Internal Revenue Code:Sec. 178. Amortization of cost of acquiring a lease

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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. 178. Amortization of cost of acquiring a lease
 
    (a) General rule
      In determining the amount of the deduction allowable to a lessee
    for exhaustion, wear and tear, obsolescence, or amortization in
    respect of any cost of acquiring the lease, the term of the lease
    shall be treated as including all renewal options (and any other
    period for which the parties reasonably expect the lease to be
    renewed) if less than 75 percent of such cost is attributable to
    the period of the term of the lease remaining on the date of its
    acquisition.
    (b) Certain periods excluded
      For purposes of subsection (a), in determining the period of the
    term of the lease remaining on the date of acquisition, there shall
    not be taken into account any period for which the lease may
    subsequently be renewed, extended, or continued pursuant to an
    option exercisable by the lessee.
 

Sources

    (Added Pub. L. 85-866, title I, Sec. 15(a), Sept. 2, 1958, 72 Stat.
    1612; amended Pub. L. 99-514, title II, Sec. 201(d)(2)(A), title
    XVIII, Sec. 1812(c)(4)(B), Oct. 22, 1986, 100 Stat. 2139, 2835;
    Pub. L. 100-647, title I, Sec. 1002(a)(9), Nov. 10, 1988, 102 Stat.
    3354.)
 

Miscellaneous

                                 AMENDMENTS
      1988 - Subsec. (a). Pub. L. 100-647 substituted ''the deduction
    allowable to a lessee for exhaustion, wear and tear, obsolescence,
    or amortization'' for ''the deduction allowable to a lessee of a
    lease for any taxable year for amortization under section 167, 169,
    179, 185, 190, 193, or 194''.
      1986 - Pub. L. 99-514, Sec. 201(d)(2)(A), in amending section
    generally, substituted provision relating to amortization of cost
    of acquiring a lease, subsec. (a) setting out a general rule and
    subsec. (b) excluding certain periods, for former provision for
    depreciation or amortization of improvements made by lessee on
    lessor's property, subsec. (a) setting out a general rule, subsec.
    (b), in case of related lessee and lessor, setting out a general
    rule in par. (1) and defining related persons in par. (2), and
    subsec. (c) setting out a reasonable certainty test.
      Subsec. (b)(2)(B). Pub. L. 99-514, Sec. 1812(c)(4)(B), inserted
    before the period ''and subsection (f)(1)(A) of such section shall
    not apply''.
                      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)(2)(A) 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)(2)(A) 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 1812(c)(4)(B) of Pub. L. 99-514 effective,
    except as otherwise provided, as if included in the provisions of
    the Tax Reform Act of 1984, Pub. L. 98-369, div.  A, to which such
    amendment relates, see section 1881 of Pub. L. 99-514, set out as a
    note under section 48 of this title.
                               EFFECTIVE DATE
      Section 15(c) of Pub. L. 85-866 provided that: ''The amendments
    made by this section (enacting this section and amending analysis
    preceding section 161 of this title) shall apply with respect to
    costs of acquiring a lease incurred, and improvements begun, after
    July 28, 1958 (other than improvements which, on July 28, 1958, and
    at all times thereafter, the lessee was under a binding legal
    obligation to make).''
             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.