
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC168]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
               Subchapter B--Computation of Taxable Income
 
      PART VI--ITEMIZED DEDUCTIONS FOR INDIVIDUALS AND CORPORATIONS
 
Sec. 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 
determined by using--
        (1) the applicable depreciation method,
        (2) the applicable recovery period, and
        (3) the applicable convention.

(b) Applicable depreciation method

    For purposes of this section--

                           (1) In general

        Except as provided in paragraphs (2) and (3), the applicable 
    depreciation method is--
            (A) the 200 percent declining balance method,
            (B) switching to the straight line method for the 1st 
        taxable year for which using the straight line method with 
        respect to the adjusted basis as of the beginning of such year 
        will yield a larger allowance.

      (2) 150 percent declining balance method in certain cases

        Paragraph (1) shall be applied by substituting ``150 percent'' 
    for ``200 percent'' in the case of--
            (A) any 15-year or 20-year property,
            (B) any property used in a farming business (within the 
        meaning of section 263A(e)(4)), or
            (C) any property (other than property described in paragraph 
        (3)) with respect to which the taxpayer elects under paragraph 
        (5) to have the provisions of this paragraph apply.

         (3) Property to which straight line method applies

        The applicable depreciation method shall be the straight line 
    method in the case of the following property:
            (A) Nonresidential real property.
            (B) Residential rental property.
            (C) Any railroad grading or tunnel bore.
            (D) Property with respect to which the taxpayer elects under 
        paragraph (5) to have the provisions of this paragraph apply.
            (E) Property described in subsection (e)(3)(D)(ii).
            (F) Water utility property described in subsection (e)(5).

                  (4) Salvage value treated as zero

        Salvage value shall be treated as zero.

                            (5) Election

        An election under paragraph (2)(C) or (3)(D) may be made with 
    respect to 1 or more classes of property for any taxable year and 
    once made with respect to any class shall apply to all property in 
    such class placed in service during such taxable year. Such an 
    election, once made, shall be irrevocable.

(c) Applicable recovery period

    For purposes of this section, the applicable recovery period shall 
be determined in accordance with the following table:


                                                       The applicable
                  In the case of:                   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 subsection, 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 during 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 \1\ residential 
            rental property, and railroad grading or tunnel bore, and
---------------------------------------------------------------------------
    \1\ So in original. Probably should be ``property,''.
---------------------------------------------------------------------------
                (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 during 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 convention which treats all 
        property placed in service during any quarter of a taxable year 
        (or disposed of during any quarter of a taxable year) as placed 
        in service (or disposed of) on the mid-point of such quarter.

(e) Classification of property

    For purposes of this section--

                           (1) In general

        Except as otherwise provided in this subsection, property shall 
    be classified under the following table:


    Property shall be treated       If such property has a class   life
               as:                            (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 percent or more of the gross 
            rental income from such building or structure for the 
            taxable year is rental income from dwelling units.
            (ii) Definitions

                For purposes of clause (i)--
                    (I) the term ``dwelling unit'' means a house or 
                apartment used to provide living accommodations in a 
                building or structure, but does not include a unit in a 
                hotel, motel, or other establishment more than one-half 
                of the units in which are used on a transient basis, and
                    (II) if any portion of the building or structure is 
                occupied by the taxpayer, the gross rental income from 
                such building or structure shall include the rental 
                value of the portion so occupied.

        (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--
                (i) any race horse which is more than 2 years old at the 
            time it is placed in service,
                (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 purpose truck,
                (ii) any semi-conductor manufacturing equipment,
                (iii) any computer-based telephone central office 
            switching equipment,
                (iv) any qualified technological equipment,
                (v) any section 1245 property used in connection with 
            research and experimentation, and
                (vi) any property which--
                    (I) is described in subparagraph (A) of section 
                48(a)(3) (or would be so described if ``solar and wind'' 
                were substituted for ``solar'' in clause (i) thereof),
                    (II) is described in paragraph (15) of section 48(l) 
                (as in effect on the day before the date of the 
                enactment of the Revenue Reconciliation Act of 1990) and 
                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
                    (III) is described in section 48(l)(3)(A)(ix) (as in 
                effect on the day before the date of the enactment of 
                the Revenue Reconciliation Act of 1990).

        Nothing in any provision of law shall be construed to treat 
        property as not being described in 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)).

        (C) 7-year property

            The term ``7-year property'' includes--
                (i) any railroad track, and
                (ii) 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 meaning of subsection (i)(13)), and
                (ii) any tree or vine bearing fruit or nuts.

        (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 exchange of voice and data 
            communications, and
                (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).

                 (4) Railroad grading or tunnel bore

        The term ``railroad grading or tunnel bore'' means all 
    improvements resulting from excavations (including tunneling), 
    construction of embankments, clearings, diversions of roads and 
    streams, sodding of slopes, and from similar work necessary to 
    provide, construct, reconstruct, alter, protect, improve, replace, 
    or restore a roadbed or right-of-way for railroad track.

                     (5) Water utility property

        The term ``water utility property'' means property--
            (A) which is an integral part of the gathering, treatment, 
        or commercial distribution of water, and which, without regard 
        to this paragraph, would be 20-year property, and
            (B) any municipal sewer.

(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 section, and
            (B) for the 1st taxable year for which a depreciation 
        deduction would be allowable with respect to such property in 
        the hands of the taxpayer, the property is properly depreciated 
        under the unit-of-production method or any method of 
        depreciation not expressed in a term of years (other than the 
        retirement-replacement-betterment method or similar method).

                 (2) Certain public utility property

        Any public utility property (within the meaning of subsection 
    (i)(10)) if the taxpayer does not use a normalization method of 
    accounting.

                      (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 appear.

        (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 deduction under this 
                section (as in effect before the date of the enactment 
                of this paragraph) with respect to such property is 
                greater than,
                    (II) the amount allowable as a deduction under this 
                section (as in effect on or after such date and using 
                the half-year convention) for such taxable year, or

                (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 amendments made by section 201 
        of the Tax Reform 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 property,
            (D) any imported property covered by an Executive order 
        under paragraph (6), and
            (E) any property to which an election under paragraph (7) 
        applies,

    the depreciation deduction provided by section 167(a) shall be 
    determined under the alternative depreciation system.

                 (2) Alternative depreciation system

        For purposes of paragraph (1), the alternative depreciation 
    system is depreciation determined by using--
            (A) the straight line method (without regard to salvage 
        value),
            (B) the applicable convention determined under subsection 
        (d), and
            (C) a recovery period determined under the following table:


                                                          The recovery
                       In the case of:                 period  shall be:

      (i) Property not described in clause (ii) or       The class life.
       (iii).........................................
      (ii) Personal property with no class life......          12 years.
      (iii) Nonresidential real and residential                40 years.
       rental property...............................
      (iv) Any railroad grading or tunnel bore or              50 years.
       water utility property........................


            (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 for purposes of paragraph (2) 
        shall in no event be less than 125 percent 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:


                                                                     The
              If property is described              in       class  life
                       subparagraph:                             is:

        (A)(iii)...........................................         4
        (B)(ii)............................................         5
        (B)(iii)...........................................          9.5
        (C)(i).............................................        10
        (D)(i).............................................        15
        (D)(ii)............................................        20
        (E)(i).............................................        24
        (E)(ii)............................................        24
        (E)(iii)...........................................        20


        (C) Qualified technological equipment

            In the case of any qualified technological equipment, the 
        recovery period used for purposes of paragraph (2) shall be 5 
        years.

        (D) Automobiles, etc.

            In the case of any automobile or light general purpose 
        truck, the recovery period used for purposes of paragraph (2) 
        shall be 5 years.

        (E) Certain real property

            In the case of any section 1245 property which is real 
        property with no class life, the recovery period used for 
        purposes of paragraph (2) shall be 40 years.

       (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 Agency 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 
            aggregating 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 person 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, developing, removing, or transporting resources from the 
        outer Continental Shelf (within the meaning of section 2 of the 
        Outer Continental Shelf Lands Act, as amended and supplemented; 
        (43 U.S.C. 1331));
            (G) any property which is owned by a domestic corporation 
        (other than a corporation which has an election in effect under 
        section 936) or by a United States citizen (other than a citizen 
        entitled to the benefits of section 931 or 933) and which is 
        used predominantly in a possession of the United States by such 
        a corporation or such a citizen, or by a corporation created or 
        organized in, or under the law of, a possession of the United 
        States;
            (H) any communications satellite (as defined in section 
        103(3) of the Communications Satellite Act of 1962, 47 U.S.C. 
        702(3)), or any interest therein, of a United States person;
            (I) any cable, or any interest therein, of a domestic 
        corporation engaged in furnishing telephone service to which 
        section 168(i)(10)(C) applies (or of a wholly owned domestic 
        subsidiary of such a corporation), if such cable is part of a 
        submarine cable system which constitutes part of a communication 
        link exclusively between the United States and one or more 
        foreign countries;
            (J) any property (other than a vessel or an aircraft) of a 
        United States person which is used in international or 
        territorial waters within the northern portion of the Western 
        Hemisphere for the purpose of exploring for, developing, 
        removing, or transporting resources from ocean waters or 
        deposits under such waters;
            (K) any property described in section 48(l)(3)(A)(ix) (as in 
        effect on the day before the date of the enactment of the 
        Revenue Reconciliation Act of 1990) which is owned by a United 
        States person and which is used in international or territorial 
        waters to generate energy for use in the United States; and
            (L) any satellite (not described in subparagraph (H)) or 
        other spacecraft (or any interest therein) held by a United 
        States person if such satellite or other spacecraft was launched 
        from within the United States.

    For purposes of subparagraph (J), the term ``northern portion of the 
    Western Hemisphere'' means the area lying west of the 30th meridian 
    west of Greenwich, east of the international dateline, and north of 
    the Equator, but not including any foreign country which is a 
    country of South America.

                (5) Tax-exempt bond financed property

        For purposes of this subsection--

        (A) In general

            Except as otherwise provided in this paragraph, the term 
        ``tax-exempt bond financed property'' means any property to the 
        extent such property is financed (directly or indirectly) by an 
        obligation the interest on which is exempt from tax under 
        section 103(a).

        (B) Allocation of bond proceeds

            For purposes of subparagraph (A), the proceeds of any 
        obligation shall be treated as used to finance property acquired 
        in connection with the issuance of such obligation in the order 
        in which such property is placed in service.

        (C) Qualified residential rental projects

            The term ``tax-exempt bond financed property'' shall not 
        include any qualified residential rental project (within the 
        meaning of section 142(a)(7)).

                        (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 restrictions, 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 restricting United States commerce,

        the President may by Executive order provide for the application 
        of paragraph (1)(D) to any article or class of articles 
        manufactured or produced in such foreign country for such period 
        as may be provided by such Executive order. Any period specified 
        in the preceding sentence shall not apply to any property 
        ordered before (or the construction, reconstruction, or erection 
        of which began before) the date of the Executive order unless 
        the President determines an earlier date to be in the public 
        interest and specifies such date in the Executive order.

        (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 Commonwealth of Puerto Rico and the possessions of 
        the United States.

         (7) Election to use alternative depreciation system

        (A) In general

            If the taxpayer makes an election under this paragraph with 
        respect to any class of property for any taxable year, the 
        alternative depreciation system under this subsection shall 
        apply to all property in such class placed in service during 
        such taxable year. Notwithstanding the preceding sentence, in 
        the case of nonresidential real property or residential rental 
        property, such election may be made separately with respect to 
        each property.

        (B) Election irrevocable

            An election under subparagraph (A), once made, shall be 
        irrevocable.

(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 subsection, the term 
        ``tax-exempt use property'' means that portion of any tangible 
        property (other than nonresidential real property) leased to a 
        tax-exempt entity.

        (B) Nonresidential real property

            (i) In general

                In the case of nonresidential real property, the term 
            ``tax-exempt use property'' means that portion of the 
            property leased to a tax-exempt entity in a disqualified 
            lease.
            (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 financed 
                (directly or indirectly) by an obligation the interest 
                on which is exempt from tax under section 103(a) and 
                such entity (or a related entity) participated in such 
                financing,
                    (II) under such lease there is a fixed or 
                determinable price purchase or sale option which 
                involves such entity (or a related entity) or there is 
                the equivalent of such an option,
                    (III) such lease has a lease term in excess 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 related 
                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 property.
            (iv) Treatment of improvements

                For purposes of this subparagraph, improvements to a 
            property (other than land) shall not be treated as a 
            separate property.
            (v) Leasebacks during 1st 3 months of use not taken 
                    into account

                Subclause (IV) of clause (ii) shall not apply to any 
            property which is leased within 3 months after the date such 
            property is first used by the tax-exempt entity (or a 
            related entity).

        (C) Exception for short-term leases

            (i) In general

                Property shall not be treated as tax-exempt 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 unrelated trade or business

            The term ``tax-exempt use property'' shall not include any 
        portion of a property if such portion is predominantly used by 
        the tax-exempt entity (directly or through a partnership of 
        which such entity is a partner) in an unrelated trade or 
        business the income of which is subject to tax under section 
        511. For purposes of subparagraph (B)(iii), any portion of a 
        property so used shall not be treated as leased to a tax-exempt 
        entity in a disqualified lease.

        (E) Nonresidential real property defined

            For purposes of this paragraph, the term ``nonresidential 
        real property'' includes residential 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 political 
            subdivision thereof, any possession of the United States, or 
            any agency or instrumentality of any of the foregoing,
                (ii) an organization (other than a cooperative described 
            in section 521) which is exempt from tax imposed by this 
            chapter, and
                (iii) any foreign person or entity.

        (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 shareholder for the taxable year with or 
            within which ends the taxable year of the controlled foreign 
            corporation in which such income was derived.

        For purposes of the preceding sentence, any exclusion or 
        exemption shall not apply for purposes of determining the amount 
        of the gross income so derived, but shall apply for purposes of 
        determining the portion of such gross income subject to tax 
        under this chapter.

        (C) Foreign person or entity

            For purposes of this paragraph, the term ``foreign person or 
        entity'' means--
                (i) any foreign government, any international 
            organization, or any agency or instrumentality of any of the 
            foregoing, and
                (ii) any person who is not a United States person.

        Such term does not include any foreign partnership or other 
        foreign pass-thru entity.

        (D) Treatment of certain taxable instrumentalities

            For purposes of this subsection, a corporation shall not be 
        treated as an instrumentality of the United States or of any 
        State or political subdivision thereof if--
                (i) all of the activities of such corporation 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 organizations

            (i) In general

                For purposes of this subsection, an organization shall 
            be treated as an organization described in subparagraph 
            (A)(ii) with respect to any property (other than property 
            held by such organization) if such organization was an 
            organization (other than a cooperative described in section 
            521) exempt from tax imposed by this chapter at any time 
            during the 5-year period ending on the date such property 
            was first used by such organization. The preceding sentence 
            and subparagraph (D)(ii) shall not apply to the Federal Home 
            Loan Mortgage Corporation.
            (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 period beginning with the taxable 
                year in which the property described in subclause (I) is 
                first used by the organization and ending with the close 
                of the 15th taxable year following the last taxable year 
                of the applicable recovery period of such property.
                (III) Election

                    Any election under subclause (I), once made, shall 
                be irrevocable.
            (iii) Treatment of successor organizations

                Any organization which is engaged in activities 
            substantially similar to those engaged in by a predecessor 
            organization shall succeed to the treatment under this 
            subparagraph of such predecessor organization.
            (iv) First used

                For purposes of this subparagraph, property shall be 
            treated as first used by the organization--
                    (I) when the property is first placed in service 
                under a lease to such organization, or
                    (II) in the case of property leased to (or held by) 
                a partnership (or other pass-thru entity) in which the 
                organization is a member, the later of when such 
                property is first used by such partnership or pass-thru 
                entity or when such organization is first a member of 
                such partnership or pass-thru entity.

       (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.

        (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 financed 
                (directly or indirectly) by an obligation 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 entity) 
                before such sale (or other transfer) or lease, or
                    (III) such tax-exempt entity is the United States or 
                any agency or instrumentality 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 
            property 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 governmental unit is related to each other 
        such unit, agency, or instrumentality which directly or 
        indirectly derives its powers, rights, and duties in whole or in 
        part from the same sovereign authority.
            (ii) For purposes of clause (i), the United States, each 
        State, and each possession of the United States shall be treated 
        as a separate sovereign authority.
            (B) Any entity not described in subparagraph (A)(i) is 
        related to any other entity if the 2 entities have--
                (i) significant common purposes and substantial common 
            membership, or
                (ii) directly or indirectly substantial common direction 
            or control.

            (C)(i) An entity is related to another entity if either 
        entity owns (directly or through 1 or more entities) a 50 
        percent or greater interest in the capital or profits of the 
        other entity.
            (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 transaction is part of an attempt by such 
        entities to avoid the application of this subsection.

    (5) Tax-exempt use of property leased to partnerships, 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 treating 
        each tax-exempt entity partner's proportionate 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 
        entities.

        (C) Presumption with respect to foreign entities

            Unless it is otherwise established to the satisfaction of 
        the Secretary, it shall be presumed that the partners of a 
        foreign partnership (and the beneficiaries of any other foreign 
        pass-thru entity) are persons who are not United States persons.

        (6) Treatment of property owned by partnerships, etc.

        (A) In general

            For purposes of this subsection, if--
                (i) any property which (but for this subparagraph) is 
            not tax-exempt use property is owned by a partnership which 
            has both a tax-exempt entity and a person who is not a tax-
            exempt entity as partners, and
                (ii) any allocation to the tax-exempt entity of 
            partnership items is not a qualified allocation,

        an amount equal to such tax-exempt entity's proportionate share 
        of such property shall (except as provided in paragraph (1)(D)) 
        be treated as tax-exempt use property.

        (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 entity is a partner in the 
            partnership, and
                (ii) has substantial economic effect within the meaning 
            of section 704(b)(2).

        For purposes of this subparagraph, items allocated under section 
        704(c) shall not be taken into account.

        (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 section 704(c)), whichever results in the 
            largest proportionate share.
            (ii) Determination where allocations vary

                For purposes of clause (i), if a tax-exempt entity's 
            share of partnership items of income or gain (excluding gain 
            allocated under section 704(c)) may vary during the period 
            such entity is a partner in the partnership, such share 
            shall be the highest share such entity may receive.

        (D) Determination of whether property used in unrelated trade or 
                business

            For purposes of this subsection, in the case of any property 
        which is owned by a partnership which has both a tax-exempt 
        entity and a person who is not a tax-exempt entity as partners, 
        the determination of whether such property is used in an 
        unrelated trade or business of such an entity shall be made 
        without regard to section 514.

        (E) Other pass-thru entities; tiered entities

            Rules similar to the rules of subparagraphs (A), (B), (C), 
        and (D) shall also apply in the case of any pass-thru entity 
        other than a partnership and in the case of tiered partnerships 
        and other entities.

        (F) Treatment of certain taxable entities

            (i) In general

                For purposes of this paragraph and paragraph (5), except 
            as otherwise provided in this subparagraph, any tax-exempt 
            controlled entity shall be treated as a tax-exempt entity.
            (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-exempt entity on 
                any disposition of an interest in such entity (and any 
                dividend or interest received or accrued by a tax-exempt 
                entity from such tax-exempt controlled entity) shall be 
                treated as unrelated business taxable income for 
                purposes of section 511.

          Any such election shall be irrevocable and shall bind all tax-
            exempt entities holding interests in such tax-exempt 
            controlled entity. For purposes of subclause (II), there 
            shall only be taken into account dividends which are 
            properly allocable to income of the tax-exempt controlled 
            entity which was not subject to tax under this chapter.
            (iii) Tax-exempt controlled entity

                (I) In general

                    The term ``tax-exempt controlled entity'' means any 
                corporation (which is not a tax-exempt entity determined 
                without regard to this subparagraph and paragraph 
                (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 traded stock

                    For purposes of subclause (I), in the case of a 
                corporation the stock of which is publicly traded on an 
                established securities market, stock held by a tax-
                exempt entity shall not be taken into account unless 
                such entity holds at least 5 percent (in value) of the 
                stock in such corporation. For purposes of this 
                subclause, related entities (within the meaning of 
                paragraph (4)) shall be treated as 1 entity.
                (III) Section 318 to apply

                    For purposes of this clause, a tax-exempt entity 
                shall be treated as holding stock which it holds through 
                application of section 318 (determined without regard to 
                the 50-percent limitation contained in subsection 
                (a)(2)(C) thereof).

        (G) Regulations

            For purposes of determining whether there is a qualified 
        allocation under subparagraph (B), the regulations prescribed 
        under paragraph (8) for purposes of this paragraph--
                (i) shall set forth the proper treatment for partnership 
            guaranteed payments, and
                (ii) may provide for the exclusion or segregation of 
            items.

                              (7) Lease

        For purposes of this subsection, the term ``lease'' includes any 
    grant of a right to use property.

                           (8) Regulations

        The Secretary shall prescribe such regulations 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 property as of January 1, 1986, under subsection (m) of 
    section 167 (determined without regard to paragraph (4) and as if 
    the taxpayer had made an election under such subsection). The 
    Secretary, through an office established in the Treasury, shall 
    monitor and analyze actual experience with respect to all 
    depreciable assets. The reference in this paragraph to subsection 
    (m) of section 167 shall be treated as a reference to such 
    subsection as in effect on the day before the date of the enactment 
    of the Revenue Reconciliation Act of 1990.

                (2) Qualified technological equipment

        (A) In general

            The term ``qualified technological equipment'' means--
                (i) any computer or peripheral equipment,
                (ii) any high technology telephone station equipment 
            installed on the customer's premises, and
                (iii) any high technology medical equipment.

        (B) Computer or peripheral equipment defined

            For purposes of this paragraph--
            (i) In general

                The term ``computer or peripheral equipment'' means--
                    (I) any computer, and
                    (II) any related peripheral equipment.
            (ii) Computer

                The term ``computer'' means a programmable 
            electronically activated device which--
                    (I) is capable of accepting information, applying 
                prescribed processes to the information, and supplying 
                the results of these processes with or without human 
                intervention, and
                    (II) consists of a central processing unit 
                containing extensive storage, logic, arithmetic, and 
                control capabilities.
            (iii) Related peripheral equipment

                The term ``related peripheral equipment'' means any 
            auxiliary machine (whether on-line or off-line) which is 
            designed to be placed under the control of the central 
            processing unit of a computer.
            (iv) Exceptions

                The term ``computer or peripheral equipment'' 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, duplicating equipment, and similar 
                equipment, and
                    (III) equipment of a kind used primarily 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, observation, diagnosis, or treatment of patients in 
        a laboratory, medical, or hospital environment.

                           (3) Lease term

        (A) In general

            In determining a lease term--
                (i) there shall be taken into account options to renew, 
            and
                (ii) 2 or more successive leases which are part of the 
            same transaction (or a series of related transactions) with 
            respect to the same or substantially similar property shall 
            be treated as 1 lease.

        (B) Special rule for fair rental options on nonresidential real 
                property or residential rental property

            For purposes of clause (i) of subparagraph (A), in the case 
        of nonresidential real property or residential rental property, 
        there shall not be taken into account any option to renew at 
        fair market value, determined at the time of renewal.

                     (4) General asset accounts

        Under regulations, a taxpayer may maintain 1 or more general 
    asset accounts for any property to which this section applies. 
    Except as provided in regulations, all proceeds realized on any 
    disposition of property in a general asset account shall be included 
    in income as ordinary income.

                         (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 improvement of) any 
    property--
            (A) any deduction under subsection (a) for such addition or 
        improvement shall be computed in the same manner as the 
        deduction for such property would be computed if such property 
        had been placed in service at the same time as such addition or 
        improvement, and
            (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 improvement) 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 transferor for purposes of computing the depreciation 
        deduction determined under this section with respect to so much 
        of the basis in the hands of the transferee as does not exceed 
        the adjusted basis in the hands of the transferor. In any case 
        where this section as in effect before the amendments made by 
        section 201 of the Tax Reform Act of 1986 applied to the 
        property in the hands of the transferor, the reference in the 
        preceding sentence to this section shall be treated as a 
        reference to this section as so in effect.

        (B) Transactions covered

            The transactions described in this subparagraph 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 taxable year for which a 
            consolidated return is made by such group.

        Subparagraph (A) shall not apply in the case of a termination of 
        a partnership under section 708(b)(1)(B).

        (C) Property reacquired by the taxpayer

            Under regulations, property which is disposed of and then 
        reacquired by the taxpayer shall be treated for purposes of 
        computing the deduction allowable under subsection (a) as if 
        such property had not been disposed of.

               (8) Treatment of leasehold improvements

        (A) In general

            In the case of any building erected (or improvements made) 
        on leased property, if such building or improvement is property 
        to which this section applies, the depreciation deduction shall 
        be determined under the provisions of this section.

        (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 termination of the lease by such lessee,

        shall be treated for purposes of determining gain or loss under 
        this title as disposed of by the lessor when so disposed of or 
        abandoned.

        (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 utility 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 regulated 
            books of account, use a method of depreciation with respect 
            to such property that is the same as, and a depreciation 
            period for such property that is no shorter than, the method 
            and period used to compute its depreciation expense for such 
            purposes; and
                (ii) if the amount allowable as a deduction under this 
            section with respect to such property differs from the 
            amount that would be allowable as a deduction under section 
            167 using the method (including the period, first and last 
            year convention, and salvage value) used to compute 
            regulated tax expense under clause (i), the taxpayer must 
            make adjustments to a reserve to reflect the deferral of 
            taxes resulting from such difference.

        (B) Use of inconsistent estimates and projections, etc.

            (i) In general

                One way in which the requirements of subparagraph (A) 
            are not met is if the taxpayer, for ratemaking purposes, 
            uses a procedure or adjustment which is inconsistent with 
            the requirements of subparagraph (A).
            (ii) Use of inconsistent estimates and projections

                The procedures and adjustments which are to be treated 
            as inconsistent for purposes of clause (i) shall include any 
            procedure or adjustment for ratemaking purposes which uses 
            an estimate or projection of the taxpayer's tax expense, 
            depreciation expense, or reserve for deferred taxes under 
            subparagraph (A)(ii) unless such estimate or projection is 
            also used, for ratemaking purposes, with respect to the 
            other 2 such items and with respect to the rate base.
            (iii) Regulatory authority

                The Secretary may by regulations prescribe procedures 
            and adjustments (in addition to those specified in clause 
            (ii)) which are to be treated as inconsistent for purposes 
            of clause (i).

        (C) Public utility property which does not meet normalization 
                rules

            In the case of any public utility property to which this 
        section does not apply by reason of subsection (f)(2), the 
        allowance for depreciation under section 167(a) shall be an 
        amount computed using the method and period referred to in 
        subparagraph (A)(i).

                    (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 disposal services,
            (B) gas or steam through a local distribution system,
            (C) telephone services, or other communication services if 
        furnished or sold by the Communications Satellite Corporation 
        for purposes authorized by the Communications Satellite Act of 
        1962 (47 U.S.C. 701), or
            (D) transportation of gas or steam by pipeline,

    if the rates for such furnishing or sale, as the case may be, have 
    been established or approved by a State or political subdivision 
    thereof, by any agency or instrumentality of the United States, or 
    by a public service or public utility commission or other similar 
    body of any State or political subdivision thereof.

                  (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 ``section 1250 
    property'' have the meanings given such terms by sections 1245(a)(3) 
    and 1250(c), respectively.

     (13) Single purpose agricultural or horticultural 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 structure.

        (B) Definitions

            For purposes of this paragraph--
            (i) Single purpose livestock structure

                The term ``single purpose livestock structure'' means 
            any enclosure or structure 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 (including 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 commercial production of plants, and
                    (II) a structure specifically designed, constructed, 
                and used for the commercial production of mushrooms.
            (iii) Structures which include work space

                An enclosure or structure which provides work space 
            shall be treated as a single purpose agricultural or 
            horticultural structure only if such work space is solely 
            for--
                    (I) the stocking, caring for, or collecting 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 business, regularly enters into rent-to-own 
        contracts with customers for the use of consumer property, if a 
        substantial portion of those contracts terminate and the 
        property is returned to such person before the receipt of all 
        payments required to transfer ownership of the property from 
        such person to the customer.

        (C) Consumer property

            The term ``consumer property'' means tangible 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 Option,'' 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 contract to acquire legal title to the 
            item of property,
                (iv) provides a beginning date and a maximum period of 
            time for which the contract may be in effect that does not 
            exceed 156 weeks or 36 months from such beginning date 
            (including renewals or options to extend),
                (v) provides for payments within the 156-week or 36-
            month period that, in the aggregate, generally exceed the 
            normal retail price of the consumer property plus interest,
                (vi) provides for payments under the contract 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 property to the rent-to-own 
            dealer in good working order, in which case the customer 
            does not incur any further obligations under the contract 
            and is not entitled to a return of any payments previously 
            made under the contract, and
                (viii) provides that the customer has no right to sell, 
            sublease, mortgage, pawn, pledge, encumber, or otherwise 
            dispose of the consumer property until all the payments 
            stated in the contract have been made.

(j) Property on Indian reservations

                           (1) In general

        For purposes of subsection (a), the applicable recovery period 
    for qualified Indian reservation property shall be determined in 
    accordance with the table contained in paragraph (2) in lieu of the 
    table contained in subsection (c).

       (2) Applicable recovery period for Indian reservation 
                                  property

        For purposes of paragraph (1)--


                                                         The  applicable
                    In the case of:                     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 property to 
    which paragraph (1) applies shall be determined under this section 
    without regard to any adjustment under section 56.

          (4) Qualified Indian reservation property defined

        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 Indian reservation 
            on a regular basis,
                (iii) not acquired (directly or indirectly) by the 
            taxpayer from a person who is related to the taxpayer 
            (within the meaning of section 465(b)(3)(C)), and
                (iv) not property (or any portion thereof) placed in 
            service for purposes of conducting or housing class I, II, 
            or III gaming (as defined in section 4 of the Indian 
            Regulatory Act (25 U.S.C. 2703)).

        (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 depreciation system), and
                (ii) after the application of section 280F(b) (relating 
            to listed property with limited business use).

        (C) Special rule for reservation infrastructure 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 located within the 
            Indian reservation.
            (ii) Qualified infrastructure property

                For purposes of this subparagraph, the term ``qualified 
            infrastructure property'' means qualified Indian reservation 
            property (determined without regard to subparagraph (A)(ii)) 
            which--
                    (I) 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 reservation.

          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 Indian reservation shall be treated as 
    the active conduct of a trade or business within an Indian 
    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 Welfare Act of 1978 
        (25 U.S.C. 1903(10)).

    For purposes of the preceding sentence, such section 3(d) shall be 
    applied by treating the term ``former Indian reservations in 
    Oklahoma'' as including only lands which are within the 
    jurisdictional area of an Oklahoma Indian tribe (as determined by 
    the Secretary of the Interior) and are recognized by such Secretary 
    as eligible for trust land status under 25 CFR Part 151 (as in 
    effect on the date of the enactment of this sentence).

                (7) Coordination with nonrevenue laws

        Any reference in this subsection to a provision not contained in 
    this title shall be treated for purposes of this subsection as a 
    reference to such provision as in effect on the date of the 
    enactment of this paragraph.

                           (8) Termination

        This subsection shall not apply to property placed in service 
    after December 31, 2003.

(Added Pub. L. 97-34, title II, Sec. 201(a), Aug. 13, 1981, 95 Stat. 
203; amended Pub. L. 97-248, title II, Secs. 206, 208(a)(1), (2)(A), 
(b), 209(a), (b), 216(a), 224(c)(1), (2), Sept. 3, 1982, 96 Stat. 431, 
432, 435, 442, 445, 470, 489; Pub. L. 97-354, Sec. 5(a)(19), (20), Oct. 
19, 1982, 96 Stat. 1693, 1694; Pub. L. 97-424, title V, Sec. 541(a)(1), 
Jan. 6, 1983, 96 Stat. 2192; Pub. L. 97-448, title I, Sec. 102(a)(1)-
(5), (8)-(10)(A), (f)(4), Jan. 12, 1983, 96 Stat. 2367, 2368, 2371; Pub. 
L. 98-369, div. A, title I, Secs. 12(a)(3), 31(a), (d), 32(a), 111(a)-
(e)(4), (9), 113(a)(2), (b)(1), (2)(A), title IV, Sec. 474(r)(7), title 
VI, Secs. 612(e)(4), (5), 628(b), July 18, 1984, 98 Stat. 503, 509, 518, 
530, 631-633, 636, 637, 840, 912, 931; Pub. L. 99-121, title I, 
Sec. 103(a), (b)(1)(A), (2)-(4), Oct. 11, 1985, 99 Stat. 509; Pub. L. 
99-514, title II, Sec. 201(a), title XVIII, Secs. 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, Secs. 1002(a)(5)-(8), (11), (16)(B), (21), 
(23)(A), (i)(2)(A)-(G), 1018(b)(2), title VI, Secs. 6027(a), (b), 
6028(a), 6029(a)-(c), 6253, Nov. 10, 1988, 102 Stat. 3353-3356, 3370, 
3371, 3577, 3693, 3694, 3753; Pub. L. 101-239, title VII, Sec. 7816(e), 
(f), (w), Dec. 19, 1989, 103 Stat. 2421, 2423; Pub. L. 101-508, title 
XI, Secs. 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, 
Secs. 13151(a), 13321(a), Aug. 10, 1993, 107 Stat. 448, 558; Pub. L. 
104-88, title III, Sec. 304(a), Dec. 29, 1995, 109 Stat. 943; Pub. L. 
104-188, title I, Secs. 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, Sec. 1086(b), title XII, 
Sec. 1213(c), title XVI, Sec. 1604(c)(1), Aug. 5, 1997, 111 Stat. 957, 
1001, 1097; Pub. L. 105-206, title VI, Sec. 6006(b), July 22, 1998, 112 
Stat. 806.)

                       References in Text

    The date of the enactment of the Revenue Reconciliation 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 subsec. (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, as amended, 
which is classified generally to chapter 6 (Sec. 701 et seq.) of Title 
47, Telegraphs, Telephones, and Radiotelegraphs. 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.


                            Prior Provisions

    A prior section 168, acts Aug. 16, 1954, ch. 746, 68A Stat. 52; Aug. 
26, 1957, Pub. L. 85-165, Sec. 4, 71 Stat. 414; Sept. 2, 1958, Pub. L. 
85-866, title I, Sec. 9(a), (b), 72 Stat. 1608, 1609, related to 
deductions with respect to amortization of emergency facilities, prior 
to repeal by Pub. L. 94-455, title XIX, Sec. 1951(b)(4)(A), Oct. 4, 
1976, 90 Stat. 1837.
    Section 1951(b)(4)(B) of Pub. L. 94-455 provided that: 
``Notwithstanding the repeal made by subparagraph (A) [repealing former 
section 168], if a certificate was issued before January 1, 1960, with 
respect to an emergency facility which is or has been placed in service 
before the date of the enactment of this Act [Oct. 4, 1976], the 
provisions of [former] section 168 shall not, with respect to such 
facility, be considered repealed. The benefit of deductions by reason of 
the preceding sentence shall be allowed to estates and trusts in the 
same manner as in the case of an individual. The allowable deduction 
shall be apportioned between the income beneficiaries and the fiduciary 
in accordance with regulations prescribed under section 642(f).''


                               Amendments

    1998--Subsec. (c). Pub. L. 105-206, Sec. 6006(b)(2), reenacted 
subsec. heading without change and substituted ``For purposes of this 
section, the applicable recovery period shall be determined in 
accordance with the following table:'' for ``For purposes of this 
section--
        ``(1) In general.--Except as provided in paragraph (2), the 
    applicable recovery period shall be determined in accordance with 
    the following table:''.
    Subsec. (c)(2). Pub. L. 105-206, Sec. 6006(b)(1), struck out heading 
and text of par. (2). Text read as follows: ``In the case of property to 
which an election under subsection (b)(2)(C) applies, the applicable 
recovery period shall be determined under the table contained in 
subsection (g)(2)(C).''
    1997--Subsec. (e)(3)(A)(iii). Pub. L. 105-34, Sec. 1086(b)(1), added 
cl. (iii).
    Subsec. (g)(3)(B). Pub. L. 105-34, Sec. 1086(b)(2), inserted table 
item relating to subpar. (A)(iii).
    Subsec. (i)(8)(C). Pub. L. 105-34, Sec. 1213(c), added subpar. (C).
    Subsec. (i)(14). Pub. L. 105-34, Sec. 1086(b)(3), added par. (14).
    Subsec. (j)(6). Pub. L. 105-34, Sec. 1604(c)(1), inserted concluding 
provisions ``For purposes of the preceding sentence, such section 3(d) 
shall be applied by treating the term `former Indian reservations in 
Oklahoma' as including only lands which are within the jurisdictional 
area of an Oklahoma Indian tribe (as determined by the Secretary of the 
Interior) and are recognized by such Secretary as eligible for trust 
land status under 25 CFR Part 151 (as in effect on the date of the 
enactment of this sentence).''
    1996--Subsec. (b)(3)(F). Pub. L. 104-188, Sec. 1613(b)(1), added 
subpar. (F).
    Subsec. (c)(1). Pub. L. 104-188, Sec. 1613(b)(2), inserted table 
item relating to water utility property.
    Subsec. (e)(3)(B). Pub. L. 104-188, Sec. 1702(h)(1)(B), inserted 
closing provisions.
    Subsec. (e)(3)(B)(vi)(I). Pub. L. 104-188, Sec. 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, Sec. 1702(h)(1)(A), 
added subcl. (III).
    Subsec. (e)(3)(E)(iii). Pub. L. 104-188, Sec. 1120(a), added cl. 
(iii).
    Subsec. (e)(3)(F). Pub. L. 104-188, Sec. 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, Sec. 1613(b)(3)(A), added par. (5).
    Subsec. (g)(2)(C)(iv). Pub. L. 104-188, Sec. 1613(b)(4), inserted 
``or water utility property'' after ``tunnel bore''.
    Subsec. (g)(3)(B). Pub. L. 104-188, Sec. 1120(b), inserted table 
item relating to subpar. (E)(iii).
    Pub. L. 104-188, Sec. 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, Sec. 1702(h)(1)(C), substituted 
``section 48(l)(3)(A)(ix) (as in effect on the day before the date of 
the enactment of the Revenue Reconciliation Act of 1990)'' for ``section 
48(a)(3)(A)(iii)''.
    Subsec. (i)(8). Pub. L. 104-188, Sec. 1121(a), reenacted heading 
without change and amended text generally. Prior to amendment, text read 
as follows: ``In the case of any building erected (or improvements made) 
on leased property, if such building or improvement is property to which 
this section applies, the depreciation deduction shall be determined 
under the provisions of this section.''
    1995--Subsec. (g)(4)(B)(i). Pub. L. 104-88 substituted ``rail 
carrier subject to part A of subtitle IV'' for ``domestic railroad 
corporation providing transportation subject to subchapter I of chapter 
105''.
    1993--Subsec. (c)(1). Pub. L. 103-66, Sec. 13151(a), substituted 
``39 years'' for ``31.5 years'' in table item relating to nonresidential 
real property.
    Subsec. (j). Pub. L. 103-66, Sec. 13321(a), added subsec. (j).
    1990--Subsec. (e)(2)(A). Pub. L. 101-508, Sec. 11812(b)(2)(A), 
amended subpar. (A) generally. Prior to amendment, subpar. (A) read as 
follows: ``The term `residential rental property' has the meaning given 
such term by section 167(j)(2)(B).''
    Subsec. (e)(3)(B)(vi)(I). Pub. L. 101-508, Sec. 11813(b)(9)(A)(i), 
which directed the substitution of ``subparagraph (A) of section 
48(a)(3) (or would be so described if `solar and wind' were substituted 
for `solar' in clause (i) thereof)'' for ``paragraph (3)(A)(viii), 
(3)(A)(ix) or (4) of section 48(l)'' was executed by making the 
substitution 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, Sec. 11813(b)(9)(A)(ii), 
inserted ``(as in effect on the day before the date of the enactment of 
the Revenue Reconciliation Act of 1990)'' after ``48(l)''.
    Subsec. (e)(3)(D)(i). Pub. L. 101-508, Sec. 11813(b)(9)(B)(i), 
substituted ``subsection (i)(13)'' for ``section 48(p)''.
    Subsec. (f)(2). Pub. L. 101-508, Sec. 11812(b)(2)(C), substituted 
``subsection (i)(10)'' for ``section 167(l)(3)(A).''
    Subsec. (g)(4). Pub. L. 101-508, Sec. 11813(b)(9)(C), substituted 
heading for one which read: ``Property used predominantly outside the 
United States'' and amended text generally. Prior to amendment, text 
read as follows: ``For purposes of this subsection, rules similar to the 
rules under section 48(a)(2) (including the exceptions contained in 
subparagraph (B) thereof) shall apply in determining whether property is 
used predominantly outside the United States. In addition to the 
exceptions contained in such subparagraph (B), there shall be excepted 
any satellite or other spacecraft (or any interest therein) held by a 
United States person if such satellite or spacecraft was launched from 
within the United States.''
    Subsec. (i)(1). Pub. L. 101-508, Sec. 11812(b)(2)(D), inserted at 
end ``The reference in this paragraph to subsection (m) of section 167 
shall be treated as a reference to such subsection as in effect on the 
day before the date of the enactment of the Revenue Reconciliation Act 
of 1990.''
    Subsec. (i)(7)(B)(i). Pub. L. 101-508, Sec. 11801(c)(8)(B), struck 
out, ``371(a), 374(a),'' after ``361,''.
    Subsec. (i)(9)(A)(ii). Pub. L. 101-508, Sec. 11812(b)(2)(E), struck 
out ``(determined without regard to section 167(l))'' after ``section 
167''.
    Subsec. (i)(10). Pub. L. 101-508, Sec. 11812(b)(2)(B), amended par. 
(10) generally. Prior to amendment, par. (10) read as follows: ``The 
term `public utility property' has the meaning given such term by 
section 167(l)(3)(A).''
    Subsec. (i)(13). Pub. L. 101-508, Sec. 11813(b)(9)(B)(ii), added 
par. (13).
    1989--Subsec. (b)(3)(D), (E). Pub. L. 101-239, Sec. 7816(f), 
redesignated subpar. (D), relating to property described in subsec. 
(e)(3)(D)(ii), as (E).
    Subsec. (b)(5). Pub. L. 101-239, Sec. 7816(e)(1), substituted 
``paragraph (2)(C)'' for ``paragraph (2)(B)''.
    Subsec. (c)(2). Pub. L. 101-239, Sec. 7816(e)(2), substituted 
``subsection (b)(2)(C)'' for ``subsection (b)(2)(B)''.
    Subsec. (i)(1). Pub. L. 101-239, Sec. 7816(w), made clarifying 
amendment to directory language of Pub. L. 100-647, Sec. 6253, see 1988 
Amendment note below.
    1988--Subsec. (b)(2). Pub. L. 100-647, Sec. 1002(a)(11)(A), 
substituted ``150 percent declining balance method in certain cases'' 
for ``15-year and 20-year property'' in heading and amended text 
generally. Prior to amendment, text read as follows: ``In the case of 
15-year and 20-year property, paragraph (1) shall be applied by 
substituting `150 percent' for `200 percent'.''
    Subsec. (b)(2)(B), (C). Pub. L. 100-647, Sec. 6028(a), added subpar. 
(B) and redesignated former subpar. (B) as (C).
    Subsec. (b)(3)(C). Pub. L. 100-647, Sec. 1002(i)(2)(B)(i), added 
subpar. (C). Former subpar. (C) redesignated (D).
    Subsec. (b)(3)(D). Pub. L. 100-647, Sec. 6029(b), added subpar. (D) 
relating to property described in subsec. (e)(3)(D)(ii).
    Pub. L. 100-647, Sec. 1002(i)(2)(B)(i), redesignated subpar. (C), 
relating to property with respect to which the taxpayer elects under 
par. (5), as (D).
    Subsec. (b)(5). Pub. L. 100-647, Sec. 1002(i)(2)(B)(ii), substituted 
``paragraph (3)(D)'' for ``paragraph (3)(C)''.
    Pub. L. 100-647, Sec. 1002(a)(11)(B), substituted ``paragraph (2)(B) 
or (3)(C)'' for ``paragraph (3)(C)''.
    Subsec. (c). Pub. L. 100-647, Sec. 1002(a)(11)(C), amended subsec. 
(c) generally, designating existing provisions as par. (1) and adding 
par. (2).
    Subsec. (c)(1). Pub. L. 100-647, Sec. 1002(i)(2)(A), inserted table 
item relating to any railroad grading or tunnel bore.
    Subsec. (d)(2)(C). Pub. L. 100-647, Sec. 1002(i)(2)(D), added 
subpar. (C).
    Subsec. (d)(3)(A)(i). Pub. L. 100-647, Sec. 1002(a)(5), struck out 
``and which are'' after ``this section applies''.
    Subsec. (d)(3)(B). Pub. L. 100-647, Sec. 1002(a)(23)(A), struck out 
``real'' after ``Certain'' in heading and amended text generally. Prior 
to amendment, text read as follows: ``For purposes of subparagraph (A), 
nonresidential real property and residential rental property shall not 
be taken into account.''
    Subsec. (d)(3)(B)(i). Pub. L. 100-647, Sec. 1002(i)(2)(E), 
substituted ``residential rental property, and railroad grading or 
tunnel bore'' for ``and residential rental property''.
    Subsec. (e)(3)(B)(v). Pub. L. 100-647, Sec. 1002(a)(21), substituted 
``any section 1245 property'' for ``any property''.
    Subsec. (e)(3)(C). Pub. L. 100-647, Sec. 6027(b)(1)(C), redesignated 
cl. (iii) as (ii), and struck out former cl. (ii) which read as follows: 
``any single-purpose agricultural or horticultural structure (within the 
meaning of section 48(p)), and''.
    Subsec. (e)(3)(D). Pub. L. 100-647, Sec. 6029(a), amended subpar. 
(D) generally. Prior to amendment, subpar. (D) read as follows: ``The 
term `10-year property' includes any single purpose agricultural or 
horticultural structure (within the meaning of section 48(p)).''
    Pub. L. 100-647, Sec. 6027(a), added subpar. (D). Former subpar. (D) 
redesignated (E).
    Subsec. (e)(3)(E), (F). Pub. L. 100-647, Sec. 6027(a), redesignated 
former subpars. (D) and (E) as (E) and (F), respectively.
    Subsec. (e)(4). Pub. L. 100-647, Sec. 1002(i)(2)(C), added par. (4).
    Subsec. (f)(4). Pub. L. 100-647, Sec. 1002(a)(16)(B), amended par. 
(4) generally. Prior to amendment, par. (4) read as follows: ``Any sound 
recording described in section 48(r)(5).''
    Subsec. (f)(5)(B)(ii). Pub. L. 100-647, Sec. 1002(a)(6)(A)(i), 
substituted ``1st taxable year'' for ``1st full taxable year''.
    Subsec. (f)(5)(B)(iii). Pub. L. 100-647, Sec. 1002(a)(6)(A)(ii), 
added cl. (iii).
    Subsec. (f)(5)(C). Pub. L. 100-647, Sec. 100-647, 
Sec. 1002(a)(6)(B), added subpar. (C).
    Subsec. (g)(2)(C). Pub. L. 100-647, Sec. 1002(i)(2)(F), added item 
(iv) in table.
    Subsec. (g)(3)(B). Pub. L. 100-647, Sec. 6029(c), substituted 
``(D)(i)'' for ``(D)'' and added item for ``(D)(ii)'' in table.
    Pub. L. 100-647, Sec. 6027(b)(2), substituted ``(D)'' for 
``(C)(ii)'', ``(E)(i)'' for ``(D)(i)'', ``(E)(ii)'' for ``(D)(ii)'', and 
``(F)'' for ``(E)'' in table.
    Subsec. (h)(2)(B). Pub. L. 100-647, Sec. 1002(a)(8), amended subpar. 
(B) generally. Prior to amendment, subpar. (B) read as follows:
    ``(i) Income from property subject to United States tax.--Clause 
(iii) of subparagraph (A) shall not apply with respect to any property 
if more than 50 percent of the gross income for the taxable year derived 
by the foreign person or entity from the use of such property is--
        ``(I) subject to tax under this chapter, or
        ``(II) included under section 951 in the gross income of a 
    United States shareholder for the taxable year with or within which 
    ends the taxable year of the controlled foreign corporation in which 
    such income was derived.
For purposes of the preceding sentence, any exclusion or exemption shall 
not apply for purposes of determining the amount of the gross income so 
derived, but shall apply for purposes of determining the portion of such 
gross income subject to tax under this chapter.
    ``(ii) Movies and sound recordings.--Clause (iii) of subparagraph 
(A) shall not apply with respect to any qualified film (as defined in 
section 48(k)(1)(B)) or any sound recording (as defined in section 
48(r)(5)).''
    Subsec. (i)(1). Pub. L. 100-647, Sec. 6253, as amended by Pub. L. 
101-239, Sec. 7816(w), amended par. (1) generally, substituting a single 
par. relating to class life for former subpar. (A) relating to class 
life generally, (B) relating to Secretarial authority, (C) relating to 
effect of modification, (D) prohibiting modification of assigned 
property before January 1, 1992, and (E) relating to assigned property 
and item.
    Subsec. (i)(1)(E)(iii). Pub. L. 100-647, Sec. 1002(i)(2)(G), added 
cl. (iii), which provided: ``Special rule for railroad grading or tunnel 
bores.--In the case of any property which is a railroad grading or 
tunnel bore--
        ``(I) such property shall be treated as an assigned property,
        ``(II) the recovery period applicable to such property shall be 
    treated as an assigned item, and
        ``(III) clause (ii) of subparagraph (D) shall not apply.''
    Subsec. (i)(7)(A). Pub. L. 100-647, Sec. 1002(a)(7)(A), inserted at 
end ``In any case where this section as in effect before the amendments 
made by section 201 of the Tax Reform Act of 1986 applied to the 
property in the hands of the transferor, the reference in the preceding 
sentence to this section shall be treated as a reference to this section 
as so in effect.''
    Subsec. (i)(7)(B). Pub. L. 100-647, Sec. 1002(a)(7)(B), amended 
subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: 
``The transactions described in this subparagraph are any transaction 
described in section 332, 351, 361, 371(a), 374(a), 721, or 731. 
Subparagraph (A) shall not apply in the case of a termination of a 
partnership under section 708(b)(1)(B).''
    Subsec. (i)(7)(D). Pub. L. 100-647, Sec. 1002(a)(7)(C), struck out 
subpar. (D) which read as follows: ``This paragraph shall not apply to 
any transaction to which subsection (f)(5) applies (relating to churning 
transactions).''
    Subsec. (j)(9)(E). Pub. L. 100-647, Sec. 1018(b)(2), amended subpar. 
(E), as amended by section 1802(a)(2) of Pub. L. 99-514 and as in effect 
before the general amendment by section 201(a) of Pub. L. 99-514, by 
substituting ``this paragraph and paragraph (8)'' for ``this paragraph'' 
in cls. (i) and (ii)(I) and by striking out cl. (iii) and inserting a 
new cl. (iii) which read as follows: ``Tax-exempt controlled entity.--
    ``(I) In general.--The term `tax-exempt controlled entity' means any 
corporation (which is not a tax-exempt entity determined without regard 
to this subparagraph and paragraph (4)(E)) if 50 percent or more (in 
value) of the stock in such corporation is held by 1 or more tax-exempt 
entities (other than a foreign person or entity).
    ``(II) Only 5-percent shareholders taken into account in case of 
publicly traded stock.--For purposes of subclause (I), in the case of a 
corporation the stock of which is publicly traded on an established 
securities market, stock held by a tax-exempt entity shall not be taken 
into account unless such entity holds at least 5 percent (in value) of 
the stock in such corporation. For purposes of this subclause, related 
entities (within the meaning of paragraph (7)) shall be treated as 1 
entity.
    ``(III) Section 318 to apply.--For purposes of this clause, a tax-
exempt entity shall be treated as holding stock which it holds through 
application of section 318 (determined without regard to the 50-percent 
limitation contained in subsection (a)(2)(C) thereof).''
    1986--Pub. L. 99-514, Sec. 201(a), amended section generally, 
applicable, with exceptions enumerated in sections 203, 204, and 251(d) 
of Pub. L. 99-514 [set out as notes below and under section 46 of this 
title], to property placed in service after Dec. 31, 1986, modifying 
existing accelerated cost recovery system by substituting new subsecs. 
(a) to (i) for former subsecs. (a) to (k). See following paragraphs of 
1986 Amendment note for amendments to former text by sections 1802 and 
1809 of Pub. L. 99-514.
    Subsec. (b)(2)(A). Pub. L. 99-514, Sec. 1809(a)(2)(A)(i)(I), struck 
out closing provisions relating to determination, in the case of 19-year 
real property, of applicable percentage in taxable year in which the 
property is placed in service.
    Subsec. (b)(2)(B). Pub. L. 99-514, Sec. 1809(a)(2)(A)(i)(II), 
substituted ``Mid-month convention for 19-year real property'' for 
``Special rule for year of disposition'' in heading and amended text 
generally, substituting ``In the case of 19-year real property, the 
amount of the deduction determined under any provision of this section 
(or for purposes of section 57(a)(12)(B) or 312(k)) for any taxable year 
shall be determined on the basis of the number of months (using a mid-
month convention) in which the property is in service.'' for prior 
provisions.
    Subsec. (b)(3)(A). Pub. L. 99-514, Sec. 1809(a)(1)(A), which 
directed that the table be amended by striking ``and low-income 
housing'' in last item, was executed by striking ``and low-income 
housing'' after ``19-year real property'' in next-to-the-last item, to 
reflect the probable intent of Congress, because that phrase did not 
appear in last item.
    Pub. L. 99-514, Sec. 1809(a)(1)(B), inserted at the end item for 
low-income housing with recovery periods of 15, 35, or 45 years.
    Subsec. (b)(4)(B). Pub. L. 99-514, Sec. 1809(a)(2)(B), substituted 
``Monthly convention'' for ``Special rule for year of disposition'' in 
heading and amended text generally, substituting ``In the case of low-
income housing, the amount of the deduction determined under any 
provision of this section (or for purposes of section 57(a)(12)(B) or 
312(k)) for any taxable year shall be determined on the basis of the 
number of months (treating all property placed in service or disposed of 
during any month as placed in service or disposed of on the first day of 
such month) in which the property is in service.'' for prior provisions.
    Subsec. (f)(2)(B). Pub. L. 99-514, Sec. 1809(a)(2)(A)(ii), 
redesignated existing provisions as entire subpar. (B), struck out ``(i) 
In general'', redesignated subcls. (I) and (II) as cls. (i) and (ii), 
and in cl. (ii) struck out ``(taking into account the next to the last 
sentence of subsection (b)(2)(A))'' after ``assign percentages'' and 
struck out heading, ``(ii) Special rule for disposition'' and text, ``In 
the case of a disposition of 19-year real property or low-income housing 
described in clause (i), subsection (b)(2)(B) shall apply.''
    Subsec. (f)(10)(A). Pub. L. 99-514, Sec. 1809(b)(1), amended subpar. 
(A) generally, substituting ``In the case of recovery property 
transferred in a transaction described in subparagraph (B), for purposes 
of computing the deduction allowable under subsection (a) with respect 
to so much of the basis in the hands of the transferee as does not 
exceed the adjusted basis in the hands of the transferor--
        ``(i) if the transaction is described in subparagraph (B)(i), 
    the transferee shall be treated in the same manner as the 
    transferor, or
        ``(ii) if the transaction is described in clause (ii) or (iii) 
    of subparagraph (B) and the transferor made an election with respect 
    to such property under subsection (b)(3) or (f)(2)(C), the 
    transferee shall be treated as having made the same election (or its 
    equivalent).''
for prior provisions.
    Subsec. (f)(10)(B). Pub. L. 99-514, Sec. 1809(b)(2), inserted at end 
``Clause (i) shall not apply in the case of the termination of a 
partnership under section 708(b)(1)(B).''
    Subsec. (f)(12)(B)(ii). Pub. L. 99-514, Sec. 1809(a)(4)(A), amended 
cl. (ii) generally, substituting ``In the case of 19-year real property, 
the amount of the deduction allowed shall be determined by using the 
straight-line method (without regard to salvage value) and a recovery 
period of 19 years.'' for prior provisions.
    Subsec. (f)(12)(C). Pub. L. 99-514, Sec. 1809(a)(4)(B), substituted 
``Exception for low- and moderate-income housing'' for ``Exception for 
projects for residential rental property'' in heading and amended text 
generally, substituting ``Subparagraph (A) shall not apply to--
        ``(i) any low-income housing, and
        ``(ii) any other recovery property which is placed in service in 
    connection with projects for residential rental property financed by 
    the proceeds of obligations described in section 103(b)(4)(A).''
for prior provisions.
    Subsec. (f)(14), (15). Pub. L. 99-514, Sec. 1802(b)(1), redesignated 
the par. (13) relating to motor vehicle operating leases as (14) and 
redesignated former par. (14) as (15).
    Subsec. (j)(2)(B)(ii). Pub. L. 99-514, Sec. 1809(a)(2)(C)(i), 
substituted ``Cross reference'' for ``19-year real property'' in heading 
and amended text generally, substituting ``For other applicable 
conventions, see paragraphs (2)(B) and (4)(B) of subsection (b).'' for 
prior provisions.
    Subsec. (j)(3)(D). Pub. L. 99-514, Sec. 1802(a)(1), inserted at end 
``For purposes of subparagraph (B)(iii), any portion of a property so 
used shall not be treated as leased to a tax-exempt entity in a 
disqualified lease.''
    Subsec. (j)(4)(E)(i). Pub. L. 99-514, Sec. 1802(a)(2)(A), (G), 
substituted ``any property (other than property held by such 
organization)'' for ``any property of which such organization is the 
lessee'', ``first used by'' for ``first leased to'', and ``preceding 
sentence and subparagraph (D)(ii)'' for ``preceding sentence''.
    Subsec. (j)(4)(E)(ii). Pub. L. 99-514, Sec. 1802(a)(2)(B), (C), 
struck out ``of which such organization is the lessee'' after ``respect 
to any property'' in subcl. (I) and substituted ``is first used by the 
organization'' for ``is placed in service under the lease'' in subcl. 
(II).
    Subsec. (j)(4)(E)(iv). Pub. L. 99-514, Sec. 1802(a)(2)(D), added cl. 
(iv), first used, which read as follows: ``For purposes of this 
subparagraph, property shall be treated as first used by the 
organization--
        ``(I) when the property is first placed in service under a lease 
    to such organization, or
        ``(II) in the case of property leased to (or held by) a 
    partnership (or other pass-thru entity) in which the organization is 
    a member, the later of when such property is first used by such 
    partnership or pass-thru entity or when such organization is first a 
    member of such partnership or pass-thru entity.''
    Subsec. (j)(5)(C)(iv). Pub. L. 99-514, Sec. 1802(a)(3), struck out 
cl. (iv), relating to exclusion of property not subject to rapid 
obsolescence.
    Subsec. (j)(8), (9)(A). Pub. L. 99-514, Sec. 1802(a)(4)(A), (B)(i), 
struck out ``and paragraphs (4) and (5) of section 48(a)'' after ``For 
purposes of this subsection'' in introductory provisions.
    Subsec. (j)(9)(B)(i). Pub. L. 99-514, Sec. 1802(a)(4)(B)(ii), 
inserted a comma between ``loss'' and ``deduction''.
    Subsec. (j)(9)(D). Pub. L. 99-514, Sec. 1802(a)(7)(A), added subpar. 
(D), determination of whether property used in unrelated trade or 
business, which read as follows: ``For purposes of this subsection, in 
the case of any property which is owned by a partnership which has both 
a tax-exempt entity and a person who is not a tax-exempt entity as 
partners, the determination of whether such property is used in an 
unrelated trade or business of such an entity shall be made without 
regard to section 514.'' Former subpar. (D) was redesignated (E).
    Subsec. (j)(9)(E). Pub. L. 99-514, Sec. 1802(a)(7), redesignated 
former subpar. (D) as (E) and substituted ``(C), and (D)'' for ``and 
(C)''. Former subpar. (E), was redesignated (F).
    Pub. L. 99-514, Sec. 1802(a)(2)(E)(i), added subpar. (E), treatment 
of certain taxable entities, consisting of cl. (i), in general, which 
read: ``For purposes of this paragraph, except as otherwise provided in 
this subparagraph, any tax-exempt controlled entity shall be treated as 
a tax-exempt entity.'', cl. (ii), election, which read: ``If a tax-
exempt controlled entity makes an election under this clause--
        ``(I) such entity shall not be treated as a tax-exempt entity 
    for purposes of this paragraph, and
        ``(II) any gain recognized by a tax-exempt entity on any 
    disposition of an interest in such entity (and any dividend or 
    interest received or accrued by a tax-exempt entity from such tax-
    exempt controlled entity) shall be treated as unrelated business 
    taxable income for purposes of section 511.
Any such election shall be irrevocable and shall bind all tax-exempt 
entities holding interests in such tax-exempt controlled entity. For 
purposes of subclause (II), there shall only be taken into account 
dividends which are properly allocable to income of the tax-exempt 
controlled entity which was not subject to tax under this chapter.'', 
and cl. (iii), tax-exempt controlled entity, which read ``The term `tax-
exempt controlled entity' means any corporation (which is not a tax-
exempt entity determined without regard to this subparagraph and 
paragraph (4)(E)) if 50 percent or more (by value) of the stock in such 
corporation is held (directly or through the application of section 318 
determined without regard to the 50-percent limitation contained in 
subsection (a)(2)(C) thereof) by 1 or more tax-exempt entities.'' Former 
subpar. (E) was redesignated (F).
    Subsec. (j)(9)(F). Pub. L. 99-514, Sec. 1802(a)(7)(A), redesignated 
former subpar. (E) as (F). Former subpar. (F) redesignated (G).
    Pub. L. 99-514, Sec. 1802(a)(2)(E)(i), redesignated former subpar. 
(E) as (F).
    Subsec. (j)(9)(G). Pub. L. 99-514, Sec. 1802(a)(7)(A), redesignated 
former subpar. (F) as (G).
    1985--Subsec. (b)(2). Pub. L. 99-121, Sec. 103(b)(1)(A), substituted 
``19-year real property'' for ``18-year real property'' in heading and 
wherever appearing in text.
    Subsec. (b)(2)(A)(i). Pub. L. 99-121, Sec. 103(a), substituted ``19-
year recovery period'' for ``18-year recovery period''.
    Subsec.(b)(3)(A). Pub. L. 99-121, Sec. 103(b)(1)(A), substituted 
``19-year real property'' for ``18-year real property'' in table.
    Pub. L. 99-121, Sec. 103(b)(2), substituted ``19, 35, or 45 years'' 
for ``18, 35, or 45'' in table.
    Subsec. (b)(3)(B)(ii), (iii). Pub. L. 99-121, Sec. 103(b)(1)(A), 
substituted ``19-year real property'' for ``18-year real property'' 
wherever appearing.
    Subsec. (c)(2)(D). Pub. L. 99-121, Sec. 103(b)(1)(A), substituted 
``19-year real property'' for ``18-year real property'' in heading and 
in text.
    Subsec. (d)(2)(B). Pub. L. 99-121, Sec. 103(b)(1)(A), substituted 
``19-year real property'' for ``18-year real property''.
    Subsec. (f)(1)(B)(ii). Pub. L. 99-121, Sec. 103(b)(3)(B), 
substituted ``March 15, 1984, and before May, 9, 1985, the'' for ``March 
15, 1984, the''.
    Subsec. (f)(1)(B)(iii), (iv). Pub. L. 99-121, Sec. 103(b)(3)(A), 
(C), added cl. (iii), redesignated former cl. (iii) as (iv), and in cl. 
(iv) substituted ``, (ii), or (iii)'' for ``or (ii)''.
    Subsec. (f)(2), (5). Pub. L. 99-121, Sec. 103(b)(1)(A), substituted 
``19-year real property'' for ``18-year real property'' wherever 
appearing.
    Subsec. (f)(12)(B)(ii). Pub. L. 99-121, Sec. 103(b)(4), substituted 
``19-year real property'' for ``15-year real property'' in heading and 
wherever appearing in text, and substituted ``19 years'' for ``15 
years''.
    Subsec. (j). Pub. L. 99-121, Sec. 103(b)(1)(A), substituted ``19-
year real property'' for ``18-year real property'' wherever appearing in 
headings, table, and text.
    1984--Subsec. (b)(2). Pub. L. 98-369, Sec. 111(a)(1), substituted 
``18-year real property'' for ``15-year real property'' in heading and 
wherever appearing in text.
    Pub. L. 98-369, Sec. 111(d), inserted in provision following cl. 
(ii) ``(using a mid-month convention)''.
    Subsec. (b)(2)(A). Pub. L. 98-369, Sec. 111(b)(3)(A), struck out in 
text following cl. (ii) provision that for purposes of this subparagraph 
``low-income housing'' means property described in section 
1250(a)(1)(B)(i), (ii), (iii), or (iv).
    Subsec. (b)(2)(A)(i). Pub. L. 98-369, Sec. 111(a)(2), substituted 
``18-year recovery period'' for ``15-year recovery period''.
    Subsec. (b)(2)(A)(ii). Pub. L. 98-369, Sec. 111(a)(3), struck out 
``(200 percent declining balance method in the case of low-income 
housing)'' after ``declining balance method''.
    Subsec. (b)(2)(B). Pub. L. 98-369, Sec. 111(d), inserted ``(using a 
mid-month convention)''.
    Subsec. (b)(3)(A). Pub. L. 98-369, Sec. 111(e)(9)(A), substituted 
``under paragraph (1), (2), or (4)'' for ``under paragraphs (1) and 
(2)''.
    Pub. L. 98-369, Sec. 111(e)(9)(B), substituted in table ``18-year 
real property and low-income housing'' for ``15-year real property'' and 
``18'' for ``15'' and struck out ``years'' after ``45''.
    Subsec. (b)(3)(B)(ii). Pub. L. 98-369, Sec. 111(e)(2), substituted 
``18-year real property or low-income housing,'' for ``15-year real 
property''.
    Subsec. (b)(3)(B)(iii). Pub. L. 98-369, Sec. 111(e)(1), substituted 
``18-year real property or low-income housing'' for ``15-year real 
property''.
    Subsec. (b)(4). Pub. L. 98-369, Sec. 111(b)(1), added par. (4).
    Subsec. (c)(2)(D). Pub. L. 98-369, Sec. 111(b)(3)(B), amended 
subpar. (D) generally, substituting ``18-year real property'' for ``15-
year real property'' in heading and text and including within such 
definition section 1250 property which is not low-income housing.
    Subsec. (c)(2)(F), (G). Pub. L. 98-369, Sec. 111(b)(2), added 
subpar. (F) and redesignated former subpar. (F) as (G).
    Subsec. (d)(2)(B). Pub. L. 98-369, Sec. 111(e)(3), substituted ``18-
year real property or low-income housing'' for ``15-year real 
property''.
    Subsec. (e). Pub. L. 98-369, Sec. 113(b)(2)(A), substituted 
``title'' for ``section'' in provision preceding par. (1).
    Subsec. (e)(5). Pub. L. 98-369, Sec. 113(b)(1), added par. (5).
    Subsec. (f)(1)(B). Pub. L. 98-369, Sec. 111(c), designated existing 
provision as cl. (i), inserted heading, inserted ``, and before March 
16, 1984,'' and struck out provision that for the purposes of the 
preceding sentence, the method of computing the deduction allowable with 
respect to such first component be determined as if it were a separate 
building, which provision is covered in cl. (iii), and added cls. (ii) 
and (iii).
    Subsec. (f)(2)(B). Pub. L. 98-369, Sec. 111(e)(1), substituted ``18-
year real property or low-income housing'' for ``15-year real property'' 
wherever appearing.
    Subsec. (f)(2)(C)(i). Pub. L. 98-369, Sec. 111(e)(4), substituted in 
table ``18-year real property or low-income housing'' for ``15-year real 
property''.
    Subsec. (f)(2)(C)(ii)(II), (E), (5). Pub. L. 98-369, Sec. 111(e)(1), 
substituted ``18-year real property or low-income housing'' for ``15-
year real property''.
    Subsec. (f)(8)(B)(ii)(I). Pub. L. 98-369, Sec. 12(a)(3)(A), in par. 
(8) as amended by section 209(a) of Pub. L. 97-248, substituted ``1990'' 
for ``1986''.
    Subsec. (f)(12)(C). Pub. L. 98-369, Sec. 628(b)(1), designated 
provisions preceding cl. (i) and cl. (i) as subpar. (C), and struck out 
cls. (ii), (iii), and (iv) which dealt with the application of subpar. 
(A) to a sewage or solid waste disposal facility, an air or water 
pollution control facility or a facility which has received an urban 
development action grant under section 119 of the Housing and Community 
Development Act of 1974.
    Subsec. (f)(12)(D), (E). Pub. L. 98-369, Sec. 628(b)(2), 
redesignated subpar. (E) as (D) and struck out former subpar. (D) which 
read as follows: ``For purposes of this paragraph, the term `existing 
facility' means a plant or property in operation before July 1, 1982.''
    Subsec. (f)(13). Pub. L. 98-369, Sec. 32(a), added second par. (13) 
relating to motor vehicle operating leases.
    Subsec. (f)(14). Pub. L. 98-369, Sec. 113(a)(2), added par. (14).
    Subsec. (g)(2). Pub. L. 98-369, Sec. 31(d), inserted ``If any 
property (other than section 1250 class property) does not have a 
present class life within the meaning of the preceding sentence, the 
Secretary may prescribe a present class life for such property which 
reasonably reflects the anticipated useful life of such property to the 
industry or other group.''
    Subsec. (i)(1)(D)(i). Pub. L. 98-369, Sec. 474(r)(7)(D), in subsec. 
(i) as amended by section 209(b) of Pub. L. 97-248, substituted 
``subparts A, B, and D of part IV'' for ``subpart A of part IV''.
    Pub. L. 98-369, Sec. 474(r)(7)(A), in subsec. (i) as added by 
section 208(a)(1) of Pub. L. 97-248, substituted ``subparts A, B, and D 
of part IV'' for ``subpart A of part IV''.
    Subsec. (i)(1)(D)(iii). Pub. L. 98-369, Sec. 612(e)(5), in subsec. 
(i) as amended by section 209(b) of Pub. L. 97-248, substituted 
``section 26(b)(2)'' for ``section 25(b)(2)''.
    Pub. L. 98-369, Sec. 612(e)(4), in subsec. (i) as added by section 
208(a)(1) of Pub. L. 97-248, substituted ``section 26(b)(2)'' for 
``section 25(b)(2)''.
    Pub. L. 98-369, Sec. 474(r)(7)(E), in subsec. (i) as amended by 
section 209(b) of Pub. L. 97-248, substituted ``section 25(b)(2)'' for 
``the last sentence of section 53(a)''.
    Pub. L. 98-369, Sec. 474(r)(7)(B), in subsec. (i) as added by 
section 208(a)(1) of Pub. L. 97-248, substituted ``section 25(b)(2)'' 
for ``the last sentence of section 53(a)''.
    Subsec. (i)(4)(A). Pub. L. 98-369, Sec. 12(a)(3)(B), in subsec. (i) 
as amended by section 209(b) of Pub. L. 97-248, substituted ``1989'' for 
``1985'' in cls. (i) and (ii).
    Pub. L. 98-369, Sec. 474(r)(7)(C), in subsec. (i) as added by 
section 208(a)(1) of Pub. L. 97-248, substituted ``section 38'' for 
``subpart A of part IV of subchapter A of this chapter''.
    Subsecs. (j), (k). Pub. L. 98-369, Sec. 31(a), added subsec. (j) and 
redesignated former subsec. (j) as (k).
    1983--Subsec. (b)(2)(A). Pub. L. 97-448, Sec. 102(a)(5), substituted 
``In the case of 15-year real property'' for ``For purposes of this 
subparagraph'' in third sentence.
    Subsec. (c)(2)(F). Pub. L. 97-448, Sec. 102(a)(8), added subpar. 
(F).
    Subsec. (d)(2)(B). Pub. L. 97-448, Sec. 102(a)(2), substituted 
``paragraph (7) or (10) of subsection (f)'' for ``subsection (f)(7)''.
    Subsec. (e)(3)(C), (D). Pub. L. 97-424, Sec. 541(a)(1), added 
subpar. (C). Former subpar. (C) redesignated (D).
    Subsec. (e)(4)(D). Pub. L. 97-448, Sec. 102(a)(9)(A), inserted 
provision that, in the case of the acquisition of property by any 
partnership which results from the termination of another partnership 
under section 708(b)(1)(B), the determination of whether the acquiring 
partnership is related to the other partnership shall be made 
immediately before the event resulting in such termination occurs.
    Subsec. (e)(4)(H), (I). Pub. L. 97-448, Sec. 102(a)(9)(B), added 
subpars. (H) and (I).
    Subsec. (f)(4)(B). Pub. L. 97-448, Sec. 102(f)(4), substituted 
``Election made on return'' for ``Made on return'' as the subpar. (B) 
heading, designated existing provisions as cl. (i), added heading for 
cl. (i), substituted ``Except as provided in clause (ii), any election'' 
for ``Any election'', in cl. (i) as so designated, and added cl. (ii).
    Subsec. (f)(5). Pub. L. 97-448, Sec. 102(a)(1), inserted provision 
that, in the case of 15-year real property, the first sentence of this 
paragraph shall not apply to the taxable year in which the property is 
placed in service or disposed of.
    Subsec. (f)(8)(D). Pub. L. 97-448, Sec. 102(a)(10)(A), amended 
subpar. (D), as in effect before the amendments made by the Tax Equity 
and Fiscal Responsibility Act of 1982 [Pub. L. 97-248], by inserting at 
end thereof the following new sentence: ``Under regulations prescribed 
by the Secretary, public utility property shall not be treated as 
qualified leased property unless the requirements of rules similar to 
the rules of subsection (e)(3) of this section and section 46(f) are met 
with respect to such property.'' See 1982 Amendment note below for 
subsec. (f)(8)(D).
    Subsec. (f)(13). Pub. L. 97-448, Sec. 102(a)(3), added par. (13).
    Subsec. (g)(8)(A). Pub. L. 97-448, Sec. 102(a)(4)(B), substituted 
``Qualified coal utilization property'' for ``In general'' in heading.
    Subsec. (g)(8)(B). Pub. L. 97-448, Sec. 102(a)(4)(C), substituted 
``Coal utilization property'' for ``In general'' in heading.
    Subsec. (h)(4). Pub. L. 97-448, Sec. 102(a)(4)(A), substituted 
``coal utilization property which would otherwise be 15-year public 
utility property'' for ``coal utilization property which is not 3-year 
property, 5-year property, or 10-year property (determined without 
regard to this paragraph)''.
    1982--Subsec. (b)(1). Pub. L. 97-248, Sec. 206(a), substituted 
``table'' for ``tables'' in introductory provisions, struck out 
designation ``(A)'' preceding the table and struck out subpar. (A) 
heading which had limited the application of the table to property 
placed in service after Dec. 31, 1980, and before Jan. 1, 1985, and 
struck out subpars. (B) and (C), which had provided tables, 
respectively, for property placed in service in 1985 and for property 
placed in service after Dec. 31, 1985.
    Subsec. (e)(4). Pub. L. 97-248, Secs. 206(b), 224(c)(1), substituted 
``1981'' for ``1986'' in heading, in subpar. (E) inserted provision that 
a similar rule shall apply in the case of a deemed liquidation under 
section 338, and struck out former subpar. (H) which had provided for 
special rules for property placed in service before certain percentages 
took effect.
    Subsec. (f)(8). Pub. L. 97-248, Sec. 209(a), amended par. (8) 
generally, substituting provisions relating to special rules for finance 
leases for provisions relating to special rule for leases.
    Subsec. (f)(8)(A). Pub. L. 97-248, Sec. 208(a)(2)(A), inserted 
``except as provided in subsection (i),'' before ``for purposes of this 
subtitle''.
    Subsec. (f)(8)(B)(i)(I). Pub. L. 97-354, Sec. 5(a)(19), substituted 
``an S corporation'' for ``an electing small business corporation 
(within the meaning of section 1371(b))'' in subsec. (f)(8)(B)(i)(I) as 
in effect before the enactment of the Tax Equity and Fiscal 
Responsibility Act of 1982 [Pub. L. 97-248].
    Pub. L. 97-248, Sec. 208(b)(1), inserted ``which is not a related 
person with respect to the lessee''.
    Subsec. (f)(8)(B)(iii). Pub. L. 97-248, Sec. 208(b)(2), in subcl. 
(I) substituted ``120 percent of the present class life of the property, 
or'' for ``90 percent of the useful life of such property for purposes 
of section 167, or'', and in subcl. II substituted ``the period equal to 
the recovery period determined with respect to such property under 
subsection (i)(2)'' for ``150 percent of the present class life of such 
property''.
    Subsec. (f)(8)(C)(i). Pub. L. 97-354, Sec. 5(a)(20), in par. (8) as 
amended by section 209(a) of Pub. L. 97-248, substituted ``an S 
corporation'' for ``an electing small business corporation within the 
meaning of section 1371(b)''.
    Subsec. (f)(8)(D). Pub. L. 97-248, Sec. 208(b)(3), amended subpar. 
(D) generally. Prior to amendment, subpar. (D) read as follows:
    ``(D) Qualified leased property defined.--For purposes of 
subparagraph (A), the term `qualified leased property' means recovery 
property (other than a qualified rehabilitated building within the 
meaning of section 48(g)(1)) which is--
        ``(i) new section 38 property (as defined in section 48(b)) of 
    the lessor which is leased within 3 months after such property was 
    placed in service and which, if acquired by the lessee, would have 
    been new section 38 property of the lessee,
        ``(ii) property--
            ``(I) which was new section 38 property of the lessee,
            ``(II) which was leased within 3 months after such property 
        was placed in service by the lessee, and
            ``(III) with respect to which the adjusted basis of the 
        lessor does not exceed the adjusted basis of the lessee at the 
        time of the lease, or
        ``(iii) property which is a qualified mass commuting vehicle (as 
    defined in section 103(b)(9)) and which is financed in whole or in 
    part by obligations the interest on which is excludable from income 
    under section 103(a).
For purposes of this title (other than this subparagraph), any property 
described in clause (i) or (ii) to which subparagraph (A) applies shall 
be deemed originally placed in service not earlier than the date such 
property is used under the lease. In the case of property placed in 
service after December 31, 1980, and before the date of the enactment of 
this subparagraph, this subparagraph shall be applied by submitting `the 
date of the enactment of this subparagraph' for `such property was 
placed in service'.'' See 1983 Amendment note above for subsec. 
(f)(8)(D).
    Subsec. (f)(8)(H) to (K). Pub. L. 97-248, Sec. 208(b)(4), added 
subpars. (H) to (J) and redesignated former subpar. (H) as (K).
    Subsec. (f)(10)(B)(i). Pub. L. 97-248, Sec. 224(c)(2), struck out 
``(other than a transaction with respect to which the basis is 
determined under section 334(b)(2))'' after ``section 332''.
    Subsec. (f)(12). Pub. L. 97-248, Sec. 216(a), added par. (12).
    Subsec. (i). Pub. L. 97-248, Sec. 209(b), amended subsec. (i) 
generally, substituting provisions concerning limitations relating to 
leases of finance lease property for provisions concerning limitations 
relating to lease of qualified leased property.
    Pub. L. 97-248, Sec. 208(a)(1), added subsec. (i). Former subsec. 
(i) redesignated (j).
    Subsec. (j). Pub. L. 97-248, Sec. 208(a)(1), redesignated former 
subsec. (i) as (j).


                    Effective Date of 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 applicable 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 applicable to leases 
entered into after Aug. 5, 1997, see section 1213(e) of Pub. L. 105-34, 
set out as an Effective Date note under section 110 of this title.
    Section 1604(c)(2) of Pub. L. 105-34 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 section 168(j) of such Code with respect to such 
    property on a return filed before March 18, 1997, but only if such 
    return is the first return of tax filed for the taxable year in 
    which such property was placed in service, or
        ``(B) with respect to wages for which the taxpayer claimed the 
    benefits of section 45A of such Code for a taxable year on a return 
    filed before March 18, 1997, but only if such return was the first 
    return of tax filed for such taxable year.''


                    Effective Date of 1996 Amendment

    Section 1120(c) of Pub. L. 104-188 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 enactment of this 
Act [Aug. 20, 1996] and to which section 168 of the Internal Revenue 
Code of 1986 applies after the amendment made by section 201 of the Tax 
Reform Act of 1986 [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 respect to any property placed in service before 
such date and to which such section so applies.''
    Section 1121(b) of Pub. L. 104-188 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.''
    Section 1613(b)(5) of Pub. L. 104-188 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 effective, except 
as otherwise expressly provided, as if included 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 701 of 
Title 49, Transportation.


                    Effective Date of 1993 Amendment

    Section 13151(b) of Pub. L. 103-66 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 section [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 commenced by or for 
    the taxpayer or a qualified person before May 13, 1993.
For purposes of this paragraph, the term `qualified person' means any 
person who transfers his rights in such a contract or such property to 
the taxpayer but only if the property is not placed in service by such 
person before such rights are transferred to the taxpayer.''
    Section 13321(b) of Pub. L. 103-66 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 section 168 of this title does not apply by reason of 
subsec. (f)(5) of section 168, and not applicable to rehabilitation 
expenditures described in section 252(f)(5) of Pub. L. 99-514, see 
section 11812(c) of Pub. L. 101-508, set out as a note under section 42 
of this title.
    Amendment by section 11813(b)(9) of Pub. L. 101-508 applicable to 
property placed in service after Dec. 31, 1990, but not applicable to 
any transition property (as defined in section 49(e) of this title), any 
property with respect to which qualified progress expenditures were 
previously taken into account under section 46(d) of this title, and any 
property described in section 46(b)(2)(C) of this title, as such 
sections were in effect on Nov. 4, 1990, see section 11813(c) of Pub. L. 
101-508, set out as a note under section 29 of this title.


                    Effective Date of 1989 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

    Section 1002(a)(23)(B) of Pub. L. 100-647 provided that: ``Clause 
(ii) of section 168(d)(3)(B) of the 1986 Code (as added by subparagraph 
(A)) shall apply to taxable years beginning after March 31, 1988, unless 
the taxpayer elects, at such time and in such manner as the Secretary of 
the Treasury or his delegate may prescribe, to have such clause apply to 
taxable years beginning on or before such date.''
    Amendment by sections 1002(a)(5)-(8), (11), (16)(B), (21), 
(i)(2)(A)-(G), and 1018(b)(2) of Pub. L. 100-647 effective, except as 
otherwise provided, as if included in the provision of the Tax Reform 
Act of 1986, Pub. L. 99-514, to which such amendment relates, see 
section 1019(a) of Pub. L. 100-647, set out as a note under section 1 of 
this title.
    Section 6027(c) of Pub. L. 100-647 provided that:
    ``(1) In general.--Except as provided in paragraph (2), the 
amendments made by this section [amending this section] shall apply to 
property placed in service after December 31, 1988.
    ``(2) Exception.--The amendments made by this section shall not 
apply to any property if such property is placed in service before 
January 1, 1990, and if such property--
        ``(A) is constructed, reconstructed, or acquired by the taxpayer 
    pursuant to a written contract which was binding on July 14, 1988, 
    or
        ``(B) is constructed or reconstructed by the taxpayer and such 
    construction or reconstruction began by July 14, 1988.''
    Section 6028(b) of Pub. L. 100-647 provided that:
    ``(1) In general.--Except as provided in paragraph (2), the 
amendments made by this section [amending this section] shall apply to 
property placed in service after December 31, 1988.
    ``(2) Exception.--The amendments made by this section shall not 
apply to any property if such property is placed in service before July 
1, 1989, and if such property--
        ``(A) is constructed, reconstructed, or acquired by the taxpayer 
    pursuant to a written contract which was binding on July 14, 1988, 
    or
        ``(B) is constructed or reconstructed by the taxpayer and such 
    construction or reconstruction began by July 14, 1988.''
    Section 6029(d) of Pub. L. 100-647 provided that: ``The amendments 
made by this section [amending this section] shall apply to property 
placed in service after December 31, 1988.''


          Effective Date of 1986 Amendment; Transitional Rules

    Sections 203 and 204 of Pub. L. 99-514, as amended by Pub. L. 99-
509, title VIII, Sec. 8071, Oct. 21, 1986, 100 Stat. 1964; Pub. L. 100-
647, title I, Sec. 1002(c)(1), (2), (4)-(8), (d)(1)-(7)(A), (8)-(35), 
Nov. 10, 1988, 102 Stat. 3358-3367, provided that:
``SEC. 203. EFFECTIVE DATES; GENERAL TRANSITIONAL RULES.
    ``(a) General Effective Dates.--
        ``(1) Section 201.--
            ``(A) In general.--Except as provided in this section, 
        section 204, and section 251(d) [set out as a note under section 
        46 of this title], the amendments made by section 201 [amending 
        sections 46, 167, 168, 178, 179, 280F, 291, 312, 465, 467, 514, 
        751, 1245, 4162, 6111, and 7701 of this title] shall apply to 
        property placed in service after December 31, 1986, in taxable 
        years ending after such date.
            ``(B) Election to have amendments made by section 201 
        apply.--A taxpayer may elect (at such time and in such manner as 
        the Secretary of the Treasury or his delegate may prescribe) to 
        have the amendments made by section 201 apply to any property 
        placed in service after July 31, 1986, and before January 1, 
        1987. No election may be made under this subparagraph with 
        respect to property to which section 168 of the Internal Revenue 
        Code of 1986 would not apply by reason of section 168(f)(5) of 
        such Code if such property were placed in service after December 
        31, 1986.
        ``(2) Section 202.--
            ``(A) In general.--The amendments made by section 202 
        [amending section 179 of this title] shall apply to property 
        placed in service after December 31, 1986, in taxable years 
        ending after such date.
            ``(B) Special rule for fiscal years including january 1, 
        1987.--In the case of any taxable year (other than a calendar 
        year) which includes January 1, 1987, for purposes of applying 
        the amendments made by section 202 to property placed in service 
        during such taxable year and after December 31, 1986--
                ``(i) the limitation of section 179(b)(1) of the 
            Internal Revenue Code of 1986 (as amended by section 202) 
            shall be reduced by the aggregate deduction under section 
            179 (as in effect on the day before the date of the 
            enactment of the Tax Reform Act of 1986 [Oct. 22, 1986]) for 
            section 179 property placed in service during such taxable 
            year and before January 1, 1987,
                ``(ii) the limitation of section 179(b)(2) of such Code 
            (as so amended) shall be applied by taking into account the 
            cost of all section 179 property placed in service during 
            such taxable year, and
                ``(iii) the limitation of section 179(b)(3) of such Code 
            shall be applied by taking into account the taxable income 
            for the entire taxable year reduced by the amount of any 
            deduction under section 179 of such Code for property placed 
            in service during such taxable year and before January 1, 
            1987.
    ``(b) General Transitional Rule.--
        ``(1) In general.--The amendments made by section 201 [amending 
    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, reconstructed, or 
        acquired by the taxpayer pursuant to a written contract which 
        was binding on March 1, 1986,
            ``(B) property which is constructed or reconstructed by the 
        taxpayer if--
                ``(i) the lesser of (I) $1,000,000, or (II) 5 percent of 
            the cost of such property has been incurred or committed by 
            March 1, 1986, and
                ``(ii) the construction or reconstruction of such 
            property began by such date, or
            ``(C) an equipped building or plant facility if construction 
        has commenced as of March 1, 1986, pursuant to a written 
        specific plan and more than one-half of the cost of such 
        equipped building or facility has been incurred or committed by 
        such date.
    For purposes of this paragraph, all members of the same affiliated 
    group of corporations (within the meaning of section 1504 of the 
    Internal Revenue Code of 1986) filing a consolidated return shall be 
    treated as one taxpayer.
        ``(2) Requirement that certain property be placed in service 
    before certain date.--
            ``(A) In general.--Paragraph (1) and section 204(a) (other 
        than paragraph (8) or (12) thereof) shall not apply to any 
        property unless such property has a class life of at least 7 
        years and is placed in service before the applicable date 
        determined under the following table:




  ``In the case of property                               The applicable
  with a class life of:                                         date is:
    At least 7 but less than 20 years..............    January 1, 1989
    20 years or more...............................     January 1, 1991.


            ``(B) Residential rental and nonresidential real property.--
        In the case of residential rental property and nonresidential 
        real property, the applicable date is January 1, 1991.
            ``(C) Class lives.--For purposes of subparagraph (A)--
                ``(i) the class life of property to which section 
            168(g)(3)(B) of the Internal Revenue Code of 1986 (as added 
            by section 201) applies shall be the class life in effect on 
            January 1, 1986, except that computer-based telephone 
            central office switching equipment described in section 
            168(e)(3)(B)(iii) of such Code shall be treated as having a 
            class life of 6 years,
                ``(ii) property described in section 204(a) shall be 
            treated as having a class life of 20 years, and
                ``(iii) property with no class life shall be treated as 
            having a class life of 12 years.
            ``(D) Substitution of applicable dates.--If any provision of 
        this Act [see Tables for classification] substitutes a date for 
        an applicable date, this paragraph shall be applied by using 
        such date.
        ``(3) Property qualifies if sold and leased back in 3 months.--
    Property shall be treated as meeting the requirements of paragraphs 
    (1) and (2) or section 204(a) with respect to any taxpayer if such 
    property is acquired by the taxpayer from a person--
            ``(A) in whose hands such property met the requirements of 
        paragraphs (1) and (2) or section 204(a) (or would have met such 
        requirements if placed in service by such person), or
            ``(B) who placed the property in service before January 1, 
        1987,
    and such property is leased back by the taxpayer to such person, or 
    is leased to such person, not later than the earlier of the 
    applicable date under paragraph (2) or the day which is 3 months 
    after such property was placed in service.
        ``(4) Plant facility.--For purposes of paragraph (1), the term 
    `plant facility' means a facility which does not include any 
    building (or with respect to which buildings constitute an 
    insignificant portion) and which is--
            ``(A) a self-contained single operating unit or processing 
        operation,
            ``(B) located on a single site, and
            ``(C) identified as a single unitary project as of March 1, 
        1986.
    ``(c) Property Financed With Tax-Exempt Bonds.--
        ``(1) In general.--Except as otherwise provided in this 
    subsection or section 204, subparagraph (C) of section 168(g)(1) of 
    the Internal Revenue Code of 1986 (as added by this Act) shall apply 
    to property placed in service after December 31, 1986, in taxable 
    years ending after such date, to the extent such property is 
    financed by the proceeds of an obligation (including a refunding 
    obligation) issued after March 1, 1986.
        ``(2) Exceptions.--
            ``(A) Construction or binding agreements.--Subparagraph (C) 
        of section 168(g)(1) of such Code (as so added) shall not apply 
        to obligations with respect to a facility--
                ``(i)(I) the original use of which commences with the 
            taxpayer, and the construction, reconstruction, or 
            rehabilitation of which began before March 2, 1986, and was 
            completed on or after such date,
                ``(II) with respect to which a binding contract to incur 
            significant expenditures for construction, reconstruction, 
            or rehabilitation was entered into before March 2, 1986, and 
            some of such expenditures are incurred on or after such 
            date, or
                ``(III) acquired on or after March 2, 1986, pursuant to 
            a binding contract entered into before such date, and
                ``(ii) described in an inducement resolution or other 
            comparable preliminary approval adopted by the issuing 
            authority (or by a voter referendum) before March 2, 1986.
            ``(B) Refunding.--
                ``(i) In general.--Except as provided in clause (ii), in 
            the case of property placed in service after December 31, 
            1986, which is financed by the proceeds of an obligation 
            which is issued solely to refund another obligation which 
            was issued before March 2, 1986, subparagraph (C) of section 
            168(g)(1) of such Code (as so added) shall apply only with 
            respect to an amount equal to the basis in such property 
            which has not been recovered before the date such refunded 
            obligation is issued.
                ``(ii) Significant expenditures.--In the case of 
            facilities the original use of which commences with the 
            taxpayer and with respect to which significant expenditures 
            are made before January 1, 1987, subparagraph (C) of section 
            168(g)(1) of such Code (as so added) shall not apply with 
            respect to such facilities to the extent such facilities are 
            financed by the proceeds of an obligation issued solely to 
            refund another obligation which was issued before March 2, 
            1986.
            ``(C) Facilities.--In the case of an inducement resolution 
        or other comparable preliminary approval adopted by an issuing 
        authority before March 2, 1986, for purposes of subparagraphs 
        (A) and (B)(ii) with respect to obligations described in such 
        resolution, the term `facilities' means the facilities described 
        in such resolution.
            ``(D) Significant expenditures.--For purposes of this 
        paragraph, the term `significant expenditures' means 
        expenditures greater than 10 percent of the reasonably 
        anticipated cost of the construction, reconstruction, or 
        rehabilitation of the facility involved.
    ``(d) Mid-Quarter Convention.--In the case of any taxable year 
beginning before October 1, 1987 in which property to which the 
amendments made by section 201 [amending 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.
    ``(e) Normalization Requirements.--
        ``(1) In general.--A normalization method of accounting shall 
    not be treated as being used with respect to any public utility 
    property for purposes of section 167 or 168 of the Internal Revenue 
    Code of 1986 if the taxpayer, in computing its cost of service for 
    ratemaking purposes and reflecting operating results in its 
    regulated books of account, reduces the excess tax reserve more 
    rapidly or to a greater extent than such reserve would be reduced 
    under the average rate assumption method.
        ``(2) Definitions.--For purposes of this subsection--
            ``(A) Excess tax reserve.--The term `excess tax reserve' 
        means the excess of--
                ``(i) the reserve for deferred taxes (as described in 
            section 167(l)(3)(G)(ii) or 168(e)(3)(B)(ii) of the Internal 
            Revenue Code of 1954 as in effect on the day before the date 
            of the enactment of this Act [Oct. 22, 1986]), over
                ``(ii) the amount which would be the balance in such 
            reserve if the amount of such reserve were determined by 
            assuming that the corporate rate reductions provided in this 
            Act [see Tables for classification] were in effect for all 
            prior periods.
            ``(B) Average rate assumption method.--The average rate 
        assumption method is the method under which the excess in the 
        reserve for deferred taxes is reduced over the remaining lives 
        of the property as used in its regulated books of account which 
        gave rise to the reserve for deferred taxes. Under such method, 
        if timing differences for the property reverse, the amount of 
        the adjustment to the reserve for the deferred taxes is 
        calculated by multiplying--
                ``(i) the ratio of the aggregate deferred taxes for the 
            property to the aggregate timing differences for the 
            property as of the beginning of the period in question, by
                ``(ii) the amount of the timing differences which 
            reverse during such period.
``SEC. 204. ADDITIONAL TRANSITIONAL RULES.
    ``(a) Other Transitional Rules.--
        ``(1) Urban renovation projects.--
            ``(A) In general.--The amendments made by section 201 
        [amending 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 announced by a 
            political subdivision of a State for a renovation of an 
            urban area within its jurisdiction,
                ``(ii) described in subparagraph (C), (D) or (G) which 
            before March 1, 1986, was identified as a single unitary 
            project in the internal financing plans of the primary 
            developer of the project,
                ``(iii) described in subparagraph (C) or (D), which is 
            not substantially modified on or after March 1, 1986, and
                ``(iv) described in subparagraph (F) or (H).
            ``(C) Project where agreement on december 19, 1984.--A 
        project is described in this subparagraph if--
                ``(i) a political subdivision granted on July 11, 1985, 
            development rights to the primary developer-purchaser of 
            such project, and
                ``(ii) such project was the subject of a development 
            agreement between a political subdivision and a bridge 
            authority on December 19, 1984.
    For purposes of this subparagraph, section 203(b)(2) shall be 
        applied by substituting `January 1, 1994' for `January 1, 1991' 
        each place it appears.
            ``(D) Certain additional projects.--A project is described 
        in this subparagraph if it is described in any of the following 
        clauses of this subparagraph and the primary developer of all 
        such projects is the same person:
                ``(i) A project is described in this clause if the 
            development agreement with respect thereto was entered into 
            during April 1984 and the estimated cost of the project is 
            approximately $194,000,000.
                ``(ii) A project is described in this clause if the 
            development agreement with respect thereto was entered into 
            during May 1984 and the estimated cost of the project is 
            approximately $190,000,000.
                ``(iii) A project is described in this clause if the 
            project has an estimated cost of approximately $92,000,000 
            and at least $7,000,000 was spent before September 26, 1985, 
            with respect to such project.
                ``(iv) A project is described in this clause if the 
            estimated project cost is approximately $39,000,000 and at 
            least $2,000,000 of construction cost for such project were 
            incurred before September 26, 1985.
                ``(v) A project is described in this clause if the 
            development agreement with respect thereto was entered into 
            before September 26, 1985, and the estimated cost of the 
            project is approximately $150,000,000.
                ``(vi) A project is described in this clause if the 
            board of directors of the primary developer approved such 
            project in December 1982, and the estimated cost of such 
            project is approximately $107,000,000.
                ``(vii) A project is described in this clause if the 
            board of directors of the primary developer approved such 
            project in December 1982, and the estimated cost of such 
            project is approximately $59,000,000.
                ``(viii) A project is described in this clause if the 
            Board of Directors of the primary developer approved such 
            project in December 1983, following selection of the 
            developer by a city council on September 26, 1983, and the 
            estimated cost of such project is approximately 
            $107,000,000.
            ``(E) Project where plan confirmed on october 4, 1984.--A 
        project is described in this subparagraph if--
                ``(i) a State or an agency, instrumentality, or 
            political subdivision thereof approved the filing of a 
            general project plan on June 18, 1981, and on October 4, 
            1984, a State or an agency, instrumentality, or political 
            subdivision thereof confirmed such plan,
                ``(ii) the project plan as confirmed on October 4, 1984, 
            included construction or renovation of office buildings, a 
            hotel, a trade mart, theaters, and a subway complex, and
                ``(iii) significant segments of such project were the 
            subject of one or more conditional designations granted by a 
            State or an agency, instrumentality, or political 
            subdivision thereof to one or more developers before January 
            1, 1985.
    The preceding sentence shall apply with respect to a property only 
        to the extent that a building on such property site was 
        identified as part of the project plan before September 26, 
        1985, and only to the extent that the size of the building on 
        such property site was not substantially increased by reason of 
        a modification to the project plan with respect to such property 
        on or after such date. For purposes of this subparagraph, 
        section 203(b)(2) shall be applied by substituting `January 1, 
        1998' for `January 1, 1991' each place it appears.
            ``(F) A project is described in this subparagraph if it is a 
        sports and entertainment facility which--
                ``(i) is to be used by both a National Hockey League 
            team and a National Basketball Association team;
                ``(ii) is to be constructed on a platform utilizing air 
            rights over land acquired by a State authority and 
            identified as site B in a report dated May 30, 1984, 
            prepared for a State urban development corporation; and
                ``(iii) is eligible for real property tax, and power and 
            energy benefits pursuant to the provisions of State 
            legislation approved and effective July 7, 1982.
    A project is also described in this subparagraph if it is a mixed-
        use development which is--
          ``(I) to be constructed above a public railroad station 
                utilized by the national railroad passenger corporation 
                and commuter railroads serving two States; and
          ``(II) will include the reconstruction of such station so as 
                to make it a more efficient transportation center and to 
                better integrate the station with the development above, 
                such reconstruction plans to be prepared in cooperation 
                with a State transportation authority.
    For purposes of this subparagraph, section 203(b)(2) shall be 
        applied by substituting `January 1, 1998' for the applicable 
        date that would otherwise apply.
            ``(G) A project is described in this subparagraph if--
                ``(i) an inducement resolution was passed on March 9, 
            1984, for the issuance of obligations with respect to such 
            project,
                ``(ii) such resolution was extended by resolutions 
            passed on August 14, 1984, April 2, 1985, August 13, 1985, 
            and July 8, 1986,
                ``(iii) an application was submitted on January 31, 
            1984, for an Urban Development Action Grant with respect to 
            such project, and
                ``(iv) an Urban Development Action Grant was 
            preliminarily approved for all or part of such project on 
            July 3, 1986.
            ``(H) A project is described in this subparagraph if it is a 
        redevelopment project, with respect to which $10,000,000 in 
        industrial revenue bonds were approved by a State Development 
        Finance Authority on January 15, 1986, a village transferred 
        approximately $4,000,000 of bond volume authority to the State 
        in June 1986, and a binding Redevelopment Agreement was executed 
        between a city and the development team on June 30, 1986.
        ``(2) Certain projects granted ferc licenses, etc.--The 
    amendments made by section 201 [amending 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 Utility Regulatory Policies Act of 1978 
        [see Short Title note set out under 16 U.S.C. 2601],
            ``(B) which was granted before March 2, 1986, a 
        hydroelectric license for such project by the Federal Energy 
        Regulatory Commission, or
            ``(C) which is a hydroelectric project of less than 80 
        megawatts that filed an application for a permit, exemption, or 
        license with the Federal Energy Regulatory Commission before 
        March 2, 1986.
        ``(3) Supply or service contracts.--The amendments made by 
    section 201 shall not apply to any property which is readily 
    identifiable with and necessary to carry out a written supply or 
    service contract, or agreement to lease, which was binding on March 
    1, 1986.
        ``(4) Property treated under prior tax acts.--The amendments 
    made by section 201 shall not apply--
            ``(A) to property described in section 12(c)(2) (as amended 
        by the Technical and Miscellaneous Revenue Act of 1988), 
        31(g)(5), or 31(g)(17)(J) of the Tax Reform Act of 1984 
        [sections 12(c)(2) and 31(g)(5), (17)(J) of Pub. L. 98-369, set 
        out 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 master plans of 
    integrated projects.--The amendments made by section 201 shall not 
    apply to any property placed in service pursuant to a master plan 
    which is clearly identifiable as of March 1, 1986, for any project 
    described in any of the following subparagraphs of this paragraph:
            ``(A) A project is described in this subparagraph if--
                ``(i) the project involves production platforms for 
            offshore drilling, oil and gas pipeline to shore, process 
            and storage facilities, and a marine terminal, and
                ``(ii) at least $900,000,000 of the costs of such 
            project were incurred before September 26, 1985.
            ``(B) A project is described in this subparagraph if--
                ``(i) such project involves a fiber optic network of at 
            least 20,000 miles, and
                ``(ii) before September 26, 1985, construction commenced 
            pursuant to the master plan and at least $85,000,000 was 
            spent on construction.
            ``(C) A project is described in this subparagraph if--
                ``(i) such project passes through at least 10 States and 
            involves intercity communication links (including one or 
            more repeater sites, terminals and junction stations for 
            microwave transmissions, regenerators or fiber optics and 
            other related equipment),
                ``(ii) the lesser of $150,000,000 or 5 percent of the 
            total project cost has been expended, incurred, or committed 
            before March 2, 1986, by one or more taxpayers each of which 
            is a member of the same affiliated group (as defined in 
            section 1504(a) [of the Internal Revenue Code of 1986]), and
                ``(iii) such project consists of a comprehensive plan 
            for meeting network capacity requirements as encompassed 
            within either:
          ``(I) a November 5, 1985, presentation made to and accepted by 
                the Chairman of the Board and the president of the 
                taxpayer, or
          ``(II) the approvals by the Board of Directors of the parent 
                company of the taxpayer on May 3, 1985, and September 
                22, 1985, and of the executive committee of said board 
                on December 23, 1985.
            ``(D) A project is described in this subparagraph if--
                ``(i) such project is part of a flat rolled product 
            modernization plan which was initially presented to the 
            Board of Directors of the taxpayer on July 8, 1983,
                ``(ii) such program will be carried out at 3 locations, 
            and
                ``(iii) such project will involve a total estimated 
            minimum capital cost of at least $250,000,000.
            ``(E) A project is described in this subparagraph if the 
        project is being carried out by a corporation engaged in the 
        production of paint, chemicals, fiberglass, and glass, and if--
                ``(i) the project includes a production line which 
            applies a thin coating to glass in the manufacture of energy 
            efficient residential products, if approved by the 
            management committee of the corporation on January 29, 1986,
                ``(ii) the project is a turbogenerator which was 
            approved by the president of such corporation and at least 
            $1,000,000 of the cost of which was incurred or committed 
            before such date,
                ``(iii) the project is a waste-to-energy disposal system 
            which was initially approved by the management committee of 
            the corporation on March 29, 1982, and at least $5,000,000 
            of the cost of which was incurred before September 26, 1985,
                ``(iv) the project, which involves the expansion of an 
            existing service facility and the addition of new lab 
            facilities needed to accommodate topcoat and undercoat 
            production needs of a nearby automotive assembly plant, was 
            approved by the corporation's management committee on March 
            5, 1986, or
                ``(v) the project is part of a facility to consolidate 
            and modernize the silica production of such corporation and 
            the project was approved by the president of such 
            corporation on August 19, 1985.
            ``(F) A project is described in this subparagraph if--
                ``(i) such project involves a port terminal and oil 
            pipeline extending generally from the area of Los Angeles, 
            California, to the area of Midland, Texas, and
                ``(ii) before September 26, 1985, there is a binding 
            contract for dredging and channeling with respect thereto 
            and a management contract with a construction manager for 
            such project.
            ``(G) A project is described in this subparagraph if--
                ``(i) the project is a newspaper printing and 
            distribution plant project with respect to which a contract 
            for the purchase of 8 printing press units and related 
            equipment to be installed in a single press line was entered 
            into on January 8, 1985, and
                ``(ii) the contract price for such units and equipment 
            represents at least 50 percent of the total cost of such 
            project.
            ``(H) A project is described in this subparagraph if it is 
        the second phase of a project involving direct current 
        transmission lines spanning approximately 190 miles from the 
        United States-Canadian border to Ayer, Massachusetts, 
        alternating current transmission lines in Massachusetts from 
        Ayers to Millbury to West Medway, DC-AC converted terminals to 
        Monroe, New Hampshire, and Ayer, Massachusetts, and other 
        related equipment and facilities.
            ``(I) A project is described in this subparagraph if it 
        involves not more than two natural gas-fired combined cycle 
        electric generating units each having a net electrical 
        capability of approximately 233 megawatts, and a sales contract 
        for approximately one-half of the output of the 1st unit was 
        entered into in December 1985.
            ``(J) A project is described in this subparagraph if--
                ``(i) the project involves an automobile manufacturing 
            facility (including equipment and incidental appurtenances) 
            to be located in the United States, and
                ``(ii) either--
          ``(I) the project was the subject of a memorandum of 
                understanding between 2 automobile manufacturers that 
                was signed before September 25, 1985, the automobile 
                manufacturing facility (including equipment and 
                incidental appurtenances) will involve a total estimated 
                cost of approximately $750,000,000, and will have an 
                annual production capacity of approximately 240,000 
                vehicles or
          ``(II) the Board of Directors of an automobile manufacturer 
                approved a written plan for the conversion of existing 
                facilities to produce new models of a vehicle not 
                currently produced in the United States, such facilities 
                will be placed in service by July 1, 1987, and such 
                Board action occurred in July 1985 with respect to a 
                $602,000,000 expenditure, a $438,000,000 expenditure, 
                and a $321,000,000 expenditure.
            ``(K) A project is described in this subparagraph if--
                ``(i) the project involves a joint venture between a 
            utility company and a paper company for a supercalendered 
            paper mill, and at least $50,000,000 was incurred or 
            committed with respect to such project before March 1, 1986, 
            or
                ``(ii) the project involves a paper mill for the 
            manufacture of newsprint (including a cogeneration facility) 
            is generally based on a written design and feasibility study 
            that was completed on December 15, 1981, and will be placed 
            in service before January 1, 1991, or
                ``(iii) the project is undertaken by a Maine corporation 
            and involves the modernization of pulp and paper mills in 
            Millinocket and/or East Millinocket, Maine, or
                ``(iv) the project involves the installation of a paper 
            machine for production of coated publication papers, the 
            modernization of a pulp mill, and the installation of 
            machinery and equipment with respect to related processes, 
            as of December 31, 1985, in excess of $50,000,000 was 
            incurred for the project, as of July 1986, in excess of 
            $150,000,000 was incurred for the project, and the project 
            is located in Pine Bluff, Arkansas, or
                ``(v) the project involves property of a type described 
            in ADR classes 26.1, 26.2, 25, 00.3 and 00.4 included in a 
            paper plant which will manufacture and distribute tissue, 
            towel or napkin products; is located in Effingham County, 
            Georgia; and is generally based upon a written General 
            Description which was submitted to the Georgia Department of 
            Revenue on or about June 13, 1985.
            ``(L) A project is described in this subparagraph if--
                ``(i) a letter of intent with respect to such project 
            was executed on June 4, 1985, and
                ``(ii) a 5-percent downpayment was made in connection 
            with such project for 2 10-unit press lines and related 
            equipment.
            ``(M) A project is described in this subparagraph if--
                ``(i) the project involves the retrofit of ammonia 
            plants,
                ``(ii) as of March 1, 1986, more than $390,000 had been 
            expended for engineering and equipment, and
                ``(iii) more than $170,000 was expensed in 1985 as a 
            portion of preliminary engineering expense.
            ``(N) A project is described in this subparagraph if the 
        project involves bulkhead intermodal flat cars which are placed 
        in service before January 1, 1987, and either--
                ``(i) more than $2,290,000 of expenditures were made 
            before March 1, 1986, with respect to a project involving up 
            to 300 platforms, or
                ``(ii) more than $95,000 of expenditures were made 
            before March 1, 1986, with respect to a project involving up 
            to 850 platforms.
            ``(O) A project is described in this subparagraph if--
                ``(i) the project involves the production and 
            transportation of oil and gas from a well located north of 
            the Arctic Circle, and
                ``(ii) more than $200,000,000 of cost had been incurred 
            or committed before September 26, 1985.
            ``(P) A project is described in this subparagraph if--
                ``(i) a commitment letter was entered into with a 
            financial institution on January 23, 1986, for the financing 
            of the project,
                ``(ii) the project involves intercity communication 
            links (including microwave and fiber optics communications 
            systems and related property),
                ``(iii) the project consists of communications links 
            between--
          ``(I) Omaha, Nebraska, and Council Bluffs, Iowa,
          ``(II) Waterloo, Iowa and Sioux City, Iowa,
          ``(III) Davenport, Iowa and Springfield, Illinois, and
                ``(iv) the estimated cost of such project is 
            approximately $13,000,000.
            ``(Q) A project is described in this subparagraph if--
                ``(i) such project is a mining modernization project 
            involving mining, transport, and milling operations,
                ``(ii) before September 26, 1985, at least $20,000,000 
            was expended for engineering studies which were approved by 
            the Board of Directors of the taxpayer on January 27, 1983, 
            and
                ``(iii) such project will involve a total estimated 
            minimum cost of $350,000,000.
            ``(R) A project is described in this subparagraph if--
                ``(i) such project is a dragline acquired in connection 
            with a 3-stage program which began in 1980 to increase 
            production from a coal mine,
                ``(ii) at least $35,000,000 was spent before September 
            26, 1985, on the 1st 2 stages of the program, and
                ``(iii) at least $4,000,000 was spent to prepare the 
            mine site for the dragline.
            ``(S) A project is described in this subparagraph if--it is 
        a project consisting of a mineral processing facility using a 
        heap leaching system (including waste dumps, low-grade dumps, a 
        leaching area, and mine roads) and if--
                ``(i) convertible subordinated debentures were issued in 
            August 1985, to finance the project,
                ``(ii) construction of the project was authorized by the 
            Board of Directors of the taxpayer on or before December 31, 
            1985,
                ``(iii) at least $750,000 was paid or incurred with 
            respect to the project on or before December 31, 1985, and
                ``(iv) the project is placed in service on or before 
            December 31, 1986.
            ``(T) A project is described in this subparagraph if it is a 
        plant facility on Alaska's North Slope which is placed in 
        service before January 1, 1988, and--
                ``(i) the approximate cost of which is $675,000,000, of 
            which approximately $400,000,000 was spent on off-site 
            construction,
                ``(ii) the approximate cost of which is $445,000,000, of 
            which approximately $400,000,000 was spent on off-site 
            construction and more than 50 percent of the project cost 
            was spent prior to December 31, 1985, or
                ``(iii) the approximate cost of which is $375,000,000, 
            of which approximately $260,000,000 was spent on off-site 
            construction.
            ``(U) A project is described in this subparagraph if it 
        involves the connecting of existing retail stores in the 
        downtown area of a city to a new covered area, the total project 
        will be 250,000 square feet, a formal Memorandum of 
        Understanding relating to development of the project was 
        executed with the city on July 2, 1986, and the estimated cost 
        of the project is $18,186,424.
            ``(V) A project is described in this subparagraph if it 
        includes a 200,000 square foot office tower, a 200-room hotel, a 
        300,000 square foot retail center, an 800-space parking 
        facility, the total cost is projected to be $60,000,000, and 
        $1,250,000 was expended with respect to the site before August 
        25, 1986.
            ``(W) A project is described in this subparagraph if it is a 
        joint use and development project including an integrated hotel, 
        convention center, office, related retail facilities and public 
        mass transportation terminal, and vehicle parking facilities 
        which satisfies the following conditions:
                ``(i) is developed within certain air space rights and 
            upon real property exchanged for such joint use and 
            development project which is owned or acquired by a state 
            department of transportation, a regional mass transit 
            district in a county with a population of at least 5,000,000 
            and a community redevelopment agency;
                ``(ii) such project affects an existing, approximately 
            40 acre public mass transportation bus-way terminal facility 
            located adjacent to an interstate highway;
                ``(iii) a memorandum of understanding with respect to 
            such joint use and development project is executed by a 
            state department of transportation, such a county regional 
            mass transit district and a community redevelopment agency 
            on or before December 31, 1986, and
                ``(iv) a major portion of such joint use and development 
            project is placed in service by December 31, 1990.
            ``(X) A project is described in this subparagraph if--
                ``(i) it is an $8,000,000 project to provide advanced 
            control technology for adipic acid at a plant, which was 
            authorized by the company's Board of Directors in October 
            1985, at December 31, 1985, $1,400,000 was committed and 
            $400,000 expended with respect to such project, or
                ``(ii) it is an $8,300,000 project to achieve compliance 
            with State and Federal regulations for particulates 
            emissions, which was authorized by the company's Board of 
            Directors in December 1985, by March 31, 1986, $250,000 was 
            committed and $250,000 was expended with respect to such 
            project, or
                ``(iii) it is a $22,000,000 project for the retrofit of 
            a plant that makes a raw material for aspartame, which was 
            approved in the company's December 1985 capital budget, if 
            approximately $3,000,000 of the $22,000,000 was spent before 
            August 1, 1986.
            ``(Y) A project is described in this subparagraph if such 
        project passes through at least 9 States and involves an 
        intercity communication link (including multiple repeater sites 
        and junction stations for microwave transmissions and amplifiers 
        for fiber optics); the link from Buffalo to New York/Elizabeth 
        was completed in 1984; the link from Buffalo to Chicago was 
        completed in 1985; and the link from New York to Washington is 
        completed in 1986.
            ``(Z) A project is described in this subparagraph if--
                ``(i) such project involves a fiber optic network of at 
            least 475 miles, passing through Minnesota and Wisconsin; 
            and
                ``(ii) before January 1, 1986, at least $15,000,000 was 
            expended or committed for electronic equipment or fiber 
            optic cable to be used in constructing the network.
        ``(6) Natural gas pipeline.--The amendments made by section 201 
    [amending sections 46, 167, 168, 178, 179, 280F, 291, 312, 465, 467, 
    514, 751, 1245, 4162, 6111, and 7701 of this title] shall not apply 
    to any interstate natural gas pipeline (and related equipment) if--
            ``(A) 3 applications for the construction of such pipeline 
        were filed with the Federal Energy Regulatory Commission before 
        November 22, 1985 (and 2 of which were filed before September 
        26, 1985), and
            ``(B) such pipeline has 1 of its terminal points near 
        Bakersfield, California.
        ``(7) Certain leasehold improvements.--The amendments made by 
    section 201 shall not apply to any reasonable leasehold 
    improvements, equipment and furnishings placed in service by a 
    lessee or its affiliates if--
            ``(A) the lessee or an affiliate is the original lessee of 
        each building in which such property is to be used,
            ``(B) such lessee is obligated to lease the building under 
        an agreement to lease entered into before September 26, 1985, 
        and such property is provided for such building, and
            ``(C) such buildings are to serve as world headquarters of 
        the lessee and its affiliates.
    For purposes of this paragraph, a corporation is an affiliate of 
    another corporation if both corporations are members of a controlled 
    group of corporations within the meaning of section 1563(a) of the 
    Internal Revenue Code of 1954 without regard to section 1563(b)(2) 
    of such Code. Such lessee shall include a securities firm that meets 
    the requirements of subparagraph (A), except the lessee is obligated 
    to lease the building under a lease entered into on June 18, 1986.
        ``(8) Solid waste disposal facilities.--The amendments made by 
    section 201 [amending sections 46, 167, 168, 178, 179, 280F, 291, 
    312, 465, 467, 514, 751, 1245, 4162, 6111, and 7701 of this title] 
    shall not apply to the taxpayer who originally places in service any 
    qualified solid waste disposal facility (as defined in section 
    7701(e)(3)(B) of the Internal Revenue Code of 1986) if before March 
    2, 1986--
            ``(A) there is a binding written contract between a service 
        recipient and a service provider with respect to the operation 
        of such facility to pay for the services to be provided by such 
        facility,
            ``(B) a service recipient or governmental unit (or any 
        entity related to such recipient or unit) made a financial 
        commitment of at least $200,000 for the financing or 
        construction of such facility,
            ``(C) such facility is the Tri-Cities Solid Waste Recovery 
        Project involving Fremont, Newark, and Union City, California, 
        and has received an authority to construct from the 
        Environmental Protection Agency or from a State or local agency 
        authorized by the Environmental Protection Agency to issue air 
        quality permits under the Clean Air Act [42 U.S.C. 7401 et 
        seq.],
            ``(D) a bond volume carryforward election was made for the 
        facility and the facility is for Chattanooga, Knoxville, or 
        Kingsport, Tennessee, or
            ``(E) such facility is to serve Haverhill, Massachusetts.
        ``(9) Certain submersible drilling units.--In the case of a 
    binding contract entered into on October 30, 1984, for the purchase 
    of 6 semi-submersible drilling units at a cost of $425,000,000, such 
    units shall be treated as having an applicable date under subsection 
    [section] 203(b)(2) of January 1, 1991.
        ``(10) Wastewater or sewage treatment facility.--The amendments 
    made by section 201 [amending 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 approved a service 
        agreement with respect to such facility on December 4, 1985;
            ``(B) a city-parish advertised in September 1985, for bids 
        for construction of secondary treatment improvements for such 
        facility, in May 1985, the city-parish received statements from 
        16 firms interested in privatizing the wastewater treatment 
        facilities, and the metropolitan council selected a privatizer 
        at its meeting on November 20, 1985, and adopted a resolution 
        authorizing the Mayor to enter into contractual negotiation with 
        the selected privatizer;
            ``(C) the property is part of a wastewater treatment 
        facility serving Greenville, South Carolina with respect to 
        which a binding service agreement between a privatizer and the 
        Western Carolina Regional Sewer Authority with respect to such 
        facility was signed before January 1, 1986; or
            ``(D) such property is part of a wastewater treatment 
        facility (located in Cameron County, Texas, within one mile of 
        the City of Harlingen), an application for a wastewater 
        discharge permit was filed with respect to such facility on 
        December 4, 1985, and a City Commission approved a letter of 
        intent relating to a service agreement with respect to such 
        facility on August 7, 1986; or a wastewater facility (located in 
        Harlingen, Texas) which is a subject of such letter of intent 
        and service agreement and the design of which was contracted for 
        in a letter of intent dated January 23, 1986.
        ``(11) Certain aircraft.--The amendments made by section 201 
    [amending 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 aircraft is `manufactured' at 
        the point of its final assembly,
            ``(B) the aircraft was in inventory or in the planned 
        production schedule of the final assembly manufacturer, with 
        orders placed for the engine(s) on or before August 16, 1986, 
        and
            ``(C) the aircraft is purchased or subject to a binding 
        contract on or before December 31, 1986, and is delivered and 
        placed in service by the purchaser, before July 1, 1987.
        ``(12) Certain satellites.--The amendments made by section 201 
    shall not apply to any satellite with respect to which--
            ``(A) on or before January 28, 1986, there was a binding 
        contract to construct or acquire a satellite, and
                ``(i) an agreement to launch was in existence on that 
            date, or
                ``(ii) on or before August 5, 1983, the Federal 
            Communications Commission had authorized the construction 
            and for which the authorized party has a specific although 
            undesignated agreement to launch in existence on January 28, 
            1986;
            ``(B) by order adopted on July 25, 1985, the Federal 
        Communications Commission granted the taxpayer an orbital slot 
        and authorized the taxpayer to launch and operate 2 satellites 
        with a cost of approximately $300,000,000; or
            ``(C) the International Telecommunications Satellite 
        Organization or the International Maritime Satellite 
        Organization entered into written binding contracts before May 
        1, 1985.
        ``(13) Certain nonwire line cellular telephone systems.--The 
    amendments made by section 201 shall not apply to property that is 
    part of a nonwire line system in the Domestic Public Cellular Radio 
    Telecommunications Service for which the Federal Communications 
    Commission has issued a construction permit before September 26, 
    1985, but only if such property is placed in service before January 
    1, 1987.
        ``(14) Certain cogeneration facilities.--The amendments made by 
    section 201 shall not apply to projects consisting of 1 or more 
    facilities for the cogeneration and distribution of electricity and 
    steam or other forms of thermal energy if--
            ``(A) at least $100,000 was paid or incurred with respect to 
        the project before March 1, 1986, a memorandum of understanding 
        was executed on September 13, 1985, and the project is placed in 
        service before January 1, 1989,
            ``(B) at least $500,000 was paid or incurred with respect to 
        the projects before May 6, 1986, the projects involve a 22-
        megawatt combined cycle gas turbine plant and a 45-megawatt coal 
        waste plant, and applications for qualifying facility status 
        were filed with the Federal Energy Regulatory Commission on 
        March 5, 1986,
            ``(C) the project cost approximates $125,000,000 to 
        $140,000,000 and an application was made to the Federal Energy 
        Regulatory Commission in July 1985,
            ``(D) an inducement resolution for such facility was adopted 
        on September 10, 1985, a development authority was given an 
        inducement date of September 10, 1985, for a loan not to exceed 
        $80,000,000 with respect to such facility, and such facility is 
        expected to have a capacity of approximately 30 megawatts of 
        electric power and 70,000 pounds of steam per hour,
            ``(E) at least $1,000,000 was incurred with respect to the 
        project before May 6, 1986, the project involves a 52-megawatt 
        combined cycle gas turbine plant and a petition was filed with 
        the Connecticut Department of Public Utility Control to approve 
        a power sales agreement with respect to the project on March 27, 
        1986,
            ``(F) the project has a planned scheduled capacity of 
        approximately 38,000 kilowatts, the project property is placed 
        in service before January 1, 1991, and the project is operated, 
        established, or constructed pursuant to certain agreements, the 
        negotiation of which began before 1986, with public or municipal 
        utilities conducting business in Massachusetts, or
            ``(G) the Board of Regents of Oklahoma State University took 
        official action on July 25, 1986, with respect to the project.
    In the case of the project described in subparagraph (F), section 
    203(b)(2)(A) shall be applied by substituting `January 1, 1991' for 
    `January 1, 1989'.
        ``(15) Certain electric generating stations.--The amendments 
    made by section 201 shall not apply to a project located in New 
    Mexico consisting of a coal-fired electric generating station 
    (including multiple generating units, coal mine equipment, and 
    transmission facilities) if--
            ``(A) a tax-exempt entity will own an equity interest in all 
        property included in the project (except the coal mine 
        equipment), and
            ``(B) at least $72,000,000 was expended in the acquisition 
        of coal leases, land and water rights, engineering studies, and 
        other development costs before May 6, 1986.
    For purposes of this paragraph, section 203(b)(2) shall be applied 
    by substituting `January 1, 1996' for `January 1, 1991' each place 
    it appears.
        ``(16) Sports arenas.--
            ``(A) Indoor sports facility.--The amendments made by 
        section 201 shall not apply to up to $20,000,000 of improvements 
        made by a lessee of any indoor sports facility pursuant to a 
        lease from a State commission granting the right to make limited 
        and specified improvements (including planned seat 
        explanations), if architectural renderings of the project were 
        commissioned and received before December 22, 1985.
            ``(B) Metropolitan sports arena.--The amendments made by 
        section 201 shall not apply to any property which is part of an 
        arena constructed for professional sports activities in a 
        metropolitan area, provided that such arena is capable of 
        seating no less than 18,000 spectators and a binding contract to 
        incur significant expenditures for its construction was entered 
        into before June 1, 1986.
        ``(17) Certain waste-to-energy facilities.--The amendments made 
    by section 201 shall not apply to 2 agricultural waste-to-energy 
    powerplants (and required transmission facilities), in connection 
    with which a contract to sell 100 megawatts of electricity to a city 
    was executed in October 1984.
        ``(18) Certain coal-fired plants.--The amendments made by 
    section 201 shall not apply to one of three 540 megawatt coal-fired 
    plants that are placed in service after a sale leaseback occurring 
    after January 1, 1986, if--
            ``(A) the Board of Directors of an electric power 
        cooperation authorized the investigation of a sale leaseback of 
        a nuclear generation facility by resolution dated January 22, 
        1985, and
            ``(B) a loan was extended by the Rural Electrification 
        Administration on February 20, 1986, which contained a covenant 
        with respect to used property leasing from unit II.
        ``(19) Certain rail systems.--
            ``(A) The amendments made by section 201 shall not apply to 
        a light rail transit system, the approximate cost of which is 
        $235,000,000, if, with respect to which, the board of directors 
        of a corporation (formed in September 1984 for the purpose of 
        developing, financing, and operating the system) authorized a 
        $300,000 expenditure for a feasibility study in April 1985.
            ``(B) The amendments made by section 201 shall not apply to 
        any project for rehabilitation of regional railroad rights of 
        way and properties including grade crossings which was 
        authorized by the Board of Directors of such company prior to 
        October 1985; and/or was modified, altered or enlarged as a 
        result of termination of company contracts, but approved by said 
        Board of Directors no later than January 30, 1986, and which is 
        in the public interest, and which is subject to binding 
        contracts or substantive commitments by December 31, 1987.
        ``(20) Certain detergent manufacturing facility.--The amendments 
    made by section 201 shall not apply to a laundry detergent 
    manufacturing facility, the approximate cost of which is 
    $13,200,000, with respect to which a project agreement was fully 
    executed on March 17, 1986.
        ``(21) Certain resource recovery facility.--The amendments made 
    by section 201 shall not apply to any of 3 resource recovery plants, 
    the aggregate cost of which approximates $300,000,000, if an 
    industrial development authority adopted a bond resolution with 
    respect to such facilities on December 17, 1984, and the projects 
    were approved by the department of commerce of a Commonwealth on 
    December 27, 1984.
        ``(22) The amendments made by section 201 shall not apply to a 
    computer and office support center building in Minneapolis, with 
    respect to which the first contract, with an architecture firm, was 
    signed on April 30, 1985, and a construction contract was signed on 
    March 12, 1986.
        ``(23) Certain district heating and cooling facilities.--The 
    amendments made by section 201 shall not apply to pipes, mains, and 
    related equipment included in district heating and cooling 
    facilities, with respect to which the development authority of a 
    State approved the project through an inducement resolution adopted 
    on October 8, 1985, and in connection with which approximately 
    $11,000,000 of tax-exempt bonds are to be issued.
        ``(24) Certain vessels.--
            ``(A) Certain offshore vessels.--The amendments made by 
        section 201 shall not apply to any offshore vessel the 
        construction contract for which was signed on February 28, 1986, 
        and the approximate cost of which is $9,000,000.
            ``(B) Certain inland river vessel.--The amendments made by 
        section 201 shall not apply to a project involving the 
        reconstruction of an inland river vessel docked on the 
        Mississippi River at St. Louis, Missouri, on July 14, 1986, and 
        with respect to which:
                ``(i) the estimated cost of reconstruction is 
            approximately $39,000,000;
                ``(ii) reconstruction was commenced prior to December 1, 
            1985;
                ``(iii) at least $17,000,000 was expended before 
            December 31, 1985; and
            ``(C) Special automobile carrier vessels.--The amendments 
        made by section 201 shall not apply to two new automobile 
        carrier vessels which will cost approximately $47,000,000 and 
        will be constructed by a United States-flag carrier to operate, 
        under the United States-flag and with an American crew, to 
        transport foreign automobiles to the United States, in a case 
        where negotiations for such transportation arrangements 
        commenced in April 1985, formal contract bids were submitted 
        prior to the end of 1985, and definitive transportation 
        contracts were awarded in May 1986.
            ``(D) The amendments made by section 201 shall not apply to 
        a 562-foot passenger cruise ship, which was purchased in 1980 
        for the purpose of returning the vessel to United States 
        service, the approximate cost of refurbishment of which is 
        approximately $47,000,000.
            ``(E) The amendments made by section 201 shall not apply to 
        the Muskegon, Michigan, Cross-Lake Ferry project having a 
        projected cost of approximately $7,200,000.
            ``(F) The amendments made by section 201 shall not apply to 
        a new automobile carrier vessel, the contract price for which is 
        no greater than $28,000,000, and which will be constructed for 
        and placed in service by OSG Car Carriers, Inc., to transport, 
        under the United States flag and with an American crew, foreign 
        automobiles to North America in a case where negotiations for 
        such transportation arrangements commenced in 1985, and 
        definitive transportation contracts were awarded before June 
        1986.
        ``(25) Certain wood energy projects.--The amendments made by 
    section 201 shall not apply to two wood energy projects for which 
    applications with the Federal Energy Regulatory Commission were 
    filed before January 1, 1986, which are described as follows:
            ``(A) a 26.5 megawatt plant in Fresno, California, and
            ``(B) a 26.5 megawatt plant in Rocklin, California.
        ``(26) The amendments made by section 201 shall not apply to 
    property which is a geothermal project of less than 20 megawatts 
    that was certified by the Federal Energy Regulatory Commission on 
    July 14, 1986, as a qualifying small power production facility for 
    purposes of the Public Utility Regulatory Policies Act of 1978 [see 
    Short Title note set out under 16 U.S.C. 2601] pursuant to an 
    application filed with the Federal Energy Regulatory Commission on 
    April 17, 1986.
        ``(27) Certain economic development projects.--The amendments 
    made by section 201 shall not apply to any of the following 
    projects:
            ``(A) A mixed use development on the East River the total 
        cost of which is approximately $400,000,000, with respect to 
        which a letter of intent was executed on January 24, 1984, and 
        with respect to which approximately $2.5 million had been spent 
        by March 1, 1986.
            ``(B) A 356-room hotel, banquet, and conference facility 
        (including 540,000 square feet of office space) the approximate 
        cost of which is $158,000,000, with respect to which a letter of 
        intent was executed on June 1, 1984, and with respect to which 
        an inducement resolution and bond resolution was adopted on 
        August 20, 1985.
            ``(C) Phase 1 of a 4-phase project involving the 
        construction of laboratory space and ground-floor retail space 
        the estimated cost of which is $22,000,000 and with respect to 
        which a memoradum [sic] of understanding was made on August 29, 
        1983.
            ``(D) A project involving the development of a 490,000 
        square foot mixed-use building at 152 W. 57th Street, New York, 
        New York, the estimated cost of which is $100,000,000, and with 
        respect to which a building permit application was filed in May 
        1986.
            ``(E) A mixed-use project containing a 300 unit, 12-story 
        hotel, garage, two multi-rise office buildings, and also 
        included a park, renovated riverboat, and barge with festival 
        marketplace, the capital outlays for which approximate 
        $68,000,000.
            ``(F) The construction of a three-story office building that 
        will serve as the home office for an insurance group and its 
        affiliated companies, with respect to which a city agreed to 
        transfer its ownership of the land for the project in a 
        Redevelopment Agreement executed on September 18, 1985, once 
        certain conditions are met.
            ``(G) A commercial bank formed under the laws of the State 
        of New York which entered into an agreement on September 5, 
        1985, to construct its headquarters at 60 Wall Street, New York, 
        New York, with respect to such headquarters.
            ``(H) Any property which is part of a commercial and 
        residential project, the first phase of which is currently under 
        construction, to be developed on land which is the subject of an 
        ordinance passed on July 20, 1981, by the city council of the 
        city in which such land is located, designating such land and 
        the improvements to be placed thereon as a residential-business 
        planned development, which development is being financed in part 
        by the proceeds of industrial development bonds in the amount of 
        $62,600,000 issued on December 4, 1985.
            ``(I) A 600,000 square foot mixed use building known as 
        Flushing Center with respect to which a letter of intent was 
        executed on March 26, 1986.
    In the case of the building described in subparagraph (I), section 
    203(b)(2)(A) shall be applied by substituting `January 1, 1993' for 
    the applicable date which would otherwise apply.
        ``(28) The amendments made by section 201 shall not apply to an 
    $80,000,000 capital project steel seamless tubular casings minimill 
    and melting facility located in Youngstown, Ohio, which was 
    purchased by the taxpayer in April 1985, and--
            ``(A) the purchase and renovation of which was approved by a 
        committee of the Board of Directors on February 22, 1985, and
            ``(B) as of December 31, 1985, more than $20,000,000 was 
        incurred or committed with respect to the renovation.
        ``(29) The amendments made by section 201 shall not apply to any 
    project for residential rental property if--
            ``(A) an inducement resolution with respect to such project 
        was adopted by the State housing development authority on 
        January 25, 1985, and
            ``(B) such project was the subject of a law suit filed on 
        October 25, 1985.
        ``(30) The amendments made by section 201 shall not apply to a 
    30 megawatt electric generating facility fueled by geothermal and 
    wood waste, the approximate cost of which is $55,000,000, and with 
    respect to which a 30-year power sales contract was executed on 
    March 22, 1985.
        ``(31) The amendments made by section 201 shall not apply to 
    railroad maintenance-of-way equipment, with respect to which a 
    Boston bank entered into a firm binding contract with a major 
    northeastern railroad before March 2, 1986, to finance $10,500,000 
    of such equipment, if all of the equipment was placed in service 
    before August 1, 1986.
        ``(32) The amendment made by section 201 shall not apply to--
            ``(A) a facility constructed on approximately seven acres of 
        land located on Ogle's Poso Creek Oil field, the primary fuel of 
        which will be bituminous coal from Utah or Wyoming, with respect 
        to which an application for an authority to construct was filed 
        on December 26, 1985, an authority to construct was issued on 
        July 2, 1986, and a prevention of significant deterioration 
        permit application was submitted in May 1985,
            ``(B) a facility constructed on approximately seven acres of 
        land located on Teorco's Jasmin oil field, the primary fuel of 
        which will be bituminous coal from Utah or Wyoming, with respect 
        to which an authority to construct was filed on December 26, 
        1985, an authority to construct was issued on July 2, 1986, and 
        a prevention of significant deterioration permit application was 
        submitted in July 1985,
            ``(C) the Mountain View Apartments, in Hadley, 
        Massachusetts,
            ``(D) a facility expected to have a capacity of not less 
        than 65 megawatts of electricity, the steam from which is to be 
        sold to a pulp and paper mill, with respect to which application 
        was made to the Federal Regulatory Commission for certification 
        as a qualified facility on November 1, 1985, and received such 
        certification on January 24, 1986,
            ``(E) $5,000,000 of equipment ordered in 1986, in connection 
        with a 60,000 square foot plant in Masontown, Pennsylvania, that 
        was completed in 1983,
            ``(F) a magnetic resonance imaging machine, with respect to 
        which a binding contract to purchase was entered into in April 
        1986, in connection with the construction of a magnetic 
        resonance imaging clinic with respect to which a Determination 
        of Need certification was obtained from a State Department of 
        Public Health on October 22, 1985, if such property is placed in 
        service before December 31, 1986,
            ``(G) a company located in Salina, Kansas, which has been 
        engaged in the construction of highways and city streets since 
        1946, but only to the extent of $1,410,000 of investment in new 
        section 38 property,
            ``(H) a $300,000 project undertaken by a small metal 
        finishing company located in Minneapolis, Minnesota, the first 
        parts of which were received and paid for in January 1986, with 
        respect to which the company received Board approval to purchase 
        the largest piece of machinery it has ever ordered in 1985,
            ``(I) A $1,200,000 finishing machine that was purchased on 
        April 2, 1986 and placed into service in September 1986 by a 
        company located in Davenport, Iowa,
            ``(J) A 25 megawatt small power production facility, with 
        respect to which Qualifying Facility status numbered QF86-593-
        000 was granted on March 5, 1986,
            ``(K) A 250 megawatt coal-fired electric plant in 
        northeastern Nevada estimated to cost $600,000,000 and known as 
        the Thousand Springs project, on which the Sierra Pacific Power 
        Company, a subsidiary of Sierra Pacific Resources, began in 1980 
        work to design, finance, construct, and operate (and section 
        203(b)(2) shall be applied with respect to such plant by 
        substituting `January 1, 1995' for `January 1, 1991'),
            ``(L) 128 units of rental housing in connection with the 
        Point Gloria Limited Partnership,
            ``(M) property which is part of the Kenosha Downtown 
        Redevelopment Project and which is financed with the proceeds of 
        bonds issued pursuant to section 1317(6)(W) [set out as a note 
        under section 141 of this title],
            ``(N) Lakeland Park Phase II, in Baton Rouge, Louisiana,
            ``(O) the Santa Rosa Hotel, in Pensacola, Florida,
            ``(P) the Sheraton Baton Rouge, in Baton Rouge, Louisiana,
            ``(Q) $300,000 of equipment placed in service in 1986, in 
        connection with the renovation of the Best Western Townhouse 
        Convention Center in Cedar Rapids, Iowa,
            ``(R) the segment of a nationwide fiber optics 
        telecommunications network placed in service by SouthernNet, the 
        total estimated cost of which is $37,000,000,
            ``(S) two cogeneration facilities, to be placed in service 
        by the Reading Anthracite Coal Company (or any subsidiary 
        thereof), costing approximately $110,000,000 each, with respect 
        to which filings were made with the Federal Energy Regulatory 
        Commission by December 31, 1985, and which are located in 
        Pennsylvania,
            ``(T) a portion of a fiber optics network placed in service 
        by LDX NET after December 31, 1988, but only to the extent the 
        cost of such portion does not exceed $25,000,000,
            ``(U) 3 newly constructed fishing vessels, and one vessel 
        that is overhauled, constructed by Mid Coast Marine, but only to 
        the extent of $6,700,000 of investment,
            ``(V) $350,000 of equipment acquired in connection with the 
        reopening of a plant in Bristol, Rhode Island, which plant was 
        purchased by Buttonwoods, Ltd., Associates on February 7, 1986,
            ``(W) $4,046,000 of equipment placed in service by Brendle's 
        Incorporated, acquired in connection with a Distribution Center,
            ``(X) a multi-family mixed-use housing project located in a 
        home rule city, the zoning for which was changed to residential 
        business planned development on November 26, 1985, and with 
        respect to which both the home rule city on December 4, 1985, 
        and the State housing finance agency on December 20, 1985, 
        adopted inducement resolutions,
            ``(Y) the Myrtle Beach Convention Center, in South Carolina, 
        to the extent of $25,000,000 of investment, and
            ``(Z) railroad cars placed in service by the Pullman Leasing 
        Company, pursuant to an April 3, 1986 purchase order, costing 
        approximately $10,000,000.
        ``(33) The amendments made by section 201 [amending 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 depreciable real 
        property of which is $14,700,000.
            ``(C)(i) a waste-to-energy project in Derry, New Hampshire, 
        costing approximately $60,000,000, and
            ``(ii) a waste-to-energy project in Manchester, New 
        Hampshire, costing approximately $60,000,000,
            ``(D) the City of Los Angeles Co-composting project, the 
        estimated cost of which is $62,000,000, with respect to which, 
        on July 17, 1985, the California Pollution Control Financing 
        Authority issued an initial resolution in the maximum amount of 
        $75,000,000 to finance this project,
            ``(E) the St. Charles, Missouri Mixed-Use Center,
            ``(F) Oxford Place in Tulsa, Oklahoma,
            ``(G) an amount of investment generating $20,000,000 of 
        investment tax credits attributable to property used on the 
        Illinois Diversatech Campus,
            ``(H) $25,000,000 of equipment used in the Melrose Park 
        Engine Plant that is sold and leased back by Navistar,
            ``(I) 80,000 vending machines, for a cost approximating 
        $3,400,000 placed into service by Folz Vending Co.,
            ``(J) A 25.85 megawatt alternative energy facility located 
        in Deblois, Maine, with respect to which certification by the 
        Federal Energy Regulatory Commission was made on April 3, 1986,
            ``(K) Burbank Manors, in Illinois, and
            ``(L) a cogeneration facility to be built at a paper company 
        in Turners Falls, Massachusetts, with respect to which a letter 
        of intent was executed on behalf of the paper company on 
        September 26, 1985.
        ``(40) \2\ Certain trucks, etc.--The amendments made by section 
    201 shall not apply to trucks, tractor units, and trailers which a 
    privately held truck leasing company headquartered in Des Moines, 
    Iowa, contracted to purchase in September 1985 but only to the 
    extent the aggregate reduction in Federal tax liability by reason of 
    the application of this paragraph does not exceed $8,500,000.
---------------------------------------------------------------------------
    \2\ So in original. Par. (40) probably should follow par. (39).
---------------------------------------------------------------------------
        ``(34) The amendments made by section 201 shall not apply to an 
    approximately 240,000 square foot beverage container manufacturing 
    plant located in Batesville, Mississippi, or plant equipment used 
    exclusively on the plant premises if--
            ``(A) a 2-year supply contract was signed by the taxpayer 
        and a customer on November 1, 1985,
            ``(B) such contract further obligated the customer to 
        purchase beverage containers for an additional 5-year period if 
        physical signs of construction of the plant are present before 
        September 1986,
            ``(C) ground clearing for such plant began before August 
        1986, and
            ``(D) construction is completed, the equipment is installed, 
        and operations are commenced before July 1, 1987.
        ``(35) The amendments made by section 201 shall not apply to any 
    property which is part of the multifamily housing at the Columbia 
    Point Project in Boston, Massachusetts. A project shall be treated 
    as not described in the preceding sentence and as not described in 
    section 252(f)(1)(D) [set out as a note under section 42 of this 
    title] unless such project includes at substantially all times 
    throughout the compliance period (within the meaning of section 
    42(i)(1) of the Internal Revenue Code of 1986), a facility which 
    provides health services to the residents of such project for fees 
    commensurate with the ability of such individuals to pay for such 
    services.
        ``(36) The amendments made by section 201 shall not apply to any 
    ethanol facility located in Blair, Nebraska, if--
            ``(A) in July of 1984 an initial binding construction 
        contract was entered into for such facility,
            ``(B) in June of 1986, certain Department of Energy 
        recommended contract changes required a change of contractor, 
        and
            ``(C) in September of 1986, a new contract to construct such 
        facility, consistent with such recommended changes, was entered 
        into.
        ``(37) The amendments made by section 201 shall not apply to any 
    property which is part of a sewage treatment facility if, prior to 
    January 1, 1986, the City of Conyers, Georgia, selected a privatizer 
    to construct such facility, received a guaranteed maximum price bid 
    for the construction of such facility, signed a letter of intent and 
    began substantial negotiations of a service agreement with respect 
    to such facility.
        ``(38) The amendments made by section 201 shall not apply to--
            ``(A) a $28,000,000 wood resource complex for which 
        construction was authorized by the Board of Directors on August 
        9, 1985,
            ``(B) an electrical cogeneration plant in Bethel, Maine 
        which is to generate 2 megawatts of electricity from the burning 
        of wood residues, with respect to which a contract was entered 
        into on July 10, 1984, and with respect to which $200,000 of the 
        expected $2,000,000 cost had been committed before June 15, 
        1986,
            ``(C) a mixed income housing project in Portland, Maine 
        which is known as the Back Bay Tower and which is expected to 
        cost $17,300,000,
            ``(D) the Eastman Place project and office building in 
        Rochester, New York, which is projected to cost $20,000,000, 
        with respect to which an inducement resolution was adopted in 
        December 1986, and for which a binding contract of $500,000 was 
        entered into on April 30, 1986,
            ``(E) the Marquis Two project in Atlanta, Georgia which has 
        a total budget of $72,000,000 and the construction phase of 
        which began under a contract entered into on March 26, 1986,
            ``(F) a 166-unit continuing care retirement center in New 
        Orleans, Louisiana, the construction contract for which was 
        signed on February 12, 1986, and is for a maximum amount not to 
        exceed $8,500,000,
            ``(G) the expansion of the capacity of an oil refining 
        facility in Rosemont, Minnesota from 137,000 to 207,000 barrels 
        per day which is expected to be completed by December 31, 1990, 
        and
            ``(H) a project in Ransom, Pennsylvania which will burn coal 
        waste (known as `culm') with an approximate cost of $64,000,000 
        and for which a certification from the Federal Energy Regulatory 
        Commission was received on March 11, 1986.
        ``(39) The amendments made by section 201 shall not apply to any 
    facility for the manufacture of an improved particle board if a 
    binding contract to purchase such equipment was executed March 3, 
    1986, such equipment will be placed in service by January 1, 1988, 
    and such facility is located in or near Moncure, North Carolina.
    ``(b) Special Rule for Certain Property.--The provisions of section 
168(f)(8) of the Internal Revenue Code of 1954 (as amended by section 
209 of the Tax Equity and Fiscal Responsibility Act of 1982) shall 
continue to apply to any transaction permitted by reason of section 
12(c)(2) of the Tax Reform Act of 1984 or section 209(d)(1)(B) of the 
Tax Equity and Fiscal Responsibility Act of 1982 (as amended by the Tax 
Reform Act of 1984) [section 12(c)(2) of Pub. L. 98-369 and section 
209(d)(1)(B) of Pub. L. 97-248, respectively, set out below].
    ``(c) Applicable Date in Certain Cases.--
        ``(1) Section 203(b)(2) shall be applied by substituting 
    `January 1, 1992' for `January 1, 1991' in the following cases.
            ``(A) in the case of a 2-unit nuclear powered electric 
        generating plant (and equipment and incidental appurtenances), 
        located in Pennsylvania and constructed pursuant to contracts 
        entered into by the owner operator of the facility before 
        December 31, 1975, including contracts with the engineer/
        constructor and the nuclear steam system supplier, such 
        contracts shall be treated as contracts described in section 
        203(b)(1)(A),
            ``(B) a cogeneration facility with respect to which an 
        application with the Federal Energy Regulatory Commission was 
        filed on August 2, 1985, and approved October 15, 1985.
            ``(C) in the case of a 1,300 megawatt coal-fired steam 
        powered electric generating plant (and related equipment and 
        incidental appurtenances), which the three owners determined in 
        1984 to convert from nuclear power to coal power and for which 
        more than $600,000,000 had been incurred or committed for 
        construction before September 25, 1985, except that no 
        investment tax credit will be allowable under section 49(d)(3) 
        added by section 211(a) of this Act [section 49(d) of this title 
        does not contain a par. (3)] for any qualified progress 
        expenditures made after December 31, 1990.
        ``(2) Section 203(b)(2) shall be applied by substituting `April 
    1, 1992' for the applicable date that would otherwise apply, in the 
    case of the second unit of a twin steam electric generating facility 
    and related equipment which was granted a certificate of public 
    convenience and necessity by a public service commission prior to 
    January 1, 1982, if the first unit of the facility was placed in 
    service prior to January 1, 1985, and before September 26, 1985, 
    more than $100,000,000 had been expended toward the construction of 
    the second unit.
        ``(3) Section 203(b)(2) shall be applied by substituting 
    `January 1, 1990,' (or, in the case of a project described in 
    subparagraph (B), by substituting `April 1, 1992') for the 
    applicable date that would otherwise apply in the case of--
            ``(A) new commercial passenger aircraft used by a domestic 
        airline, if a binding contract with respect to such aircraft was 
        entered into on or before April 1, 1986, and such aircraft has a 
        present class life of 12 years,
            ``(B) a pumped storage hydroelectric project with respect to 
        which an application was made to the Federal Energy Regulatory 
        Commission for a license on February 4, 1974, and license was 
        issued August 1, 1977, the project number of which is 2740, and
            ``(C) a newsprint mill in Pend Oreille county, Washington, 
        costing about $290,000,000.
    In the case of an aircraft described in subparagraph (A), section 
    203(b)(1)(A) shall be applied by substituting `April 1, 1986' for 
    `March 1, 1986' and section 49(e)(1)(B) of the Internal Revenue Code 
    of 1986 shall not apply.
        ``(4) The amendments made by section 201 [amending 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 following property or a limited amount of 
    property set forth in a submission before September 16, 1986, by the 
    following taxpayers:
            ``(A) Arena project, Michigan, but only with respect to 
        $78,000,000 of investments.
            ``(B) Campbell Soup Company, Pennsylvania, California, North 
        Carolina, Ohio, Maryland, Florida, Nebraska, Michigan, South 
        Carolina, Texas, New Jersey, and Delaware, but only with respect 
        to $9,329,000 of regular investment tax credits.
            ``(C) The Southeast Overtown/Park West development, Florida, 
        but only with respect to $200,000,000 of investments.
            ``(D) Equipment placed in service and operated by Leggett 
        and Platt before July 1, 1987, but only with respect to 
        $2,000,000 of regular investment tax credits, and subsections 
        (c) and (d) of section 49 of the Internal Revenue Code of 1986 
        shall not apply to such equipment.
            ``(E) East Bank Housing Project.
            ``(F) $1,561,215 of investments by Standard Telephone 
        Company.
            ``(G) Five aircraft placed in service before January 1, 
        1987, by Presidential Air.
            ``(H) A rehabilitation project by Ann Arbor Railroad, but 
        only with respect to $2,900,000 of investments.
            ``(I) Property that is part of a cogeneration project 
        located in Ada, Michigan, but only with respect to $30,000,000 
        of investments.
            ``(J) Anchor Store Project, Michigan, but only with respect 
        to $21,000,000 of investments.
            ``(K) A waste-fired electrical generating facility of Biogen 
        Power, but only with respect to $34,000,000 of investments.
            ``(L) $14,000,000 of television transmitting towers placed 
        in service by Media General, Inc., which were subject to binding 
        contracts as of January 21, 1986, and will be placed in service 
        before January 1, 1988,
            ``(M) Interests of Samuel A. Hardage (whether owned 
        individually or in partnership form).
            ``(N) Two aircraft of Mesa Airlines with an aggregate cost 
        of $5,723,484.
            ``(O) Yarn-spinning equipment used at Spray Cotton Mills, 
        but only with respect to $3,000,000 of investments.
            ``(P) 328 units of low-income housing at Angelus Plaza, but 
        only with respect to $20,500,000 of investments.
            ``(Q) One aircraft of Continental Aviation Services with a 
        cost of approximately $15,000,000 that was purchased pursuant to 
        a contract entered into during March of 1983 and that is placed 
        in service by December 31, 1988.
    ``(d) Railroad Grading and Tunnel Bores.--
        ``(1) In general.--In the case of expenditures for railroad 
    grading and tunnel bores which were incurred by a common carrier by 
    railroad to replace property destroyed in a disaster occurring on or 
    about April 17, 1983, near Thistle, Utah, such expenditures, to the 
    extent not in excess of $15,000,000, shall be treated as recovery 
    property which is 5-year property under section 168 of the Internal 
    Revenue Code of 1954 (as in effect before the amendments made by 
    this Act) and which is placed in service at the time such 
    expenditures were incurred.
        ``(2) Business interruption proceeds.--Business interruption 
    proceeds received for loss of use, revenues, or profits in 
    connection with the disaster described in paragraph (1) and devoted 
    by the taxpayer described in paragraph (1) to the construction of 
    replacement track and related grading and tunnel bore expenditures 
    shall be treated as constituting an amount received from the 
    involuntary conversion of property under section 1033(a)(2) of such 
    Code.
        ``(3) Effective date.--This subsection shall apply to taxable 
    years ending after April 17, 1983.
    ``(e) Treatment of Certain Disaster Losses.--
        ``(1) In general.--In the case of a disaster described in 
    paragraph (2), at the election of the taxpayer, the amendments made 
    by section 201 of this Act [amending 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 section shall 
    apply to a flood which occurred on November 3 through 7, 1985, and 
    which was declared a natural disaster area by the President of the 
    United States.''
    Section 1002(c)(3) of Pub. L. 100-647 provided that: 
``Notwithstanding section 203 of the Reform Act [section 203 of Pub. L. 
99-514, set out above], the amendments made by section 201 of the Reform 
Act [section 201 of Pub. L. 99-514, amending 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 allowable.''
    Amendment by section 201(a) of Pub. L. 99-514 not applicable to any 
property placed in service before Jan. 1, 1994, if such property placed 
in service as part of specified rehabilitations, and not applicable to 
certain additional rehabilitations, see section 251(d)(2), (3) of Pub. 
L. 99-514, set out as a note under section 46 of this title.
    Amendment by sections 1802(a)(1)-(2)(D), (G), (3), (4)(A), (B), (7), 
(b)(1), 1809(a)(1)-(2)(B), (4)(A), (B) of Pub. L. 99-514 effective, 
except as otherwise provided, as if included in the provisions of the 
Tax Reform Act of 1984, Pub. L. 98-369, div. A, to which such amendment 
relates, see section 1881 of Pub. L. 99-514, set out as a note under 
section 48 of this title.
    Section 1802(a)(2)(E)(ii) of Pub. L. 99-514 provided that:
    ``(I) Except as otherwise provided in this clause, the amendment 
made by clause (i) [amending this section] shall apply to property 
placed in service after September 27, 1985; except that such amendment 
shall not apply to any property acquired pursuant to a binding written 
contract in effect on such date (and at all times thereafter).
    ``(II) If an election under this subclause is made with respect to 
any property, the amendment made by clause (i) shall apply to such 
property whether or not placed in service on or before September 27, 
1985.''
    Section 1809(a)(2)(C)(i) of Pub. L. 99-514 provided in part that 
amendment by section 1809(a)(2)(C)(i) of Pub. L. 99-514 is effective on 
and after Oct. 22, 1986.
    Section 1809(b)(3) of Pub. L. 99-514 provided that: ``The amendments 
made by this subsection [amending this section] shall apply to property 
placed in service by the transferee after December 31, 1985, in taxable 
years ending after such date.''


                    Effective Date of 1985 Amendment

    Section 105(b) of Pub. L. 99-121, as amended by Pub. L. 99-514, 
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
    ``(1) In general.--Except as otherwise provided in this subsection, 
the amendments made by section 103 [amending 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 person' means any 
person whose rights in such a contract or such property are transferred 
to the taxpayer, but only if such property is not placed in service 
before such rights are transferred to the taxpayer.
    ``(3) Special rule for components.--For purposes of applying section 
168(f)(1)(B) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] 
(as amended by section 103) to components placed in service after 
December 31, 1986, property to which paragraph (2) of this subsection 
applies shall be treated as placed in service by the taxpayer before May 
9, 1985.
    ``(4) Technical correction.--The amendment made by paragraph (6) of 
section 103(b) [amending section 47 of this title] shall apply as if 
included in the amendments made by section 111 of the Tax Reform Act of 
1984 [Pub. L. 98-369, see Effective Date of 1984 Amendment note below].
    ``(5) Special rule for leasing of qualified rehabilitated 
buildings.--The amendment made by paragraph (5) of section 103(b) to 
section 48(g)(2)(B)(v) of the Internal Revenue Code of 1986 shall not 
apply to leases entered into before May 22, 1985, but only if the lessee 
signed the lease before May 17, 1985.''


                    Effective Date of 1984 Amendment

    Amendment by section 12 of Pub. L. 98-369 applicable to taxable 
years ending after Dec. 31, 1983, see section 18(a) of Pub. L. 98-369, 
set out as a note under section 48 of this title.
    Section 31(g) of Pub. L. 98-369, as amended by Pub. L. 99-514, 
Sec. 2, title XVIII, Sec. 1802(a)(2)(F), (10)(A)-(D)(i), (E)-(G), Oct. 
22, 1986, 100 Stat. 2095, 2788, 2790, 2791; Pub. L. 100-647, title I, 
Sec. 1018(b)(1), Nov. 10, 1988, 102 Stat. 3577, provided that:
    ``(1) In general.--Except as otherwise provided in this subsection, 
the amendments made by this section [amending 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-exempt entity is entered into 
    after May 23, 1983.
    ``(2) Leases entered into on or before may 23, 1983.--The amendments 
made by this section shall not apply with respect to any property leased 
to a tax-exempt entity if the property is leased pursuant to--
        ``(A) a lease entered into on or before May 23, 1983 (or a 
    sublease under such a lease), or
        ``(B) any renewal or extension of a lease entered into on or 
    before May 23, 1983, if such renewal or extension is pursuant to an 
    option exercisable by the tax-exempt entity which was held by the 
    tax-exempt entity on May 23, 1983.
    ``(3) Binding contracts, etc.--
        ``(A) The amendments made by this section shall not apply with 
    respect to any property leased to a tax-exempt entity if such lease 
    is pursuant to 1 or more written binding contracts which, on May 23, 
    1983, and at all times thereafter, required--
            ``(i) the taxpayer (or his predecessor in interest under the 
        contract) to acquire, construct, reconstruct, or rehabilitate 
        such property, and
            ``(ii) the tax-exempt entity (or a tax-exempt predecessor 
        thereof) to be the lessee of such property.
        ``(B) Paragraph (9) of section 168(j) of the Internal Revenue 
    Code of 1986 [formerly I.R.C. 1954] (as added by this section) shall 
    not apply with respect to any property owned by a partnership if--
            ``(i) such property was acquired by such partnership on or 
        before October 21, 1983, or
            ``(ii) such partnership entered into a written binding 
        contract which, on October 21, 1983, and at all times 
        thereafter, required the partnership to acquire or construct 
        such property.
        ``(C) The amendments made by this section shall not apply with 
    respect to any property leased to a tax-exempt entity (other than 
    any foreign person or entity)--
            ``(i) if--
                ``(I) on or before May 23, 1983, the taxpayer (or his 
            predecessor in interest under the contract) or the tax-
            exempt entity entered into a written binding contract to 
            acquire, construct, reconstruct, or rehabilitate such 
            property and such property had not previously been used by 
            the tax-exempt entity, or
                ``(II) the taxpayer or the tax-exempt entity acquired 
            the property after June 30, 1982, and on or before May 23, 
            1983, or completed the construction, reconstruction, or 
            rehabilitation of the property after December 31, 1982, and 
            on or before May 23, 1983, and
            ``(ii) if such lease is pursuant to a written binding 
        contract entered into before January 1, 1985, which requires the 
        tax-exempt entity to be the lessee of such property.
    ``(4) Official governmental action on or before november 1, 1983.--
        ``(A) In general.--The amendments made by this section shall not 
    apply with respect to any property leased to a tax-exempt entity 
    (other than the United States, any agency or instrumentality 
    thereof, or any foreign person or entity) if--
            ``(i) on or before November 1, 1983, there was significant 
        official governmental action with respect to the project or its 
        design, and
            ``(ii) the lease to the tax-exempt entity is pursuant to a 
        written binding contract entered into before January 1, 1985, 
        which requires the tax-exempt entity to be the lessee of the 
        property.
        ``(B) Significant official governmental action.--For purposes of 
    subparagraph (A), the term `significant official governmental 
    action' does not include granting of permits, zoning changes, 
    environmental impact statements, or similar governmental actions.
        ``(C) Special rule for credit unions.--In the case of any 
    property leased to a credit union pursuant to a written binding 
    contract with an expiration date of December 31, 1984, which was 
    entered into by such organization on August 23, 1984--
            ``(i) such credit union shall not be treated as an agency or 
        instrumentality of the United States; and
            ``(ii) clause (ii) of subparagraph (A) shall be applied by 
        substituting `January 1, 1987' for `January 1, 1985'.
        ``(D) Special rule for greenville auditorium board.--For 
    purposes of this paragraph, significant official governmental action 
    taken by the Greenville County Auditorium Board of Greenville, South 
    Carolina, before May 23, 1983, shall be treated as significant 
    official governmental action with respect to the coliseum facility 
    subject to a binding contract to lease which was in effect on 
    January 1, 1985.
        ``(E) Treatment of certain historic structures.--If--
            ``(i) on June 16, 1982, the legislative body of the local 
        governmental unit adopted a bond ordinance to provide funds to 
        renovate elevators in a deteriorating building owned by the 
        local governmental unit and listed in the National Register, and
            ``(ii) the chief executive officer of the local governmental 
        unit, in connection with the renovation of such building, made 
        an application on June 1, 1983, to a State agency for a Federal 
        historic preservation grant and made an application on June 17, 
        1983, to the Economic Development Administration of the United 
        States Department of Commerce for a grant,
    the requirements of clauses (i) and (ii) of subparagraph (A) shall 
    be treated as met.
    ``(5) Mass commuting vehicles.--The amendments made by this section 
shall not apply to any qualified mass commuting vehicle (as defined in 
section 103(b)(9) of the Internal Revenue Code of 1986 [formerly I.R.C. 
1954]) which is financed in whole or in part by obligations the interest 
on which is excludable from gross income under section 103(a) of such 
Code if--
        ``(A) such vehicle is placed in service before January 1, 1988, 
    or
        ``(B) such vehicle is placed in service on or after such date--
            ``(i) pursuant to a binding contract or commitment entered 
        into before April 1, 1983, and
            ``(ii) solely because of conditions which, as determined by 
        the Secretary of the Treasury or his delegate, are not within 
        the control of the lessor or lessee.
    ``(6) Certain turbines and boilers.--The amendments made by this 
section shall not apply to any property described in section 
208(d)(3)(E) of the Tax Equity and Fiscal Responsibility Act of 1982 
[section 208(d)(3)(E) of Pub. L. 97-248, set out as an Effective Date of 
1982 Amendments note below].
    ``(7) Certain facilities for which ruling requests filed on or 
before may 23, 1983.--The amendments made by this section shall not 
apply with respect to any facilities described in clause (ii) of section 
168(f)(12)(C) of the Internal Revenue Code of 1986 (relating to certain 
sewage or solid waste disposal facilities), as in effect on the day 
before the date of the enactment of this Act [July 18, 1984], if a 
ruling request with respect to the lease of such facility to the tax-
exempt entity was filed with the Internal Revenue Service on or before 
May 23, 1983.
    ``(8) Recovery period for certain qualified sewage facilities.--
        ``(A) In general.--In the case of any property (other than 15-
    year real property) which is part of a qualified sewage facility, 
    the recovery period used for purposes of paragraph (1) of section 
    168(j) of the Internal Revenue Code of 1986 (as added by this 
    section) shall be 12 years. For purposes of the preceding sentence, 
    the term `15-year real property' includes 18-year real property.
        ``(B) Qualified sewage facility.--For purposes of subparagraph 
    (A), the term `qualified sewage facility' means any facility which 
    is part of the sewer system of a city, if--
            ``(i) on June 15, 1983, the City Council approved a 
        resolution under which the city authorized the procurement of 
        equity investments for such facility, and
            ``(ii) on July 12, 1983, the Industrial Development Board of 
        the city approved a resolution to issue a $100,000,000 
        industrial development bond issue to provide funds to purchase 
        such facility.
    ``(9) Property used by the postal service.--In the case of property 
used by the United States Postal Service, paragraphs (1) and (2) shall 
be applied by substituting `October 31' for `May 23'.
    ``(10) Existing appropriations.--The amendments made by this section 
shall not apply to personal property leased to or used by the United 
States if--
        ``(A) an express appropriation has been made for rentals under 
    such lease for the fiscal year 1983 before May 23, 1983, and
        ``(B) the United States or an agency or instrumentality thereof 
    has not provided an indemnification against the loss of all or a 
    portion of the tax benefits claimed under the lease or service 
    contract.
    ``(11) Special rule for certain partnerships.--
        ``(A) Partnerships for which qualifying action existed before 
    october 21, 1983.--Paragraph (9) of section 168(j) of the Internal 
    Revenue Code of 1986 (as added by this section) shall not apply to 
    any property acquired, directly or indirectly, before January 1, 
    1985, by any partnership described in subparagraph (B).
        ``(B) Application filed before october 21, 1983.--A partnership 
    is described in this subparagraph if--
            ``(i) before October 21, 1983, the partnership was 
        organized, a request for exemption with respect to such 
        partnership was filed with the Department of Labor, and a 
        private placement memorandum stating the maximum number of units 
        in the partnership that would be offered had been circulated,
            ``(ii) the interest in the property to be acquired, directly 
        or indirectly (including through acquiring an interest in 
        another partnership) by such partnership was described in such 
        private placement memorandum, and
            ``(iii) the marketing of partnership units in such 
        partnership is completed not later than two years after the 
        later of the date of the enactment of this Act [July 18, 1984] 
        or the date of publication in the Federal Register of such 
        exemption by the Department of Labor and the aggregate number of 
        units in such partnership sold does not exceed the amount 
        described in clause (i).
        ``(C) Partnerships for which qualifying action existed before 
    march 6, 1984.--Paragraph (9) of section 168(j) of the Internal 
    Revenue Code of 1986 (as added by this section) shall not apply to 
    any property acquired directly or indirectly, before January 1, 
    1986, by any partnership described in subparagraph (D). For purposes 
    of this subparagraph, property shall be deemed to have been acquired 
    prior to January 1, 1986, if the partnership had entered into a 
    written binding contract to acquire such property prior to January 
    1, 1986 and the closing of such contract takes place within 6 months 
    of the date of such contract (24 months in the case of new 
    construction).
        ``(D) Partnership organized before march 6, 1984.--A partnership 
    is described in this subparagraph if--
            ``(i) before March 6, 1984, the partnership was organized 
        and publicly announced the maximum amount (as shown in the 
        registration statement, prospectus or partnership agreement, 
        whichever is greater) of interests which would be sold in the 
        partnership, and
            ``(ii) the marketing or partnership interests in such 
        partnership was completed not later than the 90th day after the 
        date of the enactment of this Act [July 18, 1984] and the 
        aggregate amount of interest in such partnership sold does not 
        exceed the maximum amount described in clause (i).
    ``(12) Special rule for amendment made by subsection (c)(2).--The 
amendment made by subsection (c)(2) [amending section 48(g)(2)(B)(i) of 
this title] to the extent it relates to subsection (f)(12) of section 
168 of the Internal Revenue Code of 1986 shall take effect as if it had 
been included in the amendments made by section 216(a) of the Tax Equity 
and Fiscal Responsibility Act of 1982 [section 216(a) of Pub. L. 97-248, 
which amended this section].
    ``(13) Special rule for service contracts not involving tax-exempt 
entities.--In the case of a service contract or other arrangement 
described in section 7701(e) of the Internal Revenue Code of 1986 (as 
added by this section) with respect to which no party is a tax-exempt 
entity, such section 7701(e) shall not apply to--
        ``(A) such contract or other arrangement if such contract or 
    other arrangement was entered into before November 5, 1983, or
        ``(B) any renewal or other extension of such contract or other 
    arrangement pursuant to an option contained in such contract or 
    other arrangement on November 5, 1983.
    ``(14) Property leased to section 593 organizations.--For purposes 
of the amendment made by subsection (f) [enacting section 46(e)(4) of 
this title], paragraphs (1), (2), and (4) shall be applied by 
substituting--
        ``(A) `November 5, 1983' for `May 23, 1983' and `November 1, 
    1983', as the case may be, and
        ``(B) `organization described in section 593 of the Internal 
    Revenue Code of 1986' for `tax-exempt entity'.
    ``(15) Special rules relating to foreign persons or entities.--
        ``(A) In general.--In the case of tax-exempt use property which 
    is used by a foreign person or entity, the amendments made by this 
    section shall not apply to any property which--
            ``(i) is placed in service by the taxpayer before January 1, 
        1984, and
            ``(ii) is used by such foreign person or entity pursuant to 
        a lease entered into before January 1, 1984.
        ``(B) Special rule for subleases.--If tax-exempt use property is 
    being used by a foreign person or entity pursuant to a sublease 
    under a lease described in subparagraph (A)(ii), subparagraph (A) 
    shall apply to such property only if such property was used before 
    January 1, 1984, by any foreign person or entity pursuant to such 
    lease.
        ``(C) Binding contracts, etc.--The amendments made by this 
    section shall not apply with respect to any property (other than 
    aircraft described in subparagraph (D)) leased to a foreign person 
    or entity--
            ``(i) if--
                ``(I) on or before May 23, 1983, the taxpayer (or a 
            predecessor in interest under the contract) or the foreign 
            person or entity entered into a written binding contract to 
            acquire, construct, or rehabilitate such property and such 
            property had not previously been used by the foreign person 
            or entity, or
                ``(II) the taxpayer or the foreign person or entity 
            acquired the property or completed the construction, 
            reconstruction, or rehabilitation of the property after 
            December 31, 1982 and on or before May 23, 1983, and
            ``(ii) if such lease is pursuant to a written binding 
        contract entered into before January 1, 1984, which requires the 
        foreign person or entity to be the lessee of such property.
        ``(D) Certain aircraft.--The amendments made by this section 
    shall not apply with respect to any wide-body, four-engine, 
    commercial aircraft used by a foreign person or entity if--
            ``(i) on or before November 1, 1983, the foreign person or 
        entity entered into a written binding contract to acquire such 
        aircraft, and
            ``(ii) such aircraft is originally placed in service by such 
        foreign person or entity (or its successor in interest under the 
        contract) after May 23, 1983, and before January 1, 1986.
        ``(E) Use after 1983.--Qualified container equipment placed in 
    service before January 1, 1984, which is used before such date by a 
    foreign person shall not, for purposes of section 47 of the Internal 
    Revenue Code of 1986, be treated as ceasing to be section 38 
    property by reason of the use of such equipment before January 1, 
    1985, by a foreign person or entity. For purposes of this 
    subparagraph, the term `qualified container equipment' means any 
    container, container chassis, or container trailer of a United 
    States person with a present class life of not more than 6 years.
    ``(16) Organizations electing exemption from rules relating to 
previously tax-exempt organizations must elect taxation of exempt 
arbitrage profits.--
        ``(A) In general.--An organization may make the election under 
    section 168(j)(4)(E)(ii) of the Internal Revenue Code of 1986 
    (relating to election not to have rules relating to previously tax-
    exempt organizations apply) only if such organization elects the tax 
    treatment of exempt arbitrage profits described in subparagraph (B).
        ``(B) Taxation of exempt arbitrage profits.--
            ``(i) In general.--In the case of an organization which 
        elects the application of this subparagraph, there is hereby 
        imposed a tax on the exempt arbitrage profits of such 
        organization.
            ``(ii) Rate of tax, etc.--The tax imposed by clause (i)--
                ``(I) shall be the amount of tax which would be imposed 
            by section 11 of such Code if the exempt arbitrage profits 
            were taxable income (and there were no other taxable 
            income), and
                ``(II) shall be imposed for the first taxable year of 
            the tax-exempt use period (as defined in section 
            168(j)(4)(E)(ii) of such Code).
        ``(C) Exempt arbitrage profits.--
            ``(i) In general.--For purposes of this paragraph, the term 
        exempt arbitrage profits means the aggregate amount described in 
        clauses (i) and (ii) of subparagraph (D) of section 103(c)(6) of 
        such Code for all taxable years for which the organization was 
        exempt from tax under section 501(a) of such Code with respect 
        to obligations--
                ``(I) associated with property described in section 
            168(j)(4)(E)(i), and
                ``(II) issued before January 1, 1985.
            ``(ii) Application of section 103(b)(6).--For purposes of 
        this paragraph, section 103(b)(6) of such Code shall apply to 
        obligations issued before January 1, 1985, but the amount 
        described in clauses (i) and (ii) of subparagraph (D) thereof 
        shall be determined without regard to clauses (i)(II) and (ii) 
        of subparagraph (F) thereof.
        ``(D) Other laws applicable.--
            ``(i) In general.--Except as provided in clause (ii), all 
        provisions of law, including penalties, applicable with respect 
        to the tax imposed by section 11 of such Code shall apply with 
        respect to the tax imposed by this paragraph.
            ``(ii) No credits against tax, etc.--The tax imposed by this 
        paragraph shall not be treated as imposed by section 11 of such 
        Code for purposes of--
                ``(I) part VI of subchapter A of chapter 1 of such Code 
            (relating to minimum tax for tax preferences), and
                ``(II) determining the amount of any credit allowable 
            under subpart A of part IV of such subchapter.
        ``(E) Election.--Any election under subparagraph (A)--
            ``(i) shall be made at such time and in such manner as the 
        Secretary may prescribe,
            ``(ii) shall apply to any successor organization which is 
        engaged in substantially similar activities, and
            ``(iii) once made, shall be irrevocable.
    ``(17) Certain transitional leased property.--The amendments made by 
this section shall not apply to property described in section 
168(c)(2)(D) of the Internal Revenue Code of 1986, as in effect on the 
day before the date of the enactment of this Act [July 18, 1984], and 
which is described in any of the following subparagraphs:
        ``(A) Property is described in this subparagraph if such 
    property is leased to a university, and--
            ``(i) on June 16, 1983, the Board of Administrators of the 
        university adopted a resolution approving the rehabilitation of 
        the property in connection with an overall campus development 
        program; and
            ``(ii) the property houses a basketball arena and university 
        offices.
        ``(B) Property is described in this subparagraph if such 
    property is leased to a charitable organization, and--
            ``(i) on August 21, 1981, the charitable organization 
        acquired the property, with a view towards rehabilitating the 
        property; and
            ``(ii) on June 12, 1982, an arson fire caused substantial 
        damage to the property, delaying the planned rehabilitation.
        ``(C) Property is described in this subparagraph if such 
    property is leased to a corporation that is described in section 
    501(c)(3) of the Internal Revenue Code of 1986 (relating to 
    organizations exempt from tax) pursuant to a contract--
            ``(i) which was entered into on August 3, 1983; and
            ``(ii) under which the corporation first occupied the 
        property on December 22, 1983.
        ``(D) Property is described in this subparagraph if such 
    property is leased to an educational institution for use as an Arts 
    and Humanities Center and with respect to which--
            ``(i) in November 1982, an architect was engaged to design a 
        planned renovation;
            ``(ii) in January 1983, the architectural plans were 
        completed;
            ``(iii) in December 1983, a demolition contract was entered 
        into; and
            ``(iv) in March 1984, a renovation contract was entered 
        into.
        ``(E) Property is described in this subparagraph if such 
    property is used by a college as a dormitory, and--
            ``(i) in October 1981, the college purchased the property 
        with a view towards renovating the property;
            ``(ii) renovation plans were delayed because of a zoning 
        dispute; and
            ``(iii) in May 1983, the court of highest jurisdiction in 
        the State in which the college is located resolved the zoning 
        dispute in favor of the college.
        ``(F) Property is described in this subparagraph if such 
    property is a fraternity house related to a university with respect 
    to which--
            ``(i) in August 1982, the university retained attorneys to 
        advise the university regarding the rehabilitation of the 
        property;
            ``(ii) on January 21, 1983, the governing body of the 
        university established a committee to develop rehabilitation 
        plans;
            ``(iii) on January 10, 1984, the governor of the state in 
        which the university is located approved historic district 
        designation for an area that includes the property; and
            ``(iv) on February 2, 1984, historic preservation 
        certification applications for the property were filed with a 
        historic landmarks commission.
        ``(G) Property is described in this subparagraph if such 
    property is leased to a retirement community with respect to which--
            ``(i) on January 5, 1977, a certificate of incorporation was 
        filed with the appropriate authority of the state in which the 
        retirement community is located; and
            ``(ii) on November 22, 1983, the Board of Trustees adopted a 
        resolution evidencing the intention to begin immediate 
        construction of the property.
        ``(H) Property is described in this subparagraph if such 
    property is used by a university, and--
            ``(i) in July 1982, the Board of Trustees of the university 
        adopted a master plan for the financing of the property; and
            ``(ii) as of August 1, 1983, at least $60,000 in private 
        expenditures had been expended in connection with the property.
    In the case of Clemson University, the preceding sentence applies 
    only to the Continuing Education Center and the component housing 
    project.
        ``(I) Property is described in this subparagraph if such 
    property is used by a university as a fine arts center and the Board 
    of Trustees of such university authorized the sale-leaseback 
    agreement with respect to such property on March 7, 1984.
        ``(J) Property is described in this subparagraph if such 
    property is used by a tax-exempt entity as an international trade 
    center, and
            ``(i) prior to 1982, an environmental impact study for such 
        property was completed;
            ``(ii) on June 24, 1981, a developer made a written 
        commitment to provide one-third of the financing for the 
        development of such property; and
            ``(iii) on October 20, 1983, such developer was approved by 
        the Board of Directors of the tax-exempt entity.
        ``(K) Property is described in this subparagraph if such 
    property is used by university of osteopathic medicine and health 
    sciences, and on or before December 31, 1983, the Board of Trustees 
    of such university approved the construction of such property.
        ``(L) Property is described in this subparagraph if such 
    property is used by a tax-exempt entity, and--
            ``(i) such use is pursuant to a lease with a taxpayer which 
        placed substantial improvements in service;
            ``(ii) on May 23, 1983, there existed architectural plans 
        and specifications (within the meaning of sec. 48(g)(1)(C)(ii) 
        of the Internal Revenue Code of 1986); and
            ``(iii) prior to May 23, 1983, at least 10 percent of the 
        total cost of such improvements was actually paid or incurred.
    Property is described in this subparagraph if such property was 
    leased to a tax-exempt entity pursuant to a lease recorded in the 
    Register of Deed of Essex County, New Jersey, on May 7, 1984, and a 
    deed of such property was recorded in the Register of Deed of Essex 
    County, New Jersey, on May 7, 1984.
        ``(M) Property is described in this subparagraph if such 
    property is used as a convention center and on June 2, 1983, the 
    City Council of the city in which the center is located provided for 
    over $6 million for the project.
    ``(18) Special rule for amendment made by subsection (c)(1).--
        ``(A) In general.--The amendment made by subsection (c)(1) 
    [enacting section 48(g)(2)(B)(vi) of this title] shall not apply to 
    property--
            ``(i) leased by the taxpayer on or before November 1, 1983, 
        or
            ``(ii) leased by the taxpayer after November 1, 1983, if on 
        or before such date the taxpayer entered into a written binding 
        contract requiring the taxpayer to lease such property.
        ``(B) Limitation.--Subparagraph (A) shall apply to the amendment 
    made by subsection (c)(1) only to the extent such amendment relates 
    to property described in subclause (II), (III), or (IV) of section 
    168(j)(3)(B)(ii) of the Internal Revenue Code of 1986 (as added by 
    this section).
    ``(19) Special rule for certain energy management contracts.--
        ``(A) In general.--The amendments made by subsection (e) 
    [amending section 7701 of this title] shall not apply to property 
    used pursuant to an energy management contract that was entered into 
    prior to May 1, 1984.
        ``(B) Definition of energy management contract.--For purposes of 
    subparagraph (A), the term `energy management contract' means a 
    contract for the providing of energy conservation or energy 
    management services.
    ``(20) Definitions.--For purposes of this subsection--
        ``(A) Tax-exempt entity.--The term `tax-exempt entity' has the 
    same meaning as when used in section 168(j) of the Internal Revenue 
    Code of 1986 (as added by this section), except that such term shall 
    include any related entity (within the meaning of such section).
        ``(B) Treatment of improvements.--
            ``(i) In general.--For purposes of this subsection, an 
        improvement to property shall not be treated as a separate 
        property unless such improvement is a substantial improvement 
        with respect to such property.
            ``(ii) Substantial improvement.--For purposes of clause (i), 
        the term `substantial improvement' has the meaning given such 
        term by section 168(f)(1)(C) of such Code determined--
                ``(I) by substituting `property' for `building' each 
            place it appears therein,
                ``(II) by substituting `20 percent' for `25 percent' in 
            clause (ii) thereof, and
                ``(III) without regard to clause (iii) thereof.
        ``(C) Foreign person or entity.--The term `foreign person or 
    entity' has the meaning given to such term by subparagraph (C) of 
    section 168(j)(4) of such Code (as added by this section). For 
    purposes of this subparagraph and subparagraph (A), such 
    subparagraph (C) shall be applied without regard to the last 
    sentence thereof.
        ``(D) Leases and subleases.--The determination of whether there 
    is a lease or sublease to a tax-exempt entity shall take into 
    account sections 168(j)(6)(A), 168(j)(8)(A), and 7701(e) of the 
    Internal Revenue Code of 1986 (as added by this section).''
    [Section 1802(a)(10)(B) of Pub. L. 99-514 provided in part that 
amendment by section 1802(a)(10)(B) of Pub. L. 99-514, amending section 
31(g)(15)(D)(ii) of Pub. L. 98-369, set out above, is effective with 
respect to property placed in service by the taxpayer after July 18, 
1984.]
    [Section 1802(a)(10)(D)(ii) of Pub. L. 99-514 provided that: ``The 
amendment made by clause (i) [amending section 31(g)(20)(B)(ii) of Pub. 
L. 98-369, set out above] shall not apply to any property if--
        ``(I) on or before March 28, 1985, the taxpayer (or a 
    predecessor in interest under the contract) or the tax-exempt entity 
    entered into a written binding contract to acquire, construct, or 
    rehabilitate the property, or
        ``(II) the taxpayer or the tax-exempt entity began the 
    construction, reconstruction, or rehabilitation of the property on 
    or before March 28, 1985.'']
    Section 32(c) of Pub. L. 98-369, as amended by Pub. L. 99-514, 
Sec. 2, title XVIII, Sec. 1802(b)(2), Oct. 22, 1986, 100 Stat. 2095, 
2791, provided that: ``The amendment made by subsection (a) [amending 
this section] shall apply to agreements described in section 168(f)(14) 
of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as added by 
subsection (a)) entered into more than 90 days after the date of the 
enactment of this Act [July 18, 1984].''
    Section 111(g) of Pub. L. 98-369, as amended by Pub. L. 99-514, 
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
    ``(1) In general.--Except as otherwise provided in this subsection, 
the amendments made by this section [amending 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 section shall not 
apply to property placed in service by the taxpayer before January 1, 
1987, if--
        ``(A) the taxpayer or a qualified person entered into a binding 
    contract to purchase or construct such property before March 16, 
    1984, or
        ``(B) construction of such property was commenced by or for the 
    taxpayer or a qualified person before March 16, 1984.
For purposes of this paragraph the term `qualified person' means any 
person who transfers his rights in such a contract or such property to 
the taxpayer, but only if such property is not placed in service by such 
person before such rights are transferred to the taxpayer.
    ``(3) Special rules for application of paragraph (2).--
        ``(A) Certain inventory.--In the case of any property which--
            ``(i) is held by a person as property described in section 
        1221(1) [26 U.S.C. 1221(1)], and
            ``(ii) is disposed of by such person before January 1, 1985,
    such person shall not, for purposes of paragraph (2), be treated as 
    having placed such property in service before such property is 
    disposed of merely because such person rented such property or held 
    such property for rental. No deduction for depreciation or 
    amortization shall be allowed to such person with respect to such 
    property,
        ``(B) Certain property financed by bonds.--In the case of any 
    property with respect to which--
            ``(i) bonds were issued to finance such property before 
        1984, and
            ``(ii) an architectural contract was entered into before 
        March 16, 1984,
    paragraph (2) shall be applied by substituting `May 2' for `March 
    16'.
    ``(4) Special rule for components.--For purposes of applying section 
168(f)(1)(B) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] 
(as amended by this section) to components placed in service after 
December 31, 1986, property to which paragraph (2) applies shall be 
treated as placed in service by the taxpayer before March 16, 1984.
    ``(5) Special rule for mid-month convention.--In the case of the 
amendment made by subsection (d) [amending subsec. (b)(2)(A), (B) of 
this section]--
        ``(A) paragraph (1) shall be applied by substituting `June 22, 
    1984' for `March 15, 1984', and
        ``(B) paragraph (2) shall be applied by substituting `June 23, 
    1984' for `March 15, 1984' each place it appears.''
    Amendment by section 113(a)(2) of Pub. L. 98-369 applicable to 
property placed in service after Mar. 15, 1984, in taxable years ending 
after such date, see section 113(c)(1) of Pub. L. 98-369, set out as a 
note under section 48 of this title.
    Section 113(c)(2) of Pub. L. 98-369, as amended by Pub. L. 99-514, 
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
    ``(A) The amendments made by paragraphs (1) of subsection (b) 
[amending this section] shall apply to any motion picture film or video 
tape placed in service before, on, or after the date of the enactment of 
this Act [July 18, 1984], except that such amendment shall not apply 
to--
        ``(i) any qualified film placed in service by the taxpayer 
    before March 15, 1984, if the taxpayer treated such film as recovery 
    property for purposes of section 168 of the Internal Revenue Code of 
    1986 [formerly I.R.C. 1954] on a return of tax under chapter 1 of 
    such Code filed before March 16, 1984, or
        ``(ii) any qualified film placed in service by the taxpayer 
    before January 1, 1985, if--
            ``(I) 20 percent or more of the production costs of such 
        film were incurred before March 16, 1984, and
            ``(II) the taxpayer treats such film as recovery property 
        for purposes of section 168 of such Code.
No credit shall be allowable under section 38 of such Code with respect 
to any qualified film described in clause (ii), except to the extent 
provided in section 48(k) of such Code.
    ``(B) The amendment made by paragraph (2) and (3) of subsection (b) 
[amending 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 [sections 201(a), 
211(a)(1), and 211(f)(1) of Pub. L. 97-34, enacting this section and 
amending section 46 of this title].
    ``(C) The amendment made by paragraph (4) of subsection (b) 
[amending section 48 of this title] shall take effect as if included in 
the amendments made by section 205(a)(1) of the Tax Equity and Fiscal 
Responsibility Act of 1982 [section 205(a)(1) of Pub. L. 97-248, 
amending section 48 of this title].
    ``(D) For purposes of this paragraph, the terms `qualified film' and 
`production costs' have the same respective meanings as when used in 
section 48(k) of the Internal Revenue Code of 1986.''
    Amendment by section 474(r)(7) of Pub. L. 98-369 applicable to 
taxable years beginning after Dec. 31, 1983, and to carrybacks from such 
years, see section 475(a) of Pub. L. 98-369, set out as a note under 
section 21 of this title.
    Amendment by section 612(e) of Pub. L. 98-369 applicable to interest 
paid or accrued after Dec. 31, 1984, on indebtedness incurred after Dec. 
31, 1984, see section 612(g) of Pub. L. 98-369, set out as an Effective 
Date note under section 25 of this title.
    Amendment by section 628(b) of Pub. L. 98-369 applicable to property 
placed in service after Dec. 31, 1983, with certain conditions and 
exceptions, see section 631(b) of Pub. L. 98-369, set out as a note 
under section 103 of this title.


                    Effective Date of 1983 Amendments

    Amendment by title I of Pub. L. 97-448 effective, except as 
otherwise provided, as if it had been included in the provision of the 
Economic Recovery Tax Act of 1981, Pub. L. 97-34, to which such 
amendment relates, see section 109 of Pub. L. 97-448, set out as a note 
under section 1 of this title.
    Section 102(a)(10)(B) of Pub. L. 97-448, as amended by Pub. L. 99-
514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ``The 
amendment made by subparagraph (A) [amending this section] shall apply 
with respect to property to which the provisions of section 168(f)(8) of 
the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as in effect 
before the amendments made by the Tax Equity and Fiscal Responsibility 
Act of 1982 [Pub. L. 97-248]) apply.''
    Amendment by section 541 of Pub. L. 97-424 applicable to taxable 
years beginning after Dec. 31, 1979, with a special rule for periods 
beginning before Mar. 1, 1980, see section 541(c) of Pub. L. 97-424, set 
out as a note under section 46 of this title.


                    Effective Date of 1982 Amendments

    Amendment by Pub. L. 97-354 applicable to taxable years beginning 
after Dec. 31, 1982, see section 6(a) of Pub. L. 97-354, set out as an 
Effective Date note under section 1361 of this title.
    Section 208(d) of Pub. L. 97-248, as amended by Pub. L. 97-448, 
title III, Sec. 306(a)(4), Jan. 12, 1983, 96 Stat. 2400; Pub. L. 98-369, 
div. A, title X, Sec. 1067(a), July 18, 1984, 98 Stat. 1048; Pub. L. 99-
514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
    ``(1) In general.--Except as otherwise provided in this subsection, 
the amendments made by subsections (a) and (b) of this section [amending 
this section and section 47 of this title] shall apply to agreements 
entered into after July 1, 1982, or to property placed in service after 
July 1, 1982.
    ``(2) Transitional rule for certain safe harbor lease property.--
        ``(A) In general.--The amendments made by subsections (a) and 
    (b) [amending this section and section 47 of this title] shall not 
    apply to transitional safe harbor lease property.
        ``(B) Special rule for certain provisions.--Subparagraph (A) 
    shall not apply with respect to the provisions of paragraph (6) of 
    section 168(i) of the Internal Revenue Code of 1986 [formerly I.R.C. 
    1954] (as added by subsection (a)(1)), to the provisions of section 
    168(f)(8)(J) of such Code (as added by subsection (b)(4)), or to the 
    amendment made by subsection (b)(1).
    ``(3) Transitional safe harbor lease property.--For purposes of this 
subsection, the term `transitional safe harbor lease property' means 
property described in any of the following subparagraphs:
        ``(A) In general.--Property is described in this subparagraph if 
    such property is placed in service before January 1, 1983, if--
            ``(i) with respect to such property a binding contract to 
        acquire or to construct such property was entered into by the 
        lessee after December 31, 1980, and before July 2, 1982, or
            ``(ii) such property was acquired by the lessee, or 
        construction of such property was commenced by or for the 
        lessee, after December 31, 1980, and before July 2, 1982.
        ``(B) Certain qualified lessees.--Property is described in this 
    subparagraph if such property is placed in service before July 1, 
    1982, and with respect to which--
            ``(i) an agreement to which section 168(f)(8)(A) of the 
        Internal Revenue Code of 1986 applies was entered into before 
        August 15, 1982, and
            ``(ii) the lessee under such agreement is a qualified lessee 
        (within the meaning of paragraph (6)).
        ``(C) Automotive manufacturing property.--
            ``(i) In general.--Property is described in this 
        subparagraph if--
                ``(I) such property is used principally by the taxpayer 
            directly in connection with the trade or business of the 
            taxpayer of the manufacture of automobiles or light-duty 
            trucks,
                ``(II) such property is automotive manufacturing 
            property, and
                ``(III) such property would be described in subparagraph 
            (A) if `October 1' were substituted for `January 1'.
            ``(ii) Light-duty truck.--For purposes of this subparagraph, 
        the term `light-duty truck' means any truck with a gross vehicle 
        weight of 13,000 pounds or less. Such term shall not include any 
        truck tractor.
            ``(iii) Automotive manufacturing property.--For purposes of 
        this subparagraph, the term `automotive manufacturing property' 
        means machinery, equipment, and special tools of the type 
        included in the former asset depreciation range guideline 
        classes 37.11 and 37.12.
            ``(iv) Special tools used by certain vendors.--For purposes 
        of this subparagraph, any special tools owned by a taxpayer 
        described in subclause (I) of clause (i) which are used by a 
        vendor solely for the production of component parts for sale to 
        the taxpayer shall be treated as automotive manufacturing 
        property used directly by such taxpayer.
        ``(D) Certain aircraft.--Property is described in this 
    subparagraph if such property--
            ``(i) is a commercial passenger aircraft (other than a 
        helicopter), and
            ``(ii) would be described in subparagraph (A) if `January 1, 
        1984' were substituted for `January 1, 1983'.
    For purposes of determining whether property described in this 
    subparagraph is described in subparagraph (A), subparagraph (A)(ii) 
    shall be applied by substituting `June 25, 1981' for `December 31, 
    1980' and by substituting `February 20, 1982' for `July 2, 1982' and 
    construction of the aircraft shall be treated as having been begun 
    during the period referred to in subparagraph (A)(ii) if during such 
    period construction or reconstruction of a subassembly was 
    commenced, or the stub wing join occurred.
        ``(E) Turbines and boilers.--Property is described in this 
    subparagraph if such property--
            ``(i) is a turbine or boiler of a cooperative organization 
        engaged in the furnishing of electric energy to persons in rural 
        areas, and
            ``(ii) would be property described in subparagraph (A) if 
        `July 1' were substituted for `January 1'.
    For purposes of determining whether property described in this 
    subparagraph is described in subparagraph (A), such property shall 
    be treated as having been acquired during the period referred to in 
    subparagraph (A)(ii) if at least 20 percent of the cost of such 
    property is paid during such period.
        ``(F) Property used in the production of steel.--Property is 
    described in this subparagraph if such property--
            ``(i) is used by the taxpayer directly in connection with 
        the trade or business of the taxpayer of the manufacture or 
        production of steel, and
            ``(ii) would be described in subparagraph (A) if `January 1, 
        1984' were substituted for `January 1, 1983'.
        ``(G) Coal gasification facilities.--
            ``(i) In general.--Property is described in this 
        subparagraph if such property--
                ``(I) is used directly in connection with the 
            manufacture or production of low sulfur gaseous fuel from 
            coal, and
                ``(II) would be described in subparagraph (A) if `July 
            1, 1984' were substituted for `January 1, 1983'.
            ``(ii) Special rule.--For purposes of determining whether 
        property described in this subparagraph is described in 
        subparagraph (A), such property shall be treated as having been 
        acquired during the period referred to in subparagraph (A)(ii) 
        if at least 20 percent of the cost of such property is paid 
        during such period.
            ``(iii) Limitation on amount.--Clause (i) shall only apply 
        to the lease of an undivided interest in the property in an 
        amount which does not exceed the lesser of--
                ``(I) 50 percent of the cost basis of such property, or
                ``(II) $67,500,000.
            ``(iv) Placed in service.--In the case of property to which 
        this subparagraph applies--
                ``(I) such property shall be treated as placed in 
            service when the taxpayer receives an operating permit with 
            respect to such property from a State environmental 
            protection agency, and
                ``(II) the term of the lease with respect to such 
            property shall be treated as being 5 years.
    ``(4) Special rule for antiavoidance provisions.--The provisions of 
paragraph (6) of section 168(i) of such Code (as added by subsection 
(a)(1)), and the amendment made by subsection (b)(1) [amending this 
section] shall apply to leases entered into after February 19, 1982, in 
taxable years ending after such date.
    ``(5) Special rule for mass commuting vehicles.--The amendments made 
by this section (other than section 168(i)(1) and (7) of such Code, as 
added by subsection (a)(1) or section 168(f)(8)(J) of such Code, as 
added by subsection (b)(4)) and section 209 [amending this section and 
section 48 of this title] shall not apply to qualified leased property 
described in section 168(f)(8)(D)(V) of such Code (as in effect after 
the amendments made by this section) which--
        ``(A) is placed in service before January 1, 1988, or
        ``(B) is placed in service after such date--
            ``(i) pursuant to a binding contract or commitment entered 
        into before April 1, 1983, and
            ``(ii) solely because of conditions which, as determined by 
        the Secretary of the Treasury or his delegate, are not within 
        the control of the lessor or lessee.
    ``(6) Qualified lessee defined.--
        ``(A) In general.--The term `qualified lessee' means a taxpayer 
    which is a lessee of an agreement to which section 168(f)(8)(A) of 
    such Code applies and which--
            ``(i) had net operating losses in each of the three most 
        recent taxable years ending before July 1, 1982, and had an 
        aggregate net operating loss for the five most recent taxable 
        years ending before July 1, 1982, and
            ``(ii) which uses the property subject to the agreement to 
        manufacture and produce within the United States a class of 
        products in an industry with respect to which--
                ``(I) the taxpayer produced less than 5 percent of the 
            total number of units (or value) of such products during the 
            period covering the three most recent taxable years of the 
            taxpayer ending before July 1, 1982, and
                ``(II) four or fewer United States persons (including as 
            one person an affiliated group as defined in section 
            1504(a)) other than the taxpayer manufactured 85 percent or 
            more of the total number of all units (or value) within such 
            class of products manufactured and produced in the United 
            States during such period.
        ``(B) Class of products.--For purposes of subparagraph (A)--
            ``(i) the term `class of products' means any of the 
        categories designated and numbered as a `class of products' in 
        the 1977 Census of Manufacturers compiled and published by the 
        Secretary of Commerce under title 13 of the United States Code, 
        and
            ``(ii) information--
                ``(I) compiled or published by the Secretary of 
            Commerce, as part of or in connection with the Statistical 
            Abstract of the United States or the Census of 
            Manufacturers, regarding the number of units (or value) of a 
            class of products manufactured and produced in the United 
            States during any period, or
                ``(II) if information under subclause (I) is not 
            available, so compiled or published with respect to the 
            number of such units shipped or sold by such manufacturers 
            during any period,
    shall constitute prima facie evidence of the total number of all 
        units of such class of products manufactured and produced in the 
        United States in such period.
    ``(6) Underpayments of tax for 1982.--No addition to the tax shall 
be made under section 6655 of the Internal Revenue Code of 1954 
(relating to failure by corporation to pay estimated income tax) for any 
period before October 15, 1982, with respect to any underpayment of 
estimated tax by a taxpayer with respect to any tax imposed by chapter 1 
of such Code to the extent that such underpayment was created or 
increased by any provision of this section.
    ``(7) Coordination with at risk rules.--Subparagraph (J) of section 
168(f)(8) of the Internal Revenue Code of 1986 (as added by subsection 
(b)(4)) shall take effect as provided in such subparagraph (J).''

    [Section 1067(c) of Pub. L. 98-369 provided that: ``The amendment 
made by subsection (a) [enacting section 208(d)(3)(G) of Pub. L. 97-248, 
set out above] shall take effect as if included in the provision of 
section 208(d)(3) of the Tax Equity and Fiscal Responsibility Act of 
1982 [Pub. L. 97-248].''
    Section 209(d) of Pub. L. 97-248; as amended by Pub. L. 98-369, div. 
A, title I, Sec. 12(a)(1), (2), July 18, 1984, 98 Stat. 503, provided 
that:
    ``(1) Subsection (a).--
        ``(A) In general.--Except as provided in subparagraph (B) and 
    paragraph (2), the amendments made by this section [amending this 
    section and section 48 of this title] shall apply to agreements 
    entered into after December 31, 1987.
        ``(B) Special rule for farm property aggregating $150,000 or 
    less.--
            ``(i) In general.--The amendments made by subsection (a) 
        [amending this section] shall also apply to any agreement 
        entered into after July 1, 1982, and before January 1, 1988, if 
        the property subject to such agreement is section 38 property 
        which is used for farming purposes (within the meaning of 
        section 2032A(e)(5)).
            ``(ii) $150,000 limitation.--The provisions of clause (i) 
        shall not apply to any agreement if the sum of--
                ``(I) the cost basis of the property subject to the 
            agreement, plus
                ``(II) the cost basis of any property subject to an 
            agreement to which this subparagraph previously applied, 
            which was entered into during the same calendar year, and 
            with respect to which the lessee was the lessee of the 
            agreement described in subclause (I) (or any related person 
            within the meaning of section 168(e)(4)(D)),
    exceeds $150,000. For purposes of subclause (II), in the case of an 
        individual, there shall not be taken into account any agreement 
        of any individual who is a related person involving property 
        which is used in a trade or business of farming of such related 
        person which is separate from the trade or business of farming 
        of the lessee described in subclause (II).
    ``(2) Special rule for definition of new section 38 property.--The 
amendment made by subsection (c) [amending section 48 of this title] 
shall apply to property placed in service after December 31, 1983.''
    Section 216(b) of Pub. L. 97-248, as amended by Pub. L. 99-514, 
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
    ``(1) In general.--Except as otherwise provided in this subsection, 
the amendments made by this section [amending this section] shall apply 
with respect to property placed in service after December 31, 1982, to 
the extent such property is financed by the proceeds of an obligation 
(including a refunding obligation) issued after June 30, 1982.
    ``(2) Exceptions.--
        ``(A) Construction or binding agreement.--The amendments made by 
    this section [amending this section] shall not apply with respect to 
    facilities the original use of which commences with the taxpayer 
    and--
            ``(i) the construction, reconstruction, or rehabilitation of 
        which began before July 1, 1982, or
            ``(ii) with respect to which a binding agreement to incur 
        significant expenditures was entered into before July 1, 1982.
        ``(B) Refunding.--
            ``(i) In general.--Except as provided in clause (ii), in the 
        case of property placed in service after December 31, 1982 which 
        is financed by the proceeds of an obligation which is issued 
        solely to refund another obligation which was issued before July 
        1, 1982, the amendments made by this section [amending this 
        section] shall apply only with respect to the basis in such 
        property which has not been recovered before the date such 
        refunding obligation is issued.
            ``(ii) Significant expenditures.--In the case of facilities 
        the original use of which commences with the taxpayer and with 
        respect to which significant expenditures are made before 
        January 1, 1983, the amendments made by this section shall not 
        apply with respect to such facilities to the extent such 
        facilities are financed by the proceeds of an obligation issued 
        solely to refund another obligation which was issued before July 
        1, 1982.
In the case of an inducement resolution adopted by an issuing authority 
before July 1, 1982, for purposes of applying subparagraphs (A)(i) and 
(B)(ii) with respect to obligations described in such resolution, the 
term `facilities' means the facilities described in such resolution.
    ``(3) Certain projects for residential real property.--For purposes 
of clause (i) of section 168(f)(12)(C) of the Internal Revenue Code of 
1986 [formerly I.R.C. 1954] (as added by this section), any obligation 
issued to finance a project described in the table contained in 
paragraph (1) of section 1104(n) of the Mortgage Subsidy Bond Tax Act of 
1980 [section 1104(n) of Pub. L. 96-499, set out as a note under section 
103A of this title] shall be treated as an obligation described in 
section 103(b)(4)(A) of the Internal Revenue Code of 1986.''
    Amendment by section 224(c)(1), (2) of Pub. L. 97-248 to apply to 
any target corporation, within the meaning of section 338 of this title, 
with respect to which the acquisition date, within the meaning of such 
section, occurs after Aug. 31, 1982, and also to apply to certain 
acquisitions before September 1, 1982, but not to apply in the case of 
certain acquisitions of financial institutions, see section 224(d) of 
Pub. L. 97-248, set out as an Effective Date note under section 338 of 
this title.


                             Effective Date

    Section 209(a)-(c) of Pub. L. 97-34, as amended by Pub. L. 97-448, 
title I, Sec. 102(d)(1), (g), Jan. 12, 1983, 96 Stat. 2370; Pub. L. 99-
514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
    ``(a) General Rule.--Except as otherwise provided in this section, 
the amendments made by this subtitle [subtitle A (Secs. 201-209) of 
title II of Pub. L. 97-34, enacting this section, amending sections 44E, 
46, 50A, 53, 57, 167, 172, 179, 263, 312, 381, 453, 812, 825, 964, 1033, 
1245, and 1250 of this title, and enacting provisions set out as notes 
under this section and sections 46 and 167 of this title] shall apply to 
property placed in service after December 31, 1980, in taxable years 
ending after such date.
    ``(b) Special Rule for RRB Property.--The amendment made by 
subsection (c) of section 203 [amending section 167 of this title and 
enacting provisions set out as notes under section 167 of this title] 
shall take effect on January 1, 1981, and shall apply with respect to 
taxable years ending after such date.
    ``(c) Special Rule for Carryovers.--
        ``(1)(A) Except as provided in subparagraph (B), the amendments 
    made by subsections (a) and (b) of section 207 [amending sections 
    172, 812, and 825 of this title] shall apply to net operating losses 
    in taxable years ending after December 31, 1975.
        ``(B) The amendments made by subparagraph (B)(i) of section 
    207(a)(2) [amending section 172 of this title] shall take effect as 
    if they had been included in the amendments made by section 1(a) of 
    Public Law 96-595 [amending section 172 of this title]; except that 
    the amendments made by such subparagraph shall apply only to net 
    operating losses in taxable years ending after December 31, 1972.
        ``(C) If any net operating loss for any taxable year ending on 
    or before December 31, 1975, could be a net operating loss carryover 
    to a taxable year ending in 1981 by reason of subclause (II) of 
    section 172(b)(1)(E)(ii) of the Internal Revenue Code of 1986 
    [formerly I.R.C. 1954] (as in effect on the day before the date of 
    the enactment of this Act [Aug. 13, 1981] and as modified by section 
    1(b) of Public Law 96-595 [set out as an Effective Date of 1980 
    Amendment note under section 172 of this title]), such net operating 
    loss shall be a net operating loss carryover under section 172 of 
    such Code to each of the 15 taxable years following the taxable year 
    of such loss.
        ``(2)(A) The amendments made by subsection (c)(1) of section 207 
    [amending sections 46 and 50A of this title] shall apply to unused 
    credit years ending after December 31, 1973.
        ``(B) The amendment made by subsection (c)(2) of section 207 
    [amending section 53 of this title] shall apply to unused credit 
    years beginning after December 31, 1976.
        ``(C) The amendments made by subsection (c)(3) of section 207 
    [amending section 44E of this title] shall apply to unused credit 
    years ending after September 30, 1980.
        ``(3) Carryover must have been alive in 1981.--The amendments 
    made by subsections (a), (b), and (c) of section 207 [amending 
    sections 44E, 46, 50A, 53, 172, 812, and 825 of this title] shall 
    not apply to any amount which, under the law in effect on the day 
    before the date of the enactment of this Act [Aug. 13, 1981], could 
    not be carried to a taxable year ending in 1981.''


                            Savings Provision

    For provisions that nothing in amendment by Pub. L. 101-508 be 
construed to affect treatment of certain transactions occurring, 
property acquired, or items of income, loss, deduction, or credit taken 
into account prior to Nov. 5, 1990, for purposes of determining 
liability for tax for periods ending after Nov. 5, 1990, see section 
11821(b) of Pub. L. 101-508, set out as a note under section 29 of this 
title.


                           Depreciation Study

    Pub. L. 105-277, div. J, title II, Sec. 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 recovery 
    periods and depreciation methods under section 168 of the Internal 
    Revenue Code of 1986, and
        ``(2) not later than March 31, 2000, shall submit the results of 
    such study, together with recommendations for determining such 
    periods and methods in a more rational manner, to the Committee on 
    Ways and Means of the House of Representatives and the Committee on 
    Finance of the Senate.''


           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 [Secs. 1101-1147 and 1171-1177] or title XVIII 
[Secs. 1800-1899A] of Pub. L. 99-514 require an amendment to any plan, 
such plan amendment shall not be required to be made before the first 
plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. 
L. 99-514, as amended, set out as a note under section 401 of this 
title.


                Treatment of Certain Farm Finance Leases

    Section 1801(a)(2) of Pub. L. 99-514, as amended by Pub. L. 100-647, 
title I, Sec. 1018(a), Nov. 10, 1988, 102 Stat. 3577, provided that:
    ``(A) In general.--If--
        ``(i) any partnership or grantor trust is the lessor under a 
    specified agreement,
        ``(ii) such partnership or grantor trust met the requirements of 
    section 168(f)(8)(C)(i) of the Internal Revenue Code of 1954 
    (relating to special rules for finance leases) when the agreement 
    was entered into, and
        ``(iii) a person became a partner in such partnership (or a 
    beneficiary in such trust) after its formation but before September 
    26, 1985,
then, for purposes of applying the revenue laws of the United States in 
respect to such agreement, the portion of the property allocable to 
partners (or beneficiaries) not described in clause (iii) shall be 
treated as if it were subject to a separate agreement and the portion of 
such property allocable to the partner or beneficiary described in 
clause (iii) shall be treated as if it were subject to a separate 
agreement.
    ``(B) Specified agreement.--For purposes of subparagraph (A), the 
term `specified agreement' means an agreement to which subparagraph (B) 
of section 209(d)[(1)] of the Tax Equity and Fiscal Responsibility Act 
of 1982 [section 209(d)(1) of Pub. L. 97-248, set out as a note above] 
applies which is--
        ``(i) an agreement dated as of December 20, 1982, as amended and 
    restated as of February 1, 1983, involving approximately $8,734,000 
    of property at December 31, 1983,
        ``(ii) an agreement dated as of December 15, 1983, as amended 
    and restated as of January 3, 1984, involving approximately 
    $13,199,000 of property at December 31, 1984, or
        ``(iii) an agreement dated as of October 25, 1984, as amended 
    and restated as of December 1, 1984, involving approximately 
    $966,000 of property at December 31, 1984.''


Certain Residential Real Property Treated as Residential Rental Property

    Section 1809(a)(4)(C) of Pub. L. 99-514 provided that: ``Any 
property described in paragraph (3) of section 631(d) of the Tax Reform 
Act of 1984 [section 631(d) of Pub. L. 99-369, set out as a note under 
section 103 of this title] shall be treated as property described in 
clause (ii) of section 168(f)(12)(C) of the Internal Revenue Code of 
1954 [now 1986] as amended by subparagraph (B).''


               Coordination With Imputed Interest Changes

    Section 1809(a)(5) of Pub. L. 99-514 provided that: ``In the case of 
any property placed in service before May 9, 1985 (or treated as placed 
in service before such date by section 105(b)(3) of Public Law 99-121 
[set out as a note above])--
        ``(A) any reference in any amendment made by this subsection 
    [amending 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

    Section 12(b) of Pub. L. 98-369, as amended by Pub. L. 99-514, 
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ``Paragraph (8) of 
section 168(f) of the Internal Revenue 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

    Section 12(c) of Pub. L. 98-369, as amended by Pub. L. 99-514, 
Sec. 2, title XVIII, Sec. 1801(a)(1), Oct. 22, 1986, 100 Stat. 2095, 
2785; Pub. L. 100-647, title I, Sec. 1002(d)(7)(B), Nov. 10, 1988, 102 
Stat. 3360, provided that:
    ``(1) In general.--The amendments made by subsection (a) [amending 
this section and section 208(d) of Pub. L. 97-248, set out as an 
Effective Date of 1982 Amendments note above] shall not apply with 
respect to any property if--
        ``(A) a binding contract to acquire or to construct such 
    property was entered into by or for the lessee before March 7, 1984, 
    or
        ``(B) such property was acquired by the lessee, or the 
    construction of such property was begun, by or for the lessee, 
    before March 7, 1984.
The preceding sentence shall not apply to any property with respect to 
which an election is made under this sentence at such time after the 
date of the enactment of the Tax Reform Act of 1986 [Oct. 22, 1986] as 
the Secretary of the Treasury or his delegate may prescribe.
    ``(2) Special rule for certain automotive property.--
        ``(A) In general.--The amendments made by subsection (a) shall 
    not apply to property--
            ``(i) which is automotive manufacturing property, and
            ``(ii) with respect to which the lessee is a qualified 
        lessee (within the meaning of section 208(d)(6) of the Tax 
        Equity and Fiscal Responsibility Act of 1982) [Pub. L. 97-248, 
        set out as an Effective Date of 1982 Amendments note above].
        ``(B) $150,000,000 limitation.--The provisions of subparagraph 
    (A) shall not apply to any agreement if the sum of--
            ``(i) the cost basis of the property subject to the 
        agreement, plus
            ``(ii) the cost basis of any property subject to an 
        agreement to which subparagraph (A) previously applied and with 
        respect to which the lessee was the lessee under the agreement 
        described in clause (i) (or any related person within the 
        meaning of section 168(e)(4)(D) of the Internal Revenue Code of 
        1986 [formerly I.R.C. 1954]),
    exceeds $150,000,000.
        ``(C) Automotive manufacturing property.--For purposes of this 
    paragraph, the term `automotive manufacturing property' means--
            ``(i) property used principally by the taxpayer directly in 
        connection with the trade or business of the taxpayer of the 
        manufacturing of automobiles or trucks (other than truck 
        tractors) with a gross vehicle weight of 13,000 pounds or less,
            ``(ii) machinery, equipment, and special tools of the type 
        included in former depreciation range guideline classes 37.11 
        and 37.12, and
            ``(iii) any special tools owned by the taxpayer which are 
        used by a vendor solely for the production of component parts 
        for sale to the taxpayer.
    ``(3) Special rule for certain cogeneration facilities.--The 
amendments made by subsection (a) shall not apply with respect to any 
property which is part of a coal-fired cogeneration facility--
        ``(A) for which an application for certification was filed with 
    the Federal Energy Regulatory Commission on December 30, 1983,
        ``(B) for which an application for a construction permit was 
    filed with a State environmental protection agency on February 20, 
    1984, and
        ``(C) which is placed in service before January 1, 1988.''


       Special Leasing Rule Regarding Coal Gasification Facilities

    Section 1067(b) of Pub. L. 98-369, as amended by Pub. L. 99-514, 
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ``The amount of 
any recapture under section 47 of the Internal Revenue Code of 1986 
[formerly I.R.C. 1954] with respect to the credit allowed under section 
38 of such Code with respect to progress expenditures (within the 
meaning of section 46(d) of such Code) shall apply only to the 
percentage of the cost basis of the coal gasification facility to which 
the amendment made by subsection (a) [amending section 208(d) of Pub. L. 
97-248, set out as an Effective Date of 1982 Amendments note above] 
applies.''


   Certain Leases Before October 20, 1981, Treated as Qualified Leases

    Section 208(c) of Pub. L. 97-248, as amended by Pub. L. 99-514, 
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ``Nothing in 
paragraph (8) of section 168(f) of the Internal Revenue Code of 1986 
[formerly I.R.C. 1954], or in any regulations prescribed thereunder, 
shall be treated as making such paragraph inapplicable to any agreement 
entered into before October 20, 1981, solely because under such 
agreement 1 party to such agreement is entitled to the credit allowable 
under section 38 of such Code with respect to property and another party 
to such agreement is entitled to the deduction allowable under section 
168 of such Code with respect to such property. Section 168(f)(8)(B)(ii) 
of such Code shall not apply to the party entitled to such credit.''


                     Motor Vehicle Operating Leases

    Section 210 of Pub. L. 97-248, as amended by Pub. L. 98-369, div. A, 
title I, Sec. 32(b), title VII, Sec. 712(d), July 18, 1984, 98 Stat. 
531, 947; Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, 
provided that:
    ``(a) In general.--In the case of any qualified motor vehicle 
agreement entered into on or before the 90th day after the date of the 
enactment of the Tax Reform Act of 1984 [July 18, 1984], the fact that 
such agreement contains a terminal rental adjustment clause shall not be 
taken into account in determining whether such agreement is a lease.
    ``(b) Definitions.--For purposes of this section--
        ``(1) Qualified motor vehicle agreement.--The term `qualified 
    motor vehicle agreement' means any agreement with respect to a motor 
    vehicle (including a trailer)--
            ``(A) which was entered into before--
                ``(i) the enactment of any law, or
                ``(ii) the publication by the Secretary of the Treasury 
            or his delegate of any regulation,
    which provides that any agreement with a terminal rental adjustment 
        clause is not a lease,
            ``(B) with respect to which the lessor under the agreement--
                ``(i) is personally liable for the repayment of, or
                ``(ii) has pledged property (but only to the extent of 
            the net fair market value of the lessor's interest in such 
            property), other than property subject to the agreement or 
            property directly or indirectly financed by indebtedness 
            secured by property subject to the agreement, as security 
            for,
    all amounts borrowed to finance the acquisition of property subject 
        to the agreement, and
            ``(C) with respect to which the lessee under the agreement 
        uses the property subject to the agreement in a trade or 
        business or for the production of income.
        ``(2) Terminal rental adjustment clause.--The term `terminal 
    rental adjustment clause' means a provision of an agreement which 
    permits or requires the rental price to be adjusted upward or 
    downward by reference to the amount realized by the lessor under the 
    agreement upon sale or other disposition of such property. Such term 
    also includes a provision of an agreement which requires a lessee 
    who is a dealer in motor vehicles to purchase the motor vehicle for 
    a predetermined price and then resell such vehicle where such 
    provision achieves substantially the same results as a provision 
    described in the preceding sentence.
    ``(c) Exception Where Lessee Took Position on Return.--Subsection 
(a) shall not apply to deny a deduction for interest paid or accrued 
claimed by a lessee with respect to a qualified motor vehicle agreement 
on a return of tax imposed by chapter 1 of the Internal Revenue Code of 
1986 [formerly I.R.C. 1954] which was filed before the date of the 
enactment of this Act [Sept. 3, 1982] or to deny a credit for investment 
in depreciable property claimed by the lessee on such a return pursuant 
to an agreement with the lessor that the lessor would not claim the 
credit.''


         Information Returns With Respect to Safe Harbor Leases

    Pub. L. 97-119, title I, Sec. 112, Dec. 29, 1981, 95 Stat. 1640, as 
amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, 
provided that:
    ``(a) Requirement of Return.--
        ``(1) In general.--Except as provided in paragraph (2), 
    paragraph (8) of section 168(f) of the Internal Revenue Code of 1986 
    [formerly I.R.C. 1954] (relating to special rule for leases) shall 
    not apply with respect to an agreement unless a return, signed by 
    the lessor and lessee and containing the information required to be 
    included in the return pursuant to subsection (b), has been filed 
    with the Internal Revenue Service not later than the 30th day after 
    the date on which the agreement is executed.
        ``(2) Special rules for agreements executed before january 1, 
    1982.--
            ``(A) In general.--In the case of an agreement executed 
        before January 1, 1982, such agreement shall cease on February 
        1, 1982, to be treated as a lease under section 168(f)(8) unless 
        a return, signed by the lessor and containing the information 
        required to be included in subsection (b), has been filed with 
        the Internal Revenue Service not later than January 31, 1982.
            ``(B) Filing by lessee.--If the lessor does not file a 
        return under subparagraph (A), the return requirement under 
        subparagraph (A) shall be satisfied if such return is filed by 
        the lessee before January 31, 1982.
        ``(3) Certain failure to file.--If--
            ``(A) a lessor or lessee fails to file any return within the 
        time prescribed by this subsection, and
            ``(B) such failure is shown to be due to reasonable cause 
        and not due to willful neglect,
    the lessor or lessee shall be treated as having filed a timely 
    return if a return is filed within a reasonable time after the 
    failure is ascertained.
    ``(b) Information Required.--The information required to be included 
in the return pursuant to this subsection is as follows:
        ``(1) The name, address, and taxpayer identifying number of the 
    lessor and the lessee (and parent company if a consolidated return 
    is filed);
        ``(2) The district director's office with which the income tax 
    returns of the lessor and lessee are filed;
        ``(3) A description of each individual property with respect to 
    which the election is made;
        ``(4) The date on which the lessee places the property in 
    service, the date on which the lease begins and the term of the 
    lease;
        ``(5) The recovery property class and the ADR midpoint life of 
    the leased property;
        ``(6) The payment terms between the parties to the lease 
    transaction;
        ``(7) Whether the ACRS deductions and the investment tax credit 
    are allowable to the same taxpayer;
        ``(8) The aggregate amount paid to outside parties to arrange or 
    carry out the transaction;
        ``(9) For the lessor only: the unadjusted basis of the property 
    as defined in section 168(d)(1);
        ``(10) For the lessor only: if the lessor is a partnership or a 
    grantor trust, the name, address, and taxpayer identifying number of 
    the partners or the beneficiaries, and the district director's 
    office with which the income tax return of each partner or 
    beneficiary is filed; and
        ``(11) Such other information as may be required by the return 
    or its instructions.
Paragraph (8) shall not apply with respect to any person for any 
calendar year if it is reasonable to estimate that the aggregate 
adjusted basis of the property of such person which will be subject to 
subsection (a) for such year is $1,000,000 or less.
    ``(c) Coordination With Other Information Requirements.--In the case 
of agreements executed after December 31, 1982, to the extent provided 
in regulations prescribed by the Secretary of the Treasury or his 
delegate, the provisions of this section shall be modified to coordinate 
such provisions with the other information requirements of the Internal 
Revenue Code of 1986.''


Regulated Public Utilities; Special Transitional Rule for Normalization 
                              Requirements

    Section 209(d)(1) of Pub. L. 97-34, as amended by Pub. L. 99-514, 
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ``If, by the terms 
of the applicable rate order last entered before the date of the 
enactment of this Act [Aug. 13, 1981] by a regulatory commission having 
appropriate jurisdiction, a regulated public utility would (but for this 
provision) fail to meet the requirements of section 168(e)(3) of the 
Internal Revenue Code of 1986 [formerly I.R.C. 1954] with respect to 
property because, for an accounting period ending after December 31, 
1980, such public utility used a method of accounting other than a 
normalization method of accounting, such regulated public utility shall 
not fail to meet such requirements if, by the terms of its first rate 
order determining cost of service with respect to such property which 
becomes effective after the date of the enactment of this Act and on or 
before January 1, 1983, such regulated public utility uses a 
normalization method of accounting. This provision shall not apply to 
any rate order which, under the rules in effect before the date of the 
enactment of this Act, required a regulated public utility to use a 
method of accounting with respect to the deduction allowable by section 
167 which, under section 167(l), it was not permitted to use.''


    Interim Regulations With Respect to Normalization; Authority To 
                                Prescribe

    Section 209(d)(4) of Pub. L. 97-34, as amended by Pub. L. 99-514, 
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ``Until Congress 
acts further, the Secretary of the Treasury or his delegate may 
prescribe such interim regulations as may be necessary or appropriate to 
determine whether the requirements of section 168(e)(3)(B) of the 
Internal Revenue Code of 1986 [formerly I.R.C. 1954] have been met with 
respect to property placed in service after December 31, 1980.''

                  Section Referred to in Other Sections

    This section is referred to in sections 42, 45A, 47, 50, 56, 110, 
142, 167, 170, 179, 263A, 280F, 291, 312, 381, 404, 460, 467, 512, 514, 
527, 860E, 865, 936, 1031, 1245, 1250, 1393, 1397C, 1397D, 1400I, 1400J, 
4052 of this title; title 10 section 2401.
