Page:United States Statutes at Large Volume 100 Part 3.djvu/726

 100 STAT. 2534

PUBLIC LAW 99-514—OCT. 22, 1986

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"(ii) such property is used predominantly outside the United States, all of the depreciation deductions allowable for such year shall be treated as having been allocated to income from sources in the United States (or, where clause (ii) applies, from sources outside the United States). "(4) OTHER DEFINITIONS.—For purposes of this subsection— "(A) DEPRECIABLE PERSONAL PROPERTY.—The term 'depreciable personal property' means any personal property if the adjusted basis of such property includes depreciation adjustments. "(B) DEPRECIATION ADJUSTMENTS.—The term 'depreciation adjustments' means adjustments reflected in the adjusted basis of any property on account of depreciation deductions (whether allowed with respect to such property or other property and whether allowed to the taxpayer or to any other person). "(C) DEPRECIATION DEDUCTIONS.—The term 'depreciation deductions' means any deductions for depreciation or amortization or any other deduction allowable under any provision of this chapter which treats an otherwise capital expenditure as a deductible expense.

"(d) EXCEPTION FOR INTANGIBLES.—

"(1) IN GENERAL.—In the case of any sale of an intangible— "(A) this section shall apply only to the extent the payments in consideration of such sale are not contingent on vr > s *^he productivity, use, or disposition of the intangible, and "(B) to the extent such payments are so contingent, the source of such payments shall be determined under this .. part in the same manner as if such payments were royalties. "(2) INTANGIBLE.—For purposes of paragraph (1), the term 'intangible' means any patent, copyright, secret process or formula, goodwill, trademark, trade brand, or other like property. "(3) SPECIAL RULE IN THE CASE OF GOODWILL.—To the extent this section applies to the sale of goodwill, payments in consideration of such sale shall be treated as from sources in the country in which such goodwill was generated. "(e) SPECIAL RULES FOR SALES THROUGH OFFICES OR FIXED PLACES OF BUSINESS.— "(1) SALES BY RESIDENTS.—

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"(A) IN GENERAL.—In the case of income not sourced under subsection (b), (c), (d), or (f), if a United States resident maintains an office or other fixed place of business outside the United States, income from sales of personal property attributable to such office or other fixed place of business shall be sourced outside the United States. "(B) TAX MUST BE IMPOSED.—Subparagraph (A) shall not

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apply unless an income tax equal to at least 10 percent of the income from the sale is actually paid to a foreign country with respect to such income. "(2) SALES BY NONRESIDENTS.—

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"(A) IN GENERAL.—Notwithstanding any other provisions of this part, if a nonresident maintains an office or other fixed place of business in the United States, income from any sale of personal property (including inventory property) attributable to such office or other fixed place of business

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