Page:United States Statutes at Large Volume 100 Part 3.djvu/1012

 100 STAT. 2820

PUBLIC LAW 99-514—OCT. 22, 1986 -

real property or low-income housing, the amount (if any) by which the deduction allowed under section 168(a) (or, in the Case of property described in section 167(k), under section 167) for the taxable year exceeds the deduction which would have been allowable for the taxable year had the property been depreciated using a straight-line method (without regard to salvage value) over a recovery period of—". (4) TREATMENT OF PROPERTY FINANCED WITH TAX-EXEMPT BONDS.—

(A) Clause (ii) of section 168(f)(12)(B) (relating to recovery method) is amended to read as follows: "(ii) 19-YEAR REAL PROPERTY.—In the case of 19-year real property, the amount of the deduction allowed shall be determined by using the straight-line method (without regard to salvage value) and a recovery period of 19 years. (B) Subparagraph (C) of section 168(f)(12) (relating to exception for projects for residential rental property) is amended to read as follows:

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"(C) EXCEPTION FOR LOW- AND MODERATE-INCOME HOUS-

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ING.—Subparagraph (A) shall not apply to— "(i) any low-income housing, and "(ii) any other recovery property which is placed in service in connection with projects for residential rental property financed by the proceeds of obligations described in section 103(b)(4)(A)." (C) Any property described in paragraph (3) of section 631(d) of the Tax Reform Act of 1984 shall be treated as property described in clause (ii) of section 168(f)(12)(C) of the Internal Revenue Code of 1954 as amended by subparagraph (B).

(5) COORDINATION WITH IMPUTED INTEREST CHANGES.—In the

case of any property placed in service before May 9, 1985 (or treated as placed in service before such date by section 105(b)(3) of Public Law 99-121)— (A) any reference in any amendment made by this subsection to 19-year real property shall be treated as a reference to 18-year real property, and (B) section 168(f)(12XBXii) of the Internal Revenue Code of 1954 (as amended by paragraph (4)(A)) shall be applied by substituting "18 years for "19 years". OD) TREATMENT OF TRANSFEREE IN CERTAIN TRANSACTIONS.—

(1) IN GENERAL.—Subparagraph (A) of section 168(fK10) (relating to transferee bound by transferor's period and method in certain cases) is amended to read as follows: "(A) IN GENERAL.—In the case of recovery property transferred in a transaction described in subparagraph (B), for .. purposes of computing the deduction allowable under subsection (a) with respect to so much of the basis in the hands of the transferee as does not exceed the adjusted basis in the hands of the transferor— "(i) if the transaction is described in subparagraph (B)(i), the transferee shall be treated in the same manner as the transferor, or _;p, "(ii) if the transaction is described in clause (ii) or (iii) •i-f '.*yjj "• of subparagraph (B) and the transferor made an election with respect to such property under subsection

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