Page:United States Statutes at Large Volume 98 Part 1.djvu/762

 98 STAT. 714

PUBLIC LAW 98-369—JULY 18, 1984 limitation of paragraph (1) applicable to such passenger automobile shall be % of the amount which would be so applicable but for this paragraph. "(b) LIMITATION WHERE BUSINESS USE OF LISTED PROPERTY NOT GREATER THAN 50 PERCENT.— "(1) INVESTMENT TAX CREDIT.—For purposes of this subtitle,

Post, p. 827.

any listed property shall not be treated as section 38 property for any taxable year unless such property is predominantly used in a qualified business use for such taxable year. "(2) DEPRECIATION.—If any listed property is not predominantly used in a qualified business use for any taxable year, the deduction allowed under section 168 with respect to such property for such taxable year and any subsequent taxable year shall be determined under the straight line method over the earnings and profits life for such property. "(3) RECAPTURE.— "(A) WHERE BUSINESS USE PERCENTAGE DOES NOT EXCEED 50 PERCENT.—If—

"(i) property is predominantly used in a qualified business use in a taxable year in which it is placed in service, and "(ii) such property is not predominantly used in a qualified business use for any subsequent taxable year, then any excess depreciation shall be included in gross income for the taxable year referred to in clause (ii), and the recovery deduction for the taxable year referred to in clause (ii) and any subsequent taxable years shall be determined under the straight line method over the earnings and profits life. "(B) EXCESS DEPRECIATION.—For purposes of subpara-

graph (A), the term 'excess depreciation means the excess (if any) of— "(i) the amount of the recovery deductions allowable with respect to the property for taxable years before the 1st taxable year in which the property was not predominantly used in a qualified business use, over "(ii) the amount which would have been so allowable if the property had not been predominantly used in a qualified business use for the taxable year in which it was placed in service. "(4) DEFINITIONS.—For purposes of this subsection— "(A) PROPERTY PREDOMINANTLY USED IN QUALIFIED BUSINESS USE.—Property shall be treated as predominantly used

in a qualified business use for any taxable year if the business use percentage for such taxable year exceeds 50 percent. "(B) STRAIGHT LINE METHOD OVER EARNINGS AND PROFITS

LIFE.—The amount determined under the straight line method over the earnings and profits life with respect to any property shall be the amount which would be determined with respect to such property under the principles of section 312(k)(3). If the recovery period applicable to any property under section 168 is longer than the recovery period applicable to such property under section 312(k)(3), such longer recovery period shall be used for purposes of the preceding sentence. "(c) TREATMENT OF LEASES.—

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