Page:United States Statutes at Large Volume 98 Part 1.djvu/578

 98 STAT. 530

PUBLIC LAW 98-369—JULY 18, 1984 Internal Revenue Code of 1954 (as added by this section), except that such term shall include any related entity (within the meaning of such section). (B) TREATMENT OF IMPROVEMENTS.—

(i) IN GENERAL.—For purposes of this subsection, an improvement to property shall not be treated as a separate property unless such improvement is a substantial improvement with respect to such property. (ii) SUBSTANTIAL IMPROVEMENT.—For

Ante, p. 509.

(D)

Ante, p. 518.

26 USC 168.

purposes

of

clause (i), the term "substantial improvement' has the meaning given such term by section 168(f)(1)(C) of such Code determined— (I) by substituting "20 percent" for "25 percent" in clause (ii) thereof, and (II) without regard to clause (iii) thereof. (C) FOREIGN PERSON OR ENTITY.—The term "foreign person or entity" has the meaning given to such term by subparagraph (C) of section 168(j)(4) of such Code (as added by this section). For purposes of this subparagraph and subparagraph (A), such subparagraph (C) shall be applied without regard to the last sentence thereof. LEASES

AND SUBLEASES.—The

determination

of

whether there is a lease or sublease to a tax-exempt entity shall take into account sections 168(j)(6)(A), 168(j)(8)(A), and 7701(e) of the Internal Revenue Code of 1954 (as added by this section). SEC. 32. MOTOR VEHICLE OPERATING LEASES. (a) IN GENERAL.—Section 168(f) (relating to special rules) is amended by adding at the end thereof the following new paragraph: "(13) MOTOR VEHICLE OPERATING LEASES.—

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"(A) IN GENERAL.—For purposes of this title, in the case of a qualified motor vehicle operating agreement which contains a terminal rental adjustment clause— "(i) such agreement shall be treated as a lease if (but for such terminal rental adjustment clause) such agreement would be treated as a lease under this title, and "(ii) the lessee shall not be treated as the owner of the property subject to an agreement during any period such agreement is in effect. "(B) QUALIFIED MOTOR VEHICLE OPERATING AGREEMENT DEFINED.—For purposes of this paragraph— "(i) IN GENERAL.—The term qualified motor vehicle operating agreement' means any agreement with respect to a motor vehicle (including a trailer) which meets the requirements of clauses (ii), (iii), and (iv) of this subparagraph. "(ii) MINIMUM LIABILITY OF LESSOR.—An agreement

meets the requirements of this clause if under such agreement the sum of— "(I) the amount the lessor is personally liable to repay, and (II) the net fair market value of the lessor's interest in any property pledged as security for property subject to the agreement, equals or exceeds all amounts borrowed to finance the acquisition of property subject to the agreement. There

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