Page:United States Statutes at Large Volume 85.djvu/538

 508

26 u*sc'4^6°/'

PUBLIC LAW 92-178-DEC. 10, 1971

[85 STAT.

^f section 46(a)(5)) to another corporation which is a component member of the same controlled group, the basis of such property to the lessor. " (2) SPECIAL RULE FOR CERTAUST SHORT TERM LEASES.—

76 Stat. 965.

" (A) IN GENERAL.—A person (other than a person referred ^^ jj^ section 46(d)(1)) who is a lessor of property described in paragraph (4) may (at such time, in such manner, and subject to such conditions as are provided by regulations prescribed by the Secretary or his delegate) elect with respect to such property to treat the lessee as having acquired a portion of such property for the amount determined under subparagraph (B). " (B) DETERMINATION

^"^'•a-

or

LESSEE'S

INVESTMENT.—The

amount for which a lessee of property described in paragraph (4) shall be treated as having acquired a portion of such property is an amount equal to a fraction, the numerator of which is the term of the lease and the denominator of which is the class life of the property leased (determined under section 167(m)), of the amount for which the lessee would be treated as having acquired the property under paragraph (1).

" (C) DETERMINATION OF LESSOR'S QUALIFIED INVESTMENT.—

Ante, p. 499, ' '

post, p. 522.

^I^st^t* 51;

The qualified investment of a lessor of property described in paragraph (4) in any such property with respect to which he has made an election under this paragraph is an amount equal to his qualified investment in such property (as determined under section 46(c)) multiplied by a fraction equal to the excess of one over the fraction used under subparagraph (B) to determine the lessee's investment in such property. "(3) LIMITATIONS.—The elections provided by paragraphs (1) and (2) may be made with respect 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 m the hands of the lessor. If a lessor makes the election provided by paragraph (1) with respect to any property, the lessee shall be treated for all purposes of this subpart as having acquired such property. If a lessor makes the election provided by paragraph (2) with respect to any property, the lessee shall be treated for all purposes of this subpart as having acquired a fractional portion of such property equal to the fraction determined under paragraph (2)(B) with respect to such property. "(4) PROPERTY TO WHICH PARAGRAPH (2) APPLIES.—Paragraph (2) shall apply only to property which— " (A) is new section 38 property, " (B) has a class life (determined under section 167(m)) in excess of 14 years, " (C) is leased for a period which is less than 80 percent of its class life, and " (D) is not leased subject to a net lease (within the meaning of section 57(c)(2)). " (d) EFFECTIVE DATES.—The amendments made by subsections (a) and (b) shall apply to leases entered into after September 22, 1971. The amendment made by subsection (c) shall apply to leases entered into after November 8, 1971. SEC. 109. REASONABLE ALLOWANCE FOR DEPRECIATION; REPAIR ALLOWANCE. (a) Section 167 (relating to depreciation) is amended by redesignating subsection (m) as subsection (n) and by inserting after subsection (1) the following new subsection:

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