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10 U.S.C. § 3674 — Long-term lease or charter defined; substantial termination liability
Federal law — U.S. Code and appendices · legal_authorities
**(a) Long-term Lease or Charter.—**
(1) **General rule.—**
(A) In this chapter, the term “long-term lease or charter” (except as provided in paragraph (2)) means a lease, charter, service contract, or conditional sale agreement—
(i) the term of which is for a period of five years or longer or more than one-half the useful life of the vessel, aircraft, or combat vehicle; or
(ii) the initial term of which is for a period of less than five years but which contains an option to renew or extend the agreement for a period which, when added to the initial term (or any previous renewal or extension), is five years or longer.
(B) Such term includes the extension or renewal of a lease or charter agreement if the term of the extension or renewal thereof is for a period of five years or longer or if the term of the lease or charter agreement being extended or renewed was for a period of five years or longer.
(2) **Special rule.—**
(A) In the case of an agreement under which the lessor first places the property in service under the agreement or the property has been in service for less than one year and there is allowable to the lessor or charterer an investment tax credit or depreciation for the property leased, chartered, or otherwise provided under the agreement under section 168 of the Internal Revenue Code of 1986 (unless the lessor or charterer has elected depreciation on a straightline method for such property), the term “long-term lease or charter” means a lease, charter, service contract, or conditional sale agreement—
(i) the term of which is for a period of three years or longer; or
(ii) the initial term of which is for a period of less than three years but which contains an option to renew or extend the agreement for a period which, when a
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Source file: Laws/federal/codes/united-states-code/title-10/section-3674-long-term-lease-or-charter-defined-substantial-termination-liability--bb5ab0c6ac.md
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Source location: Title 10, Chapter 257, § 3674; chapter-257-contracts-for-long-term-lease-or-charter-of-vessels-aircraft-and-combat-vehicles.md
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**(a) Long-term Lease or Charter.—**
(1) **General rule.—**
(A) In this chapter, the term “long-term lease or charter” (except as provided in paragraph (2)) means a lease, charter, service contract, or conditional sale agreement—
(i) the term of which is for a period of five years or longer or more than one-half the useful life of the vessel, aircraft, or combat vehicle; or
(ii) the initial term of which is for a period of less than five years but which contains an option to renew or extend the agreement for a period which, when added to the initial term (or any previous renewal or extension), is five years or longer.
(B) Such term includes the extension or renewal of a lease or charter agreement if the term of the extension or renewal thereof is for a period of five years or longer or if the term of the lease or charter agreement being extended or renewed was for a period of five years or longer.
(2) **Special rule.—**
(A) In the case of an agreement under which the lessor first places the property in service under the agreement or the property has been in service for less than one year and there is allowable to the lessor or charterer an investment tax credit or depreciation for the property leased, chartered, or otherwise provided under the agreement under section 168 of the Internal Revenue Code of 1986 (unless the lessor or charterer has elected depreciation on a straightline method for such property), the term “long-term lease or charter” means a lease, charter, service contract, or conditional sale agreement—
(i) the term of which is for a period of three years or longer; or
(ii) the initial term of which is for a period of less than three years but which contains an option to renew or extend the agreement for a period which, when added to the initial term (or any previous renewal or extension), is three years or longer.
(B) Such term includes the extension or renewal of a lease or charter agreement if the term of the extension or renewal thereof is for a period of three years or longer or if the term of the lease or charter agreement being extended or renewed was for a period of three years or longer.
**(b) Substantial Termination Liability.—** For the purposes of this chapter, the United States shall be considered to have a substantial termination liability under a contract—
(1) if there is an agreement by the United States under the contract to pay an amount not less than the amount equal to 25 percent of the value of the vessel, aircraft, or combat vehicle under lease or charter, calculated on the basis of the present value of the termination liability of the United States under such charter or lease (as determined under regulations prescribed by the Secretary of Defense); or
(2) if (as determined under regulations prescribed by the Secretary of Defense) the sum of—
(A) the present value of the amount of the termination liability of the United States under the contract as of the end of the term of the contract (exclusive of any option to extend the contract); and
(B) the present value of the total of the payments to be made by the United States under the contract (excluding any option to extend the contract) attributable to capital-hire,
is more than one-half the price of the vessel, aircraft, or combat vehicle involved.
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Federal law — U.S. Code and appendices · legal_authorities
**(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—
(1) the applicable depreciation method,
(2) the applicable recovery period, and
(3) the applicable convention.
**(b) Applicable depreciation method** For purposes of this section—
(1) **In general** — Except as provided in paragraphs (2) and (3), the applicable depreciation method is—
(A) the 200 percent declining balance method,
(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.
(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—
(A) any 15-year or 20-year property not referred to in paragraph (3),
(B) any property (other than property described in paragraph (3)) which is a qualified smart electric meter or qualified smart electric grid system, or
(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.
(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:
(A) Nonresidential real property.
(B) Residential rental property.
(C) Any railroad grading or tunnel bore.
(D) Property with respect to which the taxpayer elects under paragraph (5) to have the provisions of this paragraph apply.
(E) Property described in subsection (e)(3)(D)(ii).
(F) Water utility property described in
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Defense Acquisition System.—** In this part, the term “defense acquisition system” means—
(1) the workforce engaged in carrying out the acquisition of property and services for the Department of Defense;
(2) the management structure responsible for directing and overseeing the acquisition of property and services for the Department of Defense; and
(3) the statutory, regulatory, and policy framework that guides the acquisition of property and services for the Department of Defense.
**(b) Element of the Defense Acquisition System.—** In this part, the term “element of the defense acquisition system” means an organization that—
(1) employs members of the acquisition workforce;
(2) carries out acquisition functions; and
(3) focuses primarily on acquisition.
**(c) Acquisition.—** In this part, the term “acquisition” has the meaning provided in [section 131 of title 41](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title41-section131&num=0&edition=prelim).
Source: Supplied U.S. Code snapshot — release unconfirmed · 10 U.S.C. § 3001
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Federal law — U.S. Code and appendices · legal_authorities
### Statutory Notes
#### Codification
Subsecs. (a) to (h) of this section were transferred to chapter 257 of this title by Pub. L. 116–283, div. A, title XVIII, § 1825(a), Jan. 1, 2021, 134 Stat. 4205. Subsecs. (a) and (b) of this section were renumbered as [section 3671 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title10-section3671&num=0&edition=prelim) by Pub. L. 116–283, div. A, title XVIII, § 1825(b), Jan. 1, 2021, 134 Stat. 4206. Subsec. (c)(1) of this section was renumbered as [section 3672(a) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title10-section3672/a&num=0&edition=prelim) by Pub. L. 116–283, div. A, title XVIII, § 1825(d), Jan. 1, 2021, 134 Stat. 4207. Subsec. (c)(2) of this section was renumbered as [section 3673 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title10-section3673&num=0&edition=prelim) by Pub. L. 116–283, div. A, title XVIII, § 1825(c), Jan. 1, 2021, 134 Stat. 4206. Subsec. (d) of this section was renumbered as [section 3674 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title10-section3674&num=0&edition=prelim) by Pub. L. 116–283, div. A, title XVIII, § 1825(f)(1), Jan. 1, 2021, 134 Stat. 4207. Subsec. (e) of this section was renumbered as [section 3672(b) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title10-section3672/b&num=0&edition=prelim) by Pub. L. 116–283, div. A, title XVIII, § 1825(e), Jan. 1, 2021, 134 Stat. 4207. Subsec. (f) of this section was renumbered as [section 3675 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title10-section3675&num=0&edition=prelim) by Pub. L. 116–283, div. A, title XVIII, § 1825(g)(1), Jan. 1, 2021, 134 Stat. 4208. Subse
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Federal law — U.S. Code and appendices · legal_authorities
Page 2521
TITLE 10—ARMED FORCES
§ 3674
CODIFICATION
The text of par. (2) of subsec. (c) of section 2401 of this
title, which was transferred to this section and amend-
ed by Pub. L. 116–283, § 1825(c), was based on Pub. L.
98–525, title XII, § 1232(a)(1)(C), Oct. 19, 1984, 98 Stat.
2600; Pub. L. 103–35, title II, § 201(c)(6), May 31, 1993, 107
Stat. 98; Pub. L. 104–106, div. A, title XV, § 1503(a)(21),
Feb. 10, 1996, 110 Stat. 512.
AMENDMENTS
2021—Pub. L. 116–283, § 1825(c), transferred par. (2) of
section 2401(c) of this title to this section, struck out
par. (2) designation at beginning, substituted ‘‘this
chapter’’ for ‘‘this section’’ in introductory provisions,
and redesignated subpars. (A) and (B) of such former
par. (2) as pars. (1) and (2), respectively.
Statutory Notes and Related Subsidiaries
EFFECTIVE DATE
Section and amendment by Pub. L. 116–283 effective
Jan. 1, 2022, with additional provisions for delayed im-
plementation and applicability of existing law, see sec-
tion 1801(d) of Pub. L. 116–283, set out as an Effective
Date of 2021 Amendment note preceding section 3001 of
this title.
§ 3674. Long-term lease or charter defined; sub-
stantial termination liability
(a) LONG-TERM LEASE OR CHARTER.—
(1) GENERAL RULE.—
(A) In this chapter, the term ‘‘long-term
lease or charter’’ (except as provided in
paragraph (2)) means a lease, charter, serv-
ice contract, or conditional sale agreement—
(i) the term of which is for a period of
five years or longer or more than one-half
the useful life of the vessel, aircraft, or
combat vehicle; or
(ii) the initial term of which is for a pe-
riod of less than five years but which con-
tains an option to renew or extend the
agreement for a period which, when added
to the initial term (or any previo
Source: Supplied 2024 U.S. Code historical extraction · 10 U.S.C. § 3674
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