Page:United States Statutes at Large Volume 95.djvu/250

 95 STAT. 224

PUBLIC LAW 97-34—AUG. 13, 1981 "(C) PARAGRAPHS (2) AND (3) SHALL NOT APPLY.—Para-

Ante, p. 203. 26 USC 57.

graphs (2) and (3) shall not apply to recovery property. "(D) DEFINITIONS.—For purposes of this paragraph, the terms '3-year property*, *5-year property',' 10-year property', 'recovery property', shall have the same meanings given such terms under section 168." (b) CONFORMING AMENDMENT.—The next to the last sentence of section 57(a) is amended by striking out "and (11)" and inserting in lieu thereof ", (11), and (12)*^. SEC. 206. EARNINGS AND PROFITS.
 * 15-year public utility property', 15-year real property', and

26 USC 312.

(a) IN GENERAL.—Subsection (k) of section 312 (relating to earnings and profits) is amended by redesignating paragraph (3) as paragraph (4) and by inserting after paragraph (2) the following new paragraph: "(3) EXCEPTION FOR RECOVERY AND SECTION 179 PROPERTY.— "(A) RECOVERY PROPERTY.—Except as provided in subpara-

graphs (B) and (C), in the case of recovery property (within the meaning of section 168), the adjustment to earnings and profits for depreciation for any taxable year shall be the amount determined under the straight-line method (using a half year convention in the case of property other than the 15-year real property and without regard to salvage value) and using a recovery period determined in accordance with the following table:

"In the case of: 3-year property 5-year property 10-year property 15-year real property 15-year public utility property

The applicable recovery period is: 5 years. 12 years. 25 years. 35 years. 35 years.

For purposes of this subparagraph, no adjustment shall be allowed in the year of disposition (except with respect to 15year real property), and rules similar to the rules under the next to the last sentence of section 168(b)(2)(A) and section 168(b)(2)(B) shall apply. "(B) TREATMENT OF AMOUNTS DEDUCTIBLE UNDER SECTION

Ante, p. 219.

179.—For purposes of computing the earnings and profits of a corporation, any amount deductible under section 179 shall be allowed as a deduction ratably over the period of 5 years (beginning with the year for which such amount is deductible under section 179). "(C) FLEXIBILITY.—In any case where a different recovery percentage is elected under section 168(b)(3) or (f)(2)(C) based on a recovery period longer than the recovery period provided in subparagraph (A), the adjustment to earnings and profits shall be based on such longer period under rules similar to those provided in subparagraph (A)." (b) FOREIGN CORPORATIONS.—Paragraph (4) of section 312(k), as redesignated by subsection (a), is amended— (1) by striking out "paragraph (1)" and inserting in lieu thereof "paragraphs (1) and (3)", and (2) by adding at the end thereof the following new sentence: "In determining the earnings and profits of such corporation in the case of recovery property (within the meaning of section 168), the rules of section 168(fK2) shall apply."

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