Internal Revenue Code:Sec. 167. Depreciation

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Contents


Location in Internal Revenue Code


     TITLE 26 - INTERNAL REVENUE CODE
      Subtitle A - Income Taxes
       CHAPTER 1 - NORMAL TAXES AND SURTAXES
        Subchapter B - Computation of Taxable Income
         PART VI - ITEMIZED DEDUCTIONS FOR INDIVIDUALS AND CORPORATIONS
       

Statute

    Sec. 167. Depreciation
 
    (a) General rule
      There shall be allowed as a depreciation deduction a reasonable
    allowance for the exhaustion, wear and tear (including a reasonable
    allowance for obsolescence) -
        (1) of property used in the trade or business, or
        (2) of property held for the production of income.
    (b) Cross reference
          For determination of depreciation deduction in case of
        property to which section 168 applies, see section 168.
    (c) Basis for depreciation
      (1) In general
        The basis on which exhaustion, wear and tear, and obsolescence
      are to be allowed in respect of any property shall be the
      adjusted basis provided in section 1011, for the purpose of
      determining the gain on the sale or other disposition of such
      property.
      (2) Special rule for property subject to lease
        If any property is acquired subject to a lease -
          (A) no portion of the adjusted basis shall be allocated to
        the leasehold interest, and
          (B) the entire adjusted basis shall be taken into account in
        determining the depreciation deduction (if any) with respect to
        the property subject to the lease.
    (d) Life tenants and beneficiaries of trusts and estates
      In the case of property held by one person for life with
    remainder to another person, the deduction shall be computed as if
    the life tenant were the absolute owner of the property and shall
    be allowed to the life tenant.  In the case of property held in
    trust, the allowable deduction shall be apportioned between the
    income beneficiaries and the trustee in accordance with the
    pertinent provisions of the instrument creating the trust, or, in
    the absence of such provisions, on the basis of the trust income
    allocable to each.  In the case of an estate, the allowable
    deduction shall be apportioned between the estate and the heirs,
    legatees, and devisees on the basis of the income of the estate
    allocable to each.
    (e) Certain term interests not depreciable
      (1) In general
        No depreciation deduction shall be allowed under this section
      (and no depreciation or amortization deduction shall be allowed
      under any other provision of this subtitle) to the taxpayer for
      any term interest in property for any period during which the
      remainder interest in such property is held (directly or
      indirectly) by a related person.
      (2) Coordination with other provisions
        (A) Section 273
          This subsection shall not apply to any term interest to which
        section 273 applies.
        (B) Section 305(e)
          This subsection shall not apply to the holder of the dividend
        rights which were separated from any stripped preferred stock
        to which section 305(e)(1) applies.
      (3) Basis adjustments
        If, but for this subsection, a depreciation or amortization
      deduction would be allowable to the taxpayer with respect to any
      term interest in property -
          (A) the taxpayer's basis in such property shall be reduced by
        any depreciation or amortization deductions disallowed under
        this subsection, and
          (B) the basis of the remainder interest in such property
        shall be increased by the amount of such disallowed deductions
        (properly adjusted for any depreciation deductions allowable
        under subsection (d) to the taxpayer).
      (4) Special rules
        (A) Denial of increase in basis of remainderman
          No increase in the basis of the remainder interest shall be
        made under paragraph (3)(B) for any disallowed deductions
        attributable to periods during which the term interest was held
        -
            (i) by an organization exempt from tax under this subtitle,
          or
            (ii) by a nonresident alien individual or foreign
          corporation but only if income from the term interest is not
          effectively connected with the conduct of a trade or business
          in the United States.
        (B) Coordination with subsection (d)
          If, but for this subsection, a depreciation or amortization
        deduction would be allowable to any person with respect to any
        term interest in property, the principles of subsection (d)
        shall apply to such person with respect to such term interest.
      (5) Definitions
        For purposes of this subsection -
        (A) Term interest in property
          The term ''term interest in property'' has the meaning given
        such term by section 1001(e)(2).
        (B) Related person
          The term ''related person'' means any person bearing a
        relationship to the taxpayer described in subsection (b) or (e)
        of section 267.
      (6) Regulations
        The Secretary shall prescribe such regulations as may be
      necessary to carry out the purposes of this subsection, including
      regulations preventing avoidance of this subsection through
      cross-ownership arrangements or otherwise.
    (f) Treatment of certain property excluded from section 197
      (1) Computer software
        (A) In general
          If a depreciation deduction is allowable under subsection (a)
        with respect to any computer software, such deduction shall be
        computed by using the straight line method and a useful life of
        36 months.
        (B) Computer software
          For purposes of this section, the term ''computer software''
        has the meaning given to such term by section 197(e)(3)(B);
        except that such term shall not include any such software which
        is an amortizable section 197 intangible.
        (C) Tax-exempt use property subject to lease.--In 
        the case of computer software which would be tax-exempt 
        use property as defined in subsection (h) of section 168 
        if such section applied to computer software, the useful 
        life under subparagraph (A) shall not be less than 125 
        percent of the lease term (within the meaning of section 
        168(i)(3)).
      (2) Certain interests or rights acquired separately
        If a depreciation deduction is allowable under subsection (a)
      with respect to any property described in subparagraph (B), (C),
      or (D) of section 197(e)(4), such deduction shall be computed in
      accordance with regulations prescribed by the Secretary.
        If such property would be tax-
      exempt use property as defined in subsection (h) of section 168 
      if such section applied to such property, the useful life under 
      such regulations shall not be less than 125 percent of the lease 
      term (within the meaning of section 168(i)(3)).
      (3) Mortgage servicing rights
        If a depreciation deduction is allowable under subsection (a)
      with respect to any right described in section 197(e)(6), such
      deduction shall be computed by using the straight line method and
      a useful life of 108 months.
    (g) Depreciation under income forecast method
      (1) In general
        If the depreciation deduction allowable under this section to
      any taxpayer with respect to any property is determined under the
      income forecast method or any similar method -
          (A) the income from the property to be taken into account in
        determining the depreciation deduction under such method shall
        be equal to the amount of income earned in connection with the
        property before the close of the 10th taxable year following
        the taxable year in which the property was placed in service,
          (B) the adjusted basis of the property shall only include
        amounts with respect to which the requirements of section
        461(h) are satisfied,
          (C) the depreciation deduction under such method for the 10th
        taxable year beginning after the taxable year in which the
        property was placed in service shall be equal to the adjusted
        basis of such property as of the beginning of such 10th taxable
        year, and
          (D) such taxpayer shall pay (or be entitled to receive)
        interest computed under the look-back method of paragraph (2)
        for any recomputation year.
      (2) Look-back method
        The interest computed under the look-back method of this
      paragraph for any recomputation year shall be determined by -
          (A) first determining the depreciation deductions under this
        section with respect to such property which would have been
        allowable for prior taxable years if the determination of the
        amounts so allowable had been made on the basis of the sum of
        the following (instead of the estimated income from such
        property) -
            (i) the actual income earned in connection with such
          property for periods before the close of the recomputation
          year, and
            (ii) an estimate of the future income to be earned in
          connection with such property for periods after the
          recomputation year and before the close of the 10th taxable
          year following the taxable year in which the property was
          placed in service,
          (B) second, determining (solely for purposes of computing
        such interest) the overpayment or underpayment of tax for each
        such prior taxable year which would result solely from the
        application of subparagraph (A), and
          (C) then using the adjusted overpayment rate (as defined in
        section 460(b)(7)), compounded daily, on the overpayment or
        underpayment determined under subparagraph (B).
      For purposes of the preceding sentence, any cost incurred after
      the property is placed in service (which is not treated as a
      separate property under paragraph (5)) shall be taken into
      account by discounting (using the Federal mid-term rate
      determined under section 1274(d) as of the time such cost is
      incurred) such cost to its value as of the date the property is
      placed in service.  The taxpayer may elect with respect to any
      property to have the preceding sentence not apply to such
      property.
      (3) Exception from look-back method
        Paragraph (1)(D) shall not apply with respect to any property
      which had a cost basis of $100,000 or less.
      (4) Recomputation year
        For purposes of this subsection, except as provided in
      regulations, the term ''recomputation year'' means, with respect
      to any property, the 3d and the 10th taxable years beginning
      after the taxable year in which the property was placed in
      service, unless the actual income earned in connection with the
      property for the period before the close of such 3d or 10th
      taxable year is within 10 percent of the income earned in
      connection with the property for such period which was taken into
      account under paragraph (1)(A).
      (5) Special rules
        (A) Certain costs treated as separate property
          For purposes of this subsection, the following costs shall be
        treated as separate properties:
            (i) Any costs incurred with respect to any property after
          the 10th taxable year beginning after the taxable year in
          which the property was placed in service.
            (ii) Any costs incurred after the property is placed in
          service and before the close of such 10th taxable year if
          such costs are significant and give rise to a significant
          increase in the income from the property which was not
          included in the estimated income from the property.
        (B) Syndication income from television series
          In the case of property which is 1 or more episodes in a
        television series, income from syndicating such series shall
        not be required to be taken into account under this subsection
        before the earlier of -
            (i) the 4th taxable year beginning after the date the first
          episode in such series is placed in service, or
            (ii) the earliest taxable year in which the taxpayer has an
          arrangement relating to the future syndication of such
          series.
        (C) Special rules for financial exploitation of characters,
            etc.
          For purposes of this subsection, in the case of television
        and motion picture films, the income from the property shall
        include income from the exploitation of characters, designs,
        scripts, scores, and other incidental income associated with
        such films, but only to the extent that such income is earned
        in connection with the ultimate use of such items by, or the
        ultimate sale of merchandise to, persons who are not related
        persons (within the meaning of section 267(b)) to the taxpayer.
        (D) Collection of interest
          For purposes of subtitle F (other than sections 6654 and
        6655), any interest required to be paid by the taxpayer under
        paragraph (1) for any recomputation year shall be treated as an
        increase in the tax imposed by this chapter for such year.
        (E)Treatment of distribution costs.--For purposes 
        of this subsection, the income with respect to any 
        property shall be the taxpayer's gross income from such 
        property.
        (F) Determinations
          For purposes of paragraph (2), determinations of the amount
        of income earned in connection with any property shall be made
        in the same manner as for purposes of applying the income
        forecast method; except that any income from the disposition of
        such property shall be taken into account.
        (G) Treatment of pass-thru entities
          Rules similar to the rules of section 460(b)(4) shall apply
        for purposes of this subsection.
      (6) Limitation on property for which income forecast method may
          be used
        The depreciation deduction allowable under this section may be
      determined under the income forecast method or any similar method
      only with respect to -
          (A) property described in paragraph (3) or (4) of section
        168(f),
          (B) copyrights,
          (C) books,
          (D) patents, and
          (E) other property specified in regulations.
      Such methods may not be used with respect to any amortizable
      section 197 intangible (as defined in section 197(c)).
      (7) Treatment of participations and residuals.--
          (A) In general.--For purposes of determining the 
        depreciation deduction allowable with respect to a 
        property under this subsection, the taxpayer may include 
        participations and residuals with respect to such 
        property in the adjusted basis of such property for the 
        taxable year in which the property is placed in service, 
        but only to the extent that such participations and 
        residuals relate to income estimated (for purposes of 
        this subsection) to be earned in connection with the 
        property before the close of the 10th taxable year 
        referred to in paragraph (1)(A).
           (B) Participations and residuals.--For purposes of 
        this paragraph, the term `participations and residuals' 
        means, with respect to any property, costs the amount of 
        which by contract varies with the amount of income 
        earned in connection with such property.
           (C) Special rules relating to recomputation 
        years.--If the adjusted basis of any property is 
        determined under this paragraph, paragraph (4) shall be 
        applied by substituting `for each taxable year in such 
        period' for `for such period'.
           (D) Other special rules.--
               (i) Participations and residuals.--
            Notwithstanding subparagraph (A), the taxpayer may 
            exclude participations and residuals from the 
            adjusted basis of such property and deduct such 
            participations and residuals in the taxable year 
            that such participations and residuals are paid.
               (ii) Coordination with other rules.--
            Deductions computed in accordance with this 
            paragraph shall be allowable notwithstanding 
            paragraph (1)(B), section 263, 263A, 404, 419, or 
            461(h).
           (E) Authority to make adjustments.--The Secretary 
            shall prescribe appropriate adjustments to the basis of 
            property and to the look-back method for the additional 
            amounts allowable as a deduction solely by reason of 
            this paragraph.
      (8) Special rules for certain musical works and 
        copyrights.--
          (A) In general.--If an election is in effect under 
        this paragraph for any taxable year, then, 
        notwithstanding paragraph (1), any expense which--
              (i) is paid or incurred by the taxpayer in 
            creating or acquiring any applicable musical 
            property placed in service during the taxable 
            year, and
              (ii) is otherwise properly chargeable to 
            capital account,
            shall be amortized ratably over the 5-year period 
            beginning with the month in which the property was 
            placed in service. The preceding sentence shall not 
            apply to any expense which, without regard to this 
            paragraph, would not be allowable as a deduction.
          (B) Exclusive method.--Except as provided in this 
        paragraph, no depreciation or amortization deduction 
        shall be allowed with respect to any expense to which 
        subparagraph (A) applies.
          (C) Applicable musical property.--For purposes of 
        this paragraph--
              (i) In general.--The term `applicable 
            musical property' means any musical composition 
            (including any accompanying words), or any 
            copyright with respect to a musical composition, 
            which is property to which this subsection applies 
            without regard to this paragraph.
              (ii) Exceptions.--Such term shall not 
            include any property--
                  (I) with respect to which expenses 
                are treated as qualified creative 
                expenses to which section 263A(h) 
                applies,
                  (II) to which a simplified 
                procedure established under section 
                263A(j)(2) applies, or
                  (III) which is an amortizable 
                section 197 intangible (as defined in 
                section 197(c)).
          (D) Election.--
        An <<NOTE: Applicability.>> election under this 
        paragraph shall be made at such time and in such form as 
        the Secretary may prescribe and shall apply to all 
        applicable musical property placed in service during the 
        taxable year for which the election applies.
          (E) Termination.--An election may not be made 
        under this paragraph for any taxable year beginning 
        after December 31, 2010.
    (h) Amortization of Geological and Geophysical Expenditures-
      (1) IN GENERAL- Any geological and geophysical expenses paid or 
        incurred in connection with the exploration for, or development 
        of, oil or gas within the United States (as defined in 
        section 638) shall be allowed as a deduction ratably over the
        24-month period beginning on the date that such expense was paid 
        or incurred.
      (2) HALF-YEAR CONVENTION- For purposes of paragraph (1), any 
        payment paid or incurred during the taxable year shall be 
        treated as paid or incurred on the mid-point of such taxable 
        year.
      (3) EXCLUSIVE METHOD- Except as provided in this subsection, no 
        depreciation or amortization deduction shall be allowed with 
        respect to such payments.
      (4) TREATMENT UPON ABANDONMENT- If any property with respect to 
        which geological and geophysical expenses are paid or incurred 
        is retired or abandoned during the 24-month period described in 
        paragraph (1), no deduction shall be allowed on account of such 
        retirement or abandonment and the amortization deduction under 
        this subsection shall continue with respect to such payment.
      (5) Special rule for major integrated oil companies.--
                    (A) In general.--In <<NOTE: Applicability.>> the 
                case of a major integrated oil company, paragraphs (1) 
                and (4) shall be applied by substituting `7-year' for 
                `24 month'.
                    (B) Major integrated oil company.--For purposes of 
                this paragraph, the term `major integrated oil company' 
                means, with respect to any taxable year, a producer of 
                crude oil--
                        (i) which has an average daily worldwide 
                      production of crude oil of at least 500,000 
                      barrels for the taxable year,
                        (ii) which had gross receipts in excess of 
                      $1,000,000,000 for its last taxable year ending 
                      during calendar year 2005, and
                        (iii) to which subsection (c) of section 
                      613A does not apply by reason of paragraph (4) of 
                      section 613A(d), determined--
                                  (I) by substituting `15 percent' 
                                for `5 percent' each place it occurs in 
                                paragraph (3) of section 613A(d), and
                                  (II) without regard to whether 
                                subsection (c) of section 613A does not 
                                apply by reason of paragraph (2) of 
                                section 613A(d).
                For purposes of <<NOTE: Applicability.>> clauses (i) and 
                (ii), all persons treated as a single employer under 
                subsections (a) and (b) of section 52 shall be treated 
                as 1 person and, in case of a short taxable year, the 
                rule under section 448(c)(3)(B) shall apply.
    (i) Cross references
          (1) For additional rule applicable to depreciation of
        improvements in the case of mines, oil and gas wells, other
        natural deposits, and timber, see section 611.
          (2) For amortization of goodwill and certain other
        intangibles, see section 197.
 

Sources

    (Aug. 16, 1954, ch. 736, 68A Stat. 51; Pub. L. 85-866, title I,
    Sec. 89(b), Sept. 2, 1958, 72 Stat. 1665; Pub. L. 87-834, Sec.
    13(b), (c)(1), Oct. 16, 1962, 76 Stat. 1034; Pub. L. 89-800, Sec.
    2, Nov. 8, 1966, 80 Stat. 1513; Pub. L. 90-26, Sec. 1, 2(b), June
    13, 1967, 81 Stat. 57, 58; Pub. L. 91-172, title IV, Sec. 441(a),
    title V, Sec. 521(a), (d), Dec. 30, 1969, 83 Stat. 625, 649, 653;
    Pub. L. 92-178, title I, Sec. 109(a), Dec. 10, 1971, 85 Stat. 508;
    Pub. L. 93-625, Sec. 3(c), Jan. 3, 1975, 88 Stat. 2109; Pub. L.
    94-455, title II, Sec. 202(c)(3), 203(a), title XIX, Sec.
    1901(a)(27), 1906(b)(13)(A), title XXI, Sec. 2124(c)(1), (d)(1),
    Oct. 4, 1976, 90 Stat. 1530, 1768, 1834, 1918; Pub. L. 95-171, Sec.
    4(a), Nov. 12, 1977, 91 Stat. 1355; Pub. L. 95-600, title III, Sec.
    312(c)(4), 367, title VII, Sec. 701(f)(4), (6), Nov. 6, 1978, 92
    Stat. 2826, 2857, 2901, 2902; Pub. L. 95-615, Sec. 7(a), Nov. 8,
    1978, 92 Stat. 3098; Pub. L. 95-618, title III, Sec. 301(d)(3),
    (e)(1), Nov. 9, 1978, 92 Stat. 3200, 3201; Pub. L. 96-541, Sec.
    2(c), (d), 3, Dec. 17, 1980, 94 Stat. 3204, 3205; Pub. L. 96-613,
    Sec. 2(a), Dec. 28, 1980, 94 Stat. 3579; Pub. L. 97-34, title II,
    Sec. 203(a)-(c)(1), (d), 209(d)(3), 212(d)(1), 264(a), Aug. 13,
    1981, 95 Stat. 221, 222, 227, 239, 264; Pub. L. 97-424, title V,
    Sec. 541(a)(2), Jan. 6, 1983, 96 Stat. 2192; Pub. L. 98-369, div.
    A, title X, Sec. 1064, July 18, 1984, 98 Stat. 1047; Pub. L.
    99-514, title II, Sec. 201(d)(1), title XV, Sec. 1511(c)(4), title
    XVIII, Sec. 1809(d)(1), Oct. 22, 1986, 100 Stat. 2139, 2745, 2821;
    Pub. L. 100-647, title I, Sec. 1002(a)(22), (24), (31), (i)(1),
    Nov. 10, 1988, 102 Stat. 3356, 3357, 3370; Pub. L. 101-239, title
    VII, Sec. 7622(b)(1) ((d)(1)), 7645(a), Dec. 19, 1989, 103 Stat.
    2378, 2381; Pub. L. 101-508, title XI, Sec. 11812(a), (b)(1), Nov.
    5, 1990, 104 Stat. 1388-534; Pub. L. 103-66, title XIII, Sec.
    13206(c)(2), 13261(b), (f)(1), Aug. 10, 1993, 107 Stat. 466, 538,
    539; Pub. L. 104-188, title I, Sec. 1604(a), Aug. 20, 1996, 110
    Stat. 1836; Pub. L. 105-34, title X, Sec. 1086(a), Aug. 5, 1997,
    111 Stat. 957.)
 

Miscellaneous

                                 AMENDMENTS

     2007 - P.L. 110-140
SEC. 1502. 7-YEAR AMORTIZATION OF GEOLOGICAL AND GEOPHYSICAL 
            EXPENDITURES FOR CERTAIN MAJOR INTEGRATED OIL COMPANIES.
    (a) In General.--Subparagraph (A) of section <<NOTE: 26 USC 167.>>  
167(h)(5) (relating to special rule for major integrated oil companies) 
is amended by striking ``5-year'' and inserting ``7-year''.
   
     2006 - P.L. 109-222
     SEC. 503. 5-YEAR AMORTIZATION OF GEOLOGICAL AND GEOPHYSICAL EXPENDITURES 
            FOR CERTAIN MAJOR INTEGRATED OIL COMPANIES.
     (a) In General.--Section 167(h) (relating to amortization of 
     geological and geophysical expenditures) is amended by adding at the end 
     the following new paragraph:
            ``(5) Special rule for major integrated oil companies.--
                    ``(A) In general.--In <<NOTE: Applicability.>> the 
                case of a major integrated oil company, paragraphs (1) 
                and (4) shall be applied by substituting `5-year' for 
                `24 month'.
                    ``(B) Major integrated oil company.--For purposes of 
                this paragraph, the term `major integrated oil company' 
                means, with respect to any taxable year, a producer of 
                crude oil--
                          ``(i) which has an average daily worldwide 
                      production of crude oil of at least 500,000 
                      barrels for the taxable year,
                          ``(ii) which had gross receipts in excess of 
                      $1,000,000,000 for its last taxable year ending 
                      during calendar year 2005, and
                          ``(iii) to which subsection (c) of section 
                      613A does not apply by reason of paragraph (4) of 
                      section 613A(d), determined--
                                    ``(I) by substituting `15 percent' 
                                for `5 percent' each place it occurs in 
                                paragraph (3) of section 613A(d), and
                                    ``(II) without regard to whether 
                                subsection (c) of section 613A does not 
                                apply by reason of paragraph (2) of 
                                section 613A(d).
                For purposes of <<NOTE: Applicability.>> clauses (i) and 
                (ii), all persons treated as a single employer under 
                subsections (a) and (b) of section 52 shall be treated 
                as 1 person and, in case of a short taxable year, the 
                rule under section 448(c)(3)(B) shall apply.''.
     (b) Effective Date.--The <<NOTE: 26 USC 167 note.>> amendment made 
     by this section shall apply to amounts paid or incurred after the date 
     of the enactment of this Act.
     
     2006 - P.L. 109-222
     SEC. 207. AMORTIZATION OF EXPENSES INCURRED IN CREATING OR ACQUIRING 
            MUSIC OR MUSIC COPYRIGHTS.
     (a) In General.--Section 167(g) (relating to depreciation under 
     income forecast method) is amended by adding at the end the following 
     new paragraph:
            ``(8) Special rules for certain musical works and 
        copyrights.--
                    ``(A) In general.--If an election is in effect under 
                this paragraph for any taxable year, then, 
                notwithstanding paragraph (1), any expense which--
                          ``(i) is paid or incurred by the taxpayer in 
                      creating or acquiring any applicable musical 
                      property placed in service during the taxable 
                      year, and
                          ``(ii) is otherwise properly chargeable to 
                      capital account,
                shall be amortized ratably over the 5-year period 
                beginning with the month in which the property was 
                placed in service. The preceding sentence shall not 
                apply to any expense which, without regard to this 
                paragraph, would not be allowable as a deduction.
                    ``(B) Exclusive method.--Except as provided in this 
                paragraph, no depreciation or amortization deduction 
                shall be allowed with respect to any expense to which 
                subparagraph (A) applies.
                    ``(C) Applicable musical property.--For purposes of 
                this paragraph--
                          ``(i) In general.--The term `applicable 
                      musical property' means any musical composition 
                      (including any accompanying words), or any 
                      copyright with respect to a musical composition, 
                      which is property to which this subsection applies 
                      without regard to this paragraph.
                          ``(ii) Exceptions.--Such term shall not 
                      include any property--
                                    ``(I) with respect to which expenses 
                                are treated as qualified creative 
                                expenses to which section 263A(h) 
                                applies,
                                    ``(II) to which a simplified 
                                procedure established under section 
                                263A(j)(2) applies, or
                                    ``(III) which is an amortizable 
                                section 197 intangible (as defined in 
                                section 197(c)).
                    ``(D) Election.--
                An <<NOTE: Applicability.>> election under this 
                paragraph shall be made at such time and in such form as 
                the Secretary may prescribe and shall apply to all 
                applicable musical property placed in service during the 
                taxable year for which the election applies.
                    ``(E) Termination.--An election may not be made 
                under this paragraph for any taxable year beginning 
                after December 31, 2010.''.
     (b) Effective Date.--The <<NOTE: 26 USC 167 note.>> amendments made 
     by this section shall apply to expenses paid or incurred with respect to 
     property placed in service in taxable years beginning after December 31, 
     2005.

     2005 - Energy Policy Act of 2005. Section 167 (relating to
     depreciation) is amended by redesignating subsection (h) as 
     subsection (i) and by inserting after subsection (g) the following 
     new subsection:  "(h) Amortization of Geological and Geophysical 
     Expenditures-...".
     Effective Date- The amendments made by this section shall apply to 
     amounts paid or incurred in taxable years beginning after the date 
     of the enactment of this Act.

    2004 - Pub. L. 108-357, Sec 847(b).  Computer software.--
    Paragraph (1) of section 167(f) is amended by adding at the end
    the following new subparagraph:  "(C) Tax-exempt use property
    subject to lease.--...".  Paragraph (2) of section 167(f) is amended
    by adding at the end the following new sentence:  "If such property
    would be tax-exempt use property as defined in subsection (h) of 
    section 168 if such section applied to such property, the useful
    life under such regulations shall not be less than 125 percent of
    the lease term (within the meaning of section 168(i)(3))".
 
      2004 - Subsec.242(a),Pub.L.108-357, amended Sec.167(g)
    by adding a new paragraph (7). Subsec.242(b)amended Sec.167
    (g)(5)by redesignating paragraphs (E)and(F) to (F)and(G) and
    inserting a new paragraph (E).
      1997 - Subsec. (g)(6). Pub. L. 105-34 added par. (6).
      1996 - Subsecs. (g), (h). Pub. L. 104-188 added subsec. (g) and
    redesignated former subsec. (g) as (h).
      1993 - Subsec. (c). Pub. L. 103-66, Sec. 13261(b)(2), amended
    heading and text of subsec. (c) generally.  Prior to amendment,
    text read as follows: ''The basis on which exhaustion, wear and
    tear, and obsolescence are to be allowed in respect of any property
    shall be the adjusted basis provided in section 1011 for the
    purpose of determining the gain on the sale or other disposition of
    such property.''
      Subsec. (e)(2). Pub. L. 103-66, Sec. 13206(c)(2), amended heading
    and text of par. (2) generally.  Prior to amendment, text read as
    follows: ''This subsection shall not apply to any term interest to
    which section 273 applies.''
      Subsec. (f). Pub. L. 103-66, Sec. 13261(b)(1), added subsec. (f).
    Former subsec. (f) redesignated (g).
      Subsec. (g). Pub. L. 103-66, Sec. 13261(b)(1), (f)(1),
    redesignated subsec. (f) as (g) and amended heading and text
    generally, designating existing provisions of text as par. (1) and
    adding par. (2).
      1990 - Subsec. (b). Pub. L. 101-508, Sec. 11812(a), added subsec.
    (b) and struck out former subsec. (b) ''Use of certain methods and
    rates'' which read as follows: ''For taxable years ending after
    December 31, 1953, the term 'reasonable allowance' as used in
    subsection (a) shall include (but shall not be limited to) an
    allowance computed in accordance with regulations prescribed by the
    Secretary, under any of the following methods:
        ''(1) the straight line method,
        ''(2) the declining balance method, using a rate not exceeding
      twice the rate which would have been used had the annual
      allowance been computed under the method described in paragraph
      (1),
        ''(3) the sum of the years-digits method, and
        ''(4) any other consistent method productive of an annual
      allowance which, when added to all allowances for the period
      commencing with the taxpayer's use of the property and including
      the taxable year, does not, during the first two-thirds of the
      useful life of the property, exceed the total of such allowances
      which would have been used had such allowances been computed
      under the method described in paragraph (2).
    Nothing in this subsection shall be construed to limit or reduce an
    allowance otherwise allowable under subsection (a).''
      Subsec. (c). Pub. L. 101-508, Sec. 11812(a)(1), redesignated
    subsec. (g) as (c) and struck out former subsec. (c) ''Limitations
    on use of certain methods and rates'' which read as follows:
    ''Paragraphs (2), (3), and (4) of subsection (b) shall apply only
    in the case of property (other than intangible property) described
    in subsection (a) with a useful life of 3 years or more -
        ''(1) the construction, reconstruction, or erection of which is
      completed after December 31, 1953, and then only to that portion
      of the basis which is properly attributable to such construction,
      reconstruction, or erection after December 31, 1953, or
        ''(2) acquired after December 31, 1953, if the original use of
      such property commences with the taxpayer and commences after
      such date.
    Paragraphs (2), (3), and (4) of subsection (b) shall not apply to
    any motion picture film, video tape, or sound recording.''
      Subsec. (d). Pub. L. 101-508, Sec. 11812(a)(1), redesignated
    subsec. (h) as (d) and struck out former subsec. (d) ''Agreement as
    to useful life on which depreciation rate is based'' which read as
    follows: ''Where, under regulations prescribed by the Secretary,
    the taxpayer and the Secretary have, after August 16, 1954, entered
    into an agreement in writing specifically dealing with the useful
    life and rate of depreciation of any property, the rate so agreed
    upon shall be binding on both the taxpayer and the Secretary in the
    absence of facts or circumstances not taken into consideration in
    the adoption of such agreement.  The responsibility of establishing
    the existence of such facts and circumstances shall rest with the
    party initiating the modification.  Any change in the agreed rate
    and useful life specified in the agreement shall not be effective
    for taxable years before the taxable year in which notice in
    writing by certified mail or registered mail is served by the party
    to the agreement initiating such change.  This subsection shall not
    apply with respect to property to which section 168 applies.''
      Subsec. (e). Pub. L. 101-508, Sec. 11812(a)(1), redesignated
    subsec. (r) as (e) and struck out former subsec. (e) which related
    to changes in method of depreciation from declining balance method
    and changes with respect to sections 1245 and 1250 property.
      Subsec. (e)(3)(B). Pub. L. 101-508, Sec. 11812(b)(1) substituted
    ''(d)'' for ''(h)''.
      Subsec. (e)(4)(B). Pub. L. 101-508, Sec. 11812(b)(1), substituted
    ''(d)'' for ''(h)'' in heading and text.
      Subsec. (f). Pub. L. 101-508, Sec. 11812(a)(1), redesignated
    subsec. (s) as (f) and struck out former subsec. (f) ''Salvage
    value'' which read as follows:
      ''(1) General rule. - Under regulations prescribed by the
    Secretary, a taxpayer may, for purposes of computing the allowance
    under subsection (a) with respect to personal property, reduce the
    amount taken into account as salvage value by an amount which does
    not exceed 10 percent of the basis of such property (as determined
    under subsection (g) as of the time as of which such salvage value
    is required to be determined).
      ''(2) Personal property defined. - For purposes of this
    subsection, the term 'personal property' means depreciable personal
    property (other than livestock) with a useful life of 3 years or
    more acquired after October 16, 1962.''
      Subsecs. (g), (h). Pub. L. 101-508, Sec. 11812(a)(1),
    redesignated subsecs. (g) and (h) as (c) and (d), respectively.
      Subsec. (j). Pub. L. 101-508, Sec. 11812(a)(1), struck out
    subsec. (j) which related to special rules for section 1250
    property including residential rental property and change in method
    of depreciation.
      Subsec. (k). Pub. L. 101-508, Sec. 11812(a)(1), struck out
    subsec. (k) which related to depreciation of expenditures to
    rehabilitate low-income rental housing.
      Subsec. (l). Pub. L. 101-508, Sec. 11812(a)(1), struck out
    subsec. (l) which related to reasonable allowance in case of
    property of certain utilities, pre-1970 public utility property and
    post-1969 public utility property.
      Subsec. (m). Pub. L. 101-508, Sec. 11812(a)(1), struck out
    subsec. (m) which related to class lives.
      Subsec. (p). Pub. L. 101-508, Sec. 11812(a)(1), struck out
    subsec. (p) which related to straight line method for boilers
    fueled by oil or gas.
      Subsec. (q). Pub. L. 101-508, Sec. 11812(a)(1), struck out
    subsec. (q) which related to retirement or replacement of certain
    boilers, etc., fueled by oil or gas.
      Subsecs. (r), (s). Pub. L. 101-508, Sec. 11812(a)(1),
    redesignated subsecs. (r) and (s) as (e) and (f), respectively.
      1989 - Subsec. (r). Pub. L. 101-239, Sec. 7645(a), added subsec.
    (r).
      Pub. L. 101-239, Sec. 7622(b)(1) ((d)(1)), repealed subsec. (r)
    which provided that trademark or trade name expenditures were not
    depreciable.
      1988 - Subsec. (a). Pub. L. 100-647, Sec. 1002(a)(24), struck out
    at end ''In the case of recovery property (within the meaning of
    section 168), the deduction allowable under section 168 shall be
    deemed to constitute the reasonable allowance provided by this
    section, except with respect to that portion of the basis of such
    property to which subsection (k) applies.''
      Subsec. (d). Pub. L. 100-647, Sec. 1002(a)(31), substituted
    ''property to which section 168 applies'' for ''recovery property
    defined in section 168''.
      Subsec. (l)(3)(G). Pub. L. 100-647, Sec. 1002(a)(22), substituted
    ''section 168(i)(9)(B)'' for ''section 168(e)(3)(C)'' in last
    sentence.
      Subsecs. (r), (s). Pub. L. 100-647, Sec. 1002(i)(1), added
    subsec. (r) and redesignated former subsec. (r) as (s).
      1986 - Subsec. (c). Pub. L. 99-514, Sec. 1809(d)(1), inserted
    ''Paragraphs (2), (3), and (4) of subsection (b) shall not apply to
    any motion picture film, video tape, or sound recording.''
      Subsec. (m)(4). Pub. L. 99-514, Sec. 201(d)(1), amended par. (4)
    generally.  Prior to amendment, par. (4) read as follows: ''This
    subsection shall not apply with respect to recovery property
    (within the meaning of section 168) placed in service after
    December 31, 1980.''
      Subsec. (q)(2)(B). Pub. L. 99-514, Sec. 1511(c)(4), substituted
    ''at the underpayment rate established under section 6621'' for
    ''at the rate determined under section 6621''.
      1984 - Subsec. (k)(1), (3)(D). Pub. L. 98-369 substituted
    ''January 1, 1987'' for ''January 1, 1984'' wherever appearing.
      1983 - Subsec. (l)(3)(G). Pub. L. 97-424 inserted provision that,
    for the purposes of this paragraph, rules similar to the rules of
    section 168(e)(3)(C) of this title shall apply.
      1981 - Subsec. (a). Pub. L. 97-34, Sec. 203(a), inserted
    provision that, in the case of recovery property (within the
    meaning of section 168), the deduction allowable under section 168
    shall be deemed to constitute the reasonable allowance provided by
    this section, except with respect to that portion of the basis of
    such property to which subsection (k) applies.
      Subsec. (d). Pub. L. 97-34, Sec. 203(d), provided that subsec.
    (d) did not apply with respect to recovery property defined in
    section 168.
      Subsec. (k)(2). Pub. L. 97-34, Sec. 264(a), substituted ''Except
    as provided in subparagraph (B), the aggregate amount'' for ''The
    aggregate amount'' in subpar. (A), added subpar. (B), and
    redesignated former subpar. (B) as (C).
      Subsec. (l)(3)(C). Pub. L. 97-34, Sec. 209(d)(3), inserted ''and
    which is placed in service before January 1, 1981'' after
    ''pre-1970 public utility property''.
      Subsec. (m)(4). Pub. L. 97-34, Sec. 203(b), added par. (4).
      Subsecs. (n), (o). Pub. L. 97-34, Sec. 212(d)(1), struck out
    subsec. (n) which dealt with the use of the straight line method of
    depreciation in certain cases, and subsec. (o) which dealt with the
    method of depreciation to be used in the case of substantially
    rehabilitated historic property.
      Subsec. (r). Pub. L. 97-34, Sec. 203(c)(1), redesignated subsec.
    (s) as (r). Former subsec. (r), relating to the
    retirement-replacement-betterment method of calculating
    depreciation, was struck out.
      Subsec. (s). Pub. L. 97-34, Sec. 203(c)(1), redesignated subsec.
    (s) as (r).
      1980 - Subsec. (k). Pub. L. 96-541, Sec. 3, substituted in pars.
    (1) and (3)(D) ''January 1, 1984'' for ''January 1, 1982'' wherever
    appearing.
      Subsec. (n)(4). Pub. L. 96-541, Sec. 2(c), added par. (4).
      Subsec. (o)(3). Pub. L. 96-541, Sec. 2(d), added par. (3).
      Subsecs. (r), (s). Pub. L. 96-613 added subsec. (r) and
    redesignated former subsec. (r) as (s).
      1978 - Subsec. (i). Pub. L. 95-600, Sec. 312(c)(4), struck out
    subsec. (i) which related to a limitation in the case of property
    constructed or acquired during the suspension period.
      Subsec. (k)(1), (3)(D). Pub. L. 95-615 substituted ''January 1,
    1979'' for ''January 1, 1978'' wherever appearing.
      Pub. L. 95-600, Sec. 367, substituted ''January 1, 1982'' for
    ''January 1, 1979'' wherever appearing.
      Subsec. (n). Pub. L. 95-600, Sec. 701(f)(4), in par. (1),
    substituted ''occupied by a certified historic structure (or by any
    structure in a registered historic district) which is demolished or
    substantially altered after such date'' for ''occupied by a
    certified historic structure (as defined in section 191(d)(1))
    which is demolished or substantially altered (other than by virtue
    of a certified rehabilitation as defined in section 191(d)(3) after
    such date'', inserted ''and'' preceding subpar. (B), substituted
    ''means'' for ''shall mean'' in subpar. (B), and inserted provision
    that ''The preceding sentence shall not apply if the last
    substantial alteration of the structure is a certified
    rehabilitation.''; in par. (2), substituted heading ''Exceptions''
    for ''Exception'', designated existing text as subpar. (A), and
    added subpar. (B); and added par. (3).
      Subsec. (o). Pub. L. 95-600, Sec. 701(f)(6), inserted in par. (1)
    ''(other than property with respect to which an amortization
    deduction has been allowed to the taxpayer under section 191)''
    after ''substantially rehabilitated historic property'' and
    substituted in par. (2) ''section 191(d)(4)'' for ''section
    191(d)(3)''.
      Subsec. (p). Pub. L. 95-618, Sec. 301(d)(3), added subsec. (p).
    Former subsec. (p) redesignated (r).
      Subsec. (q). Pub. L. 95-618, Sec. 301(e)(1), added subsec. (q).
      Subsec. (r). Pub. L. 95-618, Sec. 301(d)(3), redesignated former
    subsec. (p) as (r).
      1977 - Subsec. (k). Pub. L. 95-171 substituted ''January 1,
    1979'' for ''January 1, 1978'' wherever appearing in pars. (1) and
    (3)(D).
      1976 - Subsec. (b). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck
    out ''or his delegate'' after ''Secretary''.
      Subsec. (d). Pub. L. 94-455, Sec. 1901(a)(27)(A), 1906(b)(13)(A),
    substituted ''after August 16, 1954'' for ''after the date of
    enactment of this title'' and struck out ''or his delegate'' after
    ''Secretary'' in first sentence before ''shall be binding''.
      Subsec. (e). Pub. L. 94-455, Sec. 202(c)(3), 1906(b)(13)(A),
    substituted in par. (3) ''beginning after December 31, 1975'' for
    ''beginning after July 24, 1969'' and in pars. (1) to (3) struck
    out ''or his delegate'' after ''Secretary''.
      Subsec. (f)(1). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out
    ''or his delegate'' after ''Secretary''.
      Subsec. (f)(2). Pub. L. 94-455, Sec. 1901(a)(27)(B), substituted
    ''October 16, 1962'' for ''the date of enactment of the Revenue Act
    of 1962''.
      Subsec. (i). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out in
    pars. (1) and (2) ''or his delegate'' after ''Secretary''.
      Subsec. (j). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out in
    pars. (1), (4)(B), (5)(C), and (6)(A) ''or his delegate'' after
    ''Secretary''.
      Subsec. (k)(1). Pub. L. 94-455, Sec. 203(a)(1), 1906(b)(13)(A),
    substituted reference to January 1, 1978 for reference to January
    1, 1976 and struck out ''or his delegate'' after ''Secretary''.
      Subsec. (k)(2)(A). Pub. L. 94-455, Sec. 203(a)(2), substituted
    ''$20,000'' for ''$15,000''.
      Subsec. (k)(3)(B). Pub. L. 94-455, Sec. 203(a)(3),
    1906(b)(13)(A), substituted ''the Leased Housing Program under
    section 8 of the United States Housing Act of 1937'' for ''the
    policies of the Housing and Urban Development Act of 1968'' and
    struck out ''or his delegate'' after ''Secretary''.
      Subsec. (k)(3)(D). Pub. L. 94-455, Sec. 203(a)(4), added subpar.
    (D).
      Subsec. (l)(3)(F). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck
    out ''or his delegate'' after ''Secretary''.
      Subsec. (l)(4)(A). Pub. L. 94-455, Sec. 1901(a)(27)(C),
    1906(b)(13)(A), substituted ''before June 29, 1970,'' for ''within
    180 days after the date of the enactment of this subparagraph'' and
    struck out ''or his delegate'' after ''Secretary''.
      Subsec. (l)(5). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out
    ''or his delegate'' after ''Secretary''.
      Subsec. (m). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out in
    pars. (1) and (3) ''or his delegate'' after ''Secretary''.
      Subsec. (n). Pub. L. 94-455, Sec. 2124(c)(1), added subsec. (n).
    Former subsec. (n) redesignated (p).
      Subsec. (o). Pub. L. 94-455, Sec. 2124(d)(1), added subsec. (o).
      Subsec. (p). Pub. L. 94-455, Sec. 2124(c)(1), redesignated former
    subsec. (n) as (p).
      1975 - Subsec. (k)(1). Pub. L. 93-625 substituted ''January 1,
    1976'' for ''January 1, 1975''.
      1971 - Subsecs. (m), (n). Pub. L. 92-178 added subsec. (m) and
    redesignated former subsec. (m) as (n).
      1969 - Subsec. (e)(3). Pub. L. 91-172, Sec. 521(d), added par.
    (3).
      Subsecs. (j), (k). Pub. L. 91-172, Sec. 521(a), added subsecs.
    (j) and (k). Former subsec. (j) redesignated (m).
      Subsec. (l). Pub. L. 91-172, Sec. 441(a), added subsec. (l).
      Subsec. (m). Pub. L. 91-172, Sec. 521(a), redesignated former
    subsec. (j) as (m).
      1967 - Subsec. (i)(1). Pub. L. 90-26, Sec. 2(b), provided that
    accelerated depreciation was not to apply if the physical
    construction, reconstruction or erection by any person was begun
    during the suspension period or begun, pursuant to an order placed
    during such period, before May 24, 1967, subject to the proviso
    that only that portion of the basis which was properly attributable
    to construction, reconstruction or erection before May 24, 1967,
    shall be affected by the applicability of the suspension period.
      Subsec. (i)(3). Pub. L. 90-26, Sec. 1, substituted ''March 9,
    1967'' for ''December 31, 1967''.
      1966 - Subsecs. (i), (j). Pub. L. 89-800 added subsec. (i) and
    redesignated former subsec. (i) as (j).
      1962 - Subsec. (e). Pub. L. 87-834, Sec. 13(b), designated
    existing provisions as par. (1) and added par. (2).
      Subsecs. (f) to (i). Pub. L. 87-834, Sec. 13(c)(1), added subsec.
    (f) and redesignated former subsecs. (f), (g), and (h) as (g), (h),
    and (i), respectively.
      1958 - Subsec. (d). Pub. L. 85-866 inserted ''certified mail or''
    before ''registered mail''.

                      EFFECTIVE DATE OF 2007 AMENDMENT
     2007 - P.L. 110-140
SEC. 1502. 7-YEAR AMORTIZATION OF GEOLOGICAL AND GEOPHYSICAL 
            EXPENDITURES FOR CERTAIN MAJOR INTEGRATED OIL COMPANIES.
    (b) <<NOTE: 26 USC 167 note.>>  Effective Date.--The amendment made 
by this section shall apply to amounts paid or incurred after the date 
of the enactment of this Act.

                      EFFECTIVE DATE OF 2006 AMENDMENT
     2006 - P.L. 109-222
     SEC. 503. 5-YEAR AMORTIZATION OF GEOLOGICAL AND GEOPHYSICAL EXPENDITURES 
            FOR CERTAIN MAJOR INTEGRATED OIL COMPANIES.
          (b) Effective Date.--The <<NOTE: 26 USC 167 note.>> amendment made 
     by this section shall apply to amounts paid or incurred after the date 
     of the enactment of this Act.

                      EFFECTIVE DATE OF 2006 AMENDMENT
     2006 - P.L. 109-222
     SEC. 207. AMORTIZATION OF EXPENSES INCURRED IN CREATING OR ACQUIRING 
            MUSIC OR MUSIC COPYRIGHTS.
          (b) Effective Date.--The <<NOTE: 26 USC 167 note.>> amendments made 
     by this section shall apply to expenses paid or incurred with respect to 
     property placed in service in taxable years beginning after December 31, 
     2005.

                      EFFECTIVE DATE OF 2004 AMENDMENT
    Effective Date.--The amendments made by Sec. 242, PL108-357,
    shall apply to property placed in service after the 
    date of the enactment of the Act. 
       
                      EFFECTIVE DATE OF 1997 AMENDMENT
      Section 1086(c) of Pub. L. 105-34 provided that: ''The amendment
    made by this section (amending this section and section 168 of this
    title) shall apply to property placed in service after the date of
    the enactment of this Act (Aug. 5, 1997).''
                      EFFECTIVE DATE OF 1996 AMENDMENT
      Section 1604(b) of Pub. L. 104-188, as amended by Pub. L.
    105-206, title VI, Sec. 6018(d), July 22, 1998, 112 Stat. 823,
    provided that:
      ''(1) In general. - The amendment made by subsection (a)
    (amending this section) shall apply to property placed in service
    after September 13, 1995.
      ''(2) Binding contracts. - The amendment made by subsection (a)
    shall not apply to any property produced or acquired by the
    taxpayer pursuant to a written contract which was binding on
    September 13, 1995, and at all times thereafter before such
    production or acquisition.
      ''(3) Underpayments of income tax. - No addition to tax shall be
    made under section 6662 of the Internal Revenue Code of 1986 as a
    result of the application of subsection (d) of that section
    (relating to substantial understatements of income tax) with
    respect to any underpayment of income tax for any taxable year
    ending before the date of the enactment of this Act (Aug. 20,
    1996), to the extent such underpayment was created or increased by
    the amendments made by subsection (a).''
                      EFFECTIVE DATE OF 1993 AMENDMENT
      Section 13206(c)(3) of Pub. L. 103-66 provided that: ''The
    amendments made by this subsection (amending this section and
    section 305 of this title) shall take effect on April 30, 1993.''
      Amendment by section 13261(b) and (f)(1) of Pub. L. 103-66
    applicable, except as otherwise provided, with respect to property
    acquired after Aug. 10, 1993, see section 13261(g) of Pub. L.
    103-66, set out as an Effective Date note under section 197 of this
    title.
                      EFFECTIVE DATE OF 1990 AMENDMENT
      Amendment by Pub. L. 101-508 applicable to property placed in
    service after Nov. 5, 1990, but not applicable to any property to
    which section 168 of this title does not apply by reason of subsec.
    (f)(5) of section 168, and not applicable to rehabilitation
    expenditures described in section 252(f)(5) of Pub. L. 99-514, see
    section 11812(c) of Pub. L. 101-508, set out as a note under
    section 42 of this title.
                      EFFECTIVE DATE OF 1989 AMENDMENT
      Section 7622(c)((e)) of Pub. L. 101-239 provided that:
      ''(1) In general. - The amendments made by this section (amending
    this section and sections 1245 and 1253 of this title) shall apply
    to transfers after October 2, 1989.
      ''(2) Binding contract. - The amendments made by this section
    shall not apply to any transfer pursuant to a written binding
    contract in effect on October 2, 1989, and at all times thereafter
    before the transfer.''
      Section 7645(b) of Pub. L. 101-239 provided that: ''The amendment
    made by subsection (a) (amending this section) shall apply to
    interests created or acquired after July 27, 1989, in taxable years
    ending after such date.''
                      EFFECTIVE DATE OF 1988 AMENDMENT
      Amendment by Pub. L. 100-647 effective, except as otherwise
    provided, as if included in the provision of the Tax Reform Act of
    1986, Pub. L. 99-514, to which such amendment relates, see section
    1019(a) of Pub. L. 100-647, set out as a note under section 1 of
    this title.
                      EFFECTIVE DATE OF 1986 AMENDMENT
      Amendment by section 201(d)(1) of Pub. L. 99-514 applicable to
    property placed in service after Dec. 31, 1986, in taxable years
    ending after such date, with exceptions, see sections 203 and 204
    of Pub. L. 99-514, set out as a note under section 168 of this
    title.
      Amendment by section 201(d)(1) of Pub. L. 99-514 not applicable
    to any property placed in service before Jan. 1, 1994, if such
    property placed in service as part of specified rehabilitations,
    and not applicable to certain additional rehabilitations, see
    section 251(d)(2), (3) of Pub. L. 99-514, set out as a note under
    section 46 of this title.
      Amendment by section 1511(c)(4) of Pub. L. 99-514 applicable for
    purposes of determining interest for periods after Dec. 31, 1986,
    see section 1511(d) of Pub. L. 99-514, set out as a note under
    section 47 of this title.
      Section 1809(d)(1) of Pub. L. 99-514 provided that subsec. (c) is
    amended except with respect to property placed in service by the
    taxpayer on or before Mar. 28, 1985.
                      EFFECTIVE DATE OF 1983 AMENDMENT
      Amendment by Pub. L. 97-424 applicable to taxable years beginning
    after Dec. 31, 1979, with a special rule for periods beginning
    before Mar. 1, 1980, see section 541(c) of Pub. L. 97-424, set out
    as a note under section 46 of this title.
                      EFFECTIVE DATE OF 1981 AMENDMENT
      Section 264(b) of Pub. L. 97-34 provided that: ''The amendments
    made by this section (amending this section) shall apply with
    respect to rehabilitation expenditures incurred after December 31,
    1980.''
      Amendment by sections 203 and 209 of Pub. L. 97-34 applicable to
    property placed in service after Dec. 31, 1980, in taxable years
    ending after that date, except that amendment by section 203(c) of
    Pub. L. 97-34 effective Jan. 1, 1981, and applicable with respect
    to taxable years ending after that date, see section 209(a), (b) of
    Pub. L. 97-34, set out as an Effective Date note under section 168
    of this title.
      Amendment by section 212(d)(1) of Pub. L. 97-34 applicable to
    expenditures incurred after Dec. 31, 1981, in taxable years ending
    after that date, see section 212(e) of Pub. L. 97-34, set out as a
    note under section 46 of this title.
                      EFFECTIVE DATE OF 1980 AMENDMENT
      Section 2(b) of Pub. L. 96-613 provided that: ''The amendments
    made by subsection (a) (amending this section) shall apply with
    respect to taxable years ending after December 31, 1953.''
             EFFECTIVE AND TERMINATION DATES OF 1978 AMENDMENTS
      Amendment by section 312(c)(4) of Pub. L. 95-600 applicable to
    taxable years ending after Dec. 31, 1978, see section 312(d) of
    Pub. L. 95-600, set out as an Effective Date of 1978 Amendment note
    under section 46 of this title.
      Section 701(f)(8) of Pub. L. 95-600, as amended by Pub. L.
    99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ''The
    amendments made by this subsection (amending this section and
    sections 57, 191, 280B, 1245, and 1250 of this title) shall take
    effect as if included in the respective provisions of the Internal
    Revenue Code of 1986 (formerly I.R.C. 1954) to which such
    amendments relate, as such provision(s) were added to such Code, or
    amended, by section 2124 of the Tax Reform Act of 1976 (Pub. L.
    94-455, title XXI, Sec. 2124, Oct. 4, 1976, 90 Stat. 1916).''
      Amendment by Pub. L. 95-615 to cease to have effect on the day
    after Nov. 8, 1978, see section 210(a) of Pub. L. 95-615, set out
    as a Termination Date of 1978 Amendment note under section 61 of
    this title.
      Amendment by section 301(d)(3) of Pub. L. 95-618 applicable to
    property which is placed in service after Sept. 30, 1978, but not
    to property which is constructed, reconstructed, erected, or
    acquired pursuant to a contract which, on Oct. 1, 1978, and at all
    times thereafter, was binding on the taxpayer, see section
    301(d)(4) of Pub. L. 95-618, set out as an Effective Date of 1978
    Amendment note under section 48 of this title.
      Section 301(e)(2) of Pub. L. 95-618 provided that: ''The
    amendment made by paragraph (1) (amending this section) shall apply
    to taxable years ending after the date of enactment of this Act
    (Nov. 9, 1978).''
                      EFFECTIVE DATE OF 1976 AMENDMENT
      Amendment by section 1901(a)(27)(A) of Pub. L. 94-455 applicable
    with respect to taxable years beginning after Dec. 31, 1976, see
    section 1901(d) of Pub. L. 94-455, set out as a note under section
    2 of this title.
      Amendment by section 202(c)(3) of Pub. L. 94-455 applicable for
    taxable years ending after Dec. 31, 1975, see section 202(d) of
    Pub. L. 94-455, set out as a note under section 1250 of this title.
      Section 203(b) of Pub. L. 94-455, as amended by Pub. L. 95-171,
    Sec. 4(b), Nov. 12, 1977, 91 Stat. 1355; Pub. L. 95-615, Sec. 7(b),
    Nov. 8, 1978, 92 Stat. 3098, provided that: ''The amendments made
    by paragraphs (1), (3), and (4) of subsection (a) (amending this
    section) shall apply to expenditures paid or incurred after
    December 31, 1975. The amendment made by paragraph (2) of
    subsection (a) (amending this section) shall apply to expenditures
    incurred after December 31, 1975.''
      (Section 7(b) of Pub. L. 95-615 (which amended section 203(b) of
    Pub. L. 94-455 exactly as that section 203(b) had been amended by
    Pub. L. 95-171) to cease to have effect on the day after Nov. 8,
    1978, see section 210(a) of Pub. L. 95-615, set out as a
    Termination Date of 1978 Amendment note under section 61 of this
    title.)
      Section 2124(c)(2), (d)(2) of Pub. L. 94-455, which provided that
    the amendment of this section was applicable to that portion of the
    basis attributable to construction, reconstruction, or erection
    after Dec. 31, 1975, and before Jan. 1, 1981, and with respect to
    additions to capital account occurring after June 30, 1976, and
    before July 1, 1981, was repealed by section 2(e)(3), (4) of Pub.
    L. 96-541.
                      EFFECTIVE DATE OF 1975 AMENDMENT
      Section 5(d) of Pub. L. 93-625 provided that: ''The amendments
    made by this section (amending section 1250 of this title and
    enacting and repealing provisions set out as notes under this
    section) shall apply with respect to property placed in service
    after December 31, 1973.''
                      EFFECTIVE DATE OF 1971 AMENDMENT
      Section 109(d)(1) of Pub. L. 92-178 provided that: ''The
    amendments made by subsection (a) (amending this section) shall
    apply to property placed in service after December 31, 1970.''
                      EFFECTIVE DATE OF 1969 AMENDMENT
      Section 441(b) of Pub. L. 91-172 provided that: ''The amendment
    made by subsection (a) (amending this section) shall apply with
    respect to all taxable years for which a return has not been filed
    before August 1, 1969.''
      Section 521(g) of Pub. L. 91-172 provided that: ''The amendments
    made by this section (amending this section and sections 381 and
    1250 of this title) shall apply with respect to taxable years
    ending after July 24, 1969.''
                      EFFECTIVE DATE OF 1967 AMENDMENT
      Amendment by Pub. L. 90-26 applicable with respect to taxable
    years ending after March 9, 1967, see section 4 of Pub. L. 90-26,
    set out as a note under section 48 of this title.
                      EFFECTIVE DATE OF 1966 AMENDMENT
      Amendment by Pub. L. 89-800 applicable to taxable years ending
    after Oct. 9, 1966, see section 4 of Pub. L. 89-800, set out as a
    note under section 46 of this title.
                      EFFECTIVE DATE OF 1962 AMENDMENT
      Amendment by section 13(b) of Pub. L. 87-834 applicable to
    taxable years beginning after Dec. 31, 1962, and amendment by
    section 13(c)(1) of Pub. L. 87-834 applicable to taxable years
    beginning after Dec. 31, 1961, and ending after Oct. 16, 1962, see
    section 13(g) of Pub. L. 87-834, set out as an Effective Date note
    under section 1245 of this title.
                      EFFECTIVE DATE OF 1958 AMENDMENT
      Amendment by Pub. L. 85-866 applicable only if mailing occurs
    after Sept. 2, 1958, see section 89(d) of Pub. L. 85-866, set out
    as a note under section 7502 of this title.
                             SAVINGS PROVISION
      For provisions that nothing in amendment by Pub. L. 101-508 be
    construed to affect treatment of certain transactions occurring,
    property acquired, or items of income, loss, deduction, or credit
    taken into account prior to Nov. 5, 1990, for purposes of
    determining liability for tax for periods ending after Nov. 5,
    1990, see section 11821(b) of Pub. L. 101-508, set out as a note
    under section 29 of this title.
             PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989
      For provisions directing that if any amendments made by subtitle
    A or subtitle C of title XI (Sec. 1101-1147 and 1171-1177) or title
    XVIII (Sec. 1800-1899A) of Pub. L. 99-514 require an amendment to
    any plan, such plan amendment shall not be required to be made
    before the first plan year beginning on or after Jan. 1, 1989, see
    section 1140 of Pub. L. 99-514, as amended, set out as a note under
    section 401 of this title.
       DISCONTINUATION OF RETIREMENT-REPLACEMENT-BETTERMENT METHOD OF
                      DEPRECIATION; TRANSITIONAL RULE
      Section 203(c)(2), (3) of Pub. L. 97-34, as amended by Pub. L.
    99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
      ''(2) Change in method of accounting. - Sections 446 and 481 of
    the Internal Revenue Code of 1986 (formerly I.R.C. 1954) shall not
    apply to the change in the method of depreciation to comply with
    the provisions of this subsection (which struck out subsec. (r) of
    this section relating to the retirement-replacement-betterment
    method of accounting).
      ''(3) Transitional rule. - The adjusted basis of RRB property (as
    defined in section 168(g)(6) of such Code) as of December 31, 1980,
    shall be depreciated using a useful life of no less than 5 years
    and no more than 50 years and a method described in section 167(b)
    of such Code, including the method described in section 167(b)(2)
    of such Code, switching to the method described in section
    167(b)(3) of such Code at a time to maximize the deduction.''
      INTERNAL REVENUE CODE PROVISIONS RELATING TO DEPRECIATION AS NOT
        APPLICABLE TO CALCULATIONS OF SECRETARY OF HEALTH AND HUMAN
                 SERVICES IN DETERMINING COSTS OF PROGRAMS
      Section 203(e) of Pub. L. 97-34, as amended by Pub. L. 99-514,
    Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ''The
    Secretary of Health and Human Services is not required to apply any
    provision of the Internal Revenue Code of 1986 (formerly I.R.C.
    1954), as amended, in calculating depreciation (for the purpose of
    determining any cost under a program administered by the
    Secretary), unless a provision of law requires so expressly.''
       CLASS LIFE SYSTEM; APPLICATION TO REAL PROPERTY; GENERAL RULE
      Section 5(a) of Pub. L. 93-625, as amended by Pub. L. 99-514,
    Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ''In the case
    of buildings and other items of section 1250 property (within the
    meaning of section 1250(c) of the Internal Revenue Code of 1986
    (formerly I.R.C. 1954)) placed in service before the effective date
    of the class lives first prescribed by the Secretary of the
    Treasury or his delegate under section 167(m) of such Code for the
    class in which such property falls, if an election under such
    section 167(m) applies to the taxpayer for the taxable year in
    which such property is placed in service, the taxpayer may, in
    accordance with regulations prescribed by the Secretary of the
    Treasury or his delegate, elect to determine the useful life of
    such property -
        ''(1) under Revenue Procedure 62-21 (as amended and
      supplemented) as in effect on December 31, 1970, or
        ''(2) on the facts and circumstances.''
        TRANSITIONAL RULES FOR REASONABLE ALLOWANCE FOR DEPRECIATION
      Section 109(e) of Pub. L. 92-178, as amended by Pub. L. 93-625,
    Sec. 5(b), Jan. 3, 1975, 88 Stat. 2112; Pub. L. 99-514, Sec. 2,
    Oct. 22, 1986, 100 Stat. 2095, provided that:
      ''(1) (Repealed. Pub. L. 93-625, Sec. 5(b), Jan. 3, 1975, 88
    Stat. 2112.)
      ''(2) Subsidiary assets. - If a significant portion of a class of
    property first prescribed by the Secretary of the Treasury or his
    delegate under section 167(m) of the Internal Revenue Code of 1986
    (formerly I.R.C. 1954) consists of subsidiary assets, all such
    subsidiary assets in such class placed in service by the taxpayer
    during the period beginning on January 1, 1971, and ending on
    December 31, 1973 (or such earlier date on which a class which
    includes such subsidiary assets subsequently prescribed by the
    Secretary of the Treasury or his delegate under such section
    becomes effective), may, in accordance with regulations prescribed
    by the Secretary of the Treasury or his delegate, be excluded by
    the taxpayer from an election under such section.''
     REHABILITATION EXPENDITURES FOR LOW INCOME RENTAL HOUSING INCURRED
      AFTER DECEMBER 31, 1974, AND BEFORE JANUARY 1, 1978, PURSUANT TO
                 CONTRACT ENTERED BEFORE DECEMBER 31, 1974
      Pub. L. 93-482, Sec. 4, Oct. 26, 1974, 88 Stat. 1456, as amended
    by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided
    that: ''Notwithstanding the provisions of section 167(k)(1) of the
    Internal Revenue Code of 1986 (formerly I.R.C. 1954) (relating to
    depreciation of expenditures to rehabilitate low income rental
    housing), the provisions of section 167(k) shall apply with respect
    to rehabilitation expenditures incurred with respect to low income
    rental housing after December 31, 1974, and before January 1, 1978,
    if such expenditures are incurred pursuant to a binding contract
    entered into before December 31, 1974.''
 

References

                   SECTION REFERRED TO IN OTHER SECTIONS
      This section is referred to in sections 42, 56, 62, 132, 142,
    168, 169, 172, 174, 175, 179A, 197, 198, 216, 312, 381, 453, 514,
    542, 543, 545, 556, 611, 616, 617, 642, 818, 832, 834, 936, 1016,
    1082, 1221, 1231, 1239, 1245, 1250, 4940, 7518, 7701 of this title;
    title 33 sections 1316, 1326; title 46 App. section 1177.
 

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