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TITLE 26-INTERNAL REVENUE CODE 1958-Subsec. (d)(2)(A). Pub. L. 85-866 substituted "a trade or business of the taxpayer" for "a taxpayer's trade or business". EFFEcTIVE DAT O 1976 AMENDMENT Section 605(c) of Pub. L. 94-455 provided that: "The amendments made by this section [repealing subsec. () of this section, redeslgnating subsecs. (g) and (h) as () and (e), and amending section 81(1) of this title] shall apply to guarantees made after December 31, 1975, in taxable years beginning after such date." Section 1402(b)(1), (2), of Pub. L. 94-455 provided In part that the substitution of "9 months" for "6 months" in subsec. (d)(1)(B) of this section by section 1402(b)(1)(A) of Pub. L. 94-455 is effective with re- spect to taxable years beginning in 1977, and that the substitution thereafter of "1 year" for "9 months" is effective with respect to taxable years beginning after Dec. 31, 1977. EFFECTIVE DAT OF 1969 AMENDMENT Amendment by Pub. L. 91-172 applicable to taxable years beginning after July 11, 1969, see section 431(d) of Pub. L. 91-172, set out as an Effective Date note under section 585 of this title. EFEcTivz DATE o 1966 AMENDMENT Section 2 of Pub. L. 89-722 provided that: "(a) Except as provided in subsections (b) and (c), the amendments made by the first section of this Act [enacting subsec. (g) of this section and section 81 of this title] shall apply to taxable years ending after Oc- tober 21, 1965. "(b) If- "(1) the taxpayer before October 22, 1965. claimed a deduction, for a taxable year ending before such date, under section 166(c) of the Internal Revenue Code of 1954 [subsec. (c) of this section] for an addi- tion to a reserve for bad debts on account of debt ob- ligations described In section 166(g)(1)(A) of such Code (as amended by the first section of this Act) (subsec. (g)(1)(A) of this section], and "(2) the assessment of a deficiency of the tax im- posed by chapter 1 of such Code for such taxable year and each subsequent taxable year ending before October 22, 1965, Is not prevented on Decem- ber 31, 1966, by the operation of any law or rule of law, then such deduction on account of such debt obliga- tions shall be allowed for each such taxable yeax under such section 166(c) to the extent that the de- duction would have been allowable under the provi- sions of such section 166(g)(1)(A) if such provisions ap- plied to such taxable years. "c) Section 166(g)(2) of the Internal Revenue Code of 1954 (as amended by the first section of this Act) [subsec. (g)(2) of this section] shall apply to taxable years beginning after December 31, 1953, and ending after August 16, 1954." EFFECTIVE DATE or 1958 AMENDMENT Amendment of subsec. (d)(2)(A) by Pub. L. 85-866 applicable to taxable years beginning after Dec. 31, 1953, and ending after Aug. 16, 1954, see section l(c) of Pub. L. 85-866, set out as an Effective Date of 1958 Amendment note under section 165 of this title. ESTABLISHMENT OF RESERVE FOR TAXABLE YEAR ENDING AFTER OCT. 21, 1965, AND BEGINNING BEORE Auu. 2, 1966 Section l(c) of Pub. L. 89-722 provided that: "If the taxpayer establishes a reserve described in section 166(g)(1) of the Internal Revenue Code of 1954 (as amended by subsection (a) of this section) (subsec. (g)(1) of this section] for a taxable year ending after October 21, 1965, and beginning before August 2, 1966, the establishment of such reserve shall not be consid- ered as a change in method of accounting for purposes of section 446(e) of such Code." CRoss REFERENCES Bad debts- Addition to reserve, see section 593 of this title. Carryover, see section 381 of this title. Limitation of claim for credit or refund, see section 6511 of this title. Debts owed political parties not deductible, see sec- tion 271 of this title. Time for taking deduction, see section 461 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 57, 81, 163, 172, 271. 582, 585, 586, 593, 595, 809, 1351, 6511 of this title. § 167. Depreciation (a) General rule There shall be allowed as a depreciation de- duction a reasonable allowance for the exhaus- tion, wear and tear (including a reasonable allowance for obsolescence)- (1) of property used in the trade or busi- ness, or (2) of property held for the production of income. (b) Use of certain methods and rates 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 accor- dance with regulations prescribed by the Secre- tary, 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 allowa- ble under subsection (a). () Limitations on use of certain methods and rates Paragraphs (2), (3), and (4) of subsection (b) shall apply only in the case of property (other than intangible property) described in subsec- tion (a) with a useful life of 3 years or more- (1) the construction, reconstruction, or erec- tion 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. (d) Agreement as to useful life on which depreciation rate is based Where, under regulations prescribed by the Secretary, the taxpayer and the Secretary have, after August 16, 1954, entered into an Page 152 § 167