Page:United States Statutes at Large Volume 98 Part 1.djvu/628

 98 STAT. 580

PUBLIC LAW 98-369—JULY 18, 1984

26 USC 312.

(1) IN GENERAL.—Section 312 (relating to effect on earnings and profits) is amended by adding at the end thereof the following new subsection: "(n) ADJUSTMENTS TO EARNINGS AND PROFITS TO MORE ACCURATELY REFLECT ECONOMIC GAIN AND LOSS.—For purposes of com-

puting the earnings and profits of a corporation, the following adjustments shall be made: "(1) CONSTRUCTION PERIOD CARRYING CHARGES.—

"(A) IN GENERAL.—In the case of any amount paid or incurred for construction period carrying charges— "(i) no deduction shall be allowed with respect to such amount, and "(ii) the basis of the property with respect to which such charges are allocable shall be increased by such amount.

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"(B) CONSTRUCTION PERIOD CARRYING CHARGES DEFINED.—

For purposes of this paragraph, the term 'construction period carrying charges means all— "(i) interest paid or accrued on indebtedness incurred or continued to acquire, construct, or carry property, "(ii) property taxes, and "(iii) similar carrying charges, to the extent such interest, taxes, or charges are attributable to the construction period for such property and would be allowable as a deduction in determining taxable income under this chapter for the taxable year in which paid or incurred (determined without regard to section 189). "(C) CONSTRUCTION PERIOD.—The term 'construction period' has the meaning given such term by section 189(e)(2) (determined without regard to any real property limitation). "(2) INTANGIBLE DRILLING COSTS AND MINERAL EXPLORATION AND DEVELOPMENT COSTS.— "(A) INTANGIBLE DRILLING COSTS.—Any amount allowable

as a deduction under section 263(c) in determining taxable income (other than costs incurred in connection with a nonproductive well)— "(i) shall be capitalized, and "(ii) shall be allowed as a deduction ratably over the 60-month period beginning with the month in which the production from the well begins. "(B)

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MINERAL EXPLORATION AND DEVELOPMENT COSTS.—

Any amount allowable as a deduction under section 616(a) or 617 in determining taxable income— "(i) shall be capitalized, and "(ii) shall be allowed as a deduction ratably over the 120-month period beginning with the later of— "(I) the month in which production from the deposit begins, or "(II) the month in which such amount was paid or incurred. "(3) CERTAIN AMORTIZATION PROVISIONS NOT TO APPLY.—Sec-

tions 173,177, and 248 shall not apply. "(4)

Ante, p. 568.

CERTAIN UNTAXED APPRECIATION OF DISTRIBUTED PROP-

ERTY.—In the case of any distribution of property by a corporation described in section 311(d), earnings and profits shall be increased by the amount of any gain which would be includible

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