Page:United States Statutes at Large Volume 100 Part 3.djvu/331

 PUBLIC LAW 99-514—OCT. 22, 1986

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

�