§ 203. EFFECTIVE DATES; GENERAL TRANSITIONAL RULES.
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General Effective Dates.— Section 201.— In general .— Except as provided in this section, section 204, and section 251(d) [set out as a note under section 46 of this title ], the amendments made by section 201 [amending sections 46, 167, 168, 178, 179, 280F, 291, 312, 465, 467, 514, 751, 1245, 4162, 6111, and 7701 of this title] shall apply to property placed in service after December 31, 1986 , in taxable years ending after such date. Election to have amendments made by section 201 apply .— A taxpayer may elect (at such time and in such manner as the Secretary of the Treasury or his delegate may prescribe) to have the amendments made by section 201 apply to any property placed in service after July 31, 1986 , and before January 1, 1987 .
No election may be made under this subparagraph with respect to property to which section 168 of the Internal Revenue Code of 1986 would not apply by reason of section 168(f)(5) of such Code if such property were placed in service after December 31, 1986 . Section 202.— In general .— The amendments made by section 202 [amending section 179 of this title ] shall apply to property placed in service after December 31, 1986 , in taxable years ending after such date. Special rule for fiscal years including .— january 1, 1987 In the case of any taxable year (other than a calendar year) which includes January 1, 1987 , for purposes of applying the amendments made by section 202 to property placed in service during such taxable year and after December 31, 1986 — the limitation of section 179(b)(1) of the Internal Revenue Code of 1986 (as amended by section 202) shall be reduced by the aggregate deduction under section 179 (as in effect on the day before the date of the enactment of the Tax Reform Act of 1986 [ Oct. 22, 1986 ]) for section 179 property placed in service during such taxable year and before January 1, 1987 , the limitation of section 179(b)(2) of such Code (as so amended) shall be applied by taking into account the cost of all section 179 property placed in service during such taxable year, and the limitation of section 179(b)(3) of such Code shall be applied by taking into account the taxable income for the entire taxable year reduced by the amount of any deduction under section 179 of such Code for property placed in service during such taxable year and before January 1, 1987 .
General Transitional Rule.— In general .— The amendments made by section 201 [amending this section and sections 46, 167, 178, 179, 280F, 291, 312, 465, 467, 514, 751, 1245, 4162, 6111, and 7701 of this title] shall not apply to— any property which is constructed, reconstructed, or acquired by the taxpayer pursuant to a written contract which was binding on March 1, 1986 , property which is constructed or reconstructed by the taxpayer if— the lesser of
(I)$1,000,000, or
(II)5 percent of the cost of such property has been incurred or committed by March 1, 1986 , and the construction or reconstruction of such property began by such date, or an equipped building or plant facility if construction has commenced as of March 1, 1986 , pursuant to a written specific plan and more than one-half of the cost of such equipped building or facility has been incurred or committed by such date. For purposes of this paragraph, all members of the same affiliated group of corporations (within the meaning of section 1504 of the Internal Revenue Code of 1986) filing a consolidated return shall be treated as one taxpayer. Requirement that certain property be placed in service before certain date.— In general .— Paragraph
(1)and section 204(a) (other than paragraph
(8)or
(12)thereof) shall not apply to any property unless such property has a class life of at least 7 years and is placed in service before the applicable date determined under the following table: “In the case of property The applicable with a class life of: date is: At least 7 but less than 20 years January 1, 1989 20 years or more January 1, 1991 . Residential rental and nonresidential real property .— In the case of residential rental property and nonresidential real property, the applicable date is January 1, 1991 . Class lives .— For purposes of subparagraph (A)— the class life of property to which section 168(g)(3)(B) of the Internal Revenue Code of 1986 (as added by section 201) applies shall be the class life in effect on January 1, 1986 , except that computer-based telephone central office switching equipment described in section 168(e)(3)(B)(iii) of such Code shall be treated as having a class life of 6 years, property described in section 204(a) shall be treated as having a class life of 20 years, and property with no class life shall be treated as having a class life of 12 years. Substitution of applicable dates .— If any provision of this Act [see Tables for classification] substitutes a date for an applicable date, this paragraph shall be applied by using such date. Property qualifies if sold and leased back in 3 months .— Property shall be treated as meeting the requirements of paragraphs
(1)and
(2)or section 204(a) with respect to any taxpayer if such property is acquired by the taxpayer from a person— in whose hands such property met the requirements of paragraphs
(1)and
(2)or section 204(a) (or would have met such requirements if placed in service by such person), or who placed the property in service before January 1, 1987 , and such property is leased back by the taxpayer to such person, or is leased to such person, not later than the earlier of the applicable date under paragraph
(2)or the day which is 3 months after such property was placed in service. Plant facility .— For purposes of paragraph (1), the term ‘plant facility’ means a facility which does not include any building (or with respect to which buildings constitute an insignificant portion) and which is— a self-contained single operating unit or processing operation, located on a single site, and identified as a single unitary project as of March 1, 1986 . Property Financed With Tax-Exempt Bonds.— In general .— Except as otherwise provided in this subsection or section 204, subparagraph
(C)of section 168(g)(1) of the Internal Revenue Code of 1986 (as added by this Act) shall apply to property placed in service after December 31, 1986 , in taxable years ending after such date, to the extent such property is financed by the proceeds of an obligation (including a refunding obligation) issued after March 1, 1986 . Exceptions.— Construction or binding agreements .— Subparagraph
(C)of section 168(g)(1) of such Code (as so added) shall not apply to obligations with respect to a facility— the original use of which commences with the taxpayer, and the construction, reconstruction, or rehabilitation of which began before March 2, 1986 , and was completed on or after such date, with respect to which a binding contract to incur significant expenditures for construction, reconstruction, or rehabilitation was entered into before March 2, 1986 , and some of such expenditures are incurred on or after such date, or acquired on or after March 2, 1986 , pursuant to a binding contract entered into before such date, and described in an inducement resolution or other comparable preliminary approval adopted by the issuing authority (or by a voter referendum) before March 2, 1986 . Refunding.— In general .— Except as provided in clause (ii), in the case of property placed in service after December 31, 1986 , which is financed by the proceeds of an obligation which is issued solely to refund another obligation which was issued before March 2, 1986 , subparagraph
(C)of section 168(g)(1) of such Code (as so added) shall apply only with respect to an amount equal to the basis in such property which has not been recovered before the date such refunded obligation is issued. Significant expenditures .— In the case of facilities the original use of which commences with the taxpayer and with respect to which significant expenditures are made before January 1, 1987 , subparagraph
(C)of section 168(g)(1) of such Code (as so added) shall not apply with respect to such facilities to the extent such facilities are financed by the proceeds of an obligation issued solely to refund another obligation which was issued before March 2, 1986 . Facilities .— In the case of an inducement resolution or other comparable preliminary approval adopted by an issuing authority before March 2, 1986 , for purposes of subparagraphs
(A)and (B)(ii) with respect to obligations described in such resolution, the term ‘facilities’ means the facilities described in such resolution. Significant expenditures .— For purposes of this paragraph, the term ‘significant expenditures’ means expenditures greater than 10 percent of the reasonably anticipated cost of the construction, reconstruction, or rehabilitation of the facility involved. Mid-Quarter Convention .— In the case of any taxable year beginning before October 1, 1987 in which property to which the amendments made by section 201 [amending this section and sections 46, 167, 178, 179, 280F, 291, 312, 465, 467, 514, 751, 1245, 4162, 6111, and 7701 of this title] do not apply is placed in service, such property shall be taken into account in determining whether section 168(d)(3) of the Internal Revenue Code of 1986 (as added by section 201) applies for such taxable year to property to which such amendments apply. The preceding sentence shall only apply to property which would be taken into account if such amendments did apply. Normalization Requirements.— In general .— A normalization method of accounting shall not be treated as being used with respect to any public utility property for purposes of section 167 or 168 of the Internal Revenue Code of 1986 if the taxpayer, in computing its cost of service for ratemaking purposes and reflecting operating results in its regulated books of account, reduces the excess tax reserve more rapidly or to a greater extent than such reserve would be reduced under the average rate assumption method. Definitions .— For purposes of this subsection— Excess tax reserve .— The term ‘excess tax reserve’ means the excess of— the reserve for deferred taxes (as described in section 167( l )(3)(G)(ii) or 168(e)(3)(B)(ii) of the Internal Revenue Code of 1954 as in effect on the day before the date of the enactment of this Act [ Oct. 22, 1986 ]), over the amount which would be the balance in such reserve if the amount of such reserve were determined by assuming that the corporate rate reductions provided in this Act [see Tables for classification] were in effect for all prior periods. Average rate assumption method .— The average rate assumption method is the method under which the excess in the reserve for deferred taxes is reduced over the remaining lives of the property as used in its regulated books of account which gave rise to the reserve for deferred taxes. Under such method, if timing differences for the property reverse, the amount of the adjustment to the reserve for the deferred taxes is calculated by multiplying— the ratio of the aggregate deferred taxes for the property to the aggregate timing differences for the property as of the beginning of the period in question, by the amount of the timing differences which reverse during such period.
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§ 203
EFFECTIVE DATES; GENERAL TRANSITIONAL RULES.
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