Page:United States Statutes at Large Volume 100 Part 3.djvu/530

 100 STAT. 2338

PUBLIC LAW 99-514—OCT. 22, 1986 "(A) section 173 (relating to circulation expenditures), "(B) section 174(a) (relating to research and experimental expenditures), "(C) section 263(c) (relating to intangible drilling and development expenditures), "(D) section 616(a) (relating to development expenditures), or "(E) section 617(a) (relating to mining exploration expenditures). "(3) OTHER SECTIONS NOT APPLICABLE.—Except as provided in

this subsection, no deduction shall be allowed under any other section for any qualified expenditure to which an election under this subsection applies. "(4) ELECTION.—

"(A) IN GENERAL.—An election may be made under paragraph (1) with respect to any portion of any qualified expenditure. "(B) REVOCABLE ONLY WITH CONSENT.—Any election under this subsection may be revoked only with the consent of the Secretary. "(C) PARTNERS AND SHAREHOLDERS OF S CORPORATIONS.—In

the case of a partnership, any election under paragraph (1) shall be made separately by each partner with respect to the partner's allocable share of any qualified expenditure. A similar rule shall apply in the case of an S corporation and its shareholders. "(5) DISPOSITIONS.— "(A) APPLICATION OF SECTION

1254.—In the case of any disposition of property to which section 1254 applies (determined without regard to this section), any deduction under paragraph (1) with respect to amounts which are allocable to such property shall, for purposes of section 1254, be treated as a deduction allowable under section 263(c), 616(a), or 617(a), whichever is appropriate. "(B) APPLICATION OF SECTION 617(d).—In the case of any disposition of mining property to which section 617(d) applies (determined without regard to this subsection), any deduction under paragraph (1) with respect to amounts which are allocable to such property shall, for purposes of section 617(d), be treated as a deduction allowable under section 617(a).

"(6) AMOUNTS TO WHICH ELECTION APPLY NOT TREATED AS TAX

PREFERENCE.—Any portion of any qualified expenditure to which an election under paragraph (1) applies shall not be treated as an item of tax preference under section 57(a) and section 56 shall not apply to such expenditure. "(f) COORDINATION WITH SECTION 291.—Except as otherwise provided in this part, section 291 (relating to cutback of corporate preferences) shall apply before the application of this part. "(g) TAX BENEFIT RULE.—The Secretary may prescribe regulations under which differently treated items shall be properly adjusted where the tax treatment giving rise to such items will not result in the reduction of the taxpayer's regular tax for any taxable year. "(h) COORDINATION WITH CERTAIN LIMITATIONS.—The limitations of sections 704(d), 465, and 1366(d) (and such other provisions as may be specified in regulations) shall be applied for purposes of comput-

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