Page:United States Statutes at Large Volume 76.djvu/1015

 76 STAT. 3

PUBLIC LAW 87-834-OCT. 16, 1962

" (B) section 38 property is placed in service by the taxpayer to replace the property described in subparagraph (A), and " (C) the reduction in basis or cost of such section 38 property described in the first sentence of section 46(c)(4) is equal to or; greater than the reduction in qualified investment which (but tor this paragraph) would be made by reason of the substitution required by paragraph (1) with respect to the property described in subparagraph (A). "(b)

Ante, p. 962.

Ante, p. 965.

SECTION NOT TO APPLY IN CERTAIN CASES.—Subsection (a)

shall not apply to— "(1) a transfer by reason of death, or " (2) a transaction to which section 381(a) applies. For purposes of subsection (a), property shall not be treated as ceasing to be section 38 property with respect to the taxpayer by reason of a mere change in the form of conducting the trade or business so long as the property is retained in such trade or business as section 38 property and the taxpayer retains a substantial interest in such trade or business. "(c) SPECIAL, R U I ^. — Any increase in tax under subsection (a) shall not be treated as tax imposed by this chapter for purposes of determining the amount of any credit allowable under subpart A. -SEC. 48. DEFINITIONS; SPECIAL RULES. "(a)

967

26 USC 381.

SECTION 38 PROPERTY.—

"(1) IN GENERAL.—Except as provided in this subsection, the term 'section 38 property' means— "^A) tangible personal property, or " (B) other tangible property (not including a building and its structural components) but only if such property— " (i) is used as an integral part of manufacturing, production, or extraction or of furnishing transportation, communications, electrical energy, gas, water, or sewage disposal services, or "(ii) constitutes a research or storage facility used in connection with any of the activities referred to in clause Such term includes only property with respect to which depreciation (or amortization in lieu of depreciation) is allowable and having a useful life (determined as of the time such property is placed in service) of 4 years or more. "(2)

PROPERTY USED OUTSIDE THE UNITED STATES.—

" (A) IN GENERAL.—Except as provided in subparagraph (B), the term 'section 38 property^ does not include property which is used predominantly outside the United States. " (B) EXCEPTIONS.—Subparagraph (A) shall not apply to— " (i) any aircraft which is registered by the Administrator of the Federal Aviation Agency and which is operated to and from the United States; "(ii) rolling stock,'of a domestic railroad corporation subject to part I of the Interstate Commerce Act, which is used within and without the United States; "(iii) any vessel documented under the laws of the United States which is operated in the foreign or domestic commerce of the United States; "(iv) any motor vehicle of a United States person (as defined in section 7701(a) (30)) which is operated to and from the United States;

24 Stat. 379. ^^ "^^ ' «' ^^i-

Post, p. 988.

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