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100 STAT. 2139

amount realized by the lessor under the agreement upon sale or other disposition of such property. "(B) SPECIAL RULE FOR LESSEE DEALERS.—The term 'terminal rental adjustment clause' also includes a provision of an agreement which requires a lessee who is a dealer in motor vehicles to purchase the motor vehicle for a predetermined price and then resell such vehicle where such provision achieves substantially the same results as a provision described in subparagraph (A)." (d) TECHNICAL AND CONFORMING AMENDMENTS.— (1) SECTION 167.—Paragraph (4) of section 167(m) (relating to

termination of class lives) is amended to read as follows: "(4) TERMINATION.—This subsection shall not apply with respect to any property to which section 168 applies." (2) SECTION 178.—

(A) Section 178 is amended to read as follows: "SEC. 178. AMORTIZATION OF COST OF ACQUIRING A LEASE.

"(a) GENERAL RULE.—In determining the amount of the deduction allowable to a lessee of a lease for any taxable year for amortization under section 167, 169, 179, 185, 190, 193, or 194 in respect of any cost of acquiring the lease, the term of the lease shall be treated as including all renewal options (and any other period for which the parties reasonably expect the lease to be renewed) if less than 75 percent of such cost is attributable to the period of the term of the lease remaining on the date of its acquisition. "Ob) CERTAIN PERIODS EXCLUDED.—For purposes of subsection (a), in determining the period of the term of the lease remaining on the date of acquisition, there shall not be taken into account any period for which the lease may subsequently be renewed, extended, or continued pursuant to an option exercisable by the lessee." (B) The table of sections for part VI of subchapter B of chapter 1 is amended by striking out the item relating to section 178 and inserting in lieu thereof the following new item: "Sec. 178. Amortization of cost of acquiring a lease." (3) SECTION 179.—Paragraph (8) of section 179(d) is amended to

read as follows: "(8) TREATMENT OF PARTNERSHIPS AND S CORPORATIONS.—In

the case of a partnership, the limitations of subsection (b) shall apply with respect to the partnership and with respect to each partner. A similar rule shall apply in the case of an S corporation and its shareholders." (4) SECTION 280F.—

(A) Paragraph (2) of section 280F(a) (relating to depreciation) is amended— (i) by striking out clauses (i) and (ii) of subparagraph (A) thereof and inserting in lieu thereof the following new clauses: "(i) $2,560 for the 1st taxable year in the recovery period, "(ii) $4,100 for the 2nd taxable year in the recovery period, "(iii) $2,450 for the 3rd taxable year in the recovery period, and

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PUBLIC LAW 99-514—OCT. 22, 1986 recovery period.", and (ii) by striking out "$4,800" each place it appears in subparagraph (B) thereof and inserting in lieu thereof "$1,475". (B) Subparagraph (A) of section 280F(b)(3) (relating to recapture) is amended by striking out "the straight line method over the earnings and profits life" and inserting in lieu thereof "section 168(g) (relating to alternative depreciation system)". (C) Paragraph (4) of section 280FOt>) (relating to definitions) is amended to read as follows: "(4) PROPERTY PREDOMINANTLY USED IN QUALIFIED BUSINESS
 * (iv) $1,475 for each succeeding taxable year in the

USE.—For purposes of this subsection, property shall be treated as predominantly used in a qualified business use for any taxable year if the business use percentage for such taxable year exceeds 50 percent." (D) Paragraph (4) of section 280F(c) is amended by striking out "section 168(j)(6)(B)" and inserting in lieu thereof "section 168(i)(3)(A)". (E) Paragraph (1) of section 280F(d) is amended by striking out "recovery deduction" and inserting in lieu thereof "depreciation deduction". (F) Paragraph (2) of section 280F(d) is amended— (i) by striking out "recovery deduction" and inserting in lieu thereof "depreciation deduction", and (ii) by striking out "use described in section 168(c)(l) (defining recovery property)" and inserting in lieu thereof "use in a trade or business (including the holding for the production of income)". (G) Clause (iv) of section 280F(d)(4)(A) is amended by striking out "section 168(j)(5)(D)" and inserting in lieu thereof "section 168(i)(2)(B)'\ (H) Paragraph (8) of section 280F(d) (defining unrecovered basis) is amended to read as follows: "(8) UNRECOVERED BASIS.—For purposes of subsection (a)(2), the term 'unrecovered basis' means the adjusted basis of the passenger automobile determined after the application of subsection (a) and as if all use during the recovery period were use in a trade or business (including the holding of property for the production of income)." (I) Paragraph (10) of section 280F(d) is amended by striking out ", notwithstanding any regulations prescribed under section 168(fK7),". (J) Paragraph (2) of section 280FOt>) is amended by striking out "the straight line method over the earnings and profits life for such property" and inserting in lieu thereof 'section 168(g) (relating to alternative depreciation system)". (K) Subsections (a) and (b) of section 280F are amended by striking out "recovery deduction" each place it appears and inserting in lieu thereof "depreciation deduction'. (5) SECTION 291.—

(A) Subparagraph (A) of section 291(a)(l) is amended by striking out "or section 1245 recovery property". (B) Paragraph (1) of section 291(c) is amended to read as follows:

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 PUBLIC LAW 99-514—OCT. 22, 1986 "(1)

ACCELERATED COST RECOVERY DEDUCTION.—Section

100 STAT. 2141 168

shall apply with respect to that portion of the basis of any property not taken into account under section 169 by reason of subsection (a)(5)." (C) Section 291(e)(2) is amended by striking out ", 'section 1245 recovery property'," and ", section 1245(a)(5),". (6) SECTION 312.—Paragraph (4) of section 312(k) is amended by striking out the last sentence. (7) SECTION 465.— (A) Subparagraph (C) of section 46503)(3) is amended to read as follows: "(C) RELATED PERSON.—For purposes of this subsection, a person (hereinafter in this paragraph referred to as the 'related person') is related to any person if— "(i) the related person bears a relationship to such person specified in section 267(b) or section 707(b)(1), or "(ii) the related person and such person are engaged in trades or business under common control (within the meaning of subsections (a) and (b) of section 52). For purposes of clause (i), in applying section 267(b) or 7070t>Xl), '10 percent' shall be substituted for '50 percent'." (B) Section 46(c)(8)(D)(v) is amended by striking out "section 168(e)(4)" and inserting in lieu thereof "section 465(b)(3)(C)". (C) Section 4162(c)(3) is amended by striking out "section 168(e)(4)(D)" and inserting in lieu thereof "section 465(b)(3)(C)". (8) SECTION 467.— (A) Paragraph (3) of section 467(e) is amended to read as follows: "(3) STATUTORY RECOVERY PERIOD.— "(A) IN GENERAL.— The statutory recovery "In the case of: period is: 3-year property 3 years 5-year property 5 years 7-year property 7 years 10-year property 10 years 15-year and 20-year property 15 years Residential rental property and nonresidential real property 19 years. "(B) SPECIAL RULE FOR PROPERTY NOT DEPRECIABLE UNDER

SECTION 168.—In the case of property to which section 168 does not apply, subparagraph (A) shall be applied as if section 168 applies to such property." (B) Paragraph (5) of section 467(e) (defining related person) is amended by striking out "section 168(e)(4)(D)" and inserting in lieu thereof "section 4650t))(3)(C)". (9) SECTION 5 14.—Subclause (II) of section 514(c)(9)(B)(vi) (relating to real property acquired by a qualified organization) is amended by striking out "section 168(j)(9)" and inserting in lieu thereof "section 168(h)(6)". (10) SECTION 751.—Subsection (c) of section 751 (defining unrealized receivables) is amended by striking out "section 1245 recovery property (as defined in section 1245(a)(5)),". (11) SECTION 1245.—

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PUBLIC LAW 99-514—OCT. 22, 1986 (A) Paragraph (1) of section 1245(a) (relating to gain from dispositions of certain depreciable property) is amended by striking out "during a taxable year beginning after December 31, 1962, or section 1245 recovery property is disposed of after December 31, 1980,". (B) Paragraph (2) of section 1245(a) (defining recomputed basis) is amended to read as follows: "(2) RECOMPUTED BASIS.—For purposes of this section— "(A) IN GENERAL.—The term 'recomputed basis' means, with respect to any property, its adjusted basis recomputed by adding thereto all adjustments reflected in such adjusted basis on account of deductions (whether in respect of the same or other property) allowed or allowable to the taxpayer or to any other person for depreciation or amortization. "(B)

TAXPAYER MAY ESTABLISH AMOUNT ALLOWED.—For

purposes of subparagraph (A), if the taxpayer can establish by adequate records or other sufficient evidence that the amount allowed for depreciation or amortization for any period was less than the amount allowable, the amount added for such period shall be the amount allowed. "(C)

CERTAIN DEDUCTIONS TREATED AS AMORTIZATION.—

Any deduction allowable under section 179,190, or 193 shall be treated as if it were a deduction allowable for amortization." (C) Paragraph (3) of section 1245(a) (defining section 1245 property) is amended by striking out subparagraph (C) and by redesignating subparagraphs (D), (E), and (F) as subparagraphs (C), (D), and (E), respectively. (D) Subsection (a) of section 1245 is amended by striking out paragraphs (5) and (6). (12) SECTION 4162.—Paragraph (3) of section 4162(c) (defining related person) is amended by striking out "section 168(e)(4)(D)" and inserting in lieu thereof "section 4650t))(3)(C)". (13) SECTION 6111.—Clause (ii) of section 6111(c)(3)(B) (relating to certain borrowed amounts excluded) is amended by striking out "section 168(e)(4)" and inserting in lieu thereof "section 465(b)(3)(C)". (14) SECTION 7701.— (A) Subparagraph (A) of section 7701(e)(4) is amended by striking out "section 168(j)" and inserting in lieu thereof "section 168(h)". (B) Paragraph (5) of section 7701(e) (relating to exception for certain low-income housing) is amended by striking out "low-income housing (section 168(c)(2)(F))" and inserting in lieu thereof "property described in clause (i), (ii), (iii), or (iv) of section 1250(a)(l)(B) (relating to low-income housing)". SEC. 202. EXPENSING OF DEPRECIABLE ASSETS.

(a) LIMITATIONS ON EXPENSING.—Subsection (h) of section 179

(relating o election to expense certain depreciable assets) is amended to read as follows: "(b) LIMITATIONS.— "(1) DOLLAR LIMITATION.—The

aggregate cost which may be taken into account under subsection (a) for any taxable year shall not exceed $10,000.

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 PUBLIC LAW 99-514—OCT. 22, 1986 "(2) REDUCTION IN LIMITATION.—The graph (1) for any taxable year shall be zero) by the amount by which the cost placed in service during such taxable

100 STAT. 2143

limitation under parareduced (but not below of section 179 property year exceeds $200,000.

"(3) LIMITATION BASED ON INCOME FROM TRADE OR BUSINESS.—

"(A) IN GENERAL.—The aggregate cost of section 179 property taken into account under subsection (a) for any taxable year shall not exceed the aggregate amount of taxable income of the taxpayer for such taxable year which is derived from the active conduct by the taxpayer of any trade or business during such taxable year. "(B) CARRYOVER OF UNUSED COST.—The amount of any cost which (but for subparagraph (A)) would have been allowed as a deduction under subsection (a) for any taxable year shall be carried to the succeeding taxable year and added to the amount allowable as a deduction under subsection (a) for such succeeding taxable year. "(C) COMPUTATION OF TAXABLE INCOME.—For purposes of

this paragraph, taxable income derived from the conduct of a trade or business shall be computed without regard to the cost of any section 179 property. "(4) MARRIED INDIVIDUALS FIUNG SEPARATELY.—In the case of a husband and wife filing separate returns for the taxable year— "(A) such individuals shall be treated as 1 tgixpayer for purposes of paragraphs (1) and (2), and "(B) unless such individuals elect otherwise, 50 percent of the cost which may be taken into account under subsection (a) for such taxable year (before application of paragraph (3)) shall be allocated to each such individual." (b) SECTION 179 PROPERTY.—Paragraph (1) of section 179(d) (defining section 179 property) is amended by inserting "in the active conduct o f after "purchase for use". (c) RECAPTURE.—Section 179(d)(10) (relating to recapture in certain cases) is amended by striking out all that follows "at any time" and inserting in lieu thereof a period. SEC. 203. EFFECTIVE DATES; GENERAL TRANSITIONAL RULES. (a) GENERAL EFFECTIVE DATES.— (1) SECTION 201.—

(A) IN GENERAL.—Except as provided in this section, section 204, and section 251(d), the amendments made by section 201 shall apply to property placed in service after December 31, 1986, in taxable years ending after such date. (B) ELECTION TO HAVE AMENDMENTS MADE BY SECTION 201

APPLY.—A taxpayer may elect (at such time and in such manner as the Secretary of the Treasury or his delegate may prescribe) to have the amendments made by section 201 apply to any property placed in service after July 31, 1986, and before January 1, 1987. (2) SECTION 202.—The amendments made by section 202 shall apply to property placed in service after December 31, 1986, in taxable years ending after such date. (b) GENERAL TRANSITIONAL RULE.—

(1) IN GENERAL.—The amendments made by section 201 shall not apply to—

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PUBLIC LAW 99-514—OCT. 22, 1986 (A) any property which is constructed, reconstructed, or acquired by the taxpayer pursuant to a written contract which was binding on March 1, 1986, (B) property which is constructed or reconstructed by the taxpayer if— (i) the lesser of (I) $1,000,000, or (II) 5 percent of the cost of such property has been incurred or committed by March 1, 1986, and (ii) the construction or reconstruction of such property began by such date, or (C) an equipped building or plant facility if construction has commenced as of March 1, 1986, pursuant to a written specific plan and more than one-half of the cost of such equipped building or facility has been incurred or committed by such date. (2) REQUIREMENT THAT CERTAIN PROPERTY BE PLACED IN SERVICE BEFORE CERTAIN DATE.—

(A) IN GENERAL.—Paragraph (1) and section 204(a) (other than paragraph (8) or (12) thereof) shall not apply to any property unless such property has a class life of at legist 7 years and is placed in service before the applicable date determined under the following table: In the case of property with a class life of: At least 7 but less than 20 years 20 years or more

The applicable date is: January 1, 1989 January 1, 1991.

(B) RESIDENTIAL RENTAL AND NONRESIDENTIAL REAL PROP-

ERTY.—In the case of residential rental property and nonresidential real property, the applicable date is January 1, 1991. (C) CLASS LIVES.—For purposes of subparagraph (A)—

(i) the class life of property to which section 168(g)(3)(B) of the Internal Revenue Code of 1986 (as added by section 201) shall be the class life in effect on January 1, 1986, except that computer-based telephone central office switching equipment described in section 168(e)(3)(B)(iii) of such Code shall be treated as having a class life of 6 years, (ii) property described in section 204(a) shall be treated as having a class life of 20 years, and (iii) property with no class life shall be treated as having a class life of 12 years. (D) SUBSTITUTION OF APPLICABLE DATES.—If any provision

of this Act substitutes a date for an applicable date, this paragraph shall be applied by using such date. (3)

PROPERTY

QUALIFIES

IF SOLD

AND LEASED

BACK

IN 3

MONTHS.—Property shall be treated as meeting the requirements of paragraphs (1) and (2) or section 204(a) with respect to any taxpayer if such property is acquired by the taxpayer from a person— (A) in whose hands such property met the requirements of paragraphs (1) and (2) or section 204(a), or (B) who placed the property in service before January 1, 1987, and such property is leased back by the taxpayer to such person not later than the earlier of the applicable date under para-

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graph (2) or the day which is 3 months after such property was placed in service. (4) PLANT FACILITY.—For purposes of paragraph (1), the term "plant facility" means a facility which does not include any building (or with respect to which buildings constitute an insignificant portion) and which is— (A) a self-contained single operating unit or processing operation, (B) located on a single site, and (C) identified as a single unitary project as of March 1, 1986. (c) PROPERTY FINANCED WITH TAX-EXEMPT BONDS.—

(1) IN GENERAL.—Subparagraph (C) of section 168(g)(l) of the Internal Revenue Code of 1986 (as added by this Act) shall apply to property placed in service after December 31, 1986, in taxable years ending after such date, to the extent such property is financed by the proceeds of an obligation (including a refunding obligation) issued after March 1, 1986. (2) EXCEPTIONS.— (A) CONSTRUCTION OR BINDING AGREEMENTS.—Subpara-

graph (C) of section 168(g)(1) of such Code (as so added) shall not apply to obligations with respect to a facility— (i)(I) the original use of which commences with the taxpayer, and the construction, reconstruction, or rehabilitation of which began before March 2, 1986, and was completed on or after such date, (II) with respect to which a binding contract to incur significant expenditures for construction, reconstruction, or rehabilitation was entered into before March 2, 1986, and some of such expenditures are incurred on or after such date, or (III) acquired on or after March 2, 1986, pursuant to a binding contract entered into before such date, and (ii) described in an inducement resolution or other comparable preliminary approval adopted by the issuing authority (or by a voter referendum) before March 2, 1986. (B) REFUNDING.—

(i) IN GENERAL.—Except as provided in clause (ii), in the case of property placed in service after December 31, 1986, which is financed by the proceeds of an obligation which is issued solely to refund another obligation which was issued before March 2, 1986, subparagraph (C) of section 168(g)(1) of such Code (as so added) shall apply only with respect to an amount equal to the basis in such property which has not been recovered before the date such refunded obligation is issued. (ii) SIGNIFICANT EXPENDITURES.—In the case of facilities the original use of which commences with the taxpayer and with respect to which significant expenditures are made before January 1, 1987, subparagraph (C) of section 168(g)(1) of such Code (as so added) shall not apply with respect to such facilities to the extent such facilities are financed by the proceeds of an obligation issued solely to refund another obligation which was issued before March 2, 1986.

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PUBLIC LAW 99-514—OCT. 22, 1986

(C) FACILITIES.—In the case of an inducement resolution or other comparable preliminary approval adopted by an issuing authority before March 2, 1986, for purposes of subparagraphs (A) and (B)(ii) with respect to obligations described in such resolution, the term "facilities" means the facilities described in such resolution. (D) SIGNIFICANT EXPENDITURES.—For purposes of this paragraph, the term "significant expenditures" means expenditures greater than 10 percent of the reasonably anticipated cost of the construction, reconstruction, or rehabilitation of the facility involved. (d) MID-QUARTER CONVENTION.—In the case of any taxable year in which property to which the amendments made by section 201 do not apply is placed in service, such property shall be taken into account in determining whether section 168(d)(3) of the Internal Revenue Code of 1986 (as added by section 201) applies for such taxable year to property to which such amendments apply. (e) NORMAUZATION REQUIREMENTS.—

(1) IN GENERAL.—A normalization method of accounting shall not be treated as being used with respect to any public utility property for purposes of section 167 or 168 of the Internal Revenue Code of 1986 if the taxpayer, in computing its cost of service for ratemaking purposes and reflecting operating results in its regulated books of account, reduces the excess tax reserve more rapidly or to a greater extent than such reserve would be reduced under the average rate assumption method. (2) DEFINITIONS.—For purposes of this subsection— (A) EXCESS TAX RESERVE.—The term "excess tax reserve" means the excess of— (i) the reserve for deferred taxes (as described in section 167(l)(3)(G)(ii) or 168(e)(3)(B)(ii) of the Internal Revenue Code of 1954 as in effect on the day before the date of the enactment of this Act), over (ii) the amount which would be the balance in such reserve if the amount of such reserve were determined by assuming that the corporate rate reductions provided in this Act were in effect for all prior periods. (B) AVERAGE RATE ASSUMPTION METHOD.—The average

rate assumption method is the method under which the excess in the reserve for deferred taxes is reduced over the remaining lives of the property as used in its regulated books of account which gave rise to the reserve for deferred taxes. Under such method, if timing differences for the property reverse, the amount of the adjustment to the reserve for the deferred taxes is calculated by multiplying— (i) the ratio of the aggregate deferred taxes for the property to the aggregate timing differences for the property as of the beginning of the period in question, by (ii) the amount of the timing differences which reverse during such period. SEC. 204. ADDITIONAL TRANSITIONAL RULES. (a) OTHER TRANSITIONAL RULES.— (1) URBAN RENOVATION PROJECTS.—

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100 STAT. 2147

(A) IN GENERAL.—The amendments made by section 201 shall not apply to any property which is an integral part of any qualified urban renovation project. (B) QUALIFIED URBAN RENOVATION PROJECT.—For purposes of subparagraph (A), the term "qualified urban renovation project" means any project— (i) described in subparagraph (C), (D), (E), or (G) which before March 1, 1986, was publicly announced by a political subdivision of a State for a renovation of an urban area within its jurisdiction, (ii) described in subparagraph (C), (D) or (G) which before March 1, 1986, was identified as a single unitary project in the internal financing plans of the primary developer of the project, and (iii) described in subparagraph (C) or (D), which is not substantially modified on or after March 1, 1986. (C) PROJECT WHERE AGREEMENT O N DECEMBER 1 9, I 9 8 4. — A

project is described in this subparagraph if— (i) a political subdivision granted on July 11, 1985, development rights to the primary developer-purchaser of such project, and (ii) such project was the subject of a development agreement between a political subdivision and a bridge authority on December 19, 1984. For purposes of this subparagraph, subsection (b)(2) shall be applied by substituting "January 1, 1994" for "January 1, 1991". (D) CERTAIN ADDITIONAL PROJECTS.—A project is described

in this subparagraph if it is described in any of the following clauses of this subparagraph and the primary developer of all such projects is the same person: (i) A project is described in this clause if the development agreement with respect thereto was entered into during April 1984 and the estimated cost of the project is approximately $194,000,000. (ii) A project is described in this clause if the development agreement with respect thereto was entered into during May 1984 and the estimated cost of the project is approximately $190,000,000. (iii) A project is described in this clause if the project has an estimated cost of approximately $92,000,000 and at least $7,000,000 was spent before September 26, 1985, with respect to such project. (iv) A project is described in this clause if the estimated project cost is approximately $39,000,000 and at least $2,000,000 of construction cost for such project were incurred before September 26, 1985. (v) A project is described in this clause if the development agreement with respect thereto was entered into before September 26, 1985, and the estimated cost of the project is approximately $150,000,000. (vi) A project is described in this clause if the board of directors of the primary developer approved such project in December 1982, and the estimated cost of such project is approximately $107,000,000. (vii) A project is described in this clause if the board of directors of the primary developer approved such

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 100 STAT. 2148

PUBLIC LAW 99-514—OCT. 22, 1986 project in December 1982, and the estimated cost of such project is approximately $59,000,000. (viii) A project is described in this clause if the Board of Directors of the primary developer approved such project in December 1983, following selection of the developer by a city council on September 26, 1983, and the estimated cost of such project is approximately $107,000,000." (E)

PROJECT WHERE PLAN CONFIRMED ON OCTOBER

4,

1984.—A project is described in this subparagraph if— (i) a State or an agency, instrumentality, or political subdivision thereof approved the filing of a general project plan on June 18, 1981, and on October 4, 1984, a State or an agency, instrumentality, or political subdivision thereof confirmed such plan, (ii) the project plan as confirmed on October 4, 1984, included construction or renovation of office buildings, a hotel, a trade mart, theaters, and a subway complex, and (iii) significant segments of such project were the sulbject of one or more conditional designations granted by a State or an agency, instrumentality, or political subdivision thereof to one or more developers before January 1, 1985. The preceding sentence shall apply with respect to a property only to the extent that a building on such property site was identified as part of the project plan before September 26, 1985, and only to the extent that the size of the building on such property site was not substantially increased by reason of a modification to the project plan with respect to such property on or after such date. For purposes of this subparagraph, subsection (b)(2) shall be applied by substituting "January 1, 1998" for "January 1, 1991". (F) A project is described in this paragraph if it is a sports and entertainment facility which— (i) is to be used by both a National Hockey League team and a National Basketball Association team; (ii) is to be constructed on a platform utilizing air rights over land acquired by a State authority and identified as site B in a report dated May 30, 1984, prepared for a State urban development corporation; and (iii) is eligible for real property tax, and power and energy benefits pursuant to the provisions of State legislation approved and effective July 7, 1982, or (iv) the mixed-use development is— (I) to be constructed above a public railroad station utilized by the national railroad passenger corporation and commuter railroads serving two States; and (II) will include the reconstruction of such station so as to make it a more efficient transportation center and to better integrate the station with the development above, such reconstruction plans to be prepared in cooperation with a State transportation authority.

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100 STAT. 2149

For purposes of this subparagraph, subsection (b)i2) shall be applied by substituting "January 1, 1993" for the applicable date that would otherwise apply. (G) A project is described in this subparagraph if— (i) an inducement resolution was passed on March 9, 1984, for the issuance of obligations with respect to such project, (ii) such resolution was extended by resolutions passed on August 14, 1984, April 2, 1985, August 13, 1985, and July 8, 1986, (iii) an application was submitted on January 31, 1984, for an Urban Development Action Grant with respect to such project, and (iv) an Urban Development Action Grant was preliminarily approved for all or part of such project on July 3, 1986. (H) A project is described in this subparagraph if it is a redevelopment project, with respect to which $10,000,000 in industrial revenue bonds were approved by a State Development Finance Authority on January 15, 1986, a village transferred approximately $4,000,000 of bond volume authority to the State in June 1986, and a binding Redevelopment Agreement was executed between a city and the development team on July 1, 1986. (2)

CERTAIN PROJECTS GRANTED FERC LICENSES, ETC.—The

amendments made by section 201 shall not apply to any property which is part of a project— (A) which is certified by the Federal Energy Regulatory Commission before March 2, 1986, as a qualifying facility for purposes of the Public Utility Regulatory Policies Act of 1978, (B) which was granted before March 2, 1986, a hydroelectric license for such project by the Federal Energy Regulatory Commission, or (C) which is a hydroelectric project of less than 80 megawatts that filed an application for a permit, exemption, or license with the Federal Energy Regulatory Commission before March 2, 1986. (3) SUPPLY OR SERVICE CONTRACTS.—The amendments made by section 201 shall not apply to any property which is readily identifiable with and necessary to carry out a written supply or service contract, or agreement to lease, which was binding on March 1, 1986. (4) PROPERTY TREATED UNDER PRIOR TAX ACTS.—The amendments made by section 201 shall not apply to property described in section 12(c)(2) or 31(g)(5) and 31(g)(17)g) of the Tax Reform Act of 1984, to property described in section 209(d)(1)(B) of the Tax Equity and Fiscal Responsibility Act of 1982, as amended by the Tax Reform Act of 1984 and to property described in section 216(b)(3) of the Tax Equity and Fiscal Responsibility Act of 1982. (5) SPECIAL RULES FOR PROPERTY INCLUDED IN MASTER PLANS OF INTEGRATED PROJECTS.—The amendments made by section 201

shall not apply to any property placed in service pursuant to a master plan which is clearly identifiable as of March 1, 1986, for any project described in any of the following subparagraphs of this paragraph: (A) A project is described in this subparagraph if—

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 100 STAT. 2150

PUBLIC LAW 99-514—OCT. 22, 1986 (i) the project involves production platforms for offshore drilling, oil and gas pipeline to shore, process and storage facilities, and a marine terminal, and (ii) at least $900,000,000 of the costs of such project were incurred Isefore September 26, 1985. (B) A project is described in this subparagraph if— (i) such project involves a fiber optic network of at least 20,000 miles, and (ii) before September 26, 1985, construction commenced pursuant to the master plan and at least $85,000,000 was spent on construction. (C) A project is described in this subparagraph if— (i) such project passes through at least 10 States and involves intercity communication links (including one or more repeater sites, terminals and junction stations for microwave transmissions, regenerators or fiber optics and other related equipment), (ii) the lesser of $150,000,000 or 5 percent of the total project cost has been expended, incurred, or committed before March 2, 1986, by one or more taxpayers each of which is a member of the same affiliated group (as defined in section 1504(a)), and (iii) such project consists of a comprehensive plan for meeting network capacity requirements as encompassed within either: (I) a November 5, 1985, presentation made to and accepted by the Chairman of the Board and the president of the taxpayer, or (II) the approvals by the Board of Directors of the parent company of the taxpayer on May 3, 1985, and September 22, 1985, and of the executive committee of said board on December 23, 1985. (D) A project is described in this subparagraph if— (i) such project is part of a flat rolled product modernization plan which was initially presented to the Board of Directors of the taxpayer on July 8, 1983, (ii) such program will be carried out at 3 locations, and (iii) such project will involve a total estimated minimum capital cost of at least $250,000,000. (E) A project is described in this subparagraph if the project is being carried out by a corporation engaged in the production of paint, chemicals, fiberglass, and glass, and if— (i) the project includes a production line which applies a thin coating to glass in the manufacture of energy efficient residential products, if approved by the management committee of the corporation on January 29, 1986, (ii) the project is a turbogenerator which was approved by the president of such corporation and at least $1,000,000 of the cost of which was incurred or committed before such date, (iii) the project is a waste-to-energy disposal system which was initially approved by the management committee of the corporation on March 29, 1982, and at

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Page:United States Statutes at Large Volume 100 Part 3.djvu/343

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2151

least $5,000,000 of the cost of which was incurred before September 26, 1985, (iv) the project, which involves the expansion of an existing service facility and the addition of new lab facilities needed to accommodate topcoat and undercoat production needs of a nearby automotive assembly plant, was approved by the corporation's management committee on March 5, 1986, or (v) the project is part of a facility to consolidate and modernize the silica production of such corporation and the project was approved by the president of such corporation on August 19, 1985. (F) A project is described in this subparagraph if— (i) such project involves a port terminal and oil pipeline extending generally from the area of Los Angeles, California, to the area of Midland, Texas, and (ii) before September 26, 1985, there is a binding contract for dredging and channeling with respect thereto and a management contract with a construction manager for such project. (G) A project is described in this subparagraph if— (i) the project is a newspaper printing and distribution plant project with respect to which a contract for the purchase of 8 printing press units and related equipment to be installed in a single press line was entered into on January 8, 1985, and (ii) the contract price for such units and equipment represents at least 50 percent of the total cost of such project. (H) A project is described in this subparagraph if it is the second phase of a project involving direct current transmission lines spanning approximately 190 miles from the United States-Canadian border to Ayer, Massachusetts, alternating current transmission lines in Massachusetts from Ayers to Millbury to West Medway, DC-AC converted terminals to Monroe, New Hampshire, and Ayer, Massachusetts, and other related equipment and facilities. (I) A project is described in this subparagraph if it involves not more than two natural gas-fired combined cycle electric generating units each having a net electrical capability of approximately 233 megawatts, and a sales contract for approximately one-half of the output of the 1st unit was entered into in December 1985. (J) A project is described in this subparagraph if— (i) the project involves an automobile manufacturing facility (including equipment and incidental appurtenances) to be located in the United States, and (ii) either— (I) the project was the subject of a memorandum of understanding between 2 automobile manufacturers that was signed before September 25, 1985, the automobile manufacturing facility (including equipment and incidental appurtenances) will involve a total estimated cost of approximately $750,000,000, and will have an annual production capacity of approximately 240,000 vehicles or

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Page:United States Statutes at Large Volume 100 Part 3.djvu/344

 100 STAT. 2152

PUBLIC LAW 99-514—OCT. 22, 1986 (II) the Board of Directors of an automobile manufacturer approved a written plan for the conversion of an existing facility to produce a new model of a vehicle currently not produced in the United States, such facility will be placed in service by July 1, 1987, and such Board action occurred in July 1985, with respect to a $523,000,000 expenditure, in June 1983, with respect to a $475,000,000 expenditure, or in July 1984, with respect to a $312,000,000 expenditure. (K) A project is described in this subparagraph if either— (i) the project involves a joint venture between a utility company and a paper company for a super calendar paper mill, and at least $50,000,000 were incurred or committed with respect to such project before March 1, 1986, or (ii) the project involves a paper mill for the manufacture of newsprint (including a cogeneration facility) is generally based on a written design and feasibility study that was completed on December 15, 1981, and will be placed in service before January 1, 1991, or (iii) the project is undertaken by a Maine corporation and involves the modernization of pulp and paper mills in Millinocket and/or East Millinocket, Maine, or (iv) the project involves the installation of a paper machine for production of coated publication papers, the modernization of a pulp mill, and the installation of machinery and equipment with respect to related processes, as of December 31, 1985, in excess of $50,000,000 was incurred for the project, as of July 1986, in excess of $150,000,000 was incurred for the project, and the project is located in Pine Bluff, Arkansas, or (v) involves property of a type described in ADR classes 26.1, 26.2, 25, 00.3 and 00.4 included in a paper plant which will manufacture and distribute tissue, towel or napkin products; is located in Effingham County, Georgia; and is generally based upon a written General Description which was submitted to the Georgia Department of Revenue on or about June 13, 1985. (L) A project is described in this subparagraph if— (i) a letter of intent with respect to such project was executed on June 4, 1985, and (ii) a 5-percent downpayment was made in connection with such project for 2 10-unit press lines and related equipment. (M) A project is described in this subparagraph if— (i) the project involves the retrofit of ammonia plants, (ii) as of March 1, 1986, more than $390,000 had been expended for engineering and equipment, and (iii) more than $170,000 was expensed in 1985 as a portion of preliminary engineering expense. (N) A project is described in this subparagraph if the project involves bulkhead intermodal flat cars which are placed in service before January 1, 1987, and either—

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Page:United States Statutes at Large Volume 100 Part 3.djvu/345

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2153

(i) more than $2,290,000 of expenditures were made before March 1, 1986, with respect to a project involving up to 300 platforms, or (ii) more than $95,000 of expenditures were made before March 1, 1986, with respect to a project involving up to 850 platforms. (O) A project is described in this subparagraph if—(i) the project involves the production and transportation of oil and gas from a well located north of the Arctic Circle, and (ii) more than $200,000,000 of cost had been incurred or committed before September 26, 1985. (P) A project is described in this subparagraph if— (i) a commitment letter was entered into with a financial institution on January 23, 1986, for the financing of the project, (ii) the project involves intercity communication links (including microwave and fiber optics communications systems and related property), (iii) the project consists of communications links between— (I) Omaha, Nebraska, and Council Bluffs, Iowa, (II) Waterloo, Iowa and Sioux City, Iowa, (III) Davenport, Iowa and Springfield, Illinois, and (iv) the estimated cost of such project is approximately $13,000,000. (Q) A project is described in this subparagraph if— (i) such project is a mining modernization project involving mining, transport, and milling operations, (ii) before September 26, 1985, at least $20,000,000 was expended for engineering studies which were approved by the Board of Directors of the taxpayer on January 27, 1983, and (iii) such project will involve a total estimated minimum cost of $350,000,000. (R) A project is described in this subparagraph if— (i) such project is a dragline acquired in connection with a 3-stage program which began in 1980 to increase production from a coal mine, (ii) at least $35,000,000 was spent before September 26, 1985, on the 1st 2 stages of the program, and (iii) at least $4,000,000 was spent to prepare the mine site for the dragline. (S) A project is described in this subparagraph if—it is a project consisting of a mineral processing facility using a heap leaching system (including waste dumps, low-grade dumps, a leaching area, and mine roads) and if— (i) convertible subordinated debentures were issued in August 1985, to finance the project, (ii) construction of the project was authorized by the Board of Directors of the taxpayer on or before December 31, 1985, (iii) at least $750,000 was paid or incurred with respect to the project on or before December 31, 1985, and (iv) the project is placed in service on or before December 31, 1986.

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Page:United States Statutes at Large Volume 100 Part 3.djvu/346

 100 STAT. 2154

PUBLIC LAW 99-514—OCT. 22, 1986 (T) A project is described in this subparagraph if it is a plant facility on Alaska's North Slope and— (i) the approximate cost is $575,000,000 of which approximately $100,000,000 was spent on off-site construction or (ii) the approximate cost of which is $450,000,000, of which approximately $100,000,000 was spent on off-site construction, more than 50 percent of the project cost was spent prior to December 31, 1985, and which will be placed in service in 1987. (U) A project is described in this subparagraph if it involves the connecting of existing retail stores in the downtown area of a city to a new covered area, the total project will be 250,000 square feet, a formal Memorandum of Understanding relating to development of the project was executed with the city on July 2, 1986, and the estimated cost of the project is $18,186,424. (V) A project is described in this subparagraph if it includes a 200,000 square foot office tower, a 200-room hotel, a 300,000 square foot retail center, an 800-space parking facility, the total cost is projected to be $60,000,000, and $1,250,000 was expended with respect to the site before August 25, 1986. (W) A project is described in this subparagraph if it is a joint use and development project including an integrated hotel, convention center, office, related retail facilities and public mass transportation terminal, and vehicle parking facilities which satisfies the following conditions: (i) is developed within certain air space rights and upon real property exchanged for such joint use and development project which is owned or acquired by a state department of transportation, a regional mass transit district in a county with a population of at least 5,000,000 and a community redevelopment agency; (ii) such project affects an existing, approximately 40 acre public mass transportation bus-way terminal facility located adjacent to an interstate highway; (iii) a memorandum of understanding with respect to such joint use and development project is executed by a state department of transportation, such a county regional mass transit district and a community redevelopment agency on or before December 31, 1986, and (iv) a major portion of such joint use and development project is placed in service by December 31, 1990. (X) A project is described in this subparagraph if^ (i) it is an $8,000,000 project to provide advanced control technology for adipic acid at a plant, which was authorized by the company's Board of Directors in October 1985, at December 31, 1985, $1,400,000 was committed and $400,000 expended with respect to such project, or (ii) it is an $8,300,000 project to achieve compliance with State and Federal regulations for particulates emissions, which was authorized by the company's Board of Directors in December 1985, by March 31, 1986, $250,000 was committed and $250,000 was expended with respect to such project, or

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Page:United States Statutes at Large Volume 100 Part 3.djvu/347

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2155

(iii) it is a $22,000,000 project for the retrofit of a plant that makes a raw material for aspartame, which was approved in the company's December 1985 capital budget, if approximately $3,000,000 of the $22,000,000 was spent before August 1, 1986. (Y) A project is described in this subparagraph if such project passes through at least 9 States and involves an intercity communication link (including multiple repeater sites and junction stations for microwave transmissions and amplifiers for fiber optics); the link from Buffalo to New York/Elizabeth was completed in 1984; the link from Buffalo to Chicago was completed in 1985; and the link from New York to Washington is completed in 1986. (6) NATURAL GAS PIPELINE.—The amendments made by section 201 shall not apply to any interstate natural gas pipeline (and related equipment) if— (A) 3 applications for the construction of such pipeline were filed with the Federal Energy Regulatory Commission before November 22, 1985 (and 2 of which were filed before September 26, 1985), and (B) such pipeline has 1 of its terminal points near Bakersfield, California. (7) CERTAIN LEASEHOLD IMPROVEMENTS.—The amendments made by section 201 shall not apply to any reasonable leasehold improvements, equipment and furnishings placed in service by a lessee or its affiliates if^ (A) the lessee or an affiliate is the original lessee of each building in which such property is to be used, (B) such lessee is obligated to lease the building under an agreement to lease entered into before September 26, 1985, and such property is provided for such building, and (C) such buildings are to serve as world headquarters of the lessee and its affiliates. For purposes of this paragraph, a corporation is an affiliate of another corporation if both corporations are members of a controlled group of corporations within the meaning of section 1563(a) of the Internal Revenue Code of 1954 without regard to section 1563(b)(2) of such Code. Such lessee shall include a securities firm that meets the requirements of subparagraph (A), except the lessee is obligated to lease the building under a lease entered into on June 18, 1986. (8) SOLID WASTE DISPOSAL FACILITIES.—The amendments made by section 201, and section 203(c), shall not apply to the taxpayer who originally places in service any qualified solid waste disposal facility (as defined in section 7701(e)(3)(B) of the Internal Revenue Code of 1986) if before March 2, 1986— (A) there is a binding written contract between a service recipient and a service provider with respect to the operation of such facility to pay for the services to be provided by such facility, (B) a service recipient or governmental unit (or any entity related to such recipient or unit) made a financial commitment of at least $200,000 for the financing or construction of such facility, (C) such facility is the Tri-Cities Solid Waste Recovery Project involving Fremont, Newark, and Union City, California, and has received an authority to construct from

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Page:United States Statutes at Large Volume 100 Part 3.djvu/348

 100 STAT. 2156

PUBLIC LAW 99-514—OCT. 22, 1986 '

the Environmental Protection Agency or from a State or local agency authorized by the Environmental Protection Agency to issue air quality permits under the Clean Air Act. (9) CERTAIN SUBMERSIBLE DRILLING UNITS.—In the case of a binding contract entered into on October 30, 1984, for the purchase of 6 semi-submersible drilling units at a cost of $425,000,000, such units shall be treated as having an applicable date under subsection 203(b)(2) of January 1, 1991. (10)

WASTEWATER OR SEWAGE TREATMENT FACILITY.—The

amendments made by section 201 shall not apply to any property which is part of a wastewater or sewage treatment facility if either— (A) site preparation for such facility commenced before September 1985, and a parish council approved a service agreement with respect to such facility on December 4, 1985; (B) a city-parish advertised in September 1985, for bids for construction of secondary treatment improvements for such facility, in May 1985, the city-parish received statements from 16 firms interested in privatizing the wastewater treatment facilities, and the metropolitan council selected a privatizer at its meeting on November 20, 1985, and adopted a resolution authorizing the Mayor to enter into contractual negotiation with the selected privatizer; r (Q the property is part of a wastewater treatment facility with respect to which a binding service agreement between a privatizer and the Western Carolina Regional Sewer Authority with respect to such facility was signed before January 1, 1986; or (D) such property is part of a wastewater treatment facility (located in Cameron County, Texas, within one mile of the City of Harlingen), an application for a wastewater discharge permit was filed with respect to such facility on December 4, 1985, and a City Commission approved a letter of intent relating to a service agreement with respect to such facility on August 7, 1986; or a wastewater facility (located in Harlingen, Texas) which is a subject of the letter of intent and service agreement described in subparagraph (A)(2) of this paragraph and the design of which was contracted for in a letter of intent dated January 23, 1986. (11) CERTAIN AIRCRAFT.—The amendments made by section 201 shall not apply to any new aircraft with 19 or fewer passenger seats if— (A) the aircraft is manufactured in Kansas, Florida, Georgia, or Texas. For purposes of this subparagraph, an aircraft is "manufactured' at the point of its final assembly, (B) the aircraft was in inventory or in the planned production schedule of the final assembly manufacturer, with orders placed for the engine(s) on or before August 16, 1986, and (C) the aircraft is purchased or subject to a binding contract on or before December 31, 1986, and is delivered and placed in service by the purchase, before July 1, 1987. Section 211(d)(2)(B) shall not apply to aircraft which meet the requirements of this subparagraph.

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Page:United States Statutes at Large Volume 100 Part 3.djvu/349

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2157

(12) CERTAIN SATELLITES.—The amendments made by section 201 shall not apply to any satellite with respect to which— (A) on or before January 28, 1986, there wgis a binding contract to construct or acquire a satellite, and (i) an agreement to launch was in existence on that date, or (ii) on or before August 5, 1983, the Federal Communications Commission had authorized the construction and for which the authorized party has a specific although undesignated agreement to launch in existence on January 28, 1986; (B) by order adopted on July 25, 1985, the Federal Communications Commission granted the taxpayer an or bital slot and authorized the taxpayer to launch and operate 2 satellites with a cost of approximately $300,000,000; or (C) the International Telecommunications Satellite Organization or the International Maritime Satellite Organization entered into written binding contracts before May 1, 1985. (13) CERTAIN NONWIRE U N E CELLULAR TELEPHONE SYSTEMS.—

The amendments made by section 201 shall not apply to property that is part of a nonwire line system in the Domestic Public Cellular Radio Telecommunications Service for which the Federal Communications Commission has issued a construction permit before September 26, 1985, but only if such property is placed in service before January 1, 1987. (14) CERTAIN COGENERATION FACILITIES.—The amendments made by section 201 shall not apply to projects consisting of 1 or more facilities for the cogeneration and distribution of electricity and steam or other forms of thermal energy if— (A) at least $100,000 was paid or incurred with respect to the project before March 1, 1986, a memorandum of understanding was executed on September 13, 1985, and the project is placed in service before January 1, 1989, (B) at least $500,000 was paid or incurred with respect to the projects before May 6, 1986, the projects involve a 22megawatt combined cycle gas turbine plant and a 45-megawatt coal waste plant, and applications for qualifying facility status were filed with the Federal Energy Regulatory Commission on March 5, 1986, (C) the project cost approximates $125,000,000 to $140,000,000 and an application was made to the Federal Energy Regulatory Commission in July 1985, (D) an inducement resolution for such facility was adopted on September 10, 1985, a development authority was given an inducement date of September 10, 1985, for a loan not to exceed $80,000,000 with respect to such facility, and such facility is expected to have a capacity of approximately 30 megawatts of electric power and 70,000 pounds of steam per hour, (E) at least $1,000,000 was incurred with respect to the project before May 6, 1986, the project involves a 52-megawatt combined cycle gas turbine plant and a petition was filed with the Connecticut Department of Public Utility Control to approve a power sales agreement with respect to the project on March 27, 1986.

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Page:United States Statutes at Large Volume 100 Part 3.djvu/350

 100 STAT. 2158 r '; u,

PUBLIC LAW 99-514—OCT. 22, 1986 (15) CERTAIN ELECTRIC GENERATING STATIONS.—The amendments made by section 201 shall not apply to a project consisting of a coal-fired electric generating station (including multiple generating units, coal mine equipment, and transmission facilities) if— (A) a tax-exempt entity will own an equity interest in all property included in the project (except the coal mine equipment), and (B) at least $72,000 was expended in the acquisition of coal leases, land and water rights, engineering studies, and other development costs before May 6, 1986. For purposes of this subparagraph, subsection (b)(2) shall be applied by substituting "January 1, 1986" for "January 1, 1991." (16) SPORTS ARENAS.— (A) INDOOR SPORTS FACILITY.—The

amendments made by section 201 shall not apply to up to $20,000,000 of improvements made by a lessee of any indoor sports facility pursuant to a lease from a State commission granting the right to make limited and specified improvements (including planned seat explanations), if architectural renderings of the project were commissioned and received before December 22, 1985. (B) METROPOLITAN SPORTS ARENA.—The amendments made by section 201 shall not apply to any property which is part of an arena constructed for professional sports activities in a metropolitan area, provided that such arena ' is capable of seating no less than 18,000 spectators and a binding contract to incur significant expenditures for its construction was entered into before June 1, 1986. (17) CERTAIN WASTE-TO-ENERGY FACILITIES.—The amendments made by section 201 shall not apply to 2 agricultural waste-toenergy powerplants (and required transmission facilities), in connection with which a contract to sell 100 megawatts of electricity to a city was executed in October 1984. (18) CERTAIN COAL-FIRED PLANTS.—The amendments made by section 201 shall not apply to one of three 540 megawatt coalfired plants that are placed in service after a sale leaseback occurring after January 1, 1986, if— (A) the Board of Directors of an electric power cooperation authorized the investigation of a sale leaseback of a nuclear generation facility by resolution dated January 22, 1985, and (B) a loan was extended by the Rural Electrification t' ' Administration on February 20, 1986, which contained a covenant with respect to used property leasing from unit II. (19) CERTAIN RAIL SYSTEMS.—

(A) The amendments made by section 201 shall not apply to a light rail transit system, the approximate cost of which is $235,000,000, if, with respect to which, the board of directors of a corporation (formed in September 1984 for the purpose of developing, financing, and operating the system) authorized a $300,000 expenditure for a feasibility study in April 1985. (B) The amendments made by section 201 shall not apply to any project for rehabilitation of regional railroad rights of way and properties including grade crossings which was

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Page:United States Statutes at Large Volume 100 Part 3.djvu/351

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2159

authorized by the Board of Directors of such company prior to October 1985; and/or was modified, altered or enlarged as a result of termination of company contracts, but approved by said Board of Directors no later than January 30, 1986, and which is in the public interest, and which is subject to binding contracts or substantive commitments by December 31, 1987. (20)

CERTAIN

DETERGENT MANUFACTURING

FACILITY.—The

amendments made by section 201 shall not apply to a laundry detergent manufacturing facility, the approximate cost of which is $13,200,000, with respect to which a project agreement was fully executed on March 17, 1986. (21) CERTAIN RESOURCE RECOVERY FACILITY.—The amendments made by section 201 shall not apply to any of 3 resource recovery plants, the aggregate cost of which approximates $300,000,000, if an industrial development authority adopted a bond resolution with respect to such facilities on December 17, 1984, and the projects were approved by the department of commerce of a Commonwealth on December 27, 1984. (22) The amendments made by section 201 shall not apply to a computer and office support center building in Minneapolis, with respect to which the first contract, with an architecture firm, was signed on April 30, 1985, and a construction contract was signed on March 12, 1986. (23) CERTAIN DISTRICT HEATING AND COOUNG FACILITIES.—The

amendments made by section 201 shall not apply to pipes, mains, and related equipment included in district heating and cooling facilities, with respect to which the development authority of a State approved the project through an inducement resolution adopted on October 8, 1985, and in connection with which approximately $11,000,000 of tax-exempt bonds are to be issued. (24) CERTAIN VESSELS.— (A) CERTAIN OFFSHORE VESSELS.—The

amendments made by section 201 shall not apply to any offshore vessel the construction contract for which was signed on February 28, 1986, and the approximate cost of which is $9,000,000. (B) CERTAIN INLAND RIVER VESSEL.—The amendments made by section 201 shall not apply to a project involving the reconstruction of an inland river vessel docked on the Mississippi River at St. Louis, Missouri, on July 14, 1986, and with respect to which: (i) the estimated cost of reconstruction is approximately $39,000,000; (ii) reconstruction was commenced prior to December 1, 1985; (iii) at least $17,000,000 was expended before December 31, 1985; and (C) SPECIAL AUTOMOBILE CARRIER VESSELS.—The amendments made by section 201 shall not apply to two new automobile carrier vessels which will cost approximately $47,000,000 and will be constructed by a United States-flag carrier to operate, under the United States-flag and with an American crew, to transport foreign automobiles to the United States, in a case where negotiations for such transportation arrangements commenced in April 1985, formal contract bids were submitted prior to the end of

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Page:United States Statutes at Large Volume 100 Part 3.djvu/352

 100 STAT. 2160

PUBLIC LAW 99-514—OCT. 22, 1986 1985, and definitive transportation contracts were awarded in May 1986. (D) The amendments made by section 201 shall not apply to a 562-foot passenger cruise ship, which was purchased in 1980 for the purpose of returning the vessel to United States service, the approximate cost of refurbishment of which is approximately $47,000,000. (25) CERTAIN WOOD ENERGY PROJECTS.—The amendments made by section 201 shall not apply to two wood energy products for which applications with the Federal Energy Regulatory Commission were filed before January 1, 1986, which are described as follows: (A) a 26.5 megawatt plant in Fresno, California, and (B) a 26.5 megawatt plant in Rocklin, California. (26) The amendments made by section 201 shall not apply to property which is a geothermal project of less than 20 megawatts that was certified by the Federal Energy Regulatory Commission on July 14, 1986, as a qualifying small power production facility for purposes of the Public Utility Regulatory Policies Act of 1978 pursuant to an application filed with the Federal Energy Regulatory Commission on April 17, 1986. (27) CERTAIN ECONOMIC DEVELOPMENT PROJECTS.—The amendments made by section 201 shall not apply to any of the following projects: (A) A mixed use development on the East River the total cost of which is approximately $400,000,000, with respect to which a letter of intent was executed on January 24, 1984, and with respect to which approximately $2.5 million had been spent by March 1, 1986. . (B) A 356-room hotel, banquet, and conference facility (including 525,000 square feet of office space) the approximate cost of which is $158,000,000, with respect to which a letter of intent was executed on June 1, 1984, and with respect to which an inducement resolution and bond resolution was adopted on August 20, 1985. (C) Phase 1 of a 4-phase project involving the construction of laboratory space and ground-floor retail space the estimated cost of which is $32,000,000 and with respect to which a memoradum of understanding was made before August 29, 1983. (D) A project involving the development of a 490,000 square foot mixed-use building at 152 W. 57th Street and 7th Avenue, New York, New York, the estimated cost of which is $100,000,000, and with respect to which a building permit application was filed in May 1986. (E) A mixed-use project containing a 300 unit, 12-story hotel, garage, two multi-rise office buildings, and also included a park, renovated riverboat, and barge with festival marketplace, the capital outlays for which approximate $68,000,000. (F) The construction of a three-story office building that will serve as the home office for an insurance group and its affiliated companies, with respect to which a city agreed to transfer its ownership of the land for the project in a Redevelopment Agreement executed on September 18, 1985, once certain conditions are met.

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Page:United States Statutes at Large Volume 100 Part 3.djvu/353

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2161

(G) A commercial bank formed under the laws of the State of New York which entered into an agreement on September 5, 1985, to construct its headquarters at 60 Wall Street, New York, New York, with respect to such headquarters. (H) Any property which is part of a commercial and residential project, the first phase of which is currently under construction, to be developed on land which is the subject of an ordinance passed on July 20, 1981, by the city council of the city in which such land is located, designating such land and the improvements to be placed thereon as a residential-business planned development, which development is being financed in part by the proceeds of industrial development bonds in the amount of $62,000 issued on December 4, 1985. (28) The amendments made by section 201 shall not apply to an $80,000,000 capital project steel seamless tubular casings minimill and melting facility located in Youngstown, Ohio, which was purchased by the taxpayer in April 1985, and— (A) the purchase and renovation of which was approved by a committee of the Board of Directors on February 22, 1985, and (B) as of December 31, 1985, more than $20,000,000 was incurred or committed with respect to the renovation. (29) The amendments made by section 201 shall not apply to any project for residential rental property if— (A) an inducement resolution with respect to such project was adopted by the State housing development authority on January 18, 1985, and (B) such project was the subject of law suits filed on June 22, 1984, and November 21, 1985. (30) The amendments made by section 201 shall not apply to a 30 megawatt electric generating facility fueled by geothermal and wood waste, the approximate cost of which is $55,000,000, and with respect to which a 30-year power sales contract was executed on March 22, 1985. (31) The amendments made by section 201 shall not apply to railroad maintenance-of-way equipment, with respect to which a Boston bank entered into a firm binding contract with a major northeastern railroad before March 2, 1986, to finance $10,200,000 of such equipment, if all of the equipment was placed in service before August 1, 1986. (32) The amendment made by section 201 shall not apply to— (A) a facility constructed on approximately seven acres of land located on Ogle's Poso Creek Oil field, the primary fuel of which will be bituminous coal from Utah or Wyoming, with respect to which an application for an authority to construct was filed on July 30, 1984, an authority to construct was issued on February 28, 1985, and a prevention of significant deterioration permit application was submitted on June 17, 1985, (B) a facility constructed on approximately seven acres of land located on Teorco's Jasmin oil field, the primary fuel of which will be bituminous coal from Utah or Wyoming, with respect to which an authority to construct was filed on August 30, 1984, an authority to construct was issued on

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PUBLIC LAW 99-514—OCT. 22, 1986 May 4, 1985, and a prevention of significant deterioration permit application was submitted on July 3, 1985, (C) the Mountain View Apartments, in Hadley, Massachusetts, (D) a facility expected to have a capacity of not less than 65 megawatts of electricity, the steam from which is to be sold to a pulp and paper mill, with respect to which application was made to the Federal Regulatory Commission for certification as a qualified facility on November 1, 1985, and received such certification on January 24, 1986, (E) $2,200,000 of equipment ordered on January 27, 1986, in connection with a 60,000 square foot plant that was completed in 1983, (F) a magnetic resonance imaging machine, with respect to which a binding contract to purchase was entered into in April 1986, in connection with the construction of a magnetic resonance imaging clinic with respect to which a Determination of Need certification was obtained from a State Department of Public Health on October 22, 1985, if such property is placed in service before December 31, 1986, (G) a company located in Salina, Kansas, which has been engaged in the construction of highways and city streets since 1946, but only to the extent of $1,410,000 of investment in new section 38 property, (H) a $300,000 project undertaken by a small metal finishing company located in Minneapolis, Minnesota, the first parts of which were received and paid for in January 1986, with respect to which the company received Board approval to purchase the largest piece of machinery it has ever ordered in 1985, (I) A $1,200,000 finishing machine that was purchased on April 2, 1986 and placed into service in September 1986 by a company located in Davenport, Iowa, (J) A 25 megawatt small power production facility, with respect to which Qualifying Facility status numbered QF86-593-000 was granted on March 5, 1986, (K) A $600,000,000, 250 megawatt plant placed in service by the Sierra Pacific Power Company, (L) 128 units of rental housing the Point Gloria Limited Partnership, (M) Kenosha Harbor, in Kenosha, Wisconsin, (N) Lakeland Park Phase II, in Baton Rouge, Louisiana, (O) the Santa Rosa Hotel, in New Orleans, Louisiana, (P) the Sheraton Baton Rouge, in Baton Rouge, Louisiana, (Q) $300,000 of equipment placed in service in 1986, in connection with the renovation of the Best Western Townhouse Convention Center in Cedar Rapids, Iowa, (R) the segment of a nationwide fiber optics telecommunications network placed in service by SouthernNet, the total estimated cost of which is $37,000,000, (S) two cogeneration facilities, placed in service by the Reading Anthracite Company, costing approximately $110,000,000 each, with respect to which filings were made with the Federal Energy Regulatory Commission on December 31, 1985, and which are located in Pennsylvania,

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(T) a fiber optics network placed in service by Kansas City Southern Industries, the total estimated cost of which is $25,000,000, (U) 3 newly constructed fishing vessels, and one vessel that is overhauled, placed in service by Mid Coast Marine, but only to the extent of $6,700,000 of investment, (V) $350,000 of equipment acquired in connection with the reopening of a plant in Bristol, Rhode Island, which plant was purchased by Button woods, Ltd., Associates on February 7, 1986, (W) $4,046,000 of equipment placed in service by Brendle's Incorporated, acquired in connection with a Distribution Center, (X) a multi-family mixed-use housing project located in a home rule city, the zoning for which was changed to residential business planned development on November 26, 1985, and with respect to which both the home rule city and the State housing finance agency adopted inducement resolutions on December 20, 1985, (Y) the Myrtle Beach Convention Center, in South Carolina, to the extent of $25,000,000 of investment, and (Z) railroad cars placed in service by the Pullman Leasing Company, pursuant to an April 3, 1986 purchase order, costing approximately $10,000,000. (33) The amendments made by section 201 shall not apply to— (A) $400,000 of equipment placed in service by Super Key Market, if such equipment is placed in service before January 1, 1987, (B) the Trolley Square project, the total project cost of which is $24,500,000, and the amount of depreciable real property of which is $14,700,000. (C) a waste-to-energy project in Derry, New Hampshire, costing approximtely $60,000,000, (D) the City of Los Angeles Co-composting project, the estimated cost of which is $62,000,000, with respect to which, on July 17, 1985, the California Pollution Control Financing Authority issued an initial resolution in the maximum amount of $75,000,000 to finance this project, (E) the St. Charles, Missouri Mixed-Use Center, (F) Oxford Place in Tulsa, Oklahoma, (G) an amount of investment generating $20,000,000 of investment tax credits attributable to property used on the Illinois Diversatech Campus, (H) $25,000,000 of equipment used in the Melrose Park Engine Plant that is sold and leased back by Navistar, (I) 80,000 vending machines, for a cost approximating $3,400,000 placed into service by Folz Vending Co., (J) a 24 megawatt alternative energy facility placed in service by Peat Products, with respect to which certification by the Federal Energy Regulatory Commission on April 3, 1986, and (K) Burbank Manors, in Illinois. O> SPECIAL RULE FOR CERTAIN PROPERTY.—The provisions of sect) tion 168(f)(8) of the Internal Revenue Code of 1954 (as amended by section 209 of the Tax Equity and Fiscal Responsibility Act of 1982) shall continue to apply to any transaction permitted by reason of

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section 12(c)(2) of the Tax Reform Act of 1984 or section 209(d)(1)(B) of the Tax Equity and Fiscal Responsibility Act of 1982. (c) APPLICABLE DATE IN CERTAIN CASES.—

(1) Section 203(b)(2) shall be applied by substituting "January 1, 1992" for January 1, 1991" in the following cases. (A) in the case of a 2-unit nuclear powered electric generating plant (and equipment and incidental appurtenances), constructed pursuant to contracts entered into by the owner operator of the facility before December 31, 1975, including contracts with the engineer/constructor and the nuclear steam system supplier, such contracts shall be treated as contracts described in section 2030t))(l)(A), (B) a cogeneration facility with respect to which an application with the Federal Energy Regulatory Commission was filed on August 2, 1985, and approved October 15, 1985. (C) in the case of a 1,300 megawatt coal-fired steam powered electric generating plant (and related equipment and incidental appurtenances), which the three owners determined in 1984 to convert from nuclear power to coal power and for which more than $600,000,000 had been incurred or committed for construction before September 25, 1985, except that no investment tax credit will be allowable under section 49(d)(3) added by section 211(a) of this Act for any qualified progress expenditures made after December 31, 1990. (2) Section 203a))(2) shall be applied by substituting "April 1, 1992" for the applicable date that would otherwise apply, in the case of the second unit of a twin steam electric generating facility and related equipment which was granted a certificate of public convenience and necessity by a public service commission prior to January 1, 1982, if the first unit of the facility was placed in service prior to January 1, 1985, and before September 26, 1985, more than $100,000,000 had been expended toward the construction of the second unit. (3) Section 203(b)(2) shall be applied by substituting "January 1, 1990," for the applicable date that would otherwise apply in the case of— (A) new commercial passenger aircraft used by a domestic airline, if a binding contract with respect to such aircraft was entered into before April 1, 1986, and such aircraft has a present class life of 12 years, (B) a pumped storage hydroelectric project with respect to which an application was made to the Federal Energy Regulatory Commission for a license on February 4, 1974, and license was issued August 1, 1977, the project number of which is 2740, (C) a facility for the manufacture of an improved particleboard, if—a binding contract to purchase such equipment was executed March 3, 1986, such equipment will be placed in service by January 1, 1988, and such facility is located in or near Moncure, North Carolina, and (D) a newsprint mill in Pend Oreille county, Washington, costing about $290,000,000. (4) The amendments made by section 201 shall not apply to a limited amount of the following property or a limited amount of property set forth in submission before September 16, 1986, by the following taxpayers—

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(A) Arena project, Michigan, (B) Campbell Soup Company, Pennsylvania and California, (C) Overton, Florida, (D) Legett and Piatt, (E) East Bank Housing Project, (F) Standard Telephone Company, (G) Presidential Air, (H) Ann Arbor Railroad, (I) Ada, Michigan Cogeneration, (J) Anchor Store Project, Michigan, (K) Biogen Power, (L) $14,000,000 of television transmitting towers placed in service by Media General, Inc., which were subject to binding contracts as of January 21, 1986, and will be placed in service before January 1, 1988, (M) Hardage Company, (N) Mesa Airlines, (O) Yarn-spinning equipment used at Spring Cotton Mills, and (P) 328 units of low-income housing at Angelus Plaza. (d) RAILROAD GRADING AND TUNNEL BORES.—

(1) IN GENERAL.—In the case of expenditures for railroad grading and tunnel bores which were incurred by a common carrier by railroad to replace property destroyed in a disaster occurring on or about April 17, 1983, near Thistle, Utah, such expenditures, to the extent not in excess of $15,000,000, shall be treated as recovery property which is 5-year property under section 168 of the Internal Revenue Code of 1954 (as in effect before the amendments made by this Act) and which is placed in service at the time such expenditures were incurred. (2) BUSINESS INTERRUPTION PROCEEDS.—Business interruption proceeds received for loss of use, revenues, or profits in connection with the disaster described in paragraph (1) and devoted by the taxpayer described in paragraph (1) to the construction of replacement track and related grading and tunnel bore expenditures shall be treated as constituting an amount received from the involuntary conversion of property under section 1033(a)(2) of such Code. (3) EFFECTIVE DATE.—This subsection shall apply to taxable years ending after April 17, 1983. (e) TREATMENT OF CERTAIN DISASTER LOSSES.—

(1) IN GENERAL.—In the case of a disaster described in paragraph (2), at the election of the taxpayer, the amendments made by section 201 of this Act— (A) shall not apply to any property placed in service during 1987 or 1988, or (B) shall apply to any property placed in service during 1985 or 1986, which is property to replace property lost, damaged, or destroyed in such disaster. (2) DISASTER TO WHICH SECTION APPLIES.—This section shall apply to a flood which occurred on November 3 through 7, 1985, and which was declared a natural disaster area by the President of the United States.

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Subtitle B—Repeal of Regular Investment Tax Credit SEC. 211. REPEAL OF REGULAR INVESTMENT TAX CREDIT. (a) GENERAL RULE.—Subpart E of part IV of subchapter A of chapter 1 (relating to investment tax credit) is amended by adding at the end thereof the following new section: "SEC. 49. TERMINATION OF REGULAR PERCENTAGE. "(a) GENERAL RULE.—For purposes of determining the amount of the investment tax credit determined under section 46, the regular percentage shall not apply to any property placed in service after December 31, 1985. "(b) EXCEPTIONS.—Subject to the provisions of subsections (c) and (d), subsection (a) shall not apply to the following: "(1) TRANSITION PROPERTY.—Property which is transition property (within the meaning of subsection (e)). "(2) QUALIFIED PROGRESS EXPENDITURE FOR PERIODS BEFORE

JANUARY 1, 1986.—In the case of any taxpayer who has made an election under section 46(d)(6), the portion of the adjusted basis of any progress expenditure property attributable to qualified progress expenditures for periods before January 1, 1986. "(3) QUALIFIED TIMBER PROPERTY.—The portion of the adjusted basis of qualified timber property which is treated as section 38 property under section 48(a)(1)(F). "(c) 35-PERCENT REDUCTION IN CREDIT FOR TAXABLE YEARS AFTER

1986.— "(1) REDUCTION IN CURRENT YEAR INVESTMENT CREDIT.—Any

portion of the current year business credit under section 38(b) for any taxable year beginning after June 30, 1987, which is attributable to the regular investment credit shall be reduced by 35 percent. "(2) UNEXPIRED CARRYFORWARDS TO IST TAXABLE YEAR BEGINNING AFTER JUNE 30, 1987.—Any portion of the business credit

carryforward under section 38(a)(1) attributable to the regular investment credit which has not expired as of the close of the taxable year preceding the 1st taxable year of the taxpayer beginning after June 30, 1987, shall be reduced by 35 percent. "(3) SPECIAL RULE FOR TAXABLE YEARS BEGINNING BEFORE AND ENDING AFTER JULY 1, 1987.—In the case of any taxable year

beginning before and ending after July 1, 1987— "(A) any portion of the current year business credit under section 3803) for such taxable year, or "(B) any portion of the business credit carryforward under section 38(a)(1) to such year, which is attributable to the regular investment credit shall be reduced by the applicable percentage. "(4) TREATMENT OF DISALLOWED CREDIT.—

"(A) IN GENERAL.—The amount of the reduction of the regular investment credit under paragraphs (1) and (2) shall not be allowed as a credit for any taxable year. "(B) No CARRYBACK FOR YEAR STRADDLING JULY 1, 1987; GROSS UP OF CARRYFORWARDS.—The amount of the reduction of the regular investment credit under paragraph (3)— "(i) may not be carried back to any taxable year, but

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"(ii) shall be added to the carryforwards from the taxable year before applying paragraph (2). "(5) DEFINITIONS AND SPECIAL RULES.—For purposes of this subsection— "(A) APPLICABLE PERCENTAGE.—The term 'applicable percentage' means, with respect to a taxable year beginning before and ending after July 1, 1987, the percentage which bears the same ratio to 35 percent as— "(i) the number of months in such taxable year after June 30, 1987, bears to "(ii) the number of months in such taxable year. "(B) REGULAR INVESTMENT CREDIT.—

"(i) IN GENERAL.—The term 'regular investment credit' has the meaning given such term by section 48(0). "(ii) EXCEPTION FOR TIMBER PROPERTY.—The term 'regular investment credit' shall not include any portion of the regular investment credit which is attributable to section 38 property described in section 48(a)(l)(F). "(C) PORTION OF CREDITS ATTRIBUTABLE TO REGULAR INVESTMENT CREDIT.—The portion of any current year busi-

ness credit or business credit carryforward which is attributable to the regular investment credit shall be determined on the basis that the regular investment credit is used first. '(d) FULL BASIS ADJUSTMENT.—

"(1) IN GENERAL.—In the case of periods after December 31, 1985, section 48(q) (relating to basis adjustment to section 38 property) shall be applied with respect to transaction property— "(A) by substituting '100 percent' for '50 percent' in paragraph (1), and "(B) without regard to paragraph (4) thereof (relating to election of reduced credit in lieu of basis adjustment). "(2) SPECIAL RULE FOR QUALIFIED PROGRESS EXPENDITURES.—If

the taxpayer made an election under section 48(q)(4) with respect to any qualified progress expenditures for periods before Januarv 1, 1986— ' (A) paragraph (1) shall not apply to the portion of the adjusted basis attributable to such expenditures, and '(B) such election shall not apply to such expenditures for periods after December 31, 1985. '(e) TRANSITION PROPERTY.—For purposes of this section— "(1) TRANSITION PROPERTY.—The term 'transition property' means any property placed in service after December 31, 1985, and to which the amendments made by section 201 of the Tax Reform Act of 1986 do not apply, except that in making such determination— "(A) section 203(a)(l)(A) of such Act shall be applied by substituting '1985' for '1986', "(B) sections 2030^X1) and 204(a)(3) of such Act shall be applied by substituting 'December 31, 1985' for 'March 1, 1986', "(C) in the case of transition property with a cltiss life of less than 7 years— "(i) section 203(b)(2) of such Act shall apply, and "(ii) in the case of property with a class life—

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"(I) of less than 5 years, the appHcable date shall be July 1, 1986, and "(II) at least 5 years, but less than 7 years, the applicable date shall be January 1, 1987, and "(D) section 203(b)(3) shall be applied by substituting '1986' for '1987'. "(2) TREATMENT OF PROGRESS EXPENDITURES.—No progress expenditures for periods after December 31, 1985, with respect to any property shall be taken into account for purposes of applying the regular percentage unless it is reasonable to expect that such property will be transition property when placed in service. If any progress expenditures are taken into account by reason of the preceding sentence and subsequently there is not a reasonable expectation that such property would be transition property when placed in service, the credits attributable to progress expenditures with respect to such property shall be recaptured under section 47." (b) NORMALIZATION RULES.—If, for any taxable year beginning after December 31, 1985, the requirements of paragraph (1) or (2) of section 46(f) of the Internal Revenue Code of 1986 are not met with respect to public utility property to which the regular percentage applied for purposes of determining the amount of the investment tax credit— (1) all credits for open taxable years as of the time of the final determination referred to in section 46(f)(4)(A) of such Code shall be recaptured, and (2) if the amount of the taxpayer's unamortized credits (or the credits not previously restored to rate base) with respect to such property (whether or not for open years) exceeds the amount referred to in paragraph (1), the taxpayer's tax for the taxable year shall be increased by the amount of such excess. If any portion of the excess described in paragraph (2) is attributable to a credit which is allowable as a carryover to a taxable year beginning after December 31, 1985, in lieu of applying paragraph (2) with respect to such portion, the amount of such carryover shall be reduced by the amount of such portion. Rules similar to the rules of this subsection shall apply in the case of any property with respect to which the requirements of section 46(0(9) of such Code are met. (c) CONFORMING AMENDMENT.—The table of sections for subpart E of part IV of subchapter A of chapter 1 is amended by adding at the end thereof the following new item: "Sec. 49. Termination of regular percentage." (d) EXCEPTION FOR CERTAIN AIRCRAFT USED IN ALASKA.—

(1) The amendments made by subsection (a) shall not apply to property originally placed in service after December 29, 1982, and before August 1, 1985, by a corporation incorporated in Alaska on May 21, 1953, and used by it— (A) in part, for the transportation of mail for the United States Postal Service in the State of Alaska, and (B) in part, to provide air service in the State of Alaska on routes which had previously been served by an air carrier that received compensation from the Civil Aeronautics Board for providing service. (2) In the case of property described in subparagraph (A)—

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(A) such property shall be treated as recovery property described in section 208(d)(5) of the Tax Equity and Fiscal Responsibility Act of 1982 ("TEFRA"); (B) "48 months" shall be substituted for "3 months" each place it appears in applying— (i) section 48(b)(2)(B) of the Code, and (ii) section 168(f)(8)(D) of the Code (as in effect after the amendments made by the Technical Corrections Act of 1982 but before the amendments made by TEFRA); and (C) the limitation of section 168(D(8)(D)(iiXIII) (as then in effect) shall be read by substituting "the lessee's original cost basis.", for "the adjusted basis of the lessee at the time of the lease.". (3) The aggregate amount of property to which this paragraph shall apply shall not exceed $60,000,000. (e) EFFECTIVE DATE.—

(1) IN GENERAL.—Except as provided in this subsection, the amendments made by this section shall apply to property placed in service after December 31, 1985, in taxable years ending after such date. (2) EXCEPTIONS FOR CERTAIN FILMS.—For purposes of determin-

ing whether any property is transition property within the meaning of section 49(e) of the Internal Revenue Code of 1986— (A) in the case of any motion picture or television film, construction shall be treated as including production for purposes of section 2030t)Xl) of this Act, and written contemporary evidence of an agreement (in accordance with industry practice) shall be treated as a written binding contract for such purposes, (B) in the case of any television film, a license agreement or agreement for production services between a television network and a producer shall be treated as a binding contract for purposes of section 203(b)(l)(A) of this Act, and (C) a motion picture film shall be treated as described in section 203(b)(l)(A) of this Act if— (i) funds were raised pursuant to a public offering before September 26, 1985, for the production of such film, (ii) 40 percent of the funds raised pursuant to such public offering are being spent on films the production of which commenced before such date, and (iii) all of the films funded by such public offering are required to be distributed pursuant to distribution agreements entered into before September 26, 1985. (3) NORMALIZATION RULES.—The provisions of subsection 0^) shall apply to any violation of the normalization requirements under paragraph (1) or (2) of section 46(f) of the Internal Revenue Code of 1986 occurring in taxable years ending after December 31, 1985. (4) ADDITIONAL EXCEPTIONS.—

(A) Paragraphs (c) and (d) of section 49 of the Internal Revenue Code of 1954 shall not apply to any continuous caster facility for slabs and blooms which is subject to a lease and which is part of a project the second phase of which is a continuous slab caster which was placed in service before December 31, 1935.

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PUBLIC LAW 99-514—OCT. 22, 1986 (B) For purposes of determining whether an automobile manufacturing facility (including equipment and incidental appurtenances) is transition property within the meaning of section 49(e), property with respect to which the Board of Directors of an automobile manufacturer formally approved the plan for the project on January 7, 1985 shall be treated as transition property, but only with respect to $70,000,000 of regular investment tax credits.

SEC. 212. EFFECTIVE 15-YEAR CARRYBACK FORWARDS OF STEEL COMPANIES.

OF

EXISTING

CARRY-

(a) GENERAL RULE.—If a qualified corporation makes an election under this section for its 1st taxable year beginning after December 31, 1986, with respect to any portion of its existing carryforwards, the amount determined under subsectionflt>)shall be treated as a payment against the tax imposed by chapter 1 of the Internal Revenue Code of 1986 made by such corporation on the last day prescribed by law (without regard to extensions) for filing its return of tax under chapter 1 of such Code for such 1st taxable year. (b) AMOUNT.—For purposes of subsection (a), the amount determined under this subsection shall be the lesser of— (1) 50 percent of the portion of the corporation's existing carryforwards to which the election under subsection (a) applies, or (2) the corporation's net tax liability for the carryback period. (c) CORPORATION MAKING ELECTION MAY NOT USE SAME AMOUNTS UNDER SECTION 38.—In the case of a qualified corporation which

makes an election under subsection (a), the portion of such corporation's existing carryforwards to which such an election applies shall not be taken into account under section 38 of the Internal Revenue Code of 1986 for any taxable year beginning after December 31, 1986. (d) NET TAX LIABILITY FOR CARRYBACK PERIOD.—For purposes of this section— (1) IN GENERAL.—A corporation's net tax liability for the carryback period is the aggregate of such corporation's net tax liability for taxable years in the carryback period. (2) NET TAX LIABILITY.—The term "net tax liability" means, with respect to any taxable year, the amount of the tax imposed by chapter 1 of the Internal Revenue Code of 1954 for such taxable year, reduced by the sum of the credits allowable under part IV of subchapter A of such chapter 1 (other than section 34 thereof). For purposes of the preceding sentence, any tax treated as not imposed by chapter 1 of such Code under section 26(b)(2) of such Code shall not be treated as tax imposed by such chapter 1. (3) CARRYBACK PERIOD.—The term "carryback period" means the period— (A) which begins with the corporation's 15th taxable year preceding the 1st taxable year from which there is an unused credit included in such corporation's existing carryforwards (but in no event shall such period begin before the corporation's 1st taxable year ending after December 31, 1961), and (B) which ends with the corporation's last taxable year beginning before January 1, 1986.

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(e) No RECOMPUTATION OF MINIMUM TAX, ETC.—Nothing in this section shall be construed to affect— (1) the amount of the tax imposed by section 56 of the Internal Revenue Code of 1986, or (2) the amount of any credit allowable under such Code, for any taxable year in the carryback period. (0 REINVESTMENT REQUIREMENT.—

(1) IN GENERAL.—Any amount determined under this section must be committed to reinvestment in, and modernization of the steel industry through investment in modern plant and equipment, research and development, and other appropriate projects, such as working capital for steel operations and programs for the retraining of steel workers. (2) GENERAL RULE.—If this section applies to LTV Corporation, then, in lieu of the requirements of paragraph (1)— (A) such corporation shall place such refund in a separate account; and (B) amounts in such separate account— (i) shall only be used by the corporation— (I) to purchase an insurance policy which provides that, in the event the corporation becomes involved in a title 11 or similar case (as defined in section 368(a)(3)(A) of the Internal Revenue Code of 1954), the insurer will provide life and health insurance coverage during the 1-year period beginning on the date such involvement begins to any individual with respect to whom the corporation would (but for such involvement) have been obligated to provide such coverage the coverage provided by the insurer will be identical to the coverage which the corporation would (but for such involvement) have been obligated to provide, and provides that the payment of insurance premiums will not be required during such 1-year period to keep such policy in force, or (II) directly in connection with the trade or business of the corporation in the manufacturer or production of steel; and (ii) shall be used (or obligated) for purposes described in clause (i) not later than 3 months after the corporation receives the refund, (g) DEFINITIONS.—For purposes of this section— (1) QUALIFIED CORPORATION.—

(A) IN GENERAL.—The term 'qualified corporation" means any corporation which is described in section 806(b) of the Steel Import Stabilization Act and a company which was incorporated on February 11, 1983, in Michigan. (B) CERTAIN PREDECESSORS INCLUDED.—In the case of any qualified corporation which has carr5^orward attributable to a predecessor corporation described in such section 806(b), the qualified corporation and the predecessor corporation shall be treated as 1 corporation for purposes of subsections (d) and (e). (2) EXISTING CARRYFORWARDS.—The term "existing carryforward" means the aggregate of the amounts which— (A) are unused business credit carryforwards to the taxpayer's 1st taxable year beginning after December 31, 1986

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