Internal Revenue Code:Sec. 167. Depreciation
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Location in Internal Revenue Code
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter B - Computation of Taxable Income
PART VI - ITEMIZED DEDUCTIONS FOR INDIVIDUALS AND CORPORATIONS
Statute
Sec. 167. Depreciation
(a) General rule
There shall be allowed as a depreciation deduction a reasonable
allowance for the exhaustion, wear and tear (including a reasonable
allowance for obsolescence) -
(1) of property used in the trade or business, or
(2) of property held for the production of income.
(b) Cross reference
For determination of depreciation deduction in case of
property to which section 168 applies, see section 168.
(c) Basis for depreciation
(1) In general
The basis on which exhaustion, wear and tear, and obsolescence
are to be allowed in respect of any property shall be the
adjusted basis provided in section 1011, for the purpose of
determining the gain on the sale or other disposition of such
property.
(2) Special rule for property subject to lease
If any property is acquired subject to a lease -
(A) no portion of the adjusted basis shall be allocated to
the leasehold interest, and
(B) the entire adjusted basis shall be taken into account in
determining the depreciation deduction (if any) with respect to
the property subject to the lease.
(d) Life tenants and beneficiaries of trusts and estates
In the case of property held by one person for life with
remainder to another person, the deduction shall be computed as if
the life tenant were the absolute owner of the property and shall
be allowed to the life tenant. In the case of property held in
trust, the allowable deduction shall be apportioned between the
income beneficiaries and the trustee in accordance with the
pertinent provisions of the instrument creating the trust, or, in
the absence of such provisions, on the basis of the trust income
allocable to each. In the case of an estate, the allowable
deduction shall be apportioned between the estate and the heirs,
legatees, and devisees on the basis of the income of the estate
allocable to each.
(e) Certain term interests not depreciable
(1) In general
No depreciation deduction shall be allowed under this section
(and no depreciation or amortization deduction shall be allowed
under any other provision of this subtitle) to the taxpayer for
any term interest in property for any period during which the
remainder interest in such property is held (directly or
indirectly) by a related person.
(2) Coordination with other provisions
(A) Section 273
This subsection shall not apply to any term interest to which
section 273 applies.
(B) Section 305(e)
This subsection shall not apply to the holder of the dividend
rights which were separated from any stripped preferred stock
to which section 305(e)(1) applies.
(3) Basis adjustments
If, but for this subsection, a depreciation or amortization
deduction would be allowable to the taxpayer with respect to any
term interest in property -
(A) the taxpayer's basis in such property shall be reduced by
any depreciation or amortization deductions disallowed under
this subsection, and
(B) the basis of the remainder interest in such property
shall be increased by the amount of such disallowed deductions
(properly adjusted for any depreciation deductions allowable
under subsection (d) to the taxpayer).
(4) Special rules
(A) Denial of increase in basis of remainderman
No increase in the basis of the remainder interest shall be
made under paragraph (3)(B) for any disallowed deductions
attributable to periods during which the term interest was held
-
(i) by an organization exempt from tax under this subtitle,
or
(ii) by a nonresident alien individual or foreign
corporation but only if income from the term interest is not
effectively connected with the conduct of a trade or business
in the United States.
(B) Coordination with subsection (d)
If, but for this subsection, a depreciation or amortization
deduction would be allowable to any person with respect to any
term interest in property, the principles of subsection (d)
shall apply to such person with respect to such term interest.
(5) Definitions
For purposes of this subsection -
(A) Term interest in property
The term ''term interest in property'' has the meaning given
such term by section 1001(e)(2).
(B) Related person
The term ''related person'' means any person bearing a
relationship to the taxpayer described in subsection (b) or (e)
of section 267.
(6) Regulations
The Secretary shall prescribe such regulations as may be
necessary to carry out the purposes of this subsection, including
regulations preventing avoidance of this subsection through
cross-ownership arrangements or otherwise.
(f) Treatment of certain property excluded from section 197
(1) Computer software
(A) In general
If a depreciation deduction is allowable under subsection (a)
with respect to any computer software, such deduction shall be
computed by using the straight line method and a useful life of
36 months.
(B) Computer software
For purposes of this section, the term ''computer software''
has the meaning given to such term by section 197(e)(3)(B);
except that such term shall not include any such software which
is an amortizable section 197 intangible.
(C) Tax-exempt use property subject to lease.--In
the case of computer software which would be tax-exempt
use property as defined in subsection (h) of section 168
if such section applied to computer software, the useful
life under subparagraph (A) shall not be less than 125
percent of the lease term (within the meaning of section
168(i)(3)).
(2) Certain interests or rights acquired separately
If a depreciation deduction is allowable under subsection (a)
with respect to any property described in subparagraph (B), (C),
or (D) of section 197(e)(4), such deduction shall be computed in
accordance with regulations prescribed by the Secretary.
If such property would be tax-
exempt use property as defined in subsection (h) of section 168
if such section applied to such property, the useful life under
such regulations shall not be less than 125 percent of the lease
term (within the meaning of section 168(i)(3)).
(3) Mortgage servicing rights
If a depreciation deduction is allowable under subsection (a)
with respect to any right described in section 197(e)(6), such
deduction shall be computed by using the straight line method and
a useful life of 108 months.
(g) Depreciation under income forecast method
(1) In general
If the depreciation deduction allowable under this section to
any taxpayer with respect to any property is determined under the
income forecast method or any similar method -
(A) the income from the property to be taken into account in
determining the depreciation deduction under such method shall
be equal to the amount of income earned in connection with the
property before the close of the 10th taxable year following
the taxable year in which the property was placed in service,
(B) the adjusted basis of the property shall only include
amounts with respect to which the requirements of section
461(h) are satisfied,
(C) the depreciation deduction under such method for the 10th
taxable year beginning after the taxable year in which the
property was placed in service shall be equal to the adjusted
basis of such property as of the beginning of such 10th taxable
year, and
(D) such taxpayer shall pay (or be entitled to receive)
interest computed under the look-back method of paragraph (2)
for any recomputation year.
(2) Look-back method
The interest computed under the look-back method of this
paragraph for any recomputation year shall be determined by -
(A) first determining the depreciation deductions under this
section with respect to such property which would have been
allowable for prior taxable years if the determination of the
amounts so allowable had been made on the basis of the sum of
the following (instead of the estimated income from such
property) -
(i) the actual income earned in connection with such
property for periods before the close of the recomputation
year, and
(ii) an estimate of the future income to be earned in
connection with such property for periods after the
recomputation year and before the close of the 10th taxable
year following the taxable year in which the property was
placed in service,
(B) second, determining (solely for purposes of computing
such interest) the overpayment or underpayment of tax for each
such prior taxable year which would result solely from the
application of subparagraph (A), and
(C) then using the adjusted overpayment rate (as defined in
section 460(b)(7)), compounded daily, on the overpayment or
underpayment determined under subparagraph (B).
For purposes of the preceding sentence, any cost incurred after
the property is placed in service (which is not treated as a
separate property under paragraph (5)) shall be taken into
account by discounting (using the Federal mid-term rate
determined under section 1274(d) as of the time such cost is
incurred) such cost to its value as of the date the property is
placed in service. The taxpayer may elect with respect to any
property to have the preceding sentence not apply to such
property.
(3) Exception from look-back method
Paragraph (1)(D) shall not apply with respect to any property
which had a cost basis of $100,000 or less.
(4) Recomputation year
For purposes of this subsection, except as provided in
regulations, the term ''recomputation year'' means, with respect
to any property, the 3d and the 10th taxable years beginning
after the taxable year in which the property was placed in
service, unless the actual income earned in connection with the
property for the period before the close of such 3d or 10th
taxable year is within 10 percent of the income earned in
connection with the property for such period which was taken into
account under paragraph (1)(A).
(5) Special rules
(A) Certain costs treated as separate property
For purposes of this subsection, the following costs shall be
treated as separate properties:
(i) Any costs incurred with respect to any property after
the 10th taxable year beginning after the taxable year in
which the property was placed in service.
(ii) Any costs incurred after the property is placed in
service and before the close of such 10th taxable year if
such costs are significant and give rise to a significant
increase in the income from the property which was not
included in the estimated income from the property.
(B) Syndication income from television series
In the case of property which is 1 or more episodes in a
television series, income from syndicating such series shall
not be required to be taken into account under this subsection
before the earlier of -
(i) the 4th taxable year beginning after the date the first
episode in such series is placed in service, or
(ii) the earliest taxable year in which the taxpayer has an
arrangement relating to the future syndication of such
series.
(C) Special rules for financial exploitation of characters,
etc.
For purposes of this subsection, in the case of television
and motion picture films, the income from the property shall
include income from the exploitation of characters, designs,
scripts, scores, and other incidental income associated with
such films, but only to the extent that such income is earned
in connection with the ultimate use of such items by, or the
ultimate sale of merchandise to, persons who are not related
persons (within the meaning of section 267(b)) to the taxpayer.
(D) Collection of interest
For purposes of subtitle F (other than sections 6654 and
6655), any interest required to be paid by the taxpayer under
paragraph (1) for any recomputation year shall be treated as an
increase in the tax imposed by this chapter for such year.
(E)Treatment of distribution costs.--For purposes
of this subsection, the income with respect to any
property shall be the taxpayer's gross income from such
property.
(F) Determinations
For purposes of paragraph (2), determinations of the amount
of income earned in connection with any property shall be made
in the same manner as for purposes of applying the income
forecast method; except that any income from the disposition of
such property shall be taken into account.
(G) Treatment of pass-thru entities
Rules similar to the rules of section 460(b)(4) shall apply
for purposes of this subsection.
(6) Limitation on property for which income forecast method may
be used
The depreciation deduction allowable under this section may be
determined under the income forecast method or any similar method
only with respect to -
(A) property described in paragraph (3) or (4) of section
168(f),
(B) copyrights,
(C) books,
(D) patents, and
(E) other property specified in regulations.
Such methods may not be used with respect to any amortizable
section 197 intangible (as defined in section 197(c)).
(7) Treatment of participations and residuals.--
(A) In general.--For purposes of determining the
depreciation deduction allowable with respect to a
property under this subsection, the taxpayer may include
participations and residuals with respect to such
property in the adjusted basis of such property for the
taxable year in which the property is placed in service,
but only to the extent that such participations and
residuals relate to income estimated (for purposes of
this subsection) to be earned in connection with the
property before the close of the 10th taxable year
referred to in paragraph (1)(A).
(B) Participations and residuals.--For purposes of
this paragraph, the term `participations and residuals'
means, with respect to any property, costs the amount of
which by contract varies with the amount of income
earned in connection with such property.
(C) Special rules relating to recomputation
years.--If the adjusted basis of any property is
determined under this paragraph, paragraph (4) shall be
applied by substituting `for each taxable year in such
period' for `for such period'.
(D) Other special rules.--
(i) Participations and residuals.--
Notwithstanding subparagraph (A), the taxpayer may
exclude participations and residuals from the
adjusted basis of such property and deduct such
participations and residuals in the taxable year
that such participations and residuals are paid.
(ii) Coordination with other rules.--
Deductions computed in accordance with this
paragraph shall be allowable notwithstanding
paragraph (1)(B), section 263, 263A, 404, 419, or
461(h).
(E) Authority to make adjustments.--The Secretary
shall prescribe appropriate adjustments to the basis of
property and to the look-back method for the additional
amounts allowable as a deduction solely by reason of
this paragraph.
(8) Special rules for certain musical works and
copyrights.--
(A) In general.--If an election is in effect under
this paragraph for any taxable year, then,
notwithstanding paragraph (1), any expense which--
(i) is paid or incurred by the taxpayer in
creating or acquiring any applicable musical
property placed in service during the taxable
year, and
(ii) is otherwise properly chargeable to
capital account,
shall be amortized ratably over the 5-year period
beginning with the month in which the property was
placed in service. The preceding sentence shall not
apply to any expense which, without regard to this
paragraph, would not be allowable as a deduction.
(B) Exclusive method.--Except as provided in this
paragraph, no depreciation or amortization deduction
shall be allowed with respect to any expense to which
subparagraph (A) applies.
(C) Applicable musical property.--For purposes of
this paragraph--
(i) In general.--The term `applicable
musical property' means any musical composition
(including any accompanying words), or any
copyright with respect to a musical composition,
which is property to which this subsection applies
without regard to this paragraph.
(ii) Exceptions.--Such term shall not
include any property--
(I) with respect to which expenses
are treated as qualified creative
expenses to which section 263A(h)
applies,
(II) to which a simplified
procedure established under section
263A(j)(2) applies, or
(III) which is an amortizable
section 197 intangible (as defined in
section 197(c)).
(D) Election.--
An <<NOTE: Applicability.>> election under this
paragraph shall be made at such time and in such form as
the Secretary may prescribe and shall apply to all
applicable musical property placed in service during the
taxable year for which the election applies.
(E) Termination.--An election may not be made
under this paragraph for any taxable year beginning
after December 31, 2010.
(h) Amortization of Geological and Geophysical Expenditures-
(1) IN GENERAL- Any geological and geophysical expenses paid or
incurred in connection with the exploration for, or development
of, oil or gas within the United States (as defined in
section 638) shall be allowed as a deduction ratably over the
24-month period beginning on the date that such expense was paid
or incurred.
(2) HALF-YEAR CONVENTION- For purposes of paragraph (1), any
payment paid or incurred during the taxable year shall be
treated as paid or incurred on the mid-point of such taxable
year.
(3) EXCLUSIVE METHOD- Except as provided in this subsection, no
depreciation or amortization deduction shall be allowed with
respect to such payments.
(4) TREATMENT UPON ABANDONMENT- If any property with respect to
which geological and geophysical expenses are paid or incurred
is retired or abandoned during the 24-month period described in
paragraph (1), no deduction shall be allowed on account of such
retirement or abandonment and the amortization deduction under
this subsection shall continue with respect to such payment.
(5) Special rule for major integrated oil companies.--
(A) In general.--In <<NOTE: Applicability.>> the
case of a major integrated oil company, paragraphs (1)
and (4) shall be applied by substituting `7-year' for
`24 month'.
(B) Major integrated oil company.--For purposes of
this paragraph, the term `major integrated oil company'
means, with respect to any taxable year, a producer of
crude oil--
(i) which has an average daily worldwide
production of crude oil of at least 500,000
barrels for the taxable year,
(ii) which had gross receipts in excess of
$1,000,000,000 for its last taxable year ending
during calendar year 2005, and
(iii) to which subsection (c) of section
613A does not apply by reason of paragraph (4) of
section 613A(d), determined--
(I) by substituting `15 percent'
for `5 percent' each place it occurs in
paragraph (3) of section 613A(d), and
(II) without regard to whether
subsection (c) of section 613A does not
apply by reason of paragraph (2) of
section 613A(d).
For purposes of <<NOTE: Applicability.>> clauses (i) and
(ii), all persons treated as a single employer under
subsections (a) and (b) of section 52 shall be treated
as 1 person and, in case of a short taxable year, the
rule under section 448(c)(3)(B) shall apply.
(i) Cross references
(1) For additional rule applicable to depreciation of
improvements in the case of mines, oil and gas wells, other
natural deposits, and timber, see section 611.
(2) For amortization of goodwill and certain other
intangibles, see section 197.
Sources
(Aug. 16, 1954, ch. 736, 68A Stat. 51; Pub. L. 85-866, title I,
Sec. 89(b), Sept. 2, 1958, 72 Stat. 1665; Pub. L. 87-834, Sec.
13(b), (c)(1), Oct. 16, 1962, 76 Stat. 1034; Pub. L. 89-800, Sec.
2, Nov. 8, 1966, 80 Stat. 1513; Pub. L. 90-26, Sec. 1, 2(b), June
13, 1967, 81 Stat. 57, 58; Pub. L. 91-172, title IV, Sec. 441(a),
title V, Sec. 521(a), (d), Dec. 30, 1969, 83 Stat. 625, 649, 653;
Pub. L. 92-178, title I, Sec. 109(a), Dec. 10, 1971, 85 Stat. 508;
Pub. L. 93-625, Sec. 3(c), Jan. 3, 1975, 88 Stat. 2109; Pub. L.
94-455, title II, Sec. 202(c)(3), 203(a), title XIX, Sec.
1901(a)(27), 1906(b)(13)(A), title XXI, Sec. 2124(c)(1), (d)(1),
Oct. 4, 1976, 90 Stat. 1530, 1768, 1834, 1918; Pub. L. 95-171, Sec.
4(a), Nov. 12, 1977, 91 Stat. 1355; Pub. L. 95-600, title III, Sec.
312(c)(4), 367, title VII, Sec. 701(f)(4), (6), Nov. 6, 1978, 92
Stat. 2826, 2857, 2901, 2902; Pub. L. 95-615, Sec. 7(a), Nov. 8,
1978, 92 Stat. 3098; Pub. L. 95-618, title III, Sec. 301(d)(3),
(e)(1), Nov. 9, 1978, 92 Stat. 3200, 3201; Pub. L. 96-541, Sec.
2(c), (d), 3, Dec. 17, 1980, 94 Stat. 3204, 3205; Pub. L. 96-613,
Sec. 2(a), Dec. 28, 1980, 94 Stat. 3579; Pub. L. 97-34, title II,
Sec. 203(a)-(c)(1), (d), 209(d)(3), 212(d)(1), 264(a), Aug. 13,
1981, 95 Stat. 221, 222, 227, 239, 264; Pub. L. 97-424, title V,
Sec. 541(a)(2), Jan. 6, 1983, 96 Stat. 2192; Pub. L. 98-369, div.
A, title X, Sec. 1064, July 18, 1984, 98 Stat. 1047; Pub. L.
99-514, title II, Sec. 201(d)(1), title XV, Sec. 1511(c)(4), title
XVIII, Sec. 1809(d)(1), Oct. 22, 1986, 100 Stat. 2139, 2745, 2821;
Pub. L. 100-647, title I, Sec. 1002(a)(22), (24), (31), (i)(1),
Nov. 10, 1988, 102 Stat. 3356, 3357, 3370; Pub. L. 101-239, title
VII, Sec. 7622(b)(1) ((d)(1)), 7645(a), Dec. 19, 1989, 103 Stat.
2378, 2381; Pub. L. 101-508, title XI, Sec. 11812(a), (b)(1), Nov.
5, 1990, 104 Stat. 1388-534; Pub. L. 103-66, title XIII, Sec.
13206(c)(2), 13261(b), (f)(1), Aug. 10, 1993, 107 Stat. 466, 538,
539; Pub. L. 104-188, title I, Sec. 1604(a), Aug. 20, 1996, 110
Stat. 1836; Pub. L. 105-34, title X, Sec. 1086(a), Aug. 5, 1997,
111 Stat. 957.)
Miscellaneous
AMENDMENTS
2007 - P.L. 110-140
SEC. 1502. 7-YEAR AMORTIZATION OF GEOLOGICAL AND GEOPHYSICAL
EXPENDITURES FOR CERTAIN MAJOR INTEGRATED OIL COMPANIES.
(a) In General.--Subparagraph (A) of section <<NOTE: 26 USC 167.>>
167(h)(5) (relating to special rule for major integrated oil companies)
is amended by striking ``5-year'' and inserting ``7-year''.
2006 - P.L. 109-222
SEC. 503. 5-YEAR AMORTIZATION OF GEOLOGICAL AND GEOPHYSICAL EXPENDITURES
FOR CERTAIN MAJOR INTEGRATED OIL COMPANIES.
(a) In General.--Section 167(h) (relating to amortization of
geological and geophysical expenditures) is amended by adding at the end
the following new paragraph:
``(5) Special rule for major integrated oil companies.--
``(A) In general.--In <<NOTE: Applicability.>> the
case of a major integrated oil company, paragraphs (1)
and (4) shall be applied by substituting `5-year' for
`24 month'.
``(B) Major integrated oil company.--For purposes of
this paragraph, the term `major integrated oil company'
means, with respect to any taxable year, a producer of
crude oil--
``(i) which has an average daily worldwide
production of crude oil of at least 500,000
barrels for the taxable year,
``(ii) which had gross receipts in excess of
$1,000,000,000 for its last taxable year ending
during calendar year 2005, and
``(iii) to which subsection (c) of section
613A does not apply by reason of paragraph (4) of
section 613A(d), determined--
``(I) by substituting `15 percent'
for `5 percent' each place it occurs in
paragraph (3) of section 613A(d), and
``(II) without regard to whether
subsection (c) of section 613A does not
apply by reason of paragraph (2) of
section 613A(d).
For purposes of <<NOTE: Applicability.>> clauses (i) and
(ii), all persons treated as a single employer under
subsections (a) and (b) of section 52 shall be treated
as 1 person and, in case of a short taxable year, the
rule under section 448(c)(3)(B) shall apply.''.
(b) Effective Date.--The <<NOTE: 26 USC 167 note.>> amendment made
by this section shall apply to amounts paid or incurred after the date
of the enactment of this Act.
2006 - P.L. 109-222
SEC. 207. AMORTIZATION OF EXPENSES INCURRED IN CREATING OR ACQUIRING
MUSIC OR MUSIC COPYRIGHTS.
(a) In General.--Section 167(g) (relating to depreciation under
income forecast method) is amended by adding at the end the following
new paragraph:
``(8) Special rules for certain musical works and
copyrights.--
``(A) In general.--If an election is in effect under
this paragraph for any taxable year, then,
notwithstanding paragraph (1), any expense which--
``(i) is paid or incurred by the taxpayer in
creating or acquiring any applicable musical
property placed in service during the taxable
year, and
``(ii) is otherwise properly chargeable to
capital account,
shall be amortized ratably over the 5-year period
beginning with the month in which the property was
placed in service. The preceding sentence shall not
apply to any expense which, without regard to this
paragraph, would not be allowable as a deduction.
``(B) Exclusive method.--Except as provided in this
paragraph, no depreciation or amortization deduction
shall be allowed with respect to any expense to which
subparagraph (A) applies.
``(C) Applicable musical property.--For purposes of
this paragraph--
``(i) In general.--The term `applicable
musical property' means any musical composition
(including any accompanying words), or any
copyright with respect to a musical composition,
which is property to which this subsection applies
without regard to this paragraph.
``(ii) Exceptions.--Such term shall not
include any property--
``(I) with respect to which expenses
are treated as qualified creative
expenses to which section 263A(h)
applies,
``(II) to which a simplified
procedure established under section
263A(j)(2) applies, or
``(III) which is an amortizable
section 197 intangible (as defined in
section 197(c)).
``(D) Election.--
An <<NOTE: Applicability.>> election under this
paragraph shall be made at such time and in such form as
the Secretary may prescribe and shall apply to all
applicable musical property placed in service during the
taxable year for which the election applies.
``(E) Termination.--An election may not be made
under this paragraph for any taxable year beginning
after December 31, 2010.''.
(b) Effective Date.--The <<NOTE: 26 USC 167 note.>> amendments made
by this section shall apply to expenses paid or incurred with respect to
property placed in service in taxable years beginning after December 31,
2005.
2005 - Energy Policy Act of 2005. Section 167 (relating to
depreciation) is amended by redesignating subsection (h) as
subsection (i) and by inserting after subsection (g) the following
new subsection: "(h) Amortization of Geological and Geophysical
Expenditures-...".
Effective Date- The amendments made by this section shall apply to
amounts paid or incurred in taxable years beginning after the date
of the enactment of this Act.
2004 - Pub. L. 108-357, Sec 847(b). Computer software.--
Paragraph (1) of section 167(f) is amended by adding at the end
the following new subparagraph: "(C) Tax-exempt use property
subject to lease.--...". Paragraph (2) of section 167(f) is amended
by adding at the end the following new sentence: "If such property
would be tax-exempt use property as defined in subsection (h) of
section 168 if such section applied to such property, the useful
life under such regulations shall not be less than 125 percent of
the lease term (within the meaning of section 168(i)(3))".
2004 - Subsec.242(a),Pub.L.108-357, amended Sec.167(g)
by adding a new paragraph (7). Subsec.242(b)amended Sec.167
(g)(5)by redesignating paragraphs (E)and(F) to (F)and(G) and
inserting a new paragraph (E).
1997 - Subsec. (g)(6). Pub. L. 105-34 added par. (6).
1996 - Subsecs. (g), (h). Pub. L. 104-188 added subsec. (g) and
redesignated former subsec. (g) as (h).
1993 - Subsec. (c). Pub. L. 103-66, Sec. 13261(b)(2), amended
heading and text of subsec. (c) generally. Prior to amendment,
text read as follows: ''The basis on which exhaustion, wear and
tear, and obsolescence are to be allowed in respect of any property
shall be the adjusted basis provided in section 1011 for the
purpose of determining the gain on the sale or other disposition of
such property.''
Subsec. (e)(2). Pub. L. 103-66, Sec. 13206(c)(2), amended heading
and text of par. (2) generally. Prior to amendment, text read as
follows: ''This subsection shall not apply to any term interest to
which section 273 applies.''
Subsec. (f). Pub. L. 103-66, Sec. 13261(b)(1), added subsec. (f).
Former subsec. (f) redesignated (g).
Subsec. (g). Pub. L. 103-66, Sec. 13261(b)(1), (f)(1),
redesignated subsec. (f) as (g) and amended heading and text
generally, designating existing provisions of text as par. (1) and
adding par. (2).
1990 - Subsec. (b). Pub. L. 101-508, Sec. 11812(a), added subsec.
(b) and struck out former subsec. (b) ''Use of certain methods and
rates'' which read as follows: ''For taxable years ending after
December 31, 1953, the term 'reasonable allowance' as used in
subsection (a) shall include (but shall not be limited to) an
allowance computed in accordance with regulations prescribed by the
Secretary, under any of the following methods:
''(1) the straight line method,
''(2) the declining balance method, using a rate not exceeding
twice the rate which would have been used had the annual
allowance been computed under the method described in paragraph
(1),
''(3) the sum of the years-digits method, and
''(4) any other consistent method productive of an annual
allowance which, when added to all allowances for the period
commencing with the taxpayer's use of the property and including
the taxable year, does not, during the first two-thirds of the
useful life of the property, exceed the total of such allowances
which would have been used had such allowances been computed
under the method described in paragraph (2).
Nothing in this subsection shall be construed to limit or reduce an
allowance otherwise allowable under subsection (a).''
Subsec. (c). Pub. L. 101-508, Sec. 11812(a)(1), redesignated
subsec. (g) as (c) and struck out former subsec. (c) ''Limitations
on use of certain methods and rates'' which read as follows:
''Paragraphs (2), (3), and (4) of subsection (b) shall apply only
in the case of property (other than intangible property) described
in subsection (a) with a useful life of 3 years or more -
''(1) the construction, reconstruction, or erection of which is
completed after December 31, 1953, and then only to that portion
of the basis which is properly attributable to such construction,
reconstruction, or erection after December 31, 1953, or
''(2) acquired after December 31, 1953, if the original use of
such property commences with the taxpayer and commences after
such date.
Paragraphs (2), (3), and (4) of subsection (b) shall not apply to
any motion picture film, video tape, or sound recording.''
Subsec. (d). Pub. L. 101-508, Sec. 11812(a)(1), redesignated
subsec. (h) as (d) and struck out former subsec. (d) ''Agreement as
to useful life on which depreciation rate is based'' which read as
follows: ''Where, under regulations prescribed by the Secretary,
the taxpayer and the Secretary have, after August 16, 1954, entered
into an agreement in writing specifically dealing with the useful
life and rate of depreciation of any property, the rate so agreed
upon shall be binding on both the taxpayer and the Secretary in the
absence of facts or circumstances not taken into consideration in
the adoption of such agreement. The responsibility of establishing
the existence of such facts and circumstances shall rest with the
party initiating the modification. Any change in the agreed rate
and useful life specified in the agreement shall not be effective
for taxable years before the taxable year in which notice in
writing by certified mail or registered mail is served by the party
to the agreement initiating such change. This subsection shall not
apply with respect to property to which section 168 applies.''
Subsec. (e). Pub. L. 101-508, Sec. 11812(a)(1), redesignated
subsec. (r) as (e) and struck out former subsec. (e) which related
to changes in method of depreciation from declining balance method
and changes with respect to sections 1245 and 1250 property.
Subsec. (e)(3)(B). Pub. L. 101-508, Sec. 11812(b)(1) substituted
''(d)'' for ''(h)''.
Subsec. (e)(4)(B). Pub. L. 101-508, Sec. 11812(b)(1), substituted
''(d)'' for ''(h)'' in heading and text.
Subsec. (f). Pub. L. 101-508, Sec. 11812(a)(1), redesignated
subsec. (s) as (f) and struck out former subsec. (f) ''Salvage
value'' which read as follows:
''(1) General rule. - Under regulations prescribed by the
Secretary, a taxpayer may, for purposes of computing the allowance
under subsection (a) with respect to personal property, reduce the
amount taken into account as salvage value by an amount which does
not exceed 10 percent of the basis of such property (as determined
under subsection (g) as of the time as of which such salvage value
is required to be determined).
''(2) Personal property defined. - For purposes of this
subsection, the term 'personal property' means depreciable personal
property (other than livestock) with a useful life of 3 years or
more acquired after October 16, 1962.''
Subsecs. (g), (h). Pub. L. 101-508, Sec. 11812(a)(1),
redesignated subsecs. (g) and (h) as (c) and (d), respectively.
Subsec. (j). Pub. L. 101-508, Sec. 11812(a)(1), struck out
subsec. (j) which related to special rules for section 1250
property including residential rental property and change in method
of depreciation.
Subsec. (k). Pub. L. 101-508, Sec. 11812(a)(1), struck out
subsec. (k) which related to depreciation of expenditures to
rehabilitate low-income rental housing.
Subsec. (l). Pub. L. 101-508, Sec. 11812(a)(1), struck out
subsec. (l) which related to reasonable allowance in case of
property of certain utilities, pre-1970 public utility property and
post-1969 public utility property.
Subsec. (m). Pub. L. 101-508, Sec. 11812(a)(1), struck out
subsec. (m) which related to class lives.
Subsec. (p). Pub. L. 101-508, Sec. 11812(a)(1), struck out
subsec. (p) which related to straight line method for boilers
fueled by oil or gas.
Subsec. (q). Pub. L. 101-508, Sec. 11812(a)(1), struck out
subsec. (q) which related to retirement or replacement of certain
boilers, etc., fueled by oil or gas.
Subsecs. (r), (s). Pub. L. 101-508, Sec. 11812(a)(1),
redesignated subsecs. (r) and (s) as (e) and (f), respectively.
1989 - Subsec. (r). Pub. L. 101-239, Sec. 7645(a), added subsec.
(r).
Pub. L. 101-239, Sec. 7622(b)(1) ((d)(1)), repealed subsec. (r)
which provided that trademark or trade name expenditures were not
depreciable.
1988 - Subsec. (a). Pub. L. 100-647, Sec. 1002(a)(24), struck out
at end ''In the case of recovery property (within the meaning of
section 168), the deduction allowable under section 168 shall be
deemed to constitute the reasonable allowance provided by this
section, except with respect to that portion of the basis of such
property to which subsection (k) applies.''
Subsec. (d). Pub. L. 100-647, Sec. 1002(a)(31), substituted
''property to which section 168 applies'' for ''recovery property
defined in section 168''.
Subsec. (l)(3)(G). Pub. L. 100-647, Sec. 1002(a)(22), substituted
''section 168(i)(9)(B)'' for ''section 168(e)(3)(C)'' in last
sentence.
Subsecs. (r), (s). Pub. L. 100-647, Sec. 1002(i)(1), added
subsec. (r) and redesignated former subsec. (r) as (s).
1986 - Subsec. (c). Pub. L. 99-514, Sec. 1809(d)(1), inserted
''Paragraphs (2), (3), and (4) of subsection (b) shall not apply to
any motion picture film, video tape, or sound recording.''
Subsec. (m)(4). Pub. L. 99-514, Sec. 201(d)(1), amended par. (4)
generally. Prior to amendment, par. (4) read as follows: ''This
subsection shall not apply with respect to recovery property
(within the meaning of section 168) placed in service after
December 31, 1980.''
Subsec. (q)(2)(B). Pub. L. 99-514, Sec. 1511(c)(4), substituted
''at the underpayment rate established under section 6621'' for
''at the rate determined under section 6621''.
1984 - Subsec. (k)(1), (3)(D). Pub. L. 98-369 substituted
''January 1, 1987'' for ''January 1, 1984'' wherever appearing.
1983 - Subsec. (l)(3)(G). Pub. L. 97-424 inserted provision that,
for the purposes of this paragraph, rules similar to the rules of
section 168(e)(3)(C) of this title shall apply.
1981 - Subsec. (a). Pub. L. 97-34, Sec. 203(a), inserted
provision that, in the case of recovery property (within the
meaning of section 168), the deduction allowable under section 168
shall be deemed to constitute the reasonable allowance provided by
this section, except with respect to that portion of the basis of
such property to which subsection (k) applies.
Subsec. (d). Pub. L. 97-34, Sec. 203(d), provided that subsec.
(d) did not apply with respect to recovery property defined in
section 168.
Subsec. (k)(2). Pub. L. 97-34, Sec. 264(a), substituted ''Except
as provided in subparagraph (B), the aggregate amount'' for ''The
aggregate amount'' in subpar. (A), added subpar. (B), and
redesignated former subpar. (B) as (C).
Subsec. (l)(3)(C). Pub. L. 97-34, Sec. 209(d)(3), inserted ''and
which is placed in service before January 1, 1981'' after
''pre-1970 public utility property''.
Subsec. (m)(4). Pub. L. 97-34, Sec. 203(b), added par. (4).
Subsecs. (n), (o). Pub. L. 97-34, Sec. 212(d)(1), struck out
subsec. (n) which dealt with the use of the straight line method of
depreciation in certain cases, and subsec. (o) which dealt with the
method of depreciation to be used in the case of substantially
rehabilitated historic property.
Subsec. (r). Pub. L. 97-34, Sec. 203(c)(1), redesignated subsec.
(s) as (r). Former subsec. (r), relating to the
retirement-replacement-betterment method of calculating
depreciation, was struck out.
Subsec. (s). Pub. L. 97-34, Sec. 203(c)(1), redesignated subsec.
(s) as (r).
1980 - Subsec. (k). Pub. L. 96-541, Sec. 3, substituted in pars.
(1) and (3)(D) ''January 1, 1984'' for ''January 1, 1982'' wherever
appearing.
Subsec. (n)(4). Pub. L. 96-541, Sec. 2(c), added par. (4).
Subsec. (o)(3). Pub. L. 96-541, Sec. 2(d), added par. (3).
Subsecs. (r), (s). Pub. L. 96-613 added subsec. (r) and
redesignated former subsec. (r) as (s).
1978 - Subsec. (i). Pub. L. 95-600, Sec. 312(c)(4), struck out
subsec. (i) which related to a limitation in the case of property
constructed or acquired during the suspension period.
Subsec. (k)(1), (3)(D). Pub. L. 95-615 substituted ''January 1,
1979'' for ''January 1, 1978'' wherever appearing.
Pub. L. 95-600, Sec. 367, substituted ''January 1, 1982'' for
''January 1, 1979'' wherever appearing.
Subsec. (n). Pub. L. 95-600, Sec. 701(f)(4), in par. (1),
substituted ''occupied by a certified historic structure (or by any
structure in a registered historic district) which is demolished or
substantially altered after such date'' for ''occupied by a
certified historic structure (as defined in section 191(d)(1))
which is demolished or substantially altered (other than by virtue
of a certified rehabilitation as defined in section 191(d)(3) after
such date'', inserted ''and'' preceding subpar. (B), substituted
''means'' for ''shall mean'' in subpar. (B), and inserted provision
that ''The preceding sentence shall not apply if the last
substantial alteration of the structure is a certified
rehabilitation.''; in par. (2), substituted heading ''Exceptions''
for ''Exception'', designated existing text as subpar. (A), and
added subpar. (B); and added par. (3).
Subsec. (o). Pub. L. 95-600, Sec. 701(f)(6), inserted in par. (1)
''(other than property with respect to which an amortization
deduction has been allowed to the taxpayer under section 191)''
after ''substantially rehabilitated historic property'' and
substituted in par. (2) ''section 191(d)(4)'' for ''section
191(d)(3)''.
Subsec. (p). Pub. L. 95-618, Sec. 301(d)(3), added subsec. (p).
Former subsec. (p) redesignated (r).
Subsec. (q). Pub. L. 95-618, Sec. 301(e)(1), added subsec. (q).
Subsec. (r). Pub. L. 95-618, Sec. 301(d)(3), redesignated former
subsec. (p) as (r).
1977 - Subsec. (k). Pub. L. 95-171 substituted ''January 1,
1979'' for ''January 1, 1978'' wherever appearing in pars. (1) and
(3)(D).
1976 - Subsec. (b). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck
out ''or his delegate'' after ''Secretary''.
Subsec. (d). Pub. L. 94-455, Sec. 1901(a)(27)(A), 1906(b)(13)(A),
substituted ''after August 16, 1954'' for ''after the date of
enactment of this title'' and struck out ''or his delegate'' after
''Secretary'' in first sentence before ''shall be binding''.
Subsec. (e). Pub. L. 94-455, Sec. 202(c)(3), 1906(b)(13)(A),
substituted in par. (3) ''beginning after December 31, 1975'' for
''beginning after July 24, 1969'' and in pars. (1) to (3) struck
out ''or his delegate'' after ''Secretary''.
Subsec. (f)(1). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out
''or his delegate'' after ''Secretary''.
Subsec. (f)(2). Pub. L. 94-455, Sec. 1901(a)(27)(B), substituted
''October 16, 1962'' for ''the date of enactment of the Revenue Act
of 1962''.
Subsec. (i). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out in
pars. (1) and (2) ''or his delegate'' after ''Secretary''.
Subsec. (j). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out in
pars. (1), (4)(B), (5)(C), and (6)(A) ''or his delegate'' after
''Secretary''.
Subsec. (k)(1). Pub. L. 94-455, Sec. 203(a)(1), 1906(b)(13)(A),
substituted reference to January 1, 1978 for reference to January
1, 1976 and struck out ''or his delegate'' after ''Secretary''.
Subsec. (k)(2)(A). Pub. L. 94-455, Sec. 203(a)(2), substituted
''$20,000'' for ''$15,000''.
Subsec. (k)(3)(B). Pub. L. 94-455, Sec. 203(a)(3),
1906(b)(13)(A), substituted ''the Leased Housing Program under
section 8 of the United States Housing Act of 1937'' for ''the
policies of the Housing and Urban Development Act of 1968'' and
struck out ''or his delegate'' after ''Secretary''.
Subsec. (k)(3)(D). Pub. L. 94-455, Sec. 203(a)(4), added subpar.
(D).
Subsec. (l)(3)(F). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck
out ''or his delegate'' after ''Secretary''.
Subsec. (l)(4)(A). Pub. L. 94-455, Sec. 1901(a)(27)(C),
1906(b)(13)(A), substituted ''before June 29, 1970,'' for ''within
180 days after the date of the enactment of this subparagraph'' and
struck out ''or his delegate'' after ''Secretary''.
Subsec. (l)(5). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out
''or his delegate'' after ''Secretary''.
Subsec. (m). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out in
pars. (1) and (3) ''or his delegate'' after ''Secretary''.
Subsec. (n). Pub. L. 94-455, Sec. 2124(c)(1), added subsec. (n).
Former subsec. (n) redesignated (p).
Subsec. (o). Pub. L. 94-455, Sec. 2124(d)(1), added subsec. (o).
Subsec. (p). Pub. L. 94-455, Sec. 2124(c)(1), redesignated former
subsec. (n) as (p).
1975 - Subsec. (k)(1). Pub. L. 93-625 substituted ''January 1,
1976'' for ''January 1, 1975''.
1971 - Subsecs. (m), (n). Pub. L. 92-178 added subsec. (m) and
redesignated former subsec. (m) as (n).
1969 - Subsec. (e)(3). Pub. L. 91-172, Sec. 521(d), added par.
(3).
Subsecs. (j), (k). Pub. L. 91-172, Sec. 521(a), added subsecs.
(j) and (k). Former subsec. (j) redesignated (m).
Subsec. (l). Pub. L. 91-172, Sec. 441(a), added subsec. (l).
Subsec. (m). Pub. L. 91-172, Sec. 521(a), redesignated former
subsec. (j) as (m).
1967 - Subsec. (i)(1). Pub. L. 90-26, Sec. 2(b), provided that
accelerated depreciation was not to apply if the physical
construction, reconstruction or erection by any person was begun
during the suspension period or begun, pursuant to an order placed
during such period, before May 24, 1967, subject to the proviso
that only that portion of the basis which was properly attributable
to construction, reconstruction or erection before May 24, 1967,
shall be affected by the applicability of the suspension period.
Subsec. (i)(3). Pub. L. 90-26, Sec. 1, substituted ''March 9,
1967'' for ''December 31, 1967''.
1966 - Subsecs. (i), (j). Pub. L. 89-800 added subsec. (i) and
redesignated former subsec. (i) as (j).
1962 - Subsec. (e). Pub. L. 87-834, Sec. 13(b), designated
existing provisions as par. (1) and added par. (2).
Subsecs. (f) to (i). Pub. L. 87-834, Sec. 13(c)(1), added subsec.
(f) and redesignated former subsecs. (f), (g), and (h) as (g), (h),
and (i), respectively.
1958 - Subsec. (d). Pub. L. 85-866 inserted ''certified mail or''
before ''registered mail''.
EFFECTIVE DATE OF 2007 AMENDMENT
2007 - P.L. 110-140
SEC. 1502. 7-YEAR AMORTIZATION OF GEOLOGICAL AND GEOPHYSICAL
EXPENDITURES FOR CERTAIN MAJOR INTEGRATED OIL COMPANIES.
(b) <<NOTE: 26 USC 167 note.>> Effective Date.--The amendment made
by this section shall apply to amounts paid or incurred after the date
of the enactment of this Act.
EFFECTIVE DATE OF 2006 AMENDMENT
2006 - P.L. 109-222
SEC. 503. 5-YEAR AMORTIZATION OF GEOLOGICAL AND GEOPHYSICAL EXPENDITURES
FOR CERTAIN MAJOR INTEGRATED OIL COMPANIES.
(b) Effective Date.--The <<NOTE: 26 USC 167 note.>> amendment made
by this section shall apply to amounts paid or incurred after the date
of the enactment of this Act.
EFFECTIVE DATE OF 2006 AMENDMENT
2006 - P.L. 109-222
SEC. 207. AMORTIZATION OF EXPENSES INCURRED IN CREATING OR ACQUIRING
MUSIC OR MUSIC COPYRIGHTS.
(b) Effective Date.--The <<NOTE: 26 USC 167 note.>> amendments made
by this section shall apply to expenses paid or incurred with respect to
property placed in service in taxable years beginning after December 31,
2005.
EFFECTIVE DATE OF 2004 AMENDMENT
Effective Date.--The amendments made by Sec. 242, PL108-357,
shall apply to property placed in service after the
date of the enactment of the Act.
EFFECTIVE DATE OF 1997 AMENDMENT
Section 1086(c) of Pub. L. 105-34 provided that: ''The amendment
made by this section (amending this section and section 168 of this
title) shall apply to property placed in service after the date of
the enactment of this Act (Aug. 5, 1997).''
EFFECTIVE DATE OF 1996 AMENDMENT
Section 1604(b) of Pub. L. 104-188, as amended by Pub. L.
105-206, title VI, Sec. 6018(d), July 22, 1998, 112 Stat. 823,
provided that:
''(1) In general. - The amendment made by subsection (a)
(amending this section) shall apply to property placed in service
after September 13, 1995.
''(2) Binding contracts. - The amendment made by subsection (a)
shall not apply to any property produced or acquired by the
taxpayer pursuant to a written contract which was binding on
September 13, 1995, and at all times thereafter before such
production or acquisition.
''(3) Underpayments of income tax. - No addition to tax shall be
made under section 6662 of the Internal Revenue Code of 1986 as a
result of the application of subsection (d) of that section
(relating to substantial understatements of income tax) with
respect to any underpayment of income tax for any taxable year
ending before the date of the enactment of this Act (Aug. 20,
1996), to the extent such underpayment was created or increased by
the amendments made by subsection (a).''
EFFECTIVE DATE OF 1993 AMENDMENT
Section 13206(c)(3) of Pub. L. 103-66 provided that: ''The
amendments made by this subsection (amending this section and
section 305 of this title) shall take effect on April 30, 1993.''
Amendment by section 13261(b) and (f)(1) of Pub. L. 103-66
applicable, except as otherwise provided, with respect to property
acquired after Aug. 10, 1993, see section 13261(g) of Pub. L.
103-66, set out as an Effective Date note under section 197 of this
title.
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by Pub. L. 101-508 applicable to property placed in
service after Nov. 5, 1990, but not applicable to any property to
which section 168 of this title does not apply by reason of subsec.
(f)(5) of section 168, and not applicable to rehabilitation
expenditures described in section 252(f)(5) of Pub. L. 99-514, see
section 11812(c) of Pub. L. 101-508, set out as a note under
section 42 of this title.
EFFECTIVE DATE OF 1989 AMENDMENT
Section 7622(c)((e)) of Pub. L. 101-239 provided that:
''(1) In general. - The amendments made by this section (amending
this section and sections 1245 and 1253 of this title) shall apply
to transfers after October 2, 1989.
''(2) Binding contract. - The amendments made by this section
shall not apply to any transfer pursuant to a written binding
contract in effect on October 2, 1989, and at all times thereafter
before the transfer.''
Section 7645(b) of Pub. L. 101-239 provided that: ''The amendment
made by subsection (a) (amending this section) shall apply to
interests created or acquired after July 27, 1989, in taxable years
ending after such date.''
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by Pub. L. 100-647 effective, except as otherwise
provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section
1019(a) of Pub. L. 100-647, set out as a note under section 1 of
this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by section 201(d)(1) of Pub. L. 99-514 applicable to
property placed in service after Dec. 31, 1986, in taxable years
ending after such date, with exceptions, see sections 203 and 204
of Pub. L. 99-514, set out as a note under section 168 of this
title.
Amendment by section 201(d)(1) of Pub. L. 99-514 not applicable
to any property placed in service before Jan. 1, 1994, if such
property placed in service as part of specified rehabilitations,
and not applicable to certain additional rehabilitations, see
section 251(d)(2), (3) of Pub. L. 99-514, set out as a note under
section 46 of this title.
Amendment by section 1511(c)(4) of Pub. L. 99-514 applicable for
purposes of determining interest for periods after Dec. 31, 1986,
see section 1511(d) of Pub. L. 99-514, set out as a note under
section 47 of this title.
Section 1809(d)(1) of Pub. L. 99-514 provided that subsec. (c) is
amended except with respect to property placed in service by the
taxpayer on or before Mar. 28, 1985.
EFFECTIVE DATE OF 1983 AMENDMENT
Amendment by Pub. L. 97-424 applicable to taxable years beginning
after Dec. 31, 1979, with a special rule for periods beginning
before Mar. 1, 1980, see section 541(c) of Pub. L. 97-424, set out
as a note under section 46 of this title.
EFFECTIVE DATE OF 1981 AMENDMENT
Section 264(b) of Pub. L. 97-34 provided that: ''The amendments
made by this section (amending this section) shall apply with
respect to rehabilitation expenditures incurred after December 31,
1980.''
Amendment by sections 203 and 209 of Pub. L. 97-34 applicable to
property placed in service after Dec. 31, 1980, in taxable years
ending after that date, except that amendment by section 203(c) of
Pub. L. 97-34 effective Jan. 1, 1981, and applicable with respect
to taxable years ending after that date, see section 209(a), (b) of
Pub. L. 97-34, set out as an Effective Date note under section 168
of this title.
Amendment by section 212(d)(1) of Pub. L. 97-34 applicable to
expenditures incurred after Dec. 31, 1981, in taxable years ending
after that date, see section 212(e) of Pub. L. 97-34, set out as a
note under section 46 of this title.
EFFECTIVE DATE OF 1980 AMENDMENT
Section 2(b) of Pub. L. 96-613 provided that: ''The amendments
made by subsection (a) (amending this section) shall apply with
respect to taxable years ending after December 31, 1953.''
EFFECTIVE AND TERMINATION DATES OF 1978 AMENDMENTS
Amendment by section 312(c)(4) of Pub. L. 95-600 applicable to
taxable years ending after Dec. 31, 1978, see section 312(d) of
Pub. L. 95-600, set out as an Effective Date of 1978 Amendment note
under section 46 of this title.
Section 701(f)(8) of Pub. L. 95-600, as amended by Pub. L.
99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ''The
amendments made by this subsection (amending this section and
sections 57, 191, 280B, 1245, and 1250 of this title) shall take
effect as if included in the respective provisions of the Internal
Revenue Code of 1986 (formerly I.R.C. 1954) to which such
amendments relate, as such provision(s) were added to such Code, or
amended, by section 2124 of the Tax Reform Act of 1976 (Pub. L.
94-455, title XXI, Sec. 2124, Oct. 4, 1976, 90 Stat. 1916).''
Amendment by Pub. L. 95-615 to cease to have effect on the day
after Nov. 8, 1978, see section 210(a) of Pub. L. 95-615, set out
as a Termination Date of 1978 Amendment note under section 61 of
this title.
Amendment by section 301(d)(3) of Pub. L. 95-618 applicable to
property which is placed in service after Sept. 30, 1978, but not
to property which is constructed, reconstructed, erected, or
acquired pursuant to a contract which, on Oct. 1, 1978, and at all
times thereafter, was binding on the taxpayer, see section
301(d)(4) of Pub. L. 95-618, set out as an Effective Date of 1978
Amendment note under section 48 of this title.
Section 301(e)(2) of Pub. L. 95-618 provided that: ''The
amendment made by paragraph (1) (amending this section) shall apply
to taxable years ending after the date of enactment of this Act
(Nov. 9, 1978).''
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by section 1901(a)(27)(A) of Pub. L. 94-455 applicable
with respect to taxable years beginning after Dec. 31, 1976, see
section 1901(d) of Pub. L. 94-455, set out as a note under section
2 of this title.
Amendment by section 202(c)(3) of Pub. L. 94-455 applicable for
taxable years ending after Dec. 31, 1975, see section 202(d) of
Pub. L. 94-455, set out as a note under section 1250 of this title.
Section 203(b) of Pub. L. 94-455, as amended by Pub. L. 95-171,
Sec. 4(b), Nov. 12, 1977, 91 Stat. 1355; Pub. L. 95-615, Sec. 7(b),
Nov. 8, 1978, 92 Stat. 3098, provided that: ''The amendments made
by paragraphs (1), (3), and (4) of subsection (a) (amending this
section) shall apply to expenditures paid or incurred after
December 31, 1975. The amendment made by paragraph (2) of
subsection (a) (amending this section) shall apply to expenditures
incurred after December 31, 1975.''
(Section 7(b) of Pub. L. 95-615 (which amended section 203(b) of
Pub. L. 94-455 exactly as that section 203(b) had been amended by
Pub. L. 95-171) to cease to have effect on the day after Nov. 8,
1978, see section 210(a) of Pub. L. 95-615, set out as a
Termination Date of 1978 Amendment note under section 61 of this
title.)
Section 2124(c)(2), (d)(2) of Pub. L. 94-455, which provided that
the amendment of this section was applicable to that portion of the
basis attributable to construction, reconstruction, or erection
after Dec. 31, 1975, and before Jan. 1, 1981, and with respect to
additions to capital account occurring after June 30, 1976, and
before July 1, 1981, was repealed by section 2(e)(3), (4) of Pub.
L. 96-541.
EFFECTIVE DATE OF 1975 AMENDMENT
Section 5(d) of Pub. L. 93-625 provided that: ''The amendments
made by this section (amending section 1250 of this title and
enacting and repealing provisions set out as notes under this
section) shall apply with respect to property placed in service
after December 31, 1973.''
EFFECTIVE DATE OF 1971 AMENDMENT
Section 109(d)(1) of Pub. L. 92-178 provided that: ''The
amendments made by subsection (a) (amending this section) shall
apply to property placed in service after December 31, 1970.''
EFFECTIVE DATE OF 1969 AMENDMENT
Section 441(b) of Pub. L. 91-172 provided that: ''The amendment
made by subsection (a) (amending this section) shall apply with
respect to all taxable years for which a return has not been filed
before August 1, 1969.''
Section 521(g) of Pub. L. 91-172 provided that: ''The amendments
made by this section (amending this section and sections 381 and
1250 of this title) shall apply with respect to taxable years
ending after July 24, 1969.''
EFFECTIVE DATE OF 1967 AMENDMENT
Amendment by Pub. L. 90-26 applicable with respect to taxable
years ending after March 9, 1967, see section 4 of Pub. L. 90-26,
set out as a note under section 48 of this title.
EFFECTIVE DATE OF 1966 AMENDMENT
Amendment by Pub. L. 89-800 applicable to taxable years ending
after Oct. 9, 1966, see section 4 of Pub. L. 89-800, set out as a
note under section 46 of this title.
EFFECTIVE DATE OF 1962 AMENDMENT
Amendment by section 13(b) of Pub. L. 87-834 applicable to
taxable years beginning after Dec. 31, 1962, and amendment by
section 13(c)(1) of Pub. L. 87-834 applicable to taxable years
beginning after Dec. 31, 1961, and ending after Oct. 16, 1962, see
section 13(g) of Pub. L. 87-834, set out as an Effective Date note
under section 1245 of this title.
EFFECTIVE DATE OF 1958 AMENDMENT
Amendment by Pub. L. 85-866 applicable only if mailing occurs
after Sept. 2, 1958, see section 89(d) of Pub. L. 85-866, set out
as a note under section 7502 of this title.
SAVINGS PROVISION
For provisions that nothing in amendment by Pub. L. 101-508 be
construed to affect treatment of certain transactions occurring,
property acquired, or items of income, loss, deduction, or credit
taken into account prior to Nov. 5, 1990, for purposes of
determining liability for tax for periods ending after Nov. 5,
1990, see section 11821(b) of Pub. L. 101-508, set out as a note
under section 29 of this title.
PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
For provisions directing that if any amendments made by subtitle
A or subtitle C of title XI (Sec. 1101-1147 and 1171-1177) or title
XVIII (Sec. 1800-1899A) of Pub. L. 99-514 require an amendment to
any plan, such plan amendment shall not be required to be made
before the first plan year beginning on or after Jan. 1, 1989, see
section 1140 of Pub. L. 99-514, as amended, set out as a note under
section 401 of this title.
DISCONTINUATION OF RETIREMENT-REPLACEMENT-BETTERMENT METHOD OF
DEPRECIATION; TRANSITIONAL RULE
Section 203(c)(2), (3) of Pub. L. 97-34, as amended by Pub. L.
99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
''(2) Change in method of accounting. - Sections 446 and 481 of
the Internal Revenue Code of 1986 (formerly I.R.C. 1954) shall not
apply to the change in the method of depreciation to comply with
the provisions of this subsection (which struck out subsec. (r) of
this section relating to the retirement-replacement-betterment
method of accounting).
''(3) Transitional rule. - The adjusted basis of RRB property (as
defined in section 168(g)(6) of such Code) as of December 31, 1980,
shall be depreciated using a useful life of no less than 5 years
and no more than 50 years and a method described in section 167(b)
of such Code, including the method described in section 167(b)(2)
of such Code, switching to the method described in section
167(b)(3) of such Code at a time to maximize the deduction.''
INTERNAL REVENUE CODE PROVISIONS RELATING TO DEPRECIATION AS NOT
APPLICABLE TO CALCULATIONS OF SECRETARY OF HEALTH AND HUMAN
SERVICES IN DETERMINING COSTS OF PROGRAMS
Section 203(e) of Pub. L. 97-34, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ''The
Secretary of Health and Human Services is not required to apply any
provision of the Internal Revenue Code of 1986 (formerly I.R.C.
1954), as amended, in calculating depreciation (for the purpose of
determining any cost under a program administered by the
Secretary), unless a provision of law requires so expressly.''
CLASS LIFE SYSTEM; APPLICATION TO REAL PROPERTY; GENERAL RULE
Section 5(a) of Pub. L. 93-625, as amended by Pub. L. 99-514,
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ''In the case
of buildings and other items of section 1250 property (within the
meaning of section 1250(c) of the Internal Revenue Code of 1986
(formerly I.R.C. 1954)) placed in service before the effective date
of the class lives first prescribed by the Secretary of the
Treasury or his delegate under section 167(m) of such Code for the
class in which such property falls, if an election under such
section 167(m) applies to the taxpayer for the taxable year in
which such property is placed in service, the taxpayer may, in
accordance with regulations prescribed by the Secretary of the
Treasury or his delegate, elect to determine the useful life of
such property -
''(1) under Revenue Procedure 62-21 (as amended and
supplemented) as in effect on December 31, 1970, or
''(2) on the facts and circumstances.''
TRANSITIONAL RULES FOR REASONABLE ALLOWANCE FOR DEPRECIATION
Section 109(e) of Pub. L. 92-178, as amended by Pub. L. 93-625,
Sec. 5(b), Jan. 3, 1975, 88 Stat. 2112; Pub. L. 99-514, Sec. 2,
Oct. 22, 1986, 100 Stat. 2095, provided that:
''(1) (Repealed. Pub. L. 93-625, Sec. 5(b), Jan. 3, 1975, 88
Stat. 2112.)
''(2) Subsidiary assets. - If a significant portion of a class of
property first prescribed by the Secretary of the Treasury or his
delegate under section 167(m) of the Internal Revenue Code of 1986
(formerly I.R.C. 1954) consists of subsidiary assets, all such
subsidiary assets in such class placed in service by the taxpayer
during the period beginning on January 1, 1971, and ending on
December 31, 1973 (or such earlier date on which a class which
includes such subsidiary assets subsequently prescribed by the
Secretary of the Treasury or his delegate under such section
becomes effective), may, in accordance with regulations prescribed
by the Secretary of the Treasury or his delegate, be excluded by
the taxpayer from an election under such section.''
REHABILITATION EXPENDITURES FOR LOW INCOME RENTAL HOUSING INCURRED
AFTER DECEMBER 31, 1974, AND BEFORE JANUARY 1, 1978, PURSUANT TO
CONTRACT ENTERED BEFORE DECEMBER 31, 1974
Pub. L. 93-482, Sec. 4, Oct. 26, 1974, 88 Stat. 1456, as amended
by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided
that: ''Notwithstanding the provisions of section 167(k)(1) of the
Internal Revenue Code of 1986 (formerly I.R.C. 1954) (relating to
depreciation of expenditures to rehabilitate low income rental
housing), the provisions of section 167(k) shall apply with respect
to rehabilitation expenditures incurred with respect to low income
rental housing after December 31, 1974, and before January 1, 1978,
if such expenditures are incurred pursuant to a binding contract
entered into before December 31, 1974.''
References
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 42, 56, 62, 132, 142,
168, 169, 172, 174, 175, 179A, 197, 198, 216, 312, 381, 453, 514,
542, 543, 545, 556, 611, 616, 617, 642, 818, 832, 834, 936, 1016,
1082, 1221, 1231, 1239, 1245, 1250, 4940, 7518, 7701 of this title;
title 33 sections 1316, 1326; title 46 App. section 1177.
