Page:United States Statutes at Large Volume 100 Part 3.djvu/566

 100 STAT. 2374

PUBLIC LAW 99-514—OCT. 22, 1986 (1) Paragraph (5) of section 461(h) is amended by striking out subparagraph (C) and by redesignating subparagraph (D) as subparagraph (C). (2) The table of contents for subpart C of part II of subchapter E of chapter 1 is amended by striking out the item relating to section 466. (c) EFFECTIVE DATE.—

(1) IN GENERAL.—The amendments made by this section shall apply to taxable years beginning after December 31, 1986. (2) CHANGE IN METHOD OF ACCOUNTING.—In the case of any taxpayer who elected to have section 466 of the Internal Revenue Code of 1954 apply for such taxpayer's last taxable year beginning before January 1, 1987, and is required to change its method of accounting by reason of the amendments made by this section for any taxable year— (A) such change shall be treated as initiated by the taxpayer, (B) such change shall be treated as having been made with the consent of the Secretary, and (C) the net amount of adjustments required by section 481 of the Internal Revenue Code of 1986 to be taken into account by the taxpayer shall— (i) be reduced by the balance in the suspense account under section 466(e) of such Code as of the close of such last taxable year, and (ii) be taken into account over a period not longer than 4 years. SEC. 824. INCLUSION IN GROSS INCOME OF CONTRIBUTIONS IN AID OF CONSTRUCTION.

(a) GENERAL RULE.—Section 118 (relating to contributions to the capital of a corporation) is amended by striking out subsections (b) and (c), by redesignating subsection (d) as subsection (c), and by inserting after subsection (a) the following new subsection: "(b) CONTRIBUTIONS IN AID OF CONSTRUCTION, ETC.—For purposes

of subsection (a), the term 'contribution to the capital of the taxpayer' does not include any contribution in aid of construction or any other contribution as a customer or potential customer." (b) TECHNICAL AMENDMENT.—Subsection (c) of section 362 (relating to special rules for certain contributions to capital) is amended by striking out paragraph (3). (c) EFFECTIVE DATE.—

(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to amounts received after December 31, 1986, in taxable years ending after such date. (2) TREATMENT OF CERTAIN WATER SUPPLY PROJECTS.—The

amendments made by this section shall not apply to amounts which are paid by the New Jersey Department of Environmental Protection for construction of alternative water supply projects in zones of drinking water contamination and which are designated by such department as being taken into account under this paragraph. Not more than $4,631,000 of such amounts may be designated under the preceding sentence. (3) TREATMENT OF CERTAIN CONTRIBUTIONS BY TRANSPORTATION

AUTHORITY.—The amendments made by this section shall not apply to contributions in aid of construction by a qualified

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