26 U.S.C. § 168 — Accelerated cost recovery system

Page 783 TITLE 26—INTERNAL REVENUE CODE § 168 1 See References in Text note below. such Code, switching to the method described in sec- tion 167(b)(3) of such Code at a time to maximize the deduction.’’ INTERNAL REVENUE CODE PROVISIONS RELATING TO DE- PRECIATION AS NOT APPLICABLE TO CALCULATIONS OF SECRETARY OF HEALTH AND HUMAN SERVICES IN DE- TERMINING COSTS OF PROGRAMS Pub. L. 97–34, title II, § 203(e), Aug. 13, 1981, 95 Stat. 222, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘The Secretary of Health and Human Services is not required to apply any provision of the Internal Revenue Code of 1986 [formerly I.R.C. 1954], as amended, in calculating depreciation (for the purpose of determining any cost under a program ad- ministered by the Secretary), unless a provision of law requires so expressly.’’ CLASS LIFE SYSTEM; APPLICATION TO REAL PROPERTY; GENERAL RULE Pub. L. 93–625, § 5(a), Jan. 3, 1975, 88 Stat. 2112, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘In the case of buildings and other items of section 1250 property (within the meaning of section 1250(c) of the Internal Revenue Code of 1986 [for- merly I.R.C. 1954]) placed in service before the effective date of the class lives first prescribed by the Secretary of the Treasury or his delegate under section 167(m) of such Code for the class in which such property falls, if an election under such section 167(m) applies to the taxpayer for the taxable year in which such property is placed in service, the taxpayer may, in accordance with regulations prescribed by the Secretary of the Treasury or his delegate, elect to determine the useful life of such property— ‘‘(1) under Revenue Procedure 62–21 (as amended and supplemented) as in effect on December 31, 1970, or ‘‘(2) on the facts and circumstances.’’ TRANSITIONAL RULES FOR REASONABLE ALLOWANCE FOR DEPRECIATION Pub. L. 92–178, title I, § 109(e), Dec. 10, 1971, 85 Stat. 510, as amended by Pub. L. 93–625, § 5(b), Jan. 3, 1975, 88 Stat. 2112; Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘(1) [Repealed. Pub. L. 93–625, § 5(b), Jan. 3, 1975, 88 Stat. 2112.] ‘‘(2) SUBSIDIARY ASSETS.—If a significant portion of a class of property first prescribed by the Secretary of the Treasury or his delegate under section 167(m) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] consists of subsidiary assets, all such subsidiary assets in such class placed in service by the taxpayer during the period beginning on January 1, 1971, and ending on December 31, 1973 (or such earlier date on which a class which includes such subsidiary assets subsequently pre- scribed by the Secretary of the Treasury or his delegate under such section becomes effective), may, in accord- ance with regulations prescribed by the Secretary of the Treasury or his delegate, be excluded by the tax- payer from an election under such section.’’ REHABILITATION EXPENDITURES FOR LOW INCOME RENT- AL HOUSING INCURRED AFTER DECEMBER 31, 1974, AND BEFORE JANUARY 1, 1978, PURSUANT TO CONTRACT ENTERED BEFORE DECEMBER 31, 1974 Pub. L. 93–482, § 4, Oct. 26, 1974, 88 Stat. 1456, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘Notwithstanding the provisions of section 167(k)(1) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (relating to depreciation of ex- penditures to rehabilitate low income rental housing), the provisions of section 167(k) shall apply with respect to rehabilitation expenditures incurred with respect to low income rental housing after December 31, 1974, and before January 1, 1978, if such expenditures are incurred pursuant to a binding contract entered into before De- cember 31, 1974.’’ § 168. Accelerated cost recovery system (a) General rule Except as otherwise provided in this section, the depreciation deduction provided by section 167(a) for any tangible property shall be deter- mined 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 meth- od, (B) switching to the straight line method for the 1st taxable year for which using the straight line method with respect to the ad- justed 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 sub- stituting ‘‘150 percent’’ for ‘‘200 percent’’ in the case of— (A) any 15-year or 20-year property not re- ferred to in paragraph (3), (B) any property (other than property de- scribed in paragraph (3)) which is a qualified smart electric meter or qualified smart elec- tric grid system, or (C) any property (other than property de- scribed 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 ap- plies The applicable depreciation method shall be the straight line method in the case of the fol- lowing 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 subsection (e)(5). (G) Qualified improvement property de- scribed in subsection (e)(6). (4) Salvage value treated as zero Salvage value shall be treated as zero. (5) Election An election under paragraph (2)(D) 1 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 Page 784 TITLE 26—INTERNAL REVENUE CODE § 168 during such taxable year. Such an election, once made, shall be irrevocable. (c) Applicable recovery period For purposes of this section, the applicable re- covery 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. (d) Applicable convention For purposes of this section— (1) In general Except as otherwise provided in this sub- section, the applicable convention is the half- year convention. (2) Real property In the case of— (A) nonresidential real property, (B) residential rental property, and (C) any railroad grading or tunnel bore, the applicable convention is the mid-month convention. (3) Special rule where substantial property placed in service during last 3 months of taxable year (A) In general Except as provided in regulations, if dur- ing any taxable year— (i) the aggregate bases of property to which this section applies placed in service during the last 3 months of the taxable year, exceed (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. (B) Certain property not taken into account For purposes of subparagraph (A), there shall not be taken into account— (i) any nonresidential real property, resi- dential rental property, and railroad grad- ing or tunnel bore, and (ii) any other property placed in service and disposed of during the same taxable year. (4) Definitions (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 dur- ing any taxable year) as placed in service (or disposed of) on the mid-point of such taxable year. (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. (C) Mid-quarter convention The mid-quarter convention is a conven- tion which treats all property placed in serv- ice 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. (e) Classification of property For purposes of this section— (1) In general Except as otherwise provided in this sub- section, 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. (2) Residential rental or nonresidential real property (A) Residential rental property (i) Residential rental property The term ‘‘residential rental property’’ means any building or structure if 80 per- cent or more of the gross rental income from such building or structure for the taxable year is rental income from dwell- ing units. (ii) Definitions For purposes of clause (i)— (I) the term ‘‘dwelling unit’’ means a house or apartment used to provide liv- ing 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 (II) if any portion of the building or structure is occupied by the taxpayer, the gross rental income from such build- ing or structure shall include the rental value of the portion so occupied. (B) Nonresidential real property The term ‘‘nonresidential real property’’ means section 1250 property which is not— (i) residential rental property, or (ii) property with a class life of less than 27.5 years. (3) Classification of certain property (A) 3-year property The term ‘‘3-year property’’ includes— Page 785 TITLE 26—INTERNAL REVENUE CODE § 168 (i) any race horse— (I) which is placed in service before January 1, 2022, and (II) which is placed in service after De- cember 31, 2021, and which is more than 2 years old at the time such horse is placed in service by such purchaser, (ii) any horse other than a race horse which is more than 12 years old at the time it is placed in service, and (iii) any qualified rent-to-own property. (B) 5-year property The term ‘‘5-year property’’ includes— (i) any automobile or light general pur- pose truck, (ii) any semi-conductor manufacturing equipment, (iii) any computer-based telephone cen- tral office switching equipment, (iv) any qualified technological equip- ment, (v) any section 1245 property used in con- nection with research and experimen- tation, (vi) any property which— (I) is described in subparagraph (A) of section 48(a)(3) (or would be so described if ‘‘solar or wind energy’’ were sub- stituted for ‘‘solar energy’’ in clause (i) thereof and the last sentence of such sec- tion did not apply to such subparagraph), (II) is described in paragraph (15) of section 48(l) (as in effect on the day be- fore 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 (III) is described in section 48(l)(3)(A)(ix) (as in effect on the day be- fore the date of the enactment of the Revenue Reconciliation Act of 1990), (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, and (viii) any qualified facility (as defined in section 45Y(b)(1)(A)), any qualified prop- erty (as defined in subsection (b)(2) of sec- tion 48E) which is a qualified investment (as defined in subsection (b)(1) of such sec- tion), or any energy storage technology (as defined in subsection (c)(2) of such sec- tion). Nothing in any provision of law shall be con- strued to treat property as not being de- scribed in subclause (I) or (II) of clause (vi) by reason of being public utility property. (C) 7-year property The term ‘‘7-year property’’ includes— (i) any railroad track, (ii) any motorsports entertainment com- plex, (iii) any Alaska natural gas pipeline, (iv) any natural gas gathering line the original use of which commences with the taxpayer after April 11, 2005, and (v) any property which— (I) does not have a class life, and (II) is not otherwise classified under paragraph (2) or this paragraph. (D) 10-year property The term ‘‘10-year property’’ includes— (i) any single purpose agricultural or horticultural structure (within the mean- ing of subsection (i)(13)), (ii) any tree or vine bearing fruit or nuts, (iii) any qualified smart electric meter, and (iv) any qualified smart electric grid sys- tem. (E) 15-year property The term ‘‘15-year property’’ includes— (i) any municipal wastewater treatment plant, (ii) any telephone distribution plant and comparable equipment used for 2-way ex- change of voice and data communications, (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), (iv) initial clearing and grading land im- provements with respect to gas utility property, (v) any section 1245 property (as defined in section 1245(a)(3)) used in the trans- mission at 69 or more kilovolts of elec- tricity for sale and the original use of which commences with the taxpayer after April 11, 2005, (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 (vii) any qualified improvement prop- erty. (F) 20-year property The term ‘‘20-year property’’ means initial clearing and grading land improvements with respect to any electric utility trans- mission and distribution plant. (4) Railroad grading or tunnel bore The term ‘‘railroad grading or tunnel bore’’ means all improvements resulting from exca- vations (including tunneling), construction of embankments, clearings, diversions of roads and streams, sodding of slopes, and from simi- lar work necessary to provide, construct, re- construct, alter, protect, improve, replace, or restore a roadbed or right-of-way for railroad track. (5) Water utility property The term ‘‘water utility property’’ means property— (A) which is an integral part of the gath- ering, treatment, or commercial distribution of water, and which, without regard to this paragraph, would be 20-year property, and (B) any municipal sewer. (6) Qualified improvement property (A) In general The term ‘‘qualified improvement prop- erty’’ means any improvement made by the Page 786 TITLE 26—INTERNAL REVENUE CODE § 168 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 serv- ice. (B) Certain improvements not included Such term shall not include any improve- ment for which the expenditure is attrib- utable to— (i) the enlargement of the building, (ii) any elevator or escalator, or (iii) the internal structural framework of the building. (f) Property to which section does not apply This section shall not apply to— (1) Certain methods of depreciation Any property if— (A) the taxpayer elects to exclude such property from the application of this sec- tion, and (B) for the 1st taxable year for which a de- preciation deduction would be allowable with respect to such property in the hands of the taxpayer, the property is properly depre- ciated under the unit-of-production method or any method of depreciation not expressed in a term of years (other than the retire- ment-replacement-betterment method or similar method). (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 ac- counting. (3) Films and video tape Any motion picture film or video tape. (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. (5) Certain property placed in service in churning transactions (A) In general Property— (i) described in paragraph (4) of section 168(e) (as in effect before the amendments made by the Tax Reform Act of 1986), or (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 ap- pear. (B) Subparagraph (A)(ii) not to apply Clause (ii) of subparagraph (A) shall not apply to— (i) any residential rental property or nonresidential real property, (ii) any property if, for the 1st taxable year in which such property is placed in service— (I) the amount allowable as a deduc- tion under this section (as in effect be- fore the date of the enactment of this paragraph) with respect to such property is greater than, (II) the amount allowable as a deduc- tion under this section (as in effect on or after such date and using the half-year convention) for such taxable year, or (iii) any property to which this section (as amended by the Tax Reform Act of 1986) applied in the hands of the transferor. (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 amend- ments made by section 201 of the Tax Re- form Act of 1986. (g) Alternative depreciation system for certain property (1) In general In the case of— (A) any tangible property which during the taxable year is used predominantly outside the United States, (B) any tax-exempt use property, (C) any tax-exempt bond financed prop- erty, (D) any imported property covered by an Executive order under paragraph (6), (E) any property to which an election under paragraph (7) applies, (F) any property described in paragraph (8), and (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 alter- native depreciation system. (2) Alternative depreciation system For purposes of paragraph (1), the alter- native depreciation system is depreciation de- termined by using— (A) the straight line method (without re- gard to salvage value), (B) the applicable convention determined under subsection (d), and (C) a recovery period determined under the following table: In the case of: The recovery period shall be: (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 util- ity property ..................... 50 years (3) Special rules for determining class life (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 Page 787 TITLE 26—INTERNAL REVENUE CODE § 168 for purposes of paragraph (2) shall (notwith- standing any other subparagraph of this paragraph) in no event be less than 125 per- cent of the lease term. (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 (C) Qualified technological equipment In the case of any qualified technological equipment, the recovery period used for pur- poses of paragraph (2) shall be 5 years. (D) Automobiles, etc. In the case of any automobile or light gen- eral purpose truck, the recovery period used for purposes of paragraph (2) shall be 5 years. (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 para- graph (2) shall be 40 years. (4) Exception for certain property used outside United States Subparagraph (A) of paragraph (1) shall not apply to— (A) any aircraft which is registered by the Administrator of the Federal Aviation Agen- cy and which is operated to and from the United States or is operated under contract with the United States; (B) rolling stock which is used within and without the United States and which is— (i) of a rail carrier subject to part A of subtitle IV of title 49, or (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 ag- gregating more than 12 months in any 24- month period; (C) any vessel documented under the laws of the United States which is operated in the foreign or domestic commerce of the United States; (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; (E) any container of a United States per- son which is used in the transportation of property to and from the United States; (F) any property (other than a vessel or an aircraft) of a United States person which is used for the purpose of exploring for, devel- oping, removing, or transporting resources from the outer Continental Shelf (within the meaning of section 2 of the Outer Conti- nental Shelf Lands Act, as amended and sup- plemented; (43 U.S.C. 1331)); (G) any property which is owned by a do- mestic 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 or- ganized in, or under the law of, a possession of the United States; (H) any communications satellite (as de- fined in section 103(3) of the Communica- tions Satellite Act of 1962, 47 U.S.C. 702(3)), or any interest therein, of a United States person; (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 do- mestic subsidiary of such a corporation), if such cable is part of a submarine cable sys- tem which constitutes part of a communica- tion link exclusively between the United States and one or more foreign countries; (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 re- sources from ocean waters or deposits under such waters; (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 gen- erate energy for use in the United States; and (L) any satellite (not described in subpara- graph (H)) or other spacecraft (or any inter- est 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 in- cluding any foreign country which is a coun- try of South America. (5) Tax-exempt bond financed property For purposes of this subsection— (A) In general Except as otherwise provided in this para- graph, the term ‘‘tax-exempt bond financed property’’ means any property to the extent such property is financed (directly or indi- Page 788 TITLE 26—INTERNAL REVENUE CODE § 168 rectly) by an obligation the interest on which is exempt from tax under section 103(a). (B) Allocation of bond proceeds For purposes of subparagraph (A), the pro- ceeds of any obligation shall be treated as used to finance property acquired in connec- tion with the issuance of such obligation in the order in which such property is placed in service. (C) Qualified residential rental projects The term ‘‘tax-exempt bond financed prop- erty’’ shall not include any qualified resi- dential rental project (within the meaning of section 142(a)(7)). (6) Imported property (A) Countries maintaining trade restrictions or engaging in discriminatory acts If the President determines that a foreign country— (i) maintains nontariff trade restric- tions, including variable import fees, which substantially burden United States commerce in a manner inconsistent with provisions of trade agreements, or (ii) engages in discriminatory or other acts (including tolerance of international cartels) or policies unjustifiably restrict- ing United States commerce, the President may by Executive order pro- vide for the application of paragraph (1)(D) to any article or class of articles manufac- tured 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 un- less the President determines an earlier date to be in the public interest and specifies such date in the Executive order. (B) Imported property For purposes of this subsection, the term ‘‘imported property’’ means any property if— (i) such property was completed outside the United States, or (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 Common- wealth of Puerto Rico and the possessions of the United States. (7) Election to use alternative depreciation sys- tem (A) In general If the taxpayer makes an election under this paragraph with respect to any class of property for any taxable year, the alter- native depreciation system under this sub- section shall apply to all property in such class placed in service during such taxable year. Notwithstanding the preceding sen- tence, in the case of nonresidential real property or residential rental property, such election may be made separately with re- spect to each property. (B) Election irrevocable An election under subparagraph (A), once made, shall be irrevocable. (8) Electing real property trade or business The property described in this paragraph shall consist of any nonresidential real prop- erty, residential rental property, and qualified improvement property held by an electing real property trade or business (as defined in 163(j)(7)(B)). (h) Tax-exempt use property (1) In general For purposes of this section— (A) Property other than nonresidential real property Except as otherwise provided in this sub- section, the term ‘‘tax-exempt use property’’ means that portion of any tangible property (other than nonresidential real property) leased to a tax-exempt entity. (B) Nonresidential real property (i) In general In the case of nonresidential real prop- erty, the term ‘‘tax-exempt use property’’ means that portion of the property leased to a tax-exempt entity in a disqualified lease. (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) part or all of the property was fi- nanced (directly or indirectly) by an ob- ligation the interest on which is exempt from tax under section 103(a) and such entity (or a related entity) participated in such financing, (II) under such lease there is a fixed or determinable price purchase or sale op- tion which involves such entity (or a re- lated entity) or there is the equivalent of such an option, (III) such lease has a lease term in ex- cess of 20 years, or (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 re- lated entity) before such sale (or other transfer) or lease. (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 prop- erty. (iv) Treatment of improvements For purposes of this subparagraph, im- provements to a property (other than land) shall not be treated as a separate property. Page 789 TITLE 26—INTERNAL REVENUE CODE § 168 (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 prop- erty is first used by the tax-exempt entity (or a related entity). (C) Exception for short-term leases (i) In general Property shall not be treated as tax-ex- empt use property merely by reason of a short-term lease. (ii) Short-term lease For purposes of clause (i), the term ‘‘short-term lease’’ means any lease the term of which is— (I) less than 3 years, and (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. (D) Exception where property used in unre- lated 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-ex- empt entity (directly or through a partner- ship 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 por- tion of a property so used shall not be treat- ed as leased to a tax-exempt entity in a dis- qualified lease. (E) Nonresidential real property defined For purposes of this paragraph, the term ‘‘nonresidential real property’’ includes resi- dential rental property. (2) Tax-exempt entity (A) In general For purposes of this subsection, the term ‘‘tax-exempt entity’’ means— (i) the United States, any State or polit- ical subdivision thereof, any possession of the United States, or any agency or instru- mentality of any of the foregoing, (ii) an organization (other than a cooper- ative described in section 521) which is ex- empt from tax imposed by this chapter, (iii) any foreign person or entity, and (iv) any Indian tribal government de- scribed 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 man- ner as a State. (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) subject to tax under this chapter, or (ii) included under section 951 in the gross income of a United States share- holder for the taxable year with or within which ends the taxable year of the con- trolled 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 chap- ter. (C) Foreign person or entity For purposes of this paragraph, the term ‘‘foreign person or entity’’ means— (i) any foreign government, any inter- national organization, or any agency or in- strumentality of any of the foregoing, and (ii) any person who is not a United States person. Such term does not include any foreign part- nership or other foreign pass-thru entity. (D) Treatment of certain taxable instrumen- talities For purposes of this subsection, a corpora- tion shall not be treated as an instrumen- tality of the United States or of any State or political subdivision thereof if— (i) all of the activities of such corpora- tion are subject to tax under this chapter, and (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. (E) Certain previously tax-exempt organiza- tions (i) In general For purposes of this subsection, an orga- nization shall be treated as an organiza- tion described in subparagraph (A)(ii) with respect to any property (other than prop- erty held by such organization) if such or- ganization was an organization (other than a cooperative described in section 521) ex- empt 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 Corpora- tion. (ii) Election not to have clause (i) apply (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. (II) Tax-exempt use period For purposes of subclause (I), the term ‘‘tax-exempt use period’’ means the pe- Page 790 TITLE 26—INTERNAL REVENUE CODE § 168 riod beginning with the taxable year in which the property described in sub- clause (I) is first used by the organiza- tion and ending with the close of the 15th taxable year following the last tax- able year of the applicable recovery pe- riod of such property. (III) Election Any election under subclause (I), once made, shall be irrevocable. (iii) Treatment of successor organizations Any organization which is engaged in ac- tivities substantially similar to those en- gaged in by a predecessor organization shall succeed to the treatment under this subparagraph of such predecessor organiza- tion. (iv) First used For purposes of this subparagraph, prop- erty shall be treated as first used by the organization— (I) when the property is first placed in service under a lease to such organiza- tion, 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 prop- erty is first used by such partnership or pass-thru entity or when such organiza- tion is first a member of such partner- ship or pass-thru entity. (3) Special rules for certain high technology equipment (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 sub- section (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 mar- ket value rent determined at the time of re- newal; except that the aggregate period not taken into account by reason of this sen- tence shall not exceed 24 months. (B) Exception for certain property (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) part or all of the property was fi- nanced (directly or indirectly) by an ob- ligation the interest on which is exempt from tax under section 103(a), (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 en- tity) before such sale (or other transfer) or lease, or (III) such tax-exempt entity is the United States or any agency or instru- mentality of the United States. (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 prop- erty is first used by the tax-exempt entity (or a related entity). (4) Related entities For purposes of this subsection— (A)(i) Each governmental unit and each agency or instrumentality of a govern- mental unit is related to each other such unit, agency, or instrumentality which di- rectly or indirectly derives its powers, rights, and duties in whole or in part from the same sovereign authority. (ii) For purposes of clause (i), the United States, each State, and each possession of the United States shall be treated as a sepa- rate sovereign authority. (B) Any entity not described in subpara- graph (A)(i) is related to any other entity if the 2 entities have— (i) significant common purposes and sub- stantial common membership, or (ii) directly or indirectly substantial common direction or control. (C)(i) An entity is related to another enti- ty if either entity owns (directly or through 1 or more entities) a 50 percent or greater in- terest in the capital or profits of the other entity. (ii) For purposes of clause (i), entities treated as related under subparagraph (A) or (B) shall be treated as 1 entity. (D) An entity is related to another entity with respect to a transaction if such trans- action is part of an attempt by such entities to avoid the application of this subsection. (5) Tax-exempt use of property leased to part- nerships, etc., determined at partner level For purposes of this subsection— (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 treat- ing each tax-exempt entity partner’s propor- tionate share (determined under paragraph (6)(C)) of such property as being leased to such partner. (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 en- tities. (C) Presumption with respect to foreign enti- ties Unless it is otherwise established to the satisfaction of the Secretary, it shall be pre- sumed that the partners of a foreign partner- ship (and the beneficiaries of any other for- eign pass-thru entity) are persons who are not United States persons. (6) Treatment of property owned by partner- ships, etc. (A) In general For purposes of this subsection, if— Page 791 TITLE 26—INTERNAL REVENUE CODE § 168 (i) any property which (but for this sub- paragraph) 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 (ii) any allocation to the tax-exempt en- tity 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. (B) Qualified allocation For purposes of subparagraph (A), the term ‘‘qualified allocation’’ means any allocation to a tax-exempt entity which— (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 enti- ty is a partner in the partnership, and (ii) has substantial economic effect with- in the meaning of section 704(b)(2). For purposes of this subparagraph, items al- located under section 704(c) shall not be taken into account. (C) Determination of proportionate share (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 sec- tion 704(c)), whichever results in the larg- est proportionate share. (ii) Determination where allocations vary For purposes of clause (i), if a tax-ex- empt 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 part- nership, such share shall be the highest share such entity may receive. (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 partner- ship 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. (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 partner- ships and other entities. (F) Treatment of certain taxable entities (i) In general For purposes of this paragraph and para- graph (5), except as otherwise provided in this subparagraph, any tax-exempt con- trolled entity shall be treated as a tax-ex- empt entity. (ii) Election 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 paragraph (5), and (II) any gain recognized by a tax-ex- empt entity on any disposition of an in- terest 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 un- related business taxable income for pur- poses of section 511. Any such election shall be irrevocable and shall bind all tax-exempt entities holding interests in such tax-exempt controlled en- tity. 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. (iii) Tax-exempt controlled entity (I) In general The term ‘‘tax-exempt controlled enti- ty’’ means any corporation (which is not a tax-exempt entity determined without regard to this subparagraph and para- graph (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). (II) Only 5-percent shareholders taken into account in case of publicly trad- ed stock For purposes of subclause (I), in the case of a corporation the stock of which is publicly traded on an established secu- rities market, stock held by a tax-ex- empt entity shall not be taken into ac- count unless such entity holds at least 5 percent (in value) of the stock in such corporation. For purposes of this sub- clause, related entities (within the meaning of paragraph (4)) shall be treat- ed as 1 entity. (III) Section 318 to apply For purposes of this clause, a tax-ex- empt entity shall be treated as holding stock which it holds through application of section 318 (determined without re- gard to the 50-percent limitation con- tained in subsection (a)(2)(C) thereof). (G) Regulations For purposes of determining whether there is a qualified allocation under subparagraph (B), the regulations prescribed under para- graph (8) for purposes of this paragraph— (i) shall set forth the proper treatment for partnership guaranteed payments, and (ii) may provide for the exclusion or seg- regation of items. (7) Lease For purposes of this subsection, the term ‘‘lease’’ includes any grant of a right to use property. Page 792 TITLE 26—INTERNAL REVENUE CODE § 168 (8) Regulations The Secretary shall prescribe such regula- tions as may be necessary or appropriate to carry out the purposes of this subsection. (i) Definitions and special rules For purposes of this section— (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 prop- erty 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 ex- perience with respect to all depreciable assets. The reference in this paragraph to subsection (m) of section 167 shall be treated as a ref- erence to such subsection as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990. (2) Qualified technological equipment (A) In general The term ‘‘qualified technological equip- ment’’ means— (i) any computer or peripheral equip- ment, (ii) any high technology telephone sta- tion equipment installed on the customer’s premises, and (iii) any high technology medical equip- ment. (B) Computer or peripheral equipment de- fined For purposes of this paragraph— (i) In general The term ‘‘computer or peripheral equip- ment’’ means— (I) any computer, and (II) any related peripheral equipment. (ii) Computer The term ‘‘computer’’ means a program- mable electronically activated device which— (I) is capable of accepting information, applying prescribed processes to the in- formation, and supplying the results of these processes with or without human intervention, and (II) consists of a central processing unit containing extensive storage, logic, arithmetic, and control capabilities. (iii) Related peripheral equipment The term ‘‘related peripheral equip- ment’’ means any auxiliary machine (whether on-line or off-line) which is de- signed to be placed under the control of the central processing unit of a computer. (iv) Exceptions The term ‘‘computer or peripheral equip- ment’’ shall not include— (I) any equipment which is an integral part of other property which is not a computer, (II) typewriters, calculators, adding and accounting machines, copiers, dupli- cating equipment, and similar equip- ment, and (III) equipment of a kind used pri- marily for amusement or entertainment of the user. (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, observa- tion, diagnosis, or treatment of patients in a laboratory, medical, or hospital environ- ment. (3) Lease term (A) In general In determining a lease term— (i) there shall be taken into account op- tions to renew, (ii) the term of a lease shall include the term of any service contract or similar ar- rangement (whether or not treated as a lease under section 7701(e))— (I) which is part of the same trans- action (or series of related transactions) which includes the lease, and (II) which is with respect to the prop- erty subject to the lease or substantially similar property, and (iii) 2 or more successive leases which are part of the same transaction (or a se- ries of related transactions) with respect to the same or substantially similar prop- erty shall be treated as 1 lease. (B) Special rule for fair rental options on nonresidential real property or residen- tial rental property For purposes of clause (i) of subparagraph (A), in the case of nonresidential real prop- erty 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. (4) General asset accounts Under regulations, a taxpayer may maintain 1 or more general asset accounts for any prop- erty 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. (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. (6) Treatments of additions or improvements to property In the case of any addition to (or improve- ment of) any property— Page 793 TITLE 26—INTERNAL REVENUE CODE § 168 (A) any deduction under subsection (a) for such addition or improvement shall be com- puted 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 (B) the applicable recovery period for such addition or improvement shall begin on the later of— (i) the date on which such addition (or improvement) is placed in service, or (ii) the date on which the property with respect to which such addition (or im- provement) was made is placed in service. (7) Treatment of certain transferees (A) In general In the case of any property transferred in a transaction described in subparagraph (B), the transferee shall be treated as the trans- feror for purposes of computing the deprecia- tion deduction determined under this sec- tion with respect to so much of the basis in the hands of the transferee as does not ex- ceed 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 ap- plied 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. (B) Transactions covered The transactions described in this subpara- graph are— (i) any transaction described in section 332, 351, 361, 721, or 731, and (ii) any transaction between members of the same affiliated group during any tax- able year for which a consolidated return is made by such group. (C) Property reacquired by the taxpayer Under regulations, property which is dis- posed 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. (8) Treatment of leasehold improvements (A) In general In the case of any building erected (or im- provements made) on leased property, if such building or improvement is property to which this section applies, the depreciation deduction shall be determined under the pro- visions of this section. (B) Treatment of lessor improvements which are abandoned at termination of lease An improvement— (i) which is made by the lessor of leased property for the lessee of such property, and (ii) which is irrevocably disposed of or abandoned by the lessor at the termi- nation 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. (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). (9) Normalization rules (A) In general In order to use a normalization method of accounting with respect to any public util- ity property for purposes of subsection (f)(2)— (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 reg- ulated books of account, use a method of depreciation with respect to such property that is the same as, and a depreciation pe- riod for such property that is no shorter than, the method and period used to com- pute its depreciation expense for such pur- poses; and (ii) if the amount allowable as a deduc- tion 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 al- lowable 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 ex- pense under clause (i), the taxpayer must make adjustments to a reserve to reflect the deferral of taxes resulting from such difference. (B) Use of inconsistent estimates and projec- tions, etc. (i) In general One way in which the requirements of subparagraph (A) are not met is if the tax- payer, for ratemaking purposes, uses a pro- cedure or adjustment which is inconsistent with the requirements of subparagraph (A). (ii) Use of inconsistent estimates and pro- jections The procedures and adjustments which are to be treated as inconsistent for pur- poses of clause (i) shall include any proce- dure or adjustment for ratemaking pur- poses 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 es- timate or projection is also used, for rate- making purposes, with respect to the other 2 such items and with respect to the rate base. (iii) Regulatory authority The Secretary may by regulations pre- scribe procedures and adjustments (in ad- dition to those specified in clause (ii)) which are to be treated as inconsistent for purposes of clause (i). (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 rea- Page 794 TITLE 26—INTERNAL REVENUE CODE § 168 son of subsection (f)(2), the allowance for de- preciation under section 167(a) shall be an amount computed using the method and pe- riod referred to in subparagraph (A)(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— (A) electrical energy, water, or sewage dis- posal services, (B) gas or steam through a local distribu- tion system, (C) telephone services, or other commu- nication 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 (D) transportation of gas or steam by pipe- line, if the rates for such furnishing or sale, as the case may be, have been established or ap- proved 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. (11) Research and experimentation The term ‘‘research and experimentation’’ has the same meaning as the term research and experimental has under section 174. (12) Section 1245 and 1250 property The terms ‘‘section 1245 property’’ and ‘‘sec- tion 1250 property’’ have the meanings given such terms by sections 1245(a)(3) and 1250(c), respectively. (13) Single purpose agricultural or horti- cultural structure (A) In general The term ‘‘single purpose agricultural or horticultural structure’’ means— (i) a single purpose livestock structure, and (ii) a single purpose horticultural struc- ture. (B) Definitions For purposes of this paragraph— (i) Single purpose livestock structure The term ‘‘single purpose livestock structure’’ means any enclosure or struc- ture specifically designed, constructed, and used— (I) for housing, raising, and feeding a particular type of livestock and their produce, and (II) for housing the equipment (includ- ing any replacements) necessary for the housing, raising, and feeding referred to in subclause (I). (ii) Single purpose horticultural structure The term ‘‘single purpose horticultural structure’’ means— (I) a greenhouse specifically designed, constructed, and used for the commer- cial production of plants, and (II) a structure specifically designed, constructed, and used for the commer- cial production of mushrooms. (iii) Structures which include work space An enclosure or structure which provides work space shall be treated as a single pur- pose agricultural or horticultural struc- ture only if such work space is solely for— (I) the stocking, caring for, or col- lecting of livestock or plants (as the case may be) or their produce, (II) the maintenance of the enclosure or structure, and (III) the maintenance or replacement of the equipment or stock enclosed or housed therein. (iv) Livestock The term ‘‘livestock’’ includes poultry. (14) Qualified rent-to-own property (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. (B) Rent-to-own dealer The term ‘‘rent-to-own dealer’’ means a person that, in the ordinary course of busi- ness, regularly enters into rent-to-own con- tracts with customers for the use of con- sumer 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 owner- ship of the property from such person to the customer. (C) Consumer property The term ‘‘consumer property’’ means tan- gible personal property of a type generally used within the home for personal use. (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) is titled ‘‘Rent-to-Own Agreement’’ or ‘‘Lease Agreement with Ownership Op- tion,’’ or uses other similar language, (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), (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 con- tract to acquire legal title to the item of property, (iv) provides a beginning date and a max- imum period of time for which the con- tract may be in effect that does not exceed 156 weeks or 36 months from such begin- ning date (including renewals or options to extend), (v) provides for payments within the 156- week or 36-month period that, in the ag- gregate, generally exceed the normal re- tail price of the consumer property plus interest, Page 795 TITLE 26—INTERNAL REVENUE CODE § 168 (vi) provides for payments under the con- tract that, in the aggregate, do not exceed $10,000 per item of consumer property, (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 prop- erty 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 (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 pay- ments stated in the contract have been made. (15) Motorsports entertainment complex (A) In general The term ‘‘motorsports entertainment complex’’ means a racing track facility which— (i) is permanently situated on land, and (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 admis- sion. (B) Ancillary and support facilities Such term shall include, if owned by the taxpayer who owns the complex and pro- vided for the benefit of patrons of the com- plex— (i) ancillary facilities and land improve- ments in support of the complex’s activi- ties (including parking lots, sidewalks, wa- terways, bridges, fences, and landscaping), (ii) support facilities (including food and beverage retailing, souvenir vending, and other nonlodging accommodations), and (iii) appurtenances associated with such facilities and related attractions and amusements (including ticket booths, race track surfaces, suites and hospitality fa- cilities, grandstands and viewing struc- tures, props, walls, facilities that support the delivery of entertainment services, other special purpose structures, facades, shop interiors, and buildings). (C) Exception Such term shall not include any transpor- tation equipment, administrative services assets, warehouses, administrative build- ings, hotels, or motels. (D) Termination Such term shall not include any property placed in service after December 31, 2025. (16) Alaska natural gas pipeline The term ‘‘Alaska natural gas pipeline’’ means the natural gas pipeline system located in the State of Alaska which— (A) has a capacity of more than 500,000,000,000 Btu of natural gas per day, and (B) is— (i) placed in service after December 31, 2013, or (ii) treated as placed in service on Janu- ary 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, re- lated equipment, and appurtenances used to carry natural gas, but does not include any gas processing plant. (17) Natural gas gathering line The term ‘‘natural gas gathering line’’ means— (A) the pipe, equipment, and appur- tenances determined to be a gathering line by the Federal Energy Regulatory Commis- sion, and (B) the pipe, equipment, and appur- tenances used to deliver natural gas from the wellhead or a commonpoint to the point at which such gas first reaches— (i) a gas processing plant, (ii) an interconnection with a trans- mission pipeline for which a certificate as an interstate transmission pipeline has been issued by the Federal Energy Regu- latory Commission, (iii) an interconnection with an intra- state transmission pipeline, or (iv) a direct interconnection with a local distribution company, a gas storage facil- ity, or an industrial consumer. (18) Qualified smart electric meters (A) In general The term ‘‘qualified smart electric meter’’ means any smart electric meter which— (i) is placed in service by a taxpayer who is a supplier of electric energy or a pro- vider of electric energy services, and (ii) does not have a class life (determined without regard to subsection (e)) of less than 16 years. (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) measures and records electricity usage data on a time-differentiated basis in at least 24 separate time segments per day, (ii) provides for the exchange of informa- tion between supplier or provider and the customer’s electric meter in support of time-based rates or other forms of demand response, (iii) provides data to such supplier or provider so that the supplier or provider can provide energy usage information to customers electronically, and (iv) provides net metering. (19) Qualified smart electric grid systems (A) In general The term ‘‘qualified smart electric grid system’’ means any smart grid property which— Page 796 TITLE 26—INTERNAL REVENUE CODE § 168 (i) is used as part of a system for electric distribution grid communications, moni- toring, and management placed in service by a taxpayer who is a supplier of electric energy or a provider of electric energy services, and (ii) does not have a class life (determined without regard to subsection (e)) of less than 16 years. (B) Smart grid property For the purposes of subparagraph (A), the term ‘‘smart grid property’’ means elec- tronics and related equipment that is capa- ble of— (i) sensing, collecting, and monitoring data of or from all portions of a utility’s electric distribution grid, (ii) providing real-time, two-way com- munications to monitor or manage such grid, and (iii) providing real time analysis of and event prediction based upon collected data that can be used to improve electric dis- tribution system reliability, quality, and performance. (j) Property on Indian reservations (1) In general For purposes of subsection (a), the applica- ble recovery period for qualified Indian res- ervation property shall be determined in ac- cordance with the table contained in para- graph (2) in lieu of the table contained in sub- section (c). (2) Applicable recovery period for Indian res- ervation 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. (3) Deduction allowed in computing minimum tax For purposes of determining alternative minimum taxable income under section 55, the deduction under subsection (a) for qualified In- dian reservation property shall be determined under this section without regard to any ad- justment under section 56. (4) Qualified Indian reservation property de- fined For purposes of this subsection— (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) used by the taxpayer predominantly in the active conduct of a trade or business within an Indian reservation, (ii) not used or located outside the In- dian reservation on a regular basis, (iii) not acquired (directly or indirectly) by the taxpayer from a person who is re- lated to the taxpayer (within the meaning of section 465(b)(3)(C)), and (iv) not property (or any portion thereof) placed in service for purposes of con- ducting or housing class I, II, or III gaming (as defined in section 4 of the Indian Regu- latory Act (25 U.S.C. 2703)). (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) without regard to subsection (g)(7) (relating to election to use alternative de- preciation system), and (ii) after the application of section 280F(b) (relating to listed property with limited business use). (C) Special rule for reservation infrastruc- ture investment (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 lo- cated within the Indian reservation. (ii) Qualified infrastructure property For purposes of this subparagraph, the term ‘‘qualified infrastructure property’’ means qualified Indian reservation prop- erty (determined without regard to sub- paragraph (A)(ii)) which— (I) benefits the tribal infrastructure, (II) is available to the general public, and (III) is placed in service in connection with the taxpayer’s active conduct of a trade or business within an Indian res- ervation. Such term includes, but is not limited to, roads, power lines, water systems, railroad spurs, and communications facilities. (5) Real estate rentals For purposes of this subsection, the rental to others of real property located within an In- dian reservation shall be treated as the active conduct of a trade or business within an In- dian reservation. (6) Indian reservation defined For purposes of this subsection, the term ‘‘Indian reservation’’ means a reservation, as defined in— (A) section 3(d) of the Indian Financing Act of 1974 (25 U.S.C. 1452(d)), or (B) section 4(10) of the Indian Child Wel- fare 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 Okla- homa’’ as including only lands which are with- in the jurisdictional area of an Oklahoma In- dian tribe (as determined by the Secretary of Page 797 TITLE 26—INTERNAL REVENUE CODE § 168 2 So in original. The word ‘‘or’’ probably should not appear. the Interior) and are recognized by such Sec- retary as eligible for trust land status under 25 CFR Part 151 (as in effect on the date of the enactment of this sentence). (7) Coordination with nonrevenue laws Any reference in this subsection to a provi- sion not contained in this title shall be treat- ed for purposes of this subsection as a ref- erence to such provision as in effect on the date of the enactment of this paragraph. (8) Election out If a taxpayer makes an election under this paragraph with respect to any class of prop- erty for any taxable year, paragraph (1) shall not apply to all property in such class placed in service during such taxable year. Such elec- tion, once made, shall be irrevocable. (9) Termination This subsection shall not apply to property placed in service after December 31, 2021. (k) Special allowance for certain property (1) Additional allowance In the case of any qualified property— (A) the depreciation deduction provided by section 167(a) for the taxable year in which such property is placed in service shall in- clude an allowance equal to the applicable percentage of the adjusted basis of the quali- fied property, and (B) the adjusted basis of the qualified prop- erty shall be reduced by the amount of such deduction before computing the amount oth- erwise allowable as a depreciation deduction under this chapter for such taxable year and any subsequent taxable year. (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 de- fined in section 167(f)(1)(B)) for which a de- duction is allowable under section 167(a) without regard to this subsection, (III) which is water utility property, or 2 (IV) which is a qualified film or tele- vision 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 (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, (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 (iii) which is placed in service by the taxpayer before January 1, 2027. (B) Certain property having longer produc- tion 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) and (ii) of subparagraph (A), (II) is placed in service by the taxpayer before January 1, 2028, (III) is acquired by the taxpayer (or ac- quired pursuant to a written binding contract entered into) before January 1, 2027, (IV) has a recovery period of at least 10 years or is transportation property, (V) is subject to section 263A, and (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))). (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 ex- tent of the adjusted basis thereof attrib- utable to manufacture, construction, or production before January 1, 2027. (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 subpara- graph (C). (C) Certain aircraft The term ‘‘qualified property’’ includes property— (i) which meets the requirements of sub- paragraph (A)(ii) and subclauses (II) and (III) of subparagraph (B)(i), (ii) which is an aircraft which is not a transportation property (as defined in sub- paragraph (B)(iii)) other than for agricul- tural or firefighting purposes, (iii) which is purchased and on which such purchaser, at the time of the contract for purchase, has made a nonrefundable de- posit of the lesser of— (I) 10 percent of the cost, or (II) $100,000, and (iv) which has— (I) an estimated production period ex- ceeding 4 months, and (II) a cost exceeding $200,000. (D) Exception for alternative depreciation property The term ‘‘qualified property’’ shall not include any property to which the alter- native depreciation system under subsection (g) applies, determined— (i) without regard to paragraph (7) of subsection (g) (relating to election to have system apply), and Page 798 TITLE 26—INTERNAL REVENUE CODE § 168 (ii) after application of section 280F(b) (relating to listed property with limited business use). (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 subclause (III) of subparagraph (B)(i) shall be treated as met if the taxpayer be- gins manufacturing, constructing, or pro- ducing the property before January 1, 2027. (ii) Acquisition requirements An acquisition of property meets the re- quirements of this clause if— (I) such property was not used by the taxpayer at any time prior to such ac- quisition, and (II) the acquisition of such property meets the requirements of paragraphs (2)(A), (2)(B), (2)(C), and (3) of section 179(d). (iii) Syndication For purposes of subparagraph (A)(ii), if— (I) property is used by a lessor of such property and such use is the lessor’s first use 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 sub- ject 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 serv- ice 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 re- mains the same as when such property was originally placed in service, such property shall be treated as origi- nally placed in service not earlier than the date of such last sale. (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 in- crease the limitation under section 280F(a)(1)(A)(i) by $8,000. (ii) Listed property The deduction allowable under para- graph (1) shall be taken into account in computing any recapture amount under section 280F(b)(2). (iii) Phase down In the case of a passenger automobile ac- quired by the taxpayer before September 28, 2017, and placed in service by the tax- payer after September 27, 2017, clause (i) shall be applied by substituting for ‘‘$8,000’’— (I) in the case of an automobile placed in service during 2018, $6,400, and (II) in the case of an automobile placed in service during 2019, $4,800. (G) Deduction allowed in computing min- imum 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. (H) Production placed in service For purposes of subparagraph (A)— (i) a qualified film or television produc- tion shall be considered to be placed in service at the time of initial release or broadcast, and (ii) a qualified live theatrical production shall be considered to be placed in service at the time of the initial live staged per- formance. [(3) Repealed. Pub. L. 115–97, title I, § 13204(a)(4)(B)(ii), Dec. 22, 2017, 131 Stat. 2111] [(4) Repealed. Pub. L. 115–97, title I, § 12001(b)(13), Dec. 22, 2017, 131 Stat. 2094] (5) Special rules for certain plants bearing fruits and nuts (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 ordi- nary course of the taxpayer’s farming busi- ness (as defined in section 263A(e)(4)) during a taxable year for which the taxpayer has elected the application of this paragraph— (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 (ii) the adjusted basis of such specified plant shall be reduced by the amount of such deduction. (B) Specified plant For purposes of this paragraph, the term ‘‘specified plant’’ means— (i) any tree or vine which bears fruits or nuts, and (ii) any other plant which will have more than one crop or yield of fruits or nuts and which generally has a pre-productive pe- riod 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. (C) Election revocable only with consent An election under this paragraph may be revoked only with the consent of the Sec- retary. (D) Additional depreciation may be claimed only once If this paragraph applies to any specified plant, such specified plant shall not be treat- Page 799 TITLE 26—INTERNAL REVENUE CODE § 168 ed as qualified property in the taxable year in which placed in service. (E) Deduction allowed in computing min- imum tax Rules similar to the rules of paragraph (2)(G) shall apply for purposes of this para- graph. (6) Applicable percentage For purposes of this subsection— (A) In general Except as otherwise provided in this para- graph, the term ‘‘applicable percentage’’ means— (i) in the case of property placed in serv- ice after September 27, 2017, and before January 1, 2023, 100 percent, (ii) in the case of property placed in serv- ice after December 31, 2022, and before Jan- uary 1, 2024, 80 percent, (iii) in the case of property placed in service after December 31, 2023, and before January 1, 2025, 60 percent, (iv) in the case of property placed in service after December 31, 2024, and before January 1, 2026, 40 percent, and (v) in the case of property placed in serv- ice after December 31, 2025, and before Jan- uary 1, 2027, 20 percent. (B) Rule for property with longer production periods In the case of property described in sub- paragraph (B) or (C) of paragraph (2), the term ‘‘applicable percentage’’ means— (i) in the case of property placed in serv- ice after September 27, 2017, and before January 1, 2024, 100 percent, (ii) in the case of property placed in serv- ice after December 31, 2023, and before Jan- uary 1, 2025, 80 percent, (iii) in the case of property placed in service after December 31, 2024, and before January 1, 2026, 60 percent, (iv) in the case of property placed in service after December 31, 2025, and before January 1, 2027, 40 percent, and (v) in the case of property placed in serv- ice after December 31, 2026, and before Jan- uary 1, 2028, 20 percent. (C) Rule for plants bearing fruits and nuts In the case of a specified plant described in paragraph (5), the term ‘‘applicable percent- age’’ means— (i) in the case of a plant which is planted or grafted after September 27, 2017, and be- fore January 1, 2023, 100 percent, (ii) in the case of a plant which is plant- ed or grafted after December 31, 2022, and before January 1, 2024, 80 percent, (iii) in the case of a plant which is plant- ed or grafted after December 31, 2023, and before January 1, 2025, 60 percent, (iv) in the case of a plant which is plant- ed or grafted after December 31, 2024, and before January 1, 2026, 40 percent, and (v) in the case of a plant which is planted or grafted after December 31, 2025, and be- fore January 1, 2027, 20 percent. (7) Election out If a taxpayer makes an election under this paragraph with respect to any class of prop- erty for any taxable year, paragraphs (1) and (2)(F) shall not apply to any qualified property in such class placed in service during such tax- able year. An election under this paragraph may be revoked only with the consent of the Secretary. (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 Sep- tember 27, 2017, paragraph (6) shall be applied by substituting for each percentage therein— (A) ‘‘50 percent’’ in the case of— (i) property placed in service before Jan- uary 1, 2018, and (ii) property described in subparagraph (B) or (C) of paragraph (2) which is placed in service in 2018, (B) ‘‘40 percent’’ in the case of— (i) property placed in service in 2018 (other than property described in subpara- graph (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, (C) ‘‘30 percent’’ in the case of— (i) property placed in service in 2019 (other than property described in subpara- graph (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, and (D) ‘‘0 percent’’ in the case of— (i) property placed in service after 2019 (other than property described in subpara- graph (B) or (C) of paragraph (2)), and (ii) property described in subparagraph (B) or (C) of paragraph (2) which is placed in service after 2020. (9) Exception for certain property The term ‘‘qualified property’’ shall not in- clude— (A) any property which is primarily used in a trade or business described in clause (iv) of section 163(j)(7)(A), or (B) any property used in a trade or busi- ness that has had floor plan financing in- debtedness (as defined in paragraph (9) of section 163(j)), if the floor plan financing in- terest related to such indebtedness was taken into account under paragraph (1)(C) of such section. (10) Special rule for property placed in service during certain periods (A) In general In the case of qualified property placed in service by the taxpayer during the first tax- able 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 sub- stituting ‘‘50 percent’’ for ‘‘the applicable percentage’’. (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. Page 800 TITLE 26—INTERNAL REVENUE CODE § 168 (l) Special allowance for second generation biofuel plant property (1) Additional allowance In the case of any qualified second genera- tion biofuel plant property— (A) the depreciation deduction provided by section 167(a) for the taxable year in which such property is placed in service shall in- clude an allowance equal to 50 percent of the adjusted basis of such property, and (B) the adjusted basis of such property shall be reduced by the amount of such de- duction before computing the amount other- wise allowable as a depreciation deduction under this chapter for such taxable year and any subsequent taxable year. (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 depre- ciation— (A) which is used in the United States sole- ly to produce second generation biofuel (as defined in section 40(b)(6)(E)), (B) the original use of which commences with the taxpayer after the date of the en- actment of this subsection, (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 (D) which is placed in service by the tax- payer before January 1, 2021. (3) Exceptions (A) Bonus depreciation property under sub- section (k) Such term shall not include any property to which subsection (k) applies. (B) Alternative depreciation property Such term shall not include any property described in subsection (k)(2)(D). (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. (D) Election out If a taxpayer makes an election under this subparagraph with respect to any class of property for any taxable year, this sub- section shall not apply to all property in such class placed in service during such tax- able year. (4) Special rules For purposes of this subsection, rules simi- lar to the rules of subsection (k)(2)(E) shall apply. (5) Allowance against alternative minimum tax For purposes of this subsection, rules simi- lar to the rules of subsection (k)(2)(G) shall apply. (6) Recapture For purposes of this subsection, rules simi- lar 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. (7) Denial of double benefit Paragraph (1) shall not apply to any quali- fied second generation biofuel plant property with respect to which an election has been made under section 179C (relating to election to expense certain refineries). (m) Special allowance for certain reuse and recy- cling property (1) In general In the case of any qualified reuse and recy- cling property— (A) the depreciation deduction provided by section 167(a) for the taxable year in which such property is placed in service shall in- clude an allowance equal to 50 percent of the adjusted basis of the qualified reuse and re- cycling property, and (B) the adjusted basis of the qualified reuse and recycling property shall be re- duced by the amount of such deduction be- fore computing the amount otherwise allow- able as a depreciation deduction under this chapter for such taxable year and any subse- quent taxable year. (2) Qualified reuse and recycling property For purposes of this subsection— (A) In general The term ‘‘qualified reuse and recycling property’’ means any reuse and recycling property— (i) to which this section applies, (ii) which has a useful life of at least 5 years, (iii) the original use of which commences with the taxpayer after August 31, 2008, and (iv) which is— (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 (II) acquired by the taxpayer pursuant to a written binding contract which was entered into after August 31, 2008. (B) Exceptions (i) Bonus depreciation property under sub- section (k) The term ‘‘qualified reuse and recycling property’’ shall not include any property to which subsection (k) (determined with- out regard to paragraph (4) thereof) ap- plies. (ii) Alternative depreciation property The term ‘‘qualified reuse and recycling property’’ shall not include any property to which the alternative depreciation sys- tem under subsection (g) applies, deter- mined without regard to paragraph (7) of subsection (g) (relating to election to have system apply). (iii) Election out If a taxpayer makes an election under this clause with respect to any class of Page 801 TITLE 26—INTERNAL REVENUE CODE § 168 property for any taxable year, this sub- section shall not apply to all property in such class placed in service during such taxable year. (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 manu- facturing, constructing, or producing the property after August 31, 2008. (D) Deduction allowed in computing min- imum tax For purposes of determining alternative minimum taxable income under section 55, the deduction under subsection (a) for quali- fied reuse and recycling property shall be de- termined under this section without regard to any adjustment under section 56. (3) Definitions For purposes of this subsection— (A) Reuse and recycling property (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 equip- ment, which is used exclusively to collect, distribute, or recycle qualified reuse and recyclable materials. (ii) Exclusion Such term does not include rolling stock or other equipment used to transport reuse and recyclable materials. (B) Qualified reuse and recyclable materials (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. (ii) Electronic scrap For purposes of clause (i), the term ‘‘electronic scrap’’ means— (I) any cathode ray tube, flat panel screen, or similar video display device with a screen size greater than 4 inches measured diagonally, or (II) any central processing unit. (C) Recycling or recycle The term ‘‘recycling’’ or ‘‘recycle’’ means that process (including sorting) by which worn or superfluous materials are manufac- tured or processed into specification grade commodities that are suitable for use as a replacement or substitute for virgin mate- rials in manufacturing tangible consumer and commercial products, including pack- aging. (Added Pub. L. 97–34, title II, § 201(a), Aug. 13, 1981, 95 Stat. 203; amended Pub. L. 97–248, title II, §§ 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, § 5(a)(19), (20), Oct. 19, 1982, 96 Stat. 1693, 1694; Pub. L. 97–424, title V, § 541(a)(1), Jan. 6, 1983, 96 Stat. 2192; Pub. L. 97–448, title I, § 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, §§ 12(a)(3), 31(a), (d), 32(a), 111(a)–(e)(4), (9), 113(a)(2), (b)(1), (2)(A), title IV, § 474(r)(7), title VI, §§ 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, § 103(a), (b)(1)(A), (2)–(4), Oct. 11, 1985, 99 Stat. 509; Pub. L. 99–514, title II, § 201(a), title XVIII, §§ 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, §§ 1002(a)(5)–(8), (11), (16)(B), (21), (23)(A), (i)(2)(A)–(G), 1018(b)(2), title VI, §§ 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, § 7816(e), (f), (w), Dec. 19, 1989, 103 Stat. 2421, 2423; Pub. L. 101–508, title XI, §§ 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, §§ 13151(a), 13321(a), Aug. 10, 1993, 107 Stat. 448, 558; Pub. L. 104–88, title III, § 304(a), Dec. 29, 1995, 109 Stat. 943; Pub. L. 104–188, title I, §§ 1120(a), (b), 1121(a), 1613(b)(1)–(4), 1702(h)(1), 1704(t)(54), Aug. 20, 1996, 110 Stat. 1765, 1766, 1850, 1873, 1890; Pub. L. 105–34, title X, § 1086(b), title XII, § 1213(c), title XVI, § 1604(c)(1), Aug. 5, 1997, 111 Stat. 957, 1001, 1097; Pub. L. 105–206, title VI, § 6006(b), July 22, 1998, 112 Stat. 806; Pub. L. 107–147, title I, § 101(a), title VI, § 613(b), Mar. 9, 2002, 116 Stat. 22, 61; Pub. L. 108–27, title II, § 201(a)–(c)(1), May 28, 2003, 117 Stat. 756, 757; Pub. L. 108–311, title III, § 316, title IV, §§ 403(a), 408(a)(6), (8), Oct. 4, 2004, 118 Stat. 1181, 1186, 1191; Pub. L. 108–357, title II, § 211(a)–(e), title III, §§ 336(a), (b), 337(a), title VII, §§ 704(a), (b), 706(a)–(c), title VIII, §§ 847(a), (c)–(e), 901(a)–(c), Oct. 22, 2004, 118 Stat. 1429, 1430, 1479, 1480, 1548–1550, 1601, 1602, 1650; Pub. L. 109–58, title XIII, §§ 1301(f)(5), 1308(a), (b), 1325(a), (b), 1326(a)–(c), Aug. 8, 2005, 119 Stat. 990, 1006, 1016, 1017; Pub. L. 109–135, title IV, §§ 403(j), 405(a)(1), 410(a), 412(s), Dec. 21, 2005, 119 Stat. 2625, 2634, 2636, 2638; Pub. L. 109–432, div. A, title I, §§ 112(a), 113(a), title II, § 209(a), Dec. 20, 2006, 120 Stat. 2940, 2946; Pub. L. 110–172, § 11(b)(1), Dec. 29, 2007, 121 Stat. 2488; Pub. L. 110–185, title I, § 103(a)–(c)(7), (11), (12), Feb. 13, 2008, 122 Stat. 618, 619; Pub. L. 110–234, title XV, § 15344(a), May 22, 2008, 122 Stat. 1520; Pub. L. 110–246, § 4(a), title XV, § 15344(a), June 18, 2008, 122 Stat. 1664, 2282; Pub. L. 110–289, div. C, title III, § 3081(a), July 30, 2008, 122 Stat. 2903; Pub. L. 110–343, div. B, title II, § 201(a), (b), title III, §§ 306(a)–(c), 308(a), div. C, title III, §§ 305(a)(1), (b)(1), (c)(1)–(4), 315(a), 317(a), title V, § 505(a), (b), title VII, § 710(a), Oct. 3, 2008, 122 Stat. 3832, 3848, 3849, 3867, 3868, 3872, 3873, 3879, 3926; Pub. L. 111–5, div. B, title I, § 1201(a)(1), (2)(A)–(D), (3)(A), (b)(1), Feb. 17, 2009, 123 Stat. 333, 334; Pub. L. 111–240, title II, § 2022(a)–(b)(5), Sept. 27, 2010, 124 Stat. 2558; Pub. L. 111–312, title IV, § 401(a)–(d)(5), title VII, §§ 737(a)–(b)(2), 738(a), 739(a), Dec. 17, 2010, 124 Stat. 3304–3306, 3318, 3319; Pub. L. 112–240, title III, §§ 311(a), 312(a), 313(a), 331(a), (c)–(e)(3), title IV, § 410(a)(1), (b)(1), (2), Jan. 2, 2013, 126 Stat. Page 802 TITLE 26—INTERNAL REVENUE CODE § 168 2330, 2335–2337, 2342, 2343; Pub. L. 113–295, div. A, title I, §§ 121(a), 122(a), 123(a), 124(a), 125(a), (c)–(d)(3), 157(a), title II, §§ 202(e), 210(c), (d), (g)(2), 211(b), 212(b), 214(b), Dec. 19, 2014, 128 Stat. 4015–4017, 4022, 4024, 4031–4034; Pub. L. 114–113, div. Q, title I, §§ 123(a), (b), 143(a)(1), (3), (4), (b)(1)–(6)(G), (J), 165(a), 166(a), 167(a), (b), 189(a), Dec. 18, 2015, 129 Stat. 3052, 3056–3064, 3067, 3075; Pub. L. 115–97, title I, §§ 12001(b)(13), 13201(a), (b)(1), (2)(B)–(g), 13203(a), (b), 13204(a), 13205(a), 13504(b)(1), Dec. 22, 2017, 131 Stat. 2094, 2105–2109, 2111, 2142; Pub. L. 115–123, div. D, title I, §§ 40304(a), 40305(a), 40306(a), 40412(a), Feb. 9, 2018, 132 Stat. 146, 151; Pub. L. 115–141, div. U, title I, § 101(d)(1), (2), (e), title III, § 302(a), title IV, § 401(a)(49), (50), (b)(13)(A), (d)(1)(D)(iv), Mar. 23, 2018, 132 Stat. 1160, 1161, 1184, 1186, 1202, 1207; Pub. L. 116–94, div. Q, title I, §§ 114(a), 115(a), 116(a), 130(a), Dec. 20, 2019, 133 Stat. 3229, 3232; Pub. L. 116–136, div. A, title II, § 2307(a), Mar. 27, 2020, 134 Stat. 359; Pub. L. 116–260, div. EE, title I, §§ 115(a), 137(a), 138(a), Dec. 27, 2020, 134 Stat. 3050, 3053, 3054; Pub. L. 117–169, title I, § 13703(a), Aug. 16, 2022, 136 Stat. 1997.) Editorial Notes REFERENCES IN TEXT Paragraph (2)(D), referred to in subsec. (b)(5), means par. (2)(D) of subsec. (b) of this section, which was re- designated par. (2)(C) of subsec. (b) by Pub. L. 115–97, title I, § 13203(b), Dec. 22, 2017, 131 Stat. 2109. The date of the enactment of the Revenue Reconcili- ation Act of 1990, referred to in subsecs. (e)(3)(B)(vi)(II), (III), (g)(4)(K), and (i)(1), is the date of enactment of Pub. L. 101–508, which was approved Nov. 5, 1990. Section 168(e) as in effect before the amendments made by the Tax Reform Act of 1986, referred to in sub- sec. (f)(5)(A)(i), is subsec. (e) of this section prior to the general amendment of this section by Pub. L. 99–514. The date of the enactment of this paragraph, referred to in subsec. (f)(5)(B)(ii)(I), probably means the date of enactment of Pub. L. 99–514, which was approved Oct. 22, 1986. The Tax Reform Act of 1986, referred to in subsecs. (f)(5)(B)(iii), (C) and (i)(7)(A), is Pub. L. 99–514, section 201(a) of which amended this section generally. The Communications Satellite Act of 1962, referred to in subsec. (i)(10)(C), is Pub. L. 87–624, Aug. 31, 1962, 76 Stat. 419, which is classified generally to chapter 6 (§ 701 et seq.) of Title 47, Telecommunications. For complete classification of this Act to the Code, see Short Title note set out under section 701 of Title 47 and Tables. The date of the enactment of this sentence, referred to in subsec. (j)(6), is the date of enactment of Pub. L. 105–34, which was approved Aug. 5, 1997. The date of the enactment of this paragraph, referred to in subsec. (j)(7), is the date of enactment of Pub. L. 103–66, which was approved Aug. 10, 1993. The date of the enactment of this subsection, referred to in subsec. (l)(2)(B), (C), is the date of enactment of Pub. L. 109–432, which was approved Dec. 20, 2006. Par. (3) of section 165(h), referred to in subsec. (n)(3)(B), (C), was repealed by Pub. L. 113–295, div. A, title II, § 221(a)(27)(A), Dec. 19, 2014, 128 Stat. 4040. How- ever, the terms ‘‘federally declared disaster’’ and ‘‘dis- aster area’’ are defined elsewhere in that section. CODIFICATION Pub. L. 110–234 and Pub. L. 110–246 made identical amendments to this section. The amendments by Pub. L. 110–234 were repealed by section 4(a) of Pub. L. 110–246. PRIOR PROVISIONS A prior section 168, acts Aug. 16, 1954, ch. 746, 68A Stat. 52; Aug. 26, 1957, Pub. L. 85–165, § 4, 71 Stat. 414; Sept. 2, 1958, Pub. L. 85–866, title I, § 9(a), (b), 72 Stat. 1608, 1609, related to deductions with respect to amorti- zation of emergency facilities, prior to repeal by Pub. L. 94–455, title XIX, § 1951(b)(4)(A), Oct. 4, 1976, 90 Stat. 1837. Pub. L. 94–455, title XIX, § 1951(b)(4)(B), Oct. 4, 1976, 90 Stat. 1837, 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] sec- tion 168 shall not, with respect to such facility, be con- sidered 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 indi- vidual. The allowable deduction shall be apportioned between the income beneficiaries and the fiduciary in accordance with regulations prescribed under section 642(f).’’ AMENDMENTS 2022—Subsec. (e)(3)(B)(viii). Pub. L. 117–169 added cl. (viii). 2020—Subsec. (e)(3)(A)(i)(I). Pub. L. 116–260, § 137(a)(1), substituted ‘‘January 1, 2022’’ for ‘‘January 1, 2021’’. Subsec. (e)(3)(A)(i)(II). Pub. L. 116–260, § 137(a)(2), sub- stituted ‘‘December 31, 2021’’ for ‘‘December 31, 2020’’. Subsec. (e)(3)(E)(vii). Pub. L. 116–136, § 2307(a)(1)(A), added cl. (vii). Subsec. (e)(6)(A). Pub. L. 116–136, § 2307(a)(1)(B), in- serted ‘‘made by the taxpayer’’ after ‘‘any improve- ment’’. Subsec. (g)(3)(B). Pub. L. 116–136, § 2307(a)(2), struck out table item relating to subpar. (D)(v) and inserted table item relating to subpar. (E)(vii). Subsec. (i)(15)(D). Pub. L. 116–260, § 115(a), substituted ‘‘December 31, 2025’’ for ‘‘December 31, 2020’’. Subsec. (j)(9). Pub. L. 116–260, § 138(a), substituted ‘‘December 31, 2021’’ for ‘‘December 31, 2020’’. 2019—Subsec. (e)(3)(A)(i)(I). Pub. L. 116–94, § 114(a)(1), substituted ‘‘January 1, 2021’’ for ‘‘January 1, 2018’’. Subsec. (e)(3)(A)(i)(II). Pub. L. 116–94, § 114(a)(2), sub- stituted ‘‘December 31, 2020’’ for ‘‘December 31, 2017’’. Subsec. (i)(15)(D). Pub. L. 116–94, § 115(a), substituted ‘‘December 31, 2020’’ for ‘‘December 31, 2017’’. Subsec. (j)(9). Pub. L. 116–94, § 116(a), substituted ‘‘De- cember 31, 2020’’ for ‘‘December 31, 2017’’. Subsec. (l)(2)(D). Pub. L. 116–94, § 130(a), substituted ‘‘January 1, 2021’’ for ‘‘January 1, 2018’’. 2018—Subsec. (d)(3)(B)(i). Pub. L. 115–141, § 401(a)(49), inserted comma after ‘‘real property’’. Subsec. (e)(3)(A)(i)(I). Pub. L. 115–123, § 40304(a)(1), substituted ‘‘January 1, 2018’’ for ‘‘January 1, 2017’’. Subsec. (e)(3)(A)(i)(II). Pub. L. 115–123, § 40304(a)(2), substituted ‘‘December 31, 2017’’ for ‘‘December 31, 2016’’. Subsec. (e)(3)(B). Pub. L. 115–141, § 302(a)(2), sub- stituted ‘‘subclause (I) or (II) of clause (vi) by reason of being public utility property.’’ for ‘‘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)).’’ in concluding provisions. Subsec. (e)(3)(B)(vi)(II). Pub. L. 115–141, § 302(a)(1), substituted ‘‘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, § 401(a)(50), struck out ‘‘and’’ at end. Subsec. (g)(4)(G). Pub. L. 115–141, § 401(d)(1)(D)(iv), struck out ‘‘(other than a corporation which has an election in effect under section 936)’’ after ‘‘domestic corporation’’. Subsec. (i)(15)(D). Pub. L. 115–123, § 40305(a), sub- stituted ‘‘December 31, 2017’’ for ‘‘December 31, 2016’’. Subsec. (j)(3). Pub. L. 115–141, § 101(e)(1), substituted ‘‘qualified Indian reservation property’’ for ‘‘property to which paragraph (1) applies’’. Page 803 TITLE 26—INTERNAL REVENUE CODE § 168 Subsec. (j)(8). Pub. L. 115–141, § 101(e)(2), substituted ‘‘paragraph (1)’’ for ‘‘this subsection’’. Subsec. (j)(9). Pub. L. 115–123, § 40306(a), substituted ‘‘December 31, 2017’’ for ‘‘December 31, 2016’’. Subsec. (k)(2)(B)(i)(III). Pub. L. 115–141, § 101(d)(1), in- serted ‘‘binding’’ before ‘‘contract’’. Subsec. (k)(5)(B)(ii). Pub. L. 115–141, § 101(d)(2), in- serted ‘‘crop or’’ after ‘‘more than one’’ and ‘‘a market- able crop or yield of’’ after ‘‘begins bearing’’. Subsec. (l)(2)(D). Pub. L. 115–123, § 40412(a), substituted ‘‘January 1, 2018’’ for ‘‘January 1, 2017’’. Subsec. (n). Pub. L. 115–141, § 401(b)(13)(A), struck out subsec. (n) which related to special allowance for quali- fied disaster assistance property. 2017—Subsec. (b)(2)(B) to (D). Pub. L. 115–97, § 13203(b), redesignated subpars. (C) and (D) as (B) and (C), respec- tively, and struck out former subpar. (B) which read as follows: ‘‘any property used in a farming business (within the meaning of section 263A(e)(4)),’’. Subsec. (b)(3)(G) to (I). Pub. L. 115–97, § 13204(a)(2), added subpar. (G) and struck out former subpars. (G) to (I) which read as follows: ‘‘(G) Qualified leasehold improvement property de- scribed in subsection (e)(6). ‘‘(H) Qualified restaurant property described in sub- section (e)(7). ‘‘(I) Qualified retail improvement property described in subsection (e)(8).’’ Subsec. (e)(3)(B)(vii). Pub. L. 115–97, § 13203(a), sub- stituted ‘‘after December 31, 2017’’ for ‘‘after December 31, 2008, and which is placed in service before January 1, 2010’’. Subsec. (e)(3)(E)(iv) to (ix). Pub. L. 115–97, § 13204(a)(1)(A), redesignated cls. (vi) to (viii) as (iv) to (vi), respectively, and struck out former cls. (iv), (v), and (ix) which read as follows: ‘‘(iv) any qualified leasehold improvement property, ‘‘(v) any qualified restaurant property, ‘‘(ix) any qualified retail improvement property.’’ Subsec. (e)(6). Pub. L. 115–97, § 13204(a)(1)(B), (4)(B)(i), added par. (6) and struck out former par. (6) which de- fined ‘‘qualified leasehold improvement property’’. Subsec. (e)(7), (8). Pub. L. 115–97, § 13204(a)(1)(B), struck out pars. (7) and (8) which defined ‘‘qualified res- taurant property’’ and ‘‘qualified retail improvement property’’, respectively. Subsec. (g)(1)(F). Pub. L. 115–97, § 13204(a)(3)(A)(i), added subpar. (F). Subsec. (g)(1)(G). Pub. L. 115–97, § 13205(a), added sub- par. (G). Subsec. (g)(2)(C)(iii) to (v). Pub. L. 115–97, § 13204(a)(3)(C), added items (iii) to (v) in table and struck out former items (iii) and (iv) which related to nonresidential real and residential rental property and any railroad grading or tunnel bore or water utility property, respectively. Subsec. (g)(3)(B). Pub. L. 115–97, § 13204(a)(3)(B), in- serted table items relating to subpars. (D)(v) and (E)(iv) to (vi) and struck out table items relating to subpar. (E)(iv) to (ix). Subsec. (g)(8). Pub. L. 115–97, § 13204(a)(3)(A)(ii), added par. (8). Subsec. (i)(7)(B). Pub. L. 115–97, § 13504(b)(1), struck out concluding provisions which read as follows: ‘‘Sub- paragraph (A) shall not apply in the case of a termi- nation of a partnership under section 708(b)(1)(B).’’ Subsec. (k). Pub. L. 115–97, § 13201(b)(2)(B), struck out ‘‘acquired after December 31, 2007, and before January 1, 2020’’ after ‘‘property’’ in heading. Subsec. (k)(1)(A). Pub. L. 115–97, § 13201(a)(1)(A), sub- stituted ‘‘the applicable percentage’’ for ‘‘50 percent’’. Subsec. (k)(2)(A)(i)(IV). Pub. L. 115–97, § 13201(g)(1), added subcl. (IV). Subcl. (IV) was added to cl. (i) after former subcl. (IV) was struck out by Pub. L. 115–97, § 13204(a)(4)(A), in view of directory language amending cl. (i) ‘‘as amended by section 13204’’. See below. Pub. L. 115–97, § 13204(a)(4)(A), struck out subcl. (IV) which read as follows: ‘‘which is qualified improvement property,’’. Subsec. (k)(2)(A)(i)(V). Pub. L. 115–97, § 13201(g)(1), added subcl. (V). Subsec. (k)(2)(A)(ii). Pub. L. 115–97, § 13201(c)(1), amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows: ‘‘the original use of which commences with the taxpayer, and’’. Subsec. (k)(2)(A)(iii). Pub. L. 115–97, § 13201(b)(1)(A)(i), substituted ‘‘January 1, 2027’’ for ‘‘January 1, 2020’’. Subsec. (k)(2)(B)(i)(II). Pub. L. 115–97, § 13201(b)(1)(A)(ii)(I), substituted ‘‘January 1, 2028’’ for ‘‘January 1, 2021’’. Subsec. (k)(2)(B)(i)(III). Pub. L. 115–97, § 13201(b)(1)(A)(i), substituted ‘‘January 1, 2027’’ for ‘‘January 1, 2020’’. Subsec. (k)(2)(B)(ii). Pub. L. 115–97, § 13201(b)(1)(A)(ii)(II), substituted ‘‘pre-January 1, 2027’’ for ‘‘pre-January 1, 2020’’ in heading. Pub. L. 115–97, § 13201(b)(1)(A)(i), substituted ‘‘January 1, 2027’’ for ‘‘January 1, 2020’’. Subsec. (k)(2)(E)(i). Pub. L. 115–97, § 13201(b)(1)(A)(i), substituted ‘‘January 1, 2027’’ for ‘‘January 1, 2020’’. Subsec. (k)(2)(E)(ii). Pub. L. 115–97, § 13201(c)(2), amended cl. (ii) generally. Prior to amendment, text read as follows: ‘‘For purposes of clause (iii) and sub- paragraph (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 prop- erty is used under the leaseback referred to in sub- clause (II).’’ Subsec. (k)(2)(E)(iii)(I). Pub. L. 115–97, § 13201(c)(3), amended subcl. (I) generally. Prior to amendment subcl. (I) read as follows: ‘‘property is originally placed in service by the lessor of such property,’’. Subsec. (k)(2)(F)(iii). Pub. L. 115–97, § 13201(f), sub- stituted ‘‘acquired by the taxpayer before September 28, 2017, and placed in service by the taxpayer after Sep- tember 27, 2017’’ for ‘‘placed in service by the taxpayer after December 31, 2017’’ in introductory provisions. Subsec. (k)(2)(H). Pub. L. 115–97, § 13201(g)(2), added subpar. (H). Subsec. (k)(3). Pub. L. 115–97, § 13204(a)(4)(B)(ii), struck out par. (3) which defined ‘‘qualified improve- ment property’’. Subsec. (k)(4). Pub. L. 115–97, § 12001(b)(13), struck out par. (4) which related to election to accelerate AMT credits in lieu of bonus depreciation. Subsec. (k)(5)(A). Pub. L. 115–97, § 13201(b)(1)(B), sub- stituted ‘‘January 1, 2027’’ for ‘‘January 1, 2020’’ in in- troductory provisions. Subsec. (k)(5)(A)(i). Pub. L. 115–97, § 13201(a)(1)(B), substituted ‘‘the applicable percentage’’ for ‘‘50 per- cent’’. Subsec. (k)(5)(F). Pub. L. 115–97, § 13201(a)(3)(A), struck out subpar. (F). Text read as follows: ‘‘In the case of a specified plant which is planted after Decem- ber 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, § 13201(a)(2), amended par. (6) generally. Prior to amendment, text read as fol- lows: ‘‘In the case of qualified property placed in serv- ice 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 per- cent’, ‘‘(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, § 13201(a)(3)(B), added par. (8). Page 804 TITLE 26—INTERNAL REVENUE CODE § 168 Subsec. (k)(9). Pub. L. 115–97, § 13201(d), added par. (9). Subsec. (k)(10). Pub. L. 115–97, § 13201(e), added par. (10). 2015—Subsec. (e)(3)(A)(i)(I). Pub. L. 114–113, § 165(a)(1), substituted ‘‘January 1, 2017’’ for ‘‘January 1, 2015’’. Subsec. (e)(3)(A)(i)(II). Pub. L. 114–113, § 165(a)(2), sub- stituted ‘‘December 31, 2016’’ for ‘‘December 31, 2014’’. Subsec. (e)(3)(E)(iv), (v). Pub. L. 114–113, § 123(a), struck out ‘‘placed in service before January 1, 2015’’ after ‘‘property’’. Subsec. (e)(3)(E)(ix). Pub. L. 114–113, § 123(b), struck out ‘‘placed in service after December 31, 2008, and be- fore January 1, 2015’’ after ‘‘property’’. Subsec. (e)(6). Pub. L. 114–113, § 143(b)(6)(A), in intro- ductory provisions, substituted ‘‘For purposes of this subsection—’’ for ‘‘The term ‘qualified leasehold im- provement property’ has the meaning given such term in section 168(k)(3) except that the following special rules shall apply:’’; added subpars. (A) to (C) and redes- ignated former subpars. (A) and (B) as (D) and (E), re- spectively; and, in subpar. (E), substituted ‘‘subpara- graph (D)’’ for ‘‘subparagraph (A)’’ in introductory pro- visions. Subsec. (e)(7)(B). Pub. L. 114–113, § 143(b)(6)(B), sub- stituted ‘‘qualified improvement property’’ for ‘‘quali- fied leasehold improvement property’’. Subsec. (e)(8)(D). Pub. L. 114–113, § 143(b)(6)(C), struck out subpar. (D). Text read as follows: ‘‘Property de- scribed in this paragraph which is not qualified lease- hold improvement property shall not be considered qualified property for purposes of subsection (k).’’ Subsec. (i)(15)(D). Pub. L. 114–113, § 166(a), substituted ‘‘December 31, 2016’’ for ‘‘December 31, 2014’’. Subsec. (j)(8). Pub. L. 114–113, § 167(b), added par. (8). Former par. (8) redesignated (9). Pub. L. 114–113, § 167(a), substituted ‘‘December 31, 2016’’ for ‘‘December 31, 2014’’. Subsec. (j)(9). Pub. L. 114–113, § 167(b), redesignated par. (8) as (9). Subsec. (k). Pub. L. 114–113, § 143(b)(6)(J), substituted ‘‘and before January 1, 2020’’ for ‘‘and before January 1, 2016’’ in heading. Pub. L. 114–113, § 143(a)(4)(A), substituted ‘‘January 1, 2016’’ for ‘‘January 1, 2015’’ in heading. Subsec. (k)(2). Pub. L. 114–113, § 143(b)(1), amended par. (2) generally. Prior to amendment, par. (2) related to meaning of qualified property for purposes of subsec. (k). Pub. L. 114–113, § 143(a)(1)(B), substituted ‘‘January 1, 2016’’ for ‘‘January 1, 2015’’ wherever appearing. Subsec. (k)(2)(A)(iv). Pub. L. 114–113, § 143(a)(1)(A), substituted ‘‘January 1, 2017’’ for ‘‘January 1, 2016’’. Subsec. (k)(2)(B)(ii). Pub. L. 114–113, § 143(a)(4)(B), sub- stituted ‘‘pre-January 1, 2016’’ for ‘‘pre-January 1, 2015’’ in heading. Subsec. (k)(3). Pub. L. 114–113, § 143(b)(2), amended par. (3) generally. Prior to amendment, par. (3) related to meaning of qualified leasehold improvement prop- erty for purposes of subsec. (k). Subsec. (k)(4). Pub. L. 114–113, § 143(b)(3), amended par. (4) generally. Prior to amendment, par. (4) related to election to accelerate the AMT and research credits in lieu of bonus depreciation. Subsec. (k)(4)(D)(iii)(II). Pub. L. 114–113, § 143(a)(3)(A), substituted ‘‘January 1, 2016’’ for ‘‘January 1, 2015’’. Subsec. (k)(4)(L). Pub. L. 114–113, § 143(a)(3)(B), added subpar. (L). Subsec. (k)(5). Pub. L. 114–113, § 143(b)(4)(B), added par. (5). Pub. L. 114–113, § 143(b)(4)(A), struck out par. (5). Text read as follows: ‘‘In the case of qualified property ac- quired by the taxpayer (under rules similar to the rules of clauses (ii) and (iii) of paragraph (2)(A)) after Sep- tember 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)(6). Pub. L. 114–113, § 143(b)(5), added par. (6). Subsec. (k)(7). Pub. L. 114–113, § 143(b)(6)(D), added par. (7). Subsec. (l)(2)(D). Pub. L. 114–113, § 189(a), substituted ‘‘January 1, 2017’’ for ‘‘January 1, 2015’’. Subsec. (l)(3)(A). Pub. L. 114–113, § 143(b)(6)(E)(i), sub- stituted ‘‘subsection (k)’’ for ‘‘section 168(k)’’. Subsec. (l)(3)(B). Pub. L. 114–113, § 143(b)(6)(E)(ii), sub- stituted ‘‘subsection (k)(2)(D)’’ for ‘‘section 168(k)(2)(D)(i)’’. Subsec. (l)(4). Pub. L. 114–113, § 143(b)(6)(F), sub- stituted ‘‘subsection (k)(2)(E) shall apply.’’ for ‘‘sub- paragraph (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 ap- pears 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, § 143(b)(6)(G), sub- stituted ‘‘subsection (k)(2)(G)’’ for ‘‘section 168(k)(2)(G)’’. 2014—Subsec. (b)(5). Pub. L. 113–295, § 210(g)(2)(A), sub- stituted ‘‘paragraph (2)(D)’’ for ‘‘paragraph (2)(C)’’. Subsec. (e)(3)(A)(i)(I). Pub. L. 113–295, § 121(a)(1), sub- stituted ‘‘January 1, 2015’’ for ‘‘January 1, 2014’’. Subsec. (e)(3)(A)(i)(II). Pub. L. 113–295, § 121(a)(2), sub- stituted ‘‘December 31, 2014’’ for ‘‘December 31, 2013’’. Subsec. (e)(3)(E)(iv), (v), (ix). Pub. L. 113–295, § 122(a), substituted ‘‘January 1, 2015’’ for ‘‘January 1, 2014’’. Subsec. (e)(7)(B), (8)(D). Pub. L. 113–295, § 211(b), in- serted ‘‘which is not qualified leasehold improvement property’’ after ‘‘Property described in this para- graph’’. Subsec. (i)(15)(D). Pub. L. 113–295, § 123(a), substituted ‘‘December 31, 2014’’ for ‘‘December 31, 2013’’. Subsec. (i)(18)(A)(ii), (19)(A)(ii). Pub. L. 113–295, § 210(c), substituted ‘‘16 years’’ for ‘‘10 years’’. Subsec. (j)(8). Pub. L. 113–295, § 124(a), substituted ‘‘December 31, 2014’’ for ‘‘December 31, 2013’’. Subsec. (k). Pub. L. 113–295, § 125(d)(1), substituted ‘‘January 1, 2015’’ for ‘‘January 1, 2014’’ in heading. Subsec. (k)(2). Pub. L. 113–295, § 125(a)(2), substituted ‘‘January 1, 2015’’ for ‘‘January 1, 2014’’ wherever ap- pearing. Subsec. (k)(2)(A)(iv). Pub. L. 113–295, § 125(a)(1), sub- stituted ‘‘January 1, 2016’’ for ‘‘January 1, 2015’’. Subsec. (k)(2)(B)(i)(IV). Pub. L. 113–295, § 214(b), sub- stituted ‘‘clause also applies’’ for ‘‘clauses also apply’’. Subsec. (k)(2)(B)(ii). Pub. L. 113–295, § 125(d)(2), sub- stituted ‘‘pre-January 1, 2015’’ for ‘‘pre-January 1, 2014’’ in heading. Subsec. (k)(4)(C)(i). Pub. L. 113–295, § 210(g)(2)(B), sub- stituted ‘‘subsection (b)(2)(D)’’ for ‘‘subsection (b)(2)(C)’’ in concluding provisions. Subsec. (k)(4)(D)(iii)(II). Pub. L. 113–295, § 125(c)(1), substituted ‘‘January 1, 2015’’ for ‘‘January 1, 2014’’. Subsec. (k)(4)(E)(iv). Pub. L. 113–295, § 212(b), sub- stituted ‘‘adjusted net minimum tax’’ for ‘‘adjusted minimum tax’’. Subsec. (k)(4)(J)(iii). Pub. L. 113–295, § 202(e), sub- stituted ‘‘its first taxable year ending after December 31, 2010’’ for ‘‘any taxable year ending after December 31, 2010’’ in introductory provisions. Subsec. (k)(4)(K). Pub. L. 113–295, § 125(c)(2), added subpar. (K). Subsec. (l)(2)(D). Pub. L. 113–295, § 157(a), substituted ‘‘January 1, 2015’’ for ‘‘January 1, 2014’’. Subsec. (m)(2)(B)(i). Pub. L. 113–295, § 210(d), sub- stituted ‘‘subsection (k) (determined without regard to paragraph (4) thereof)’’ for ‘‘section 168(k)’’. Subsec. (n)(2)(C)(ii). Pub. L. 113–295, § 125(d)(3), sub- stituted ‘‘January 1, 2015’’ for ‘‘January 1, 2014’’. 2013—Subsec. (e)(3)(E)(iv), (v), (ix). Pub. L. 112–240, § 311(a), substituted ‘‘January 1, 2014’’ for ‘‘January 1, 2012’’. Subsec. (i)(9)(A)(ii). Pub. L. 112–240, § 331(d), inserted ‘‘(respecting all elections made by the taxpayer under this section)’’ after ‘‘such property’’. Subsec. (i)(15)(D). Pub. L. 112–240, § 312(a), substituted ‘‘December 31, 2013’’ for ‘‘December 31, 2011’’. Page 805 TITLE 26—INTERNAL REVENUE CODE § 168 Subsec. (j)(8). Pub. L. 112–240, § 313(a), substituted ‘‘December 31, 2013’’ for ‘‘December 31, 2011’’. Subsec. (k). Pub. L. 112–240, § 331(e)(1), substituted ‘‘January 1, 2014’’ for ‘‘January 1, 2013’’ in heading. Subsec. (k)(2). Pub. L. 112–240, § 331(a)(2), substituted ‘‘January 1, 2014’’ for ‘‘January 1, 2013’’ wherever ap- pearing. Subsec. (k)(2)(A)(iv). Pub. L. 112–240, § 331(a)(1), sub- stituted ‘‘January 1, 2015’’ for ‘‘January 1, 2014’’. Subsec. (k)(2)(B)(ii). Pub. L. 112–240, § 331(e)(2), sub- stituted ‘‘pre-January 1, 2014’’ for ‘‘pre-January 1, 2013’’ in heading. Subsec. (k)(4)(D)(iii)(II). Pub. L. 112–240, § 331(c)(1), substituted ‘‘2014’’ for ‘‘2013’’. Subsec. (k)(4)(J). Pub. L. 112–240, § 331(c)(2), added sub- par. (J). Subsec. (l). Pub. L. 112–240, § 410(b)(2)(C), substituted ‘‘second generation’’ for ‘‘cellulosic’’ in heading. Pub. L. 112–240, § 410(b)(2)(A), substituted ‘‘second gen- eration biofuel’’ for ‘‘cellulosic biofuel’’ wherever ap- pearing in text. Subsec. (l)(2). Pub. L. 112–240, § 410(b)(2)(D), sub- stituted ‘‘second generation’’ for ‘‘cellulosic’’ in head- ing. Subsec. (l)(2)(A). Pub. L. 112–240, § 410(b)(1), sub- stituted ‘‘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, § 410(a)(1), sub- stituted ‘‘January 1, 2014’’ for ‘‘January 1, 2013’’. Subsec. (l)(3) to (8). Pub. L. 112–240, § 410(b)(2)(B), re- designated pars. (4) to (8) as (3) to (7), respectively, and struck out former par. (3). Text read as follows: ‘‘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. (n)(2)(C)(ii). Pub. L. 112–240, § 331(e)(3), sub- stituted ‘‘January 1, 2014’’ for ‘‘January 1, 2013’’. 2010—Subsec. (e)(3)(E)(iv), (v), (ix). Pub. L. 111–312, § 737(a), substituted ‘‘January 1, 2012’’ for ‘‘January 1, 2010’’. Subsec. (e)(7)(A)(i). Pub. L. 111–312, § 737(b)(1), struck out ‘‘if such building is placed in service after Decem- ber 31, 2008, and before January 1, 2010,’’ after ‘‘build- ing,’’. Subsec. (e)(8)(E). Pub. L. 111–312, § 737(b)(2), struck out subpar. (E). Text read as follows: ‘‘Such term shall not include any improvement placed in service after De- cember 31, 2009.’’ Subsec. (i)(15)(D). Pub. L. 111–312, § 738(a), substituted ‘‘December 31, 2011’’ for ‘‘December 31, 2009’’. Subsec. (j)(8). Pub. L. 111–312, § 739(a), substituted ‘‘December 31, 2011’’ for ‘‘December 31, 2009’’. Subsec. (k). Pub. L. 111–312, § 401(d)(1), substituted ‘‘January 1, 2013’’ for ‘‘January 1, 2011’’ in heading. Pub. L. 111–240, § 2022(b)(1), substituted ‘‘January 1, 2011’’ for ‘‘January 1, 2010’’ in heading. Subsec. (k)(2)(A)(iii). Pub. L. 111–312, § 401(a)(2), sub- stituted ‘‘January 1, 2013’’ for ‘‘January 1, 2011’’ in subcls. (I) and (II). Pub. L. 111–240, § 2022(a)(2), substituted ‘‘January 1, 2011’’ for ‘‘January 1, 2010’’ in subcls. (I) and (II). Subsec. (k)(2)(A)(iv). Pub. L. 111–312, § 401(a), sub- stituted ‘‘January 1, 2013’’ for ‘‘January 1, 2011’’ and ‘‘January 1, 2014’’ for ‘‘January 1, 2012’’. Pub. L. 111–240, § 2022(a), substituted ‘‘January 1, 2011’’ for ‘‘January 1, 2010’’ and ‘‘January 1, 2012’’ for ‘‘January 1, 2011’’. Subsec. (k)(2)(B)(ii). Pub. L. 111–312, § 401(a)(2), (d)(2), substituted ‘‘pre-January 1, 2013’’ for ‘‘pre-January 1, 2011’’ in heading and ‘‘January 1, 2013’’ for ‘‘January 1, 2011’’ in text. Pub. L. 111–240, § 2022(a)(2), (b)(2), substituted ‘‘pre- January 1, 2011’’ for ‘‘pre-January 1, 2010’’ in heading and ‘‘January 1, 2011’’ for ‘‘January 1, 2010’’ in text. Subsec. (k)(2)(E)(i). Pub. L. 111–312, § 401(a)(2), sub- stituted ‘‘January 1, 2013’’ for ‘‘January 1, 2011’’. Pub. L. 111–240, § 2022(a)(2), substituted ‘‘January 1, 2011’’ for ‘‘January 1, 2010’’. Subsec. (k)(4)(D)(ii). Pub. L. 111–312, § 401(d)(3)(B), in- serted ‘‘and’’ at the end. Subsec. (k)(4)(D)(iii). Pub. L. 111–312, § 401(d)(3)(C), substituted period for comma at the end. Pub. L. 111–312, § 401(c)(1), substituted ‘‘or produc- tion—’’ for ‘‘or production after March 31, 2008, and be- fore January 1, 2010, shall be taken into account under subparagraph (B)(ii) thereof,’’ and added subcls. (I) and (II) and concluding provisions. Subsec. (k)(4)(D)(iv), (v). Pub. L. 111–312, § 401(d)(3)(A), struck out cls. (iv) and (v) which read as follows: ‘‘(iv) ‘January 1, 2011’ shall be substituted for ‘Janu- ary 1, 2012’ in subparagraph (A)(iv) thereof, and ‘‘(v) ‘January 1, 2010’ shall be substituted for ‘Janu- ary 1, 2011’ each place it appears in subparagraph (A) thereof.’’ Pub. L. 111–240, § 2022(b)(3), added cls. (iv) and (v). Subsec. (k)(4)(I). Pub. L. 111–312, § 401(c)(2), added sub- par. (I). Subsec. (k)(5). Pub. L. 111–312, § 401(b), added par. (5). Subsec. (l)(5)(A). Pub. L. 111–312, § 401(d)(4)(A), in- serted ‘‘and’’ at the end. Subsec. (l)(5)(B). Pub. L. 111–312, § 401(d)(4)(B), (C), re- designated subpar. (C) as (B) and struck out former sub- par. (B) which read as follows: ‘‘by substituting ‘Janu- ary 1, 2013’ for ‘January 1, 2011’ in clause (i) thereof, and’’. Pub. L. 111–240, § 2022(b)(4), substituted ‘‘January 1, 2011’’ for ‘‘January 1, 2010’’. Subsec. (l)(5)(C). Pub. L. 111–312, § 401(d)(4)(C), redesig- nated subpar. (C) as (B). Subsec. (n)(2)(C)(ii). Pub. L. 111–312, § 401(d)(5), sub- stituted ‘‘January 1, 2013’’ for ‘‘January 1, 2011’’. Pub. L. 111–240, § 2022(b)(5), substituted ‘‘January 1, 2011’’ for ‘‘January 1, 2010’’. 2009—Subsec. (k). Pub. L. 111–5, § 1201(a)(2)(A), sub- stituted ‘‘January 1, 2010’’ for ‘‘January 1, 2009’’ in heading. Subsec. (k)(2)(A)(iii)(I), (II). Pub. L. 111–5, § 1201(a)(1)(B), substituted ‘‘January 1, 2010’’ for ‘‘Janu- ary 1, 2009’’. Subsec. (k)(2)(A)(iv). Pub. L. 111–5, § 1201(a)(1), sub- stituted ‘‘January 1, 2010,’’ for ‘‘January 1, 2009,’’ and ‘‘January 1, 2011.’’ for ‘‘January 1, 2010.’’ Subsec. (k)(2)(B)(ii). Pub. L. 111–5, § 1201(a)(1)(B), (2)(B), substituted ‘‘pre-January 1, 2010’’ for ‘‘pre-Janu- ary 1, 2009’’ in heading and ‘‘January 1, 2010’’ for ‘‘Janu- ary 1, 2009’’ in text. Subsec. (k)(2)(E)(i). Pub. L. 111–5, § 1201(a)(1)(B), sub- stituted ‘‘January 1, 2010’’ for ‘‘January 1, 2009’’. Subsec. (k)(4)(D)(ii). Pub. L. 111–5, § 1201(a)(3)(A)(i), (iii), added cl. (ii). Former cl. (ii) redesignated (iii). Subsec. (k)(4)(D)(iii). Pub. L. 111–5, § 1201(b)(1)(A), sub- stituted ‘‘2010’’ for ‘‘2009’’. Pub. L. 111–5, § 1201(a)(3)(A)(ii), redesignated cl. (ii) as (iii). Subsec. (k)(4)(H). Pub. L. 111–5, § 1201(b)(1)(B), added subpar. (H). Subsec. (l)(5)(B). Pub. L. 111–5, § 1201(a)(2)(C), sub- stituted ‘‘January 1, 2010’’ for ‘‘January 1, 2009’’. Subsec. (n)(2)(C)(ii). Pub. L. 111–5, § 1201(a)(2)(D), sub- stituted ‘‘January 1, 2010’’ for ‘‘January 1, 2009’’. 2008—Subsec. (b)(2)(C), (D). Pub. L. 110–343, § 306(c), added subpar. (C) and redesignated former subpar. (C) as (D). Subsec. (b)(3)(I). Pub. L. 110–343, § 305(c)(3), added sub- par. (I). Subsec. (e)(3)(A)(i). Pub. L. 110–246, § 15344(a), amended cl. (i) generally. Prior to amendment, cl. (i) read as fol- lows: ‘‘any race horse which is more than 2 years old at the time it is placed in service,’’. Subsec. (e)(3)(B)(vii). Pub. L. 110–343, § 505(a), added cl. (vii). Subsec. (e)(3)(D)(iii), (iv). Pub. L. 110–343, § 306(a), added cls. (iii) and (iv). Subsec. (e)(3)(E)(iv), (v). Pub. L. 110–343, § 305(a)(1), substituted ‘‘January 1, 2010’’ for ‘‘January 1, 2008’’. Subsec. (e)(3)(E)(ix). Pub. L. 110–343, § 305(c)(1), added cl. (ix). Subsec. (e)(7). Pub. L. 110–343, § 305(b)(1), reenacted heading without change and amended text generally. Page 806 TITLE 26—INTERNAL REVENUE CODE § 168 Prior to amendment, text read as follows: ‘‘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, § 305(c)(2), added par. (8). Subsec. (g)(3)(B). Pub. L. 110–343, § 505(b), inserted table item relating to subpar. (B)(vii). Pub. L. 110–343, § 305(c)(4), inserted table item relating to subpar. (E)(ix). Subsec. (i)(15)(D). Pub. L. 110–343, § 317(a), substituted ‘‘December 31, 2009’’ for ‘‘December 31, 2007’’. Subsec. (i)(18), (19). Pub. L. 110–343, § 306(b), added pars. (18) and (19). Subsec. (j)(8). Pub. L. 110–343, § 315(a), substituted ‘‘December 31, 2009’’ for ‘‘December 31, 2007’’. Subsec. (k). Pub. L. 110–185, § 103(c)(11), substituted ‘‘December 31, 2007’’ for ‘‘September 10, 2001’’ and ‘‘Jan- uary 1, 2009’’ for ‘‘January 1, 2005’’ in heading. Pub. L. 110–185, § 103(a)(1), (3), substituted ‘‘December 31, 2007’’ for ‘‘September 10, 2001’’ and ‘‘January 1, 2009’’ for ‘‘January 1, 2005’’ wherever appearing in text. Subsec. (k)(1)(A). Pub. L. 110–185, § 103(b), substituted ‘‘50 percent’’ for ‘‘30 percent’’. Subsec. (k)(2)(A)(iii)(I). Pub. L. 110–185, § 103(a)(2), substituted ‘‘January 1, 2008’’ for ‘‘September 11, 2001’’. Subsec. (k)(2)(A)(iv). Pub. L. 110–185, § 103(a)(4), sub- stituted ‘‘January 1, 2010’’ for ‘‘January 1, 2006’’. Subsec. (k)(2)(B)(i)(I). Pub. L. 110–185, § 103(c)(1), sub- stituted ‘‘(iii), and (iv)’’ for ‘‘and (iii)’’. Subsec. (k)(2)(B)(i)(IV). Pub. L. 110–185, § 103(c)(2), which directed substitution of ‘‘clause (iii)’’ for ‘‘clauses (ii) and (iii)’’, was executed by substituting ‘‘clause (iii)’’ for ‘‘clause (ii) or (iii)’’ to reflect the probable intent of Congress. Subsec. (k)(2)(B)(ii). Pub. L. 110–185, § 103(c)(12), sub- stituted ‘‘pre-January 1, 2009’’ for ‘‘pre-January 1, 2005’’ in heading. Subsec. (k)(2)(C)(i). Pub. L. 110–185, § 103(c)(3), sub- stituted ‘‘, (iii), and (iv)’’ for ‘‘and (iii)’’. Subsec. (k)(2)(D)(iii). Pub. L. 110–185, § 103(c)(5)(B), struck out last sentence which read as follows: ‘‘The preceding sentence shall be applied separately with re- spect to property treated as qualified property by para- graph (4) and other qualified property.’’ Subsec. (k)(2)(F)(i). Pub. L. 110–185, § 103(c)(4), sub- stituted ‘‘$8,000’’ for ‘‘$4,600’’. Subsec. (k)(4). Pub. L. 110–289 added par. (4). Pub. L. 110–185, § 103(c)(5)(A), struck out par. (4) which related to treatment of 50-percent bonus depreciation for certain property. Subsec. (k)(4)(B)(iii). Pub. L. 110–185, § 103(a)(4), sub- stituted ‘‘January 1, 2010’’ for ‘‘January 1, 2006’’. Subsec. (l). Pub. L. 110–343, § 201(b)(1), (2), substituted ‘‘cellulosic biofuel’’ for ‘‘cellulosic biomass ethanol’’ in heading and wherever appearing in text. Subsec. (l)(2). Pub. L. 110–343, § 201(b)(3), substituted ‘‘cellulosic biofuel’’ for ‘‘cellulosic biomass ethanol’’ in heading. Subsec. (l)(3). Pub. L. 110–343, § 201(a), amended head- ing and text of par. (3) generally. Prior to amendment, text read as follows: ‘‘For purposes of this subsection, the term ‘cellulosic biomass ethanol’ means ethanol produced by hydrolysis of any lignocellulosic or hemicellulosic matter that is available on a renewable or recurring basis.’’ Subsec. (l)(4). Pub. L. 110–185, § 103(c)(6), added subpar. (A) and redesignated former subpars. (A) to (C) as (B) to (D), respectively. Subsec. (l)(5)(A). Pub. L. 110–185, § 103(c)(7)(A), sub- stituted ‘‘December 31, 2007’’ for ‘‘September 10, 2001’’. Subsec. (l)(5)(B). Pub. L. 110–185, § 103(c)(7)(B), sub- stituted ‘‘January 1, 2009’’ for ‘‘January 1, 2005’’. Subsec. (m). Pub. L. 110–343, § 308(a), added subsec. (m). Subsec. (n). Pub. L. 110–343, § 710(a), added subsec. (n). 2007—Subsec. (l)(3). Pub. L. 110–172 struck out ‘‘enzy- matic’’ before ‘‘hydrolysis’’. 2006—Subsec. (e)(3)(E)(iv), (v). Pub. L. 109–432, § 113(a), substituted ‘‘2008’’ for ‘‘2006’’. Subsec. (j)(8). Pub. L. 109–432, § 112(a), substituted ‘‘2007’’ for ‘‘2005’’. Subsec. (l). Pub. L. 109–432, § 209(a), added subsec. (l). 2005—Subsec. (e)(3)(B)(vi)(I). Pub. L. 109–135, § 410(a), substituted ‘‘if ‘solar or wind energy’ were substituted for ‘solar energy’ in clause (i) thereof’’ for ‘‘if ‘solar and wind’ were substituted for ‘solar’ in clause (i) thereof’’. Pub. L. 109–58, § 1301(f)(5), amended subcl. (I) gen- erally. Prior to amendment, subcl. (I) read as follows: ‘‘is described in subparagraph (A) of section 48(a)(3) (or would be so described if ‘solar and wind’ were sub- stituted for ‘solar’ in clause (i) thereof),’’. Subsec. (e)(3)(C)(iv), (v). Pub. L. 109–58, § 1326(a), added cl. (iv) and redesignated former cl. (iv) as (v). Subsec. (e)(3)(E)(vii). Pub. L. 109–58, § 1308(a), added cl. (vii). Subsec. (e)(3)(E)(viii). Pub. L. 109–58, § 1325(a), added cl. (viii). Subsec. (g)(3)(B). Pub. L. 109–58, § 1326(c), inserted table item relating to subpar. (C)(iv). Pub. L. 109–58, § 1325(b), inserted table item relating to subpar. (E)(viii). Pub. L. 109–58, § 1308(b), inserted table item relating to subpar. (E)(vii). Subsec. (i)(15)(D). Pub. L. 109–135, § 412(s), substituted ‘‘Such term shall not include’’ for ‘‘This paragraph shall not apply to’’. Subsec. (i)(17). Pub. L. 109–58, § 1326(b), added par. (17). Subsec. (k)(2)(A)(iv). Pub. L. 109–135, § 403(j)(1), sub- stituted ‘‘subparagraph (B) or (C)’’ for ‘‘subparagraphs (B) and (C)’’. Subsec. (k)(4)(B)(ii). Pub. L. 109–135, § 405(a)(1), amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows: ‘‘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, § 403(j)(2), sub- stituted ‘‘or paragraph (2)(C) (as so modified)’’ for ‘‘and paragraph (2)(C)’’. 2004—Subsec. (b)(2)(A). Pub. L. 108–357, § 211(d)(2), in- serted ‘‘not referred to in paragraph (3)’’ before comma at end. Subsec. (b)(3)(G), (H). Pub. L. 108–357, § 211(d)(1), added subpars. (G) and (H). Subsec. (e)(3)(C)(ii). Pub. L. 108–357, § 704(a), added cl. (ii). Former cl. (ii) redesignated (iii). Subsec. (e)(3)(C)(iii). Pub. L. 108–357, § 706(a), added cl. (iii). Former cl. (iii) redesignated (iv). Pub. L. 108–357, § 704(a), redesignated cl. (ii) as (iii). Subsec. (e)(3)(C)(iv). Pub. L. 108–357, § 706(a), redesig- nated cl. (iii) as (iv). Subsec. (e)(3)(E)(iv), (v). Pub. L. 108–357, § 211(a), added cls. (iv) and (v). Subsec. (e)(3)(E)(vi). Pub. L. 108–357, § 901(a), added cl. (vi). Subsec. (e)(3)(F). Pub. L. 108–357, § 901(b), added sub- par. (F). Subsec. (e)(6), (7). Pub. L. 108–357, § 211(b), (c), added pars. (6) and (7). Subsec. (g)(3)(A). Pub. L. 108–357, § 847(a), inserted ‘‘(notwithstanding any other subparagraph of this para- graph)’’ after ‘‘shall’’. Subsec. (g)(3)(B). Pub. L. 108–357, § 901(c), inserted table items relating to subpars. (E)(vi) and (F). Pub. L. 108–357, § 706(c), which directed amendment of table by inserting item relating to subpar. (C)(iii) after item relating to subpar. (C)(ii), was executed by mak- ing the insertion after item relating to subpar. (C)(i) to reflect the probable intent of Congress. Pub. L. 108–357, § 211(e), inserted table items relating to subpars. (E)(iv) and (E)(v). Subsec. (h)(2)(A). Pub. L. 108–357, § 847(e), added cl. (iv) and concluding provisions. Subsec. (h)(3)(A). Pub. L. 108–357, § 847(d), inserted at end ‘‘Notwithstanding subsection (i)(3)(A)(i), in deter- Page 807 TITLE 26—INTERNAL REVENUE CODE § 168 mining a lease term for purposes of the preceding sen- tence, there shall not be taken into account any option of the lessee to renew at the fair market value rent de- termined at the time of renewal; except that the aggre- gate period not taken into account by reason of this sentence shall not exceed 24 months.’’ Subsec. (i)(3)(A)(ii), (iii). Pub. L. 108–357, § 847(c), added cl. (ii) and redesignated former cl. (ii) as (iii). Subsec. (i)(15). Pub. L. 108–357, § 704(b), added par. (15). Subsec. (i)(16). Pub. L. 108–357, § 706(b), added par. (16). Subsec. (j)(8). Pub. L. 108–311, § 316, substituted ‘‘2005’’ for ‘‘2004’’. Subsec. (k)(2)(A)(iv). Pub. L. 108–357, § 336(a)(2), sub- stituted ‘‘subparagraphs (B) and (C)’’ for ‘‘subparagraph (B)’’. Subsec. (k)(2)(B)(i). Pub. L. 108–311, § 403(a)(1), reen- acted heading without change and amended text gen- erally. Prior to amendment, text read as follows: ‘‘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)(B)(iv). Pub. L. 108–357, § 336(b)(1), added cl. (iv). Subsec. (k)(2)(C). Pub. L. 108–357, § 336(a)(1), added subpar. (C). Former subpar. (C) redesignated (D). Subsec. (k)(2)(D). Pub. L. 108–357, § 336(a)(1), redesig- nated subpar. (C) as (D). Former subpar. (D) redesig- nated (E). Subsec. (k)(2)(D)(ii). Pub. L. 108–311, § 408(a)(6)(A), in- serted ‘‘is’’ after ‘‘if property’’ in introductory provi- sions. Pub. L. 108–311, § 403(a)(2)(B), inserted ‘‘clause (iii) and’’ before ‘‘subparagraph (A)(ii)’’ in introductory pro- visions. Subsec. (k)(2)(D)(ii)(I). Pub. L. 108–311, § 408(a)(6)(B), struck out ‘‘is’’ before ‘‘originally’’. Subsec. (k)(2)(D)(iii), (iv). Pub. L. 108–311, § 403(a)(2)(A), added cls. (iii) and (iv). Subsec. (k)(2)(E). Pub. L. 108–357, § 336(a)(1), redesig- nated subpar. (D) as (E). Former subpar. (E) redesig- nated (F). Subsec. (k)(2)(E)(iii)(II). Pub. L. 108–357, § 337(a), which directed amendment of subcl. (II) by inserting before comma at end ‘‘(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)’’, was executed by making the insertion before ‘‘, and’’ to reflect the probable in- tent of Congress. Subsec. (k)(2)(F). Pub. L. 108–357, § 336(a)(1), redesig- nated subpar. (E) as (F). Former subpar. (F) redesig- nated (G). Pub. L. 108–311, § 408(a)(8), substituted ‘‘minimum’’ for ‘‘miniumum’’ in heading. Subsec. (k)(2)(G). Pub. L. 108–357, § 336(a)(1), redesig- nated subpar. (F) as (G). Subsec. (k)(4)(A)(ii). Pub. L. 108–357, § 336(b)(2), sub- stituted ‘‘paragraph (2)(D)’’ for ‘‘paragraph (2)(C)’’. Subsec. (k)(4)(B)(iii). Pub. L. 108–357, § 336(b)(3), in- serted ‘‘and paragraph (2)(C)’’ after ‘‘of this para- graph)’’. Subsec. (k)(4)(C). Pub. L. 108–357, § 336(b)(4), sub- stituted ‘‘subparagraphs (B), (C), and (E)’’ for ‘‘subpara- graphs (B) and (D)’’. Subsec. (k)(4)(D). Pub. L. 108–357, § 336(b)(5), sub- stituted ‘‘Paragraph (2)(F)’’ for ‘‘Paragraph (2)(E)’’. 2003—Subsec. (k). Pub. L. 108–27, § 201(c)(1), sub- stituted ‘‘January 1, 2005’’ for ‘‘September 11, 2004’’ in heading. Subsec. (k)(2)(A)(iii). Pub. L. 108–27, § 201(b)(2), sub- stituted ‘‘January 1, 2005’’ for ‘‘September 11, 2004’’ in subcls. (I) and (II). Subsec. (k)(2)(B)(ii). Pub. L. 108–27, § 201(b)(1), sub- stituted ‘‘pre-January 1, 2005’’ for ‘‘pre-September 11, 2004’’ in heading and ‘‘January 1, 2005’’ for ‘‘September 11, 2004’’ in text. Subsec. (k)(2)(C)(iii). Pub. L. 108–27, § 201(b)(3), in- serted at end ‘‘The preceding sentence shall be applied separately with respect to property treated as qualified property by paragraph (4) and other qualified prop- erty.’’ Subsec. (k)(2)(D)(i). Pub. L. 108–27, § 201(b)(1)(A), sub- stituted ‘‘January 1, 2005’’ for ‘‘September 11, 2004’’. Subsec. (k)(4). Pub. L. 108–27, § 201(a), added par. (4). 2002—Subsec. (j)(8). Pub. L. 107–147, § 613(b), sub- stituted ‘‘December 31, 2004’’ for ‘‘December 31, 2003’’. Subsec. (k). Pub. L. 107–147, § 101(a), added subsec. (k). 1998—Subsec. (c). Pub. L. 105–206, § 6006(b)(2), reen- acted subsec. heading without change and substituted ‘‘For purposes of this section, the applicable recovery period shall be determined in accordance with the fol- lowing table:’’ for ‘‘For purposes of this section— ‘‘(1) IN GENERAL.—Except as provided in paragraph (2), the applicable recovery period shall be deter- mined in accordance with the following table:’’. Subsec. (c)(2). Pub. L. 105–206, § 6006(b)(1), struck out heading and text of par. (2). Text read as follows: ‘‘In the case of property to which an election under sub- section (b)(2)(C) applies, the applicable recovery period shall be determined under the table contained in sub- section (g)(2)(C).’’ 1997—Subsec. (e)(3)(A)(iii). Pub. L. 105–34, § 1086(b)(1), added cl. (iii). Subsec. (g)(3)(B). Pub. L. 105–34, § 1086(b)(2), inserted table item relating to subpar. (A)(iii). Subsec. (i)(8)(C). Pub. L. 105–34, § 1213(c), added sub- par. (C). Subsec. (i)(14). Pub. L. 105–34, § 1086(b)(3), added par. (14). Subsec. (j)(6). Pub. L. 105–34, § 1604(c)(1), inserted con- cluding provisions ‘‘For purposes of the preceding sen- tence, such section 3(d) shall be applied by treating the term ‘former Indian reservations in Oklahoma’ as in- cluding 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).’’ 1996—Subsec. (b)(3)(F). Pub. L. 104–188, § 1613(b)(1), added subpar. (F). Subsec. (c)(1). Pub. L. 104–188, § 1613(b)(2), inserted table item relating to water utility property. Subsec. (e)(3)(B). Pub. L. 104–188, § 1702(h)(1)(B), in- serted closing provisions. Subsec. (e)(3)(B)(vi)(I). Pub. L. 104–188, § 1704(t)(54), provided that section 11813(b)(9)(A)(i) of Pub. L. 101–508 shall be applied as if a comma appeared after ‘‘(3)(A)(ix)’’ in the material proposed to be stricken. See 1990 Amendment note below. Subsec. (e)(3)(B)(vi)(III). Pub. L. 104–188, § 1702(h)(1)(A), added subcl. (III). Subsec. (e)(3)(E)(iii). Pub. L. 104–188, § 1120(a), added cl. (iii). Subsec. (e)(3)(F). Pub. L. 104–188, § 1613(b)(3)(B)(i), struck out subpar. (F) which read as follows: ‘‘20-YEAR PROPERTY.—The term ‘20-year property’ includes any municipal sewers.’’ Subsec. (e)(5). Pub. L. 104–188, § 1613(b)(3)(A), added par. (5). Subsec. (g)(2)(C)(iv). Pub. L. 104–188, § 1613(b)(4), in- serted ‘‘or water utility property’’ after ‘‘tunnel bore’’. Subsec. (g)(3)(B). Pub. L. 104–188, § 1120(b), inserted table item relating to subpar. (E)(iii). Pub. L. 104–188, § 1613(b)(3)(B)(ii), struck out table item relating to subpar. (F) for which the class life was 50. Subsec. (g)(4)(K). Pub. L. 104–188, § 1702(h)(1)(C), sub- stituted ‘‘section 48(l)(3)(A)(ix) (as in effect on the day before the date of the enactment of the Revenue Rec- onciliation Act of 1990)’’ for ‘‘section 48(a)(3)(A)(iii)’’. Subsec. (i)(8). Pub. L. 104–188, § 1121(a), reenacted heading without change and amended text generally. Prior to amendment, text read as follows: ‘‘In the case Page 808 TITLE 26—INTERNAL REVENUE CODE § 168 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.’’ 1995—Subsec. (g)(4)(B)(i). Pub. L. 104–88 substituted ‘‘rail carrier subject to part A of subtitle IV’’ for ‘‘do- mestic railroad corporation providing transportation subject to subchapter I of chapter 105’’. 1993—Subsec. (c)(1). Pub. L. 103–66, § 13151(a), sub- stituted ‘‘39 years’’ for ‘‘31.5 years’’ in table item relat- ing to nonresidential real property. Subsec. (j). Pub. L. 103–66, § 13321(a), added subsec. (j). 1990—Subsec. (e)(2)(A). Pub. L. 101–508, § 11812(b)(2)(A), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: ‘‘The term ‘residential rent- al property’ has the meaning given such term by sec- tion 167(j)(2)(B).’’ Subsec. (e)(3)(B)(vi)(I). Pub. L. 101–508, § 11813(b)(9)(A)(i), which directed the substitution of ‘‘subparagraph (A) of section 48(a)(3) (or would be so de- scribed 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)’’ was executed by making the sub- stitution for ‘‘paragraph (3)(A)(viii), (3)(A)(ix), or (4) of section 48(l)’’. See 1996 Amendment note above. Subsec. (e)(3)(B)(vi)(II). Pub. L. 101–508, § 11813(b)(9)(A)(ii), inserted ‘‘(as in effect on the day be- fore the date of the enactment of the Revenue Rec- onciliation Act of 1990)’’ after ‘‘48(l)’’. Subsec. (e)(3)(D)(i). Pub. L. 101–508, § 11813(b)(9)(B)(i), substituted ‘‘subsection (i)(13)’’ for ‘‘section 48(p)’’. Subsec. (f)(2). Pub. L. 101–508, § 11812(b)(2)(C), sub- stituted ‘‘subsection (i)(10)’’ for ‘‘section 167(l)(3)(A).’’ Subsec. (g)(4). Pub. L. 101–508, § 11813(b)(9)(C), sub- stituted heading for one which read: ‘‘Property used predominantly outside the United States’’ and amended text generally. Prior to amendment, text read as fol- lows: ‘‘For purposes of this subsection, rules similar to the rules under section 48(a)(2) (including the excep- tions contained in subparagraph (B) thereof) shall apply in determining whether property is used predomi- nantly outside the United States. In addition to the ex- ceptions 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, § 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, § 11801(c)(8)(B), struck out, ‘‘371(a), 374(a),’’ after ‘‘361,’’. Subsec. (i)(9)(A)(ii). Pub. L. 101–508, § 11812(b)(2)(E), struck out ‘‘(determined without regard to section 167(l))’’ after ‘‘section 167’’. Subsec. (i)(10). Pub. L. 101–508, § 11812(b)(2)(B), amend- ed 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, § 11813(b)(9)(B)(ii), added par. (13). 1989—Subsec. (b)(3)(D), (E). Pub. L. 101–239, § 7816(f), redesignated subpar. (D), relating to property described in subsec. (e)(3)(D)(ii), as (E). Subsec. (b)(5). Pub. L. 101–239, § 7816(e)(1), substituted ‘‘paragraph (2)(C)’’ for ‘‘paragraph (2)(B)’’. Subsec. (c)(2). Pub. L. 101–239, § 7816(e)(2), substituted ‘‘subsection (b)(2)(C)’’ for ‘‘subsection (b)(2)(B)’’. Subsec. (i)(1). Pub. L. 101–239, § 7816(w), made clari- fying amendment to directory language of Pub. L. 100–647, § 6253, see 1988 Amendment note below. 1988—Subsec. (b)(2). Pub. L. 100–647, § 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 amend- ment, text read as follows: ‘‘In the case of 15-year and 20-year property, paragraph (1) shall be applied by sub- stituting ‘150 percent’ for ‘200 percent’.’’ Subsec. (b)(2)(B), (C). Pub. L. 100–647, § 6028(a), added subpar. (B) and redesignated former subpar. (B) as (C). Subsec. (b)(3)(C). Pub. L. 100–647, § 1002(i)(2)(B)(i), added subpar. (C). Former subpar. (C) redesignated (D). Subsec. (b)(3)(D). Pub. L. 100–647, § 6029(b), added sub- par. (D) relating to property described in subsec. (e)(3)(D)(ii). Pub. L. 100–647, § 1002(i)(2)(B)(i), redesignated subpar. (C), relating to property with respect to which the tax- payer elects under par. (5), as (D). Subsec. (b)(5). Pub. L. 100–647, § 1002(i)(2)(B)(ii), sub- stituted ‘‘paragraph (3)(D)’’ for ‘‘paragraph (3)(C)’’. Pub. L. 100–647, § 1002(a)(11)(B), substituted ‘‘para- graph (2)(B) or (3)(C)’’ for ‘‘paragraph (3)(C)’’. Subsec. (c). Pub. L. 100–647, § 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, § 1002(i)(2)(A), inserted table item relating to any railroad grading or tunnel bore. Subsec. (d)(2)(C). Pub. L. 100–647, § 1002(i)(2)(D), added subpar. (C). Subsec. (d)(3)(A)(i). Pub. L. 100–647, § 1002(a)(5), struck out ‘‘and which are’’ after ‘‘this section applies’’. Subsec. (d)(3)(B). Pub. L. 100–647, § 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), nonresi- dential real property and residential rental property shall not be taken into account.’’ Subsec. (d)(3)(B)(i). Pub. L. 100–647, § 1002(i)(2)(E), sub- stituted ‘‘residential rental property, and railroad grading or tunnel bore’’ for ‘‘and residential rental property’’. Subsec. (e)(3)(B)(v). Pub. L. 100–647, § 1002(a)(21), sub- stituted ‘‘any section 1245 property’’ for ‘‘any prop- erty’’. Subsec. (e)(3)(C). Pub. L. 100–647, § 6027(b)(1)(C), redes- ignated 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 sec- tion 48(p)), and’’. Subsec. (e)(3)(D). Pub. L. 100–647, § 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 struc- ture (within the meaning of section 48(p)).’’ Pub. L. 100–647, § 6027(a), added subpar. (D). Former subpar. (D) redesignated (E). Subsec. (e)(3)(E), (F). Pub. L. 100–647, § 6027(a), redesig- nated former subpars. (D) and (E) as (E) and (F), respec- tively. Subsec. (e)(4). Pub. L. 100–647, § 1002(i)(2)(C), added par. (4). Subsec. (f)(4). Pub. L. 100–647, § 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, § 1002(a)(6)(A)(i), substituted ‘‘1st taxable year’’ for ‘‘1st full taxable year’’. Subsec. (f)(5)(B)(iii). Pub. L. 100–647, § 1002(a)(6)(A)(ii), added cl. (iii). Subsec. (f)(5)(C). Pub. L. 100–647, § 100–647, § 1002(a)(6)(B), added subpar. (C). Subsec. (g)(2)(C). Pub. L. 100–647, § 1002(i)(2)(F), added item (iv) in table. Subsec. (g)(3)(B). Pub. L. 100–647, § 6029(c), substituted ‘‘(D)(i)’’ for ‘‘(D)’’ and added item for ‘‘(D)(ii)’’ in table. Pub. L. 100–647, § 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, § 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 per- cent of the gross income for the taxable year derived by the foreign person or entity from the use of such prop- erty is— Page 809 TITLE 26—INTERNAL REVENUE CODE § 168 ‘‘(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 deter- mining 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, § 6253, as amended by Pub. L. 101–239, § 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 as- signed property before January 1, 1992, and (E) relating to assigned property and item. Subsec. (i)(1)(E)(iii). Pub. L. 100–647, § 1002(i)(2)(G), added cl. (iii), which provided: ‘‘SPECIAL RULE FOR RAIL- ROAD 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 prop- erty 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, § 1002(a)(7)(A), in- serted at end ‘‘In any case where this section as in ef- fect 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, § 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. Subpara- graph (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, § 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, § 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 insert- ing 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-ex- empt entity determined without regard to this subpara- graph 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 AC- COUNT IN CASE OF PUBLICLY TRADED STOCK.—For pur- poses of subclause (I), in the case of a corporation the stock of which is publicly traded on an established se- curities 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 en- tities (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 limita- tion contained in subsection (a)(2)(C) thereof).’’ 1986—Pub. L. 99–514, § 201(a), amended section gen- erally, applicable, with exceptions enumerated in sec- tions 203, 204, and 251(d) of Pub. L. 99–514 [set out as notes below and under section 46 of this title], to prop- erty placed in service after Dec. 31, 1986, modifying ex- isting 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, § 1809(a)(2)(A)(i)(I), struck out closing provisions relating to determina- tion, 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, § 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 de- duction 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, § 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 prob- able intent of Congress, because that phrase did not ap- pear in last item. Pub. L. 99–514, § 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, § 1809(a)(2)(B), sub- stituted ‘‘Monthly convention’’ for ‘‘Special rule for year of disposition’’ in heading and amended text gen- erally, substituting ‘‘In the case of low-income housing, the amount of the deduction determined under any pro- vision of this section (or for purposes of section 57(a)(12)(B) or 312(k)) for any taxable year shall be de- termined on the basis of the number of months (treat- ing 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, § 1809(a)(2)(A)(ii), re- designated 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, § 1809(b)(1), amended subpar. (A) generally, substituting ‘‘In the case of re- covery property transferred in a transaction described in subparagraph (B), for purposes of computing the de- duction 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 sub- section (b)(3) or (f)(2)(C), the transferee shall be treat- ed as having made the same election (or its equiva- lent).’’ for prior provisions. Subsec. (f)(10)(B). Pub. L. 99–514, § 1809(b)(2), inserted at end ‘‘Clause (i) shall not apply in the case of the ter- mination of a partnership under section 708(b)(1)(B).’’ Subsec. (f)(12)(B)(ii). Pub. L. 99–514, § 1809(a)(4)(A), amended cl. (ii) generally, substituting ‘‘In the case of Page 810 TITLE 26—INTERNAL REVENUE CODE § 168 19-year real property, the amount of the deduction al- lowed shall be determined by using the straight-line method (without regard to salvage value) and a recov- ery period of 19 years.’’ for prior provisions. Subsec. (f)(12)(C). Pub. L. 99–514, § 1809(a)(4)(B), sub- stituted ‘‘Exception for low- and moderate-income housing’’ for ‘‘Exception for projects for residential rental property’’ in heading and amended text gen- erally, 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 obliga- tions described in section 103(b)(4)(A).’’ for prior provisions. Subsec. (f)(14), (15). Pub. L. 99–514, § 1802(b)(1), redesig- nated 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, § 1809(a)(2)(C)(i), substituted ‘‘Cross reference’’ for ‘‘19-year real prop- erty’’ in heading and amended text generally, sub- stituting ‘‘For other applicable conventions, see para- graphs (2)(B) and (4)(B) of subsection (b).’’ for prior pro- visions. Subsec. (j)(3)(D). Pub. L. 99–514, § 1802(a)(1), inserted at end ‘‘For purposes of subparagraph (B)(iii), any por- tion 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, § 1802(a)(2)(A), (G), substituted ‘‘any property (other than property held by such organization)’’ for ‘‘any property of which such or- ganization 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, § 1802(a)(2)(B), (C), struck out ‘‘of which such organization is the lessee’’ after ‘‘respect to any property’’ in subcl. (I) and sub- stituted ‘‘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, § 1802(a)(2)(D), added cl. (iv), first used, which read as follows: ‘‘For purposes of this subparagraph, property shall be treat- ed 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 mem- ber of such partnership or pass-thru entity.’’ Subsec. (j)(5)(C)(iv). Pub. L. 99–514, § 1802(a)(3), struck out cl. (iv), relating to exclusion of property not sub- ject to rapid obsolescence. Subsec. (j)(8), (9)(A). Pub. L. 99–514, § 1802(a)(4)(A), (B)(i), struck out ‘‘and paragraphs (4) and (5) of section 48(a)’’ after ‘‘For purposes of this subsection’’ in intro- ductory provisions. Subsec. (j)(9)(B)(i). Pub. L. 99–514, § 1802(a)(4)(B)(ii), inserted a comma between ‘‘loss’’ and ‘‘deduction’’. Subsec. (j)(9)(D). Pub. L. 99–514, § 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 en- tity 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, § 1802(a)(7), redesig- nated subpar. (D) as (E) and substituted ‘‘(C), and (D)’’ for ‘‘and (C)’’. Former subpar. (E) redesignated (F). Pub. L. 99–514, § 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 para- graph, except as otherwise provided in this subpara- graph, any tax-exempt controlled entity shall be treat- ed as a tax-exempt entity.’’, cl. (ii), election, which read: ‘‘If a tax-exempt controlled entity makes an elec- tion under this clause— ‘‘(I) such entity shall not be treated as a tax-ex- empt 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-ex- empt 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-ex- empt controlled entity which was not subject to tax under this chapter.’’, and cl. (iii), tax-exempt con- trolled entity, which read ‘‘The term ‘tax-exempt con- trolled 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 de- termined 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 redesig- nated (F). Subsec. (j)(9)(F). Pub. L. 99–514, § 1802(a)(7)(A), redes- ignated subpar. (E) as (F). Former subpar. (F) redesig- nated (G). Pub. L. 99–514, § 1802(a)(2)(E)(i), redesignated former subpar. (E) as (F). Subsec. (j)(9)(G). Pub. L. 99–514, § 1802(a)(7)(A), redes- ignated subpar. (F) as (G). 1985—Subsec. (b)(2). Pub. L. 99–121, § 103(b)(1)(A), sub- stituted ‘‘19-year real property’’ for ‘‘18-year real prop- erty’’ in heading and wherever appearing in text. Subsec. (b)(2)(A)(i). Pub. L. 99–121, § 103(a), substituted ‘‘19-year recovery period’’ for ‘‘18-year recovery pe- riod’’. Subsec. (b)(3)(A). Pub. L. 99–121, § 103(b)(1)(A), sub- stituted ‘‘19-year real property’’ for ‘‘18-year real prop- erty’’ in table. Pub. L. 99–121, § 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, § 103(b)(1)(A), substituted ‘‘19-year real property’’ for ‘‘18-year real property’’ wherever appearing. Subsec. (c)(2)(D). Pub. L. 99–121, § 103(b)(1)(A), sub- stituted ‘‘19-year real property’’ for ‘‘18-year real prop- erty’’ in heading and in text. Subsec. (d)(2)(B). Pub. L. 99–121, § 103(b)(1)(A), sub- stituted ‘‘19-year real property’’ for ‘‘18-year real prop- erty’’. Subsec. (f)(1)(B)(ii). Pub. L. 99–121, § 103(b)(3)(B), sub- stituted ‘‘March 15, 1984, and before May, 9, 1985, the’’ for ‘‘March 15, 1984, the’’. Subsec. (f)(1)(B)(iii), (iv). Pub. L. 99–121, § 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, § 103(b)(1)(A), sub- stituted ‘‘19-year real property’’ for ‘‘18-year real prop- erty’’ wherever appearing. Subsec. (f)(12)(B)(ii). Pub. L. 99–121, § 103(b)(4), sub- stituted ‘‘19-year real property’’ for ‘‘15-year real prop- erty’’ in heading and wherever appearing in text, and substituted ‘‘19 years’’ for ‘‘15 years’’. Subsec. (j). Pub. L. 99–121, § 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, § 111(a)(1), sub- stituted ‘‘18-year real property’’ for ‘‘15-year real prop- erty’’ in heading and wherever appearing in text. Pub. L. 98–369, § 111(d), inserted in provision following cl. (ii) ‘‘(using a mid-month convention)’’. Subsec. (b)(2)(A). Pub. L. 98–369, § 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). Page 811 TITLE 26—INTERNAL REVENUE CODE § 168 Subsec. (b)(2)(A)(i). Pub. L. 98–369, § 111(a)(2), sub- stituted ‘‘18-year recovery period’’ for ‘‘15-year recov- ery period’’. Subsec. (b)(2)(A)(ii). Pub. L. 98–369, § 111(a)(3), struck out ‘‘(200 percent declining balance method in the case of low-income housing)’’ after ‘‘declining balance meth- od’’. Subsec. (b)(2)(B). Pub. L. 98–369, § 111(d), inserted ‘‘(using a mid-month convention)’’. Subsec. (b)(3)(A). Pub. L. 98–369, § 111(e)(9)(A), sub- stituted ‘‘under paragraph (1), (2), or (4)’’ for ‘‘under paragraphs (1) and (2)’’. Pub. L. 98–369, § 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, § 111(e)(2), sub- stituted ‘‘18-year real property or low-income housing,’’ for ‘‘15-year real property’’. Subsec. (b)(3)(B)(iii). Pub. L. 98–369, § 111(e)(1), sub- stituted ‘‘18-year real property or low-income housing’’ for ‘‘15-year real property’’. Subsec. (b)(4). Pub. L. 98–369, § 111(b)(1), added par. (4). Subsec. (c)(2)(D). Pub. L. 98–369, § 111(b)(3)(B), amend- ed 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, § 111(b)(2), added subpar. (F) and redesignated former subpar. (F) as (G). Subsec. (d)(2)(B). Pub. L. 98–369, § 111(e)(3), substituted ‘‘18-year real property or low-income housing’’ for ‘‘15- year real property’’. Subsec. (e). Pub. L. 98–369, § 113(b)(2)(A), substituted ‘‘title’’ for ‘‘section’’ in provision preceding par. (1). Subsec. (e)(5). Pub. L. 98–369, § 113(b)(1), added par. (5). Subsec. (f)(1)(B). Pub. L. 98–369, § 111(c), designated ex- isting 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 re- spect 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, § 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, § 111(e)(4), sub- stituted 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, § 111(e)(1), substituted ‘‘18-year real property or low-in- come housing’’ for ‘‘15-year real property’’. Subsec. (f)(8)(B)(ii)(I). Pub. L. 98–369, § 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, § 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 facil- ity or a facility which has received an urban develop- ment action grant under section 119 of the Housing and Community Development Act of 1974. Subsec. (f)(12)(D), (E). Pub. L. 98–369, § 628(b)(2), redes- ignated subpar. (E) as (D) and struck out former sub- par. (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, § 32(a), added second par. (13) relating to motor vehicle operating leases. Subsec. (f)(14). Pub. L. 98–369, § 113(a)(2), added par. (14). Subsec. (g)(2). Pub. L. 98–369, § 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, § 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, § 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, § 612(e)(5), in sub- sec. (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, § 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, § 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, § 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, § 12(a)(3)(B), in subsec. (i) as amended by section 209(b) of Pub. L. 97–248, sub- stituted ‘‘1989’’ for ‘‘1985’’ in cls. (i) and (ii). Pub. L. 98–369, § 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, § 31(a), added subsec. (j) and redesignated former subsec. (j) as (k). 1983—Subsec. (b)(2)(A). Pub. L. 97–448, § 102(a)(5), sub- stituted ‘‘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, § 102(a)(8), added sub- par. (F). Subsec. (d)(2)(B). Pub. L. 97–448, § 102(a)(2), substituted ‘‘paragraph (7) or (10) of subsection (f)’’ for ‘‘subsection (f)(7)’’. Subsec. (e)(3)(C), (D). Pub. L. 97–424, § 541(a)(1), added subpar. (C). Former subpar. (C) redesignated (D). Subsec. (e)(4)(D). Pub. L. 97–448, § 102(a)(9)(A), inserted provision that, in the case of the acquisition of prop- erty by any partnership which results from the termi- nation 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, § 102(a)(9)(B), added subpars. (H) and (I). Subsec. (f)(4)(B). Pub. L. 97–448, § 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 elec- tion’’, in cl. (i) as so designated, and added cl. (ii). Subsec. (f)(5). Pub. L. 97–448, § 102(a)(1), inserted provi- sion that, in the case of 15-year real property, the first sentence of this paragraph shall not apply to the tax- able year in which the property is placed in service or disposed of. Subsec. (f)(8)(D). Pub. L. 97–448, § 102(a)(10)(A), amend- ed subpar. (D), as in effect before the amendments made by the Tax Equity and Fiscal Responsibility Act of 1982 [Pub. L. 97–248], 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 require- ments 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, § 102(a)(3), added par. (13). Subsec. (g)(8)(A). Pub. L. 97–448, § 102(a)(4)(B), sub- stituted ‘‘Qualified coal utilization property’’ for ‘‘In general’’ in heading. Subsec. (g)(8)(B). Pub. L. 97–448, § 102(a)(4)(C), sub- stituted ‘‘Coal utilization property’’ for ‘‘In general’’ in heading. Subsec. (h)(4). Pub. L. 97–448, § 102(a)(4)(A), sub- stituted ‘‘coal utilization property which would other- Page 812 TITLE 26—INTERNAL REVENUE CODE § 168 wise be 15-year public utility property’’ for ‘‘coal utili- zation property which is not 3-year property, 5-year property, or 10-year property (determined without re- gard to this paragraph)’’. 1982—Subsec. (b)(1). Pub. L. 97–248, § 206(a), sub- stituted ‘‘table’’ for ‘‘tables’’ in introductory provi- sions, 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 serv- ice after Dec. 31, 1980, and before Jan. 1, 1985, and struck out subpars. (B) and (C), which had provided ta- bles, 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, §§ 206(b), 224(c)(1), sub- stituted ‘‘1981’’ for ‘‘1986’’ in heading, in subpar. (E) in- serted 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 cer- tain percentages took effect. Subsec. (f)(8). Pub. L. 97–248, § 209(a), amended par. (8) generally, substituting provisions relating to special rules for finance leases for provisions relating to spe- cial rule for leases. Subsec. (f)(8)(A). Pub. L. 97–248, § 208(a)(2)(A), inserted ‘‘except as provided in subsection (i),’’ before ‘‘for pur- poses of this subtitle’’. Subsec. (f)(8)(B)(i)(I). Pub. L. 97–354, § 5(a)(19), sub- stituted ‘‘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, § 208(b)(1), inserted ‘‘which is not a re- lated person with respect to the lessee’’. Subsec. (f)(8)(B)(iii). Pub. L. 97–248, § 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 re- covery 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, § 5(a)(20), in par. (8) as amended by section 209(a) of Pub. L. 97–248, sub- stituted ‘‘an S corporation’’ for ‘‘an electing small business corporation within the meaning of section 1371(b)’’. Subsec. (f)(8)(D). Pub. L. 97–248, § 208(b)(3), amended subpar. (D) generally. Prior to amendment, subpar. (D) read as follows: ‘‘(D) QUALIFIED LEASED PROPERTY DEFINED.—For pur- poses of subparagraph (A), the term ‘qualified leased property’ means recovery property (other than a quali- fied rehabilitated building within the meaning of sec- tion 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 les- see, ‘‘(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 inter- est on which is excludable from income under section 103(a). For purposes of this title (other than this subpara- graph), any property described in clause (i) or (ii) to which subparagraph (A) applies shall be deemed origi- nally 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 sub- paragraph 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, § 208(b)(4), added subpars. (H) to (J) and redesignated former sub- par. (H) as (K). Subsec. (f)(10)(B)(i). Pub. L. 97–248, § 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, § 216(a), added par. (12). Subsec. (i). Pub. L. 97–248, § 209(b), amended subsec. (i) generally, substituting provisions concerning limita- tions relating to leases of finance lease property for provisions concerning limitations relating to lease of qualified leased property. Pub. L. 97–248, § 208(a)(1), added subsec. (i). Former subsec. (i) redesignated (j). Subsec. (j). Pub. L. 97–248, § 208(a)(1), redesignated former subsec. (i) as (j). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2022 AMENDMENT Pub. L. 117–169, title I, § 13703(b), Aug. 16, 2022, 136 Stat. 1997, provided that: ‘‘The amendments made by this section [amending this section] shall apply to fa- cilities and property placed in service after December 31, 2024.’’ EFFECTIVE DATE OF 2020 AMENDMENT Pub. L. 116–260, div. EE, title I, § 115(b), Dec. 27, 2020, 134 Stat. 3050, provided that: ‘‘The amendment made by this section [amending this section] shall apply to property placed in service after December 31, 2020.’’ Pub. L. 116–260, div. EE, title I, § 137(b), Dec. 27, 2020, 134 Stat. 3053, provided that: ‘‘The amendments made by this section [amending this section] shall apply to property placed in service after December 31, 2020.’’ Pub. L. 116–260, div. EE, title I, § 138(b), Dec. 27, 2020, 134 Stat. 3054, provided that: ‘‘The amendment made by this section [amending this section] shall apply to property placed in service after December 31, 2020.’’ Pub. L. 116–136, div. A, title II, § 2307(b), Mar. 27, 2020, 134 Stat. 359, provided that: ‘‘The amendments made by this section [amending this section] shall take effect as if included in section 13204 of Public Law 115–97.’’ EFFECTIVE DATE OF 2019 AMENDMENT Pub. L. 116–94, div. Q, title I, § 114(b), Dec. 20, 2019, 133 Stat. 3229, provided that: ‘‘The amendments made by this section [amending this section] shall apply to property placed in service after December 31, 2017.’’ Pub. L. 116–94, div. Q, title I, § 115(b), Dec. 20, 2019, 133 Stat. 3229, provided that: ‘‘The amendment made by this section [amending this section] shall apply to property placed in service after December 31, 2017.’’ Pub. L. 116–94, div. Q, title I, § 116(b), Dec. 20, 2019, 133 Stat. 3229, provided that: ‘‘The amendment made by this section [amending this section] shall apply to property placed in service after December 31, 2017.’’ Pub. L. 116–94, div. Q, title I, § 130(b), Dec. 20, 2019, 133 Stat. 3232, provided that: ‘‘The amendment made by this section [amending this section] shall apply to property placed in service after December 31, 2017.’’ EFFECTIVE DATE OF 2018 AMENDMENT Pub. L. 115–141, div. U, title I, § 101(d)(3), (4), Mar. 23, 2018, 132 Stat. 1160, 1161, provided that: ‘‘(3) For purposes of applying section 168(k) of the In- ternal Revenue Code of 1986, as in effect on the day be- fore the date of the enactment of Public Law 115–97 [Dec. 22, 2017], with respect to property acquired before September 28, 2017, paragraph (6) thereof shall be treat- ed as reading as follows (and as having been included in section 143 of the Protecting Americans from Tax Hikes Act of 2015 [Pub. L. 114–113]): Page 813 TITLE 26—INTERNAL REVENUE CODE § 168 ‘‘ ‘(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 de- scribed 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.’ ‘‘(4) Section 168(k)(7) of the Internal Revenue Code of 1986, as in effect on the day before the date of the en- actment 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 Ameri- cans from Tax Hikes Act of 2015.’’ Amendment by section 101(d)(1), (2), (e) of Pub. L. 115–141 effective as if included in the provision of the Protecting Americans from Tax Hikes Act of 2015, div. Q of Pub. L. 114–113, to which such amendment relates, see section 101(s) of Pub. L. 115–141, set out as a note under section 24 of this title. Pub. L. 115–141, div. U, title III, § 302(b), Mar. 23, 2018, 132 Stat. 1184, provided that: ‘‘The amendments made by this section [amending this section] shall apply to property placed in service after the date of the enact- ment of this Act [Mar. 23, 2018].’’ Pub. L. 115–141, div. U, title IV, § 401(b)(13)(B), Mar. 23, 2018, 132 Stat. 1202, provided that: ‘‘The amendment made by this paragraph [amending this section] shall not apply to property placed in service before the date of the enactment of this Act [Mar. 23, 2018].’’ Pub. L. 115–123, div. D, title I, § 40304(b), Feb. 9, 2018, 132 Stat. 146, provided that: ‘‘The amendments made by this section [amending this section] shall apply to property placed in service after December 31, 2016.’’ Pub. L. 115–123, div. D, title I, § 40305(b), Feb. 9, 2018, 132 Stat. 146, provided that: ‘‘The amendment made by this section [amending this section] shall apply to property placed in service after December 31, 2016.’’ Pub. L. 115–123, div. D, title I, § 40306(b), Feb. 9, 2018, 132 Stat. 146, provided that: ‘‘The amendment made by this section [amending this section] shall apply to property placed in service after December 31, 2016.’’ Pub. L. 115–123, div. D, title I, § 40412(b), Feb. 9, 2018, 132 Stat. 151, provided that: ‘‘The amendment made by this section [amending this section] shall apply to property placed in service after December 31, 2016.’’ EFFECTIVE DATE OF 2017 AMENDMENT Amendment by section 12001(b)(13) of Pub. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, see section 12001(c) of Pub. L. 115–97, set out as a note under section 11 of this title. Pub. L. 115–97, title I, § 13201(h), Dec. 22, 2017, 131 Stat. 2108, provided that: ‘‘(1) IN GENERAL.—Except as provided by paragraph (2), the amendments made by this section [amending this section and section 460 of this title] shall apply to property which— ‘‘(A) is acquired after September 27, 2017, and ‘‘(B) is placed in service after such date. For purposes of the preceding sentence, property shall not be treated as acquired after the date on which a written binding contract is entered into for such acqui- sition. ‘‘(2) SPECIFIED PLANTS.—The amendments made by this section shall apply to specified plants planted or grafted after September 27, 2017.’’ Pub. L. 115–97, title I, § 13203(c), Dec. 22, 2017, 131 Stat. 2109, provided that: ‘‘The amendments made by this section [amending this section] shall apply to property placed in service after December 31, 2017, in taxable years ending after such date.’’ Pub. L. 115–97, title I, § 13204(b), Dec. 22, 2017, 131 Stat. 2111, as amended by Pub. L. 116–260, div. EE, title II, § 202, Dec. 27, 2020, 134 Stat. 3056, provided that: ‘‘(1) IN GENERAL.—Except as provided in paragraphs (2) and (3), the amendments made by this section [amending this section] shall apply to property placed in service after December 31, 2017. ‘‘(2) AMENDMENTS RELATED TO ELECTING REAL PROP- ERTY TRADE OR BUSINESS.—The amendments made by subsection (a)(3)(A) [amending this section] shall apply to taxable years beginning after December 31, 2017. ‘‘(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 Code of 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.’’ Pub. L. 115–97, title I, § 13205(b), Dec. 22, 2017, 131 Stat. 2111, provided that: ‘‘The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2017.’’ Pub. L. 115–97, title I, § 13504(c), Dec. 22, 2017, 131 Stat. 2142, provided that: ‘‘The amendments made by this section [amending this section and sections 708 and 743 of this title] shall apply to partnership taxable years beginning after December 31, 2017.’’ EFFECTIVE DATE OF 2015 AMENDMENT Pub. L. 114–113, div. Q, title I, § 123(c), Dec. 18, 2015, 129 Stat. 3052, provided that: ‘‘The amendments made by this section [amending this section] shall apply to property placed in service after December 31, 2014.’’ Pub. L. 114–113, div. Q, title I, § 143(a)(5), Dec. 18, 2015, 129 Stat. 3057, provided that: ‘‘(A) IN GENERAL.—Except as provided in subpara- graph (B), the amendments made by this subsection [amending this section and section 460 of this title] shall apply to property placed in service after Decem- ber 31, 2014, in taxable years ending after such date. ‘‘(B) ELECTION TO ACCELERATE AMT CREDIT.—The amendments made by paragraph (3) [amending this sec- tion] shall apply to taxable years ending after Decem- ber 31, 2014.’’ Pub. L. 114–113, div. Q, title I, § 143(b)(7), Dec. 18, 2015, 129 Stat. 3064, provided that: ‘‘(A) IN GENERAL.—Except as otherwise provided in this paragraph, the amendments made by this sub- section [amending this section and sections 263A and 460 of this title] shall apply to property placed in serv- ice after December 31, 2015, in taxable years ending after such date. ‘‘(B) EXPANSION OF ELECTION TO ACCELERATE AMT CREDITS IN LIEU OF BONUS DEPRECIATION.—The amend- ments made by paragraph (3) [amending this section] shall apply to taxable years ending after December 31, 2015, except that in the case of any taxable year begin- ning 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 (as amended by this section) 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 this sub- section), 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 Page 814 TITLE 26—INTERNAL REVENUE CODE § 168 ‘‘(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 num- ber of days in the taxable year. ‘‘(C) SPECIAL RULES FOR CERTAIN PLANTS BEARING FRUITS AND NUTS.—The amendments made by paragraph (4) [amending this section] (other than subparagraph (A) thereof) shall apply to specified plants (as defined in section 168(k)(5)(B) of the Internal Revenue Code of 1986, as amended by this subsection) planted or grafted after December 31, 2015.’’ Pub. L. 114–113, div. Q, title I, § 165(b), Dec. 18, 2015, 129 Stat. 3067, provided that: ‘‘The amendments made by this section [amending this section] shall apply to property placed in service after December 31, 2014.’’ Pub. L. 114–113, div. Q, title I, § 166(b), Dec. 18, 2015, 129 Stat. 3067, provided that: ‘‘The amendment made by this section [amending this section] shall apply to property placed in service after December 31, 2014.’’ Pub. L. 114–113, div. Q, title I, § 167(c), Dec. 18, 2015, 129 Stat. 3067, provided that: ‘‘(1) EXTENSION.—The amendment made by subsection (a) [amending this section] shall apply to property placed in service after December 31, 2014. ‘‘(2) MODIFICATION.—The amendments made by sub- section (b) [amending this section] shall apply to tax- able years beginning after December 31, 2015.’’ Pub. L. 114–113, div. Q, title I, § 189(b), Dec. 18, 2015, 129 Stat. 3075, provided that: ‘‘The amendment made by this section [amending this section] shall apply to property placed in service after December 31, 2014.’’ EFFECTIVE DATE OF 2014 AMENDMENT Pub. L. 113–295, div. A, title I, § 121(b), Dec. 19, 2014, 128 Stat. 4015, provided that: ‘‘The amendments made by this section [amending this section] shall apply to property placed in service after December 31, 2013.’’ Pub. L. 113–295, div. A, title I, § 122(b), Dec. 19, 2014, 128 Stat. 4015, provided that: ‘‘The amendments made by this section [amending this section] shall apply to property placed in service after December 31, 2013.’’ Pub. L. 113–295, div. A, title I, § 123(b), Dec. 19, 2014, 128 Stat. 4015, provided that: ‘‘The amendment made by this section [amending this section] shall apply to property placed in service after December 31, 2013.’’ Pub. L. 113–295, div. A, title I, § 124(b), Dec. 19, 2014, 128 Stat. 4016, provided that: ‘‘The amendment made by this section [amending this section] shall apply to property placed in service after December 31, 2013.’’ Pub. L. 113–295, div. A, title I, § 125(e), Dec. 19, 2014, 128 Stat. 4017, provided that: ‘‘The amendments made by this section [amending this section and sections 460, 1400L, and 1400N of this title] shall apply to property placed in service after December 31, 2013, in taxable years ending after such date.’’ Pub. L. 113–295, div. A, title I, § 157(b), Dec. 19, 2014, 128 Stat. 4022, provided that: ‘‘The amendment made by this section [amending this section] shall apply to property placed in service after December 31, 2013.’’ Amendment by section 202(e) of Pub. L. 113–295 effec- tive as if included in the provision of the American Taxpayer Relief Act of 2012, Pub. L. 112–240, to which such amendment relates, see section 202(f) of Pub. L. 113–295, set out as a note under section 55 of this title. Amendment by section 210(c), (d), (g)(2) of Pub. L. 113–295 effective as if included in the provisions of the Energy Improvement and Extension Act of 2008, Pub. L. 110–343, div. B, to which such amendment relates, see section 210(h) of Pub. L. 113–295, set out as a note under section 45 of this title. Amendment by section 211(b) of Pub. L. 113–295 effec- tive as if included in the provisions of the Tax Extend- ers and Alternative Minimum Tax Relief Act of 2008, Pub. L. 110–343, div. C, to which such amendment re- lates, see section 211(d) of Pub. L. 113–295, set out as a note under section 143 of this title. Amendment by section 212(b) of Pub. L. 113–295 effec- tive as if included in the provisions of the Housing As- sistance Tax Act of 2008, Pub. L. 110–289, div. C, to which such amendment relates, see section 212(d) of Pub. L. 113–295, set out as a note under section 42 of this title. Pub. L. 113–295, div. A, title II, § 214(c), Dec. 19, 2014, 128 Stat. 4034, provided that: ‘‘The amendments made by this section [amending this section and section 6213 of this title] shall take effect as if included in the pro- visions of the Economic Stimulus Act of 2008 [Pub. L. 110–185] to which they relate.’’ EFFECTIVE DATE OF 2013 AMENDMENT Pub. L. 112–240, title III, § 311(b), Jan. 2, 2013, 126 Stat. 2330, provided that: ‘‘The amendments made by this section [amending this section] shall apply to property placed in service after December 31, 2011.’’ Pub. L. 112–240, title III, § 312(b), Jan. 2, 2013, 126 Stat. 2330, provided that: ‘‘The amendment made by this sec- tion [amending this section] shall apply to property placed in service after December 31, 2011.’’ Pub. L. 112–240, title III, § 313(b), Jan. 2, 2013, 126 Stat. 2330, provided that: ‘‘The amendment made by this sec- tion [amending this section] shall apply to property placed in service after December 31, 2011.’’ Pub. L. 112–240, title III, § 331(f), Jan. 2, 2013, 126 Stat. 2337, provided that: ‘‘The amendments made by this section [amending this section and sections 460, 1400L, and 1400N of this title] shall apply to property placed in service after December 31, 2012, in taxable years ending after such date.’’ Pub. L. 112–240, title IV, § 410(a)(2), Jan. 2, 2013, 126 Stat. 2342, provided that: ‘‘The amendment made by this subsection [amending this section] shall apply to property placed in service after December 31, 2012.’’ Pub. L. 112–240, title IV, § 410(b)(3), Jan. 2, 2013, 126 Stat. 2343, provided that: ‘‘The amendments made by this subsection [amending this section] shall apply to property placed in service after the date of the enact- ment of this Act [Jan. 2, 2013].’’ EFFECTIVE DATE OF 2010 AMENDMENT Pub. L. 111–312, title IV, § 401(e), Dec. 17, 2010, 124 Stat. 3306, provided that: ‘‘(1) IN GENERAL.—Except as provided in paragraph (2), the amendments made by this section [amending this section and sections 1400L and 1400N of this title] shall apply to property placed in service after December 31, 2010, in taxable years ending after such date. ‘‘(2) TEMPORARY 100 PERCENT EXPENSING.—The amend- ment made by subsection (b) [amending this section] shall apply to property placed in service after Sep- tember 8, 2010, in taxable years ending after such date.’’ Pub. L. 111–312, title VII, § 737(c), Dec. 17, 2010, 124 Stat. 3318, provided that: ‘‘The amendments made by this section [amending this section and section 179 of this title] shall apply to property placed in service after December 31, 2009.’’ Pub. L. 111–312, title VII, § 738(b), Dec. 17, 2010, 124 Stat. 3318, provided that: ‘‘The amendment made by this section [amending this section] shall apply to property placed in service after December 31, 2009.’’ Pub. L. 111–312, title VII, § 739(b), Dec. 17, 2010, 124 Stat. 3319, provided that: ‘‘The amendment made by this section [amending this section] shall apply to property placed in service after December 31, 2009.’’ Pub. L. 111–240, title II, § 2022(c), Sept. 27, 2010, 124 Stat. 2559, provided that: ‘‘The amendments made by this section [amending this section and sections 1400L and 1400N of this title] shall apply to property placed in service after December 31, 2009, in taxable years ending after such date.’’ EFFECTIVE DATE OF 2009 AMENDMENT Pub. L. 111–5, div. B, title I, § 1201(c), Feb. 17, 2009, 123 Stat. 334, provided that: ‘‘(1) IN GENERAL.—Except as provided in paragraph (2), the amendments made by this section [amending this section and sections 1400N and 6211 of this title] shall apply to property placed in service after December 31, 2008, in taxable years ending after such date. Page 815 TITLE 26—INTERNAL REVENUE CODE § 168 ‘‘(2) TECHNICAL AMENDMENTS.—The amendments made by subsections (a)(3) [amending this section and section 6211 of this title] and (b)(2) [amending section 6211 of this title] shall apply to taxable years ending after March 31, 2008.’’ EFFECTIVE DATE OF 2008 AMENDMENT Pub. L. 110–343, div. B, title II, § 201(c), Oct. 3, 2008, 122 Stat. 3832, provided that: ‘‘The amendments made by this section [amending this section] shall apply to property placed in service after the date of the enact- ment of this Act [Oct. 3, 2008], in taxable years ending after such date.’’ Pub. L. 110–343, div. B, title III, § 306(d), Oct. 3, 2008, 122 Stat. 3849, provided that: ‘‘The amendments made by this section [amending this section] shall apply to property placed in service after the date of the enact- ment of this Act [Oct. 3, 2008].’’ Pub. L. 110–343, div. B, title III, § 308(b), Oct. 3, 2008, 122 Stat. 3851, provided that: ‘‘The amendment made by this section [amending this section] shall apply to property placed in service after August 31, 2008.’’ Pub. L. 110–343, div. C, title III, § 305(a)(2), Oct. 3, 2008, 122 Stat. 3867, provided that: ‘‘The amendments made by this subsection [amending this section] shall apply to property placed in service after December 31, 2007.’’ Pub. L. 110–343, div. C, title III, § 305(b)(2), Oct. 3, 2008, 122 Stat. 3867, provided that: ‘‘The amendment made by this subsection [amending this section] shall apply to property placed in service after December 31, 2008.’’ Pub. L. 110–343, div. C, title III, § 305(c)(5), Oct. 3, 2008, 122 Stat. 3868, provided that: ‘‘The amendments made by this subsection [amending this section] shall apply to property placed in service after December 31, 2008.’’ Pub. L. 110–343, div. C, title III, § 315(b), Oct. 3, 2008, 122 Stat. 3872, provided that: ‘‘The amendment made by this section [amending this section] shall apply to property placed in service after December 31, 2007.’’ Pub. L. 110–343, div. C, title III, § 317(b), Oct. 3, 2008, 122 Stat. 3873, provided that: ‘‘The amendment made by this section [amending this section] shall apply to property placed in service after December 31, 2007.’’ Pub. L. 110–343, div. C, title V, § 505(c), Oct. 3, 2008, 122 Stat. 3880, provided that: ‘‘The amendments made by this section [amending this section] shall apply to property placed in service after December 31, 2008.’’ Pub. L. 110–343, div. C, title VII, § 710(b), Oct. 3, 2008, 122 Stat. 3928, provided that: ‘‘The amendment made by this section [amending this section] shall apply to property placed in service after December 31, 2007, with respect [to] disasters declared after such date.’’ Pub. L. 110–289, div. C, title III, § 3081(d), July 30, 2008, 122 Stat. 2907, provided that: ‘‘The amendments made by this section [amending this section and section 1324 of Title 31, Money and Finance] shall apply to taxable years ending after March 31, 2008.’’ Amendment of this section and repeal of Pub. L. 110–234 by Pub. L. 110–246 effective May 22, 2008, the date of enactment of Pub. L. 110–234, except as other- wise provided, see section 4 of Pub. L. 110–246, set out as an Effective Date note under section 8701 of Title 7, Agriculture. Pub. L. 110–234, title XV, § 15344(b), May 22, 2008, 122 Stat. 1520, and Pub. L. 110–246, § 4(a), title XV, § 15344(b), June 18, 2008, 122 Stat. 1664, 2282, provided that: ‘‘The amendment made by this section [amending this sec- tion] shall apply to property placed in service after De- cember 31, 2008.’’ [Pub. L. 110–234 and Pub. L. 110–246 enacted identical provisions. Pub. L. 110–234 was repealed by section 4(a) of Pub. L. 110–246, set out as a note under section 8701 of Title 7, Agriculture.] Pub. L. 110–185, title I, § 103(d), Feb. 13, 2008, 122 Stat. 619, provided that: ‘‘The amendments made by this sec- tion [amending this section and sections 1400L and 1400N of this title] shall apply to property placed in service after December 31, 2007, in taxable years ending after such date.’’ EFFECTIVE DATE OF 2007 AMENDMENT Pub. L. 110–172, § 11(b)(3), Dec. 29, 2007, 121 Stat. 2488, provided that: ‘‘The amendments made by this sub- section [amending this section and section 6724 of this title] shall take effect as if included in the provision of the Tax Relief and Health Care Act of 2006 [Pub. L. 109–432] to which they relate.’’ EFFECTIVE DATE OF 2006 AMENDMENT Pub. L. 109–432, div. A, title I, § 112(b), Dec. 20, 2006, 120 Stat. 2940, provided that: ‘‘The amendment made by this section [amending this section] shall apply to property placed in service after December 31, 2005.’’ Pub. L. 109–432, div. A, title I, § 113(b), Dec. 20, 2006, 120 Stat. 2940, provided that: ‘‘The amendments made by subsection (a) [amending this section] shall apply to property placed in service after December 31, 2005.’’ Pub. L. 109–432, div. A, title II, § 209(b), Dec. 20, 2006, 120 Stat. 2947, provided that: ‘‘The amendment made by this section [amending this section] shall apply to property placed in service after the date of the enact- ment of this Act [Dec. 20, 2006] in taxable years ending after such date.’’ EFFECTIVE DATE OF 2005 AMENDMENTS Amendment by section 403(j) of Pub. L. 109–135 effec- tive as if included in the provision of the American Jobs Creation Act of 2004, Pub. L. 108–357, to which such amendment relates, see section 403(nn) of Pub. L. 109–135, set out as a note under section 26 of this title. Pub. L. 109–135, title IV, § 405(b), Dec. 21, 2005, 119 Stat. 2634, provided that: ‘‘The amendments made by this section [amending this section and section 1400L of this title] shall take effect as if included in section 201 of the Jobs and Growth Tax Relief and Reconciliation Act of 2003 [probably means the Jobs and Growth Tax Relief Reconciliation Act of 2003, Pub. L. 108–27].’’ Pub. L. 109–135, title IV, § 410(b), Dec. 21, 2005, 119 Stat. 2636, provided that: ‘‘The amendment made by this sec- tion [amending this section] shall take effect as if in- cluded in section 11813 of the Omnibus Budget Rec- onciliation Act of 1990 [Pub. L. 101–508].’’ Amendment by section 1301(f)(5) of Pub. L. 109–58 ef- fective as if included in the amendments made by sec- tion 710 of the American Jobs Creation Act of 2004, Pub. L. 108–357, see section 1301(g) of Pub. L. 109–58, set out as a note under section 45 of this title. Pub. L. 109–58, title XIII, § 1308(c), Aug. 8, 2005, 119 Stat. 1006, provided that: ‘‘(1) IN GENERAL.—The amendments made by this sec- tion [amending this section] shall apply to property placed in service after April 11, 2005. ‘‘(2) EXCEPTION.—The amendments made by this sec- tion [amending this section] shall not apply to any property with respect to which the taxpayer or a re- lated 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 con- struction on or before such date.’’ Pub. L. 109–58, title XIII, § 1325(c), Aug. 8, 2005, 119 Stat. 1016, provided that: ‘‘(1) IN GENERAL.—The amendments made by this sec- tion [amending this section] shall apply to property placed in service after April 11, 2005. ‘‘(2) EXCEPTION.—The amendments made by this sec- tion [amending this section] shall not apply to any property with respect to which the taxpayer or a re- lated 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 con- struction on or before such date.’’ Amendment by section 1326(a)–(c) of Pub. L. 109–58 ap- plicable to property placed in service after Apr. 11, 2005, with exception for property with respect to which the taxpayer or a related party has entered into a binding contract for the construction thereof on or before Apr. 11, 2005, or, in the case of self-constructed property, has started construction on or before such date, see section 1326(e) of Pub. L. 109–58, set out as a note under section 56 of this title. EFFECTIVE DATE OF 2004 AMENDMENTS Pub. L. 108–357, title II, § 211(f), Oct. 22, 2004, 118 Stat. 1430, provided that: ‘‘The amendments made by this Page 816 TITLE 26—INTERNAL REVENUE CODE § 168 section [amending this section] shall apply to property placed in service after the date of the enactment of this Act [Oct. 22, 2004].’’ Pub. L. 108–357, title III, § 336(c), Oct. 22, 2004, 118 Stat. 1480, provided that: ‘‘The amendments made by this section [amending this section] shall take effect as if included in the amendments made by section 101 of the Job Creation and Worker Assistance Act of 2002 [Pub. L. 107–147].’’ Pub. L. 108–357, title III, § 337(b), Oct. 22, 2004, 118 Stat. 1480, provided that: ‘‘The amendment made by this sec- tion [amending this section] shall apply to property sold after June 4, 2004.’’ Pub. L. 108–357, title VII, § 704(c), Oct. 22, 2004, 118 Stat. 1548, provided that: ‘‘(1) IN GENERAL.—The amendments made by this sec- tion [amending this section] shall apply to any prop- erty placed in service after the date of the enactment of this Act [Oct. 22, 2004]. ‘‘(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.’’ Pub. L. 108–357, title VII, § 706(d), Oct. 22, 2004, 118 Stat. 1550, provided that: ‘‘The amendments made by this section [amending this section] shall apply to property placed in service after December 31, 2004.’’ Amendment by section 847(a), (c), (d) of Pub. L. 108–357 applicable to leases entered into after Mar. 12, 2004, and amendment by section 847(e) of Pub. L. 108–357 applicable to leases entered into after Oct. 3, 2004, ex- cept that such amendments inapplicable to qualified transportation property, see section 849 of Pub. L. 108–357, set out as an Effective Date note under section 470 of this title. Pub. L. 108–357, title VIII, § 901(d), Oct. 22, 2004, 118 Stat. 1651, provided that: ‘‘The amendments made by this section [amending this section] shall apply to property placed in service after the date of the enact- ment of this Act [Oct. 22, 2004].’’ Amendment by section 403(a) of Pub. L. 108–311 effec- tive as if included in the provisions of the Job Creation and Worker Assistance Act of 2002, Pub. L. 107–147, to which such amendment relates, see section 403(f) of Pub. L. 108–311, set out as a note under section 56 of this title. EFFECTIVE DATE OF 2003 AMENDMENT Pub. L. 108–27, title II, § 201(d), May 28, 2003, 117 Stat. 757, provided that: ‘‘The amendments made by this sec- tion [amending this section and section 1400L of this title] shall apply to taxable years ending after May 5, 2003.’’ EFFECTIVE DATE OF 2002 AMENDMENT Pub. L. 107–147, title I, § 101(b), Mar. 9, 2002, 116 Stat. 25, provided that: ‘‘The amendments made by this sec- tion [amending this section] shall apply to property placed in service after September 10, 2001, in taxable years ending after such date.’’ EFFECTIVE DATE OF 1998 AMENDMENT Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title. EFFECTIVE DATE OF 1997 AMENDMENT Amendment by section 1086(b) of Pub. L. 105–34 appli- cable to property placed in service after Aug. 5, 1997, see section 1086(c) of Pub. L. 105–34, set out as a note under section 167 of this title. Amendment by section 1213(c) of Pub. L. 105–34 appli- cable to leases entered into after Aug. 5, 1997, see sec- tion 1213(e) of Pub. L. 105–34, set out as an Effective Date note under section 110 of this title. Pub. L. 105–34, title XVI, § 1604(c)(2), Aug. 5, 1997, 111 Stat. 1098, provided that: ‘‘The amendment made by paragraph (1) [amending this section] shall apply as if included in the amendments made by section 13321 of the Omnibus Budget Reconciliation Act of 1993 [Pub. L. 103–66], 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 Code of 1986 of 6 years or less) held by the taxpayer if the taxpayer claimed the benefits of sec- tion 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 tax- able year in which such property was placed in serv- ice, 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.’’ EFFECTIVE DATE OF 1996 AMENDMENT Pub. L. 104–188, title I, § 1120(c), Aug. 20, 1996, 110 Stat. 1765, provided that: ‘‘The amendments made by this section [amending this section] shall apply to property which is placed in service on or after the date of the en- actment 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 [Pub. L. 99–514]. A taxpayer may elect (in such form and manner as the Secretary of the Treasury may prescribe) to have such amendments apply with re- spect to any property placed in service before such date and to which such section so applies.’’ Pub. L. 104–188, title I, § 1121(b), Aug. 20, 1996, 110 Stat. 1766, provided that: ‘‘Subparagraph (B) of section 168(i)(8) of the Internal Revenue Code of 1986, as added by the amendment made by subsection (a), shall apply to improvements disposed of or abandoned after June 12, 1996.’’ Pub. L. 104–188, title I, § 1613(b)(5), Aug. 20, 1996, 110 Stat. 1850, provided that: ‘‘The amendments made by this subsection [amending this section] 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.’’ Amendment by section 1702(h)(1) of Pub. L. 104–188 ef- fective, except as otherwise expressly provided, as if in- cluded in the provision of the Revenue Reconciliation Act of 1990, Pub. L. 101–508, title XI, to which such amendment relates, see section 1702(i) of Pub. L. 104–188, set out as a note under section 38 of this title. EFFECTIVE DATE OF 1995 AMENDMENT Amendment by Pub. L. 104–88 effective Jan. 1, 1996, see section 2 of Pub. L. 104–88, set out as an Effective Date note under section 1301 of Title 49, Transpor- tation. EFFECTIVE DATE OF 1993 AMENDMENT Pub. L. 103–66, title XIII, § 13151(b), Aug. 10, 1993, 107 Stat. 448, provided that: ‘‘(1) IN GENERAL.—Except as provided in paragraph (2), the amendment made by subsection (a) [amending this section] shall apply to property placed in service by the taxpayer on or after May 13, 1993. ‘‘(2) EXCEPTION.—The amendments made by this sec- tion [amending 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 com- menced by or for the taxpayer or a qualified person before May 13, 1993. Page 817 TITLE 26—INTERNAL REVENUE CODE § 168 For purposes of this paragraph, the term ‘qualified per- son’ 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 be- fore such rights are transferred to the taxpayer.’’ Pub. L. 103–66, title XIII, § 13321(b), Aug. 10, 1993, 107 Stat. 559, provided that: ‘‘The amendment made by this section [amending this section] shall apply to property placed in service after December 31, 1993.’’ EFFECTIVE DATE OF 1990 AMENDMENT 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 sec- tion 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 45K of this title. EFFECTIVE DATE OF 1989 AMENDMENT 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 AMENDMENT Pub. L. 100–647, title I, § 1002(a)(23)(B), Nov. 10, 1988, 102 Stat. 3356, 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 effec- tive, 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. Pub. L. 100–647, title VI, § 6027(c), Nov. 10, 1988, 102 Stat. 3693, 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 sec- tion 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 tax- payer and such construction or reconstruction began by July 14, 1988.’’ Pub. L. 100–647, title VI, § 6028(b), Nov. 10, 1988, 102 Stat. 3694, 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 sec- tion shall not apply to any property if such property is placed in service before July 1, 1989, and if such prop- erty— ‘‘(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 tax- payer and such construction or reconstruction began by July 14, 1988.’’ Pub. L. 100–647, title VI, § 6029(d), Nov. 10, 1988, 102 Stat. 3694, 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 Pub. L. 99–514, title II, §§ 203, 204, Oct. 22, 1986, 100 Stat. 2143, 2146, as amended by Pub. L. 99–509, title VIII, § 8071, Oct. 21, 1986, 100 Stat. 1964; Pub. L. 100–647, title I, § 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 TRANSI- TIONAL RULES. ‘‘(a) GENERAL EFFECTIVE DATES.— ‘‘(1) SECTION 201.— ‘‘(A) IN GENERAL.—Except as provided in this sec- tion, 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 SEC- TION 201 APPLY.—A taxpayer may elect (at such time and in such manner as the Secretary of the Treas- ury or his delegate may prescribe) to have the amendments made by section 201 apply to any prop- erty 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 sec- tion 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 Janu- ary 1, 1987, for purposes of applying the amend- ments made by section 202 to property placed in service during such taxable year and after Decem- ber 31, 1986— ‘‘(i) the limitation of section 179(b)(1) of the In- ternal Revenue Code of 1986 (as amended by sec- tion 202) shall be reduced by the aggregate deduc- tion under section 179 (as in effect on the day be- fore 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 be- fore 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 re- duced by the amount of any deduction under sec- tion 179 of such Code for property placed in serv- ice during such taxable year and before January 1, 1987. ‘‘(b) GENERAL TRANSITIONAL RULE.— ‘‘(1) IN GENERAL.—The amendments made by section 201 [amending this section and sections 46, 167, 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, recon- structed, or acquired by the taxpayer pursuant to a Page 818 TITLE 26—INTERNAL REVENUE CODE § 168 written contract which was binding on March 1, 1986, ‘‘(B) property which is constructed or recon- structed 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 con- struction has commenced as of March 1, 1986, pursu- ant 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 serv- ice before the applicable date determined under the following table: ‘‘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 ap- plicable 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 com- puter-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 para- graph 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 re- quirements 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 para- graph (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 re- spect to a facility— ‘‘(i)(I) the original use of which commences with the taxpayer, and the construction, recon- struction, 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 construc- tion, reconstruction, or rehabilitation was en- tered 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, pursu- ant 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 ref- erendum) 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 pro- ceeds of an obligation which is issued solely to re- fund 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 sig- nificant 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 fi- nanced 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 ap- proval 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, re- construction, or rehabilitation of the facility in- volved. ‘‘(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 this section and sections 46, 167, 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. Page 819 TITLE 26—INTERNAL REVENUE CODE § 168 ‘‘(e) NORMALIZATION REQUIREMENTS.— ‘‘(1) IN GENERAL.—A normalization method of ac- counting shall not be treated as being used with re- spect 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 av- erage 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 re- verse, the amount of the adjustment to the reserve for the deferred taxes is calculated by multi- plying— ‘‘(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 sec- tion 201 [amending this section and sections 46, 167, 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 an- nounced by a political subdivision of a State for a renovation of an urban area within its jurisdic- tion, ‘‘(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 devel- oper-purchaser of such project, and ‘‘(ii) such project was the subject of a develop- ment 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 Sep- tember 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 es- timated 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 ap- proved such project in December 1982, and the es- timated 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 ap- proved such project in December 1982, and the es- timated 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 ap- proved 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, instrumen- tality, 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 designa- tions granted by a State or an agency, instrumen- tality, 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 re- spect 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 Associa- tion 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 cor- poration; and Page 820 TITLE 26—INTERNAL REVENUE CODE § 168 ‘‘(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 pas- senger corporation and commuter railroads serving two States; and ‘‘(II) will include the reconstruction of such station so as to make it a more efficient trans- portation center and to better integrate the station with the development above, such re- construction plans to be prepared in coopera- tion 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 resolu- tions passed on August 14, 1984, April 2, 1985, Au- gust 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 ap- proved by a State Development Finance Authority on January 15, 1986, a village transferred approxi- mately $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 de- velopment team on June 30, 1986. ‘‘(2) CERTAIN PROJECTS GRANTED FERC LICENSES, ETC.—The amendments made by section 201 [amend- ing this section and sections 46, 167, 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 Util- ity 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 hy- droelectric 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 Reg- ulatory Commission before March 2, 1986. ‘‘(3) SUPPLY OR SERVICE CONTRACTS.—The amend- ments made by section 201 shall not apply to any property which is readily identifiable with and nec- essary to carry out a written supply or service con- tract, 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 Rev- enue 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 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 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 below]. ‘‘(5) SPECIAL RULES FOR PROPERTY INCLUDED IN MAS- TER PLANS OF INTEGRATED PROJECTS.—The amend- ments 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 subpara- graphs 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 ter- minal, 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, ter- minals 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 execu- tive 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 loca- tions, 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 en- gaged in the production of paint, chemicals, fiber- glass, 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 ap- proved by the management committee of the cor- poration 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 in- curred or committed before such date, ‘‘(iii) the project is a waste-to-energy disposal system which was initially approved by the man- agement 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 Page 821 TITLE 26—INTERNAL REVENUE CODE § 168 and undercoat production needs of a nearby auto- motive assembly plant, was approved by the cor- poration’s management committee on March 5, 1986, or ‘‘(v) the project is part of a facility to consoli- date 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 bind- ing contract for dredging and channeling with re- spect 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 dis- tribution 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 equip- ment 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 trans- mission lines in Massachusetts from Ayers to Millbury to West Medway, DC–AC converted termi- nals to Monroe, New Hampshire, and Ayer, Massa- chusetts, and other related equipment and facili- ties. ‘‘(I) A project is described in this subparagraph if it involves not more than two natural gas-fired combined cycle electric generating units each hav- ing 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 manu- facturing facility (including equipment and inci- dental appurtenances) to be located in the United States, and ‘‘(ii) either— ‘‘(I) the project was the subject of a memo- randum of understanding between 2 automobile manufacturers that was signed before Sep- tember 25, 1985, the automobile manufacturing facility (including equipment and incidental ap- purtenances) 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 expendi- ture, 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 re- spect to such project before March 1, 1986, or ‘‘(ii) the project involves a paper mill for the manufacture of newsprint (including a cogenera- tion facility) is generally based on a written de- sign 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 cor- poration 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 publica- tion 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 lo- cated in Pine Bluff, Arkansas, or ‘‘(v) the project involves property of a type de- scribed 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 gen- erally 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 con- nection 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 ammo- nia 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 in- curred 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 communica- tion 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, Illi- nois, and ‘‘(iv) the estimated cost of such project is ap- proximately $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 Page 822 TITLE 26—INTERNAL REVENUE CODE § 168 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 con- nection 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 Sep- tember 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 be- fore 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 pro- jected 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 includ- ing an integrated hotel, convention center, office, related retail facilities and public mass transpor- tation 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, approxi- mately 40 acre public mass transportation bus- way terminal facility located adjacent to an interstate highway; ‘‘(iii) a memorandum of understanding with re- spect 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 de- velopment project is placed in service by Decem- ber 31, 1990. ‘‘(X) A project is described in this subparagraph if— ‘‘(i) it is an $8,000,000 project to provide ad- vanced 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 ex- pended with respect to such project, or ‘‘(ii) it is an $8,300,000 project to achieve compli- ance with State and Federal regulations for par- ticulates 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 in- volves 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/Eliza- beth 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 equip- ment or fiber optic cable to be used in con- structing 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 inter- state natural gas pipeline (and related equipment) if— ‘‘(A) 3 applications for the construction of such pipeline were filed with the Federal Energy Regu- latory 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 af- filiates if— ‘‘(A) the lessee or an affiliate is the original les- see 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 head- quarters 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 Code of 1954 without regard to section 1563(b)(2) of such Code. Such lessee shall include a se- curities firm that meets the requirements of subpara- graph (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 amend- ments 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 tax- Page 823 TITLE 26—INTERNAL REVENUE CODE § 168 payer 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 re- spect 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 author- ity to construct from the Environmental Protec- tion Agency or from a State or local agency author- ized 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 Chat- tanooga, Knoxville, or Kingsport, Tennessee, or ‘‘(E) such facility is to serve Haverhill, Massachu- setts. ‘‘(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 FACIL- ITY.—The amendments made by section 201 [amend- ing this section and sections 46, 167, 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 ap- proved a service agreement with respect to such fa- cility 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 inter- ested in privatizing the wastewater treatment fa- cilities, 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 se- lected privatizer; ‘‘(C) the property is part of a wastewater treat- ment facility serving Greenville, South Carolina with respect to which a binding service agreement between a privatizer and the Western Carolina Re- gional Sewer Authority with respect to such facil- ity was signed before January 1, 1986; or ‘‘(D) such property is part of a wastewater treat- ment facility (located in Cameron County, Texas, within one mile of the City of Harlingen), an appli- cation 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 fa- cility (located in Harlingen, Texas) which is a sub- ject of such letter of intent and service agreement and the design of which was contracted for in a let- ter of intent dated January 23, 1986. ‘‘(11) CERTAIN AIRCRAFT.—The amendments made by section 201 [amending this section and sections 46, 167, 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 air- craft is ‘manufactured’ at the point of its final as- sembly, ‘‘(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 bind- ing 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 re- spect 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 ap- proximately $300,000,000; or ‘‘(C) the International Telecommunications Sat- ellite 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 Tele- communications Service for which the Federal Com- munications 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 co- generation and distribution of electricity and steam or other forms of thermal energy if— ‘‘(A) at least $100,000 was paid or incurred with re- spect to the project before March 1, 1986, a memo- randum of understanding was executed on Sep- tember 13, 1985, and the project is placed in service before January 1, 1989, ‘‘(B) at least $500,000 was paid or incurred with re- spect 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 ap- plications 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 Fed- eral 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 Sep- tember 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 in- volves 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 prop- erty 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. Page 824 TITLE 26—INTERNAL REVENUE CODE § 168 In the case of the project described in subparagraph (F), section 203(b)(2)(A) shall be applied by sub- stituting ‘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 trans- mission facilities) if— ‘‘(A) a tax-exempt entity will own an equity in- terest in all property included in the project (ex- cept the coal mine equipment), and ‘‘(B) at least $72,000,000 was expended in the acqui- sition of coal leases, land and water rights, engi- neering 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 ‘Janu- ary 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 lim- ited 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 amend- ments 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 con- tract to incur significant expenditures for its con- struction 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 re- quired 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 amend- ments 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 Janu- ary 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 reso- lution dated January 22, 1985, and ‘‘(B) a loan was extended by the Rural Electrifica- tion 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 approx- imate 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 devel- oping, financing, and operating the system) author- ized 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 re- gional railroad rights of way and properties includ- ing grade crossings which was authorized by the Board of Directors of such company prior to Octo- ber 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 sub- stantive commitments by December 31, 1987. ‘‘(20) CERTAIN DETERGENT MANUFACTURING FACIL- ITY.—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 re- spect to which a project agreement was fully exe- cuted 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 de- velopment authority adopted a bond resolution with respect to such facilities on December 17, 1984, and the projects were approved by the department of com- merce of a Commonwealth on December 27, 1984. ‘‘(22) The amendments made by section 201 shall not apply to a computer and office support center build- ing 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 FACILI- TIES.—The amendments made by section 201 shall not apply to pipes, mains, and related equipment in- cluded 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 connec- tion with which approximately $11,000,000 of tax-ex- empt bonds are to be issued. ‘‘(24) CERTAIN VESSELS.— ‘‘(A) CERTAIN OFFSHORE VESSELS.—The amend- ments made by section 201 shall not apply to any offshore vessel the construction contract for which was signed on February 28, 1986, and the approxi- mate cost of which is $9,000,000. ‘‘(B) CERTAIN INLAND RIVER VESSEL.—The amend- ments 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 ap- proximately $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 transpor- tation arrangements commenced in April 1985, for- mal 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 approxi- mate cost of refurbishment of which is approxi- mately $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 approxi- mately $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 award- ed before June 1986. ‘‘(25) CERTAIN WOOD ENERGY PROJECTS.—The amend- ments 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: Page 825 TITLE 26—INTERNAL REVENUE CODE § 168 ‘‘(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 Fed- eral 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 exe- cuted 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 out- lays for which approximate $68,000,000. ‘‘(F) The construction of a three-story office building that will serve as the home office for an in- surance group and its affiliated companies, with re- spect to which a city agreed to transfer its owner- ship 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 agree- ment on September 5, 1985, to construct its head- quarters 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 res- idential-business planned development, which de- velopment 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 sub- stituting ‘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 ren- ovation. ‘‘(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 de- velopment 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 approxi- mate 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 rail- road 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 con- struct 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 re- ceived 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 clin- ic with respect to which a Determination of Need certification was obtained from a State Depart- ment 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 pur- chased on April 2, 1986 and placed into service in September 1986 by a company located in Davenport, Iowa, Page 826 TITLE 26—INTERNAL REVENUE CODE § 168 ‘‘(J) A 25 megawatt small power production facil- ity, with respect to which Qualifying Facility sta- tus 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 sub- sidiary 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 Down- town Redevelopment Project and which is financed with the proceeds of bonds issued pursuant to sec- tion 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 Commis- sion 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 in- vestment, ‘‘(V) $350,000 of equipment acquired in connection with the reopening of a plant in Bristol, Rhode Is- land, 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 lo- cated in a home rule city, the zoning for which was changed to residential business planned develop- ment 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 in- vestment, and ‘‘(Z) railroad cars placed in service by the Pull- man Leasing Company, pursuant to an April 3, 1986 purchase order, costing approximately $10,000,000. ‘‘(33) The amendments made by section 201 [amend- ing this section and sections 46, 167, 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 de- preciable 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 Cali- fornia 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 approxi- mating $3,400,000 placed into service by Folz Vend- ing 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 re- spect to which a letter of intent was executed on behalf of the paper company on September 26, 1985. ‘‘(40) [Par. (40) probably should follow par. (39).] CERTAIN TRUCKS, ETC.—The amendments made by sec- tion 201 shall not apply to trucks, tractor units, and trailers which a privately held truck leasing com- pany 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 bev- erage container manufacturing plant located in Batesville, Mississippi, or plant equipment used ex- clusively 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 multi- family housing at the Columbia Point Project in Bos- ton, Massachusetts. A project shall be treated as not described in the preceding sentence and as not de- scribed 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 pro- vides health services to the residents of such project for fees commensurate with the ability of such indi- viduals to pay for such services. ‘‘(36) The amendments made by section 201 shall not apply to any ethanol facility located in Blair, Ne- braska, if— ‘‘(A) in July of 1984 an initial binding construc- tion contract was entered into for such facility, ‘‘(B) in June of 1986, certain Department of En- ergy recommended contract changes required a change of contractor, and ‘‘(C) in September of 1986, a new contract to con- struct such facility, consistent with such rec- ommended changes, was entered into. ‘‘(37) The amendments made by section 201 shall not apply to any property which is part of a sewage treat- ment facility if, prior to January 1, 1986, the City of Page 827 TITLE 26—INTERNAL REVENUE CODE § 168 Conyers, Georgia, selected a privatizer to construct such facility, received a guaranteed maximum price bid for the construction of such facility, signed a let- ter 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 Direc- tors on August 9, 1985, ‘‘(B) an electrical cogeneration plant in Bethel, Maine which is to generate 2 megawatts of elec- tricity from the burning of wood residues, with re- spect to which a contract was entered into on July 10, 1984, and with respect to which $200,000 of the ex- pected $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 build- ing in Rochester, New York, which is projected to cost $20,000,000, with respect to which an induce- ment 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 con- struction phase of which began under a contract en- tered into on March 26, 1986, ‘‘(F) a 166-unit continuing care retirement center in New Orleans, Louisiana, the construction con- tract 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 refin- ing facility in Rosemont, Minnesota from 137,000 to 207,000 barrels per day which is expected to be com- pleted by December 31, 1990, and ‘‘(H) a project in Ransom, Pennsylvania which will burn coal waste (known as ‘culm’) with an ap- proximate cost of $64,000,000 and for which a certifi- cation from the Federal Energy Regulatory Com- mission was received on March 11, 1986. ‘‘(39) The amendments made by section 201 shall not apply to any facility for the manufacture of an im- proved particle board if a binding contract to pur- chase 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 pro- visions 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 below]. ‘‘(c) APPLICABLE DATE IN CERTAIN CASES.— ‘‘(1) Section 203(b)(2) shall be applied by sub- stituting ‘January 1, 1992’ for ‘January 1, 1991’ in the following cases. ‘‘(A) in the case of a 2-unit nuclear powered elec- tric generating plant (and equipment and inci- dental 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/con- structor and the nuclear steam system supplier, such contracts shall be treated as contracts de- scribed 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 ap- proved October 15, 1985. ‘‘(C) in the case of a 1,300 megawatt coal-fired steam powered electric generating plant (and re- lated equipment and incidental appurtenances), which the three owners determined in 1984 to con- vert 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 expend- itures made after December 31, 1990. ‘‘(2) Section 203(b)(2) shall be applied by sub- stituting ‘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 re- lated 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 construc- tion of the second unit. ‘‘(3) Section 203(b)(2) shall be applied by sub- stituting ‘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 li- cense 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 sub- stituting ‘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 [amend- ing this section and sections 46, 167, 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 fol- lowing 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 re- spect to $78,000,000 of investments. ‘‘(B) Campbell Soup Company, Pennsylvania, California, North Carolina, Ohio, Maryland, Flor- ida, 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 develop- ment, 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 cred- its, 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 Tele- phone Company. ‘‘(G) Five aircraft placed in service before Janu- ary 1, 1987, by Presidential Air. ‘‘(H) A rehabilitation project by Ann Arbor Rail- road, but only with respect to $2,900,000 of invest- ments. ‘‘(I) Property that is part of a cogeneration project located in Ada, Michigan, but only with re- spect 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. Page 828 TITLE 26—INTERNAL REVENUE CODE § 168 ‘‘(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 aggre- gate cost of $5,723,484. ‘‘(O) Yarn-spinning equipment used at Spray Cot- ton Mills, but only with respect to $3,000,000 of in- vestments. ‘‘(P) 328 units of low-income housing at Angelus Plaza, but only with respect to $20,500,000 of invest- ments. ‘‘(Q) One aircraft of Continental Aviation Serv- ices 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 in- curred by a common carrier by railroad to replace property destroyed in a disaster occurring on or about April 17, 1983, near Thistle, Utah, such expendi- tures, to the extent not in excess of $15,000,000, shall be treated as recovery property which is 5-year prop- erty 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, reve- nues, or profits in connection with the disaster de- scribed in paragraph (1) and devoted by the taxpayer described in paragraph (1) to the construction of re- placement 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 [amend- ing this section and sections 46, 167, 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 sec- tion shall apply to a flood which occurred on Novem- ber 3 through 7, 1985, and which was declared a nat- ural disaster area by the President of the United States.’’ Pub. L. 100–647, title I, § 1002(c)(3), Nov. 10, 1988, 102 Stat. 3358, 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 Re- form Act [section 201 of Pub. L. 99–514, amending this section and sections 46, 167, 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 al- lowable.’’ Amendment by section 201(a) of Pub. L. 99–514 not ap- plicable to any property placed in service before Jan. 1, 1994, if such property placed in service as part of speci- fied rehabilitations, and not applicable to certain addi- tional 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. Pub. L. 99–514, title XVIII, § 1802(a)(2)(E)(ii), Oct. 22, 1986, 100 Stat. 2788, 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 Sep- tember 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.’’ Pub. L. 99–514, title XVIII, § 1809(a)(2)(C)(i), Oct. 22, 1986, 100 Stat. 2819, 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. Pub. L. 99–514, title XVIII, § 1809(b)(3), Oct. 22, 1986, 100 Stat. 2821, provided that: ‘‘The amendments made by this subsection [amending this section] shall apply to property placed in service by the transferee after De- cember 31, 1985, in taxable years ending after such date.’’ EFFECTIVE DATE OF 1985 AMENDMENT Pub. L. 99–121, title I, § 105(b), Oct. 11, 1985, 99 Stat. 510, as amended by Pub. L. 99–514, § 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 this section and sections 47, 48, 57, 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 per- son’ 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 sec- tion 103) to components placed in service after Decem- ber 31, 1986, property to which paragraph (2) of this sub- section 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 amend- ments made by section 111 of the Tax Reform Act of 1984 [Pub. L. 98–369, see Effective Date of 1984 Amend- ment note below]. ‘‘(5) SPECIAL RULE FOR LEASING OF QUALIFIED REHA- BILITATED BUILDINGS.—The amendment made by para- graph (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. Pub. L. 98–369, div. A, title I, § 31(g), July 18, 1984, 98 Stat. 521, as amended by Pub. L. 99–514, § 2, title XVIII, Page 829 TITLE 26—INTERNAL REVENUE CODE § 168 § 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, § 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 this section and sections 46, 48, 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-ex- empt 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 en- tity 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 ex- tension 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, recon- struct, or rehabilitate such property, and ‘‘(ii) the tax-exempt entity (or a tax-exempt pred- ecessor 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 partner- ship on or before October 21, 1983, or ‘‘(ii) such partnership entered into a written bind- ing contract which, on October 21, 1983, and at all times thereafter, required the partnership to ac- quire 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, recon- struct, 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 ac- quired the property after June 30, 1982, and on or before May 23, 1983, or completed the construc- tion, 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 NO- VEMBER 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 sig- nificant official governmental action with respect to the project or its design, and ‘‘(ii) the lease to the tax-exempt entity is pursu- ant to a written binding contract entered into be- fore 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 ‘signifi- cant 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 or- ganization 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 ap- plied 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 Caro- lina, before May 23, 1983, shall be treated as signifi- cant 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 deterio- rating building owned by the local governmental unit and listed in the National Register, and ‘‘(ii) the chief executive officer of the local gov- ernmental unit, in connection with the renovation of such building, made an application on June 1, 1983, to a State agency for a Federal historic preser- vation 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 subpara- graph (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 Code of 1986 [formerly I.R.C. 1954]) which is financed in whole or in part by obliga- tions the interest on which is excludable from gross in- come under section 103(a) of such Code if— ‘‘(A) such vehicle is placed in service before Janu- ary 1, 1988, or ‘‘(B) such vehicle is placed in service on or after such date— ‘‘(i) pursuant to a binding contract or commit- ment entered into before April 1, 1983, and ‘‘(ii) solely because of conditions which, as deter- mined by the Secretary of the Treasury or his dele- gate, are not within the control of the lessor or les- see. ‘‘(6) CERTAIN TURBINES AND BOILERS.—The amend- ments made by this section shall not apply to any prop- erty 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 (relat- ing 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 re- spect to the lease of such facility to the tax-exempt en- tity 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 Page 830 TITLE 26—INTERNAL REVENUE CODE § 168 purposes of paragraph (1) of section 168(j) of the Inter- nal Revenue Code of 1986 (as added by this section) shall be 12 years. For purposes of the preceding sen- tence, 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 pro- curement 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 Serv- ice, paragraphs (1) and (2) shall be applied by sub- stituting ‘October 31’ for ‘May 23’. ‘‘(10) EXISTING APPROPRIATIONS.—The amendments made by this section shall not apply to personal prop- erty 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 instrumen- tality 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 sec- tion 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 stat- ing the maximum number of units in the partner- ship 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 partner- ship 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 Depart- ment 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 sec- tion 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 or- ganized 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 max- imum amount described in clause (i). ‘‘(12) SPECIAL RULE FOR AMENDMENT MADE BY SUB- SECTION (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 sec- tion 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 IN- VOLVING TAX-EXEMPT ENTITIES.—In the case of a service contract or other arrangement described in section 7701(e) of the Internal Revenue Code of 1986 (as added by this section) with respect to which no party is a tax-ex- empt entity, such section 7701(e) shall not apply to— ‘‘(A) such contract or other arrangement if such contract or other arrangement was entered into be- fore November 5, 1983, or ‘‘(B) any renewal or other extension of such con- tract or other arrangement pursuant to an option contained in such contract or other arrangement on November 5, 1983. ‘‘(14) PROPERTY LEASED TO SECTION 593 ORGANIZA- TIONS.—For purposes of the amendment made by sub- section (f) [enacting section 46(e)(4) of this title], para- graphs (1), (2), and (4) shall be applied by substituting— ‘‘(A) ‘November 5, 1983’ for ‘May 23, 1983’ and ‘No- vember 1, 1983’, as the case may be, and ‘‘(B) ‘organization described in section 593 of the In- ternal 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 pur- suant 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 enti- ty 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 pur- suant 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 sub- paragraph (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 writ- ten binding contract to acquire, construct, or re- habilitate 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 enti- ty acquired the property or completed the con- struction, 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 les- see 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 for- eign person or entity if— ‘‘(i) on or before November 1, 1983, the foreign per- son or entity entered into a written binding con- tract to acquire such aircraft, and Page 831 TITLE 26—INTERNAL REVENUE CODE § 168 ‘‘(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 Janu- ary 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 treat- ment of exempt arbitrage profits described in sub- paragraph (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 arbi- trage 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 sec- tion 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 aggre- gate amount described in clauses (i) and (ii) of sub- paragraph (D) of section 103(c)(6) of such Code for all taxable years for which the organization was ex- empt from tax under section 501(a) of such Code with respect to obligations— ‘‘(I) associated with property described in sec- tion 168(j)(4)(E)(i), and ‘‘(II) issued before January 1, 1985. ‘‘(ii) APPLICATION OF SECTION 103(b)(6).—For pur- poses of this paragraph, section 103(b)(6) of such Code shall apply to obligations issued before Janu- ary 1, 1985, but the amount described in clauses (i) and (ii) of subparagraph (D) thereof shall be deter- mined 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, appli- cable with respect to the tax imposed by section 11 of such Code shall apply with respect to the tax im- posed by this paragraph. ‘‘(ii) NO CREDITS AGAINST TAX, ETC.—The tax im- posed by this paragraph shall not be treated as im- posed 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 pref- erences), and ‘‘(II) determining the amount of any credit al- lowable under subpart A of part IV of such sub- chapter. ‘‘(E) ELECTION.—Any election under subparagraph (A)— ‘‘(i) shall be made at such time and in such man- ner 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 subpara- graphs: ‘‘(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 organiza- tion acquired the property, with a view towards re- habilitating the property; and ‘‘(ii) on June 12, 1982, an arson fire caused sub- stantial 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 de- scribed 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 re- spect 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 en- tered 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 prop- erty; ‘‘(ii) renovation plans were delayed because of a zoning dispute; and ‘‘(iii) in May 1983, the court of highest jurisdic- tion in the State in which the college is located re- solved 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 uni- versity with respect to which— ‘‘(i) in August 1982, the university retained attor- neys to advise the university regarding the reha- bilitation 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 in- cludes 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 incorpora- tion was filed with the appropriate authority of the state in which the retirement community is lo- cated; and ‘‘(ii) on November 22, 1983, the Board of Trustees adopted a resolution evidencing the intention to begin immediate construction of the property. Page 832 TITLE 26—INTERNAL REVENUE CODE § 168 ‘‘(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 uni- versity 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 sen- tence applies only to the Continuing Education Cen- ter 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 ap- proved 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 De- cember 31, 1983, the Board of Trustees of such univer- sity 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 tax- payer 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 SUB- SECTION (c)(1).— ‘‘(A) IN GENERAL.—The amendment made by sub- section (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 tax- payer 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 sub- section (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 CON- TRACT.—For purposes of subparagraph (A), the term ‘energy management contract’ means a contract for the providing of energy conservation or energy man- agement 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 sec- tion). ‘‘(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 prop- erty. ‘‘(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 sub- paragraph and subparagraph (A), such subparagraph (C) shall be applied without regard to the last sen- tence 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).’’ [Pub. L. 99–514, title XVIII, § 1802(a)(10)(B), Oct. 22, 1986, 100 Stat. 2790, provided in part that amendment by section 1802(a)(10)(B) of Pub. L. 99–514, amending sec- tion 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.] [Pub. L. 99–514, title XVIII, § 1802(a)(10)(D)(ii), Oct. 22, 1986, 100 Stat. 2790, 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 con- tract to acquire, construct, or rehabilitate the prop- erty, or ‘‘(II) the taxpayer or the tax-exempt entity began the construction, reconstruction, or rehabilitation of the property on or before March 28, 1985.’’] Pub. L. 98–369, div. A, title I, § 32(c), July 18, 1984, 98 Stat. 531, as amended by Pub. L. 99–514, § 2, title XVIII, § 1802(b)(2), Oct. 22, 1986, 100 Stat. 2095, 2791, provided that: ‘‘The amendment made by subsection (a) [amend- ing 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)) en- tered into more than 90 days after the date of the en- actment of this Act [July 18, 1984].’’ Pub. L. 98–369, div. A, title I, § 111(g), July 18, 1984, 98 Stat. 634, as amended by Pub. L. 99–514, § 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 and sections 48, 51, 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 sec- tion 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. Page 833 TITLE 26—INTERNAL REVENUE CODE § 168 For purposes of this paragraph the term ‘qualified per- son’ 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 prop- erty 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 prop- erty for rental. No deduction for depreciation or am- ortization shall be allowed to such person with re- spect 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 Decem- ber 31, 1986, property to which paragraph (2) applies shall be treated as placed in service by the taxpayer be- fore March 16, 1984. ‘‘(5) SPECIAL RULE FOR MID-MONTH CONVENTION.—In the case of the amendment made by subsection (d) [amend- ing 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 ap- pears.’’ Amendment by section 113(a)(2) of Pub. L. 98–369 ap- plicable to property placed in service after Mar. 15, 1984, in taxable years ending after such date, see sec- tion 113(c)(1) of Pub. L. 98–369, set out as a note under section 48 of this title. Pub. L. 98–369, div. A, title I, § 113(c)(2), July 18, 1984, 98 Stat. 637, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘(A) The amendments made by paragraphs (1) of sub- section (b) [amending this section] shall apply to any motion picture film or video tape placed in service be- fore, 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 tax- payer 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 tax- payer 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 this section and sections 46 and 48 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 [sec- tions 201(a), 211(a)(1), and 211(f)(1) of Pub. L. 97–34, en- acting this section and amending section 46 of this title]. ‘‘(C) The amendment made by paragraph (4) of sub- section (b) [amending section 48 of this title] shall take effect as if included in the amendments made by sec- tion 205(a)(1) of the Tax Equity and Fiscal Responsi- bility 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 ‘quali- fied film’ and ‘production costs’ have the same respec- tive meanings as when used in section 48(k) of the In- ternal Revenue Code of 1986.’’ Amendment by section 474(r)(7) of Pub. L. 98–369 ap- plicable 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 appli- cable 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 appli- cable 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 AMENDMENT Amendment by title I of Pub. L. 97–448 effective, ex- cept 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. Pub. L. 97–448, title I, § 102(a)(10)(B), Jan. 12, 1983, 96 Stat. 2369, as amended by Pub. L. 99–514, § 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 amend- ments made by the Tax Equity and Fiscal Responsi- bility 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 AMENDMENT 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. Pub. L. 97–248, title II, § 208(d), Sept. 3, 1982, 96 Stat. 439, as amended by Pub. L. 97–448, title III, § 306(a)(4), Jan. 12, 1983, 96 Stat. 2400; Pub. L. 98–369, div. A, title X, § 1067(a), July 18, 1984, 98 Stat. 1048; Pub. L. 99–514, § 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 en- tered 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 sub- sections (a) and (b) [amending this section and sec- tion 47 of this title] shall not apply to transitional safe harbor lease property. ‘‘(B) SPECIAL RULE FOR CERTAIN PROVISIONS.—Sub- paragraph (A) shall not apply with respect to the pro- visions of paragraph (6) of section 168(i) of the Inter- nal Revenue Code of 1986 [formerly I.R.C. 1954] (as added by subsection (a)(1)), to the provisions of sec- tion 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 Page 834 TITLE 26—INTERNAL REVENUE CODE § 168 safe harbor lease property’ means property described in any of the following subparagraphs: ‘‘(A) IN GENERAL.—Property is described in this sub- paragraph if such property is placed in service before January 1, 1983, if— ‘‘(i) with respect to such property a binding con- tract 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 de- scribed 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 en- tered into before August 15, 1982, and ‘‘(ii) the lessee under such agreement is a quali- fied 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 manufac- turing property, and ‘‘(III) such property would be described in sub- paragraph (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 ‘auto- motive manufacturing property’ means machinery, equipment, and special tools of the type included in the former asset depreciation range guideline class- es 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 tax- payer shall be treated as automotive manufac- turing 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 de- scribed in this subparagraph is described in subpara- graph (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 construc- tion or reconstruction of a subassembly was com- menced, 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 organi- zation 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 de- scribed in this subparagraph is described in subpara- graph (A), such property shall be treated as having been acquired during the period referred to in sub- paragraph (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 pe- riod 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 prop- erty, 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 amend- ment 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 sec- tion 168(i)(1) and (7) of such Code, as added by sub- section (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 commit- ment entered into before April 1, 1983, and ‘‘(ii) solely because of conditions which, as deter- mined by the Secretary of the Treasury or his dele- gate, are not within the control of the lessor or les- see. ‘‘(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 agree- ment 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 Page 835 TITLE 26—INTERNAL REVENUE CODE § 168 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 (in- cluding as one person an affiliated group as de- fined 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 subpara- graph (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 com- piled 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 manufac- tured 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 manu- factured 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 Oc- tober 15, 1982, with respect to any underpayment of es- timated tax by a taxpayer with respect to any tax im- posed by chapter 1 of such Code to the extent that such underpayment was created or increased by any provi- sion of this section. ‘‘(7) COORDINATION WITH AT RISK RULES.—Subpara- graph (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).’’ [Pub. L. 98–369, div. A, title X, § 1067(c), July 18, 1984, 98 Stat. 1049, 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].’’] Pub. L. 97–248, title II, § 209(d), Sept. 3, 1982, 96 Stat. 447, as amended by Pub. L. 98–369, div. A, title I, § 12(a)(1), (2), July 18, 1984, 98 Stat. 503, provided that: ‘‘(1) SUBSECTION (a).— ‘‘(A) IN GENERAL.—Except as provided in subpara- graph (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 AGGRE- GATING $150,000 OR LESS.— ‘‘(i) IN GENERAL.—The amendments made by sub- section (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 les- see 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 prop- erty placed in service after December 31, 1983.’’ Pub. L. 97–248, title II, § 216(b), Sept. 3, 1982, 96 Stat. 471, as amended by Pub. L. 99–514, § 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 rehabili- tation 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 an- other obligation which was issued before July 1, 1982, the amendments made by this section [amend- ing this section] shall apply only with respect to the basis in such property which has not been re- covered 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 fa- cilities are financed by the proceeds of an obliga- tion 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 ap- plying subparagraphs (A)(i) and (B)(ii) with respect to obligations described in such resolution, the term ‘fa- cilities’ means the facilities described in such resolu- tion. ‘‘(3) CERTAIN PROJECTS FOR RESIDENTIAL REAL PROP- ERTY.—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 ac- quisition date, within the meaning of such section, oc- curs after Aug. 31, 1982, and also to apply to certain ac- quisitions before September 1, 1982, but not to apply in the case of certain acquisitions of financial institu- tions, see section 224(d) of Pub. L. 97–248, set out as an Effective Date note under section 338 of this title. EFFECTIVE DATE Pub. L. 97–34, title II, § 209(a)–(c), Aug. 13, 1981, 95 Stat. 226, as amended by Pub. L. 97–448, title I, Page 836 TITLE 26—INTERNAL REVENUE CODE § 168 § 102(d)(1), (g), Jan. 12, 1983, 96 Stat. 2370; Pub. L. 99–514, § 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 (§§ 201–209) of title II of Pub. L. 97–34, enact- ing 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 this section and sections 46 and 167 of this title] shall apply to property placed in service after De- cember 31, 1980, in taxable years ending after such date. ‘‘(b) SPECIAL RULE FOR RRB PROPERTY.—The amend- ment 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 tax- able 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 sec- tion 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 sec- tion 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 Decem- ber 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 be- fore the date of the enactment of this Act [Aug. 13, 1981], could not be carried to a taxable year ending in 1981.’’ SAVINGS PROVISION For provisions that nothing in amendment by section 401(b)(13)(A), (d)(1)(D)(iv) of Pub. L. 115–141 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Mar. 23, 2018, for purposes of determining liability for tax for periods ending after Mar. 23, 2018, see section 401(e) of Pub. L. 115–141, set out as a note under section 23 of this title. 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 liabil- ity for tax for periods ending after Nov. 5, 1990, see sec- tion 11821(b) of Pub. L. 101–508, set out as a note under section 45K of this title. NORMALIZATION REQUIREMENTS Pub. L. 115–97, title I, § 13001(d), Dec. 22, 2017, 131 Stat. 2099, provided that: ‘‘(1) IN GENERAL.—A normalization method of ac- counting 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 rate- making purposes and reflecting operating results in its regulated books of account, reduces the excess tax re- serve more rapidly or to a greater extent than such re- serve would be reduced under the average rate assump- tion 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 [Dec. 22, 2017]— ‘‘(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 jurisdic- tion, the taxpayer uses the alternative method for pub- lic utility property that is subject to the regulatory au- thority of that jurisdiction. ‘‘(3) DEFINITIONS.—For purposes of this subsection— ‘‘(A) EXCESS TAX RESERVE.—The term ‘excess tax re- serve’ 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 re- ductions provided in the amendments made by this section [amending this section and sections 11, 12, 280C, 453A, 527, 535, 594, 691, 801, 831, 832, 834, 852, 857, 860E, 882, 904, 1374, 1381, 1445, 1446, 1561, 6425, 6655, 7518, and 7874 of this title and repealing sections 1201 and 1551 of this title] take effect, over ‘‘(ii) the amount which would be the balance in such reserve if the amount of such reserve were de- termined by assuming that the corporate rate re- ductions provided in this Act [see Tables for classi- fication] were in effect for all prior periods. ‘‘(B) AVERAGE RATE ASSUMPTION METHOD.—The aver- age 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 dif- ferences 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 meth- od’ 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 en- actment of this Act, the taxpayer does not use a nor- malization 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 ex- Page 837 TITLE 26—INTERNAL REVENUE CODE § 168 cess 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 In- ternal Revenue Code of 1986.’’ DEPRECIATION STUDY Pub. L. 105–277, div. J, title II, § 2022, Oct. 21, 1998, 112 Stat. 2681–903, provided that: ‘‘The Secretary of the Treasury (or the Secretary’s delegate)— ‘‘(1) shall conduct a comprehensive study of the re- covery periods and depreciation methods under sec- tion 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 recommenda- tions 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.’’ 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 [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 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 Pub. L. 99–514, title XVIII, § 1801(a)(2), Oct. 22, 1986, 100 Stat. 2785, as amended by Pub. L. 100–647, title I, § 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 re- quirements of section 168(f)(8)(C)(i) of the Internal Revenue Code of 1954 (relating to special rules for fi- nance 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 de- scribed in clause (iii) shall be treated as if it were sub- ject to a separate agreement. ‘‘(B) SPECIFIED AGREEMENT.—For purposes of subpara- graph (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, involv- ing 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, involv- ing approximately $966,000 of property at December 31, 1984.’’ CERTAIN RESIDENTIAL REAL PROPERTY TREATED AS RESIDENTIAL RENTAL PROPERTY Pub. L. 99–514, title XVIII, § 1809(a)(4)(C), Oct. 22, 1986, 100 Stat. 2820, 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 prop- erty described in clause (ii) of section 168(f)(12)(C) of the Internal Revenue Code of 1954 [now 1986] as amend- ed by subparagraph (B).’’ COORDINATION WITH IMPUTED INTEREST CHANGES Pub. L. 99–514, title XVIII, § 1809(a)(5), Oct. 22, 1986, 100 Stat. 2820, 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 this section and sections 57 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 Pub. L. 98–369, div. A, title I, § 12(b), July 18, 1984, 98 Stat. 504, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘Paragraph (8) of section 168(f) of the Internal Revenue Code of 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 Pub. L. 98–369, div. A, title I, § 12(c), July 18, 1984, 98 Stat. 504, as amended by Pub. L. 99–514, § 2, title XVIII, § 1801(a)(1), Oct. 22, 1986, 100 Stat. 2095, 2785; Pub. L. 100–647, title I, § 1002(d)(7)(B), Nov. 10, 1988, 102 Stat. 3360, provided that: ‘‘(1) IN GENERAL.—The amendments made by sub- section (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 Sec- retary of the Treasury or his delegate may prescribe. ‘‘(2) SPECIAL RULE FOR CERTAIN AUTOMOTIVE PROP- ERTY.— ‘‘(A) IN GENERAL.—The amendments made by sub- section (a) shall not apply to property— ‘‘(i) which is automotive manufacturing property, and ‘‘(ii) with respect to which the lessee is a quali- fied 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 sub- paragraph (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 sec- Page 838 TITLE 26—INTERNAL REVENUE CODE § 168 tion 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 di- rectly 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 produc- tion of component parts for sale to the taxpayer. ‘‘(3) SPECIAL RULE FOR CERTAIN COGENERATION FACILI- TIES.—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 Commis- sion on December 30, 1983, ‘‘(B) for which an application for a construction permit was filed with a State environmental protec- tion agency on February 20, 1984, and ‘‘(C) which is placed in service before January 1, 1988.’’ SPECIAL LEASING RULE REGARDING COAL GASIFICATION FACILITIES Pub. L. 98–369, div. A, title X, § 1067(b), July 18, 1984, 98 Stat. 1049, as amended by Pub. L. 99–514, § 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 re- spect to progress expenditures (within the meaning of section 46(d) of such Code) shall apply only to the per- centage of the cost basis of the coal gasification facil- ity 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] ap- plies.’’ CERTAIN LEASES BEFORE OCTOBER 20, 1981, TREATED AS QUALIFIED LEASES Pub. L. 97–248, title II, § 208(c), Sept. 3, 1982, 96 Stat. 439, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘Nothing in paragraph (8) of section 168(f) of the Internal Revenue Code of 1986 [for- merly I.R.C. 1954], or in any regulations prescribed thereunder, shall be treated as making such paragraph inapplicable to any agreement entered into before Oc- tober 20, 1981, solely because under such agreement 1 party to such agreement is entitled to the credit allow- able under section 38 of such Code with respect to prop- erty 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 Pub. L. 97–248, title II, § 210, Sept. 3, 1982, 96 Stat. 447, as amended by Pub. L. 98–369, div. A, title I, § 32(b), title VII, § 712(d), July 18, 1984, 98 Stat. 531, 947; Pub. L. 99–514, § 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 ex- tent 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 agree- ment 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 sen- tence. ‘‘(c) EXCEPTION WHERE LESSEE TOOK POSITION ON RE- TURN.—Subsection (a) shall not apply to deny a deduc- tion 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 pursu- ant 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, § 112, Dec. 29, 1981, 95 Stat. 1640, as amended by Pub. L. 99–514, § 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 Rev- enue 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 BE- FORE JANUARY 1, 1982.— ‘‘(A) IN GENERAL.—In the case of an agreement ex- ecuted 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 Janu- ary 31, 1982. ‘‘(B) FILING BY LESSEE.—If the lessor does not file a return under subparagraph (A), the return re- quirement under subparagraph (A) shall be satisfied if such return is filed by the lessee before January 31, 1982. Page 839 TITLE 26—INTERNAL REVENUE CODE § 169 ‘‘(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 re- quired 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 com- pany if a consolidated return is filed); ‘‘(2) The district director’s office with which the in- come 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 prop- erty in service, the date on which the lease begins and the term of the lease; ‘‘(5) The recovery property class and the ADR mid- point life of the leased property; ‘‘(6) The payment terms between the parties to the lease transaction; ‘‘(7) Whether the ACRS deductions and the invest- ment 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 partner- ship or a grantor trust, the name, address, and tax- payer identifying number of the partners or the bene- ficiaries, 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 per- son 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 REQUIRE- MENTS.—In the case of agreements executed after De- cember 31, 1982, to the extent provided in regulations prescribed by the Secretary of the Treasury or his dele- gate, 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 Pub. L. 97–34, title II, § 209(d)(1), Aug. 13, 1981, 95 Stat. 226, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘If, by the terms of the appli- cable rate order last entered before the date of the en- actment of this Act [Aug. 13, 1981] by a regulatory com- mission 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 provi- sion 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 Pub. L. 97–34, title II, § 209(d)(4), Aug. 13, 1981, 95 Stat. 227, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘Until Congress acts further, the Secretary of the Treasury or his delegate may pre- scribe 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.’’ § 169. Amortization of pollution control facilities (a) Allowance of deduction Every person, at his election, shall be entitled to a deduction with respect to the amortization of the amortizable basis of any certified pollu- tion control facility (as defined in subsection (d)), based on a period of 60 months. Such amor- tization deduction shall be an amount, with re- spect to each month of such period within the taxable year, equal to the amortizable basis of the pollution control facility at the end of such month divided by the number of months (includ- ing the month for which the deduction is com- puted) remaining in the period. Such amortiz- able basis at the end of the month shall be com- puted without regard to the amortization deduc- tion for such month. The amortization deduc- tion provided by this section with respect to any month shall be in lieu of the depreciation deduc- tion with respect to such pollution control facil- ity for such month provided by section 167. The 60-month period shall begin, as to any pollution control facility, at the election of the taxpayer, with the month following the month in which such facility was completed or acquired, or with the succeeding taxable year. (b) Election of amortization The election of the taxpayer to take the amor- tization deduction and to begin the 60-month pe- riod with the month following the month in which the facility is completed or acquired, or with the taxable year succeeding the taxable year in which such facility is completed or ac- quired, shall be made by filing with the Sec- retary, in such manner, in such form, and within such time, as the Secretary may by regulations prescribe, a statement of such election. (c) Termination of amortization deduction A taxpayer which has elected under subsection (b) to take the amortization deduction provided in subsection (a) may, at any time after making such election, discontinue the amortization de- duction with respect to the remainder of the amortization period, such discontinuance to begin as of the beginning of any month specified by the taxpayer in a notice in writing filed with the Secretary before the beginning of such month. The depreciation deduction provided under section 167 shall be allowed, beginning with the first month as to which the amortiza- tion deduction does not apply, and the taxpayer shall not be entitled to any further amortization deduction under this section with respect to such pollution control facility. (d) Definitions and special rules For purposes of this section—