Page:United States Statutes at Large Volume 103 Part 3.djvu/307

 PUBLIC LAW 101-239—DEC. 19, 1989 103 STAT. 2375 maintenance or capital replacements or improvements of an existing business), and "(iv) all of such distributions by such corporation to United States persons are used by such persons in a trade or business conducted in the United States." (2) EFFECTIVE DATE. — 26 USC 59 note. (A) IN GENERAL.—The amendment made by paragraph (1) shall apply to taxable years beginning after March 31, 1990. (B) SPECIAL RULE FOR YEAR WHICH INCLUDES MARCH 31, 1990.—In the case of £Uiy taxable year (of a corporation described in subparagraph (C) of section 59(a)(2) of the Internal Revenue Code of 1986 (as added by paragraph (1))) which begins after December 31, 1989, and includes March 31, 1990, the amount determined under clause (ii) of section 59(a)(2)(A) of such dkxle shall be an amount which bears the same ratio to the amount which would have been deter- mined under such clause without regard to this subpara- graph as the number of dayB in such taxable year on or before March 31, 1990, bears to the total number of days in such taxable year. (f) STUDY OF DEPRECIATION TREATMENT OF CERTAIN VEHICLES. — (1) IN GENERAL.—The Secretary of the Treasury or his dele- gate shall conduct a study on the proper class life for cars and light trucks. (2) REPORT.—Not later than the day 1 year after the date of the enactment of this Act, the Secretary shall submit a report to the Committee on Ways and Means of the House of Representa- tives and the Committee on Finemce of the Senate on the report conducted under paragraph (1), together with such rec- ommendations as he may deem advisable. PART III—ACCOUNTING PROVISIONS SEC. 7621. REPEAL OF COMPLETED CONTRACT METHOD OF ACCOUNTING FOR LONG-TERM CONTRACTS. (a) IN GENERAL.—Subsection (a) of section 460 (relating to special rules for long-term contracts) is amended to read as follows: "(a) REQUIREMENT THAT PERCENTAGE OF COMPLETION METHOD BE USED.—In the case of any long-term contract, the taxable income from such contract shall be determined under the percentage of completion method (as modified by subsection (b))." (b) ELECTION TO USE MODIFIED PERCENTAGE OF COMPLETION METHOD. — Subsection (b) of section 460 (as amended by subsection (c)(D) is amended by adding at the end thereof the following new paragraph: "(5) ELECTION TO USE IO-PERCENT METHOD.— "(A) GENERAL RULE.— In the case of any long-term con- tract with respect to which an election under this peu*a- graph is in effect, the 10-percent method shall apply in determining the taxable income from such contract. "(B) 10-PERCENT METHOD.— For purposes of this para- graph- ed) IN GENERAL.— The 10-percent method is the percentage of completion method, modified so that any item which would otherwise be taken into account in computing taxable income with respect to a contract

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