Title 26 — Internal Revenue Code

Part IV · Chapter 1 — Normal Taxes and Surtaxes

§ 47. Rehabilitation credit

Statutory text

General rule

In general

For purposes of section 46, for any taxable year during the 5-year period beginning in the taxable year in which a qualified rehabilitated building is placed in service, the rehabilitation credit for such year is an amount equal to the ratable share for such year.

Ratable share

For purposes of paragraph (1), the ratable share for any taxable year during the period described in such paragraph is the amount equal to 20 percent of the qualified rehabilitation expenditures with respect to the qualified rehabilitated building, as allocated ratably to each year during such period.

When expenditures taken into account

In general

Qualified rehabilitation expenditures with respect to any qualified rehabilitated building shall be taken into account for the taxable year in which such qualified rehabilitated building is placed in service.

Coordination with subsection (d)

The amount which would (but for this paragraph) be taken into account under paragraph (1) with respect to any qualified rehabilitated building shall be reduced (but not below zero) by any amount of qualified rehabilitation expenditures taken into account under subsection (d) by the taxpayer or a predecessor of the taxpayer (or, in the case of a sale and leaseback described in section 50(a)(2)(C), by the lessee), to the extent any amount so taken into account has not been required to be recaptured under section 50(a).

Definitions

For purposes of this section—

Qualified rehabilitated building

In general

The term “qualified rehabilitated building” means any building (and its structural components) if—

such building has been substantially rehabilitated,

such building was placed in service before the beginning of the rehabilitation,

such building is a certified historic structure, and

depreciation (or amortization in lieu of depreciation) is allowable with respect to such building.

Substantially rehabilitated defined

In general

For purposes of subparagraph (A)(i), a building shall be treated as having been substantially rehabilitated only if the qualified rehabilitation expenditures during the 24-month period selected by the taxpayer (at the time and in the manner prescribed by regulation) and ending with or within the taxable year exceed the greater of—

the adjusted basis of such building (and its structural components), or

$5,000.

The adjusted basis of the building (and its structural components) shall be determined as of the beginning of the 1st day of such 24-month period, or of the holding period of the building, whichever is later. For purposes of the preceding sentence, the determination of the beginning of the holding period shall be made without regard to any reconstruction by the taxpayer in connection with the rehabilitation.

Special rule for phased rehabilitation

In the case of any rehabilitation which may reasonably be expected to be completed in phases set forth in architectural plans and specifications completed before the rehabilitation begins, clause (i) shall be applied by substituting “60-month period” for “24-month period”.

Lessees

The Secretary shall prescribe by regulation rules for applying this subparagraph to lessees.

Reconstruction

Rehabilitation includes reconstruction.

Qualified rehabilitation expenditure defined

In general

The term “qualified rehabilitation expenditure” means any amount properly chargeable to capital account—

for property for which depreciation is allowable under section 168 and which is—

nonresidential real property,

residential rental property,

real property which has a class life of more than 12.5 years, or

an addition or improvement to property described in subclause (I), (II), or (III), and

in connection with the rehabilitation of a qualified rehabilitated building.

Certain expenditures not included

The term “qualified rehabilitation expenditure” does not include—

Straight line depreciation must be used

Any expenditure with respect to which the taxpayer does not use the straight line method over a recovery period determined under subsection (c) or (g) of section 168. The preceding sentence shall not apply to any expenditure to the extent the alternative depreciation system of section 168(g) applies to such expenditure by reason of subparagraph (B) or (C) of section 168(g)(1).

Cost of acquisition

The cost of acquiring any building or interest therein.

Enlargements

Any expenditure attributable to the enlargement of an existing building.

Certified historic structure

Any expenditure attributable to the rehabilitation of a qualified rehabilitated building unless the rehabilitation is a certified rehabilitation (within the meaning of subparagraph (C)).

Tax-exempt use property

In general

Any expenditure in connection with the rehabilitation of a building which is allocable to the portion of such property which is (or may reasonably be expected to be) tax-exempt use property (within the meaning of section 168(h), except that “50 percent” shall be substituted for “35 percent” in paragraph (1)(B)(iii) thereof).

Clause not to apply for purposes of paragraph (1)(C)

This clause shall not apply for purposes of determining under paragraph (1)(C) whether a building has been substantially rehabilitated.

Expenditures of lessee

Any expenditure of a lessee of a building if, on the date the rehabilitation is completed, the remaining term of the lease (determined without regard to any renewal periods) is less than the recovery period determined under section 168(c).

Certified rehabilitation

For purposes of subparagraph (B), the term “certified rehabilitation” means any rehabilitation of a certified historic structure which the Secretary of the Interior has certified to the Secretary as being consistent with the historic character of such property or the district in which such property is located.

Nonresidential real property; residential rental property; class life

For purposes of subparagraph (A), the terms “nonresidential real property,” “residential rental property,” and “class life” have the respective meanings given such terms by section 168.

Certified historic structure defined

In general

The term “certified historic structure” means any building (and its structural components) which—

is listed in the National Register, or

is located in a registered historic district and is certified by the Secretary of the Interior to the Secretary as being of historic significance to the district.

Registered historic district

The term “registered historic district” means—

any district listed in the National Register, and

any district—

which is designated under a statute of the appropriate State or local government, if such statute is certified by the Secretary of the Interior to the Secretary as containing criteria which will substantially achieve the purpose of preserving and rehabilitating buildings of historic significance to the district, and

which is certified by the Secretary of the Interior to the Secretary as meeting substantially all of the requirements for the listing of districts in the National Register.

Progress expenditures

In general

In the case of any building to which this subsection applies, except as provided in paragraph (3)—

if such building is self-rehabilitated property, any qualified rehabilitation expenditure with respect to such building shall be taken into account for the taxable year for which such expenditure is properly chargeable to capital account with respect to such building, and

if such building is not self-rehabilitated property, any qualified rehabilitation expenditure with respect to such building shall be taken into account for the taxable year in which paid.

Property to which subsection applies

In general

This subsection shall apply to any building which is being rehabilitated by or for the taxpayer if—

the normal rehabilitation period for such building is 2 years or more, and

it is reasonable to expect that such building will be a qualified rehabilitated building in the hands of the taxpayer when it is placed in service.

Clauses (i) and (ii) shall be applied on the basis of facts known as of the close of the taxable year of the taxpayer in which the rehabilitation begins (or, if later, at the close of the first taxable year to which an election under this subsection applies).

Normal rehabilitation period

For purposes of subparagraph (A), the term “normal rehabilitation period” means the period reasonably expected to be required for the rehabilitation of the building—

beginning with the date on which physical work on the rehabilitation begins (or, if later, the first day of the first taxable year to which an election under this subsection applies), and

ending on the date on which it is expected that the property will be available for placing in service.

Special rules for applying paragraph (1)

For purposes of paragraph (1)—

Component parts, etc.

Property which is to be a component part of, or is otherwise to be included in, any building to which this subsection applies shall be taken into account—

at a time not earlier than the time at which it becomes irrevocably devoted to use in the building, and

as if (at the time referred to in clause (i)) the taxpayer had expended an amount equal to that portion of the cost to the taxpayer of such component or other property which, for purposes of this subpart, is properly chargeable (during such taxable year) to capital account with respect to such building.

Certain borrowing disregarded

Any amount borrowed directly or indirectly by the taxpayer from the person rehabilitating the property for him shall not be treated as an amount expended for such rehabilitation.

Limitation for buildings which are not self-rehabilitated

In general

In the case of a building which is not self-rehabilitated, the amount taken into account under paragraph (1)(B) for any taxable year shall not exceed the amount which represents the portion of the overall cost to the taxpayer of the rehabilitation which is properly attributable to the portion of the rehabilitation which is completed during such taxable year.

Carryover of certain amounts

In the case of a building which is not a self-rehabilitated building, if for the taxable year—

the amount which (but for clause (i)) would have been taken into account under paragraph (1)(B) exceeds the limitation of clause (i), then the amount of such excess shall be taken into account under paragraph (1)(B) for the succeeding taxable year, or

the limitation of clause (i) exceeds the amount taken into account under paragraph (1)(B), then the amount of such excess shall increase the limitation of clause (i) for the succeeding taxable year.

Determination of percentage of completion

The determination under subparagraph (C)(i) of the portion of the overall cost to the taxpayer of the rehabilitation which is properly attributable to rehabilitation completed during any taxable year shall be made, under regulations prescribed by the Secretary, on the basis of engineering or architectural estimates or on the basis of cost accounting records. Unless the taxpayer establishes otherwise by clear and convincing evidence, the rehabilitation shall be deemed to be completed not more rapidly than ratably over the normal rehabilitation period.

No progress expenditures for certain prior periods

No qualified rehabilitation expenditures shall be taken into account under this subsection for any period before the first day of the first taxable year to which an election under this subsection applies.

No progress expenditures for property for year it is placed in service, etc.

In the case of any building, no qualified rehabilitation expenditures shall be taken into account under this subsection for the earlier of—

the taxable year in which the building is placed in service, or

the first taxable year for which recapture is required under section 50(a)(2) with respect to such property,

or for any taxable year thereafter.

Self-rehabilitated building

For purposes of this subsection, the term “self-rehabilitated building” means any building if it is reasonable to believe that more than half of the qualified rehabilitation expenditures for such building will be made directly by the taxpayer.

Election

This subsection shall apply to any taxpayer only if such taxpayer has made an election under this paragraph. Such an election shall apply to the taxable year for which made and all subsequent taxable years. Such an election, once made, may be revoked only with the consent of the Secretary.

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1962
Revenue Act of 1962
Pub. L. 87–834 § 2(b) · 76 Stat. 960
Enacted · 26 U.S.C. § 47
Added Pub. L. 87–834, § 2(b), Oct. 16, 1962, 76 Stat. 966
Source evidence
Code source credit
Added Pub. L. 87–834, § 2(b), Oct. 16, 1962, 76 Stat. 966
Enacted provision · exact public law section
(b) Rules fob Computing Credit.— Part IV of subchapter A of chapter 1 is amended by adding at the end thereof the following new 26 USC 31–38. subpart: “Subpart B— Rules for Computing Credit for Investment in Certain Depreciable Property “Sec. 46. Amount of credit. “Sec. 47. Certain dispositions, etc., of section 38 property. “Sec. 48. Definitions; special rules. “SEC. 46. AMOUNT OF CREDIT. “(a) Determination of Amount.— “(1) General rule.— The amount of the credit allowed by section 38 for the taxable year shall be equal to 7 percent of the Ante, p. 962. qualified investment (as defined in subsection (c)). “(2) Limitation based on amount of tax.— Notwithstanding paragraph (1), the credit allowed by section 38 for the taxable year shall not exceed— “(A) so much of the liability for tax for the taxable year as does not exceed $25,000, plus “(B) 25 percent of so much of the liability for tax for the taxable year as exceeds $25,000. “(3) Liability for tax.— For purposes of paragraph (2), the liability for tax for the taxable year shall be the tax imposed by this chapter for such year, reduced by the sum of the credits allowable under— “(A) section 33 (relating to foreign tax credit), 26 USC 33. “(B) section 34 (relating to dividends received by individuals), “(C) section 35 (relating to partially tax-exempt interest), and “(D) section 37 (relating to retirement income). For purposes of this paragraph, any tax imposed for the taxable year by section 531 (relating to accumulated earnings tax) or by section 541 (relating to personal holding company tax) shall not be considered tax imposed by this chapter for such year. “(4) Married individuals.— In the case of a husband or wife who files a separate return, the amount specified under subparagraphs (A) and (B) of paragraph (2) shall be $12,500 in lieu of $25,000. This paragraph shall not apply if the spouse of the taxpayer has no qualified investment for, and no unused credit carryback or carryover to, the taxable year of such spouse which ends within or with the taxpayer’s taxable year. “(5) Affiliated groups.— In the case of an affiliated group, the $25,000 amount specified under subparagraphs (A) and (B) of paragraph (2) shall be reduced for each member of the group by apportioning $25,000 among the members of such group in such manner as the Secretary or his delegate shall by regulations prescribe. For purposes of the preceding sentence, the term ‘affiliated group’ has the meaning assigned to such term by section 1504(a), except that all corporations shall be treated as includible corporations (without any exclusion under section 1504(b)). “(b) Carryback and Carryover of Unused Credits.— “(1) Allowance of credit.— If the amount of the credit determined under subsection (a)(1) for any taxable year exceeds the limitation provided by subsection (a)(2) for such taxable year (hereinafter in this subsection referred to as ‘unused credit year’), such excess shall be— “(A) an investment credit carryback to each of the 3 taxable years preceding the unused credit year, and “(B) an investment credit carryover to each of the 5 taxable years following the unused credit year, and shall be added to the amount allowable as a credit by section Ante, p. 962. 38 for such years, except that such excess may be a carryback only to a taxable year ending after December 31, 1961. The entire amount of the unused credit for an unused credit year shall be carried to the earliest of the 8 taxable years to which (by reason of subparagraphs (A) and (B)) such credit may be carried, and then to each of the other 7 taxable years to the extent that, because of the limitation contained in paragraph (2), such unused credit may not be added for a prior taxable year to which such unused credit may be carried. “(2) Limitation.— The amount of the unused credit which may be added under paragraph (1) for any preceding or succeeding taxable year shall not exceed the amount by which the limitation provided by subsection (a)(2) for such taxable year exceeds the sum of— “(A) the credit allowable under subsection (a)(1) for such taxable year, and “(B) the amounts which, by reason of this subsection, are added to the amount allowable for such taxable year and attributable to taxable years preceding the unused credit year. “(3) Effect of net operating loss carryback.— To the extent that the excess described in paragraph (1) arises by reason of a net operating loss carryback, subparagraph (A) of paragraph (1) shall not apply. “(4) Taxable year beginning before January 1, 1962.— For purposes of determining the amount of an investment credit carryback that may be added under paragraph (1) for a taxable year beginning before January 1, 1962, and ending after December 31, 1961, the amount of the limitation provided by subsection (a)(2) is the amount which bears the same ratio to such limitation as the number of days in such year after December 31, 1961, bears to the total number of days in such year. “(c) Qualified Investment.— “(1) In general.— For purposes of this subpart, the term ‘qualified investment’ means, with respect to any taxable year, the aggregate of— “(A) the applicable percentage of the basis of each new Poet, p. 968. section 38 property (as defined in section 48(b)) placed in service by the taxpayer during such taxable year, plus “(B) the applicable percentage of the cost of each used Post, p. 968. section 38 property (as defined in section 48(c)(1)) placed in service by the taxpayer during such taxable year. “(2) Applicable percentage.— For purposes of paragraph (1), the applicable percentage for any property shall be determined under the following table: “If the useful life Is— The applicable percentage Is— 4 years or more but less than 6 years 33⅓ 6 years or more but less then 8 years 66⅔ 8 years or more 100 For purposes of this paragraph, the useful life of any property shall be determined as of the time such property is placed in service by the taxpayer. “(3) Public utility property.— “(A) In the case of section 38 property which is public Ante, p. 962. utility property, the amount of the qualified investment shall be 3/7 of the amount determined under paragraph (1). “(B) For purposes of subparagraph (A), the term‘public utility property’ means property used predominantly m the trade or business of the furnishing or sale of— “(i) electrical energy, water, or sewage disposal services, “(ii) gas through a local distribution system, “(iii) telephone service, or “(iv) telegraph service by means of domestic telegraph operations (as defined in section 222(a)(5) of the Communications Act of 1934, as amended; 47 U.S.C., sec. 222(a)(5)), 57 Stat. 5. 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 an 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. “(4) Certain replacement property.— For purposes of paragraph (1), if section 38 property is placed in service by the taxpayer to replace property which was— “(A) destroyed or damaged by fire, storm, shipwreck, or other casualty, or “(B) stolen, the basis of such section 38 property (in the case of new section 38 property), or the cost of such section 38 property (in the case of used section 38 property), which (but for this paragraph) would be taken into account under paragraph (1) shall be reduced by an amount equal to the amount received by the taxpayer as compensation, by insurance or otherwise, for the property so destroyed, damaged, or stolen, or to the adjusted basis of such property, whichever is the lesser. No reduction in basis or cost shall be made under the preceding sentence in any case in which the reduction in qualified investment attributable to the substitution required by section 47(a)(1) with respect to the Post, p. 966. property so destroyed, damaged, or stolen (determined without regard to section 47 (a)(4)) is greater than the reduction described in the preceding sentence. “(d) Limitations With Respect to Certain Persons.— “(1) In general.— In the case of— “(A) an organization to which section 593 applies, Post, p. 977. “(B) a regulated investment company or a real estate investment trust subject to taxation under subchapter M (sec. 851 and following), and “(C) a cooperative organization described in section 1381(a), the qualified investment and the $25,000 amount specified under subparagraphs (A) and (B) of subsection (a)(2) shall equal such person s ratable share of such items. “(2) Ratable share.— For purposes of paragraph (1), the ratable share of any person for any taxable year of the items described therein shall be— “(A) in the case of an organization referred to in paragraph (1)(A), 50 percent thereof, “(B) in the case of a regulated investment company or a real estate investment trust, the ratio (i) the numerator of which is its taxable income and (ii) the denominator of which is its taxable income computed without regard to the deduction for dividends paid provided by section 852(b)(2)(D) 26 USC 852, 857. or 857(b)(2)(C), as the case may be, and “(C) in the case of a cooperative organization, the ratio (i) the numerator of which is its taxable income and (ii) the denominator of which is its taxable income increased by Post, p. 1046. amounts to which section 1382(b) or (c) applies and similar amounts the tax treatment of which is determined without Post, p. 1045. regard to subchapter T (sec. 1381 and following). For purposes of subparagraph (B) of the preceding sentence, the term ‘taxable income’ means in the case of a regulated investment company its investment company taxable income (within the meaning of section 852(b)(2)), and in the case of a real estate investment trust its real estate investment trust taxable income (within the meaning of section 857(b)(2)). “SEC. 47. CERTAIN DISPOSITIONS. ETC, OF SECTION 38 PROPERTY. “(a) General Rule.— Under regulations prescribed by the Secretary or his delegate— “(1) Early disposition, etc.— If during any taxable year any property is disposed of, or otherwise ceases to be section 38 property with respect to the taxpayer, before the close of the useful life which was taken into account in computing the credit under section 38, then the tax under this chapter for such taxable year shall be increased by an amount equal to the aggregate decrease in the credits allowed under section 38 for all prior taxable years which would have resulted solely from substituting, in determining qualified investment, for such useful life the period beginning with the time such property was placed in service by the taxpayer and ending with the time such property ceased to be section 38 property. “(2) Property becomes public utility property.— If during any taxable year any property taken into account in determining qualified investment becomes public utility property (within the Ante, p. 965. meaning of section 46(c)(3)(B)), then the tax under this chapter for such taxable year shall be increased by an amount equal to the aggregate decrease in the credits allowed under section 38 for all prior taxable years which would have resulted solely from treating the property, for purposes of determining qualified investment, as public utility property (after giving due regard to the period before such change in use). If the application of this paragraph to any property is followed by the application of paragraph (1) to such property, proper adjustment shall be make in applying paragraph (1). “(3) Carrybacks and carry’overs adjusted.— In the case of any cessation described in paragraph (1) or any change in use described in paragraph (2), the carrybacks and carryovers under section 46(b) shall be adjusted by reason of such cessation (or change in use). “(4) Property destroyed by casualty, etc.— No increase shall be made under paragraph (1) and no adjustment shall be made under paragraph (3) in any case in which— “(A) any property is disposed of, or otherwise ceases to be section 38 property with respect to the taxpayer, on account of its destruction or damage by fire, storm, shipwreck, or other casualty, or by reason of its theft, “(B) section 38 property is placed in service by the taxpayer Ante, p. 962. to replace the property described in subparagraph (A), and “(C) the reduction in basis or cost of such section 38 property described in the first sentence of section 46(c)(4) is Ante, p. 965. equal to or; greater than the reduction in qualified investment which (but for this paragraph) would be made by reason of the substitution required by paragraph (1) with respect to the property described in subparagraph (A). “(b) Section Not To Apply in Certain Cases.— Subsection (a) shall not apply to— “(1) a transfer by reason of death, or “(2) a transaction to which section 381 (a) applies. 26 USC 381. For purposes of subsection (a), property shall not be treated as ceasing to be section 38 property with respect to the taxpayer by reason of a mere change in the form of conducting the trade or business so long as the property is retained in such trade or business as section 38 property and the taxpayer retains a substantial interest in such trade or business. “(c) Special Rule.— Any increase in tax under subsection (a) shall not be treated as tax imposed by this chapter for purposes of determining the amount of any credit allowable under subpart A. “SEC. 48. DEFINITIONS; SPECIAL RULES. “(a) Section 38 Property.— “(1) In general.— Except as provided in this subsection, the term ‘section 38 property’ means— “(A) tangible personal property, or “(B) other tangible property (not including a building and its structural components) but only if such property— “(i) is used as an integral part of manufacturing, production, or extraction or of furnishing transportation, communications, electrical energy, gas, water, or sewage disposal services, or “(ii) constitutes a research or storage facility used in connection with any of the activities referred to in clause (i). Such term includes only property with respect to which depreciation (or amortization in lieu of depreciation) is allowable and having a useful life (determined as of the time such property is placed in service) of 4 years or more. “(2) Property used outside the united states.— “(A) In general.— Except as provided in subparagraph (B), the term ‘section 38 property’ does not include property which is used predominantly outside the United States. “(B) Exceptions.— Subparagraph (A) shall not apply “(i) any aircraft which is registered by the Administrator of the Federal Aviation Agency and which is operated to and from the United States; “(ii) rolling stock, of a domestic railroad corporation subject to part I of the Interstate Commerce Act, which 24 Stat. 379. 49 USC 1 et seq. is used within and without the United States; “(iii) any vessel documented under the laws of the United States which is operated in the foreign or domestic commerce of the United States; “(iv) any motor vehicle of a United States person (as defined in section 7701 (a)(30)) which is operated to Post, p. 988. and from the United States; “(v) any container of a United States person which is used in the transportation of property to and from the United States; and “(vi) 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. 67 Stat. 462. sec. 1331). “(3) Property used for lodging.— Property which is used predominantly to furnish lodging or in connection with the furnishing Ante, p. 962. of lodging shall not be treated as section 38 property. The preceding sentence shall not apply to— “(A) nonlodging commercial facilities which are available to persons not using the lodging facilities on the same basis as they are available to persons using the lodging facilities, and “(B) property used by a hotel or motel in connection with the trade or business of furnishing lodging where the predominant portion of the accommodations is used by transients. “(4) Property used by certain tax-exempt organizations.— Property used by an organization (other than a cooperative described 26 USC 521. in section 521) which is exempt from the tax imposed by this chapter shall be treated as section 38 property only if such property is used predominantly in an unrelated trade or business the income of which is subject to tax under section 511. “(5) Property used by governmental units.— Property used by the United States, any State or political subdivision thereof, any international organization, or any agency or instrumentality of any of the foregoing shall not be treated as section 38 property. “(6) Livestock.— Livestock shall not be treated as section 38 property. “(b) New Section 38 Property.— For purposes of this subpart, the term ‘new section 38 property’ means section 38 property— “(1) the construction, reconstruction, or erection of which is completed by the taxpayer after December 31, 1961, or “(2) acquired after December 31, 1961, if the original use of such property commences with the taxpayer and commences after such date. Ante, p. 964. In applying section 46(c)(1)(A) in the case of property described in paragraph (1), there shall be taken into account only that portion of the basis which is properly attributable to construction, reconstruction, or erection after December 31, 1961. “(c) Used Section 38 Property.— “(1) In general.— For purposes of this subpart, the term ‘used section 38 property’ means section 38 property acquired by purchase after December 31, 1961, which is not new section 38 property. Property shall not be treated as ‘used section 38 property’ if, after its acquisition by the taxpayer, it is used by a person who used such property before such acquisition (or by a person who 26 USC 179. bears a relationship described in section 179(d)(2)(A) or (B) to a person who used such property before such acquisition). “(2) Dollar limitation.— “(A) In general.— The cost of used section 38 property taken into account under section 46(c)(1)(B) for any taxable year shall not exceed $50,000. If such cost exceeds $50,000, the taxpayer shall select (at such time and in such manner as the Secretary or his delegate shall by regulations prescribe) the items to be taken into account, but only to the extent of an aggregate cost of $50,000. Such a selection, once made, may be changed only in the manner, and to the extent, provided by such regulations. “(B) Married individuals.— In the case of a husband or wife who files a separate return, the limitation under subparagraph (A) shall be $25,000 in lieu of $50,000. This subparagraph Ante, p. 968. shall not apply if the spouse of the taxpayer has no used sect ion 38 property which may be taken into account as qualified investment for the taxable year of such spouse which ends within or with the taxpayer’s taxable year. “(C) Affiliated groups.— In the case of an affiliated group, the $50,000 amount specified under subparagraph (A) shall be reduced for each member of the group by apportioning $50,000 among the members of such group in accordance with their respective amounts of used section 38 property which Ante, pp. 962, 968. may be taken into account. “(D) Partnerships.— In the case of a partnership, the limitation contained in subparagraph (A) shall apply with respect to the partnership and with respect to each partner. “(3) Definitions.— For purposes of this subsection— “(A) Purchase.— The term ‘purchase’ has the meaning assigned to such term by section 179(d)(2). 26 USC 179. “(B) Cost.— The cost of used section 38 property does not include so much of the basis of such property as is determined by reference to the adjusted basis of other property held at any time by the person acquiring such property. If property is disposed of (other than by reason of its destruction or damage by fire, storm, shipwreck, or other casualty, or its theft) and used section 38 property similar or related in service or use is acquired as a replacement therefor in a transaction to which the preceding sentence does not apply, the cost of the used section 38 property acquired shall be its basis reduced by the adjusted basis of the property replaced. The cost of used section 38 property shall not be reduced with respect to the adjusted basis of any property disposed of if, by reason of section 47, such disposition involved an increase Ante, p. 966. of tax or a reduction of the unused credit carrybacks or carryovers described in section 46(b). Ante, p. 963. “(C) Affiliated group.— The term ‘affiliated group’ has the meaning assigned to such term by section 1504(a), except 26 USC 1504. that— “(i) the phrase ‘more than 50 percent’ shall be substituted for the phrase ‘at least 80 percent’ each place it appears in section 1504(a), and “(ii) all corporations shall be treated as includible corporations (without any exclusion under section 1504(b)). “(d) Certain Leased Property.— A person (other than a person referred to in section 46(d)) who is a lessor of property may (at such Ante, p. 965. time, in such manner, and subject to such conditions as are provided by regulations prescribed by the Secretary or his delegate) elect with respect to any new section 38 property to treat the lessee as having acquired such property for an amount equal to— “(1) if such property was constructed by the lessor (or by a corporation which controls or is controlled by the lessor within the meaning of section 368(c)), the fair market value of such 26 USC 368. property, or “(2) if paragraph (1) does not apply, the basis of such property to the lessor. The election provided by the preceding sentence may be made only Ante, p. 968. with respect to property which would be new section 38 property if acquired by the lessee. For purposes of the preceding sentence and Ante, p. 964. section 46(c), the useful life of property in the hands of the lessee is the useful life of such property in the hands of the lessor. If a lessor makes the election provided by this subsection with respect to any property, the lessee shall be treated for all purposes of this subpart as having acquired such property. If a lessor makes the election provided by this subsection with respect to any property, then, under regulations prescribed by the Secretary or his delegate, subsection (g) shall not apply with respect to such property and the deductions 26 USC 162; Post, p. 973. otherwise allowable under section 162 to the lessee for amounts paid to the lessor under the lease shall be adjusted in a manner consistent with the provisions of subsection (g). “(e) Subchapter S Corporations.— In the case of an electing small business corporation (as defined in section 1371)— “(1) the qualified investment for each taxable year shall be apportioned pro rata among the persons who are shareholders of such corporation on the last day of such taxable year; and “(2) any person to whom any investment has been apportioned under paragraph (1) shall be treated (for purposes of this subpart) as the taxpayer with respect to such investment, and such investment shall not (by reason of such apportionment) lose its character as an investment in new section 38 property or used Ante, p. 968. section 38 property, as the case may be. “(f) Estates and Trusts.— In the case of an estate or trust— “(1) the qualified investment for any taxable year shall be apportioned between the estate or trust and the beneficiaries on the basis of the income of the estate or trust allocable to each, “(2) any beneficiary to whom any investment has been apportioned under paragraph (1) shall be treated (for purposes of this subpart) as the taxpayer with respect to such investment, and such investment shall not (by reason of such apportionment) lose its character as an investment in new section 38 property or used section 38 property, as the case may be, and “(3) the $2.5,000 amount specified under subparagraphs (A) Ante, p. 963. and (B) of section 46(a)(2) applicable to such estate or trust shall be reduced to an amount which bears the same ratio to $25,000 as the amount of the qualified investment allocated to the estate or trust under paragraph (1) bears to the entire amount of the qualified investment. “(g) Adjustments to Basis of Property.— “(1) In general.— The basis of any section 38 property shall be reduced, for purposes of this subtitle other than this subpart, by an amount equal to 7 percent of the qualified investment as determined under section 46(c) with respect to such property. “(2) Certain dispositions, etc.— If the tax under this chapter is increased for any taxable year under paragraph (1) or (2) of Ante, p. 966. section 47(a) or an adjustment in carrybacks or carryovers is made under paragraph (3) of such section, the basis of the property described in such paragraph (1) or (2), as the case may be (immediately before the event on account of which such paragraph (1), (2), or (3) applies), shall be increased by an amount equal to the portion or such increase and the portion of such adjustment attributable to such property. “(h) Cross Reference.— “For application of this subpart to certain acquiring corporations, Poet, p. 971. see section 381(c)(23).”
1969
Tax Reform Act of 1969
Pub. L. 91–172 § 703(c)(2) · 83 Stat. 487
Added · 26 U.S.C. § 47(a)(5)
Pub. L. 91–172, § 703(c)(2), added par. (5)
Source evidence
Code amendment note
Subsec. (a)(5). Pub. L. 91–172, § 703(c)(2), added par. (5).
Enacted provision · exact public law section
(2) Replacement of certain section 38 property.— Section 47(a) (relating to certain dispositions of section 38 property) is amended by adding at the end thereof the following new paragraph: “(5) Certain property replaced after april 18, 1969.— In any case in which— “(A) section 38 property is disposed of, and “(B) property which would be section 38 property but for section 49 is placed in service by the taxpayer to replace the Ante, p. 660. property disposed of, the increase under paragraph (1) and the adjustment under paragraph (3) shall not be greater than the increase or adjustment which would result if the qualified investment of the property described in subparagraph (B) (determined as if such property were section 38 property) were substituted for the qualified investment of the property disposed of (as determined under paragraph (1)). Except in the case of a disposition by reason of a casualty or theft occurring before April 19, 1969, the preceding sentence shall apply only if the section 38 property disposed of is replaced within 6 months after the date of such disposition.”
1969
Tax Reform Act of 1969
Pub. L. 91–172 § 703(c)(1) · 83 Stat. 487
Inserted · 26 U.S.C. § 47(a)(4)
Pub. L. 91–172, § 703(c)(1), inserted provision making subpars. (B) and (C) inapplicable to any casualty or theft occurring after April 18, 1969
Source evidence
Code amendment note
Subsec. (a)(4). Pub. L. 91–172, § 703(c)(1), inserted provision making subpars. (B) and (C) inapplicable to any casualty or theft occurring after April 18, 1969.
Enacted provision · exact public law section
(1) Property destroyed by casualty.— Section 47(a)(4) (relating to rules with respect to section 38 property destroyed by casualty, etc.) is amended by adding at the end thereof the following new sentence: “Subparagraphs (B) and (C) shall not apply with respect to any casualty or theft occurring after April 18, 1969.”
1971
Pub. L. 91–676 § 1 · 84 Stat. 2060
Added · 26 U.S.C. § 47(a)(6)
Pub. L. 91–676 added par. (6)
Source evidence
Code amendment note
Subsec. (a)(6). Pub. L. 91–676 added par. (6).
1971
Revenue Act of 1971
Pub. L. 92–178 § 107(a)(1) · 85 Stat. 494
Struck · 26 U.S.C. § 47(a)(4)
Pub. L. 92–178, § 107(a)(1), struck out par. (4) relating to property destroyed by casualty, etc
Source evidence
Code amendment note
Subsec. (a)(4). Pub. L. 92–178, § 107(a)(1), struck out par. (4) relating to property destroyed by casualty, etc.
Enacted provision · exact public law section
(1) Sections 46(c)(4) (relating to certain replacements of Repeals. 76 Stat. 963. 26 USC 46, 47. section 38 property) and 47(a) (4) (relating to property destroyed by casualty, etc.) are hereby repealed.
1971
Revenue Act of 1971
Pub. L. 92–178 § 107(b)(1) · 85 Stat. 494
Repealed · 26 U.S.C. § 47(a)(5)
Pub. L. 92–178, § 107(b)(1), provided for the repeal of par. (5) with the repeal not to apply, however, in the case of certain replacement property. See section 107(b)(2) of Pub. L. 92–178, set out in the Effective Date of 1971 Amendment note below
Source evidence
Code amendment note
Subsec. (a)(5). Pub. L. 92–178, § 107(b)(1), provided for the repeal of par. (5) with the repeal not to apply, however, in the case of certain replacement property. See section 107(b)(2) of Pub. L. 92–178, set out in the Effective Date of 1971 Amendment note below.
Enacted provision · exact public law section
(1) Section 47(a)(5) (relating to certain property replaced Repeal. 83 Stat. 666. after April 18, 1969) is hereby repealed.
1971
Revenue Act of 1971
Pub. L. 92–178 § 102(c) · 85 Stat. 494
Substituted · 26 U.S.C. § 47(a)(6)(A)
Pub. L. 92–178, § 102(c), substituted “3½ years” for “4 years”
Source evidence
Code amendment note
Subsec. (a)(6)(A). Pub. L. 92–178, § 102(c), substituted “3½ years” for “4 years”.
Enacted provision · exact public law section
(c) Technical Amendment— Section 47(a)(6)(A) (relating to aircraft used outside the United States after April 18, 1969) is amended by striking out “4 years” and inserting in lieu thereof “3years”.
1975
Tax Reduction Act of 1975
Pub. L. 94–12 § 302(b)(2)(A) · 89 Stat. 26
1. Added · 26 U.S.C. § 47(a)(3); 26 U.S.C. § 47(a)(4)
  Pub. L. 94–12, § 302(b)(2)(A), (c)(1), added par. (3)
2. Redesignated · 26 U.S.C. § 47(a)(3); 26 U.S.C. § 47(a)(4)
  Pub. L. 94–12, § 302(b)(2)(A), (c)(1), redesignated former par. (3) as (4)
3. Repealed · 26 U.S.C. § 47(a)(3); 26 U.S.C. § 47(a)(4)
  Pub. L. 94–12, § 302(b)(2)(A), (c)(1), substituted “paragraph (1) or (3)” for “paragraph (1)”. A former par. (4), relating to increase or adjustment of tax where property is destroyed by casualty, etc., was repealed by Pub. L. 92–178
Source evidence
Code amendment note
Subsec. (a)(3), (4). Pub. L. 94–12, § 302(b)(2)(A), (c)(1), added par. (3), redesignated former par. (3) as (4) and substituted “paragraph (1) or (3)” for “paragraph (1)”. A former par. (4), relating to increase or adjustment of tax where property is destroyed by casualty, etc., was repealed by Pub. L. 92–178.
Enacted provision · exact public law section
(A) Subsection (a) of section 47 (relating to certain dispositions, 26 USC 47. etc., of section 38 property) is amended by redesignating paragraph (3) as paragraph (4) and by inserting after paragraph (2) the following new paragraph: “(3) Property ceases to be progress expenditure property.— “(A) In general.— If during any taxable year any property taken into account in determining qualified investment under section 46(d) ceases (by reason of sale or other disposition, Ante, p. 40. cancellation or abandonment of contract, or otherwise) to be, with respect to the taxpayer, property which, when placed in service, will be new section 38 property, then the tax under this chapter for such taxable year shall be increased by an amount equal to the aggregate decrease in the credits allowed under section 38 for all prior taxable years which would have resulted solely from reducing to zero the qualified investment taken into account, with respect to such property. “(B) Certain excess credit recaptured.— Any amount which would have been applied as a reduction of the qualified investment in property by reason of paragraph (4) of section 46(c) but for the fact that a reduction under such paragraph cannot reduce qualified investment below zero shall be treated as an amount required to be recaptured under subparagraph (A) for the taxable year in which the property is placed in service. “(C) Certain sales and leasebacks.— Under regulations prescribed by the Secretary or his delegate, a sale by, and leaseback to, a taxpayer who, when the property is placed in 26 USC 48. service, will be n lessee to whom section 48(d) applies shall not be treated as a cessation described in subparagraph (A) to the extent that the qualified investment which will be passed through to the lessee under section 48(d) with respect to such property is not less than the qualified progress expenditures properly taken into account by the lessee with respect to such property. “(D) Coordination with paragraph (1).— If, after property is placed in service, there is a disposition or other cessation described in paragraph (1), paragraph (1) shall be applied as if any credit which was allowable by reason of Ante, p. 40. section 46(d) and which has not been required to be recaptured before such cessation were allowable for the taxable year the property was placed in service.”
1975
Tax Reduction Act of 1975
Pub. L. 94–12 § 302(c)(2) · 89 Stat. 26
Substituted · 26 U.S.C. § 47(a)(5); 26 U.S.C. § 47(6)(B)
Pub. L. 94–12, § 302(c)(2), substituted “paragraph (4)” for “paragraph (3)”
Source evidence
Code amendment note
Subsec. (a)(5), (6)(B). Pub. L. 94–12, § 302(c)(2), substituted “paragraph (4)” for “paragraph (3)”.
Enacted provision · exact public law section
(2) Paragraphs (5) and (6)(B) of section 47(a) are each amended by striking out “paragraph (3)” and inserting in lieu thereof “paragraph (4)”.
1976
Pub. L. 94–455 § 1906(b)(13)(A) · 90 Stat. 1520
Struck · 26 U.S.C. § 47(a)
Pub. L. 94–455, § 1906(b)(13)(A), struck out in introductory provision and in par. (3)(C) “or his delegate” after “Secretary”
Source evidence
Code amendment note
Subsec. (a). Pub. L. 94–455, § 1906(b)(13)(A), struck out in introductory provision and in par. (3)(C) “or his delegate” after “Secretary”.
Enacted provision · exact public law section
(A) The Internal Revenue Code of 1954, as amended by this Act, is amended by striking out “Secretary or his delegate” each place it appears and inserting in lieu thereof “Secretary”.
1976
Pub. L. 94–455 § 804(b) · 90 Stat. 1520
Added · 26 U.S.C. § 47(a)(7)
Pub. L. 94–455, § 804(b), added par. (7)
Source evidence
Code amendment note
Subsec. (a)(7). Pub. L. 94–455, § 804(b), added par. (7).
1978
Pub. L. 95–600 § 317(a) · 92 Stat. 2763
Added · 26 U.S.C. § 47(b)(3)
Pub. L. 95–600, § 317(a), added par. (3)
Source evidence
Code amendment note
Subsec. (b)(3). Pub. L. 95–600, § 317(a), added par. (3).
Enacted provision · exact public law section
(a) 26 USC 47.26 USC 38. In General.— Subsection (b) of section 47 (relating to certain disposition, etc., of section 38 property) is amended by striking out “or” at the end of paragraph (1), by striking out the period at the end of paragraph (2) and inserting in lieu thereof “, or”, and by inserting after paragraph (2) the following new paragraph: “(3) 26 USC 374. transfer to which subsection (c) of section 374 (relating to exchanges under the final system plan for ConRail) applies.”
1978
Energy Tax Act of 1978
Pub. L. 95–618 § 241(b)(1) · 92 Stat. 3174
1. Added · 26 U.S.C. § 47(a)(4); 26 U.S.C. § 47(a)(5)
  Pub. L. 95–618, § 241(b)(1), added par. (4)
2. Redesignated · 26 U.S.C. § 47(a)(4); 26 U.S.C. § 47(a)(5)
  Pub. L. 95–618, § 241(b)(1), redesignated former par. (4) as (5)
3. Substituted · 26 U.S.C. § 47(a)(4); 26 U.S.C. § 47(a)(5)
  Pub. L. 95–618, § 241(b)(1), substituted “paragraph (2) or (4)” for “paragraph (2)”
Source evidence
Code amendment note
Subsec. (a)(4), (5). Pub. L. 95–618, § 241(b)(1), added par. (4), redesignated former par. (4) as (5) and substituted “paragraph (2) or (4)” for “paragraph (2)”.
Enacted provision · exact public law section
(1) Subsection (a) of section 47 (relating to recapture in case 26 USC 47. of certain dispositions, etc., of section 38 property) is amended by redesignating paragraph (4) as paragraph (5) and by inserting after paragraph (3) the following new paragraph: “(4) Special rules for commuter highway vehicles.— “(A) Useful life.— For purposes of this subsection, 3 years shall be treated as the useful life which was taken into account in computing the credit under section 38 with respect 26 USC 38. to any commuter highway vehicle (as defined in section 46 (c)(6)(B)). Ante, p. 3192. “(B) Change in use.— If less than 80 percent of the mileage use of any commuter highway vehicle by the taxpayer during that portion of any taxable year which is within the first 36 months of the operation of such vehicle by the tax-payer meets the requirements of section 46(c)(6) (B), then the tax under this chapter for such taxable year shall be increased by an amount equal to the aggregate decrease in the credits allowed under section 38 for all prior taxable years which would have resulted solely from treating such vehicle, for purposes of determining qualified investment, as not being a commuter highway vehicle. If the application of this subparagraph to any property is followed by the application of paragraph (1) to such property, proper adjustment shall be made in applying paragraph (1).”
1978
Energy Tax Act of 1978
Pub. L. 95–618 § 241(b)(3) · 92 Stat. 3174
Substituted · 26 U.S.C. § 47(a)(6)(B)
Pub. L. 95–618, § 241(b)(3), substituted “paragraph (5)” for “paragraph (4)”
Source evidence
Code amendment note
Subsec. (a)(6)(B). Pub. L. 95–618, § 241(b)(3), substituted “paragraph (5)” for “paragraph (4)”.
Enacted provision · exact public law section
(3) Subparagraph (B) of section 47 (a) (6) is amended by striking out “paragraph (4)” and inserting in lieu thereof “paragraph (5)”.
1981
Economic Recovery Tax Act of 1981
Pub. L. 97–34 § 211(g)(2)(A) · 95 Stat. 175
Inserted · 26 U.S.C. § 47(a)(3)(D)
Pub. L. 97–34, § 211(g)(2)(A), inserted provisions relating to disposition, cessation, or change in expected use described in paragraph (5)
Source evidence
Code amendment note
Subsec. (a)(3)(D). Pub. L. 97–34, § 211(g)(2)(A), inserted provisions relating to disposition, cessation, or change in expected use described in paragraph (5).
Enacted provision · exact public law section
(A) Subparagraph (D) of section 47(a)(3) is amended to read as follows: “(D) Coordination with paragraphs (1) and (5).— If, after property is placed in service, there is a disposition or other cessation described in paragraph (1), or a disposition, cessation, or change in expected use described in paragraph (5), then paragraph (1) or (5), as the case may be, shall be applied as if any credit, which was allowable by reason of section 46(d) and which has not been required to be recaptured before such disposition, cessation, or change in use were allowable for the taxable year the property was placed in service.”
1981
Economic Recovery Tax Act of 1981
Pub. L. 97–34 § 211(g)(1) · 95 Stat. 175
1. Added · 26 U.S.C. § 47(a)(5); 26 U.S.C. § 47(a)(6)
  Pub. L. 97–34, § 211(g)(1), (2)(B), added par. (5)
2. Redesignated · 26 U.S.C. § 47(a)(5); 26 U.S.C. § 47(a)(6)
  Pub. L. 97–34, § 211(g)(1), (2)(B), redesignated former par. (5) as (6)
3. Redesignated · 26 U.S.C. § 47(a)(5); 26 U.S.C. § 47(a)(6)
  Pub. L. 97–34, § 211(g)(1), (2)(B), substituted “paragraph (1), (3), or (5)” for “paragraph (1) or (3)”. Former par. (6) redesignated (7)
Source evidence
Code amendment note
Subsec. (a)(5), (6). Pub. L. 97–34, § 211(g)(1), (2)(B), added par. (5), redesignated former par. (5) as (6) and substituted “paragraph (1), (3), or (5)” for “paragraph (1) or (3)”. Former par. (6) redesignated (7).
Enacted provision · exact public law section
(1) In general.— Subsection (a) of section 47 (relating to 26 USC 47. certain dispositions, etc, of section 38 property) is amended by redesignating paragraphs (5), (6), and (7) as paragraphs (6), (7), and (8), respectively, and by inserting after paragraph (4) the following new paragraph: “(5) Special rules for recovery property.— “(A) General rule.— If, during any taxable year, section 38 recovery property is disposed of, or otherwise ceases to be section 38 property with respect to the taxpayer before the close of the recapture period, then, except as provided in subparagraph (D), the tax under this chapter for such taxable year shall be increased by the recapture percentage of the aggregate decrease in the credits allowed under section 38 for all prior taxable years which would have resulted solely from reducing to zero the qualified investment taken into account with respect to such property. “(B) Recapture percentage.— For purposes of subparagraph (A), the recapture percentage shall be determined in accordance with the following table: “If the recovery property ceases to be section 38 property within— The recapture percentage is: For 15-year, 10-year, and 5-year property For 3-year property One full year after placed in service 100 100 One full year after the close of the period described in clause (i) 80 66 One full year after the close of the period described in clause (ii) 60 33 “If the recovery property ceases to be section 38 property within— The recapture percentage is: For 15-year, 10-year, and 5-year property For 3-year property One full year after the close of the period described in clause (iii) 40 0 One full year after the close of the period described in clause (iv) 20 0 “(C) Property ceases to be progress expenditure property.— If, during any taxable year, any recovery property taken into account in determining qualified investment Ante, p. 228. under section 46(d)(1) ceases to be progress expenditure property (as determined under paragraph (3)) or becomes, with respect to the taxpayer, recovery property of a character other than that expected in determining the applicable percentage under section 46(d)(1)(B)(i), then the tax under this chapter for such taxable year shall be adjusted in accordance with regulations prescribed by the Secretary. “(D) Limitation.— The tax for the taxable year shall be increased under subparagraph (A) only with respect to the credits allowed under section 38 which were used to reduce tax liability. In the case of credits not so used to reduce tax liability, the carrybacks and carryovers under section 46(b) shall be appropriately adjusted. “(E) Definitions and special rules.— “(i) Section 38 recovery property.— For purposes of this paragraph, the term ‘section 38 recovery property’ means any section 38 property which is recovery property Ante, p. 203. (within the meaning of section 168). “(ii) Recapture period.— For purposes of this paragraph, the term ‘recapture period’ means, with respect to any recovery property, the period consisting of the first full year after the property is placed in service and the 4 succeeding full years (the 2 succeeding full years in the case of 3-year property). “(iii) Classification of property.— For purposes of this paragraph, property shall be classified as provided in section 168(c). “(iv) Paragraph (1) not to apply.— Paragraph (1) shall not apply with respect to any recovery property.”
1981
Economic Recovery Tax Act of 1981
Pub. L. 97–34 § 211(g)(1) · 95 Stat. 175
1. Redesignated · 26 U.S.C. § 47(a)(7); 26 U.S.C. § 47(a)(8)
  Pub. L. 97–34, § 211(g)(1), (2)(C), redesignated former par. (6) as (7)
2. Substituted · 26 U.S.C. § 47(a)(7); 26 U.S.C. § 47(a)(8)
  Pub. L. 97–34, § 211(g)(1), (2)(C), substituted “paragraph (6)” for “paragraph (5)”
3. Redesignated · 26 U.S.C. § 47(a)(7); 26 U.S.C. § 47(a)(8)
  Pub. L. 97–34, § 211(g)(1), (2)(C), redesignated former par. (7) as (8)
Source evidence
Code amendment note
Subsec. (a)(7), (8). Pub. L. 97–34, § 211(g)(1), (2)(C), redesignated former par. (6) as (7), substituted “paragraph (6)” for “paragraph (5)”, and redesignated former par. (7) as (8).
Enacted provision · exact public law section
(1) In general.— Subsection (a) of section 47 (relating to 26 USC 47. certain dispositions, etc, of section 38 property) is amended by redesignating paragraphs (5), (6), and (7) as paragraphs (6), (7), and (8), respectively, and by inserting after paragraph (4) the following new paragraph: “(5) Special rules for recovery property.— “(A) General rule.— If, during any taxable year, section 38 recovery property is disposed of, or otherwise ceases to be section 38 property with respect to the taxpayer before the close of the recapture period, then, except as provided in subparagraph (D), the tax under this chapter for such taxable year shall be increased by the recapture percentage of the aggregate decrease in the credits allowed under section 38 for all prior taxable years which would have resulted solely from reducing to zero the qualified investment taken into account with respect to such property. “(B) Recapture percentage.— For purposes of subparagraph (A), the recapture percentage shall be determined in accordance with the following table: “If the recovery property ceases to be section 38 property within— The recapture percentage is: For 15-year, 10-year, and 5-year property For 3-year property One full year after placed in service 100 100 One full year after the close of the period described in clause (i) 80 66 One full year after the close of the period described in clause (ii) 60 33 “If the recovery property ceases to be section 38 property within— The recapture percentage is: For 15-year, 10-year, and 5-year property For 3-year property One full year after the close of the period described in clause (iii) 40 0 One full year after the close of the period described in clause (iv) 20 0 “(C) Property ceases to be progress expenditure property.— If, during any taxable year, any recovery property taken into account in determining qualified investment Ante, p. 228. under section 46(d)(1) ceases to be progress expenditure property (as determined under paragraph (3)) or becomes, with respect to the taxpayer, recovery property of a character other than that expected in determining the applicable percentage under section 46(d)(1)(B)(i), then the tax under this chapter for such taxable year shall be adjusted in accordance with regulations prescribed by the Secretary. “(D) Limitation.— The tax for the taxable year shall be increased under subparagraph (A) only with respect to the credits allowed under section 38 which were used to reduce tax liability. In the case of credits not so used to reduce tax liability, the carrybacks and carryovers under section 46(b) shall be appropriately adjusted. “(E) Definitions and special rules.— “(i) Section 38 recovery property.— For purposes of this paragraph, the term ‘section 38 recovery property’ means any section 38 property which is recovery property Ante, p. 203. (within the meaning of section 168). “(ii) Recapture period.— For purposes of this paragraph, the term ‘recapture period’ means, with respect to any recovery property, the period consisting of the first full year after the property is placed in service and the 4 succeeding full years (the 2 succeeding full years in the case of 3-year property). “(iii) Classification of property.— For purposes of this paragraph, property shall be classified as provided in section 168(c). “(iv) Paragraph (1) not to apply.— Paragraph (1) shall not apply with respect to any recovery property.”
1981
Economic Recovery Tax Act of 1981
Pub. L. 97–34 § 211(f)(2) · 95 Stat. 175
Added · 26 U.S.C. § 47(d)
Pub. L. 97–34, § 211(f)(2), added subsec. (d)
Source evidence
Code amendment note
Subsec. (d). Pub. L. 97–34, § 211(f)(2), added subsec. (d).
Enacted provision · exact public law section
(2) Recapture.— Section 47 (relating to certain dispositions of 26 USC 47. section 38 property), is amended by adding at the end thereof the following new subsection: “(d) Property Ceasing To Be at Risk.— “(1) In general.— If the taxpayer ceases to any extent to be at risk (within the meaning of section 46(c)(8)(B)) with respect to any Ante, p. 229. amount in connection with section 38 property, then the tax under this chapter for such taxable year shall be increased by an amount equal to the aggregate decrease in credits allowed under section 38 for all prior taxable years which would have resulted from substituting, in determining qualified investment, the amount determined under section 46(c)(8) with respect to such property if, on the date the property was placed in service, the taxpayer had not been at risk with respect to the amount he ceased to be at risk to. “(2) Certain transfers not treated as ceasing to be at risk.— If, after the 12-month period after the date on which a taxpayer borrows an amount from a qualified person (within the Ante, p. 229. meaning of section 48(c)(8)(D)) with respect to which such taxpayer is considered at risk under section 48(c)(8)(B), the qualified person transfers or agrees to transfer any evidence of such indebtedness to a person who is not a qualified person, then, for purposes of paragraph (1), the taxpayer shall not be treated as ceasing to be at risk with respect to such amount. “(3) Special rules for certain energy property.— “(A) In general.— In the case of the second taxable year following the taxable year in which any qualified energy property (within the meaning of section 46(c)(8)(E)) is placed in service by the taxpayer and any succeeding taxable year, the taxpayer, for purposes of paragraph (1), shall be treated as ceasing to be at risk with respect to such property for such taxable year in an amount equal to the credit recapture amount (if any). “(B) Credit recapture amount.— For purposes of this paragraph, the term ‘credit recapture amount’ means an amount equal to the excess (if any) of— “(i) the total amount of principal to be paid as of the close of any taxable year under a nonrecourse level payment loan (as defined in section 46(c)(8)(F)(iv) other than a loan described in section 46(c)(8)(B)(ii)) with respect to such property, over “(ii) the sum of— “(I) the amount of principal actually paid as of the close of such taxable year, plus “(II) the sum of the credit recapture amounts with respect to such property for all preceding taxable years. “(C) Special rules for determining principal to be paid.— For purposes of subparagraph (B)(i), in determining the amount of the principal to be paid under a level payment loan, such determination shall be made as if such loan was to be fully repaid by the end of a period equal to the earlier of— “(i) the present class life (as defined in section Ante, p. 203. 168(g)(2)) of the property or, if the property has no present class life, a similar period determined by the Secretary, or “(ii) the period at the end of which full repayment is to occur under the terms of the loan. “(D) Special rule for certain cumulative deficiencies.— If the excess of— “(i) the amount of the total scheduled principal payments under a loan described in subparagraph (B)(i) as of the close of the taxable year, over “(ii) the total principal actually paid under such loan as of the close of such taxable year, is equal to or greater than the amount of such total scheduled payments for the 5-taxable year period ending with such taxable year, then, notwithstanding subparagraph (B), the credit recapture amount for such taxable year shall be equal to the principal remaining to be paid as of the close of such taxable year over the sum of the credit recapture amounts with respect to such property for all preceding taxable years. “(E) Special rule for certain dispositions.— “(i) In general.— If any property which is held by the taxpayer and to which this paragraph applies is disposed of by the taxpayer, then for purposes of paragraph (1) and notwithstanding subparagraph (B), the credit recapture amount for the taxpayer shall be an amount equal to the unpaid principal on the loan described in subparagraph (B)(i) as of the date of disposition; “(ii) Assumptions, etc.— Any amount of the loan described in subparagraph (B)(i) which is assumed or taken subject to by any person shall be treated for purposes of clause (i) as not reducing unpaid principal with respect to such loan. “(F) Application with subsection (a).— The amount of any increase in tax under subsection (a) with respect to any property to which this paragraph applies shall be determined by reducing the qualified investment with respect to such property by the aggregate credit recapture amounts for all taxable years under this paragraph. “(G) Additional interest.— In the case of any increase in tax under paragraph (1) by reason of the application of this paragraph, there shall be added to such tax interest on such tax (determined under section 6621) as if the increase in tax under paragraph (1) was for the taxable year in which the property was placed in service.”
1982
Pub. L. 97–248 § 208(a)(2)(B) · 96 Stat. 324
Inserted · 26 U.S.C. § 47(a)(5)(D)
Pub. L. 97–248, § 208(a)(2)(B), inserted provision that if, prior to a disposition to which this subsection applies, any portion of any credit is not allowable with respect to any property by reason of section 168(i)(3), such portion shall be treated, for purposes of this subparagraph, as not having been used to reduce tax liability
Source evidence
Code amendment note
Subsec. (a)(5)(D). Pub. L. 97–248, § 208(a)(2)(B), inserted provision that if, prior to a disposition to which this subsection applies, any portion of any credit is not allowable with respect to any property by reason of section 168(i)(3), such portion shall be treated, for purposes of this subparagraph, as not having been used to reduce tax liability.
Enacted provision · exact public law section
“(2) Method of cost recovery.— The deduction allowable under subsection (a) with respect to any safe harbor lease property shall be determined by using the 150 percent declining balance method, switching to the straight-line method at a time to maximize the deduction (with a half-year convention in the first recovery year and without regard to salvage value) and a recovery period determined in accordance with the following table: “In the case of: The recovery period is: 3-year property 5 years. 5-year property 8 years. 10-year property 15 years.
1983
Pub. L. 97–448 § 102(e)(3)(A) · 96 Stat. 2365
Substituted · 26 U.S.C. § 47(d)(2)
Pub. L. 97–448, § 102(e)(3)(A), substituted “section 46(c)(8)(D)” and “section 46(c)(8)(B)” for “section 48(c)(8)(D)” and “section 48(c)(8)(B)”, respectively
Source evidence
Code amendment note
Subsec. (d)(2). Pub. L. 97–448, § 102(e)(3)(A), substituted “section 46(c)(8)(D)” and “section 46(c)(8)(B)” for “section 48(c)(8)(D)” and “section 48(c)(8)(B)”, respectively.
Enacted provision · exact public law section
(A) Paragraph (2) of section 47(d) is amended— 26 USC 47. (i) by striking out “section 48(c)(8)(D)” and inserting in lieu thereof “section 46(c)(8)(D)”, and (ii) by striking out “section 48(c)(8)(B)” and inserting in lieu thereof “section 46(c)(8)(B)”.
1983
Pub. L. 97–448 § 102(e)(3)(B) · 96 Stat. 2365
Substituted · 26 U.S.C. § 47(d)(3)(A)
Pub. L. 97–448, § 102(e)(3)(B), substituted “section 46(c)(8)(F)” for “section 46(c)(8)(E)”
Source evidence
Code amendment note
Subsec. (d)(3)(A). Pub. L. 97–448, § 102(e)(3)(B), substituted “section 46(c)(8)(F)” for “section 46(c)(8)(E)”.
Enacted provision · exact public law section
(B) Subparagraph (A) of section 47(d)(3) is amended by striking out “section 46(c)(8)(E)” and inserting in lieu thereof “section 46(c)(8)(F)”.
1984
Tax Reform Act of 1984
Pub. L. 98–369 § 474 · 98 Stat. 494
Substituted · 26 U.S.C. § 47(a)(5)(D); 26 U.S.C. § 47(a)(5)(6)
Pub. L. 98–369, § 474(o)(8), substituted “under section 39” for “under section 46(b)”
Source evidence
Code amendment note
Subsec. (a)(5)(D), (6). Pub. L. 98–369, § 474(o)(8), substituted “under section 39” for “under section 46(b)”.
Enacted provision · exact public law section
SEC. 474. TECHNICAL AND CONFORMING AMENDMENTS. (a) References to Old and New Provisions.— Whenever in this section reference is made to an old or new section or other provision, the reference is to the provision before (in the case of “old”) or after (in the case of “new”) the changes made by section 471 of this Act. (b) Old Section 21.— (1) Redesignation.— Old section 21 (relating to effect of changes) is redesignated as section 15. (2) Conforming amendments.— Sections 441(f)(2)(A) and 6013(c) are each amended by striking out “21” and inserting in lieu thereof “15”. (3) Table of sections.— The table of sections for part III of subchapter A of chapter 1 is amended by striking out the item relating to section 21 and inserting in lieu thereof the following: “Sec. 15. Effect of changes.” (c) New Section 21.— New section 21 (relating to expenses for household and dependent care services necessary for gainful employment) is amended— (1) by striking out subsection (b) and by redesignating subsections (c), (d), (e), (f), and (g) as subsections (b), (c), (d), (e), and (f), respectively, (2) by striking out “subsection (c)(1)” in subsection (a) and inserting in lieu thereof “subsection (b)(1)”, (3) by striking out “subsection (c)(2)” in subsection (a) and inserting in lieu thereof “subsection (b)(2)”, (4) by striking out “subsection (c)(1)(C)” in paragraph (2) of subsection (d) (as redesignated by paragraph (1)) and inserting in lieu thereof “subsection (b)(1)(C)”, (5) by striking out “subsection (d)(1)” in subparagraph (A) of subsection (d)(2) (as redesignated by paragraph (D) and inserting in lieu thereof, “subsection (c)(1)”, (6) by striking out “subsection (d)(2)” in subparagraph (B) of subsection (d)(2) (as redesignated by paragraph (D) and inserting in lieu thereof “subsection (c)(2)”, and (7) by striking out “subsection (c)(1)” in subsection (e)(5) (as redesignated by paragraph (1)) and inserting in lieu thereof “subsection (b)(1)”. (d) New Section 22.— New Section 22 (relating to the credit for the elderly and the permanently and totally disabled) is amended— (1) by striking out “Section 37 amount” each place it appears in the text and inserting in lieu thereof “section 22 amount”, (2) by striking out the heading of subsection (c) and inserting in lieu thereof “(c) Section 22 Amount.—”, and (3) by amending subsection (d) to read as follows: “(d) Adjusted Gross Income Limitation.— If the adjusted gross income of the taxpayer exceeds— “(1) $7,500 in the case of a single individual, “(2) $10,000 in the case of a joint return, or “(3) $5,000 in the case of a married individual filing a separate return, the section 22 amount shall be reduced by one-half of the excess of the adjusted gross income over $7,500, $10,000, or $5,000, as the case may be.” (e) New Section 23.— Subsection (b) of new section 23 (relating to 26 USC 23. Ante, p. 826. residential energy credit) is amended by striking out paragraphs (5) and (6) and inserting in lieu thereof the following: “(5) Carryforward of unused credit.— “(A) In general.— If the credit allowable under subsection (a) for any taxable year exceeds the limitation imposed by section 25(a) for such taxable year reduced by the sum of Ante, p. 827. the credits allowable under this subpart (other than this section), such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such succeeding taxable year. “(B) No carryforward to taxable years beginning after December 31, 1987.— No amount may be carried under subparagraph (A) to any taxable year beginning after December 31, 1987.” (f) New Section 24.— Subsection (b) of new section 24 (relating to 26 USC 24. Ante, p. 826. contributions to candidates for political office) is amended by striking out paragraph (2) and by redesignating paragraph (3) as paragraph (2). (g) New Section 28.— (1) New section 28 is amended— (A) by striking out “section 44F” each place it appears and inserting in lieu thereof “section 30”, and (B) by striking out “section 44F(b)” in subsection (c)(2) and inserting in lieu thereof “section 30(b),” and (C) by striking out “section 44F(D” in subsection (d)(4) and inserting in lieu thereof “section 30(f)”. (2) Paragraph (2) of new section 28(d) is amended to read as follows: “(3) Limitation based on amount of tax.— The credit allowed by this section for any taxable year shall not exceed the taxpayer’s tax liability for the taxable year (as defined in section 25(b)), reduced by the sum of the credits allowable under Ante, p. 827. Ante, pp. 825, 826. 26 USC 29. Ante, p. 826. subpart A and section 27.” (h) New Section 29.— Paragraph (5) of new section 29(b) (relating to credit for producing fuel from a nonconventional source) is amended to read as follows: “(5) Application with other credits.— The credit allowed by subsection (a) for a taxable year shall not exceed the taxpayer’s tax liability for the taxable year (as defined in section 25(b)), reduced by the sum of the credits allowable under subpart A and sections 27 and 28.” (i) New Section 30.— (1) New section 30 (relating to credit for increasing research 26 USC 30. Ante, p. 826. activities) is amended— (A) by striking out “in computing the credit under section 40 or 44B” in subsection (b)(2)(D)(iii) and inserting in lieu thereof “in determining the targeted jobs credit under section 51(a)”, and (B) by amending subparagraph (A) of subsection (g)(1) to read as follows: “(A) In general.— Except as provided in subparagraph (B), the credit allowed by subsection (a) for any taxable year shall not exceed the taxpayer’s tax liability for the taxable year (as defined in section 25(b)), reduced by the sum of the credits allowable under subpart A and sections 27, 28, and 29.” (2) New section 30 treated as continuation of old section 44F.— For purposes of determining— (A) whether any excess credit under old section 44F for a taxable year beginning before January 1, 1984, is allowable as a carryover under new section 30, and (B) the period during which new section 30 is in effect, new section 30 shall be treated as a continuation of old section 44F (and shall apply only to the extent old section 44F would have applied). (j) New Section 33— New section 33 (relating to tax withheld at source on nonresident aliens and foreign corporations and on taxfree covenant bonds) is amended to read as follows: “SEC. 33. TAX WITHHELD AT SOURCE ON NONRESIDENT ALIENS AND FOREIGN CORPORATIONS. “There 26 USC 1441. shall be allowed as a credit against the tax imposed by this subtitle the amount of tax withheld at source under subchapter A of chapter 3 (relating to withholding of tax on nonresident aliens and on foreign corporations).” (k) New Section 40.— New section 40 (relating to alcohol used as fuel) is amended— (1) by amending subsection (a) to read as follows: “(a) General Rule.— For purposes of section 38, the alcohol fuels credit determined under this section for the taxable year is an amount equal to the sum of— “(1) the alcohol mixture credit, plus “(2) the alcohol credit.”, (2) by striking out “the credit allowable under this section” in subsection (c) and inserting in lieu thereof “the credit determined under this section”, (3) by striking out “credit was allowable” each place it appears in paragraph (3) of subsection (d) and inserting in lieu thereof “credit was determined”, (4) by striking out subsection (e) and redesignating subsection (f) as subsection (e), (5) by amending paragraph (2) of subsection (e) (as redesignated by paragraph (4)) to read as follows: “(2) No carryovers to years after 1994.— No amount may be carried under section 39 by reason of this section (treating the amount allowed by reason of this section as the first amount allowed by this subpart) to any taxable year beginning after December 31, 1994.”, and (6) by adding at the end thereof the following new subsection: “(f) Election To Have Alcohol Fuels Credit Not Apply.— “(1) In general.— A taxpayer may elect to have this section not apply for any taxable year. “(2) Time for making election.— An election under paragraph (1) for any taxable year may be made (or revoked) at any time before the expiration of the 3-year period beginning on the last date prescribed by law for filing the return for such taxable year (determined without regard to extensions). “(3) Manner of making election.— An election under paragraph (1) (or revocation thereof) shall be made in such manner as the Secretary may by regulations prescribe.” (l) New Section 41.— New section 41 (relating to employee stock 26 USC 41. Ante, p. 826. ownership plan) is amended— (1) by amending paragraph (1) of subsection (a) to read as follows: “(1) Amount of credit.— In the case of a corporation which elects to have this section apply for the taxable year and which meets the requirements of subsection (c)(1), for purposes of section 38, the amount of the employee stock ownership credit Ante, p. 827. determined under this section for the taxable year is an amount equal to the amount of the credit determined under paragraph (2) for such taxable year.”, (2) by amending subsection (b) to read as follows: “(b) Certain Regulated Companies.— No credit attributable to compensation taken into account for the ratemaking purposes involved shall be determined under this section with respect to a taxpayer if— “(1) the taxpayer’s cost of service for ratemaking purposes or in its regulated books of account is reduced by reason of any portion of such credit which results from the transfer of employer securities or cash to a tax credit employee stock ownership plan which meets the requirements of section 409; Post, p. 852. “(2) the base to which the taxpayer’s rate of return for ratemaking purposes is applied is reduced by reason of any portion of such credit which results from a transfer described in paragraph (1) to such employee stock ownership plan; or “(3) any portion of the amount of such credit which results from a transfer described in paragraph (1) to such employee stock ownership plan is treated for ratemaking purposes in any way other than as though it had been contributed by the taxpayer’s common shareholders. Under regulations prescribed by the Secretary, rules similar to the rules of paragraphs (4) and (7) of section 46(f) shall apply for purposes of the preceding sentence.”, and (3) by striking out “the credit allowed under this section” in subsection (c)(3) and inserting in lieu thereof “the credit determined under this section”. (m) Repeal of Certain Old Provisions.— (1) Old sections 38, 40, 44, and 44B are hereby repealed. 26 USC 38, 40, 44, 44B. 26 USC 50A, 50B. (2) Old subpart C of part IV of subchapter A of chapter 1 is hereby repealed. (n) Redesignation of Old Subparts.— (1) Old subparts B and D of part IV of subchapter A of chapter 1 are redesignated as subparts E and F, respectively. (2) The subpart heading for subpart F of part IV of subchapter A of chapter 1 (as so redesignated) is amended to read as follows: “Subpart F— Rules for Computing Targeted Jobs Credit”. (3) The table of subparts for such part IV (as amended by subsection (a) of section 471) is amended by adding at the end thereof the following: “Subpart E. Rules for computing credit for investment in certain depreciable property.”. “Subpart F. Rules for computing targeted jobs credit.” (o) Investment Tax Credit.— (1) Section 46 (relating to amount of investment tax credit) is amended by striking out subsections (a) and (b) and inserting in lieu thereof the following: “(a) Amount of Investment Credit.— For purposes of section 38, the amount of the investment credit determined under this section for any taxable year shall be an amount equal to the sum of the following percentages of the qualified investment .(as determined under subsections (c) and (d)): “(1) the regular percentage, “(2) in the case of energy property, the energy percentage, and “(3) in the case of that portion of the basis of any property which is attributable to qualified rehabilitation expenditures, the rehabilitation percentage. “(b) Determination of Percentages.— For purposes of subsection (a)— “(1) Regular percentage.— The regular percentage is 10 percent. “(2) Energy percentage.— “(A) In general.— The energy percentage shall be determined in accordance with the following table: “Column A—Description Column B— Percentage Column C—Period In the case of: For the period: The energy percentage is: Beginning on: And ending on: (i) General Rule.—Property not described 10 percent Oct. 1, 1978 Dec. 31, 1982 in any of the following provisions of this column. (ii) Solar Wind, or Geothermal Proper- A. 10 percent Oct. 1, 1978 Dec. 31, 1979 ty.—Property described in section 41(l)(2)(A) or 4(l)(3)(A)(vii). B. 15 percent Jan. 1, +1980 Dec. 31, 1985 (iii) Ocean Thermal Property.—Property described in section 48(l)(3)(A)(ix). 15 percent Jan. 1, 1980 Dec. 31, 1985 (iv) Qualified Hydroelectric Generating Property.—Property described in section 48(i)(2)(A)(vii). 11 percent Jan. 1, 1980 Dec. 31, 1985 (v) Qualified Intercity Buses.—Property described in section 48(l)(2)(A)(is). 10 percent Jan. 1, 1980 Dec. 31, 1985 (vi) Biomass Property.—Property described in section 48(l)(15). 10 percent Oct. 1, 1978 Dec. 31, 1985 (vii) Chlor-Alkali Electrolytic Cells.— Property described in section 48(l)(5)(M). 10 percent Jan. 1, 1980 Dec. 31, 1982 “(B) Periods for which percentage not specified.— In the case of any energy property, the energy percentage shall be zero for any period for which an energy percentage is not specified for such property under subparagraph (A) (as modified by subparagraphs (C) and (D)). “(C) Longer period for certain long-term projects.— For the purpose of applying the energy percentage con- tained in clause (i) of subparagraph (A) with respect to property which is part of a project with a normal construction period of 2 years or more (within the meaning of subsection (d)(2)(A)(i)), ‘December 31, 1990’ shall be substituted for ‘December 31, 1982’ if— “(i) before January 1, 1983, all engineering studies in connection with the commencement of the construction of the project have been completed and all environmental and construction permits required under Federal, State, or local law in connection with the commencement of the construction of the project have been applied for, and “(ii) before January 1, 1986, the taxpayer has entered into binding contracts for the acquisition, construction, reconstruction, or erection of equipment specially designed for the project and the aggregate cost to the taxpayer of that equipment is at least 50 percent of the reasonably estimated cost for all such equipment which is to be placed in service as part of the project upon its completion. “(D) Longer period for certain hydroelectric generating property.— If an application has been docketed by the Federal Energy Regulatory Commission before January 1, 1986, with respect to the installation of any qualified hydroelectric generating property, for purposes of applying the energy percentage contained in clause (iv) of subparagraph (A) with respect to such property, ‘December 31, 1988’ shall be substituted for ‘December 31, 1985’. “(3) Special rule for certain energy property.— The regular percentage shall not apply to any energy property which, but for section 48(l)(1), would not be section 38 property. In the Ante, p. 827. case of any qualified hydroelectric generating property which is a fish passageway, the preceding sentence shall not apply to any period after 1979 for which the energy percentage for such property is greater than zero. “(4) Rehabilitation percentage.— “(A) In general.— “In the case of qualified rehabilitation expenditures with respect to a: The rehabilitation percentage is: 30-year building 15 40-year building 20 Certified historic structure 5. “(B) Regular and energy percentages not to apply.— The regular percentages and the energy percentages shall not apply to that portion of the basis of any property which is attributable to qualified rehabilitation expenditures. “(C) Definitions.— For purpose of this paragraph— “(i) 30-year building.— The term ‘30-year building* means a qualified rehabilitated building other than a 40-year building and other than a certified historic structure. “(ii) 40-year building.— The term ‘40-year building’ means a qualified rehabilitated building (other than a certified historic structure) which would meet the requirements of section 48(g)(1)(B) if ‘40’ were substituted for ‘30’ each place it appears in subparagraph (B) thereof. “(iii) Certified historic structure.— The term ‘certified historic structure’ means a qualified rehabilitated building which meets the requirements of section 48(g)(3).” (2) Subclause (II) of section 46(c)(8)(F)(ii) is amended by striking out “section 46(a)(2)(C)” and inserting in lieu thereof “subsection (b)(2)”. (3) (A) Paragraph (1) of section 46(e) is amended— (i) by striking out “and the $25,000 amount specified under subparagraphs (A) and (B) of subsection (a)(3)”, and (ii) by striking out “such items” and inserting in lieu thereof “such qualified investment”. (B) Paragraph (2) of section 46(e) is amended by striking out “the items described therein” and inserting in lieu thereof “qualified investment”. (4) (A) Paragraphs (1) and (2) of section 46(f) are each amended by striking out “no credit shall be allowed by section 38” and inserting in lieu thereof “no credit determined under subsection (a) shall be allowed by section 38”. (B) Paragraphs (1) and (2) of section 46(f) are each amended by striking out “the credit allowable by section 38” each place it appears and inserting in lieu thereof “the credit determined under subsection (a) and allowable by section 38”. (C) Subparagraph (B) of section 46(f)(4) is amended by striking out “the credit allowed by section 38” and inserting in lieu thereof “the credit determined under subsection (a) and allowed by section 38”. (5) Paragraph (8) of section 46(f) is amended— (A) by striking out “the credit allowable under section 38” each place it appears and inserting in lieu thereof “the credit determined under subsection (a) and allowable under section 38”, and (B) by striking out “(within the meaning of subsection (a)(7)(C)” and inserting in lieu thereof “(within the meaning of the first sentence of subsection (c)(3)(B))”. (6) Paragraph (2) of section 46(g) is amended by striking out “the limitation of subsection (a)(3)” and inserting in lieu thereof “the limitation of section 38(c)”. (7) Paragraph (1) of section 46(h) is amended— (A) by striking out “the credit allowable to the organization under section 38” and inserting in lieu thereof “the credit determined under subsection (a) and allowable to the organization under section 38”, and (B) by striking out “the limitation contained in subsection (a)(3)” and inserting in lieu thereof “the limitation contained in section 38(c)”. (8) Paragraphs (5) and (6) of section 47(a) are each amended by striking out “under section 46(b)” and inserting in lieu thereof “under section 39”. (9) Subsection (c) of section 47 is amended by striking out “subpart A” and inserting in lieu thereof “subpart A, B, or D”. (10) Subparagraph (B) of section 48(c)(3) is amended by striking out “section 46(b)” and inserting in lieu thereof “section 39”. (11) Subparagraph (B) of section 48(d)(1) is amended by striking 26 USC 48. out “section 46(a)(6)” and inserting in lieu thereof “section 38(c)(3)(B)”. (12) Subsection (f) of section 48 is amended— (A) by adding “and” at the end of paragraph (1), (B) striking out “, and” at the end of paragraph (2) and inserting in lieu thereof a period, and (C) by striking out paragraph (3). (13) Paragraph (1) of section 48(1) is amended by striking out “section 46(a)(2)(C)” and inserting in lieu thereof “section 46(b)(2)”. (14) Subsection (m) of section 48 is amended by striking out “subsection (a)(2)” and inserting in lieu thereof “subsection (b)”. (15) Subsection (n) of section 48 (relating to requirements for allowance of employee plan percentage) is hereby repealed; except that paragraph (4) of section 48(n) of the Internal Revenue Code of 1954 (as in effect before its repeal by this paragraph) shall continue to apply in the case of any recapture under section 47(f) of such Code of a credit allowable for a taxable year beginning before January 1, 1984. (16) Subsection (o) of section 48 (defining certain credits) is amended by striking out paragraphs (3), (4), (5), (6), and (7) and by redesignating paragraph (8) as paragraph (3). (17) Subsection (q) of section 48 is amended— (A) by striking out “section 46(a)(2)” each place it appears and inserting in lieu thereof “section 46(a)”, and (B) by striking out “section 46(a)(2)(B)” each place it appears and inserting in lieu thereof “section 46(b)(1)”. (18) Subsection (r) of section 48 is amended by striking out Ante, p. 635. “section 381(c)(23)” and inserting in lieu thereof “section 381(c)(26)”. (p) Targeted Jobs Credit.— (1) Subsection (a) of section 51 (relating to amount of targeted 26 USC 51. jobs credit) is amended to read as follows: “(a) Determination of Amount.— For purposes of section 38, the amount of the targeted jobs credit determined under this section for the taxable year shall be the sum of— “(1) 50 percent of the qualified first-year wages for such year, and “(2) 25 percent of the qualified second-year wages for such year.” (2) Subsection (g) of section 51 is amended by striking out “the credit provided by section 44B” and inserting in lieu thereof “the targeted jobs credit determined under this subpart”. (3) Section 51 is amended by adding at the end thereof the following new subsection: “(j) Election To Have Targeted Jobs Credit Not Apply.— (1) In general.— A taxpayer may elect to have this section not apply for any taxable year. (2) Time for making election.— An election under paragraph (1) for any taxable year may be made (or revoked) at any time before the expiration of the 3-year period beginning on the last date prescribed by law for filing the return for such taxable year (determined without regard to extensions). (3) Manner of making election.— An election under paragraph (1) (or revocation thereof) shall be made in such manner as the Secretary may by regulations prescribe.” (4) Subsection (a) of section 52 is amended by striking out “the credit (if any) allowable by section 44B to each such member” and inserting in lieu thereof “the credit (if any) determined under section 51(a) with respect to each such member”. (5) Subsection (b) of section 52 is amended by striking out “the credit (if any) allowable by section 44B” and inserting in lieu thereof “the credit (if any) determined under section 51(a)”. (6) Subsection (c) of section 52 is amended by striking out “credit shall be allowed under section 44B” and inserting in lieu thereof “credit shall be allowed under section 38 for any targeted jobs credit determined under this subpart”. (7) Paragraph (2) of section 52(d) is amended by striking out “, subject to section 53, a credit under section 44B” and inserting in lieu thereof “, subject to section 38(c), a credit under section 38(a)”. (8) Section 53 (relating to limitation based on amount of tax) is hereby repealed. (9) The table of sections for old subpart D of part IV of subchapter A of chapter 1 is amended by striking out the item relating to section 53. (q) Section 55.— (1) Paragraph (1) of section 55(c) (relating to credits) is amended— (A) by striking out “subpart A of part IV” and inserting in lieu thereof “subpart A, B, or D of part IV”, and (B) by striking out “section 33(a)” each place it appears and inserting in lieu thereof “section 27(a)”. (2) Clause (i) of section 55(c)(2)(B) is amended by striking out “section 33(a)” and inserting in lieu thereof “section 27(a)”. (3) Paragraph (3) of section 55(c) is amended to read as follows: “(3) Carryover and carryback of certain credits.— In the case of any taxable year for which a tax is imposed by this section, for purposes of determining the amount of any carryover or carryback to any other taxable year of any credit Ante, p. 826. Ante, p. 827. allowable under section 23, 30, or 38, the amount of the limitation under section 25, 30(g), or 38(c) (as the case may be) shall be deemed to be— “(A) the amount of such limitation for such taxable year (determined without regard to this paragraph), reduced (but not below zero) by “(B) the amount of the tax imposed by this section for the taxable year, reduced by— “(i) the amount of the credit allowable under section 27(a), “(ii) in the case of the limitation under section 30(g), the amount of such tax taken into account under this subparagraph with respect to the limitation under section 25, and “(iii) in the case of the limitation under section 38(c), the amount of such tax taken into account under this subparagraph with respect to limitations under sections 25 and 30(g).” (4) Paragraph (2) of section 55(f) is amended by striking out “allowable under subpart A of part IV of this subchapter (other than under sections 31, 39, and 43)” and inserting in lieu thereof “allowable under subparts A, B, and D of part IV of this subchapter”. (r) Technical and Conforming Amendments to Other Provisions.— (1) Section 56.— (A) Subsection (c) of section 56 (defining regular tax 26 USC 56. deduction) is amended— (i) by striking out “subpart A of part IV other than sections 39 and 44G” and inserting in lieu thereof “subparts A, B, and D of part IV”, and (ii) by amending the last sentence to read as follows: “For purposes of the preceding sentence, the amount of the credit determined under section 38 for any taxable Ante, p. 827. year shall be determined without regard to the employee stock ownership credit determined under section 41/’ Ante, p. 826. (B) Subparagraph (A) of section 56(e)(1) is amended by striking out clauses (i), (ii), (iii), and (iv) and inserting in lieu thereof the following: “(i) section 27 (relating to foreign tax credit), and Ante, p. 826. “(ii) section 38 (relating to general business credit), exceed”. (2) Section 86.— Paragraph (1) of section 86(f) (relating to Post, p. 1158. treatment as pension or annuity for certain purposes) is amended by striking out “section 43(c)(2)” and inserting in lieu thereof “section 32(c)(2)”. (3) Section 87.— Section 87 (relating to alcohol fuel credit 26 USC 87. included in income) is amended to read as follows: “SEC. 87. ALCOHOL FUEL CREDIT. “Gross income includes the amount of the alcohol fuel credit determined with respect to the taxpayer for the taxable year under section 40(a).” Ante, p. 832. 26 USC 103. (4) Section 103.— Clause (iv) of section 103(b)(6)(F) (relating to certain capital expenditures not taken into account) is amended by striking out “section 44F(b)(2)(A)” and inserting in lieu thereof “section 30(b)(2)(A)”. (5) Section 108.— Subparagraph (B) of section 108(b)(2) (relating 26 USC 108. 11 USC 101 et seq. to reduction of tax attributes in title 11 case or insolvency) is amended to read as follows: “(B) Research credit and general business credit.— Any carryover to or from the taxable year of a discharge of an amount for purposes of determining the amount allowable as a credit under— “(i) section 30 (relating to credit for increasing research Ante, p. 826. activities), or “(ii) section 38 (relating to general business credit). Ante, p. 827. For purposes of this subparagraph, there shall not be taken into account any portion of a carryover which is attributable to the employee stock ownership credit determined under section 41.” Ante, p. 826. (6) Section 129.— (A) Paragraph (2) of section 129(b) (relating to earned 26 USC 129. income limitation) is amended by striking out “section 44A(e)(2)” and inserting in lieu thereof “section 21(d)(2)”. (B) Paragraph (1) of section 129(e) (defining dependent care assistance) is amended by striking out ‘section 44A(c)(2)” and inserting in lieu thereof “section 21(b)(2)”. (C) Paragraph (2) of section 129(e) (defining earned income) is amended by striking out “section 43(c)(2)” and inserting in lieu thereof “section 32(c)(2)”. (7) Section 168.— (A) Clause (i) of section 168(i)(1)(D), as added by section 208(a) of the Tax Equity and Fiscal Responsibility Act of 1982, is amended by striking out “subpart A of part IV” and inserting in lieu thereof “subparts A, B, and D of part IV”. (B) Clause (iii) of section 168(i)(1)(D), as added by section 208(a) of the Tax Equity and Fiscal Responsibility Act of 1982, is amended by striking out “under the last sentence of section 53(a)” and inserting in lieu thereof “under section 25(b)(2)”. (C) Subparagraph (A) of section 168(i)(4), as added by section 208(a) of the Tax Equity and Fiscal Responsibility Act of 1982, is amended by striking out “subpart A of part IV of subchapter A of this chapter” and inserting in lieu thereof “section 38”. (D) Clause (i) of section 168(i)(1)(D), as added by section 209(b) of the Tax Equity and Fiscal Responsibility Act of 1982, is amended by striking out “subpart A of part IV” and inserting in lieu thereof “subparts A, B, and D of part IV”. (E) Clause (iii) of section 168(i)(1)(D), as added by section 209(b) of the Tax Equity and Fiscal Responsibility Act of 1982, is amended by striking out “under the last sentence of section 53(a)” and inserting in lieu thereof “under section 25(b)(2)”. (8) Section 196.— (A) Section 196 (relating to deduction for certain unused investment credits) is amended to read as follows: “SEC. 196. DEDUCTION FOR CERTAIN UNUSED BUSINESS CREDITS. “(a) Allowance of Deduction.— If any portion of the qualified business credits determined for any taxable year has not, after the Ante, p. 827. application of section 38(c), been allowed to the taxpayer as a credit under section 38 for any taxable year, an amount equal to the credit not so allowed shall be allowed to the taxpayer as a deduction for the first taxable year following the last taxable year for which such credit could, under section 39, have been allowed as a credit. “(b) Taxpayer’s Dying or Ceasing To Exist.— If a taxpayer dies or ceases to exist before the first taxable year following the last taxable year for which the qualified business credits could, under section 39, have been allowed as a credit, the amount described in subsection (a) (or the proper portion thereof) shall, under regulations prescribed by the Secretary, be allowed to the taxpayer as a deduction for the taxable year in which such death or cessation occurs. “(c) Qualified Business Credits.— For purposes of this section, the term ‘qualified business credits’ means— “(1) the investment credit determined under section 46(a) (but only to the extent attributable to property the basis of which is reduced by section 48(q)), “(2) the targeted jobs credit determined under section 51(a), and “(3) the alcohol fuels credit determined under section 40(a). “(d) Special Rule for Investment Tax Credit.— In the case of the investment credit determined under section 46(a) (other than a credit to which section 48(q)(3) applies), subsection (a) shall be applied by substituting ‘an amount equal to 50 percent of for ‘an amount equal to’.” (B) The table of sections for part VI of subchapter B of chapter 1 is amended by striking out the item relating to section 196 and inserting in lieu thereof: “Sec. 196. Deduction for certain unused business credits.” (9) Section 213.— Subsection (e) of section 213 (relating to 26 USC 213. exclusion of amounts allowed for care of certain dependents) is amended by striking out “section 44A” and inserting in lieu thereof “section 21”. (10) Section 280c.— (A) Section 280C (relating to certain expenses for which 26 USC 280C. credits are allowable) is amended by striking out subsection (a) and by redesignating subsections (b) and (c) as subsections (a) and (b), respectively. (B) Subsection (a) of section 280C (as so redesignated) is amended— (i) by striking out the first sentence and inserting in lieu thereof the following: “No deduction shall be allowed for that portion of the wages or salaries paid or incurred for the taxable year which is equal to the amount of the credit determined for the taxable year under section 51(a).”, and Ante, p. 837. (ii) by striking out “Section 44B Credit” in the subsection heading and inserting in lieu thereof “Targeted Jobs Credit’. (C) Subsection (b) of section 280C (as so redesignated) is amended by striking out “44H” each place it appears and inserting in lieu thereof “29”. (D) Paragraph (3) of section 280C(b) (as so redesignated) is amended— (i) by striking out “section 44F(f)(5)” and inserting in lieu thereof “section 30(f)(5)”, (ii) by striking out “section 44F(f)(1)(B)” and inserting in lieu thereof “section 30(f)(1)(B)”, (iii) by striking out “section 44F(f)(1)” and inserting in lieu thereof “section 30(f)(1)”. (11) Section 381.— Subsection (c) of section 381 is amended— 26 USC 381. (A) by striking out paragraphs (23), (24), (26), (27), and (30), (B) by redesignating paragraphs (25), (28), and (29) as paragraphs (23), (24), and (25), respectively, (C) by striking out “44F” each place it appears in paragraph (25) (as so redesignated) and inserting in lieu thereof “30, and (D) by adding at the end thereof the following new paragraph: “(26) Credit under section 38.— The acquiring corporation shall take into account (to the extent proper to carry out the purposes of this section and section 38, and under such regulations Ante, p. 827. as may be prescribed by the Secretary) the items required to be taken into account for purposes of section 38 in respect of the distributor or transferor corporation.” (12) Section 383.— (A) Section 383 (as in effect on the day before the date of 26 USC 383. 26 USC 1 et seq. the enactment of the Tax Reform Act of 1976) is amended— (i) by striking out “with respect to any unused investment credit” and all that follows and inserting in lieu thereof the following: “with respect to any unused business credit of the corporation which can otherwise be carried forward under section 39, to any unused credit of the corporation which could otherwise Ante, p. 828. be carried forward under section 30(g)(2), to any excess foreign taxes of the corporation which could otherwise be Ante, p. 826. carried forward under section 904(c), and to any net capital loss of the corporation which can otherwise be carried forward under section 1212.”, and (ii) by striking out the section heading and inserting in lieu thereof the following: “SEC. 383. SPECIAL LIMITATIONS ON UNUSED BUSINESS CREDITS. RESEARCH CREDITS. FOREIGN TAXES, AND CAPITAL LOSSES.” (B) Section 383 (as amended by the Tax Reform Act of 1976) is amended— (i) by striking out “with respect to any unused investment credit” and all that follows and inserting in lieu thereof the following: “with respect to any unused business credit of the corporation under section 39, to any unused credit of the corporation under section 30(g)(2), to any excess foreign taxes of the corporation under section 904(c), and to any net capital loss of the corporation under section 1212.”, and (ii) by striking out the section heading and inserting in lieu thereof the following: “SEC. 383. SPECIAL LIMITATIONS ON UNUSED BUSINESS CREDITS. RESEARCH CREDITS. FOREIGN TAXES, AND CAPITAL LOSSES.” (C) The table of sections for part V of subchapter C of chapter 1 is amended by striking out the item relating to section 383 and inserting in lieu thereof the following: “Sec. 383. Special limitations on unused business credits, research credits, foreign taxes, and capital losses.” (13) Paragraph (21) of section 401(a) is amended by striking out “allowable—” and all that follows and inserting in lieu thereof “allowable under section 41 if the employer made the transfer described in section 41(c)(1)(B).” (14) Section 404.— Subsection (i) of section 404 (relating to deductibility of unused portions of employee stock ownership credit) is amended to read as follows: “(i) Deductibility of Unused Portions of Employee Stock Ownership Credit.— (1) Unused credit carryovers.— If any portion of the employee stock ownership credit determined under section 41 for any taxable year has not, after the application of section 38(c), been allowed under section 38 for any taxable year, such portion shall be allowed as a deduction (without regard to any limitations provided under this section) for the last taxable year to which such portion could have been allowed as a credit under section 39. (2) Reductions in credit.— There shall be allowed as a deduction (subject to the limitations provided under this section) an amount equal to any reduction of the credit allowed under section 41 resulting from a final determination of such credit to the extent such reduction is not taken into account under section 41(c)(3).” (15) Section 409.— (A) Section 409 (relating to qualifications for tax credit Post, p. 852. employee stock ownership plans), as redesignated by section 491 of this Act, is amended by striking out “44G” each place Ante, p. 848. it appears in subsections (b), (g), (i), (m), and (n) and inserting in lieu thereof “41”. (B) Paragraph (1) of section 409(b), as so redesignated, is amended by striking out “48(n)(1)(A) or”. (C) Subsection (g) of section 409, as so redesignated, is amended by adding at the end thereof the following new sentence: “For purposes of the preceding sentence, the references to section 48(n)(1) and the employee plan credit shall refer to such section and credit Ante, p. 837. as in effect before the enactment of the Tax Reform Act of 1984.” Ante, p. 494. (D) Subparagraph (A) of section 409(i)(1), as so redesignated, is amended by striking out “48(n)(1) or”. (E) Subsection (k) of section 409, as so redesignated, is amended by adding at the end thereof the following new sentence: “For” purposes of this subsection, the reference to the matching employee plan credit shall refer to such credit as in effect before the enactment of the Tax Reform Act of 1984.” (16) Section 527 (g) (1).— Paragraph (1) of section 527(g) (relating 26 USC 527. to treatment of newsletter funds) is amended by striking out “section 41(c)(2)” and inserting in lieu thereof “section 24(c)(2)”. (17) Section 642 (a) (2) .— Paragraph (2) of section 642(a) (relating 26 USC 642. to credit for political contributions) is amended by striking out “section 4” and inserting in lieu thereof “section 24”. (18) Section 691 (b).— Subsection (b) of section 691 (relating to 26 USC 691. allowance of deductions and credit) is amended by striking out “section 33” each place it appears and inserting in lieu thereof “section 27”. (19) Sections 874(a) and 882(c) (2).— Sections 874(a) and 882(c)(2) are each amended— (A) by striking out “32” and inserting in lieu thereof “33”, and (B) by striking out “section 39” and inserting in lieu thereof “section 34”. (20) Section 901 (a).— Subsection (a) of section 901 (relating to 26 USC 901. allowance of foreign tax credit) is amended by striking out the last sentence and inserting in lieu thereof the following: “The credit shall not be allowed against any tax treated as a tax not imposed by this chapter under section 25(b).” (21) Section 904 (g).— Subsection (g) of section 904 (relating to Ante, p. 827. 26 USC 904. limitation on foreign tax credit) is amended to read as follows: “(g) Coordination With Nonrefundable Personal Credits.— In the case of an individual, for purposes of subsection (a), the tax against which the credit is taken is such tax reduced by the sum of the credits allowable under subpart A of part IV of subchapter A of this chapter.” (22) Section 936.— (A) Clause (i)(I)(a) of section 936(h)(5)(C) is amended by 26 USC 936. striking out “section 44F(b)” and inserting in lieu thereof “section 30(b)”. (B) Clause (i)(IV)(c) of section 936(h)(5)(C) is amended— (i) by striking out “section 44F” and inserting in lieu thereof “section 30”, and (ii) by striking out “section 44F(f)” and inserting in lieu thereof “section 30(f)”. (23) Section 1016(a) (21).— Paragraph (21) of section 1016(a) (relating to adjustments to basis) is amended— (A) by striking out “section 44C(e)” and inserting in lieu thereof “section 23(e)”, and (B) by striking out “section 44C” and inserting in lieu thereof “section 23”. (24) Section 1033(g)(3)(A).— Subparagraph (A) of section 1033(g)(3) (relating to election to treat outdoor advertising displays as real property) is amended by striking out “the credit allowed by section 38 (relating to investment in certain depreciable property)” and inserting in lieu thereof “the investment credit determined under section 46(a)”. (25) Section 1351 (i).— Subsection (i) of section 1351 (relating adjustments for succeeding years) is amended— (A) by striking out “section 33” and inserting in lieu thereof “section 27”, and (B) by striking out “section 38 (relating to investment credit)” and inserting in lieu thereof “section 38 (relating to general business credit)”. (26) Section 1366(f).— Paragraph (1) of section 1366(f) (relating to special rules) is amended by striking out “section 39” each place it appears and inserting in lieu thereof “section 34”. (27) Section 1374(b).— Subsection (b) of section 1374 (relating to amount of tax imposed on certain capital gains) is amended by striking out “section 39” and inserting in lieu thereof “section 34”. (28) Section 1375(c).— Paragraph (1) of section 1375(c) (relating to disallowance of credit) is amended by striking out “section 39” and inserting in lieu thereof “section 34”. (29) Section 1451.— (A) Chapter 3 (relating to withholding of tax on nonresident aliens and foreign corporations and tax-free covenant bonds) is amended by striking out subchapter B and by redesignating subchapter C as subchapter B. (B) The table of subchapters for chapter 3 is amended by striking out the items relating to subchapters B and C and inserting in lieu thereof the following: “Subchapter B. Application of withholding provisions.” (C) The heading of chapter 3 is amended by striking out “AND TAX-FREE COVENANT BONDS”. (D) The table of chapters for subtitle A is amended by striking out “and tax-free covenant bonds” in the item relating to chapter 3. (E) Section 12 is amended by striking out paragraph (6) and by redesignating paragraphs (7) and (8) as paragraphs (6) and (7), respectively. (F) Subsection (f) of section 164 (as in effect before its redesignation by the Social Security Amendments of 1983) is amended by striking out paragraph (1) and by redesignating paragraphs (2) and (3) as paragraphs (1) and (2), respectively. (G) Subsection (a) of section 1441 is amended by striking 26 USC 1441. out “except in the cases provided for in section 1451 and”. (H) Paragraph (3) of section 1441(c) is amended by striking out “section 1451” and inserting in lieu thereof “section 1451 (as in effect before its repeal by the Tax Reform Act of 1984)”. (I) Subsection (a) of section 1442 is amended— (i) by striking out “or section 1451”, and (ii) by striking out except that, in the case of interest described in section 1451 (relating to tax-free covenant bonds), the deduction and withholding shall be at the rate specified therein”. (J) Paragraph (2) of section 6049(b) (relating to amounts 26 USC 6049. not treated as interest) is amended— (i) by adding “and” at the end of subparagraph (C), (ii) by striking out “, and” at the end of subparagraph and inserting in lieu thereof a period, and (iii) by striking out subparagraph (E). (K) Paragraph (16) of section 7701(a) is amended by striking 26 USC 7701. out “1451,”. (30) Section 3507.— Subsections (b), (c), and (e) of section 3507 26 USC 3507. (relating to advanced payment of earned income credit) are each amended by striking out “section 43” each place it appears and inserting in lieu thereof “section 32”. (31) Section 6096(b).— Subsection (b) of section 6096 (defining 26 USC 6096. income tax liability) is amended by striking out “allowable under sections 33, 37, 38, 40, 41, 42, 44, 44A, 44B, 44C, 44D, 44E, 44F, 44G, and 44H” and inserting in lieu thereof “allowable under part IV of subchapter A of chapter 1 (other than subpart C thereof)”. (32) Section 6201 (a) (4).— Paragraph (4) of section 6201(a) (relating 26 USC 6201. to erroneous credit under section 39 or 43) is amended— (A) by striking out “section 39” and inserting in lieu thereof “section 34”, (B) by striking out “section 43” and inserting in lieu thereof “section 32”, and (C) by striking out “section 39 or 43” in the paragraph heading and inserting in lieu thereof “section 32 or 34”. (33) Section 6211 (b).— (A) Paragraph (1) of section 6211(b) is amended by striking out “without regard to so much of the credit under section 32 as exceeds 2 percent of the interest on obligations described in section 1451” and inserting in lieu thereof “without regard to the credit under section 33”. (B) Paragraph (4) of section 6211(b) is amended by striking out “section 39” and inserting in lieu thereof “section 34”. (34) Section 6213(h) (3).— Paragraph (3) of section 6213(h) is 26 USC 6213. amended by striking out “section 39” and inserting in lieu thereof “section 32 or 34”. (35) Section 6362(c)(1).— Paragraph (1) of section 6362(c) 26 USC 6362. (relating to qualified resident tax which is a percentage of the Federal tax) is amended by striking out “sections 31 and 39” and inserting in lieu thereof “sections 31 and 34”. (36) Section 6401(b).— Subsection (b) of section 6401 (relating to excessive credits treated as overpayments) is amended to read as follows: “(b) Excessive Credits.— “(1) In general.— If the amount allowable as credits under subpart C of part IV of subchapter A of chapter 1 (relating to refundable credits) exceeds the tax imposed by subtitle A (reduced by the credits allowable under subparts A, B, and D of such part IV), the amount of such excess shall be considered an overpayment. “(2) Special rule for credit under section 33.— For purposes of paragraph (1), any credit allowed under section 33 (relating to withholding of tax on nonresident aliens and on foreign corporations) for any taxable year shall be treated as a credit allowable under subpart C of part IV of subchapter A of chapter 1 only if an election under subsection (g) or (h) of section 6013 is in effect for such taxable year.” (37) Section 6411.— (A) So much of subsection (a) of section 6411 as precedes paragraph (2) thereof (relating to tentative carryback and refund adjustments) is amended to read as follows: “(a) Application for Adjustment.— A taxpayer may file an application for a tentative carryback adjustment of the tax for the prior taxable year affected by a net operating loss carryback provided in section 172(b), by a business credit carryback provided in section 39, by a research credit carryback provided in section 30(g)(2) or by a capital loss carryback provided in section 1212(a)(1), from any taxable year. The application shall be verified in the manner prescribed by section 6065 in the case of a return of such taxpayer and shall be filed, on or after the date of filing for the return for the taxable year of the net operating loss, net capital loss, or unused business credit from which the carryback results and within a period of 12 months after such taxable year or, with respect to any portion of a research credit carryback or a business credit carryback attributable to a net operating loss carryback or a net capital loss carryback from a subsequent taxable year, within a period of 12 months from the end of such subsequent taxable year (or, with respect to any portion of a business credit carryback attributable to a research credit carryback from a subsequent taxable year within a period of 12 months from the end of such subsequent taxable year), in the manner and form required by regulations prescribed by the Secretary. The applications shall set forth in such detail and with such supporting data and explanation as such regulations shall require— “(1) The amount of the net operating loss, net capital loss, unused research credit, or unused business credit;”. (B) Subsections (b) and (c) of section 6411 are each amended by striking out “unused investment credit, unused work incentive program credit, unused new employee credit, unused research credit, or unused employee stock ownership credit” each place it appears and inserting in lieu thereof “unused research credit, or unused business credit”. (38) Sections 6420(g) (2), etc.— Sections 6420(g)(2), 6421(i)(3), and 6427(i)(3) are each amended by striking out “section 39” and inserting in lieu thereof “section 34”. (39) Section 6501 (p).— Section 6501 is amended by striking out subsection (p) and by redesignating subsection (q) as subsection (p). (40) Section 6511(d) (4) (c).— Subparagraph (C) of section 26 USC 6511. 6511(d)(4) (defining credit carryback) is amended to read as follows: “(C) Credit carryback defined.— For purposes of this paragraph, the term ‘credit carryback’ means any business carryback under section 39 and any research credit carryback Ante, p. 828. Ante, p. 826. 97 Stat. 87. 26 USC 7871. under section 30(g)(2).” (41) Section 7871.— Subparagraph (A) of section 7871(a)(6) is amended by striking out “section 41(c)(4)” and inserting in lieu thereof “section 24(c)(4)”. (42) Section 9502(d).— Paragraph (3) of section 9502(d) (relating 26 USC 9502. to transfers from the Airport and Airway Trust Fund on account of certain section 39 credits) is amended— (A) by striking out “section 39“ and inserting in lieu thereof “section 34”, and (B) by striking out “section 39 credits” in the heading and inserting in lieu thereof “section 34 credits”. (43) Section 9503 (c).— Clause (ii) of section 9503(c)(2)(A) (relating 26 USC 9503. to transfers from the Highway Trust Fund for certain repayments and credits) is amended by striking out “section 39” and inserting in lieu thereof “section 34”.
1984
Tax Reform Act of 1984
Pub. L. 98–369 § 474 · 98 Stat. 494
Substituted · 26 U.S.C. § 47(c)
Pub. L. 98–369, § 474(o)(9), substituted “subpart A, B, or D” for “subpart A”
Source evidence
Code amendment note
Subsec. (c). Pub. L. 98–369, § 474(o)(9), substituted “subpart A, B, or D” for “subpart A”.
Enacted provision · exact public law section
SEC. 474. TECHNICAL AND CONFORMING AMENDMENTS. (a) References to Old and New Provisions.— Whenever in this section reference is made to an old or new section or other provision, the reference is to the provision before (in the case of “old”) or after (in the case of “new”) the changes made by section 471 of this Act. (b) Old Section 21.— (1) Redesignation.— Old section 21 (relating to effect of changes) is redesignated as section 15. (2) Conforming amendments.— Sections 441(f)(2)(A) and 6013(c) are each amended by striking out “21” and inserting in lieu thereof “15”. (3) Table of sections.— The table of sections for part III of subchapter A of chapter 1 is amended by striking out the item relating to section 21 and inserting in lieu thereof the following: “Sec. 15. Effect of changes.” (c) New Section 21.— New section 21 (relating to expenses for household and dependent care services necessary for gainful employment) is amended— (1) by striking out subsection (b) and by redesignating subsections (c), (d), (e), (f), and (g) as subsections (b), (c), (d), (e), and (f), respectively, (2) by striking out “subsection (c)(1)” in subsection (a) and inserting in lieu thereof “subsection (b)(1)”, (3) by striking out “subsection (c)(2)” in subsection (a) and inserting in lieu thereof “subsection (b)(2)”, (4) by striking out “subsection (c)(1)(C)” in paragraph (2) of subsection (d) (as redesignated by paragraph (1)) and inserting in lieu thereof “subsection (b)(1)(C)”, (5) by striking out “subsection (d)(1)” in subparagraph (A) of subsection (d)(2) (as redesignated by paragraph (D) and inserting in lieu thereof, “subsection (c)(1)”, (6) by striking out “subsection (d)(2)” in subparagraph (B) of subsection (d)(2) (as redesignated by paragraph (D) and inserting in lieu thereof “subsection (c)(2)”, and (7) by striking out “subsection (c)(1)” in subsection (e)(5) (as redesignated by paragraph (1)) and inserting in lieu thereof “subsection (b)(1)”. (d) New Section 22.— New Section 22 (relating to the credit for the elderly and the permanently and totally disabled) is amended— (1) by striking out “Section 37 amount” each place it appears in the text and inserting in lieu thereof “section 22 amount”, (2) by striking out the heading of subsection (c) and inserting in lieu thereof “(c) Section 22 Amount.—”, and (3) by amending subsection (d) to read as follows: “(d) Adjusted Gross Income Limitation.— If the adjusted gross income of the taxpayer exceeds— “(1) $7,500 in the case of a single individual, “(2) $10,000 in the case of a joint return, or “(3) $5,000 in the case of a married individual filing a separate return, the section 22 amount shall be reduced by one-half of the excess of the adjusted gross income over $7,500, $10,000, or $5,000, as the case may be.” (e) New Section 23.— Subsection (b) of new section 23 (relating to 26 USC 23. Ante, p. 826. residential energy credit) is amended by striking out paragraphs (5) and (6) and inserting in lieu thereof the following: “(5) Carryforward of unused credit.— “(A) In general.— If the credit allowable under subsection (a) for any taxable year exceeds the limitation imposed by section 25(a) for such taxable year reduced by the sum of Ante, p. 827. the credits allowable under this subpart (other than this section), such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such succeeding taxable year. “(B) No carryforward to taxable years beginning after December 31, 1987.— No amount may be carried under subparagraph (A) to any taxable year beginning after December 31, 1987.” (f) New Section 24.— Subsection (b) of new section 24 (relating to 26 USC 24. Ante, p. 826. contributions to candidates for political office) is amended by striking out paragraph (2) and by redesignating paragraph (3) as paragraph (2). (g) New Section 28.— (1) New section 28 is amended— (A) by striking out “section 44F” each place it appears and inserting in lieu thereof “section 30”, and (B) by striking out “section 44F(b)” in subsection (c)(2) and inserting in lieu thereof “section 30(b),” and (C) by striking out “section 44F(D” in subsection (d)(4) and inserting in lieu thereof “section 30(f)”. (2) Paragraph (2) of new section 28(d) is amended to read as follows: “(3) Limitation based on amount of tax.— The credit allowed by this section for any taxable year shall not exceed the taxpayer’s tax liability for the taxable year (as defined in section 25(b)), reduced by the sum of the credits allowable under Ante, p. 827. Ante, pp. 825, 826. 26 USC 29. Ante, p. 826. subpart A and section 27.” (h) New Section 29.— Paragraph (5) of new section 29(b) (relating to credit for producing fuel from a nonconventional source) is amended to read as follows: “(5) Application with other credits.— The credit allowed by subsection (a) for a taxable year shall not exceed the taxpayer’s tax liability for the taxable year (as defined in section 25(b)), reduced by the sum of the credits allowable under subpart A and sections 27 and 28.” (i) New Section 30.— (1) New section 30 (relating to credit for increasing research 26 USC 30. Ante, p. 826. activities) is amended— (A) by striking out “in computing the credit under section 40 or 44B” in subsection (b)(2)(D)(iii) and inserting in lieu thereof “in determining the targeted jobs credit under section 51(a)”, and (B) by amending subparagraph (A) of subsection (g)(1) to read as follows: “(A) In general.— Except as provided in subparagraph (B), the credit allowed by subsection (a) for any taxable year shall not exceed the taxpayer’s tax liability for the taxable year (as defined in section 25(b)), reduced by the sum of the credits allowable under subpart A and sections 27, 28, and 29.” (2) New section 30 treated as continuation of old section 44F.— For purposes of determining— (A) whether any excess credit under old section 44F for a taxable year beginning before January 1, 1984, is allowable as a carryover under new section 30, and (B) the period during which new section 30 is in effect, new section 30 shall be treated as a continuation of old section 44F (and shall apply only to the extent old section 44F would have applied). (j) New Section 33— New section 33 (relating to tax withheld at source on nonresident aliens and foreign corporations and on taxfree covenant bonds) is amended to read as follows: “SEC. 33. TAX WITHHELD AT SOURCE ON NONRESIDENT ALIENS AND FOREIGN CORPORATIONS. “There 26 USC 1441. shall be allowed as a credit against the tax imposed by this subtitle the amount of tax withheld at source under subchapter A of chapter 3 (relating to withholding of tax on nonresident aliens and on foreign corporations).” (k) New Section 40.— New section 40 (relating to alcohol used as fuel) is amended— (1) by amending subsection (a) to read as follows: “(a) General Rule.— For purposes of section 38, the alcohol fuels credit determined under this section for the taxable year is an amount equal to the sum of— “(1) the alcohol mixture credit, plus “(2) the alcohol credit.”, (2) by striking out “the credit allowable under this section” in subsection (c) and inserting in lieu thereof “the credit determined under this section”, (3) by striking out “credit was allowable” each place it appears in paragraph (3) of subsection (d) and inserting in lieu thereof “credit was determined”, (4) by striking out subsection (e) and redesignating subsection (f) as subsection (e), (5) by amending paragraph (2) of subsection (e) (as redesignated by paragraph (4)) to read as follows: “(2) No carryovers to years after 1994.— No amount may be carried under section 39 by reason of this section (treating the amount allowed by reason of this section as the first amount allowed by this subpart) to any taxable year beginning after December 31, 1994.”, and (6) by adding at the end thereof the following new subsection: “(f) Election To Have Alcohol Fuels Credit Not Apply.— “(1) In general.— A taxpayer may elect to have this section not apply for any taxable year. “(2) Time for making election.— An election under paragraph (1) for any taxable year may be made (or revoked) at any time before the expiration of the 3-year period beginning on the last date prescribed by law for filing the return for such taxable year (determined without regard to extensions). “(3) Manner of making election.— An election under paragraph (1) (or revocation thereof) shall be made in such manner as the Secretary may by regulations prescribe.” (l) New Section 41.— New section 41 (relating to employee stock 26 USC 41. Ante, p. 826. ownership plan) is amended— (1) by amending paragraph (1) of subsection (a) to read as follows: “(1) Amount of credit.— In the case of a corporation which elects to have this section apply for the taxable year and which meets the requirements of subsection (c)(1), for purposes of section 38, the amount of the employee stock ownership credit Ante, p. 827. determined under this section for the taxable year is an amount equal to the amount of the credit determined under paragraph (2) for such taxable year.”, (2) by amending subsection (b) to read as follows: “(b) Certain Regulated Companies.— No credit attributable to compensation taken into account for the ratemaking purposes involved shall be determined under this section with respect to a taxpayer if— “(1) the taxpayer’s cost of service for ratemaking purposes or in its regulated books of account is reduced by reason of any portion of such credit which results from the transfer of employer securities or cash to a tax credit employee stock ownership plan which meets the requirements of section 409; Post, p. 852. “(2) the base to which the taxpayer’s rate of return for ratemaking purposes is applied is reduced by reason of any portion of such credit which results from a transfer described in paragraph (1) to such employee stock ownership plan; or “(3) any portion of the amount of such credit which results from a transfer described in paragraph (1) to such employee stock ownership plan is treated for ratemaking purposes in any way other than as though it had been contributed by the taxpayer’s common shareholders. Under regulations prescribed by the Secretary, rules similar to the rules of paragraphs (4) and (7) of section 46(f) shall apply for purposes of the preceding sentence.”, and (3) by striking out “the credit allowed under this section” in subsection (c)(3) and inserting in lieu thereof “the credit determined under this section”. (m) Repeal of Certain Old Provisions.— (1) Old sections 38, 40, 44, and 44B are hereby repealed. 26 USC 38, 40, 44, 44B. 26 USC 50A, 50B. (2) Old subpart C of part IV of subchapter A of chapter 1 is hereby repealed. (n) Redesignation of Old Subparts.— (1) Old subparts B and D of part IV of subchapter A of chapter 1 are redesignated as subparts E and F, respectively. (2) The subpart heading for subpart F of part IV of subchapter A of chapter 1 (as so redesignated) is amended to read as follows: “Subpart F— Rules for Computing Targeted Jobs Credit”. (3) The table of subparts for such part IV (as amended by subsection (a) of section 471) is amended by adding at the end thereof the following: “Subpart E. Rules for computing credit for investment in certain depreciable property.”. “Subpart F. Rules for computing targeted jobs credit.” (o) Investment Tax Credit.— (1) Section 46 (relating to amount of investment tax credit) is amended by striking out subsections (a) and (b) and inserting in lieu thereof the following: “(a) Amount of Investment Credit.— For purposes of section 38, the amount of the investment credit determined under this section for any taxable year shall be an amount equal to the sum of the following percentages of the qualified investment .(as determined under subsections (c) and (d)): “(1) the regular percentage, “(2) in the case of energy property, the energy percentage, and “(3) in the case of that portion of the basis of any property which is attributable to qualified rehabilitation expenditures, the rehabilitation percentage. “(b) Determination of Percentages.— For purposes of subsection (a)— “(1) Regular percentage.— The regular percentage is 10 percent. “(2) Energy percentage.— “(A) In general.— The energy percentage shall be determined in accordance with the following table: “Column A—Description Column B— Percentage Column C—Period In the case of: For the period: The energy percentage is: Beginning on: And ending on: (i) General Rule.—Property not described 10 percent Oct. 1, 1978 Dec. 31, 1982 in any of the following provisions of this column. (ii) Solar Wind, or Geothermal Proper- A. 10 percent Oct. 1, 1978 Dec. 31, 1979 ty.—Property described in section 41(l)(2)(A) or 4(l)(3)(A)(vii). B. 15 percent Jan. 1, +1980 Dec. 31, 1985 (iii) Ocean Thermal Property.—Property described in section 48(l)(3)(A)(ix). 15 percent Jan. 1, 1980 Dec. 31, 1985 (iv) Qualified Hydroelectric Generating Property.—Property described in section 48(i)(2)(A)(vii). 11 percent Jan. 1, 1980 Dec. 31, 1985 (v) Qualified Intercity Buses.—Property described in section 48(l)(2)(A)(is). 10 percent Jan. 1, 1980 Dec. 31, 1985 (vi) Biomass Property.—Property described in section 48(l)(15). 10 percent Oct. 1, 1978 Dec. 31, 1985 (vii) Chlor-Alkali Electrolytic Cells.— Property described in section 48(l)(5)(M). 10 percent Jan. 1, 1980 Dec. 31, 1982 “(B) Periods for which percentage not specified.— In the case of any energy property, the energy percentage shall be zero for any period for which an energy percentage is not specified for such property under subparagraph (A) (as modified by subparagraphs (C) and (D)). “(C) Longer period for certain long-term projects.— For the purpose of applying the energy percentage con- tained in clause (i) of subparagraph (A) with respect to property which is part of a project with a normal construction period of 2 years or more (within the meaning of subsection (d)(2)(A)(i)), ‘December 31, 1990’ shall be substituted for ‘December 31, 1982’ if— “(i) before January 1, 1983, all engineering studies in connection with the commencement of the construction of the project have been completed and all environmental and construction permits required under Federal, State, or local law in connection with the commencement of the construction of the project have been applied for, and “(ii) before January 1, 1986, the taxpayer has entered into binding contracts for the acquisition, construction, reconstruction, or erection of equipment specially designed for the project and the aggregate cost to the taxpayer of that equipment is at least 50 percent of the reasonably estimated cost for all such equipment which is to be placed in service as part of the project upon its completion. “(D) Longer period for certain hydroelectric generating property.— If an application has been docketed by the Federal Energy Regulatory Commission before January 1, 1986, with respect to the installation of any qualified hydroelectric generating property, for purposes of applying the energy percentage contained in clause (iv) of subparagraph (A) with respect to such property, ‘December 31, 1988’ shall be substituted for ‘December 31, 1985’. “(3) Special rule for certain energy property.— The regular percentage shall not apply to any energy property which, but for section 48(l)(1), would not be section 38 property. In the Ante, p. 827. case of any qualified hydroelectric generating property which is a fish passageway, the preceding sentence shall not apply to any period after 1979 for which the energy percentage for such property is greater than zero. “(4) Rehabilitation percentage.— “(A) In general.— “In the case of qualified rehabilitation expenditures with respect to a: The rehabilitation percentage is: 30-year building 15 40-year building 20 Certified historic structure 5. “(B) Regular and energy percentages not to apply.— The regular percentages and the energy percentages shall not apply to that portion of the basis of any property which is attributable to qualified rehabilitation expenditures. “(C) Definitions.— For purpose of this paragraph— “(i) 30-year building.— The term ‘30-year building* means a qualified rehabilitated building other than a 40-year building and other than a certified historic structure. “(ii) 40-year building.— The term ‘40-year building’ means a qualified rehabilitated building (other than a certified historic structure) which would meet the requirements of section 48(g)(1)(B) if ‘40’ were substituted for ‘30’ each place it appears in subparagraph (B) thereof. “(iii) Certified historic structure.— The term ‘certified historic structure’ means a qualified rehabilitated building which meets the requirements of section 48(g)(3).” (2) Subclause (II) of section 46(c)(8)(F)(ii) is amended by striking out “section 46(a)(2)(C)” and inserting in lieu thereof “subsection (b)(2)”. (3) (A) Paragraph (1) of section 46(e) is amended— (i) by striking out “and the $25,000 amount specified under subparagraphs (A) and (B) of subsection (a)(3)”, and (ii) by striking out “such items” and inserting in lieu thereof “such qualified investment”. (B) Paragraph (2) of section 46(e) is amended by striking out “the items described therein” and inserting in lieu thereof “qualified investment”. (4) (A) Paragraphs (1) and (2) of section 46(f) are each amended by striking out “no credit shall be allowed by section 38” and inserting in lieu thereof “no credit determined under subsection (a) shall be allowed by section 38”. (B) Paragraphs (1) and (2) of section 46(f) are each amended by striking out “the credit allowable by section 38” each place it appears and inserting in lieu thereof “the credit determined under subsection (a) and allowable by section 38”. (C) Subparagraph (B) of section 46(f)(4) is amended by striking out “the credit allowed by section 38” and inserting in lieu thereof “the credit determined under subsection (a) and allowed by section 38”. (5) Paragraph (8) of section 46(f) is amended— (A) by striking out “the credit allowable under section 38” each place it appears and inserting in lieu thereof “the credit determined under subsection (a) and allowable under section 38”, and (B) by striking out “(within the meaning of subsection (a)(7)(C)” and inserting in lieu thereof “(within the meaning of the first sentence of subsection (c)(3)(B))”. (6) Paragraph (2) of section 46(g) is amended by striking out “the limitation of subsection (a)(3)” and inserting in lieu thereof “the limitation of section 38(c)”. (7) Paragraph (1) of section 46(h) is amended— (A) by striking out “the credit allowable to the organization under section 38” and inserting in lieu thereof “the credit determined under subsection (a) and allowable to the organization under section 38”, and (B) by striking out “the limitation contained in subsection (a)(3)” and inserting in lieu thereof “the limitation contained in section 38(c)”. (8) Paragraphs (5) and (6) of section 47(a) are each amended by striking out “under section 46(b)” and inserting in lieu thereof “under section 39”. (9) Subsection (c) of section 47 is amended by striking out “subpart A” and inserting in lieu thereof “subpart A, B, or D”. (10) Subparagraph (B) of section 48(c)(3) is amended by striking out “section 46(b)” and inserting in lieu thereof “section 39”. (11) Subparagraph (B) of section 48(d)(1) is amended by striking 26 USC 48. out “section 46(a)(6)” and inserting in lieu thereof “section 38(c)(3)(B)”. (12) Subsection (f) of section 48 is amended— (A) by adding “and” at the end of paragraph (1), (B) striking out “, and” at the end of paragraph (2) and inserting in lieu thereof a period, and (C) by striking out paragraph (3). (13) Paragraph (1) of section 48(1) is amended by striking out “section 46(a)(2)(C)” and inserting in lieu thereof “section 46(b)(2)”. (14) Subsection (m) of section 48 is amended by striking out “subsection (a)(2)” and inserting in lieu thereof “subsection (b)”. (15) Subsection (n) of section 48 (relating to requirements for allowance of employee plan percentage) is hereby repealed; except that paragraph (4) of section 48(n) of the Internal Revenue Code of 1954 (as in effect before its repeal by this paragraph) shall continue to apply in the case of any recapture under section 47(f) of such Code of a credit allowable for a taxable year beginning before January 1, 1984. (16) Subsection (o) of section 48 (defining certain credits) is amended by striking out paragraphs (3), (4), (5), (6), and (7) and by redesignating paragraph (8) as paragraph (3). (17) Subsection (q) of section 48 is amended— (A) by striking out “section 46(a)(2)” each place it appears and inserting in lieu thereof “section 46(a)”, and (B) by striking out “section 46(a)(2)(B)” each place it appears and inserting in lieu thereof “section 46(b)(1)”. (18) Subsection (r) of section 48 is amended by striking out Ante, p. 635. “section 381(c)(23)” and inserting in lieu thereof “section 381(c)(26)”. (p) Targeted Jobs Credit.— (1) Subsection (a) of section 51 (relating to amount of targeted 26 USC 51. jobs credit) is amended to read as follows: “(a) Determination of Amount.— For purposes of section 38, the amount of the targeted jobs credit determined under this section for the taxable year shall be the sum of— “(1) 50 percent of the qualified first-year wages for such year, and “(2) 25 percent of the qualified second-year wages for such year.” (2) Subsection (g) of section 51 is amended by striking out “the credit provided by section 44B” and inserting in lieu thereof “the targeted jobs credit determined under this subpart”. (3) Section 51 is amended by adding at the end thereof the following new subsection: “(j) Election To Have Targeted Jobs Credit Not Apply.— (1) In general.— A taxpayer may elect to have this section not apply for any taxable year. (2) Time for making election.— An election under paragraph (1) for any taxable year may be made (or revoked) at any time before the expiration of the 3-year period beginning on the last date prescribed by law for filing the return for such taxable year (determined without regard to extensions). (3) Manner of making election.— An election under paragraph (1) (or revocation thereof) shall be made in such manner as the Secretary may by regulations prescribe.” (4) Subsection (a) of section 52 is amended by striking out “the credit (if any) allowable by section 44B to each such member” and inserting in lieu thereof “the credit (if any) determined under section 51(a) with respect to each such member”. (5) Subsection (b) of section 52 is amended by striking out “the credit (if any) allowable by section 44B” and inserting in lieu thereof “the credit (if any) determined under section 51(a)”. (6) Subsection (c) of section 52 is amended by striking out “credit shall be allowed under section 44B” and inserting in lieu thereof “credit shall be allowed under section 38 for any targeted jobs credit determined under this subpart”. (7) Paragraph (2) of section 52(d) is amended by striking out “, subject to section 53, a credit under section 44B” and inserting in lieu thereof “, subject to section 38(c), a credit under section 38(a)”. (8) Section 53 (relating to limitation based on amount of tax) is hereby repealed. (9) The table of sections for old subpart D of part IV of subchapter A of chapter 1 is amended by striking out the item relating to section 53. (q) Section 55.— (1) Paragraph (1) of section 55(c) (relating to credits) is amended— (A) by striking out “subpart A of part IV” and inserting in lieu thereof “subpart A, B, or D of part IV”, and (B) by striking out “section 33(a)” each place it appears and inserting in lieu thereof “section 27(a)”. (2) Clause (i) of section 55(c)(2)(B) is amended by striking out “section 33(a)” and inserting in lieu thereof “section 27(a)”. (3) Paragraph (3) of section 55(c) is amended to read as follows: “(3) Carryover and carryback of certain credits.— In the case of any taxable year for which a tax is imposed by this section, for purposes of determining the amount of any carryover or carryback to any other taxable year of any credit Ante, p. 826. Ante, p. 827. allowable under section 23, 30, or 38, the amount of the limitation under section 25, 30(g), or 38(c) (as the case may be) shall be deemed to be— “(A) the amount of such limitation for such taxable year (determined without regard to this paragraph), reduced (but not below zero) by “(B) the amount of the tax imposed by this section for the taxable year, reduced by— “(i) the amount of the credit allowable under section 27(a), “(ii) in the case of the limitation under section 30(g), the amount of such tax taken into account under this subparagraph with respect to the limitation under section 25, and “(iii) in the case of the limitation under section 38(c), the amount of such tax taken into account under this subparagraph with respect to limitations under sections 25 and 30(g).” (4) Paragraph (2) of section 55(f) is amended by striking out “allowable under subpart A of part IV of this subchapter (other than under sections 31, 39, and 43)” and inserting in lieu thereof “allowable under subparts A, B, and D of part IV of this subchapter”. (r) Technical and Conforming Amendments to Other Provisions.— (1) Section 56.— (A) Subsection (c) of section 56 (defining regular tax 26 USC 56. deduction) is amended— (i) by striking out “subpart A of part IV other than sections 39 and 44G” and inserting in lieu thereof “subparts A, B, and D of part IV”, and (ii) by amending the last sentence to read as follows: “For purposes of the preceding sentence, the amount of the credit determined under section 38 for any taxable Ante, p. 827. year shall be determined without regard to the employee stock ownership credit determined under section 41/’ Ante, p. 826. (B) Subparagraph (A) of section 56(e)(1) is amended by striking out clauses (i), (ii), (iii), and (iv) and inserting in lieu thereof the following: “(i) section 27 (relating to foreign tax credit), and Ante, p. 826. “(ii) section 38 (relating to general business credit), exceed”. (2) Section 86.— Paragraph (1) of section 86(f) (relating to Post, p. 1158. treatment as pension or annuity for certain purposes) is amended by striking out “section 43(c)(2)” and inserting in lieu thereof “section 32(c)(2)”. (3) Section 87.— Section 87 (relating to alcohol fuel credit 26 USC 87. included in income) is amended to read as follows: “SEC. 87. ALCOHOL FUEL CREDIT. “Gross income includes the amount of the alcohol fuel credit determined with respect to the taxpayer for the taxable year under section 40(a).” Ante, p. 832. 26 USC 103. (4) Section 103.— Clause (iv) of section 103(b)(6)(F) (relating to certain capital expenditures not taken into account) is amended by striking out “section 44F(b)(2)(A)” and inserting in lieu thereof “section 30(b)(2)(A)”. (5) Section 108.— Subparagraph (B) of section 108(b)(2) (relating 26 USC 108. 11 USC 101 et seq. to reduction of tax attributes in title 11 case or insolvency) is amended to read as follows: “(B) Research credit and general business credit.— Any carryover to or from the taxable year of a discharge of an amount for purposes of determining the amount allowable as a credit under— “(i) section 30 (relating to credit for increasing research Ante, p. 826. activities), or “(ii) section 38 (relating to general business credit). Ante, p. 827. For purposes of this subparagraph, there shall not be taken into account any portion of a carryover which is attributable to the employee stock ownership credit determined under section 41.” Ante, p. 826. (6) Section 129.— (A) Paragraph (2) of section 129(b) (relating to earned 26 USC 129. income limitation) is amended by striking out “section 44A(e)(2)” and inserting in lieu thereof “section 21(d)(2)”. (B) Paragraph (1) of section 129(e) (defining dependent care assistance) is amended by striking out ‘section 44A(c)(2)” and inserting in lieu thereof “section 21(b)(2)”. (C) Paragraph (2) of section 129(e) (defining earned income) is amended by striking out “section 43(c)(2)” and inserting in lieu thereof “section 32(c)(2)”. (7) Section 168.— (A) Clause (i) of section 168(i)(1)(D), as added by section 208(a) of the Tax Equity and Fiscal Responsibility Act of 1982, is amended by striking out “subpart A of part IV” and inserting in lieu thereof “subparts A, B, and D of part IV”. (B) Clause (iii) of section 168(i)(1)(D), as added by section 208(a) of the Tax Equity and Fiscal Responsibility Act of 1982, is amended by striking out “under the last sentence of section 53(a)” and inserting in lieu thereof “under section 25(b)(2)”. (C) Subparagraph (A) of section 168(i)(4), as added by section 208(a) of the Tax Equity and Fiscal Responsibility Act of 1982, is amended by striking out “subpart A of part IV of subchapter A of this chapter” and inserting in lieu thereof “section 38”. (D) Clause (i) of section 168(i)(1)(D), as added by section 209(b) of the Tax Equity and Fiscal Responsibility Act of 1982, is amended by striking out “subpart A of part IV” and inserting in lieu thereof “subparts A, B, and D of part IV”. (E) Clause (iii) of section 168(i)(1)(D), as added by section 209(b) of the Tax Equity and Fiscal Responsibility Act of 1982, is amended by striking out “under the last sentence of section 53(a)” and inserting in lieu thereof “under section 25(b)(2)”. (8) Section 196.— (A) Section 196 (relating to deduction for certain unused investment credits) is amended to read as follows: “SEC. 196. DEDUCTION FOR CERTAIN UNUSED BUSINESS CREDITS. “(a) Allowance of Deduction.— If any portion of the qualified business credits determined for any taxable year has not, after the Ante, p. 827. application of section 38(c), been allowed to the taxpayer as a credit under section 38 for any taxable year, an amount equal to the credit not so allowed shall be allowed to the taxpayer as a deduction for the first taxable year following the last taxable year for which such credit could, under section 39, have been allowed as a credit. “(b) Taxpayer’s Dying or Ceasing To Exist.— If a taxpayer dies or ceases to exist before the first taxable year following the last taxable year for which the qualified business credits could, under section 39, have been allowed as a credit, the amount described in subsection (a) (or the proper portion thereof) shall, under regulations prescribed by the Secretary, be allowed to the taxpayer as a deduction for the taxable year in which such death or cessation occurs. “(c) Qualified Business Credits.— For purposes of this section, the term ‘qualified business credits’ means— “(1) the investment credit determined under section 46(a) (but only to the extent attributable to property the basis of which is reduced by section 48(q)), “(2) the targeted jobs credit determined under section 51(a), and “(3) the alcohol fuels credit determined under section 40(a). “(d) Special Rule for Investment Tax Credit.— In the case of the investment credit determined under section 46(a) (other than a credit to which section 48(q)(3) applies), subsection (a) shall be applied by substituting ‘an amount equal to 50 percent of for ‘an amount equal to’.” (B) The table of sections for part VI of subchapter B of chapter 1 is amended by striking out the item relating to section 196 and inserting in lieu thereof: “Sec. 196. Deduction for certain unused business credits.” (9) Section 213.— Subsection (e) of section 213 (relating to 26 USC 213. exclusion of amounts allowed for care of certain dependents) is amended by striking out “section 44A” and inserting in lieu thereof “section 21”. (10) Section 280c.— (A) Section 280C (relating to certain expenses for which 26 USC 280C. credits are allowable) is amended by striking out subsection (a) and by redesignating subsections (b) and (c) as subsections (a) and (b), respectively. (B) Subsection (a) of section 280C (as so redesignated) is amended— (i) by striking out the first sentence and inserting in lieu thereof the following: “No deduction shall be allowed for that portion of the wages or salaries paid or incurred for the taxable year which is equal to the amount of the credit determined for the taxable year under section 51(a).”, and Ante, p. 837. (ii) by striking out “Section 44B Credit” in the subsection heading and inserting in lieu thereof “Targeted Jobs Credit’. (C) Subsection (b) of section 280C (as so redesignated) is amended by striking out “44H” each place it appears and inserting in lieu thereof “29”. (D) Paragraph (3) of section 280C(b) (as so redesignated) is amended— (i) by striking out “section 44F(f)(5)” and inserting in lieu thereof “section 30(f)(5)”, (ii) by striking out “section 44F(f)(1)(B)” and inserting in lieu thereof “section 30(f)(1)(B)”, (iii) by striking out “section 44F(f)(1)” and inserting in lieu thereof “section 30(f)(1)”. (11) Section 381.— Subsection (c) of section 381 is amended— 26 USC 381. (A) by striking out paragraphs (23), (24), (26), (27), and (30), (B) by redesignating paragraphs (25), (28), and (29) as paragraphs (23), (24), and (25), respectively, (C) by striking out “44F” each place it appears in paragraph (25) (as so redesignated) and inserting in lieu thereof “30, and (D) by adding at the end thereof the following new paragraph: “(26) Credit under section 38.— The acquiring corporation shall take into account (to the extent proper to carry out the purposes of this section and section 38, and under such regulations Ante, p. 827. as may be prescribed by the Secretary) the items required to be taken into account for purposes of section 38 in respect of the distributor or transferor corporation.” (12) Section 383.— (A) Section 383 (as in effect on the day before the date of 26 USC 383. 26 USC 1 et seq. the enactment of the Tax Reform Act of 1976) is amended— (i) by striking out “with respect to any unused investment credit” and all that follows and inserting in lieu thereof the following: “with respect to any unused business credit of the corporation which can otherwise be carried forward under section 39, to any unused credit of the corporation which could otherwise Ante, p. 828. be carried forward under section 30(g)(2), to any excess foreign taxes of the corporation which could otherwise be Ante, p. 826. carried forward under section 904(c), and to any net capital loss of the corporation which can otherwise be carried forward under section 1212.”, and (ii) by striking out the section heading and inserting in lieu thereof the following: “SEC. 383. SPECIAL LIMITATIONS ON UNUSED BUSINESS CREDITS. RESEARCH CREDITS. FOREIGN TAXES, AND CAPITAL LOSSES.” (B) Section 383 (as amended by the Tax Reform Act of 1976) is amended— (i) by striking out “with respect to any unused investment credit” and all that follows and inserting in lieu thereof the following: “with respect to any unused business credit of the corporation under section 39, to any unused credit of the corporation under section 30(g)(2), to any excess foreign taxes of the corporation under section 904(c), and to any net capital loss of the corporation under section 1212.”, and (ii) by striking out the section heading and inserting in lieu thereof the following: “SEC. 383. SPECIAL LIMITATIONS ON UNUSED BUSINESS CREDITS. RESEARCH CREDITS. FOREIGN TAXES, AND CAPITAL LOSSES.” (C) The table of sections for part V of subchapter C of chapter 1 is amended by striking out the item relating to section 383 and inserting in lieu thereof the following: “Sec. 383. Special limitations on unused business credits, research credits, foreign taxes, and capital losses.” (13) Paragraph (21) of section 401(a) is amended by striking out “allowable—” and all that follows and inserting in lieu thereof “allowable under section 41 if the employer made the transfer described in section 41(c)(1)(B).” (14) Section 404.— Subsection (i) of section 404 (relating to deductibility of unused portions of employee stock ownership credit) is amended to read as follows: “(i) Deductibility of Unused Portions of Employee Stock Ownership Credit.— (1) Unused credit carryovers.— If any portion of the employee stock ownership credit determined under section 41 for any taxable year has not, after the application of section 38(c), been allowed under section 38 for any taxable year, such portion shall be allowed as a deduction (without regard to any limitations provided under this section) for the last taxable year to which such portion could have been allowed as a credit under section 39. (2) Reductions in credit.— There shall be allowed as a deduction (subject to the limitations provided under this section) an amount equal to any reduction of the credit allowed under section 41 resulting from a final determination of such credit to the extent such reduction is not taken into account under section 41(c)(3).” (15) Section 409.— (A) Section 409 (relating to qualifications for tax credit Post, p. 852. employee stock ownership plans), as redesignated by section 491 of this Act, is amended by striking out “44G” each place Ante, p. 848. it appears in subsections (b), (g), (i), (m), and (n) and inserting in lieu thereof “41”. (B) Paragraph (1) of section 409(b), as so redesignated, is amended by striking out “48(n)(1)(A) or”. (C) Subsection (g) of section 409, as so redesignated, is amended by adding at the end thereof the following new sentence: “For purposes of the preceding sentence, the references to section 48(n)(1) and the employee plan credit shall refer to such section and credit Ante, p. 837. as in effect before the enactment of the Tax Reform Act of 1984.” Ante, p. 494. (D) Subparagraph (A) of section 409(i)(1), as so redesignated, is amended by striking out “48(n)(1) or”. (E) Subsection (k) of section 409, as so redesignated, is amended by adding at the end thereof the following new sentence: “For” purposes of this subsection, the reference to the matching employee plan credit shall refer to such credit as in effect before the enactment of the Tax Reform Act of 1984.” (16) Section 527 (g) (1).— Paragraph (1) of section 527(g) (relating 26 USC 527. to treatment of newsletter funds) is amended by striking out “section 41(c)(2)” and inserting in lieu thereof “section 24(c)(2)”. (17) Section 642 (a) (2) .— Paragraph (2) of section 642(a) (relating 26 USC 642. to credit for political contributions) is amended by striking out “section 4” and inserting in lieu thereof “section 24”. (18) Section 691 (b).— Subsection (b) of section 691 (relating to 26 USC 691. allowance of deductions and credit) is amended by striking out “section 33” each place it appears and inserting in lieu thereof “section 27”. (19) Sections 874(a) and 882(c) (2).— Sections 874(a) and 882(c)(2) are each amended— (A) by striking out “32” and inserting in lieu thereof “33”, and (B) by striking out “section 39” and inserting in lieu thereof “section 34”. (20) Section 901 (a).— Subsection (a) of section 901 (relating to 26 USC 901. allowance of foreign tax credit) is amended by striking out the last sentence and inserting in lieu thereof the following: “The credit shall not be allowed against any tax treated as a tax not imposed by this chapter under section 25(b).” (21) Section 904 (g).— Subsection (g) of section 904 (relating to Ante, p. 827. 26 USC 904. limitation on foreign tax credit) is amended to read as follows: “(g) Coordination With Nonrefundable Personal Credits.— In the case of an individual, for purposes of subsection (a), the tax against which the credit is taken is such tax reduced by the sum of the credits allowable under subpart A of part IV of subchapter A of this chapter.” (22) Section 936.— (A) Clause (i)(I)(a) of section 936(h)(5)(C) is amended by 26 USC 936. striking out “section 44F(b)” and inserting in lieu thereof “section 30(b)”. (B) Clause (i)(IV)(c) of section 936(h)(5)(C) is amended— (i) by striking out “section 44F” and inserting in lieu thereof “section 30”, and (ii) by striking out “section 44F(f)” and inserting in lieu thereof “section 30(f)”. (23) Section 1016(a) (21).— Paragraph (21) of section 1016(a) (relating to adjustments to basis) is amended— (A) by striking out “section 44C(e)” and inserting in lieu thereof “section 23(e)”, and (B) by striking out “section 44C” and inserting in lieu thereof “section 23”. (24) Section 1033(g)(3)(A).— Subparagraph (A) of section 1033(g)(3) (relating to election to treat outdoor advertising displays as real property) is amended by striking out “the credit allowed by section 38 (relating to investment in certain depreciable property)” and inserting in lieu thereof “the investment credit determined under section 46(a)”. (25) Section 1351 (i).— Subsection (i) of section 1351 (relating adjustments for succeeding years) is amended— (A) by striking out “section 33” and inserting in lieu thereof “section 27”, and (B) by striking out “section 38 (relating to investment credit)” and inserting in lieu thereof “section 38 (relating to general business credit)”. (26) Section 1366(f).— Paragraph (1) of section 1366(f) (relating to special rules) is amended by striking out “section 39” each place it appears and inserting in lieu thereof “section 34”. (27) Section 1374(b).— Subsection (b) of section 1374 (relating to amount of tax imposed on certain capital gains) is amended by striking out “section 39” and inserting in lieu thereof “section 34”. (28) Section 1375(c).— Paragraph (1) of section 1375(c) (relating to disallowance of credit) is amended by striking out “section 39” and inserting in lieu thereof “section 34”. (29) Section 1451.— (A) Chapter 3 (relating to withholding of tax on nonresident aliens and foreign corporations and tax-free covenant bonds) is amended by striking out subchapter B and by redesignating subchapter C as subchapter B. (B) The table of subchapters for chapter 3 is amended by striking out the items relating to subchapters B and C and inserting in lieu thereof the following: “Subchapter B. Application of withholding provisions.” (C) The heading of chapter 3 is amended by striking out “AND TAX-FREE COVENANT BONDS”. (D) The table of chapters for subtitle A is amended by striking out “and tax-free covenant bonds” in the item relating to chapter 3. (E) Section 12 is amended by striking out paragraph (6) and by redesignating paragraphs (7) and (8) as paragraphs (6) and (7), respectively. (F) Subsection (f) of section 164 (as in effect before its redesignation by the Social Security Amendments of 1983) is amended by striking out paragraph (1) and by redesignating paragraphs (2) and (3) as paragraphs (1) and (2), respectively. (G) Subsection (a) of section 1441 is amended by striking 26 USC 1441. out “except in the cases provided for in section 1451 and”. (H) Paragraph (3) of section 1441(c) is amended by striking out “section 1451” and inserting in lieu thereof “section 1451 (as in effect before its repeal by the Tax Reform Act of 1984)”. (I) Subsection (a) of section 1442 is amended— (i) by striking out “or section 1451”, and (ii) by striking out except that, in the case of interest described in section 1451 (relating to tax-free covenant bonds), the deduction and withholding shall be at the rate specified therein”. (J) Paragraph (2) of section 6049(b) (relating to amounts 26 USC 6049. not treated as interest) is amended— (i) by adding “and” at the end of subparagraph (C), (ii) by striking out “, and” at the end of subparagraph and inserting in lieu thereof a period, and (iii) by striking out subparagraph (E). (K) Paragraph (16) of section 7701(a) is amended by striking 26 USC 7701. out “1451,”. (30) Section 3507.— Subsections (b), (c), and (e) of section 3507 26 USC 3507. (relating to advanced payment of earned income credit) are each amended by striking out “section 43” each place it appears and inserting in lieu thereof “section 32”. (31) Section 6096(b).— Subsection (b) of section 6096 (defining 26 USC 6096. income tax liability) is amended by striking out “allowable under sections 33, 37, 38, 40, 41, 42, 44, 44A, 44B, 44C, 44D, 44E, 44F, 44G, and 44H” and inserting in lieu thereof “allowable under part IV of subchapter A of chapter 1 (other than subpart C thereof)”. (32) Section 6201 (a) (4).— Paragraph (4) of section 6201(a) (relating 26 USC 6201. to erroneous credit under section 39 or 43) is amended— (A) by striking out “section 39” and inserting in lieu thereof “section 34”, (B) by striking out “section 43” and inserting in lieu thereof “section 32”, and (C) by striking out “section 39 or 43” in the paragraph heading and inserting in lieu thereof “section 32 or 34”. (33) Section 6211 (b).— (A) Paragraph (1) of section 6211(b) is amended by striking out “without regard to so much of the credit under section 32 as exceeds 2 percent of the interest on obligations described in section 1451” and inserting in lieu thereof “without regard to the credit under section 33”. (B) Paragraph (4) of section 6211(b) is amended by striking out “section 39” and inserting in lieu thereof “section 34”. (34) Section 6213(h) (3).— Paragraph (3) of section 6213(h) is 26 USC 6213. amended by striking out “section 39” and inserting in lieu thereof “section 32 or 34”. (35) Section 6362(c)(1).— Paragraph (1) of section 6362(c) 26 USC 6362. (relating to qualified resident tax which is a percentage of the Federal tax) is amended by striking out “sections 31 and 39” and inserting in lieu thereof “sections 31 and 34”. (36) Section 6401(b).— Subsection (b) of section 6401 (relating to excessive credits treated as overpayments) is amended to read as follows: “(b) Excessive Credits.— “(1) In general.— If the amount allowable as credits under subpart C of part IV of subchapter A of chapter 1 (relating to refundable credits) exceeds the tax imposed by subtitle A (reduced by the credits allowable under subparts A, B, and D of such part IV), the amount of such excess shall be considered an overpayment. “(2) Special rule for credit under section 33.— For purposes of paragraph (1), any credit allowed under section 33 (relating to withholding of tax on nonresident aliens and on foreign corporations) for any taxable year shall be treated as a credit allowable under subpart C of part IV of subchapter A of chapter 1 only if an election under subsection (g) or (h) of section 6013 is in effect for such taxable year.” (37) Section 6411.— (A) So much of subsection (a) of section 6411 as precedes paragraph (2) thereof (relating to tentative carryback and refund adjustments) is amended to read as follows: “(a) Application for Adjustment.— A taxpayer may file an application for a tentative carryback adjustment of the tax for the prior taxable year affected by a net operating loss carryback provided in section 172(b), by a business credit carryback provided in section 39, by a research credit carryback provided in section 30(g)(2) or by a capital loss carryback provided in section 1212(a)(1), from any taxable year. The application shall be verified in the manner prescribed by section 6065 in the case of a return of such taxpayer and shall be filed, on or after the date of filing for the return for the taxable year of the net operating loss, net capital loss, or unused business credit from which the carryback results and within a period of 12 months after such taxable year or, with respect to any portion of a research credit carryback or a business credit carryback attributable to a net operating loss carryback or a net capital loss carryback from a subsequent taxable year, within a period of 12 months from the end of such subsequent taxable year (or, with respect to any portion of a business credit carryback attributable to a research credit carryback from a subsequent taxable year within a period of 12 months from the end of such subsequent taxable year), in the manner and form required by regulations prescribed by the Secretary. The applications shall set forth in such detail and with such supporting data and explanation as such regulations shall require— “(1) The amount of the net operating loss, net capital loss, unused research credit, or unused business credit;”. (B) Subsections (b) and (c) of section 6411 are each amended by striking out “unused investment credit, unused work incentive program credit, unused new employee credit, unused research credit, or unused employee stock ownership credit” each place it appears and inserting in lieu thereof “unused research credit, or unused business credit”. (38) Sections 6420(g) (2), etc.— Sections 6420(g)(2), 6421(i)(3), and 6427(i)(3) are each amended by striking out “section 39” and inserting in lieu thereof “section 34”. (39) Section 6501 (p).— Section 6501 is amended by striking out subsection (p) and by redesignating subsection (q) as subsection (p). (40) Section 6511(d) (4) (c).— Subparagraph (C) of section 26 USC 6511. 6511(d)(4) (defining credit carryback) is amended to read as follows: “(C) Credit carryback defined.— For purposes of this paragraph, the term ‘credit carryback’ means any business carryback under section 39 and any research credit carryback Ante, p. 828. Ante, p. 826. 97 Stat. 87. 26 USC 7871. under section 30(g)(2).” (41) Section 7871.— Subparagraph (A) of section 7871(a)(6) is amended by striking out “section 41(c)(4)” and inserting in lieu thereof “section 24(c)(4)”. (42) Section 9502(d).— Paragraph (3) of section 9502(d) (relating 26 USC 9502. to transfers from the Airport and Airway Trust Fund on account of certain section 39 credits) is amended— (A) by striking out “section 39“ and inserting in lieu thereof “section 34”, and (B) by striking out “section 39 credits” in the heading and inserting in lieu thereof “section 34 credits”. (43) Section 9503 (c).— Clause (ii) of section 9503(c)(2)(A) (relating 26 USC 9503. to transfers from the Highway Trust Fund for certain repayments and credits) is amended by striking out “section 39” and inserting in lieu thereof “section 34”.
1984
Tax Reform Act of 1984
Pub. L. 98–369 § 431(b)(2) · 98 Stat. 494
Substituted · 26 U.S.C. § 47(d)
Pub. L. 98–369, § 431(b)(2), substituted “Increases in nonqualified nonrecourse financing” for “Property ceasing to be at risk” in heading
Source evidence
Code amendment note
Subsec. (d). Pub. L. 98–369, § 431(b)(2), substituted “Increases in nonqualified nonrecourse financing” for “Property ceasing to be at risk” in heading.
Enacted provision · exact public law section
(2) Subsequent increases.— So much of subsection (d) of section 47 (relating to property ceasing to be at risk) as precedes 26 USC 47. paragraph (3) thereof is amended to read as follows: “(d) Increases in Nonqualified Nonrecourse Financing.— “(1) In general.— If, as of the close of the taxable year, there is a net increase with respect to the taxpayer in the amount of nonqualified nonrecourse financing (within the meaning of section 46(c)(8)) with respect to any property to which section 46(c)(8) applied, then the tax under this chapter for such taxable year shall be increased by an amount equal to the aggregate decrease in credits allowed under section 38 for all prior taxable years which would have resulted from reducing the qualified investment taken into account with respect to such property by the amount of such net increase. “(2) Transfers of debt more than i year after initial borrowing not treated as increasing nonqualified nonrecourse financing.— For purposes of paragraph (1), the amount of nonqualified nonrecourse financing (within the meaning of Ante, p. 805. section 46(c)(8)(D)) with respect to the taxpayer shall not be treated as increased by reason of a transfer of (or agreement to transfer) any evidence of an indebtedness if such transfer occurs (or such agreement is entered into) more than 1 year after the date such indebtedness was incurred.”
1984
Tax Reform Act of 1984
Pub. L. 98–369 § 431(b)(2) · 98 Stat. 494
Substituted · 26 U.S.C. § 47(d)(1)
Pub. L. 98–369, § 431(b)(2), substituted provisions relating to increases in tax liability resulting from increases in nonqualified nonrecourse financing for provisions relating to increases in tax liability resulting from the taxpayer ceasing to be at risk with respect to certain property
Source evidence
Code amendment note
Subsec. (d)(1). Pub. L. 98–369, § 431(b)(2), substituted provisions relating to increases in tax liability resulting from increases in nonqualified nonrecourse financing for provisions relating to increases in tax liability resulting from the taxpayer ceasing to be at risk with respect to certain property.
Enacted provision · exact public law section
(2) Subsequent increases.— So much of subsection (d) of section 47 (relating to property ceasing to be at risk) as precedes 26 USC 47. paragraph (3) thereof is amended to read as follows: “(d) Increases in Nonqualified Nonrecourse Financing.— “(1) In general.— If, as of the close of the taxable year, there is a net increase with respect to the taxpayer in the amount of nonqualified nonrecourse financing (within the meaning of section 46(c)(8)) with respect to any property to which section 46(c)(8) applied, then the tax under this chapter for such taxable year shall be increased by an amount equal to the aggregate decrease in credits allowed under section 38 for all prior taxable years which would have resulted from reducing the qualified investment taken into account with respect to such property by the amount of such net increase. “(2) Transfers of debt more than i year after initial borrowing not treated as increasing nonqualified nonrecourse financing.— For purposes of paragraph (1), the amount of nonqualified nonrecourse financing (within the meaning of Ante, p. 805. section 46(c)(8)(D)) with respect to the taxpayer shall not be treated as increased by reason of a transfer of (or agreement to transfer) any evidence of an indebtedness if such transfer occurs (or such agreement is entered into) more than 1 year after the date such indebtedness was incurred.”
1984
Tax Reform Act of 1984
Pub. L. 98–369 § 431(b)(2) · 98 Stat. 494
Substituted · 26 U.S.C. § 47(d)(2)
Pub. L. 98–369, § 431(b)(2), substituted provisions that for purposes of par. (1), transfers of debt, or agreements to transfer, occurring more than one year after the initial borrowing shall not be treated as increasing nonqualified nonrecourse financing with respect to the taxpayer for provisions that for purposes of par. (1), such transfers (or agreements to transfer) by a qualified person to a nonqualified person would not cause the taxpayer to be treated as ceasing to be at risk
Source evidence
Code amendment note
Subsec. (d)(2). Pub. L. 98–369, § 431(b)(2), substituted provisions that for purposes of par. (1), transfers of debt, or agreements to transfer, occurring more than one year after the initial borrowing shall not be treated as increasing nonqualified nonrecourse financing with respect to the taxpayer for provisions that for purposes of par. (1), such transfers (or agreements to transfer) by a qualified person to a nonqualified person would not cause the taxpayer to be treated as ceasing to be at risk.
Enacted provision · exact public law section
(2) Subsequent increases.— So much of subsection (d) of section 47 (relating to property ceasing to be at risk) as precedes 26 USC 47. paragraph (3) thereof is amended to read as follows: “(d) Increases in Nonqualified Nonrecourse Financing.— “(1) In general.— If, as of the close of the taxable year, there is a net increase with respect to the taxpayer in the amount of nonqualified nonrecourse financing (within the meaning of section 46(c)(8)) with respect to any property to which section 46(c)(8) applied, then the tax under this chapter for such taxable year shall be increased by an amount equal to the aggregate decrease in credits allowed under section 38 for all prior taxable years which would have resulted from reducing the qualified investment taken into account with respect to such property by the amount of such net increase. “(2) Transfers of debt more than i year after initial borrowing not treated as increasing nonqualified nonrecourse financing.— For purposes of paragraph (1), the amount of nonqualified nonrecourse financing (within the meaning of Ante, p. 805. section 46(c)(8)(D)) with respect to the taxpayer shall not be treated as increased by reason of a transfer of (or agreement to transfer) any evidence of an indebtedness if such transfer occurs (or such agreement is entered into) more than 1 year after the date such indebtedness was incurred.”
1984
Tax Reform Act of 1984
Pub. L. 98–369 § 431(d)(4) · 98 Stat. 494
Substituted · 26 U.S.C. § 47(d)(3)(A)
Pub. L. 98–369, § 431(d)(4), substituted “increasing the amount of nonqualified nonrecourse financing (within the meaning of section 46(c)(8))” for “ceasing to be at risk”
Source evidence
Code amendment note
Subsec. (d)(3)(A). Pub. L. 98–369, § 431(d)(4), substituted “increasing the amount of nonqualified nonrecourse financing (within the meaning of section 46(c)(8))” for “ceasing to be at risk”.
Enacted provision · exact public law section
(4) Subparagraph (A) of section 47(d)(3) is amended by striking out “ceasing to be at risk” and inserting in lieu thereof “increasing the amount of nonqualified nonrecourse financing (within the meaning of section 46(c)(8))”.
1984
Tax Reform Act of 1984
Pub. L. 98–369 § 431(d)(5) · 98 Stat. 494
Struck · 26 U.S.C. § 47(d)(3)(B)(i)
Pub. L. 98–369, § 431(d)(5), struck out “other than a loan described in section 46(c)(8)(B)(ii)” after “section 46(c)(8)(F)(iv)”
Source evidence
Code amendment note
Subsec. (d)(3)(B)(i). Pub. L. 98–369, § 431(d)(5), struck out “other than a loan described in section 46(c)(8)(B)(ii)” after “section 46(c)(8)(F)(iv)”.
Enacted provision · exact public law section
(5) Clause (i) of section 47(d)(3)(B) is amended by striking out “other than a loan described in section 46(c)(8)(B)(ii)”.
1984
Tax Reform Act of 1984
Pub. L. 98–369 § 421(b)(7) · 98 Stat. 494
Added · 26 U.S.C. § 47(e)
Pub. L. 98–369, § 421(b)(7), added subsec. (e)
Source evidence
Code amendment note
Subsec. (e). Pub. L. 98–369, § 421(b)(7), added subsec. (e).
Enacted provision · exact public law section
(7) Coordination with section 47.— Section 47 (relating to certain dispositions, etc., of section 38 property) is amended by adding at the end thereof the following new subsection: “(e) Transfers Between Spouses or Incident to Divorce.— In the case of any transfer described in subsection (a) of section 1041— “(1) subsection (a) of this section shall not apply, and “(2) the same tax treatment under this section with respect to the transferred property shall apply to the transferee as would have applied to the transferor.”
1984
Pub. L. 98–443 § 9(p) · 98 Stat. 1703
Substituted · 26 U.S.C. § 47(a)(7)(C)
Pub. L. 98–443 substituted “Secretary of Transportation” for “Civil Aeronautics Board”
Source evidence
Code amendment note
Subsec. (a)(7)(C). Pub. L. 98–443 substituted “Secretary of Transportation” for “Civil Aeronautics Board”.
Enacted provision · exact public law section
(p) Section 47(a)(7)(C) of the Internal Revenue Code of 1954 is amended by striking out “Civil Aeronautics Board” and inserting in lieu thereof “Secretary of Transportation”.
1985
Pub. L. 99–121 title I § 103(b)(6) · 99 Stat. 505
Substituted · 26 U.S.C. § 47(a)(5)(B)
Pub. L. 99–121 substituted “For property other than 3-year property” for “For 15-year, 10-year, and 5-year property” in table heading
Source evidence
Code amendment note
Subsec. (a)(5)(B). Pub. L. 99–121 substituted “For property other than 3-year property” for “For 15-year, 10-year, and 5-year property” in table heading.
Enacted provision · exact public law section
(6) The table contained in subparagraph (B) of section 47(a)(5) 26 USC 47. of such Code (relating to special rules for recovery property) is amended by striking out “For 15-year, 10-year, and 5-year property” and inserting in lieu thereof “ For property other than 3-year property”.
1986
Tax Reform Act of 1986
Pub. L. 99–514 § 1802(a)(5)(A) · 100 Stat. 2085
Added · 26 U.S.C. § 47(a)(9)
Pub. L. 99–514, § 1802(a)(5)(A), added par. (9)
Source evidence
Code amendment note
Subsec. (a)(9). Pub. L. 99–514, § 1802(a)(5)(A), added par. (9).
Enacted provision · exact public law section
(A) Subsection (a) of section 47 (relating to certain dispositions, etc., of section 38 property) is amended by adding at the end thereof the following new paragraph: “(9) Aircraft leased to foreign persons or entities.— “(A) In general.— Any aircraft which was new section 38 property for the taxable year in which it was placed in service and which is used by any foreign person or entity (as defined in section 168(j)(4)(C)) under a qualified lease (as defined in paragraph (7)(C)) entered into before January 1, 1990, shall not be treated as ceasing to be section 38 property by reason of such use until such aircraft has been so used for a period or periods exceeding 3 years in total. “(B) Recapture period extended.— For purposes of paragraphs (1) and (5)(B) of this subsection, any period during which there was use described in subparagraph (A) of an aircraft shall be disregarded.”
1986
Tax Reform Act of 1986
Pub. L. 99–514 § 1844(b)(1) · 100 Stat. 2085
1. Substituted · 26 U.S.C. § 47(d)(1)
  Pub. L. 99–514, § 1844(b)(1), substituted “reducing the credit base (as defined in section 48(c)(8)(C))” for “reducing the qualified investment”
2. Inserted · 26 U.S.C. § 47(d)(1)
  Pub. L. 99–514, § 1844(b)(1), inserted “For purposes of determining the amount of credit subject to the early disposition or cessation rules of subsection (a), the net increase in the amount of the nonqualified nonrecourse financing with respect to the property shall be treated as reducing the property’s credit base (and correspondingly reducing the qualified investment in the property) in the year in which the property was first placed in service.”
Source evidence
Code amendment note
Subsec. (d)(1). Pub. L. 99–514, § 1844(b)(1), substituted “reducing the credit base (as defined in section 48(c)(8)(C))” for “reducing the qualified investment” and inserted “For purposes of determining the amount of credit subject to the early disposition or cessation rules of subsection (a), the net increase in the amount of the nonqualified nonrecourse financing with respect to the property shall be treated as reducing the property’s credit base (and correspondingly reducing the qualified investment in the property) in the year in which the property was first placed in service.”
Enacted provision · exact public law section
(1) Paragraph (1) of section 47(d) (relating to increases in nonqualified nonrecourse financing) is amended— (A) by striking out “reducing the qualified investment” and inserting in lieu thereof “reducing the credit base (as defined in section 48(c)(8)(C))”, and (B) by adding at the end thereof the following new sentence: “For purposes of determining the amount of credit subject to the early disposition or cessation rules of subsection (a), the net increase in the amount of the nonqualified nonrecourse financing with respect to the property shall be treated as reducing the property’s credit base (and correspondingly reducing the qualified investment in the property) in the year in which the property was first placed in service.”
1986
Tax Reform Act of 1986
Pub. L. 99–514 § 1844(b)(4) · 100 Stat. 2085
Inserted · 26 U.S.C. § 47(d)(3)(E)(i)
Pub. L. 99–514, § 1844(b)(4), inserted “reduced by the sum of the credit recapture amounts with respect to such property for all preceding years”
Source evidence
Code amendment note
Subsec. (d)(3)(E)(i). Pub. L. 99–514, § 1844(b)(4), inserted “reduced by the sum of the credit recapture amounts with respect to such property for all preceding years”.
Enacted provision · exact public law section
(4) Clause (i) of section 47(d)(3)9E) is amended by inserting before the semicolon at the end thereof the following: “reduced by the sum of the credit recapture amounts with respect to such property for all preceding taxable years”.
1986
Tax Reform Act of 1986
Pub. L. 99–514 § 1844(b)(2) · 100 Stat. 2085
Struck · 26 U.S.C. § 47(d)(3)(F)
Pub. L. 99–514, § 1844(b)(2), struck out subpar. (F) which read as follows: “The amount of any increase in tax under subsection (a) with respect to any property to which this paragraph applies shall be determined by reducing the qualified investment with respect to such property by the aggregate credit recapture amounts for all taxable years under this paragraph.”
Source evidence
Code amendment note
Subsec. (d)(3)(F). Pub. L. 99–514, § 1844(b)(2), struck out subpar. (F) which read as follows: “The amount of any increase in tax under subsection (a) with respect to any property to which this paragraph applies shall be determined by reducing the qualified investment with respect to such property by the aggregate credit recapture amounts for all taxable years under this paragraph.”
Enacted provision · exact public law section
(2) Subparagraph (F) of section 47(d)(3) is hereby repealed.
1986
Tax Reform Act of 1986
Pub. L. 99–514 § 1511(c)(2) · 100 Stat. 2085
Substituted · 26 U.S.C. § 47(d)(3)(G)
Pub. L. 99–514, § 1511(c)(2), substituted “determined at the underpayment rate established under section 6621” for “determined under section 6621”
Source evidence
Code amendment note
Subsec. (d)(3)(G). Pub. L. 99–514, § 1511(c)(2), substituted “determined at the underpayment rate established under section 6621” for “determined under section 6621”.
Enacted provision · exact public law section
(2) Subparagraph (G) of section 47(d)(3) is amended by striking out “determined under section 6621” and inserting in lieu thereof “determined at the underpayment rate established under section 6621”.
1988
Technical and Miscellaneous Revenue Act of 1988
Pub. L. 100–647 § 1002(a)(26)(B) · 102 Stat. 3342
Struck · 26 U.S.C. § 47(a)(5)(D)
Pub. L. 100–647, § 1002(a)(26)(B), struck out at end “If, prior to a disposition to which this subsection applies, any portion of any credit is not allowable with respect to any property by reason of section 168(i)(3), such portion shall be treated (for purposes of this subparagraph) as not having been used to reduce tax liability.”
Source evidence
Code amendment note
Subsec. (a)(5)(D). Pub. L. 100–647, § 1002(a)(26)(B), struck out at end “If, prior to a disposition to which this subsection applies, any portion of any credit is not allowable with respect to any property by reason of section 168(i)(3), such portion shall be treated (for purposes of this subparagraph) as not having been used to reduce tax liability.”
Enacted provision · exact public law section
(B) Subparagraph (D) of section 47(a)(5) of the 1986 Code is amended by striking out the last sentence.
1988
Technical and Miscellaneous Revenue Act of 1988
Pub. L. 100–647 § 1002(a)(26)(C) · 102 Stat. 3342
Substituted · 26 U.S.C. § 47(a)(5)(E)(iii)
Pub. L. 100–647, § 1002(a)(26)(C), substituted “168(e)” for “168(c)”
Source evidence
Code amendment note
Subsec. (a)(5)(E)(iii). Pub. L. 100–647, § 1002(a)(26)(C), substituted “168(e)” for “168(c)”.
Enacted provision · exact public law section
(26) (A) Subparagraph (E) of section 47(a)(5) of the 1986 Code is amended by adding at the end thereof the following new clause: “(v) Treatment as recovery property.— Any reference in this paragraph to recovery property shall be treated as including a reference to any property to which section 168 (as amended by the Tax Reform Act of 1986) applies,” (B) Subparagraph (D) of section 47(a)(5) of the 1986 Code is amended by striking out the last sentence.
1988
Technical and Miscellaneous Revenue Act of 1988
Pub. L. 100–647 § 1002(a)(26)(A) · 102 Stat. 3342
Added · 26 U.S.C. § 47(a)(5)(E)(v)
Pub. L. 100–647, § 1002(a)(26)(A), added cl. (v)
Source evidence
Code amendment note
Subsec. (a)(5)(E)(v). Pub. L. 100–647, § 1002(a)(26)(A), added cl. (v).
Enacted provision · exact public law section
(A) Subparagraph (E) of section 47(a)(5) of the 1986 Code is amended by adding at the end thereof the following new clause: “(v) Treatment as recovery property.— Any reference in this paragraph to recovery property shall be treated as including a reference to any property to which section 168 (as amended by the Tax Reform Act of 1986) applies,”
1988
Technical and Miscellaneous Revenue Act of 1988
Pub. L. 100–647 § 1002(a)(27) · 102 Stat. 3342
Substituted · 26 U.S.C. § 47(a)(9)(A)
Pub. L. 100–647, § 1002(a)(27), substituted “section 168(h)(2)” for “section 168(j)(4)(C)”
Source evidence
Code amendment note
Subsec. (a)(9)(A). Pub. L. 100–647, § 1002(a)(27), substituted “section 168(h)(2)” for “section 168(j)(4)(C)”.
Enacted provision · exact public law section
(27) Subparagraph (A) of section 47(a)(9) of the 1986 Code is amended by striking out “section 168(j)(4)(C)” and inserting in lieu thereof “section 168(h)(2)”.
1988
Technical and Miscellaneous Revenue Act of 1988
Pub. L. 100–647 § 1007(g)(3)(A) · 102 Stat. 3342
Substituted · 26 U.S.C. § 47(c)
Pub. L. 100–647, § 1007(g)(3)(A), substituted “D, or G” for “or D”
Source evidence
Code amendment note
Subsec. (c). Pub. L. 100–647, § 1007(g)(3)(A), substituted “D, or G” for “or D”.
Enacted provision · exact public law section
(A) Subsection (c) of section 47 of the 1986 Code is amended by striking out “or D” and inserting in lieu thereof “D, or G”.
1988
Technical and Miscellaneous Revenue Act of 1988
Pub. L. 100–647 § 1002(a)(18) · 102 Stat. 3342
Substituted · 26 U.S.C. § 47(d)(1)
Pub. L. 100–647, § 1002(a)(18), substituted “section 46(c)(8)(C)” for “section 48(c)(8)(C)”
Source evidence
Code amendment note
Subsec. (d)(1). Pub. L. 100–647, § 1002(a)(18), substituted “section 46(c)(8)(C)” for “section 48(c)(8)(C)”.
Enacted provision · exact public law section
(18) Paragraph (1) of section 47(d) of the 1986 Code is amended by striking out “section 48(c)(8)(C) and inserting in lieu thereof “section 46(c)(8)(C)”.
1988
Technical and Miscellaneous Revenue Act of 1988
Pub. L. 100–647 § 1002(a)(28) · 102 Stat. 3342
1. Substituted · 26 U.S.C. § 47(d)(3)(C)(i)
  Pub. L. 100–647, § 1002(a)(28), substituted “class life (as defined in section 168(i)(1))” for “present class life (as defined in section 168(g)(2))”
2. Substituted · 26 U.S.C. § 47(d)(3)(C)(i)
  Pub. L. 100–647, § 1002(a)(28), substituted “no class life” for “no present class life”
Source evidence
Code amendment note
Subsec. (d)(3)(C)(i). Pub. L. 100–647, § 1002(a)(28), substituted “class life (as defined in section 168(i)(1))” for “present class life (as defined in section 168(g)(2))” and “no class life” for “no present class life”.
Enacted provision · exact public law section
(28) Clause (i) of section 47(d)(3)(C) of the 1986 Code is amended— (A) by striking out “present class life (as defined in section 168(g)(2))” and inserting in lieu thereof “class life (as defined in section 168(i)(1))”, and (B) by striking out “no present class life” and inserting in lieu thereof “no class life”.
1990
Revenue Reconciliation Act of 1990
Pub. L. 101–508 § 11813(a) · 104 Stat. 1388
1. Amended · 26 U.S.C. § 47
  Pub. L. 101–508, § 11813(a), amended section generally
2. Substituted · 26 U.S.C. § 47
  Pub. L. 101–508, § 11813(a), substituting section catchline for one which read: “Certain dispositions, etc., of section 38 property” and in text substituting present provisions for provisions relating to general rules regarding disposition of section 38 property, nonapplicability of section in certain cases, the treatment of any increase in tax under the section, increases in nonqualified nonrecourse financing, and transfers between spouses or incident to divorce
Source evidence
Code amendment note
Pub. L. 101–508, § 11813(a), amended section generally, substituting section catchline for one which read: “Certain dispositions, etc., of section 38 property” and in text substituting present provisions for provisions relating to general rules regarding disposition of section 38 property, nonapplicability of section in certain cases, the treatment of any increase in tax under the section, increases in nonqualified nonrecourse financing, and transfers between spouses or incident to divorce.
Enacted provision · exact public law section
(a) General Rule.— Subpart E of part IV of subchapter A of chapter 1 is amended to read as follows: “Subpart E— Rules for Computing Investment Credit “Sec. 46. Amount of credit. “Sec. 47. Rehabilitation credit. “Sec. 48. Energy credit; reforestation credit. “Sec. 49. At-risk rules. “Sec. 50. Other special rules. “SEC. 46. AMOUNT OF CREDIT. 8383 So in original. Probably should be “For”.For purposes of section 38, the amount of the investment credit determined under this section for any taxable year shall be the sum of— “(1) the rehabilitation credit, “(2) the energy credit, and “(3) the reforestation credit. “SEC. 47. REHABILITATION CREDIT. “(a) General Rule.— For purposes of section 46, the rehabilitation credit for any taxable year is the sum of— “(1) 10 percent of the qualified rehabilitation expenditures with respect to any qualified rehabilitated building other than a certified historic structure, and “(2) 20 percent of the qualified rehabilitation expenditures with respect to any certified historic structure. “(b) When Expenditures Taken Into Account.— “(1) In general.— Qualified rehabilitation expenditures with respect to any qualified rehabilitated building shall be taken into account for the taxable year in which such qualified rehabilitated building is placed in service. “(2) Coordination with subsection (d).— The amount which would (but for this paragraph) be taken into account under paragraph (1) with respect to any qualified rehabilitated building shall be reduced (but not below zero) by any amount of qualified rehabilitation expenditures taken into account under subsection (d) by the taxpayer or a predecessor of the taxpayer (or, in the case of a sale and leaseback described in section 50(a)(2)(C), by the lessee), to the extent any amount so taken into account has not been required to be recaptured under section 50(a). “(c) Definitions.— For purposes of this section— “(1) Qualified rehabilitated building.— “(A) In general.— The term ‘qualified rehabilitated building’ means any building (and its structural components) if— “(i) such building has been substantially rehabilitated, “(ii) such building was placed in service before the beginning of the rehabilitation, “(iii) in the case of any building other than a certified historic structure, in the rehabilitation process— “(I) 50 percent or more of the existing external walls of such building are retained in place as external walls, “(II) 75 percent or more of the existing external walls of such building are retained in place as internal or external walls, and “(III) 75 percent or more of the existing internal structural framework of such building is retained in place, and “(iv) depreciation (or amortization in lieu of depreciation) is allowable with respect to such building. “(B) Building must be first placed in service before 1936.— In the case of a building other than a certified historic structure, a building shall not be a qualified rehabilitated building unless the building was first placed in service before 1936. “(C) Substantially rehabilitated defined.— “(i) In general.— For purposes of subparagraph (A)(i), a building shall be treated as having been substantially rehabilitated only if the qualified rehabilitation expenditures during the 24-month period selected by the taxpayer (at the time and in the manner prescribed by regulation) and ending with or within the taxable year exceed the greater of— “(I) the adjusted basis of such building (and its structural components), or “(II) $5,000. The adjusted basis of the building (and its structural components) shall be determined as of the beginning of the 1st day of such 24-month period, or of the holding period of the building, whichever is later. For purposes of the preceding sentence, the determination of the beginning of the bolting period shall be made without regard to any reconstruction by the taxpayer in connection with the rehabilitation. “(ii) Special rule for phased rehabilitation.— In the case of any rehabilitation which may reasonably be expected to be completed in phases set forth in architectural plans and specifications completed before the rehabilitation begins, clause (i) shall be applied by substituting ‘60-month period’ for ‘24-month period’. “(iii) Lessees.— The Secretary shall prescribe by regulation rules for applying this subparagraph to lessees. “(D) Reconstruction.— Rehabilitation includes reconstruction. “(2) Qualified rehabilitation expenditure defined.— “(A) In general.— The term ‘qualified rehabilitation expenditure’ means any amount properly chargeable to capital account— “(i) for property for which depreciation is allowable under section 168 and which is— “(I) nonresidential real property, “(II) residential rental property, “(III) real property which has a class life of more than 12.5 years, or “(IV) an addition or improvement to property described in subclause (I), (II), or (III), and “(ii) in connection with the rehabilitation of a qualified rehabilitated building. “(B) Certain expenditures not included.— The term ‘qualified rehabilitation expenditure’ does not include— “(i) Straight line depreciation must be used.— Any expenditure with respect to which the taxpayer does not use the straight line method over a recovery period determined under subsection (c) or (g) of section 168. The preceding sentence shall not apply to any expenditure to the extent the alternative depreciation system of section 168(g) applies to such expenditure by reason of subparagraph (B) or (O of section 168(g)(D. “(ii) Cost of acquisition.— The cost of acquiring any building or interest therein. “(iii) Enlargements.— Any expenditure attributable to the enlargement of an existing building. “(iv) Certified historic structure, etc.— Any expenditure attributable to the rehabilitation of a certified historic structure or a building in a registered historic district, unless the rehabilitation is a certified rehabilitation (within the meaning of subparagraph (O). The preceding sentence shall not apply to a building in a registered historic district if— “(I) such building was not a certified historic structure, “(II) the Secretary of the Interior certified to the Secretary that such building is not of historic significance to the district, and “(III) if the certification referred to in subclause (II) occurs after the beginning of the rehabilitation of such building, the taxpayer certifies to the Secretary that, at the beginning of such rehabilitation, he in good faith was not aware of the requirements of subclause (II). “(v) Tax-exempt use property.— “(I) In general.— Any expenditure in connection with the rehabilitation of a building which is allocable to the portion of such property which is (or may reasonably be expected to be) tax-exempt use property (within the meaning of section 168(h)). “(II) Clause not to apply for purposes of paragraph (i)(c).— This clause shall not apply for purposes of determining under paragraph (1)(C) whether a building has been substantially rehabilitated. “(vi) Expenditures of lessee.— Any expenditure of a lessee of a building if, on the date the rehabilitation is completed, the remaining term of the lease (determined without regard to any renewal periods) is less than the recovery period determined under section 168(c). “(C) Certified rehabilitation.— For purposes of subparagraph (B), the term ‘certified rehabilitation’ means any rehabilitation of a certified historic structure which the Secretary of the Interior has certified to the Secretary as being consistent with the historic character of such property or the district in which such property is located. “(D) Non residential real property; residential rental property; class life.— For purposes of subparagraph (A), the terms ‘nonresidential real property,’ ‘residential rental property,’ and ‘class life’ have the respective meanings given such terms by section 168. “(3) Certified historic structure defined.— “(A) In general.— The term ‘certified historic structure’ means any building (and its structural components) which— “(i) is listed in the National Register, or “(ii) is located in a registered historic district and is certified by the Secretary of the Interior to the Secretary as being of historic significance to the district. “(B) Registered historic district.— The term ‘registered historic district’ means— “(i) any district listed in the National Register, and “(ii) any district— “(I) which is designated under a statute of the appropriate State or local government, if such statute is certified by the Secretary of the Interior to the Secretary as containing criteria which will substantially achieve the purpose of preserving and rehabilitating buildings of historic significance to the district, and “(II) which is certified by the Secretary of the Interior to the Secretary as meeting substantially all of the requirements for the listing of districts in the National Register. “(d) Progress Expenditures.— “(1) In general.— In the case of any building to which this subsection applies, except as provided in paragraph (3)— “(A) if such building is self-rehabilitated property, any qualified rehabilitation expenditure with respect to such building shall be taken into account for the taxable year for which such expenditure is properly chargeable to capital account with respect to such building, and “(B) if such building is not self-rehabilitated property, any qualified rehabilitation expenditure with respect to such building shall be taken into account for the taxable year in which paid. “(2) Property to which subsection applies.— “(A) In general.— This subsection shall apply to any building which is being rehabilitated by or for the taxpayer if— “(i) the normal rehabilitation period for such building is 2 years or more, and “(ii) it is reasonable to expect that such building will be a qualified rehabilitated building in the hands of the taxpayer when it is placed in service. Clauses (i) and (ii) shall be applied on the basis of facts known as of the close of the taxable year of the taxpayer in which the rehabilitation begins (or, if later, at the close of the first taxable year to which an election under this subsection applies). “(B) Normal rehabilitation period.— For purposes of subparagraph (A), the term ‘normal rehabilitation period’ means the period reasonably expected to be required for the rehabilitation of the building— “(i) beginning with the date on which physical work on the rehabilitation begins (or, if later, the first day of the first taxable year to which an election under this subsection applies), and “(ii) ending on the date on which it is expected that the property will be available for placing in service. “(3) Special rules for applying paragraph (i).— For purposes of paragraph (1)— “(A) Component parts, etc.— Property which is to be a component part of, or is otherwise to be included in, any building to which this subsection applies shall be taken into account— “(i) at a time not earlier than the time at which it becomes irrevocably devoted to use in the building, and “(ii) as if (at the time referred to in clause (i)) the taxpayer had expended an amount equal to that portion of the cost to the taxpayer of such component or other property which, for purposes of this subpart, is properly chargeable (during such taxable year) to cap-ital account with respect to such building. “(B) Certain borrowing disregarded.— Any amount borrowed directly or indirectly by the taxpayer from the person rehabilitating the property for him shall not be treated as an amount expended for such rehabilitation. “(C) Limitation for buildings which are not self-rehabilitated.— “(i) In general.— In the case of a building which is not self-rehabilitated, the amount taken into account under paragraph (1)(B) for any taxable year shall not exceed the amount which represents the portion of the overall cost to the taxpayer of the rehabilitation which is properly attributable to the portion of the rehabilitation which is completed during such taxable year. “(ii) Carry-over of certain amounts.— In the case of a building which is not a self-rehabilitated building, if for the taxable year— “(I) the amount which (but for clause (i)) would have been taken into account under paragraph (1)(B) exceeds the limitation of clause (i), then the amount of such excess shall be taken into account under paragraph (1)(B) for the succeeding taxable year, or “(II) the limitation of clause (i) exceeds the amount taken into account under paragraph (1)(B), then the amount of such excess shall increase the limitation of clause (i) for the succeeding taxable year. “(D) Determination of percentage of completion.— The determination under subparagraph (C)(i) of the portion of the overall cost to the taxpayer of the rehabilitation which is properly attributable to rehabilitation completed during any taxable year shall be made, under regulations prescribed by the Secretary, on the basis of engineering or architectural estimates or on the basis of cost accounting records. Unless the taxpayer establishes otherwise by clear and convincing evidence, the rehabilitation shall be deemed to be completed not more rapidly than ratably over the normal rehabilitation period. “(E) No progress expenditures for certain prior periods.— No qualified rehabilitation expenditures shall be taken into account under this subsection for any period before the first day of the first taxable year to which an election under this subsection applies. “(F) No progress expenditures for property for year it is placed in service, etc.— In the case of any building, no qualified rehabilitation expenditures shall be taken into account under this subsection for the earlier of— “(i) the taxable year in which the building is placed in service, or “(ii) the first taxable year for which recapture is required under section 50(a)(2) with respect to such property, or for any taxable year thereafter. “(4) Self-rehabilitated building.— For purposes of this subsection, the term ‘self-rehabilitated building’ means any building if it is reasonable to believe that more than half of the qualified rehabilitation expenditures for such building will be made directly by the taxpayer. “(5) Election.— This subsection shall apply to any taxpayer only if such taxpayer has made an election under this paragraph. Such an election shall apply to the taxable year for which made and all subsequent taxable years. Such an election, once made, may be revoked only with the consent of the Secretary. “SEC. 48. ENERGY CREDIT; REFORESTATION CREDIT. “(a) Energy Credit.— “(1) In general.— For purposes of section 46, the energy credit for any taxable year is the energy percentage of the basis of each energy property placed in service during such taxable year. “(2) Energy percentage.— “(A) In general.— Except as provided in subparagraph (B), the energy percentage is 10 percent. “(B) Termination.— Effective with respect to periods after December 31, 1991, the energy percentage is zero. For purposes of the preceding sentence, rules similar to the rules of section 48(m) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply. “(C) Coordination with rehabilitation credit.— The energy percentage shall not apply to that portion of the basis of any property which is attributable to qualified rehabilitation expenditures. “(3) Energy property.— For purposes of this subpart, the term ‘energy property’ means any property— “(A) which is— “(i) equipment which uses solar energy to generate electricity, to heat or cool (or provide hot water for use in) a structure, or to provide solar process heat, or “(ii) equipment used to produce, distribute, or use energy derived from a geothermal deposit (within the meaning of section 613(e)(2)), but only, in the case of electricity generated by geothermal power, up to (but not including) the electrical transmission stage, “(B) (i) the construction, reconstruction, or erection of which is completed by the taxpayer, or “(ii) which is acquired by the taxpayer if the original use of such property commences with the taxpayer, “(C) with respect to which depreciation (or amortization in lieu of depreciation) is allowable, and “(D) which meets the performance and quality standards (if any) which— “(i) have been prescribed by the Secretary by regulations (after consultation with the Secretary of Energy), and “(ii) are in effect at the time of the acquisition of the property. The term ‘energy property’ shall not Include any property which is public utility property (as defined in section 46(f)(5) as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990). “(4) Special rule for property financed by subsidized energy financing or industrial development bonds.— “(A) Reduction of basis.— For purposes of applying the energy percentage to any property, if such property is financed in whole or in part by— “(i) subsidized energy financing, or “(ii) the proceeds of a private activity bond (within the meaning of section 141) the interest on which is exempt from tax under section 103, the amount taken into account as the basis of such property shall not exceed the amount which (but for this subpara-graph) would be so taken into account multiplied by the fraction determined under subparagraph (B). “(B) Determination of fraction.— For purposes of subparagraph (A), the fraction determined under this subparagraph is 1 reduced by a fraction— “(i) the numerator of which is that portion of the basis of the property which is allocable to such financing or proceeds, and “(ii) the denominator of which is the basis of the property. “(C) Subsidized energy financing.— For purposes of subparagraph (A), the term ‘subsidized energy financing’ means financing provided under a Federal, State, or local program a principal purpose of which is to provide subsidized financing for projects designed to conserve or produce energy. “(5) Certain progress expenditure rules made applicable.— Rules similar to the rules of subsections (c)(4) and (d) of section 46 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this subsection. “(b) Reforestation Credit.— “(1) In general.— For purposes of section 46, the reforestation credit for any taxable year is 10 percent of the portion of the amortizable basis of any qualified timber property which was acquired during such taxable year and which is taken into account under section 194 (after the application of section 194(b)(D). “(2) Definitions.— For purposes of this subpart, the terms ‘amortizable basis’ and ‘qualified timber property’ have the respective meanings given to such terms by section 194. “SEC. 49. AT-RISK RULES. “(a) General Rule.— “(1) Certain nonrecourse financing excluded from credit base.— “(A) Limitation.— The credit base of any property to which this paragraph applies shall be reduced by the non-qualified nonrecourse financing with respect to such credit base (as of the close of the taxable year in which placed in service). “(B) Property to which paragraph applies.— This paragraph applies to any property which— “(i) is placed in service during the taxable year by a taxpayer described in section 465(a)(D, and “(ii) is used in connection with an activity with respect to which any loss is subject to limitation under section 465. “(C) Credit base defined.— For purposes of this paragraph, the term ‘credit base’ means— “(i) the portion of the basis of any qualified rehabilitated building attributable to qualified rehabilitation expenditures, “(ii) the basis of any energy property, and “(iii) the amortizable basis of any qualified timber property. “(D) Nonqualified nonrecourse financing.— “(i) In general.— For purposes of this paragraph and paragraph (2), the term ‘nonqualified nonrecourse financing’ means any nonrecourse financing which is not qualified commercial financing. “(ii) Qualified commercial financing.— For purposes of this paragraph, the term ‘qualified commercial financing’ means any financing with respect to any property if— “(I) such property is acquired by the taxpayer from a person who is not a related person, “(II) the amount of the nonrecourse financing with respect to such property does not exceed 80 percent of the credit base of such property, and “(III) such financing is borrowed from a qualified person or represents a loan from any Federal, State, or local government or instrumentality thereof, or is guaranteed by any Federal, State, or local government. Such term shall not include any convertible debt. “(iii) Nonrecourse financing.— For purposes of this subparagraph, the term ‘nonrecourse financing’ includes— “(I) any amount with respect to which the tax-payer is protected against loss through guarantees, stop-loss agreements, or other similar arrangements, and “(II) except to the extent provided in regulations, any amount borrowed from a person who has an interest (other than as a creditor) in the activity in which the property is used or from a related person to a person (other than the taxpayer) having such an interest. In the case of amounts borrowed by a corporation from a shareholder, subclause (II) shall not apply to an interest as a share-holder. “(iv) Qualified person.— For purposes of this paragraph, the term ‘qualified person’ means any person which is actively and regularly engaged in the business of lending money and which is not— “(I) a related person with respect to the tax-payer, “(II) a person from which the taxpayer acquired the property (or a related person to such person), or “(III) a person who receives a fee with respect to the taxpayer’s investment in the property (or a related person to such person). “(v) Related person.— For purposes of this subparagraph, the term ‘related person’ has the meaning given such term by section 465(b)(3)(C). Except as otherwise provided in regulations prescribed by the Secretary, the determination of whether a person is a related person shall be made as of the close of the taxable year in which the property is placed in service. “(E) Application to partnerships and s corporations.— For purposes of this paragraph and paragraph (2)— “(i) In general.— Except as otherwise provided in this subparagraph, in the case of any partnership or S corporation, the determination of whether a partner s or shareholder’s allocable share of any financing is nonqualified nonrecourse financing shall be made at the partner or shareholder level. “(ii) Special rule for certain recourse financing of s corporation.— A shareholder of an S corporation shall be treated as liable for his allocable share of any financing provided by a qualified person to such corporation if— “(I) such financing is recourse financing (determined at the corporate level), and “(II) such financing is provided with respect to qualified business property of such corporation, “(iii) Qualified business property.— For purposes of clause (ii), the term ‘qualified business property’ means any property if— “(I) such property is used by the corporation in the active conduct of a trade or business, “(II) during the entire 12-month period ending on the last day of the taxable year, such corporation had at least 3 full-time employees who were not owner-employees (as defined in section 465(c)(7)(E)(i)) and substantially all the services of whom were services directly related to such trade or business, and “(III) during the entire 12-month period ending on the last day of such taxable year, such corporation had at least 1 full-time employee substantially all of the services of whom were in the active management of the trade or business. “(iv) Determination of allocable share.— The determination of any partner’s or shareholder’s allocable share of any financing shall be made in the same manner as the credit allowable by section 38 with respect to such property. “(F) Special rules for energy property.— Rules similar to the rules of subparagraph (F) of section 46(c)(8) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this paragraph. “(2) Subsequent decreases in nonqualified nonrecourse financing with respect to the property.— “(A) In general.— If, at the close of a taxable year following the taxable year in which the property was placed, in service, there is a net decrease in the amount of non-qualified nonrecourse financing with respect to such property, such net decrease shall be taken into account as an increase in the credit base for such property tn accordance with subparagraph (C). “(B) Certain transactions not taken into account.— For purposes of this paragraph, nonqualified nonrecourse financing shall not be treated as decreased through the surrender or other use of property financed by nonqualified nonrecourse financing. “(C) Manner in which taken into account.— “(i) Credit determined by reference to taxable year property placed in service.— For purposes of determining the amount of credit allowable under section 38 and the amount of credit subject to the early disposition or cessation rules under section 50(a), any increase in a taxpayer’s credit base for any property by reason of this paragraph shall be taken into account as if it were property placed in service by the taxpayer in the taxable year in which the property referred to in subparagraph (A) was first placed in service. “(ii) Credit allowed for year of decrease in non-qualified nonrecourse financing.— Any credit allow-able under this subpart for any increase in qualified investment by reason of this paragraph shall be treated as earned during the taxable year of the decrease in the amount of nonqualified nonrecourse financing. “(b) Increases in Nonqualified Nonrecourse Financing.— “(1) In general.— If, as of the close of the taxable year, there is a net increase with respect to the taxpayer in the amount of nonqualified nonrecourse financing (within the meaning of subsection (a)(l)) with respect to any property to which subsection (a)(1) applied, then the tax under this chapter for such taxable year shall be increased by an amount equal to the aggregate decrease in credits allowed under section 38 for all prior taxable years which would have resulted from reducing the credit base (as defined in subsection (a)(l)(O) taken into account with respect to such property by the amount of such net increase. For purposes of determining the amount of credit subject to the early disposition or cessation rules of section 50(a), the net increase in the amount of the nonqualified nonrecourse financing with respect to the property shall be treated as reducing the property’s credit base in the year in which the property was first placed in service. “(2) Transfers of debt more than 1 year after initial borrowing not treated as increasing nonqualified nonrecourse financing.— For purposes of paragraph (1), the amount of nonqualified nonrecourse financing (within the meaning of subsection (a)(lRD)) with respect to the taxpayer shall not be treated as increased by reason of a transfer of (or agreement to transfer) any evidence of any indebtedness if such transfer occurs (or such agreement is entered into) more than 1 year after the date such indebtedness was incurred. “(3) Special rules for certain energy property.— Rules similar to the rules of section 47(d)(3) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this subsection. “(4) Special rule.— Any increase in tax under paragraph (1) shall not be treated as tax imposed by this chapter for purposes of determining the amount of any credit allowable under sub-part A, B, D, or G. “SEC. 50. OTHER SPECIAL RULES. “(a) Recapture in Case of Dispositions, Etc.— Under regulations prescribed by the Secretary— “(1) Early disposition, etc.— “(A) General rule.— If, during any taxable year, investment credit property is disposed of, or otherwise ceases to be investment credit property with respect to the taxpayer, before the close of the recapture period, then the tax under this chapter for such taxable year shall be increased by the recapture percentage of the aggregate decrease in the cred-its allowed under section 38 for all prior taxable years which would have resulted solely from reducing to zero any credit determined under this subpart with respect to such property. “(B) Recapture percentage.— For purposes of subparagraph (A), the recapture percentage shall be determined in accordance with the following table: “If the property ceases to be investment credit property within— The recapture percentage is: (i) One full year after placed in service. 100 (ii) One full year after the close of the period described in clause (i) 80 (iii) One full year after the close of the period described in clause (ii) 60 (iv) One full year after the close of the period described in clause (iii) 40 (v) One full year after the close of the period described in clause (iv) 20 “(2) Property ceases to qualify for progress expenditures.— “(A) In general.— If during any taxable year any building to which section 47(d) applied ceases (by reason of sale or other disposition, cancellation or abandonment of con-tract, or otherwise) to be, with respect to the taxpayer, property which, when placed in service, will be a qualified rehabilitated building, then the tax under this chapter for such taxable year shall be increased by an amount equal to the aggregate decrease in the credits allowed under section 38 for all prior taxable years which would have resulted solely from reducing to zero the credit determined under this subpart with respect to such building. “(B) Certain excess credit recaptured.— Any amount which would have been applied as a reduction under paragraph (2) of section 47(b) but for the fact that a reduction under such paragraph cannot reduce the amount taken into account under section 47(b)(l) below zero shall be treated as an amount required to be recaptured under subparagraph (A) for the taxable year during which the building is placed in service. “(C) Certain sales and leasebacks.— Under regulations prescribed by the Secretary, a sale by, and leaseback to, a taxpayer who, when the property is placed in service, will be a lessee to whom the rules referred to in subsection (c)(4) apply shall not be treated as a cessation described in subparagraph (A) to the extent that the amount which will be passed through to the lessee under such rules with respect to such property is not less than the qualified rehabilitation expenditures properly taken into account by the lessee under section 47(d) with respect to such property. “(D) Coordination with paragraph (1).— If, after property is placed in service, there is a disposition or other cessation described in paragraph (1), then paragraph (1) shall be applied as if any credit which was allowable by reason of section 47(d) and which has not been required to be recaptured before such disposition, cessation, or change in use were allowable for the taxable year the property was placed in service. “(E) Special rules.— Rules similar to the rules of this paragraph shall apply in cases where qualified progress expenditures were taken into account under the rules referred to in section 48(a)(5)(A). “(3) Carrybacks and carryovers adjusted.— In the case of any cessation described in paragraph (1) or (2), the carrybacks and carryovers under section 39 shall be adjusted by reason of such cessation. “(4) Subsection not to apply in certain cases.— Paragraphs (1) and (2) shall not apply to— “(A) a transfer by reason of death, or “(B) a transaction to which section 381(a) applies. For purposes of this subsection, property shall not be treated as ceasing to be investment credit property with respect to the taxpayer by reason of a mere change in the form of conducting the trade or business so long as the property is retained in such trade or business as investment credit property and the tax-payer retains a substantial interest in such trade or business. “(5) Definitions and special rules.— “(A) Investment credit property.— For purposes of this subsection, the term ‘investment credit property’ means any property eligible for a credit determined under this subpart. “(B) Transfer between spouses or incident to divorce.— In the case of any transfer described in subsection (a) of section 1041— “(i) the foregoing provisions of this subsection shall not apply, and ’ “(ii) the same tax treatment under this subsection with respect to the transferred property shall apply to the transferee as would have applied to the transferor. “(C) Special rule.— Any increase in tax under paragraph (1) or (2) shall not be treated as tax imposed by this chapter for purposes of determining the amount of any credit allow-able under subpart A, B, D, or G. “(b) Certain Property Not Eligible.— No credit shall be determined under this subpart with respect to— “(1) Property used outside united states.— “(A) In general.— Except as provided in subparagraph (B), no credit shall be determined under this subpart with respect to any property which is used predominantly out-side the United States. “(B) Exceptions.— Subparagraph (A) shall not apply to any property described in section 168(g)(4). “(2) Property used for lodging.— No credit shall be determined under this subpart with respect to any property which is used predominantly to furnish lodging or in connection with the furnishing of lodging. The preceding sentence shall not apply to— “(A) nonlodging commercial facilities which are available to persons not using the lodging facilities on the same basis as they are available to persons using the lodging facilities.8484 So in original. Probably should be “facilities;”. “(B) property used by a hotel or motel in connection with the trade or business of furnishing lodging where the predominant portion of the accommodations is used by transients; “(C) a certified historic structure to the extent of that portion of the basis which is attributable to qualified rehabilitation expenditures; and “(D) any energy property. “(3) Property used by certain tax-exempt organization.— No credit shall be determined under this subpart with respect to any property used by an organization (other than a cooperative described in section 521) which is exempt from the tax imposed by this chapter unless such property is used predominantly in an unrelated trade or business the income of which is subject to tax under section 511. If the property is debt-financed property (as defined in section 514(b)), the amount taken into account for purposes of determining the amount of the credit under this subpart with respect to such property shall be that percentage of the amount (which but for this paragraph would be so taken into account) which is the same percentage as is used under section 514(a), for the year the property is placed in service, in computing the amount of gross income to be taken into account during such taxable year with respect to such property. If any qualified rehabilitated building is used by the tax-exempt organization pursuant to a lease, this paragraph shall not apply for purposes of determining the amount of the rehabilitation credit. “(4) Property used by governmental units or foreign persons or entities.— “(A) In general.— No credit shall be determined under this subpart with respect to any property used— “(i) by the United States, any State or political sub-division thereof, any possession of the United States, or any agency or instrumentality of any of the foregoing, or “(ii) by any foreign person or entity (as defined in section 168(h)(2)(O), but only with respect to property to which section 168(h)(2)(A)(iii) applies (determined after the application of section 168(h)(2)(B)). “(B) Exception for short-term leases.— This paragraph and paragraph (3) shall not apply to any property by reason of use under a lease with a term of less than 6 months (determined under section 168(i)(3)). “(C) Exception for qualified rehabilitated buildings leased to governments, etc.— If any qualified rehabilitated building is leased to a governmental unit (or a foreign person or entity) this paragraph shall not apply for purposes of determining the rehabilitation credit with respect to such building. “(D) Special rules for partnerships, etc.— For purposes of this paragraph and paragraph (3), rules similar to the rules of paragraphs (5) and (6) of section 168(h) shall apply. “(E) Cross reference.— “For special rules for the application of this paragraph and paragraph (3), see section 168(h).” “(c) Basis Adjustment to Investment Credit Property.— “(1) In general.— For purposes of this subtitle, if a credit is determined under this subpart with respect to any property, the basis of such property shall be reduced by the amount of the credit so determined. “(2) Certain dispositions.— If during any taxable year there is a recapture amount determined with respect to any property the basis of which was reduced under paragraph (1), the basis of such property (immediately before the event resulting in such recapture) shall be increased by an amount equal to such recapture amount. For purposes of the preceding sentence, the term ‘recapture amount’ means any increase in tax (or adjustment in carrybacks or carryovers) determined under subsection (a). “(3) Special rule.— In the case of any energy credit or re-forestation credit— “(A) only 50 percent of such credit shall be taken into account under paragraph (1), and “(B) only 50 percent of any recapture amount attributable to such credit shall be taken into account under paragraph (2). “(4) Recapture of reductions.— “(A) In general.— For purposes of sections 1245 and 1250, any reduction under this subsection shall be treated as a deduction allowed for depreciation. “(B) Special rule for section 1250.— For purposes of section 1250(b), the determination of what would have been the depreciation adjustments under the straight line method shall be made as if there had been no reduction under this section. “(5) Adjustment in basis of interest in partnership or s corporation.— The adjusted basis of— “(A) a partner’s interest in a partnership, and “(B) stock in an S corporation, shall be appropriately adjusted to take into account adjustments made under this subsection in the basis of property held by the partnership or S corporation (as the case may be). “(d) Certain Rules Made Applicable.— For purposes of this sub-part, rules similar to the rules of the following provisions (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply: “(1) Section 46(e) (relating to limitations with respect to certain persons). “(2) Section 46(f) (relating to limitation in case of certain regulated companies). “(3) Section 46(h) (relating to special rules for cooperatives). “(4) Paragraphs (2) and (3) of section 48(b) (relating to special rule for sale-leasebacks). “(5) Section 48(d) (relating to certain leased property). “(6) Section 48(f) (relating to estates and trusts). “(7) Section 48(r) (relating to certain 501(d) organizations).”
1990
Revenue Reconciliation Act of 1990
Pub. L. 101–508 § 11801(c)(8)(A) · 104 Stat. 1388
1. Inserted · 26 U.S.C. § 47(b)(1)(3)
  Pub. L. 101–508, § 11801(c)(8)(A), inserted “or” at end of par. (1)
2. Substituted · 26 U.S.C. § 47(b)(1)(3)
  Pub. L. 101–508, § 11801(c)(8)(A), substituted a period for “, or” at end of par. (2)
3. Struck · 26 U.S.C. § 47(b)(1)(3)
  Pub. L. 101–508, § 11801(c)(8)(A), struck out par. (3) which related to nonapplicability of subsec. (a) in the case of a transfer of section 38 property related to exchanges under final system plan for ConRail
Source evidence
Code amendment note
Subsec. (b)(1) to (3). Pub. L. 101–508, § 11801(c)(8)(A), inserted “or” at end of par. (1), substituted a period for “, or” at end of par. (2), and struck out par. (3) which related to nonapplicability of subsec. (a) in the case of a transfer of section 38 property related to exchanges under final system plan for ConRail.
Enacted provision · exact public law section
(A) Subsection (b) of section 47 is amended by inserting “or” at the end of paragraph (1), by striking out “, or” at the end of paragraph (2), and inserting a period, and by striking paragraph (3).
2008
Housing Assistance Tax Act of 2008
Pub. L. 110–289 div. C title I § 3025(a) · 122 Stat. 2654
Substituted · 26 U.S.C. § 47(c)(2)(B)(v)(I)
Pub. L. 110–289 substituted “section 168(h), except that ‘50 percent’ shall be substituted for ‘35 percent’ in paragraph (1)(B)(iii) thereof” for “section 168(h)”
Source evidence
Code amendment note
Subsec. (c)(2)(B)(v)(I). Pub. L. 110–289 substituted “section 168(h), except that ‘50 percent’ shall be substituted for ‘35 percent’ in paragraph (1)(B)(iii) thereof” for “section 168(h)”.
Enacted provision · exact public law section
(a) In General.— Subclause (I) of section 47(c)(2)(B)(v) is amended by striking “section 168(h)” and inserting “section 168(h), except that ‘50 percent’ shall be substituted for ‘35 percent’ in paragraph (1)(B)(iii) thereof”.
2017
Pub. L. 115–97 § 13402(a) · 131 Stat. 2054
Amended · 26 U.S.C. § 47(a)
Pub. L. 115–97, § 13402(a), amended subsec. (a) generally. Prior to amendment, text read as follows: “For purposes of section 46, the rehabilitation credit for any taxable year is the sum of—
Source evidence
Code amendment note
Subsec. (a). Pub. L. 115–97, § 13402(a), amended subsec. (a) generally. Prior to amendment, text read as follows: “For purposes of section 46, the rehabilitation credit for any taxable year is the sum of—
“(1) 10 percent of the qualified rehabilitation expenditures with respect to any qualified rehabilitated building other than a certified historic structure, and “(2) 20 percent of the qualified rehabilitation expenditures with respect to any certified historic structure.”
Enacted provision · exact public law section
(a) In General.— Subsection (a) of section 47 26 USC 47. is amended to read as follows: “(a) General Rule.— “(1) In general.— For purposes of section 46, for any taxable year during the 5-year period beginning in the taxable year in which a qualified rehabilitated building is placed in service, the rehabilitation credit for such year is an amount equal to the ratable share for such year. “(2) Ratable share.— For purposes of paragraph (1), the ratable share for any taxable year during the period described in such paragraph is the amount equal to 20 percent of the qualified rehabilitation expenditures with respect to the qualified rehabilitated building, as allocated ratably to each year during such period.” .
Effective date note
Pub. L. 115–97, title I, § 13402(c), Dec. 22, 2017, 131 Stat. 2134, provided that:
2017
Pub. L. 115–97 § 13402(b)(1)(A)(i) · 131 Stat. 2054
Amended · 26 U.S.C. § 47(c)(1)(A)(iii)
Pub. L. 115–97, § 13402(b)(1)(A)(i), amended cl. (iii) generally. Prior to amendment, cl. (iii) read as follows: “in the case of any building other than a certified historic structure, in the rehabilitation process—
Source evidence
Code amendment note
Subsec. (c)(1)(A)(iii). Pub. L. 115–97, § 13402(b)(1)(A)(i), amended cl. (iii) generally. Prior to amendment, cl. (iii) read as follows: “in the case of any building other than a certified historic structure, in the rehabilitation process—
“(I) 50 percent or more of the existing external walls of such building are retained in place as external walls, “(II) 75 percent or more of the existing external walls of such building are retained in place as internal or external walls, and “(III) 75 percent or more of the existing internal structural framework of such building is retained in place, and”.
Enacted provision · exact public law section
(i) in subparagraph (A), by amending clause (iii) to read as follows: “(iii) such building is a certified historic structure, and” ,
Effective date note
Pub. L. 115–97, title I, § 13402(c), Dec. 22, 2017, 131 Stat. 2134, provided that:
2017
Pub. L. 115–97 § 13402(b)(1)(A)(ii) · 131 Stat. 2054
1. Redesignated · 26 U.S.C. § 47(c)(1)(B)(D)
  Pub. L. 115–97, § 13402(b)(1)(A)(ii), (iii), redesignated subpars. (C) and (D) as (B) and (C), respectively
2. Struck · 26 U.S.C. § 47(c)(1)(B)(D)
  Pub. L. 115–97, § 13402(b)(1)(A)(ii), (iii), struck out former subpar. (B). Prior to amendment, text of subpar. (B) read as follows: “In the case of a building other than a certified historic structure, a building shall not be a qualified rehabilitated building unless the building was first placed in service before 1936.”
Source evidence
Code amendment note
Subsec. (c)(1)(B) to (D). Pub. L. 115–97, § 13402(b)(1)(A)(ii), (iii), redesignated subpars. (C) and (D) as (B) and (C), respectively, and struck out former subpar. (B). Prior to amendment, text of subpar. (B) read as follows: “In the case of a building other than a certified historic structure, a building shall not be a qualified rehabilitated building unless the building was first placed in service before 1936.”
Enacted provision · exact public law section
(ii) by striking subparagraph (B), and
Effective date note
Pub. L. 115–97, title I, § 13402(c), Dec. 22, 2017, 131 Stat. 2134, provided that:
2017
Pub. L. 115–97 § 13402(b)(1)(B) · 131 Stat. 2054
Amended · 26 U.S.C. § 47(c)(2)(B)(iv)
Pub. L. 115–97, § 13402(b)(1)(B), amended cl. (iv) generally. Prior to amendment, text read as follows: “Any expenditure attributable to the rehabilitation of a certified historic structure or a building in a registered historic district, unless the rehabilitation is a certified rehabilitation (within the meaning of subparagraph (C)). The preceding sentence shall not apply to a building in a registered historic district if—
Source evidence
Code amendment note
Subsec. (c)(2)(B)(iv). Pub. L. 115–97, § 13402(b)(1)(B), amended cl. (iv) generally. Prior to amendment, text read as follows: “Any expenditure attributable to the rehabilitation of a certified historic structure or a building in a registered historic district, unless the rehabilitation is a certified rehabilitation (within the meaning of subparagraph (C)). The preceding sentence shall not apply to a building in a registered historic district if—
“(I) such building was not a certified historic structure, “(II) the Secretary of the Interior certified to the Secretary that such building is not of historic significance to the district, and “(III) if the certification referred to in subclause (II) occurs after the beginning of the rehabilitation of such building, the taxpayer certifies to the Secretary that, at the beginning of such rehabilitation, he in good faith was not aware of the requirements of subclause (II).”
Enacted provision · exact public law section
(B) in paragraph (2)(B), by amending clause (iv) to read as follows: “(iv) Certified historic structure.— Any expenditure attributable to the rehabilitation of a qualified rehabilitated building unless the rehabilitation is a certified rehabilitation (within the meaning of subparagraph (C)).” .
Effective date note
Pub. L. 115–97, title I, § 13402(c), Dec. 22, 2017, 131 Stat. 2134, provided that:

62 of 64 references resolved to an enrolled provision · 2 partial

Editorial Notes

Prior Provisions

Provisions similar to this section were contained in section 48(g) of this title, prior to the general amendment of this subpart by Pub. L. 101–508.

Amendments1969–2017 · 15 rounds

2017

Subsec. (a). Pub. L. 115–97, § 13402(a), amended subsec. (a) generally. Prior to amendment, text read as follows: “For purposes of section 46, the rehabilitation credit for any taxable year is the sum of—

“(1) 10 percent of the qualified rehabilitation expenditures with respect to any qualified rehabilitated building other than a certified historic structure, and

“(2) 20 percent of the qualified rehabilitation expenditures with respect to any certified historic structure.”

Subsec. (c)(1)(A)(iii). Pub. L. 115–97, § 13402(b)(1)(A)(i), amended cl. (iii) generally. Prior to amendment, cl. (iii) read as follows: “in the case of any building other than a certified historic structure, in the rehabilitation process—

“(I) 50 percent or more of the existing external walls of such building are retained in place as external walls,

“(II) 75 percent or more of the existing external walls of such building are retained in place as internal or external walls, and

“(III) 75 percent or more of the existing internal structural framework of such building is retained in place, and”.

Subsec. (c)(1)(B) to (D). Pub. L. 115–97, § 13402(b)(1)(A)(ii), (iii), redesignated subpars. (C) and (D) as (B) and (C), respectively, and struck out former subpar. (B). Prior to amendment, text of subpar. (B) read as follows: “In the case of a building other than a certified historic structure, a building shall not be a qualified rehabilitated building unless the building was first placed in service before 1936.”

Subsec. (c)(2)(B)(iv). Pub. L. 115–97, § 13402(b)(1)(B), amended cl. (iv) generally. Prior to amendment, text read as follows: “Any expenditure attributable to the rehabilitation of a certified historic structure or a building in a registered historic district, unless the rehabilitation is a certified rehabilitation (within the meaning of subparagraph (C)). The preceding sentence shall not apply to a building in a registered historic district if—

“(I) such building was not a certified historic structure,

“(II) the Secretary of the Interior certified to the Secretary that such building is not of historic significance to the district, and

“(III) if the certification referred to in subclause (II) occurs after the beginning of the rehabilitation of such building, the taxpayer certifies to the Secretary that, at the beginning of such rehabilitation, he in good faith was not aware of the requirements of subclause (II).”

2008

Subsec. (c)(2)(B)(v)(I). Pub. L. 110–289 substituted “section 168(h), except that ‘50 percent’ shall be substituted for ‘35 percent’ in paragraph (1)(B)(iii) thereof” for “section 168(h)”.

1990

Pub. L. 101–508, § 11813(a), amended section generally, substituting section catchline for one which read: “Certain dispositions, etc., of section 38 property” and in text substituting present provisions for provisions relating to general rules regarding disposition of section 38 property, nonapplicability of section in certain cases, the treatment of any increase in tax under the section, increases in nonqualified nonrecourse financing, and transfers between spouses or incident to divorce.

Subsec. (b)(1) to (3). Pub. L. 101–508, § 11801(c)(8)(A), inserted “or” at end of par. (1), substituted a period for “, or” at end of par. (2), and struck out par. (3) which related to nonapplicability of subsec. (a) in the case of a transfer of section 38 property related to exchanges under final system plan for ConRail.

1988

Subsec. (a)(5)(D). Pub. L. 100–647, § 1002(a)(26)(B), struck out at end “If, prior to a disposition to which this subsection applies, any portion of any credit is not allowable with respect to any property by reason of section 168(i)(3), such portion shall be treated (for purposes of this subparagraph) as not having been used to reduce tax liability.”

Subsec. (a)(5)(E)(iii). Pub. L. 100–647, § 1002(a)(26)(C), substituted “168(e)” for “168(c)”.

Subsec. (a)(5)(E)(v). Pub. L. 100–647, § 1002(a)(26)(A), added cl. (v).

Subsec. (a)(9)(A). Pub. L. 100–647, § 1002(a)(27), substituted “section 168(h)(2)” for “section 168(j)(4)(C)”.

Subsec. (c). Pub. L. 100–647, § 1007(g)(3)(A), substituted “D, or G” for “or D”.

Subsec. (d)(1). Pub. L. 100–647, § 1002(a)(18), substituted “section 46(c)(8)(C)” for “section 48(c)(8)(C)”.

Subsec. (d)(3)(C)(i). Pub. L. 100–647, § 1002(a)(28), substituted “class life (as defined in section 168(i)(1))” for “present class life (as defined in section 168(g)(2))” and “no class life” for “no present class life”.

1986

Subsec. (a)(9). Pub. L. 99–514, § 1802(a)(5)(A), added par. (9).

Subsec. (d)(1). Pub. L. 99–514, § 1844(b)(1), substituted “reducing the credit base (as defined in section 48(c)(8)(C))” for “reducing the qualified investment” and inserted “For purposes of determining the amount of credit subject to the early disposition or cessation rules of subsection (a), the net increase in the amount of the nonqualified nonrecourse financing with respect to the property shall be treated as reducing the property’s credit base (and correspondingly reducing the qualified investment in the property) in the year in which the property was first placed in service.”

Subsec. (d)(3)(E)(i). Pub. L. 99–514, § 1844(b)(4), inserted “reduced by the sum of the credit recapture amounts with respect to such property for all preceding years”.

Subsec. (d)(3)(F). Pub. L. 99–514, § 1844(b)(2), struck out subpar. (F) which read as follows: “The amount of any increase in tax under subsection (a) with respect to any property to which this paragraph applies shall be determined by reducing the qualified investment with respect to such property by the aggregate credit recapture amounts for all taxable years under this paragraph.”

Subsec. (d)(3)(G). Pub. L. 99–514, § 1511(c)(2), substituted “determined at the underpayment rate established under section 6621” for “determined under section 6621”.

1985

Subsec. (a)(5)(B). Pub. L. 99–121 substituted “For property other than 3-year property” for “For 15-year, 10-year, and 5-year property” in table heading.

1984

Subsec. (a)(5)(D), (6). Pub. L. 98–369, § 474(o)(8), substituted “under section 39” for “under section 46(b)”.

Subsec. (a)(7)(C). Pub. L. 98–443 substituted “Secretary of Transportation” for “Civil Aeronautics Board”.

Subsec. (c). Pub. L. 98–369, § 474(o)(9), substituted “subpart A, B, or D” for “subpart A”.

Subsec. (d). Pub. L. 98–369, § 431(b)(2), substituted “Increases in nonqualified nonrecourse financing” for “Property ceasing to be at risk” in heading.

Subsec. (d)(1). Pub. L. 98–369, § 431(b)(2), substituted provisions relating to increases in tax liability resulting from increases in nonqualified nonrecourse financing for provisions relating to increases in tax liability resulting from the taxpayer ceasing to be at risk with respect to certain property.

Subsec. (d)(2). Pub. L. 98–369, § 431(b)(2), substituted provisions that for purposes of par. (1), transfers of debt, or agreements to transfer, occurring more than one year after the initial borrowing shall not be treated as increasing nonqualified nonrecourse financing with respect to the taxpayer for provisions that for purposes of par. (1), such transfers (or agreements to transfer) by a qualified person to a nonqualified person would not cause the taxpayer to be treated as ceasing to be at risk.

Subsec. (d)(3)(A). Pub. L. 98–369, § 431(d)(4), substituted “increasing the amount of nonqualified nonrecourse financing (within the meaning of section 46(c)(8))” for “ceasing to be at risk”.

Subsec. (d)(3)(B)(i). Pub. L. 98–369, § 431(d)(5), struck out “other than a loan described in section 46(c)(8)(B)(ii)” after “section 46(c)(8)(F)(iv)”.

Subsec. (e). Pub. L. 98–369, § 421(b)(7), added subsec. (e).

1983

Subsec. (d)(2). Pub. L. 97–448, § 102(e)(3)(A), substituted “section 46(c)(8)(D)” and “section 46(c)(8)(B)” for “section 48(c)(8)(D)” and “section 48(c)(8)(B)”, respectively.

Subsec. (d)(3)(A). Pub. L. 97–448, § 102(e)(3)(B), substituted “section 46(c)(8)(F)” for “section 46(c)(8)(E)”.

1982

Subsec. (a)(5)(D). Pub. L. 97–248, § 208(a)(2)(B), inserted provision that if, prior to a disposition to which this subsection applies, any portion of any credit is not allowable with respect to any property by reason of section 168(i)(3), such portion shall be treated, for purposes of this subparagraph, as not having been used to reduce tax liability.

1981

Subsec. (a)(3)(D). Pub. L. 97–34, § 211(g)(2)(A), inserted provisions relating to disposition, cessation, or change in expected use described in paragraph (5).

Subsec. (a)(5), (6). Pub. L. 97–34, § 211(g)(1), (2)(B), added par. (5), redesignated former par. (5) as (6) and substituted “paragraph (1), (3), or (5)” for “paragraph (1) or (3)”. Former par. (6) redesignated (7).

Subsec. (a)(7), (8). Pub. L. 97–34, § 211(g)(1), (2)(C), redesignated former par. (6) as (7), substituted “paragraph (6)” for “paragraph (5)”, and redesignated former par. (7) as (8).

Subsec. (d). Pub. L. 97–34, § 211(f)(2), added subsec. (d).

1978

Subsec. (a)(4), (5). Pub. L. 95–618, § 241(b)(1), added par. (4), redesignated former par. (4) as (5) and substituted “paragraph (2) or (4)” for “paragraph (2)”.

Subsec. (a)(6)(B). Pub. L. 95–618, § 241(b)(3), substituted “paragraph (5)” for “paragraph (4)”.

Subsec. (b)(3). Pub. L. 95–600, § 317(a), added par. (3).

1976

Subsec. (a). Pub. L. 94–455, § 1906(b)(13)(A), struck out in introductory provision and in par. (3)(C) “or his delegate” after “Secretary”.

Subsec. (a)(7). Pub. L. 94–455, § 804(b), added par. (7).

1975

Subsec. (a)(3), (4). Pub. L. 94–12, § 302(b)(2)(A), (c)(1), added par. (3), redesignated former par. (3) as (4) and substituted “paragraph (1) or (3)” for “paragraph (1)”. A former par. (4), relating to increase or adjustment of tax where property is destroyed by casualty, etc., was repealed by Pub. L. 92–178.

Subsec. (a)(5), (6)(B). Pub. L. 94–12, § 302(c)(2), substituted “paragraph (4)” for “paragraph (3)”.

1971

Subsec. (a)(4). Pub. L. 92–178, § 107(a)(1), struck out par. (4) relating to property destroyed by casualty, etc.

Subsec. (a)(5). Pub. L. 92–178, § 107(b)(1), provided for the repeal of par. (5) with the repeal not to apply, however, in the case of certain replacement property. See section 107(b)(2) of Pub. L. 92–178, set out in the Effective Date of 1971 Amendment note below.

Subsec. (a)(6)(A). Pub. L. 92–178, § 102(c), substituted “3½ years” for “4 years”.

Subsec. (a)(6). Pub. L. 91–676 added par. (6).

1969

Subsec. (a)(5). Pub. L. 91–172, § 703(c)(2), added par. (5).

Subsec. (a)(4). Pub. L. 91–172, § 703(c)(1), inserted provision making subpars. (B) and (C) inapplicable to any casualty or theft occurring after April 18, 1969.

Statutory Notes and Related Subsidiaries

Effective Date of 2017 Amendment

Pub. L. 115–97, title I, § 13402(c), Dec. 22, 2017, 131 Stat. 2134, provided that:

“(1)
In general.—
Except as provided in paragraph (2), the amendments made by this section [amending this section and section 145 of this title] shall apply to amounts paid or incurred after December 31, 2017.
#
“(2)
Transition rule.—
In the case of qualified rehabilitation expenditures with respect to any building—
“(A)
owned or leased by the taxpayer during the entirety of the period after December 31, 2017, and
#
“(B)
with respect to which the 24-month period selected by the taxpayer under clause (i) of section 47(c)(1)(B) of the Internal Revenue Code (as amended by subsection (b)), or the 60-month period applicable under clause (ii) of such section, begins not later than 180 days after the date of the enactment of this Act [Dec. 22, 2017],
#
the amendments made by this section shall apply to such expenditures paid or incurred after the end of the taxable year in which the 24-month period, or the 60-month period, referred to in subparagraph (B) ends.”
#

Effective Date of 2008 Amendment

Pub. L. 110–289, div. C, title I, § 3025(b), July 30, 2008, 122 Stat. 2897, provided that: “The amendments made by this section [amending this section] shall apply to expenditures properly taken into account for periods after December 31, 2007.”

Effective Date of 1990 Amendment

Amendment by section 11813(a) of Pub. L. 101–508 applicable to property placed in service after Dec. 31, 1990, but not applicable to any transition property (as defined in section 49(e) of this title), any property with respect to which qualified progress expenditures were previously taken into account under section 46(d) of this title, and any property described in section 46(b)(2)(C) of this title, as such sections were in effect on Nov. 4, 1990, see section 11813(c) of Pub. L. 101–508, set out as a note under section 45K of this title.

Effective Date of 1988 Amendment

Amendment by 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.

Effective Date of 1986 Amendment

Pub. L. 99–514, title XV, § 1511(d), Oct. 22, 1986, 100 Stat. 2746, provided that: “The amendments made by this section [amending this section and sections 48, 167, 644, 852, 4497, 6214, 6332, 6343, 6601, 6602, 6611, 6621, 6654, 6655, and 7426 of this title and sections 1961 and 2411 of Title 28, Judiciary and Judicial Procedure, and enacting provisions set out as a note under section 6621 of this title] shall apply for purposes of determining interest for periods after December 31, 1986.”

Amendment by sections 1802(a)(5)(A) and 1844(b)(1), (2), (4) 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.

Effective Date of 1985 Amendment

Amendment by Pub. L. 99–121 applicable as if included in the amendments made by section 111 of the Tax Reform Act of 1984, Pub. L. 98–369, see section 105(b)(4) of Pub. L. 99–121, set out as a note under section 168 of this title, and section 111(g) of Pub. L. 98–369, set out as an Effective Date of 1984 Amendment note under section 168 of this title.

Effective Date of 1984 Amendment

Amendment by Pub. L. 98–443 effective Jan. 1, 1985, see section 9(v) of Pub. L. 98–443, set out as a note under section 5314 of Title 5, Government Organization and Employees.

Amendment by section 421(b)(7) of Pub. L. 98–369 applicable to transfers after July 18, 1984, in taxable years ending after such date, subject to election to have amendment apply to transfers after 1983 or to transfers pursuant to existing decrees, see section 421(d) of Pub. L. 98–369, set out as an Effective Date note under section 1041 of this title.

Amendment by section 431(b)(2), (d)(4), (5) of Pub. L. 98–369 applicable to property placed in service after July 18, 1984, in taxable years ending after such date, but not applicable to property to which subsec. (d) of this section and section 46(c)(8), (9) of this title, as enacted by section 211(f) of Pub. L. 97–34, do not apply, with the taxpayer having an option to elect retroactive application of amendment by Pub. L. 98–369, see section 431(e) of Pub. L. 98–369, set out as a note under section 46 of this title.

Amendment by section 474(o)(8), (9) 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.

Effective Date of 1983 Amendment

Amendment by 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.

Effective Date of 1982 Amendment

Amendment by Pub. L. 97–248 applicable to agreements entered into after July 1, 1982, or to property placed in service after that date, but not to transitional safe harbor lease property, nor to qualified leased property described in section 168(f)(8)(D)(v) of this title which is placed in service before Jan. 1, 1988, or is placed in service after such date pursuant to a binding contract or commitment entered into before April 1, 1983, and 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, see section 208(d)(1), (2)(A), (5) of Pub. L. 97–248, set out as a note under section 168 of this title.

Effective Date of 1981 Amendment

Amendment by section 211(g) of Pub. L. 97–34 applicable to property placed in service after Dec. 31, 1980, see section 211(i)(1) of Pub. L. 97–34, set out in a note under section 46 of this title.

Amendment by section 211(f)(2) of Pub. L. 97–34 not to apply to property placed in service by the taxpayer on or before Feb. 18, 1981, and property placed in service by the taxpayer after Feb. 18, 1981, where such property was acquired by the taxpayer pursuant to a binding contract entered into on or before that date, see section 211(i)(5) of Pub. L. 97–34, set out as a note under section 46 of this title.

Effective Date of 1978 Amendment

Pub. L. 95–600, title III, § 317(b), Nov. 6, 1978, 92 Stat. 2830, provided that: “The amendment made by subsection (a) [amending this section] shall apply to taxable years ending after March 31, 1976.”

Effective Date of 1976 Amendment

Amendment by section 804(b) of Pub. L. 94–455 applicable to taxable years beginning after Dec. 31, 1974, see section 804(e) of Pub. L. 94–455, set out as a note under section 48 of this title.

Effective Date of 1975 Amendment

Amendment by Pub. L. 94–12 applicable to taxable years ending after Dec. 31, 1974, see section 305(a) of Pub. L. 94–12, set out as a note under section 46 of this title.

Effective Date of 1971 Amendment

In redetermining qualified investment for purposes of subsec. (a) of this section in the case of any property which ceases to be section 38 property with respect to the taxpayer after Aug. 15, 1971, or which becomes public utility property after such date, section 46(c)(2) of this title as amended by section 102(a) of Pub. L. 92–178 as applicable, see section 102(d)(2) of Pub. L. 92–178, set out as a note under section 46 of this title.

Amendment by section 107(a)(1) of Pub. L. 92–178 applicable to casualties and thefts occurring after Aug. 15, 1971, see section 107(a)(2) of Pub. L. 92–178, set out as a note under section 46 of this title.

Pub. L. 92–178, title I, § 107(b)(2), Dec. 10, 1971, 85 Stat. 507, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: “The repeal made by paragraph (1) [repealing subsec. (a)(5) of this section] shall not apply if replacement property described in subparagraph (B) of such section 47(a)(5) is not property described in section 50 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954].”

Pub. L. 92–178, title I, § 102(d)(3), Dec. 10, 1971, 85 Stat. 500, provided that: “The amendment made by subsection (c) [amending this section] shall apply to leases executed after April 18, 1969.”

Pub. L. 91–676, § 2, Jan. 12, 1971, 84 Stat. 2060, provided that: “The amendment made by the first section of this Act [amending this section] shall apply to taxable years ending after April 18, 1969.”

Effective Date

Section applicable with respect to taxable years ending after Dec. 31, 1961, see section 2(h) of Pub. L. 87–834, set out as a note under section 46 of this title.

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 45K of this title.

Plan Amendments Not Required Until January 1, 1989

For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L. 99–514, as amended, set out as a note under section 401 of this title.

Clarification of Effect of 1984 Amendment on Investment Tax Credit

For provision that nothing in the amendments made by section 474(o) of Pub. L. 98–369, which amended this section, be construed as reducing the investment tax credit in taxable years beginning before Jan. 1, 1984, see section 475(c) of Pub. L. 98–369, set out as a note under section 46 of this title.

Transfer of Functions

Functions, powers, and duties of Federal Aviation Agency and of Administrator and other offices and officers thereof transferred by Pub. L. 89–670, Oct. 15, 1966, 80 Stat. 931, to Secretary of Transportation, with functions, powers, and duties of Secretary of Transportation pertaining to aviation safety to be exercised by Federal Aviation Administrator in Department of Transportation, see section 106 of Title 49, Transportation.

Credits

1962–2017 · 19 acts

1962Added Pub. L. 87–834, § 2(b), Oct. 16, 1962, 76 Stat. 966
1969amended Pub. L. 91–172, title VII, § 703(c), Dec. 30, 1969, 83 Stat. 666
1971Pub. L. 91–676, § 1, Jan. 12, 1971, 84 Stat. 2060
1971Pub. L. 92–178, title I, §§ 102(c), 107(a)(1), (b)(1), Dec. 10, 1971, 85 Stat. 500, 507
1975Mar. 29, 1975, Pub. L. 94–12, title III, § 302(b)(2)(A), (c)(1), (2), 89 Stat. 43, 44
1976Pub. L. 94–455, title VIII, § 804(b), title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1594, 1834
1978Pub. L. 95–600, title III, § 317(a), Nov. 6, 1978, 92 Stat. 2830
1978Pub. L. 95–618, title II, § 241(b), Nov. 9, 1978, 92 Stat. 3193
1981Pub. L. 97–34, title II, § 211(f)(2), (g), Aug. 13, 1981, 95 Stat. 231, 233
1982Pub. L. 97–248, title II, § 208(a)(2)(B), Sept. 3, 1982, 96 Stat. 435
1983Pub. L. 97–448, title I, § 102(e)(3), Jan. 12, 1983, 96 Stat. 2371
1984Pub. L. 98–369, div. A, title IV, §§ 421(b)(7), 431(b)(2), (d)(4), (5), 474(o)(8), (9), July 18, 1984, 98 Stat. 794, 807, 810, 836
1984Pub. L. 98–443, § 9(p), Oct. 4, 1984, 98 Stat. 1708
1985Pub. L. 99–121, title I, § 103(b)(6), Oct. 11, 1985, 99 Stat. 510
1986Pub. L. 99–514, title XV, § 1511(c)(2), title XVIII, §§ 1802(a)(5)(A), 1844(b)(1), (2), (4), Oct. 22, 1986, 100 Stat. 2744, 2788, 2855
1988Pub. L. 100–647, title I, §§ 1002(a)(18), (26)–(28), 1007(g)(3)(A), Nov. 10, 1988, 102 Stat. 3356, 3357, 3435
1990Pub. L. 101–508, title XI, § 11801(c)(8)(A), 11813(a), Nov. 5, 1990, 104 Stat. 1388–524, 1388–536
2008Pub. L. 110–289, div. C, title I, § 3025(a), July 30, 2008, 122 Stat. 2897
2017Pub. L. 115–97, title I, § 13402(a), (b)(1), Dec. 22, 2017, 131 Stat. 2134.

Show as published

(Added Pub. L. 87–834, § 2(b), Oct. 16, 1962, 76 Stat. 966; amended Pub. L. 91–172, title VII, § 703(c), Dec. 30, 1969, 83 Stat. 666; Pub. L. 91–676, § 1, Jan. 12, 1971, 84 Stat. 2060; Pub. L. 92–178, title I, §§ 102(c), 107(a)(1), (b)(1), Dec. 10, 1971, 85 Stat. 500, 507; Mar. 29, 1975, Pub. L. 94–12, title III, § 302(b)(2)(A), (c)(1), (2), 89 Stat. 43, 44; Pub. L. 94–455, title VIII, § 804(b), title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1594, 1834; Pub. L. 95–600, title III, § 317(a), Nov. 6, 1978, 92 Stat. 2830; Pub. L. 95–618, title II, § 241(b), Nov. 9, 1978, 92 Stat. 3193; Pub. L. 97–34, title II, § 211(f)(2), (g), Aug. 13, 1981, 95 Stat. 231, 233; Pub. L. 97–248, title II, § 208(a)(2)(B), Sept. 3, 1982, 96 Stat. 435; Pub. L. 97–448, title I, § 102(e)(3), Jan. 12, 1983, 96 Stat. 2371; Pub. L. 98–369, div. A, title IV, §§ 421(b)(7), 431(b)(2), (d)(4), (5), 474(o)(8), (9), July 18, 1984, 98 Stat. 794, 807, 810, 836; Pub. L. 98–443, § 9(p), Oct. 4, 1984, 98 Stat. 1708; Pub. L. 99–121, title I, § 103(b)(6), Oct. 11, 1985, 99 Stat. 510; Pub. L. 99–514, title XV, § 1511(c)(2), title XVIII, §§ 1802(a)(5)(A), 1844(b)(1), (2), (4), Oct. 22, 1986, 100 Stat. 2744, 2788, 2855; Pub. L. 100–647, title I, §§ 1002(a)(18), (26)–(28), 1007(g)(3)(A), Nov. 10, 1988, 102 Stat. 3356, 3357, 3435; Pub. L. 101–508, title XI, § 11801(c)(8)(A), 11813(a), Nov. 5, 1990, 104 Stat. 1388–524, 1388–536; Pub. L. 110–289, div. C, title I, § 3025(a), July 30, 2008, 122 Stat. 2897; Pub. L. 115–97, title I, § 13402(a), (b)(1), Dec. 22, 2017, 131 Stat. 2134.)