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TITLE 26-INTERNAL REVENUE CODE December 31, 1970, paragraph (2)(C) shall not apply with respect to any post-1969 public utility property, to the extent that such property constitutes property which increases the productive or operational ca- pacity of the taxpayer with respect to the goods or services described in paragraph (3)(A) and does not represent the replace- ment of existing capacity. (B) Certain pending applications for changes in method In applying paragraph (1)(B), the taxpay- er shall be deemed to have used a flow- through method of accounting for its July 1969 accounting period with respect to any pre-1970 public utility property for which it filed a timely application for change of ac- counting method before August 1, 1969, if with respect to public utility property of the same (or similar) kind most recently placed in service, it used a flow-through method of accounting for its July 1969 ac- counting period. (5) Reorganizations, assets acquisitions, etc. If by reason of a corporate reorganization, by reason of any other acquisition of the assets of one taxpayer by another taxpayer, by reason of the fact that any trade or busi- ness of the taxpayer is subject to ratemaking by more than one body, or by reason of other circumstances, the application of any provi- sions of this subsection to any public utility property does not carry out the purposes of this subsection, the Secretary shall provide by regulations for the application of such pro- visions in a manner consistent with the pur- poses of this subsection. (i) Class lives (1) In general In the case of a taxpayer who has made an election under this subsection for the taxable year, the term "reasonable allowance" as used in subsection (a) means (with respect to prop- erty which is placed in service during the tax- able year and which is included in any class for which a class life has been prescribed) only an allowance based on the class life pre- scribed by the Secretary which reasonably re- flects the anticipated useful life of that class of property to the industry or other group. The allowance so prescribed may (under regu- lations prescribed by the Secretary) permit a variance from any class life by not more than 20 percent (rounded to the nearest half year) of such life. (2) Certain first-year conventions not permitted No convention with respect to the time at which assets are deemed placed in service shall be permitted under this section which generally would provide greater depreciation allowances during the taxable year in which the assets are placed in service than would be permitted if all assets were placed in service ratably throughout the year and if depreci- ation allowances were computed without regard to any convention. (3) Making of election An election under this subsection for any taxable year shall be made at such time, in such manner, and subject to such conditions as may be prescribed by the Secretary by reg- ulations. (n) Straight line method in certain cases (1) In general In the case of any property in whole or in part constructed, reconstructed, erected, or used on a site which was, on or after June 30, 1976, occupied by a certified historic struc- ture (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- (A) subsections (b), (J), (k), and (1) shall not apply, (B) the term "reasonable allowance" as used in subsection (a) shall mean only an allowance computed under the straight line method. (2) Exception The limitations imposed by this subsection shall not apply to personal property. (o) Substantially rehabilitated historic property (1) General rule Pursuant to regulations prescribed by the Secretary, the taxpayer may elect to compute the depreciation deduction attributable to substantially rehabilitated historic property as though the original use of such property commenced with him. The election shall be effective with respect to the taxable year re- ferred to in paragraph (2) and all succeeding taxable years. (2) Substantially rehabilitated property For purposes of paragraph (1), the term "substantially rehabilitated historic proper- ty" means any certified historic structure (as defined in section 191(d)(1)) with respect to which the additions to capital account for any certified rehabilitation (as defined in sec- tion 191(d)(3)) during the 24-month period ending on the last day of any taxable year, re- duced by any amounts allowed or allowable as depreciation or amortization with respect thereto, exceeds the greater of- (A) the adjusted basis of such property, or (B) $5,000. The adjusted basis of the property .shall be determined as of the beginning of the first day of such 24-month period, or of the hold- ing period of the property (within the mean- ing of section 1250(e)), whichever is later. (p) Depreciation of improvements in the case of mines, etc. For additional rule applicable to depreciation of im. provements in the case of mines, oil and gas wells, other natural deposits, and timber, see section 611. (Aug. 16, 1954, ch. 736, 68A Stat. 51; Sept. 2, 1958, Pub. L. 85-866, title I, §89(b), 72 Stat. 1665; Oct. 16, 1962, Pub. L. 87-834, §13(b), (c)(1), 76 Stat. 1034; Nov. 8, 1966, Pub. L. 89- 800, § 2, 80 Stat. 1513; June 13, 1967, Pub. L. 90- 26, §§ 1, 2(b), 81 Stat. 57, 58; Dec. 30, 1969, Pub. L. 91-172, title IV, § 441(a), title V, § 521(a), (d), 83 Stat. 625, 649, 653; Dec. 10, 1971, Pub. L. 92- 178, title I, § 109(a), 85 Stat. 508; Jan. 3, 1975, Pub. L. 93-625, § 3(c), 88 Stat. 2109; Oct. 4, 1976, Pub. L. 94-455, title II, §§ 202(c)(3), 203(a), title XIX, §§ 1901(a)(27), 1906(b)(13)(A), title XXI, Page 157 § 167