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TITLE 26-INTERNAL REVENUE CODE year to which an election under this subsec- tion applies). (B) Normal construction period For purposes of subparagraph (A), the term "normal construction period" means the period reasonably expected to be re- quired for the construction of the proper- ty- (I) beginning with the date on which physical work on the construction begins (or, if later, the first day of the first tax- able year to which an election under this subsection applies), and (ii) ending on the date on which it is ex- pected that the property will be available for placing in service. (3) Qualified progress expenditures defined For purposes of this subsection- (A) Self-constructed property In the case of any self-constructed proper- ty, the term "qualified progress expendi- tures" means the amount which, for pur- poses of this so'bpart, is, properly charge- able (during such taxable year) to capital account with respect to such property. (B) Non-self-constructed property In the case of non-self-constructed prop- erty, the term "qualified progress expendi- tures" means the lesser of- (I) the amount paid during the taxable year to another person for the construc- tion of such property, or (it) the amount which represents that proportion of the overall cost to the tax- payer of the construction by such other person which is properly attributable to that portion of such construction which is completed during such taxable year. (4) Special rules for applying paragraph (3) For purposes of paragraph (3)- (A) Component parts, etc. Property which is to be a component part of, or is otherwise to be included in, any progress expenditure property shall be taken into account- (1) at a time not earlier than the time at which it becomes irrevocably devoted to use in the progress expenditure property, and (ii) as if (at the time referred to in clause (I)) the taxpayer had expended an amount equal to that portion of the cost to the taxpayer of such component or other property which, for purposes of this subpart, is properly chargeable (during such taxable year) to capital account with respect to such property. (B) Certain borrowings disregarded Any amount borrowed directly or indirect- ly by the taxpayer from the person con- structing the property for him shall not be treated as an amount expended for such construction. (C) Certain unused expenditures carried over In the case of non-self-constructed prop- erty, if for the taxable year- (I) the amount under clause (I) of para- graph (3)(B) exceeds the amount under clause (ii) of paragraph (3)(B), then the amount of such excess shall be taken into account under such clause (I) for the suc- ceeding taxable year, or (ii) the amount under clause (ii) of para- graph (3)(B) exceeds the amount under clause (I) of paragraph (3)(B), then the amount of such excess shall be taken into account under such clause (ii) for the suc- ceeding taxable year. (D) Determination of percentage of completion In the case of non-self-constructed prop- erty, the determination under paragraph (3)(B)(ii) of the proportion of the overall cost to the taxpayer of the construction of any property which is properly attributable to construction completed during any tax- able year shall be made, under regulations prescribed by the Secretary, on the basis of engineering or architectural estimates or on the basis of cost accounting records. Unless the taxpayer establishes otherwise by clear and convincing evidence, the construction shall be deemed to be completed not more rapidly than ratably over the normal con- struction period. (E) No qualified progress expenditures for cer- tain prior periods In the case of any property, no qualified progress expenditures shall be taken into account under this subsection for any period before January 22, 1975 (or, if later, before the first day of the first taxable year to which an election under this subsection applies). (F) No qualified progress expenditures for prop- erty for year it is placed in service, etc. In the case of any property, no qualified progress expenditures shall be taken into account under this subsection for the earli- er of- (I) the taxable year in which the proper- ty is placed in service, or (ii) the first taxable year for which re- capture is required under section 47(a)(3) with respect to such property, or for any taxable year thereafter. (5) Other definitions For purposes of this subsection- (A) Self-constructed property The term "self-constructed property" means property more than half of the con- struction expenditures for which is it rea- sonable to believe will be made directly by the taxpayer. (B) Non-self-constructed property The term "non-self-constructed property" means property which is not self-construct- ed property. (C) Construction, etc. The term "construction" includes recon- struction and erection, and the term "con- structed" includes reconstructed and erect- ed. (D) Only construction of section 38 property to be taken into account Construction shall be taken into account only if, for purposes of this subpart, expen- Page 56