $80,000,000 capital
project steel seamless tubular casings minimill and melting facility located in Youngstown,
Ohio, which was purchased by the taxpayer in April 1985, and -
‘(A) the purchase and renovation of which was approved by a committee of the Board
of Directors on February 22, 1985, and
‘(B) as of December 31, 1985, more than $20,000,000 was incurred or committed with
respect to the renovation.
‘(29) The amendments made by section 201 shall not apply to any project for residential
rental property if -
‘(A) an inducement resolution with respect to such project was adopted by the State
housing development authority on January 25, 1985, and
‘(B) such project was the subject of a law suit filed on October 25, 1985.
‘(30) The amendments made by section 201 shall not apply to a 30 megawatt electric
generating facility fueled by geothermal and wood waste, the approximate cost of which
is $55,000,000, and with respect to which a 30-year power sales contract was executed
on March 22, 1985.
‘(31) The amendments made by section 201 shall not apply to railroad maintenance-of-way
equipment, with respect to which a Boston bank entered into a firm binding contract
with a major northeastern railroad before March 2, 1986, to finance
$10,500,000 of such equipment, if all of the equipment was placed in service before
August 1, 1986.
‘(32) The amendment made by section 201 shall not apply to -
‘(A) a facility constructed on approximately seven acres of land located on Ogle's
Poso Creek Oil field, the primary fuel of which will be bituminous coal from Utah
or Wyoming, with respect to which an application for an authority to construct was
filed on December 26, 1985, an authority to construct was issued on July 2, 1986,
and a prevention of significant deterioration permit application was submitted in
May 1985,
‘(B) a facility constructed on approximately seven acres of land located on Teorco's
Jasmin oil field, the primary fuel of which will be bituminous coal from Utah or Wyoming,
with respect to which an authority to construct was filed on December 26, 1985, an
authority to construct was issued on July 2, 1986, and a prevention of significant
deterioration permit application was submitted in July 1985,
‘(C) the Mountain View Apartments, in Hadley, Massachusetts,
‘(D) a facility expected to have a capacity of not less than 65 megawatts of electricity,
the steam from which is to be sold to a pulp and paper mill, with respect to which
application was made to the Federal Regulatory Commission for certification as a qualified
facility on November 1, 1985, and received such certification on January 24, 1986,
‘(E) $5,000,000 of equipment ordered in 1986, in connection with a 60,000 square foot
plant in Masontown, Pennsylvania, that was completed in 1983,
‘(F) a magnetic resonance imaging machine, with respect to which a binding contract
to purchase was entered into in April 1986, in connection with the construction of
a magnetic resonance imaging clinic with respect to which a Determination of Need
certification was obtained from a State Department of Public Health on October 22,
1985, if such property is placed in service before December 31, 1986,
‘(G) a company located in Salina, Kansas, which has been engaged in the construction
of highways and city streets since 1946, but only to the extent of $1,410,000 of investment
in new section 38 property,
‘(H) a $300,000 project undertaken by a small metal finishing company located in Minneapolis,
Minnesota, the first parts of which were received and paid for in January 1986, with
respect to which the company received Board approval to purchase the largest piece
of machinery it has ever ordered in 1985,
‘(I) A $1,200,000 finishing machine that was purchased on April 2, 1986 and placed
into service in September 1986 by a company located in Davenport, Iowa,
‘(J) A 25 megawatt small power production facility, with respect to which Qualifying
Facility status numbered QF86-593-000 was granted on March 5, 1986,
‘(K) A 250 megawatt coal-fired electric plant in northeastern Nevada estimated to
cost $600,000,000 and known as the Thousand Springs project, on which the Sierra Pacific
Power Company, a subsidiary of Sierra Pacific Resources, began in 1980 work to design,
finance, construct, and operate (and section 203(b)(2) shall be applied with respect
to such plant by substituting
‘January 1, 1995’ for ‘January 1, 1991’),
‘(L) 128 units of rental housing in connection with the Point Gloria Limited Partnership,
‘(M) property which is part of the Kenosha Downtown Redevelopment Project and which
is financed with the proceeds of bonds issued pursuant to section 1317(6)(W) (set
out as a note under section 141 of this title),
‘(N) Lakeland Park Phase II, in Baton Rouge, Louisiana,
‘(O) the Santa Rosa Hotel, in Pensacola, Florida,
‘(P) the Sheraton Baton Rouge, in Baton Rouge, Louisiana,
‘(Q) $300,000 of equipment placed in service in 1986, in connection with the renovation
of the Best Western Townhouse Convention Center in Cedar Rapids, Iowa,
‘(R) the segment of a nationwide fiber optics telecommunications network placed in
service by SouthernNet, the total estimated cost of which is $37,000,000,
‘(S) two cogeneration facilities, to be placed in service by the Reading Anthracite
Coal Company (or any subsidiary thereof), costing approximately $110,000,000 each,
with respect to which filings were made with the Federal Energy Regulatory Commission
by December 31, 1985, and which are located in Pennsylvania,
‘(T) a portion of a fiber optics network placed in service by LDX NET after December
31, 1988, but only to the extent the cost of such portion does not exceed $25,000,000,
‘(U) 3 newly constructed fishing vessels, and one vessel that is overhauled, constructed
by Mid Coast Marine, but only to the extent of $6,700,000 of investment,
‘(V) $350,000 of equipment acquired in connection with the reopening of a plant in
Bristol, Rhode Island, which plant was purchased by Buttonwoods, Ltd., Associates
on February 7, 1986,
‘(W) $4,046,000 of equipment placed in service by Brendle's Incorporated, acquired
in connection with a Distribution Center,
‘(X) a multi-family mixed-use housing project located in a home rule city, the zoning
for which was changed to residential business planned development on November 26,
1985, and with respect to which both the home rule city on December 4, 1985, and the
State housing finance agency on December 20, 1985, adopted inducement resolutions,
‘(Y) the Myrtle Beach Convention Center, in South Carolina, to the extent of $25,000,000
of investment, and
‘(Z) railroad cars placed in service by the Pullman Leasing Company, pursuant to an
April 3, 1986 purchase order, costing approximately $10,000,000.
‘(33) The amendments made by section 201 (amending sections 46, 167, 168, 178, 179,
280F, 291, 312, 465, 467, 514, 751, 1245, 4162, 6111, and 7701 of this title)
shall not apply to -
‘(A) $400,000 of equipment placed in service by Super Key Market, if such equipment
is placed in service before January 1, 1987,
‘(B) the Trolley Square project, the total project cost of which is $24,500,000, and
the amount of depreciable real property of which is $14,700,000.
‘(C)(i) a waste-to-energy project in Derry, New Hampshire, costing approximately $60,000,000,
and
‘(ii) a waste-to-energy project in Manchester, New Hampshire, costing approximately
$60,000,000,
‘(D) the City of Los Angeles Co-composting project, the estimated cost of which is
$62,000,000, with respect to which, on July 17, 1985, the California Pollution Control
Financing Authority issued an initial resolution in the maximum amount of $75,000,000
to finance this project,
‘(E) the St. Charles, Missouri Mixed-Use Center,
‘(F) Oxford Place in Tulsa, Oklahoma,
‘(G) an amount of investment generating $20,000,000 of investment tax credits attributable
to property used on the Illinois Diversatech Campus,
‘(H) $25,000,000 of equipment used in the Melrose Park Engine Plant that is sold and
leased back by Navistar,
‘(I) 80,000 vending machines, for a cost approximating $3,400,000 placed into service
by Folz Vending Co.,
‘(J) A 25.85 megawatt alternative energy facility located in Deblois, Maine, with
respect to which certification by the Federal Energy Regulatory Commission was made
on April 3, 1986,
‘(K) Burbank Manors, in Illinois, and
‘(L) a cogeneration facility to be built at a paper company in Turners Falls, Massachusetts,
with respect to which a letter of intent was executed on behalf of the paper company
on September 26, 1985.
‘(40) Certain trucks, etc. -
The amendments made by section 201 shall not apply to trucks, tractor units, and trailers
which a privately held truck leasing company headquartered in Des Moines, Iowa, contracted
to purchase in September 1985 but only to the extent the aggregate reduction in Federal
tax liability by reason of the application of this paragraph does not exceed $8,500,000.
‘(34) The amendments made by section 201 shall not apply to an approximately 240,000
square foot beverage container manufacturing plant located in Batesville, Mississippi,
or plant equipment used exclusively on the plant premises if -
‘(A) a 2-year supply contract was signed by the taxpayer and a customer on November
1, 1985,
‘(B) such contract further obligated the customer to purchase beverage containers
for an additional 5-year period if physical signs of construction of the plant are
present before September 1986,
‘(C) ground clearing for such plant began before August 1986, and
‘(D) construction is completed, the equipment is installed, and operations are commenced
before July 1, 1987.
‘(35) The amendments made by section 201 shall not apply to any property which is
part of the multifamily housing at the Columbia Point Project in Boston, Massachusetts.
A project shall be treated as not described in the preceding sentence and as not described
in section 252(f)(1)(D) (set out as a note under section 42 of this title) unless
such project includes at substantially all times throughout the compliance period
(within the meaning of section 42(i)(1) of the Internal Revenue Code of 1986), a facility which provides health services to the residents of such project
for fees commensurate with the ability of such individuals to pay for such services.
‘(36) The amendments made by section 201 shall not apply to any ethanol facility located
in Blair, Nebraska, if -
‘(A) in July of 1984 an initial binding construction contract was entered into for
such facility,
‘(B) in June of 1986, certain Department of Energy recommended contract changes required
a change of contractor, and
‘(C) in September of 1986, a new contract to construct such facility, consistent with
such recommended changes, was entered into.
‘(37) The amendments made by section 201 shall not apply to any property which is
part of a sewage treatment facility if, prior to January 1, 1986, the City of Conyers,
Georgia, selected a privatizer to construct such facility, received a guaranteed maximum
price bid for the construction of such facility, signed a letter of intent and began
substantial negotiations of a service agreement with respect to such facility.
‘(38) The amendments made by section 201 shall not apply to -
‘(A) a $28,000,000 wood resource complex for which construction was authorized by
the Board of Directors on August 9, 1985,
‘(B) an electrical cogeneration plant in Bethel, Maine which is to generate 2 megawatts
of electricity from the burning of wood residues, with respect to which a contract
was entered into on July 10, 1984, and with respect to which $200,000 of the expected
$2,000,000 cost had been committed before June 15, 1986,
‘(C) a mixed income housing project in Portland, Maine which is known as the Back
Bay Tower and which is expected to cost $17,300,000,
‘(D) the Eastman Place project and office building in Rochester, New York, which is
projected to cost $20,000,000, with respect to which an inducement resolution was
adopted in December 1986, and for which a binding contract of $500,000 was entered
into on April 30, 1986,
‘(E) the Marquis Two project in Atlanta, Georgia which has a total budget of $72,000,000
and the construction phase of which began under a contract entered into on March 26,
1986,
‘(F) a 166-unit continuing care retirement center in New Orleans, Louisiana, the construction
contract for which was signed on February 12, 1986, and is for a maximum amount not
to exceed $8,500,000,
‘(G) the expansion of the capacity of an oil refining facility in Rosemont, Minnesota
from 137,000 to 207,000 barrels per day which is expected to be completed by December
31, 1990, and
‘(H) a project in Ransom, Pennsylvania which will burn coal waste (known as ‘culm’)
with an approximate cost of $64,000,000 and for which a certification from the Federal
Energy Regulatory Commission was received on March 11, 1986.
‘(39) The amendments made by section 201 shall not apply to any facility for the manufacture
of an improved particle board if a binding contract to purchase such equipment was
executed March 3, 1986, such equipment will be placed in service by January 1, 1988,
and such facility is located in or near Moncure, North Carolina.
‘(b) Special Rule for Certain Property. -
The provisions of section 168(f)(8) of the Internal Revenue Code of 1954 (as amended by section 209 of the Tax Equity and Fiscal Responsibility Act
of 1982) shall continue to apply to any transaction permitted by reason of section
12(c)(2) of the Tax Reform Act of 1984 or section 209(d)(1)(B)
of the Tax Equity and Fiscal Responsibility Act of 1982 (as amended by the Tax Reform
Act of 1984) (section 12(c)(2) of Pub. L. 98-369 and section 209(d)(1)(B)
of Pub. L. 97-248, respectively, set out as notes below).
‘(c) Applicable Date in Certain Cases. -
‘(1) Section 203(b)(2) shall be applied by substituting ‘January 1, 1992’ for ‘January
1, 1991’
in the following cases.
‘(A) in the case of a 2-unit nuclear powered electric generating plant (and equipment
and incidental appurtenances), located in Pennsylvania and constructed pursuant to
contracts entered into by the owner operator of the facility before December 31, 1975,
including contracts with the engineer/constructor and the nuclear steam system supplier,
such contracts shall be treated as contracts described in section 203(b)(1)(A),
‘(B) a cogeneration facility with respect to which an application with the Federal
Energy Regulatory Commission was filed on August 2, 1985, and approved October 15,
1985.
‘(C) in the case of a 1,300 megawatt coal-fired steam powered electric generating
plant (and related equipment and incidental appurtenances), which the three owners
determined in 1984 to convert from nuclear power to coal power and for which more
than $600,000,000 had been incurred or committed for construction before September
25, 1985, except that no investment tax credit will be allowable under section 49(d)(3)
added by section 211(a) of this Act (section 49(d) of this title does not contain
a par. (3)) for any qualified progress expenditures made after December 31, 1990.
‘(2) Section 203(b)(2) shall be applied by substituting ‘April 1, 1992’ for the applicable
date that would otherwise apply, in the case of the second unit of a twin steam electric
generating facility and related equipment which was granted a certificate of public
convenience and necessity by a public service commission prior to January 1, 1982,
if the first unit of the facility was placed in service prior to January 1, 1985,
and before September 26, 1985, more than $100,000,000 had been expended toward the
construction of the second unit.
‘(3) Section 203(b)(2) shall be applied by substituting ‘January 1, 1990,’ (or, in
the case of a project described in subparagraph (B), by substituting ‘April 1, 1992’)
for the applicable date that would otherwise apply in the case of -
‘(A) new commercial passenger aircraft used by a domestic airline, if a binding contract
with respect to such aircraft was entered into on or before April 1, 1986, and such
aircraft has a present class life of 12 years,
‘(B) a pumped storage hydroelectric project with respect to which an application was
made to the Federal Energy Regulatory Commission for a license on February 4, 1974,
and license was issued August 1, 1977, the project number of which is 2740, and
‘(C) a newsprint mill in Pend Oreille county, Washington, costing about $290,000,000.
In the case of an aircraft described in subparagraph (A), section 203(b)(1)(A)
shall be applied by substituting ‘April 1, 1986’ for ‘March 1, 1986’
and section 49(e)(1)(B) of the Internal Revenue Code of 1986 shall not apply.
‘(4) The amendments made by section 201 (amending sections 46, 167, 168, 178, 179,
280F, 291, 312, 465, 467, 514, 751, 1245, 4162, 6111, and 7701 of this title)
shall not apply to a limited amount of the following property or a limited amount
of property set forth in a submission before September 16, 1986, by the following
taxpayers:
‘(A) Arena project, Michigan, but only with respect to $78,000,000 of investments.
‘(B) Campbell Soup Company, Pennsylvania, California, North Carolina, Ohio, Maryland,
Florida, Nebraska, Michigan, South Carolina, Texas, New Jersey, and Delaware, but
only with respect to $9,329,000 of regular investment tax credits.
‘(C) The Southeast Overtown/Park West development, Florida, but only with respect
to $200,000,000 of investments.
‘(D) Equipment placed in service and operated by Leggett and Platt before July 1,
1987, but only with respect to $2,000,000 of regular investment tax credits, and subsections
(c) and (d) of section 49 of the Internal Revenue Code of 1986 shall not apply to such equipment.
‘(E) East Bank Housing Project.
‘(F) $1,561,215 of investments by Standard Telephone Company.
‘(G) Five aircraft placed in service before January 1, 1987, by Presidential Air.
‘(H) A rehabilitation project by Ann Arbor Railroad, but only with respect to $2,900,000
of investments.
‘(I) Property that is part of a cogeneration project located in Ada, Michigan, but
only with respect to $30,000,000 of investments.
‘(J) Anchor Store Project, Michigan, but only with respect to $21,000,000 of investments.
‘(K) A waste-fired electrical generating facility of Biogen Power, but only with respect
to $34,000,000 of investments.
‘(L) $14,000,000 of television transmitting towers placed in service by Media General,
Inc., which were subject to binding contracts as of January 21, 1986, and will be
placed in service before January 1, 1988,
‘(M) Interests of Samuel A. Hardage (whether owned individually or in partnership
form).
‘(N) Two aircraft of Mesa Airlines with an aggregate cost of $5,723,484.
‘(O) Yarn-spinning equipment used at Spray Cotton Mills, but only with respect to
$3,000,000 of investments.
‘(P) 328 units of low-income housing at Angelus Plaza, but only with respect to $20,500,000
of investments.
‘(Q) One aircraft of Continental Aviation Services with a cost of approximately $15,000,000
that was purchased pursuant to a contract entered into during March of 1983 and that
is placed in service by December 31, 1988.
‘(d) Railroad Grading and Tunnel Bores. -
‘(1) In general. - In the case of expenditures for railroad grading and tunnel bores
which were incurred by a common carrier by railroad to replace property destroyed
in a disaster occurring on or about April 17, 1983, near Thistle, Utah, such expenditures,
to the extent not in excess of $15,000,000, shall be treated as recovery property
which is 5-year property under section 168 of the Internal Revenue Code of 1954 (as in effect before the amendments made by this Act) and which is placed
in service at the time such expenditures were incurred.
‘(2) Business interruption proceeds.
- Business interruption proceeds received for loss of use, revenues, or profits in
connection with the disaster described in paragraph
(1) and devoted by the taxpayer described in paragraph (1) to the construction of
replacement track and related grading and tunnel bore expenditures shall be treated
as constituting an amount received from the involuntary conversion of property under
section 1033(a)(2) of such Code.
‘(3) Effective date. - This subsection shall apply to taxable years ending after April
17, 1983.
‘(e) Treatment of Certain Disaster Losses. -
‘(1) In general. - In the case of a disaster described in paragraph (2), at the election
of the taxpayer, the amendments made by section 201 of this Act (amending sections
46, 167, 168, 178, 179, 280F, 291, 312, 465, 467, 514, 751, 1245, 4162, 6111, and
7701 of this title) -
‘(A) shall not apply to any property placed in service during 1987 or 1988, or
‘(B) shall apply to any property placed in service during 1985 or 1986, which is property
to replace property lost, damaged, or destroyed in such disaster.
‘(2) Disaster to which section applies. - This section shall apply to a flood which
occurred on November 3 through 7, 1985, and which was declared a natural disaster
area by the President of the United States.’
Section 1002(c)(3) of Pub. L. 100-647 provided that: ‘Notwithstanding section 203 of the Reform Act (section 203 of Pub. L. 99-514, set out above), the amendments made by section 201 of the Reform Act
(section 201 of Pub. L. 99-514, amending sections 46, 167, 168, 178, 179, 280F, 291, 312, 465, 467, 514, 751, 1245,
4162, 6111, and 7701 of this title) shall apply to any real property which was acquired
before January 1, 1987, and was converted on or after such date from personal use
to a use for which depreciation is allowable.'
Amendment by section 201(a) of Pub. L. 99-514 not applicable to any property placed in service before Jan. 1, 1994, if such property
placed in service as part of specified rehabilitations, and not applicable to certain
additional rehabilitations, see section 251(d)(2), (3) of Pub. L. 99-514, set out as a note under section 46 of this title.
Amendment by sections 1802(a)(1)-(2)(D), (G), (3),
(4)(A), (B), (7), (b)(1), 1809(a)(1)-(2)(B), (4)(A),(B) of Pub. L. 99-514 effective, except as otherwise provided, as if included in the provisions of the
Tax Reform Act of 1984, Pub. L. 98-369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99-514, set out as a note under section 48 of this title.
Section 1802(a)(2)(E)(ii) of Pub. L. 99-514 provided that:
‘(I) Except as otherwise provided in this clause, the amendment made by clause (i)
(amending this section) shall apply to property placed in service after September
27, 1985; except that such amendment shall not apply to any property acquired pursuant
to a binding written contract in effect on such date (and at all times thereafter).
‘(II) If an election under this subclause is made with respect to any property, the
amendment made by clause (i) shall apply to such property whether or not placed in
service on or before September 27, 1985.’
Section 1809(a)(2)(C)(i) of Pub. L. 99-514 provided in part that amendment by section 1809(a)(2)(C)(i)
of Pub. L. 99-514 is effective on and after Oct. 22, 1986.
Section 1809(b)(3) of Pub. L. 99-514 provided that: ‘The amendments made by this subsection
(amending this section) shall apply to property placed in service by the transferee
after December 31, 1985, in taxable years ending after such date.’
EFFECTIVE DATE OF 1985 AMENDMENT
Section 105(b) of Pub. L. 99-121, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
‘(1) In general. - Except as otherwise provided in this subsection, the amendments
made by section 103 (amending sections 47, 48, 57, 168, 312, and 1245 of this title)
shall apply with respect to property placed in service by the taxpayer after May 8,
1985.
‘(2) Exception. - The amendments made by section 103 shall not apply to property placed
in service by the taxpayer before January 1, 1987, if -
‘(A) the taxpayer or a qualified person entered into a binding contract to purchase
or construct such property before May 9, 1985, or
‘(B) construction of such property was commenced by or for the taxpayer or a qualified
person before May 9, 1985.
For purposes of this paragraph, the term ‘qualified person’ means any person whose
rights in such a contract or such property are transferred to the taxpayer, but only
if such property is not placed in service before such rights are transferred to the
taxpayer.
‘(3) Special rule for components. - For purposes of applying section 168(f)(1)(B)
of the Internal Revenue Code of 1986 (formerly I.R.C. 1954) (as amended by section 103)
to components placed in service after December 31, 1986, property to which paragraph
(2) of this subsection applies shall be treated as placed in service by the taxpayer
before May 9, 1985.
‘(4) Technical correction. - The amendment made by paragraph (6) of section 103(b)
(amending section 47 of this title)
shall apply as if included in the amendments made by section 111 of the Tax Reform
Act of 1984 (Pub. L. 98-369, see Effective Date of 1984 Amendment note below).
‘(5) Special rule for leasing of qualified rehabilitated buildings. - The amendment
made by paragraph (5) of section 103(b)
to section 48(g)(2)(B)(v) of the Internal Revenue Code of 1986 shall not apply to leases entered into before May 22, 1985, but only if the
lessee signed the lease before May 17, 1985.'
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by section 12 of Pub. L. 98-369 applicable to taxable years ending after Dec. 31, 1983, see section 18(a) of Pub. L. 98-369, set out as a note under section 48 of this title.
Section 31(g) of Pub. L. 98-369, as amended by Pub. L. 99-514, Sec. 2, title XVIII, Sec. 1802(a)(2)(F), (10)(A)-(D)(i),
(E)-(G), Oct. 22, 1986, 100 Stat. 2095, 2788, 2790, 2791; Pub. L. 100-647, title I, Sec. 1018(b)(1), Nov. 10, 1988, 102 Stat. 3577, provided that:
‘(1) In general. - Except as otherwise provided in this subsection, the amendments
made by this section (amending sections 46, 48, 168, and 7701 of this title) shall
apply -
‘(A) to property placed in service by the taxpayer after May 23, 1983, in taxable
years ending after such date, and
‘(B) to property placed in service by the taxpayer on or before May 23, 1983, if the
lease to the tax-exempt entity is entered into after May 23, 1983.
‘(2) Leases entered into on or before may 23, 1983.
- The amendments made by this section shall not apply with respect to any property
leased to a tax-exempt entity if the property is leased pursuant to -
‘(A) a lease entered into on or before May 23, 1983 (or a sublease under such a lease),
or
‘(B) any renewal or extension of a lease entered into on or before May 23, 1983, if
such renewal or extension is pursuant to an option exercisable by the tax-exempt entity
which was held by the tax-exempt entity on May 23, 1983.
‘(3) Binding contracts, etc. -
‘(A) The amendments made by this section shall not apply with respect to any property
leased to a tax-exempt entity if such lease is pursuant to 1 or more written binding
contracts which, on May 23, 1983, and at all times thereafter, required -
‘(i) the taxpayer (or his predecessor in interest under the contract) to acquire,
construct, reconstruct, or rehabilitate such property, and
‘(ii) the tax-exempt entity
(or a tax-exempt predecessor thereof) to be the lessee of such property.
‘(B) Paragraph (9) of section 168(j) of the Internal Revenue Code of 1986 (formerly I.R.C. 1954)
(as added by this section) shall not apply with respect to any property owned by a
partnership if -
‘(i) such property was acquired by such partnership on or before October 21, 1983,
or
‘(ii) such partnership entered into a written binding contract which, on October 21,
1983, and at all times thereafter, required the partnership to acquire or construct
such property.
‘(C) The amendments made by this section shall not apply with respect to any property
leased to a tax-exempt entity (other than any foreign person or entity) -
‘(i) if -
‘(I) on or before May 23, 1983, the taxpayer (or his predecessor in interest under
the contract) or the tax-exempt entity entered into a written binding contract to
acquire, construct, reconstruct, or rehabilitate such property and such property had
not previously been used by the tax-exempt entity, or
‘(II) the taxpayer or the tax-exempt entity acquired the property after June 30, 1982,
and on or before May 23, 1983, or completed the construction, reconstruction, or rehabilitation
of the property after December 31, 1982, and on or before May 23, 1983, and
‘(ii) if such lease is pursuant to a written binding contract entered into before
January 1, 1985, which requires the tax-exempt entity to be the lessee of such property.
‘(4) Official governmental action on or before november 1, 1983. -
‘(A) In general. - The amendments made by this section shall not apply with respect
to any property leased to a tax-exempt entity (other than the United States, any agency
or instrumentality thereof, or any foreign person or entity) if -
‘(i) on or before November 1, 1983, there was significant official governmental action
with respect to the project or its design, and
‘(ii) the lease to the tax-exempt entity is pursuant to a written binding contract
entered into before January 1, 1985, which requires the tax-exempt entity to be the
lessee of the property.
‘(B) Significant official governmental action. - For purposes of subparagraph (A),
the term ‘significant official governmental action’ does not include granting of permits,
zoning changes, environmental impact statements, or similar governmental actions.
‘(C) Special rule for credit unions. - In the case of any property leased to a credit
union pursuant to a written binding contract with an expiration date of December 31,
1984, which was entered into by such organization on August 23, 1984 -
‘(i) such credit union shall not be treated as an agency or instrumentality of the
United States;
and
‘(ii) clause (ii) of subparagraph
(A) shall be applied by substituting ‘January 1, 1987’ for ‘January 1, 1985’.
‘(D) Special rule for greenville auditorium board. - For purposes of this paragraph,
significant official governmental action taken by the Greenville County Auditorium
Board of Greenville, South Carolina, before May 23, 1983, shall be treated as significant
official governmental action with respect to the coliseum facility subject to a binding
contract to lease which was in effect on January 1, 1985.
‘(E) Treatment of certain historic structures. - If -
‘(i) on June 16, 1982, the legislative body of the local governmental unit adopted
a bond ordinance to provide funds to renovate elevators in a deteriorating building
owned by the local governmental unit and listed in the National Register, and
‘(ii) the chief executive officer of the local governmental unit, in connection with
the renovation of such building, made an application on June 1, 1983, to a State agency
for a Federal historic preservation grant and made an application on June 17, 1983,
to the Economic Development Administration of the United States Department of Commerce
for a grant, the requirements of clauses (i) and (ii) of subparagraph (A) shall be
treated as met.
‘(5) Mass commuting vehicles. - The amendments made by this section shall not apply
to any qualified mass commuting vehicle (as defined in section 103(b)(9)
of the Internal Revenue Codeof 1986 (formerly I.R.C. 1954)) which is financed in whole or in part by obligations the interest on which is excludable
from gross income under section 103(a) of such Code if -
‘(A) such vehicle is placed in service before January 1, 1988, or
‘(B) such vehicle is placed in service on or after such date -
‘(i) pursuant to a binding contract or commitment entered into before April 1, 1983,
and
‘(ii) solely because of conditions which, as determined by the Secretary of the Treasury
or his delegate, are not within the control of the lessor or lessee.
‘(6) Certain turbines and boilers. - The amendments made by this section shall not
apply to any property described in section 208(d)(3)(E) of the Tax Equity and Fiscal
Responsibility Act of 1982 (section 208(d)(3)(E) of Pub. L. 97-248, set out as an Effective Date of 1982 Amendments note below).
‘(7) Certain facilities for which ruling requests filed on or before may 23, 1983.
- The amendments made by this section shall not apply with respect to any facilities
described in clause
(ii) of section 168(f)(12)(C)
of the Internal Revenue Code of 1986 (relating to certain sewage or solid waste disposal facilities), as in effect
on the day before the date of the enactment of this Act (July 18, 1984), if a ruling
request with respect to the lease of such facility to the tax-exempt entity was filed
with the Internal Revenue Service on or before May 23, 1983.
‘(8) Recovery period for certain qualified sewage facilities. -
‘(A) In general. - In the case of any property (other than 15-year real property)
which is part of a qualified sewage facility, the recovery period used for purposes
of paragraph (1) of section 168(j) of the Internal Revenue Code of 1986 (as added by this section)
shall be 12 years. For purposes of the preceding sentence, the term
‘15-year real property’ includes 18-year real property.
‘(B) Qualified sewage facility.
- For purposes of subparagraph (A), the term ‘qualified sewage facility’
means any facility which is part of the sewer system of a city, if
-
‘(i) on June 15, 1983, the City Council approved a resolution under which the city
authorized the procurement of equity investments for such facility, and
‘(ii) on July 12, 1983, the Industrial Development Board of the city approved a resolution
to issue a $100,000,000 industrial development bond issue to provide funds to purchase
such facility.
‘(9) Property used by the postal service. - In the case of property used by the United
States Postal Service, paragraphs
(1) and (2) shall be applied by substituting ‘October 31’ for ‘May 23’.
‘(10) Existing appropriations. - The amendments made by this section shall not apply
to personal property leased to or used by the United States if -
‘(A) an express appropriation has been made for rentals under such lease for the fiscal
year 1983 before May 23, 1983, and
‘(B) the United States or an agency or instrumentality thereof has not provided an
indemnification against the loss of all or a portion of the tax benefits claimed under
the lease or service contract.
‘(11) Special rule for certain partnerships. -
‘(A) Partnerships for which qualifying action existed before October 21, 1983. - Paragraph
(9)
of section 168(j) of the Internal Revenue Code of 1986 (as added by this section) shall not apply to any property acquired, directly
or indirectly, before January 1, 1985, by any partnership described in subparagraph
(B).
‘(B) Application filed before October 21, 1983. - A partnership is described in this
subparagraph if -
‘(i) before October 21, 1983, the partnership was organized, a request for exemption
with respect to such partnership was filed with the Department of Labor, and a private
placement memorandum stating the maximum number of units in the partnership that would
be offered had been circulated,
‘(ii) the interest in the property to be acquired, directly or indirectly (including
through acquiring an interest in another partnership) by such partnership was described
in such private placement memorandum, and
‘(iii) the marketing of partnership units in such partnership is completed not later
than two years after the later of the date of the enactment of this Act (July 18,
1984)
or the date of publication in the Federal Register of such exemption by the Department
of Labor and the aggregate number of units in such partnership sold does not exceed
the amount described in clause (i).
‘(C) Partnerships for which qualifying action existed before march 6, 1984. - Paragraph
(9) of section 168(j) of the Internal Revenue Code of 1986 (as added by this section) shall not apply to any property acquired directly
or indirectly, before January 1, 1986, by any partnership described in subparagraph
(D). For purposes of this subparagraph, property shall be deemed to have been acquired
prior to January 1, 1986, if the partnership had entered into a written binding contract
to acquire such property prior to January 1, 1986 and the closing of such contract
takes place within 6 months of the date of such contract
(24 months in the case of new construction).
‘(D) Partnership organized before march 6, 1984. - A partnership is described in this
subparagraph if
-
‘(i) before March 6, 1984, the partnership was organized and publicly announced the
maximum amount
(as shown in the registration statement, prospectus or partnership agreement, whichever
is greater) of interests which would be sold in the partnership, and
‘(ii) the marketing or partnership interests in such partnership was completed not
later than the 90th day after the date of the enactment of this Act (July 18, 1984)
and the aggregate amount of interest in such partnership sold does not exceed the
maximum amount described in clause (i).
‘(12) Special rule for amendment made by subsection
(c)(2). - The amendment made by subsection (c)(2) (amending section 48(g)(2)(B)(i)
of this title) to the extent it relates to subsection
(f)(12) of section 168 of the Internal Revenue Code of 1986 shall take effect as if it had been included in the amendments made by section
216(a) of the Tax Equity and Fiscal Responsibility Act of 1982 (section 216(a) of
Pub. L. 97-248, which amended this section).
‘(13) Special rule for service contracts not involving tax-exempt entities. - In the
case of a service contract or other arrangement described in section 7701(e)
of the Internal Revenue Codeof 1986 (as added by this section)
with respect to which no party is a tax-exempt entity, such section 7701(e) shall
not apply to -
‘(A) such contract or other arrangement if such contract or other arrangement was
entered into before November 5, 1983, or
‘(B) any renewal or other extension of such contract or other arrangement pursuant
to an option contained in such contract or other arrangement on November 5, 1983.
‘(14) Property leased to section 593 organizations.
- For purposes of the amendment made by subsection (f) (enacting section 46(e)(4)
of this title), paragraphs (1), (2), and (4) shall be applied by substituting -
‘(A) ‘November 5, 1983’ for
‘May 23, 1983’ and ‘November 1, 1983’, as the case may be, and
‘(B) ‘organization described in section 593 of the Internal Revenue Code of 1986' for ‘tax-exempt entity’.
‘(15) Special rules relating to foreign persons or entities. -
‘(A) In general. - In the case of tax-exempt use property which is used by a foreign
person or entity, the amendments made by this section shall not apply to any property
which -
‘(i) is placed in service by the taxpayer before January 1, 1984, and
‘(ii) is used by such foreign person or entity pursuant to a lease entered into before
January 1, 1984.
‘(B) Special rule for subleases.
- If tax-exempt use property is being used by a foreign person or entity pursuant
to a sublease under a lease described in subparagraph
(A)(ii), subparagraph (A) shall apply to such property only if such property was used
before January 1, 1984, by any foreign person or entity pursuant to such lease.
‘(C) Binding contracts, etc.
- The amendments made by this section shall not apply with respect to any property
(other than aircraft described in subparagraph (D))
leased to a foreign person or entity -
‘(i) if -
‘(I) on or before May 23, 1983, the taxpayer (or a predecessor in interest under the
contract) or the foreign person or entity entered into a written binding contract
to acquire, construct, or rehabilitate such property and such property had not previously
been used by the foreign person or entity, or
‘(II) the taxpayer or the foreign person or entity acquired the property or completed
the construction, reconstruction, or rehabilitation of the property after December
31, 1982 and on or before May 23, 1983, and
‘(ii) if such lease is pursuant to a written binding contract entered into before
January 1, 1984, which requires the foreign person or entity to be the lessee of such
property.
‘(D) Certain aircraft. - The amendments made by this section shall not apply with
respect to any wide-body, four-engine, commercial aircraft used by a foreign person
or entity if -
‘(i) on or before November 1, 1983, the foreign person or entity entered into a written
binding contract to acquire such aircraft, and
‘(ii) such aircraft is originally placed in service by such foreign person or entity
(or its successor in interest under the contract) after May 23, 1983, and before January
1, 1986.
‘(E) Use after 1983. - Qualified container equipment placed in service before January
1, 1984, which is used before such date by a foreign person shall not, for purposes
of section 47 of the Internal Revenue Code of 1986, be treated as ceasing to be section 38 property by reason of the use of such
equipment before January 1, 1985, by a foreign person or entity. For purposes of this
subparagraph, the term ‘qualified container equipment’ means any container, container
chassis, or container trailer of a United States person with a present class life
of not more than 6 years.
‘(16) Organizations electing exemption from rules relating to previously tax-exempt
organizations must elect taxation of exempt arbitrage profits. -
‘(A) In general. - An organization may make the election under section 168(j)(4)(E)(ii) of the Internal Revenue Code of 1986 (relating to election not to have rules relating to previously tax-exempt
organizations apply) only if such organization elects the tax treatment of exempt
arbitrage profits described in subparagraph (B).
‘(B) Taxation of exempt arbitrage profits. -
‘(i) In general. - In the case of an organization which elects the application of
this subparagraph, there is hereby imposed a tax on the exempt arbitrage profits of
such organization.
‘(ii) Rate of tax, etc. - The tax imposed by clause
(i) -
‘(I) shall be the amount of tax which would be imposed by section 11 of such Code
if the exempt arbitrage profits were taxable income (and there were no other taxable
income), and
‘(II) shall be imposed for the first taxable year of the tax-exempt use period (as
defined in section 168(j)(4)(E)(ii) of such Code).
‘(C) Exempt arbitrage profits. -
‘(i) In general. - For purposes of this paragraph, the term exempt arbitrage profits
means the aggregate amount described in clauses (i) and (ii) of subparagraph (D) of
section 103(c)(6) of such Code for all taxable years for which the organization was
exempt from tax under section 501(a) of such Code with respect to obligations -
‘(I) associated with property described in section 168(j)(4)(E)(i), and
‘(II) issued before January 1, 1985.
‘(ii) Application of section 103(b)(6). - For purposes of this paragraph, section
103(b)(6) of such Code shall apply to obligations issued before January 1, 1985, but
the amount described in clauses (i) and (ii) of subparagraph (D)
thereof shall be determined without regard to clauses (i)(II) and
(ii) of subparagraph (F) thereof.
‘(D) Other laws applicable. -
‘(i) In general. - Except as provided in clause (ii), all provisions of law, including
penalties, applicable with respect to the tax imposed by section 11 of such Code shall
apply with respect to the tax imposed by this paragraph.
‘(ii) No credits against tax, etc. - The tax imposed by this paragraph shall not be
treated as imposed by section 11 of such Code for purposes of -
‘(I) part VI of subchapter A of chapter 1 of such Code (relating to minimum tax for
tax preferences), and
‘(II) determining the amount of any credit allowable under subpart A of part IV of
such subchapter.
‘(E) Election. - Any election under subparagraph
(A) -
‘(i) shall be made at such time and in such manner as the Secretary may prescribe,
‘(ii) shall apply to any successor organization which is engaged in substantially
similar activities, and
‘(iii) once made, shall be irrevocable.
‘(17) Certain transitional leased property. - The amendments made by this section
shall not apply to property described in section 168(c)(2)(D) of the Internal Revenue Code of 1986, as in effect on the day before the date of the enactment of this Act (July
18, 1984), and which is described in any of the following subparagraphs:
‘(A) Property is described in this subparagraph if such property is leased to a university,
and
-
‘(i) on June 16, 1983, the Board of Administrators of the university adopted a resolution
approving the rehabilitation of the property in connection with an overall campus
development program; and
‘(ii) the property houses a basketball arena and university offices.
‘(B) Property is described in this subparagraph if such property is leased to a charitable
organization, and -
‘(i) on August 21, 1981, the charitable organization acquired the property, with a
view towards rehabilitating the property; and
‘(ii) on June 12, 1982, an arson fire caused substantial damage to the property, delaying
the planned rehabilitation.
‘(C) Property is described in this subparagraph if such property is leased to a corporation
that is described in section 501(c)(3)
of the Internal Revenue Code of 1986 (relating to organizations exempt from tax) pursuant to a contract -
‘(i) which was entered into on August 3, 1983; and
‘(ii) under which the corporation first occupied the property on December 22, 1983.
‘(D) Property is described in this subparagraph if such property is leased to an educational
institution for use as an Arts and Humanities Center and with respect to which
-
‘(i) in November 1982, an architect was engaged to design a planned renovation;
‘(ii) in January 1983, the architectural plans were completed;
‘(iii) in December 1983, a demolition contract was entered into; and
‘(iv) in March 1984, a renovation contract was entered into.
‘(E) Property is described in this subparagraph if such property is used by a college
as a dormitory, and -
‘(i) in October 1981, the college purchased the property with a view towards renovating
the property;
‘(ii) renovation plans were delayed because of a zoning dispute; and
‘(iii) in May 1983, the court of highest jurisdiction in the State in which the college
is located resolved the zoning dispute in favor of the college.
‘(F) Property is described in this subparagraph if such property is a fraternity house
related to a university with respect to which -
‘(i) in August 1982, the university retained attorneys to advise the university regarding
the rehabilitation of the property;
‘(ii) on January 21, 1983, the governing body of the university established a committee
to develop rehabilitation plans;
‘(iii) on January 10, 1984, the governor of the state in which the university is located
approved historic district designation for an area that includes the property;
and
‘(iv) on February 2, 1984, historic preservation certification applications for the
property were filed with a historic landmarks commission.
‘(G) Property is described in this subparagraph if such property is leased to a retirement
community with respect to which -
‘(i) on January 5, 1977, a certificate of incorporation was filed with the appropriate
authority of the state in which the retirement community is located; and
‘(ii) on November 22, 1983, the Board of Trustees adopted a resolution evidencing
the intention to begin immediate construction of the property.
‘(H) Property is described in this subparagraph if such property is used by a university,
and -
‘(i) in July 1982, the Board of Trustees of the university adopted a master plan for
the financing of the property; and
‘(ii) as of August 1, 1983, at least $60,000 in private expenditures had been expended
in connection with the property. In the case of Clemson University, the preceding
sentence applies only to the Continuing Education Center and the component housing
project.
‘(I) Property is described in this subparagraph if such property is used by a university
as a fine arts center and the Board of Trustees of such university authorized the
sale-leaseback agreement with respect to such property on March 7, 1984.
‘(J) Property is described in this subparagraph if such property is used by a tax-exempt
entity as an international trade center, and
‘(i) prior to 1982, an environmental impact study for such property was completed;
‘(ii) on June 24, 1981, a developer made a written commitment to provide one-third
of the financing for the development of such property; and
‘(iii) on October 20, 1983, such developer was approved by the Board of Directors
of the tax-exempt entity.
‘(K) Property is described in this subparagraph if such property is used by university
of osteopathic medicine and health sciences, and on or before December 31, 1983, the
Board of Trustees of such university approved the construction of such property.
‘(L) Property is described in this subparagraph if such property is used by a tax-exempt
entity, and -
‘(i) such use is pursuant to a lease with a taxpayer which placed substantial improvements
in service;
‘(ii) on May 23, 1983, there existed architectural plans and specifications (within
the meaning of sec. 48(g)(1)(C)(ii) of the Internal Revenue Code of 1986); and
‘(iii) prior to May 23, 1983, at least 10 percent of the total cost of such improvements
was actually paid or incurred. Property is described in this subparagraph if such
property was leased to a tax-exempt entity pursuant to a lease recorded in the Register
of Deed of Essex County, New Jersey, on May 7, 1984, and a deed of such property was
recorded in the Register of Deed of Essex County, New Jersey, on May 7, 1984.
‘(M) Property is described in this subparagraph if such property is used as a convention
center and on June 2, 1983, the City Council of the city in which the center is located
provided for over $6 million for the project.
‘(18) Special rule for amendment made by subsection
(c)(1). -
‘(A) In general. - The amendment made by subsection (c)(1) (enacting section 48(g)(2)(B)(vi)
of this title) shall not apply to property -
‘(i) leased by the taxpayer on or before November 1, 1983, or
‘(ii) leased by the taxpayer after November 1, 1983, if on or before such date the
taxpayer entered into a written binding contract requiring the taxpayer to lease such
property.
‘(B) Limitation. - Subparagraph
(A) shall apply to the amendment made by subsection (c)(1) only to the extent such
amendment relates to property described in subclause
(II), (III), or (IV) of section 168(j)(3)(B)(ii) of the Internal Revenue Code of 1986 (as added by this section).
‘(19) Special rule for certain energy management contracts. -
‘(A) In general. - The amendments made by subsection (e) (amending section 7701 of
this title) shall not apply to property used pursuant to an energy management contract
that was entered into prior to May 1, 1984.
‘(B) Definition of energy management contract. - For purposes of subparagraph (A),
the term ‘energy management contract’ means a contract for the providing of energy
conservation or energy management services.
‘(20) Definitions. - For purposes of this subsection
-
‘(A) Tax-exempt entity. - The term ‘tax-exempt entity’ has the same meaning as when
used in section 168(j) of the Internal Revenue Code of 1986 (as added by this section), except that such term shall include any related
entity (within the meaning of such section).
‘(B) Treatment of improvements.
-
‘(i) In general. - For purposes of this subsection, an improvement to property shall
not be treated as a separate property unless such improvement is a substantial improvement
with respect to such property.
‘(ii) Substantial improvement.
- For purposes of clause (i), the term ‘substantial improvement’ has the meaning given
such term by section 168(f)(1)(C) of such Code determined
-
‘(I) by substituting ‘property’
for ‘building’ each place it appears therein,
‘(II) by substituting ‘20 percent’
for ‘25 percent’ in clause (ii) thereof, and
‘(III) without regard to clause (iii) thereof.
‘(C) Foreign person or entity.
- The term ‘foreign person or entity’ has the meaning given to such term by subparagraph
(C) of section 168(j)(4) of such Code (as added by this section). For purposes of
this subparagraph and subparagraph
(A), such subparagraph (C) shall be applied without regard to the last sentence thereof.
‘(D) Leases and subleases. -
The determination of whether there is a lease or sublease to a tax-exempt entity shall
take into account sections 168(j)(6)(A), 168(j)(8)(A), and 7701(e) of the Internal Revenue Code of 1986 (as added by this section).'
(Section 1802(a)(10)(B) of Pub. L. 99-514 provided in part that amendment by section 1802(a)(10)(B)
of Pub. L. 99-514, amending section 31(g)(15)(D)(ii) of Pub. L. 98-369, set out above, is effective with respect to property placed in service by the taxpayer
after July 18, 1984.)
(Section 1802(a)(10)(D)(ii) of Pub. L. 99-514 provided that: ‘The amendment made by clause (i) (amending section 31(g)(20)(B)(ii)
of Pub. L. 98-369, set out above) shall not apply to any property if -
‘(I) on or before March 28, 1985, the taxpayer (or a predecessor in interest under
the contract)
or the tax-exempt entity entered into a written binding contract to acquire, construct,
or rehabilitate the property, or
‘(II) the taxpayer or the tax-exempt entity began the construction, reconstruction,
or rehabilitation of the property on or before March 28, 1985.’) Section 32(c) of
Pub. L. 98-369, as amended by Pub. L. 99-514, Sec. 2, title XVIII, Sec. 1802(b)(2), Oct. 22, 1986, 100 Stat. 2095, 2791, provided that: ‘The amendment made by subsection
(a) (amending this section) shall apply to agreements described in section 168(f)(14) of the Internal Revenue Code of 1986 (formerly I.R.C. 1954) (as added by subsection (a)) entered into more than 90 days after the date of the
enactment of this Act (July 18, 1984).'
Section 111(g) of Pub. L. 98-369, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
‘(1) In general. - Except as otherwise provided in this subsection, the amendments
made by this section (amending sections 48, 51, 168, 312, and 1245 of this title)
shall apply with respect to property placed in service by the taxpayer after March
15, 1984.
‘(2) Exception. - The amendments made by this section shall not apply to property
placed in service by the taxpayer before January 1, 1987, if -
‘(A) the taxpayer or a qualified person entered into a binding contract to purchase
or construct such property before March 16, 1984, or
‘(B) construction of such property was commenced by or for the taxpayer or a qualified
person before March 16, 1984.
For purposes of this paragraph the term ‘qualified person’ means any person who transfers
his rights in such a contract or such property to the taxpayer, but only if such property
is not placed in service by such person before such rights are transferred to the
taxpayer.
‘(3) Special rules for application of paragraph
(2). -
‘(A) Certain inventory. - In the case of any property which -
‘ (i) is held by a person as property described in section 1221(1) (26 U.S.C. 1221(1)), and
‘(ii) is disposed of by such person before January 1, 1985, such person shall not,
for purposes of paragraph (2), be treated as having placed such property in service
before such property is disposed of merely because such person rented such property
or held such property for rental. No deduction for depreciation or amortization shall
be allowed to such person with respect to such property,
‘(B) Certain property financed by bonds. - In the case of any property with respect
to which -
‘(i) bonds were issued to finance such property before 1984, and
‘(ii) an architectural contract was entered into before March 16, 1984, paragraph
(2) shall be applied by substituting ‘May 2’ for ‘March 16’.
‘(4) Special rule for components. - For purposes of applying section 168(f)(1)(B)
of the Internal Revenue Code of 1986 (formerly I.R.C. 1954) (as amended by this section)
to components placed in service after December 31, 1986, property to which paragraph
(2) applies shall be treated as placed in service by the taxpayer before March 16,
1984.
‘(5) Special rule for mid-month convention. - In the case of the amendment made by
subsection (d) (amending subsec.
(b)(2)(A), (B) of this section) -
‘(A) paragraph (1) shall be applied by substituting ‘June 22, 1984’ for ‘March 15,
1984’, and
‘(B) paragraph (2) shall be applied by substituting ‘June 23, 1984’ for ‘March 15,
1984’ each place it appears.'
Amendment by section 113(a)(2) of Pub. L. 98-369 applicable to property placed in service after Mar. 15, 1984, in taxable years ending
after such date, see section 113(c)(1) of Pub. L. 98-369, set out as a note under section 48 of this title.
Section 113(c)(2) of Pub. L. 98-369, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
‘(A) The amendments made by paragraphs (1) of subsection
(b) (amending this section) shall apply to any motion picture film or video tape placed
in service before, on, or after the date of the enactment of this Act (July 18, 1984),
except that such amendment shall not apply to -
‘(i) any qualified film placed in service by the taxpayer before March 15, 1984, if
the taxpayer treated such film as recovery property for purposes of section 168 of the Internal Revenue Code of 1986 (formerly I.R.C. 1954)
on a return of tax under chapter 1 of such Code filed before March 16, 1984, or
‘(ii) any qualified film placed in service by the taxpayer before January 1, 1985,
if -
‘(I) 20 percent or more of the production costs of such film were incurred before
March 16, 1984, and
‘(II) the taxpayer treats such film as recovery property for purposes of section 168
of such Code.
No credit shall be allowable under section 38 of such Code with respect to any qualified
film described in clause (ii), except to the extent provided in section 48(k) of such
Code.
‘(B) The amendment made by paragraph (2) and (3)
of subsection (b) (amending sections 46, 48, and 168 of this title)
shall apply as if included in the amendments made by section 201(a), 211(a)(1), and
211(f)(1) of the Economic Recovery Tax Act of 1981
(sections 201(a), 211(a)(1), and 211(f)(1) of Pub. L. 97-34, enacting this section and amending section 46 of this title).
‘(C) The amendment made by paragraph (4) of subsection
(b) (amending section 48 of this title) shall take effect as if included in the amendments
made by section 205(a)(1) of the Tax Equity and Fiscal Responsibility Act of 1982
(section 205(a)(1) of Pub. L. 97-248, amending section 48 of this title).
‘(D) For purposes of this paragraph, the terms
‘qualified film’ and ‘production costs’ have the same respective meanings as when
used in section 48(k) of the Internal Revenue Code of 1986.'
Amendment by section 474(r)(7) of Pub. L. 98-369 applicable to taxable years beginning after Dec. 31, 1983, and to carrybacks from
such years, see section 475(a) of Pub. L. 98-369, set out as a note under section 21 of this title.
Amendment by section 612(e) of Pub. L. 98-369 applicable to interest paid or accrued after Dec. 31, 1984, on indebtedness incurred
after Dec. 31, 1984, see section 612(g) of Pub. L. 98-369, set out as an Effective Date note under section 25 of this title.
Amendment by section 628(b) of Pub. L. 98-369 applicable to property placed in service after Dec. 31, 1983, with certain conditions
and exceptions, see section 631(b) of Pub. L. 98-369, set out as a note under section 103 of this title.
EFFECTIVE DATE OF 1983 AMENDMENTS
Amendment by title I of Pub. L. 97-448 effective, except as otherwise provided, as if it had been included in the provision
of the Economic Recovery Tax Act of 1981, Pub. L. 97-34, to which such amendment relates, see section 109 of Pub. L. 97-448, set out as a note under section 1 of this title.
Section 102(a)(10)(B) of Pub. L. 97-448, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘The amendment made by subparagraph
(A) (amending this section) shall apply with respect to property to which the provisions
of section 168(f)(8)
of the Internal Revenue Code of 1986 (formerly I.R.C. 1954) (as in effect before the amendments made by the Tax Equity and Fiscal Responsibility
Act of 1982 (Pub. L. 97-248)) apply.'
Amendment by section 541 of Pub. L. 97-424 applicable to taxable years beginning after Dec. 31, 1979, with a special rule for
periods beginning before Mar. 1, 1980, see section 541(c) of Pub. L. 97-424, set out as a note under section 46 of this title.
EFFECTIVE DATE OF 1982 AMENDMENTS
Amendment by Pub. L. 97-354 applicable to taxable years beginning after Dec. 31, 1982, see section 6(a) of Pub. L. 97-354, set out as an Effective Date note under section 1361 of this title.
Section 208(d) of Pub. L. 97-248, as amended by Pub. L. 97-448, title III, Sec. 306(a)(4), Jan. 12, 1983, 96 Stat. 2400; Pub. L. 98-369, div. A, title X, Sec. 1067(a), July 18, 1984, 98 Stat. 1048; Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
‘(1) In general. - Except as otherwise provided in this subsection, the amendments
made by subsections (a) and (b)
of this section (amending this section and section 47 of this title)
shall apply to agreements entered into after July 1, 1982, or to property placed in
service after July 1, 1982.
‘(2) Transitional rule for certain safe harbor lease property. -
‘(A) In general. - The amendments made by subsections (a) and (b) (amending this section
and section 47 of this title) shall not apply to transitional safe harbor lease property.
‘(B) Special rule for certain provisions. - Subparagraph (A) shall not apply with
respect to the provisions of paragraph (6) of section 168(i) of the Internal Revenue Code of 1986 (formerly I.R.C. 1954) (as added by subsection
(a)(1)), to the provisions of section 168(f)(8)(J) of such Code (as added by subsection
(b)(4)), or to the amendment made by subsection
(b)(1).
‘(3) Transitional safe harbor lease property. -
For purposes of this subsection, the term ‘transitional safe harbor lease property’
means property described in any of the following subparagraphs:
‘(A) In general. - Property is described in this subparagraph if such property is
placed in service before January 1, 1983, if
‘(i) with respect to such property a binding contract to acquire or to construct such
property was entered into by the lessee after December 31, 1980, and before July 2,
1982, or
‘(ii) such property was acquired by the lessee, or construction of such property was
commenced by or for the lessee, after December 31, 1980, and before July 2, 1982.
‘(B) Certain qualified lessees.
- Property is described in this subparagraph if such property is placed in service
before July 1, 1982, and with respect to which -
‘(i) an agreement to which section 168(f)(8)(A) of the Internal Revenue Code of 1986 applies was entered into before August 15, 1982, and
‘(ii) the lessee under such agreement is a qualified lessee (within the meaning of
paragraph (6)).
‘(C) Automotive manufacturing property. -
‘(i) In general. - Property is described in this subparagraph if -
‘(I) such property is used principally by the taxpayer directly in connection with
the trade or business of the taxpayer of the manufacture of automobiles or light-duty
trucks,
‘(II) such property is automotive manufacturing property, and
‘(III) such property would be described in subparagraph (A) if ‘October 1’ were substituted
for
‘January 1’.
‘(ii) Light-duty truck. - For purposes of this subparagraph, the term ‘light-duty
truck’ means any truck with a gross vehicle weight of 13,000 pounds or less. Such
term shall not include any truck tractor.
‘(iii) Automotive manufacturing property. - For purposes of this subparagraph, the
term ‘automotive manufacturing property’ means machinery, equipment, and special tools
of the type included in the former asset depreciation range guideline classes 37.11
and 37.12.
‘(iv) Special tools used by certain vendors. - For purposes of this subparagraph,
any special tools owned by a taxpayer described in subclause (I) of clause (i)
which are used by a vendor solely for the production of component parts for sale to
the taxpayer shall be treated as automotive manufacturing property used directly by
such taxpayer.
‘(D) Certain aircraft. - Property is described in this subparagraph if such property
-
‘(i) is a commercial passenger aircraft (other than a helicopter), and
‘(ii) would be described in subparagraph (A) if ‘January 1, 1984’ were substituted
for ‘January 1, 1983’. For purposes of determining whether property described in this
subparagraph is described in subparagraph (A), subparagraph (A)(ii)
shall be applied by substituting ‘June 25, 1981’ for ‘December 31, 1980’ and by substituting
‘February 20, 1982’ for ‘July 2, 1982’ and construction of the aircraft shall be treated
as having been begun during the period referred to in subparagraph (A)(ii) if during
such period construction or reconstruction of a subassembly was commenced, or the
stub wing join occurred.
‘(E) Turbines and boilers. -
Property is described in this subparagraph if such property -
‘(i) is a turbine or boiler of a cooperative organization engaged in the furnishing
of electric energy to persons in rural areas, and
‘(ii) would be property described in subparagraph (A) if ‘July 1’ were substituted
for ‘January 1’.For purposes of determining whether property described in this subparagraph
is described in subparagraph (A), such property shall be treated as having been acquired
during the period referred to in subparagraph
(A)(ii) if at least 20 percent of the cost of such property is paid during such period.
‘(F) Property used in the production of steel. - Property is described in this subparagraph
if such property
-
‘(i) is used by the taxpayer directly in connection with the trade or business of
the taxpayer of the manufacture or production of steel, and
‘(ii) would be described in subparagraph (A) if ‘January 1, 1984’ were substituted
for ‘January 1, 1983’.
‘(G) Coal gasification facilities.
-
‘(i) In general. - Property is described in this subparagraph if such property -
‘(I) is used directly in connection with the manufacture or production of low sulfur
gaseous fuel from coal, and
‘(II) would be described in subparagraph (A) if ‘July 1, 1984’ were substituted for
‘January 1, 1983’.
‘(ii) Special rule. - For purposes of determining whether property described in this
subparagraph is described in subparagraph (A), such property shall be treated as having
been acquired during the period referred to in subparagraph (A)(ii)
if at least 20 percent of the cost of such property is paid during such period.
‘(iii) Limitation on amount.
- Clause (i) shall only apply to the lease of an undivided interest in the property
in an amount which does not exceed the lesser of -
‘(I) 50 percent of the cost basis of such property, or
‘(II) $67,500,000.
‘(iv) Placed in service. - In the case of property to which this subparagraph applies
-
‘(I) such property shall be treated as placed in service when the taxpayer receives
an operating permit with respect to such property from a State environmental protection
agency, and
‘(II) the term of the lease with respect to such property shall be treated as being
5 years.
‘(4) Special rule for antiavoidance provisions.
- The provisions of paragraph (6) of section 168(i) of such Code (as added by subsection
(a)(1)), and the amendment made by subsection
(b)(1) (amending this section) shall apply to leases entered into after February 19,
1982, in taxable years ending after such date.
‘(5) Special rule for mass commuting vehicles.
- The amendments made by this section (other than section 168(i)(1)
and (7) of such Code, as added by subsection (a)(1) or section 168(f)(8)(J)
of such Code, as added by subsection (b)(4)) and section 209 (amending this section
and section 48 of this title) shall not apply to qualified leased property described
in section 168(f)(8)(D)(V) of such Code
(as in effect after the amendments made by this section) which -
‘(A) is placed in service before January 1, 1988, or
‘(B) is placed in service after such date -
‘(i) pursuant to a binding contract or commitment entered into before April 1, 1983,
and
‘(ii) solely because of conditions which, as determined by the Secretary of the Treasury
or his delegate, are not within the control of the lessor or lessee.
‘(6) Qualified lessee defined. -
‘(A) In general. - The term
‘qualified lessee’ means a taxpayer which is a lessee of an agreement to which section
168(f)(8)(A) of such Code applies and which -
‘(i) had net operating losses in each of the three most recent taxable years ending
before July 1, 1982, and had an aggregate net operating loss for the five most recent
taxable years ending before July 1, 1982, and
‘(ii) which uses the property subject to the agreement to manufacture and produce
within the United States a class of products in an industry with respect to which
-
‘(I) the taxpayer produced less than 5 percent of the total number of units (or value)
of such products during the period covering the three most recent taxable years of
the taxpayer ending before July 1, 1982, and
‘(II) four or fewer United States persons (including as one person an affiliated group
as defined in section 1504(a)) other than the taxpayer manufactured 85 percent or
more of the total number of all units (or value) within such class of products manufactured
and produced in the United States during such period.
‘(B) Class of products. - For purposes of subparagraph (A) -
‘(i) the term ‘class of products’
means any of the categories designated and numbered as a ‘class of products’ in the
1977 Census of Manufacturers compiled and published by the Secretary of Commerce under
title 13 of the United States Code, and
‘(ii) information -
‘(I) compiled or published by the Secretary of Commerce, as part of or in connection
with the Statistical Abstract of the United States or the Census of Manufacturers,
regarding the number of units (or value) of a class of products manufactured and produced
in the United States during any period, or
‘(II) if information under subclause
(I) is not available, so compiled or published with respect to the number of such
units shipped or sold by such manufacturers during any period, shall constitute prima
facie evidence of the total number of all units of such class of products manufactured
and produced in the United States in such period.
‘(6) Underpayments of tax for 1982. - No addition to the tax shall be made under section 6655 of the Internal Revenue Code of 1954 (relating to failure by corporation to pay estimated income tax) for any period
before October 15, 1982, with respect to any underpayment of estimated tax by a taxpayer
with respect to any tax imposed by chapter 1 of such Code to the extent that such
underpayment was created or increased by any provision of this section.
‘(7) Coordination with at risk rules. - Subparagraph
(J) of section 168(f)(8) of the Internal Revenue Code of 1986 (as added by subsection (b)(4)) shall take effect as provided in such subparagraph
(J).'
(Section 1067(c) of Pub. L. 98-369 provided that: ‘The amendment made by subsection
(a) (enacting section 208(d)(3)(G) of Pub. L. 97-248, set out above) shall take effect as if included in the provision of section 208(d)(3)
of the Tax Equity and Fiscal Responsibility Act of 1982 (Pub. L. 97-248).'
Section 209(d) of Pub. L. 97-248; as amended by Pub. L. 98-369, div. A, title I, Sec. 12(a)(1), (2), July 18, 1984, 98 Stat. 503, provided that:
‘(1) Subsection (a). -
‘(A) In general. - Except as provided in subparagraph (B) and paragraph (2), the amendments
made by this section (amending this section and section 48 of this title)
shall apply to agreements entered into after December 31, 1987.
‘(B) Special rule for farm property aggregating
$150,000 or less. -
‘(i) In general. - The amendments made by subsection (a) (amending this section) shall
also apply to any agreement entered into after July 1, 1982, and before January 1,
1988, if the property subject to such agreement is section 38 property which is used
for farming purposes (within the meaning of section 2032A(e)(5)).
‘(ii) $150,000 limitation. -
The provisions of clause (i) shall not apply to any agreement if the sum of -
‘(I) the cost basis of the property subject to the agreement, plus
‘(II) the cost basis of any property subject to an agreement to which this subparagraph
previously applied, which was entered into during the same calendar year, and with
respect to which the lessee was the lessee of the agreement described in subclause
(I) (or any related person within the meaning of section 168(e)(4)(D)), exceeds $150,000.
For purposes of subclause (II), in the case of an individual, there shall not be taken
into account any agreement of any individual who is a related person involving property
which is used in a trade or business of farming of such related person which is separate
from the trade or business of farming of the lessee described in subclause (II).
‘(2) Special rule for definition of new section 38 property. - The amendment made
by subsection (c) (amending section 48 of this title) shall apply to property placed
in service after December 31, 1983.’
Section 216(b) of Pub. L. 97-248, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
‘(1) In general. - Except as otherwise provided in this subsection, the amendments
made by this section (amending this section) shall apply with respect to property
placed in service after December 31, 1982, to the extent such property is financed
by the proceeds of an obligation (including a refunding obligation) issued after June
30, 1982.
‘(2) Exceptions. -
‘(A) Construction or binding agreement. - The amendments made by this section (amending
this section)
shall not apply with respect to facilities the original use of which commences with
the taxpayer and -
‘(i) the construction, reconstruction, or rehabilitation of which began before July
1, 1982, or
‘(ii) with respect to which a binding agreement to incur significant expenditures
was entered into before July 1, 1982.
‘(B) Refunding. -
‘(i) In general. - Except as provided in clause (ii), in the case of property placed
in service after December 31, 1982 which is financed by the proceeds of an obligation
which is issued solely to refund another obligation which was issued before July 1,
1982, the amendments made by this section (amending this section) shall apply only
with respect to the basis in such property which has not been recovered before the
date such refunding obligation is issued.
‘(ii) Significant expenditures.
- In the case of facilities the original use of which commences with the taxpayer
and with respect to which significant expenditures are made before January 1, 1983,
the amendments made by this section shall not apply with respect to such facilities
to the extent such facilities are financed by the proceeds of an obligation issued
solely to refund another obligation which was issued before July 1, 1982.
In the case of an inducement resolution adopted by an issuing authority before July
1, 1982, for purposes of applying subparagraphs (A)(i) and (B)(ii) with respect to
obligations described in such resolution, the term ‘facilities’ means the facilities
described in such resolution.
‘(3) Certain projects for residential real property.
- For purposes of clause (i) of section 168(f)(12)(C) of the Internal Revenue Code of 1986 (formerly I.R.C. 1954) (as added by this section), any obligation issued to finance a project described
in the table contained in paragraph (1) of section 1104(n) of the Mortgage Subsidy
Bond Tax Act of 1980 (section 1104(n) of Pub. L. 96-499, set out as a note under section 103A of this title) shall be treated as an obligation
described in section 103(b)(4)(A) of the Internal Revenue Code of 1986.'
Amendment by section 224(c)(1), (2) of Pub. L. 97-248 to apply to any target corporation, within the meaning of section 338 of this title,
with respect to which the acquisition date, within the meaning of such section, occurs
after Aug. 31, 1982, and also to apply to certain acquisitions before September 1,
1982, but not to apply in the case of certain acquisitions of financial institutions,
see section 224(d) of Pub. L. 97-248, set out as an Effective Date note under section 338 of this title.
EFFECTIVE DATE
Section 209(a)-(c) of Pub. L. 97-34, as amended by Pub. L. 97-448, title I, Sec. 102(d)(1), (g), Jan. 12, 1983, 96 Stat. 2370; Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
‘(a) General Rule. - Except as otherwise provided in this section, the amendments
made by this subtitle (subtitle A
(Sec. 201-209) of title II of Pub. L. 97-34, enacting this section, amending sections 44E, 46, 50A, 53, 57, 167, 172, 179, 263,
312, 381, 453, 812, 825, 964, 1033, 1245, and 1250 of this title, and enacting provisions
set out as notes under sections 46, 167, and 168 of this title) shall apply to property
placed in service after December 31, 1980, in taxable years ending after such date.
‘(b) Special Rule for RRB Property. - The amendment made by subsection (c) of section
203 (amending section 167 of this title and enacting provisions set out as notes under
section 167 of this title) shall take effect on January 1, 1981, and shall apply with
respect to taxable years ending after such date.
‘(c) Special Rule for Carryovers. -
‘(1)(A) Except as provided in subparagraph (B), the amendments made by subsections
(a) and (b) of section 207 (amending sections 172, 812, and 825 of this title) shall
apply to net operating losses in taxable years ending after December 31, 1975.
‘(B) The amendments made by subparagraph (B)(i) of section 207(a)(2) (amending section
172 of this title) shall take effect as if they had been included in the amendments
made by section 1(a) of Public Law 96-595 (amending section 172 of this title); except that the amendments made by such subparagraph
shall apply only to net operating losses in taxable years ending after December 31,
1972.
‘(C) If any net operating loss for any taxable year ending on or before December 31,
1975, could be a net operating loss carryover to a taxable year ending in 1981 by
reason of subclause (II) of section 172(b)(1)(E)(ii) of the Internal Revenue Code of 1986 (formerly I.R.C. 1954) (as in effect on the day before the date of the enactment of this Act (Aug. 13,
1981) and as modified by section 1(b) of Public Law 96-595 (set out as an Effective Date of 1980 Amendment note under section 172 of this title)),
such net operating loss shall be a net operating loss carryover under section 172
of such Code to each of the 15 taxable years following the taxable year of such loss.
‘(2)(A) The amendments made by subsection (c)(1) of section 207 (amending sections
46 and 50A of this title) shall apply to unused credit years ending after December
31, 1973.
‘(B) The amendment made by subsection
(c)(2) of section 207 (amending section 53 of this title) shall apply to unused credit
years beginning after December 31, 1976.
‘(C) The amendments made by subsection (c)(3) of section 207 (amending section 44E
of this title)
shall apply to unused credit years ending after September 30, 1980.
‘(3) Carryover must have been alive in 1981. - The amendments made by subsections
(a), (b), and
(c) of section 207 (amending sections 44E, 46, 50A, 53, 172, 812, and 825 of this
title) shall not apply to any amount which, under the law in effect on the day before
the date of the enactment of this Act (Aug. 13, 1981), could not be carried to a taxable
year ending in 1981.’
SECTION 168(k)(6) SPECIAL RULE
Pub. L. 115-141, Div. U, Sec. 101(d)(3), provided:
“(3) For purposes of applying section 168(k) of the Internal Revenue Code of 1986, as in effect on the day before the date of the enactment of Public Law 115-97, with respect to property acquired before September 28, 2017, paragraph (6) thereof
shall be treated as reading as follows (and as having been included in section 143
of the Protecting Americans from Tax Hikes Act of 2015):
‘‘(6) PHASE-DOWN.—In the case of qualified property placed in service by the taxpayer
after December 31, 2017 (December 31, 2018, in the case of property described in subparagraph
(B) or (C) of paragraph (2)), paragraph (1)(A) shall be applied by substituting for
‘50 percent’—
‘‘(A) ‘40 percent’ in the case of—
‘‘(i) property placed in service in 2018 (other than property described in subparagraph
(B) or (C) of paragraph (2)), and
‘‘(ii) property described in subparagraph
(B) or (C) of paragraph (2) which is placed in service in 2019, and
‘‘(B) ‘30 percent’ in the case of—
‘‘(i) property placed in service in 2019 (other than property described in subparagraph
(B) or (C) of paragraph (2)), and
‘‘(ii) property described in subparagraph
(B) or (C) of paragraph (2) which is placed in service in 2020.’’.
SECTION 168(k)(7) SPECIAL RULE
Pub. L. 115-141, Div. U, Sec. 101(d)(4), provided:
“(4) Section 168(k)(7) of the Internal Revenue Code of 1986, as in effect on the day before the date of the enactment of Public Law 115-97, shall be applied—
“(A) by substituting ‘‘paragraphs
(1), (2)(F), and (4)’’ for ‘‘paragraphs (1)
and (2)(F)’’, and
“(B) as if the application of such substitution had been included in section 143 of
the Protecting Americans from Tax Hikes Act of 2015.”
NORMALIZATION REQUIREMENTS
Pub. L. 115-97, Sec. 13001(d), provided:
“(d) NORMALIZATION REQUIREMENTS.—
“(1) IN GENERAL.—A normalization method of accounting shall not be treated as being
used with respect to any public utility property for purposes of section 167 or 168 of the Internal Revenue Code of
1986 if the taxpayer, in computing its cost of service for ratemaking purposes and
reflecting operating results in its regulated books of account, reduces the excess
tax reserve more rapidly or to a greater extent than such reserve would be reduced
under the 11 average rate assumption method.
“(2) ALTERNATIVE METHOD FOR CERTAIN TAXPAYERS.—If, as of the first day of the taxable
year that includes the date of enactment of this Act—
“(A) the taxpayer was required by a regulatory agency to compute depreciation for
public utility property on the basis of an average life or composite rate method,
and
“(B) the taxpayer's books and underlying records did not contain the vintage account
data necessary to apply the average rate assumption method, the taxpayer will be treated
as using a normalization method of accounting if, with respect to such jurisdiction,
the taxpayer uses the alternative method for public utility property that is subject
to the regulatory authority of that jurisdiction.
“(3) DEFINITIONS.—For purposes of this subsection—
“(A) EXCESS TAX RESERVE.—The term ‘‘excess tax reserve’’ means the excess of—
“(i) the reserve for deferred taxes (as described in section 168(i)(9)(A)(ii)
of the Internal Revenue Code of 1986) as of the day before the corporate rate reductions provided in the amendments
made by this
section take effect, over
“(ii) the amount which would be the balance in such reserve if the amount of such
reserve were determined by assuming that the corporate rate reductions provided in
this Act were in effect for all prior periods.
(B) AVERAGE RATE ASSUMPTION METHOD.—The average rate assumption method is the method
under which the excess in the reserve for deferred taxes is reduced over the remaining
lives of the property as used in its regulated books of account which gave rise to
the reserve for deferred taxes. Under such method, during the time period in which
the timing differences for the property reverse, the amount of the adjustment to the
reserve for the deferred taxes is calculated by multiplying—
(i) the ratio of the aggregate deferred taxes for the property to the aggregate timing
differences for the property as of the beginning of the period in question, by
(ii) the amount of the timing differences which reverse during such period.
“(C) ALTERNATIVE METHOD.—The ‘alternative method’ is the method in which the taxpayer—
“(i) computes the excess tax reserve on all public utility property included in the
plant account on the basis of the weighted average life or composite rate used to
compute depreciation for regulatory purposes, and
“(ii) reduces the excess tax reserve ratably over the remaining regulatory life of
the property.
“(4) TAX INCREASED FOR NORMALIZATION VIOLATION.—If, for any taxable year ending after
the date of the enactment of this Act, the taxpayer does not use a normalization method
of accounting for the corporate rate reductions provided in the amendments made by
this section—
“(A) the taxpayer's tax for the taxable year shall be increased by the amount by which
it reduces its excess tax reserve more rapidly than permitted under a normalization
method of accounting, and
“(B) such taxpayer shall not be treated as using a normalization method of accounting
for purposes of subsections
(f)(2) and (i)(9)(C) of section 168 of the Internal Revenue Code of 1986.”
DEPRECIATION STUDY
“The Secretary of the Treasury (or the Secretary's delegate)--
“(1) shall conduct a comprehensive study of the recovery periods and depreciation
methods under section 168 of the Internal Revenue Code of 1986, and
“ (2) not later than March 31, 2000, shall submit the results of such study, together
with recommendations for determining such periods and methods in a more rational manner,
to the Committee on Ways and Means of the House of Representatives and the Committee
on Finance of the Senate.”
SAVINGS PROVISION
For provisions that nothing in amendment by Pub. L. 101-508 be construed to affect treatment of certain transactions occurring, property acquired,
or items of income, loss, deduction, or credit taken into account prior to Nov. 5,
1990, for purposes of determining liability for tax for periods ending after Nov.
5, 1990, see section 11821(b) of Pub. L. 101-508, set out as a note under section 29 of this title.
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments made by subtitle A or subtitle C of
title XI (Sec. 1101-1147 and 1171-1177)
or title XVIII (Sec. 1800-1899A) of Pub. L. 99-514 require an amendment to any plan, such plan amendment shall not be required to be
made before the first plan year beginning on or after Jan. 1, 1989, see section 1140
of Pub. L. 99-514, as amended, set out as a note under section 401 of this title.
TREATMENT OF CERTAIN FARM FINANCE LEASES
Section 1801(a)(2) of Pub. L. 99-514, as amended by Pub. L. 100-647, title I, Sec. 1018(a), Nov. 10, 1988, 102 Stat. 3577, provided that:
‘(A) In general. - If -
‘(i) any partnership or grantor trust is the lessor under a specified agreement,
‘(ii) such partnership or grantor trust met the requirements of section 168(f)(8)(C)(i) of the Internal Revenue Code of 1954 (relating to special rules for finance leases) when the agreement was entered
into, and
‘(iii) a person became a partner in such partnership (or a beneficiary in such trust)
after its formation but before September 26, 1985, then, for purposes of applying
the revenue laws of the United States in respect to such agreement, the portion of
the property allocable to partners (or beneficiaries) not described in clause (iii)
shall be treated as if it were subject to a separate agreement and the portion of
such property allocable to the partner or beneficiary described in clause (iii) shall
be treated as if it were subject to a separate agreement.
‘(B) Specified agreement. - For purposes of subparagraph
(A), the term ‘specified agreement’ means an agreement to which subparagraph
(B) of section 209(d)((1)) of the Tax Equity and Fiscal Responsibility Act of 1982
(section 209(d)(1) of Pub. L. 97-248, set out as a note above) applies which is -
‘(i) an agreement dated as of December 20, 1982, as amended and restated as of February
1, 1983, involving approximately $8,734,000 of property at December 31, 1983,
‘(ii) an agreement dated as of December 15, 1983, as amended and restated as of January
3, 1984, involving approximately $13,199,000 of property at December 31, 1984, or
‘(iii) an agreement dated as of October 25, 1984, as amended and restated as of December
1, 1984, involving approximately $966,000 of property at December 31, 1984.’
CERTAIN RESIDENTIAL REAL PROPERTY TREATED AS RESIDENTIAL RENTAL PROPERTY
Section 1809(a)(4)(C) of Pub. L. 99-514 provided that: ‘Any property described in paragraph
(3) of section 631(d) of the Tax Reform Act of 1984 (section 631(d)
of Pub. L. 99-369, set out as a note under section 103 of this title) shall be treated as property
described in clause (ii) of section 168(f)(12)(C) of the Internal Revenue Code of 1954 (now 1986) as amended by subparagraph (B).'
COORDINATION WITH IMPUTED INTEREST CHANGES
Section 1809(a)(5) of Pub. L. 99-514 provided that: ‘In the case of any property placed in service before May 9, 1985
(or treated as placed in service before such date by section 105(b)(3) of Public Law 99-121 (set out as a note above)) -
‘(A) any reference in any amendment made by this subsection (amending sections 57,
168, and 312 of this title) to 19-year real property shall be treated as a reference
to 18-year real property, and
‘(B) section 168(f)(12)(B)(ii) of the Internal Revenue Code of 1954
(now 1986) (as amended by paragraph (4)(A)) shall be applied by substituting
‘18 years’ for ‘19 years’.'
TERMINATION OF SAFE HARBOR LEASING RULES
Section 12(b) of Pub. L. 98-369, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘Paragraph (8) of section 168(f) of the Internal Revenue Codeof 1986 (formerly I.R.C. 1954)
(relating to special rules for leasing), as in effect after the amendments made by
section 208 of the Tax Equity and Fiscal Responsibility Act of 1982 (Pub. L. 97-248) but before the amendments made by section 209 of such Act, shall not apply to agreements
entered into after December 31, 1983. The preceding sentence shall not apply to property
described in paragraph (3)(G) or (5) of section 208(d) of such Act (set out as an
Effective Date of 1982 Amendments note above).'
TRANSITIONAL RULES FOR 1984 AMENDMENT
Section 12(c) of Pub. L. 98-369, as amended by Pub. L. 99-514, Sec. 2, title XVIII, Sec. 1801(a)(1), Oct. 22, 1986, 100 Stat. 2095, 2785; Pub. L. 100-647, title I, Sec. 1002(d)(7)(B), Nov. 10, 1988, 102 Stat. 3360, provided that:
‘(1) In general. - The amendments made by subsection
(a) (amending this section and section 208(d) of Pub. L. 97-248, set out as an Effective Date of 1982 Amendments note above) shall not apply with
respect to any property if -
‘(A) a binding contract to acquire or to construct such property was entered into
by or for the lessee before March 7, 1984, or
‘(B) such property was acquired by the lessee, or the construction of such property
was begun, by or for the lessee, before March 7, 1984.
The preceding sentence shall not apply to any property with respect to which an election
is made under this sentence at such time after the date of the enactment of the Tax
Reform Act of 1986
(Oct. 22, 1986) as the Secretary of the Treasury or his delegate may prescribe.
‘(2) Special rule for certain automotive property.
-
‘(A) In general. - The amendments made by subsection (a) shall not apply to property
-
‘(i) which is automotive manufacturing property, and
‘(ii) with respect to which the lessee is a qualified lessee (within the meaning of
section 208(d)(6)
of the Tax Equity and Fiscal Responsibility Act of 1982) (Pub. L. 97-248, set out as an Effective Date of 1982 Amendments note above).
‘(B) $150,000,000 limitation.
- The provisions of subparagraph (A) shall not apply to any agreement if the sum of
-
‘(i) the cost basis of the property subject to the agreement, plus
‘(ii) the cost basis of any property subject to an agreement to which subparagraph
(A) previously applied and with respect to which the lessee was the lessee under the
agreement described in clause (i) (or any related person within the meaning of section 168(e)(4)(D)
of the Internal Revenue Code of 1986 (formerly I.R.C. 1954)), exceeds $150,000,000.
‘(C) Automotive manufacturing property. - For purposes of this paragraph, the term
‘automotive manufacturing property’ means -
‘(i) property used principally by the taxpayer directly in connection with the trade
or business of the taxpayer of the manufacturing of automobiles or trucks (other than
truck tractors) with a gross vehicle weight of 13,000 pounds or less,
‘(ii) machinery, equipment, and special tools of the type included in former depreciation
range guideline classes 37.11 and 37.12, and
‘(iii) any special tools owned by the taxpayer which are used by a vendor solely for
the production of component parts for sale to the taxpayer.
‘(3) Special rule for certain cogeneration facilities.
- The amendments made by subsection (a) shall not apply with respect to any property
which is part of a coal-fired cogeneration facility
-
‘(A) for which an application for certification was filed with the Federal Energy
Regulatory Commission on December 30, 1983,
‘(B) for which an application for a construction permit was filed with a State environmental
protection agency on February 20, 1984, and
‘(C) which is placed in service before January 1, 1988.’
SPECIAL LEASING RULE REGARDING COAL GASIFICATION FACILITIES
Section 1067(b) of Pub. L. 98-369, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘The amount of any recapture under section 47 of the Internal Revenue Code of 1986 (formerly I.R.C. 1954) with respect to the credit allowed under section 38 of such Code with respect to
progress expenditures (within the meaning of section 46(d) of such Code) shall apply
only to the percentage of the cost basis of the coal gasification facility to which
the amendment made by subsection (a) (amending section 208(d) of Pub. L. 97-248, set out as an Effective Date of 1982 Amendments note above) applies.'
CERTAIN LEASES BEFORE OCTOBER 20, 1981, TREATED AS QUALIFIED LEASES
Section 208(c) of Pub. L. 97-248, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘Nothing in paragraph (8) of section 168(f) of the Internal Revenue Code of 1986 (formerly I.R.C. 1954), or in any regulations prescribed thereunder, shall be treated as making such paragraph
inapplicable to any agreement entered into before October 20, 1981, solely because
under such agreement 1 party to such agreement is entitled to the credit allowable
under section 38 of such Code with respect to property and another party to such agreement
is entitled to the deduction allowable under section 168 of such Code with respect
to such property. Section 168(f)(8)(B)(ii) of such Code shall not apply to the party
entitled to such credit.'
MOTOR VEHICLE OPERATING LEASES
Section 210 of Pub. L. 97-248, as amended by Pub. L. 98-369, div. A, title I, Sec. 32(b), title VII, Sec. 712(d), July 18, 1984, 98 Stat. 531, 947; Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
‘(a) In general. - In the case of any qualified motor vehicle agreement entered into
on or before the 90th day after the date of the enactment of the Tax Reform Act of
1984 (July 18, 1984), the fact that such agreement contains a terminal rental adjustment
clause shall not be taken into account in determining whether such agreement is a
lease.
‘(b) Definitions. - For purposes of this section
-
‘(1) Qualified motor vehicle agreement. - The term ‘qualified motor vehicle agreement’
means any agreement with respect to a motor vehicle (including a trailer) -
‘(A) which was entered into before -
‘(i) the enactment of any law, or
‘(ii) the publication by the Secretary of the Treasury or his delegate of any regulation,
which provides that any agreement with a terminal rental adjustment clause is not
a lease,
‘(B) with respect to which the lessor under the agreement -
‘(i) is personally liable for the repayment of, or
‘(ii) has pledged property (but only to the extent of the net fair market value of
the lessor's interest in such property), other than property subject to the agreement
or property directly or indirectly financed by indebtedness secured by property subject
to the agreement, as security for, all amounts borrowed to finance the acquisition
of property subject to the agreement, and
‘(C) with respect to which the lessee under the agreement uses the property subject
to the agreement in a trade or business or for the production of income.
‘(2) Terminal rental adjustment clause. - The term ‘terminal rental adjustment clause’
means a provision of an agreement which permits or requires the rental price to be
adjusted upward or downward by reference to the amount realized by the lessor under
the agreement upon sale or other disposition of such property. Such term also includes
a provision of an agreement which requires a lessee who is a dealer in motor vehicles
to purchase the motor vehicle for a predetermined price and then resell such vehicle
where such provision achieves substantially the same results as a provision described
in the preceding sentence.
‘(c) Exception Where Lessee Took Position on Return.
- Subsection (a) shall not apply to deny a deduction for interest paid or accrued
claimed by a lessee with respect to a qualified motor vehicle agreement on a return
of tax imposed by chapter 1 of the Internal Revenue Code of 1986
(formerly I.R.C. 1954) which was filed before the date of the enactment of this Act (Sept. 3, 1982)
or to deny a credit for investment in depreciable property claimed by the lessee on
such a return pursuant to an agreement with the lessor that the lessor would not claim
the credit.'
INFORMATION RETURNS WITH RESPECT TO SAFE HARBOR LEASES
Pub. L. 97-119, title I, Sec. 112, Dec. 29, 1981, 95 Stat. 1640, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
‘(a) Requirement of Return. -
‘(1) In general. - Except as provided in paragraph (2), paragraph (8) of section 168(f) of the Internal Revenue Code of 1986 (formerly I.R.C. 1954)
(relating to special rule for leases) shall not apply with respect to an agreement
unless a return, signed by the lessor and lessee and containing the information required
to be included in the return pursuant to subsection (b), has been filed with the Internal
Revenue Service not later than the 30th day after the date on which the agreement
is executed.
‘(2) Special rules for agreements executed before january 1, 1982. -
‘(A) In general. - In the case of an agreement executed before January 1, 1982, such
agreement shall cease on February 1, 1982, to be treated as a lease under section
168(f)(8) unless a return, signed by the lessor and containing the information required
to be included in subsection (b), has been filed with the Internal Revenue Service
not later than January 31, 1982.
‘(B) Filing by lessee. - If the lessor does not file a return under subparagraph (A),
the return requirement under subparagraph (A) shall be satisfied if such return is
filed by the lessee before January 31, 1982.
‘(3) Certain failure to file.
- If -
‘(A) a lessor or lessee fails to file any return within the time prescribed by this
subsection, and
‘(B) such failure is shown to be due to reasonable cause and not due to willful neglect,
the lessor or lessee shall be treated as having filed a timely return if a return
is filed within a reasonable time after the failure is ascertained.
‘(b) Information Required. - The information required to be included in the return
pursuant to this subsection is as follows:
‘(1) The name, address, and taxpayer identifying number of the lessor and the lessee
(and parent company if a consolidated return is filed);
‘(2) The district director's office with which the income tax returns of the lessor
and lessee are filed;
‘(3) A description of each individual property with respect to which the election
is made;
‘(4) The date on which the lessee places the property in service, the date on which
the lease begins and the term of the lease;
‘(5) The recovery property class and the ADR midpoint life of the leased property;
‘(6) The payment terms between the parties to the lease transaction;
‘(7) Whether the ACRS deductions and the investment tax credit are allowable to the
same taxpayer;
‘(8) The aggregate amount paid to outside parties to arrange or carry out the transaction;
‘(9) For the lessor only: the unadjusted basis of the property as defined in section
168(d)(1);
‘(10) For the lessor only: if the lessor is a partnership or a grantor trust, the
name, address, and taxpayer identifying number of the partners or the beneficiaries,
and the district director's office with which the income tax return of each partner
or beneficiary is filed; and
‘(11) Such other information as may be required by the return or its instructions.
Paragraph (8) shall not apply with respect to any person for any calendar year if
it is reasonable to estimate that the aggregate adjusted basis of the property of
such person which will be subject to subsection (a) for such year is $1,000,000 or
less.
‘(c) Coordination With Other Information Requirements.
- In the case of agreements executed after December 31, 1982, to the extent provided
in regulations prescribed by the Secretary of the Treasury or his delegate, the provisions
of this section shall be modified to coordinate such provisions with the other information
requirements of the Internal Revenue Code of 1986.’
REGULATED PUBLIC UTILITIES; SPECIAL TRANSITIONAL RULE FOR NORMALIZATION REQUIREMENTS
Section 209(d)(1) of Pub. L. 97-34, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘If, by the terms of the applicable rate order last entered before
the date of the enactment of this Act
(Aug. 13, 1981) by a regulatory commission having appropriate jurisdiction, a regulated
public utility would (but for this provision) fail to meet the requirements of section 168(e)(3) of the Internal Revenue Code of 1986 (formerly I.R.C. 1954) with respect to property because, for an accounting period ending after December
31, 1980, such public utility used a method of accounting other than a normalization
method of accounting, such regulated public utility shall not fail to meet such requirements
if, by the terms of its first rate order determining cost of service with respect
to such property which becomes effective after the date of the enactment of this Act
and on or before January 1, 1983, such regulated public utility uses a normalization
method of accounting. This provision shall not apply to any rate order which, under
the rules in effect before the date of the enactment of this Act, required a regulated
public utility to use a method of accounting with respect to the deduction allowable
by section 167 which, under section 167(l), it was not permitted to use.'
INTERIM REGULATIONS WITH RESPECT TO NORMALIZATION;
AUTHORITY TO PRESCRIBE
Section 209(d)(4) of Pub. L. 97-34, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘Until Congress acts further, the Secretary of the Treasury or his
delegate may prescribe such interim regulations as may be necessary or appropriate
to determine whether the requirements of section 168(e)(3)(B)
of the Internal Revenue Code of 1986 (formerly I.R.C. 1954) have been met with respect to property placed in service after December 31, 1980.'
PRIOR PROVISIONS
A prior section 168, acts Aug. 16, 1954, ch. 746, 68A Stat. 52; Aug. 26, 1957, Pub. L. 85-165, Sec. 4, 71 Stat. 414; Sept. 2, 1958, Pub. L. 85-866, title I, Sec. 9(a), (b), 72 Stat. 1608, 1609, which related to deductions with respect to amortization of emergency facilities,
was repealed by Pub. L. 94-455, title XIX, Sec. 1951(b)(4)(A), Oct. 4, 1976, 90 Stat. 1837.
Section 1951(b)(4)(B) of Pub. L. 94-455 provided that: ‘Notwithstanding the repeal made by subparagraph (A) (repealing former
section 168), if a certificate was issued before January 1, 1960, with respect to
an emergency facility which is or has been placed in service before the date of the
enactment of this Act (Oct. 4, 1976), the provisions of (former) section 168 shall
not, with respect to such facility, be considered repealed. The benefit of deductions
by reason of the preceding sentence shall be allowed to estates and trusts in the
same manner as in the case of an individual. The allowable deduction shall be apportioned
between the income beneficiaries and the fiduciary in accordance with regulations
prescribed under section 642(f).’