Page:United States Statutes at Large Volume 76.djvu/1018

 970 Ante. p. 968. Ante, p. 964.

26 USC 162; Post. p. 973.

Ante, p. 968.

Ante, p. 963.

PUBLIC LAW 87-834-OCT. 16, 1962

STAT.

The election provided by the preceding sentence may be made only with respcct to property which would be new section 38 property if acquired by the lessee. For purposes of the preceding sentence and section 46(c), the useful life of property in the hands of the lessee is the useful life of such property in.the hands of the lessor. I f a lessor makes the election provided by this subsection with respect to any property, the lessee shall be treated for all purposes of this subpart as having acquired such property. I f a lessor makes the election provided by this subsection with respect to any property, then, under regulations prescribed by the Secretary or his delegate, subsection (g) shall not apply with respect to such property and the deductions otlicrwise allowable under section 162 to the lessee for amounts paid ^Q ^jjg lessor under the lease shall be adjusted in a manner consistent with the provisions of subsection (g). "(e) SUBCHAPTER S CORPORATIONS.—In the case of an electing small business corporation (as defined in section 1371)— "(1) the qualified investment for each taxable year shall be apportioned pro rata among the persons who are shareholders of such corporation on the last day of such taxable year; and " (2) any person to whom any investment has been apportioned under paragraph (1) shall be treated (for purposes of this subpart) as the taxpayer with respect to such investment, and such investment shall not (by reason of such apportionment) lose its character as an investment in new section 38 property or used section 38 property, as the case may be. "(f) ESTATES AND TRUSTS.—In the case of an estate or trust— "(1) the qualified investment for any taxable year shall be apportioned between the estate or trust and the beneficiaries on the basis of the income of the estate or trust allocable to each, "(2) any beneficiary to whom any investment has been apportioned under paragraph (1) shall be treated (for purposes of this subpart) as the taxpayer with respect to such investment, and such investment shall not (by reason of such apportionment) lose its character as an investment in new section 38 property or used section 38 property, as the case may be, and "(3) the $25,000 amount specified under subparagraphs (A) and (B) of section 46(a)(2) applicable to such estate or trust shall be reduced to an amount which bears the same ratio to $25,000 as the amount of the qualified investment allocated to the estate or trust under paragraph (1) bears to the entire amount of the qualified investment. "(g)

Ante, p. 966.

[76

ADJUSTMENTS TO BASIS OF PROPERTY.—

"(1) I N GENERXVL.—The basis of any section 38 property shall be reduced, for purposes of this subtitle other than this subpart, by an amount equal to 7 percent of the qualified investment as determined under section 46(c) with respect to such property. "(2) CERTAIN DISPOSITIONS, ETC.—If the tax under this chapter is increased for any taxable year under paragraph (1) or (2) of section 47(a) or an adjustment in carrybacks or carryovers is made under paragraph (3) of such section, the basis of the property described in such paragraph (1) or (2), as the case may be (immediately before the event on account of which such paragraph (1), (2), or (|3) applies), shall be increased by an amount equal to the portion of such increase and the portion of such adjustment attributable to such property. "(h)

CROSS REFERENCE.—

To r application of this subpart to certain acquiring corporations, Post, p. 971. see section 381(c)(23)." (c) DEDUCTION FOR UNUSED CREDIT.—Part VI of subchapter B of 26 USC 161-180. chapter 1 (relating to itemized deductions for individuals and corpo-

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