Adjustments applicable to all taxpayers

(A) In general (i) Property other than certain personal property Except as provided in clause (ii), the depreciation deduction allowable under section 167 with respect to any tangible property placed in service after December 31, 1986 , shall be determined under the alternative system of section 168(g). In the case of property placed in service after December 31, 1998 , the preceding sentence shall not apply but clause (ii) shall continue to apply. (ii) 150-percent declining balance method for certain property The method of depreciation used shall be— (I) the 150 percent declining balance method, (II) switching to the straight line method for the 1st taxable year for which using the straight line method with respect to the adjusted basis as of the beginning of the year will yield a higher allowance. The preceding sentence shall not apply to any section 1250 property (as defined in section 1250(c)) (and the straight line method shall be used for such section 1250 property) or to any other property if the depreciation deduction determined under section 168 with respect to such other property for purposes of the regular tax is determined by using the straight line method.

(B) Exception for certain property This paragraph shall not apply to property described in paragraph (1), (2), (3), or (4) of section 168(f), or in section 168(e)(3)(C)(iv).

(C) Coordination with transitional rules (i) In general This paragraph shall not apply to property placed in service after December 31, 1986 , to which the amendments made by section 201 of the Tax Reform Act of 1986 do not apply by reason of section 203, 204, or 251(d) of such Act. (ii) Treatment of certain property placed in service before 1987 This paragraph shall apply to any property to which the amendments made by section 201 of the Tax Reform Act of 1986 apply by reason of an election under section 203(a)(1)(B) of such Act without regard to the requirement of subparagraph (A) that the property be placed in service after December 31, 1986 .

(D) Normalization rules With respect to public utility property described in section 168(i)(10), the Secretary shall prescribe the requirements of a normalization method of accounting for this section.

(A) In general With respect to each mine or other natural deposit (other than an oil, gas, or geothermal well) of the taxpayer, the amount allowable as a deduction under section 616(a) or 617(a) (determined without regard to section 291(b)) in computing the regular tax for costs paid or incurred after December 31, 1986 , shall be capitalized and amortized ratably over the 10-year period beginning with the taxable year in which the expenditures were made.

(B) Loss allowed If a loss is sustained with respect to any property described in subparagraph (A), a deduction shall be allowed for the expenditures described in subparagraph (A) for the taxable year in which such loss is sustained in an amount equal to the lesser of— (i) the amount allowable under section 165(a) for the expenditures if they had remained capitalized, or (ii) the amount of such expenditures which have not previously been amortized under subparagraph (A).

In the case of any long-term contract entered into by the taxpayer on or after March 1, 1986 , the taxable income from such contract shall be determined under the percentage of completion method of accounting (as modified by section 460(b)). For purposes of the preceding sentence, in the case of a contract described in section 460(e)(1), the percentage of the contract completed shall be determined under section 460(b)(1) by using the simplified procedures for allocation of costs prescribed under section 460(b)(3). The first sentence of this paragraph shall not apply to any residential construction contract (as defined in section 460(e)(4)).

The alternative tax net operating loss deduction shall be allowed in lieu of the net operating loss deduction allowed under section 172.

In the case of any certified pollution control facility placed in service after December 31, 1986 , the deduction allowable under section 169 (without regard to section 291) shall be determined under the alternative system of section 168(g). In the case of such a facility placed in service after December 31, 1998 , such deduction shall be determined under section 168 using the straight line method.

The adjusted basis of any property to which paragraph (1) or (5) applies (or with respect to which there are any expenditures to which paragraph (2) or subsection (b)(2) applies) shall be determined on the basis of the treatment prescribed in paragraph (1), (2), or (5), or subsection (b)(2), whichever applies.

Section 87 (relating to alcohol fuel credit) shall not apply.