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TITLE 26-INTERNAL REVENUE CODE assets of ona 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. (8) Prohibition of immediate flowthrough An election made under paragraph (3) shall apply only to the amount of the credit al- lowable under section 38 with respect to public utility property (within the meaning of subsection (a)(6)(D)) determined as if the Tax Reduction Act of 1975 and the Tax Reform Act of 1976 had not been enacted. Any tax- payer who had timely made an election under paragraph (3) may, at his own option and without regard to any requirement imposed by an agency described in subsection (c)(3)(B), elect within 90 days after the date of the enactment of the Tax Reduction Act of 1975 (in such manner as the Secretary shall prescribe) to have the provisions of para- graph (3) apply with respect to the amount of the credit allowable under section 38 with re- spect to such property which is in excess of the amount determined under the preceding sentence. If such taxpayer does not make such an election, paragraph (1) or (2) (which- ever paragraph is applicable without regard to this paragraph) shall apply to such excess credit, except that if neither paragraph (1) nor (2) is applicable (without regard to this paragraph), paragraph (1; shall apply unless the taxpayer elects (in such manner as the Secretary shall prescribe) within 90 days after the date of the enactment of the Tax Reduction Act of 1975 to have the provisions of paragraph (2) apply. The provisions of this paragraph shall not be applied to disallow such excess credit before the first final deter- mination which is inconsistent with such re- quirements is made, determined in the same manner as under paragraph (4). (9) Special rule for additional credit If the taxpayer makes an election under subparagraph (B) of subsection (a)(2), for a taxable year beginning after December 31, 1975, then, notwithstanding the prior para- graphs of this subsection, no credit shall be allowed by section 38 in excess of the amount which would be allowed without regard to the provisions of subparagraph (B) of subsection (a)(2) if- (A) the taxpayer's cost of service for rate- making purposes or in its regulated books of account is reduced by reason of any portion of such credit which results from the trans- fer of employer securities or cash to an em- ployee stock ownership plan which meets the requirements of section 301(d) of the Tax Reduction Act of 1975; (B) the base to which the taxpayer's rate of return for ratemaking purposes is ap- plied is reduced by reason of any portion of such credit which results from a transfer described in subparagraph (A) to such em- ployee stock ownership plan; or (C) any portion of the amount of such credit which results from a transfer de- scribed in subparagraph (A) to such em- ployee stock ownership plan is treated for ratemaking purposes in any way other than as though it had been contributed by the taxpayer's common shareholders. (g) 50 percent credit in the case of certain vessels (1) In general In the case of a qualified withdrawal out of the untaxed portion of a capital gain account or out of an ordinary income account in a capital construction fund established under section 607 of the Merchant Marine Act, 1936 (46 U.S.C. 1177), for- (A) the acquisition, construction, or recon- struction of a qualified vessel, or (B) the acquisition, construction, or recon- struction of barges or containers which are part of the complement of a qualified vessel and to which subsection (f)(1)(B) of such section 607 applies, for purposes of section 38 there shall be deemed to have been made (at the time of such withdrawal) a qualified investment (within the meaning of subsection (c)) or qualified progress expenditures (within the meaning of subsection (d)), whichever is ap- propriate, with respect to property which is section 38 property. (2) Amount of credit For purposes of paragraph (1), the amount of the qualified investment shall be 50 per- cent of the applicable percentage of the quali- fied withdrawal referred to in paragraph (1), or the amount of the qualified progress ex- penditures shall be 50 percent of such with- drawal, as the case may be. For purposes of determining the amount of the credit allowa- ble by reason of this subsection for any tax- able year, the limitation of subsection (a)(3) shall be determined without regard to subsec- tion (d)(1)(A) of such section 607. (3) Coordination with section 38 The amount of the credit allowable by reason of this subsection with respect to any property shall be the minimum amount al- lowable under section 38 with respect to such property. If, without regard to this subsec- tion, a greater amount is allowable under sec- tion 38 with respect to such property, then such greater amount shall apply and this sub- section shall not apply. (4) Coordination with section 47 Section 47 shall be applied- (A) to any property to which this subsec- tion applies, and (B) to the payment (out of the untaxed portion of a capital gain account or out of the ordinary income account of a capital construction fund established under section 607 of the Merchant Marine Act, 1936) of the principal of any indebtedness incurred in connection with property with respect to which a credit was allowed under section 38. For purposes of section 47, any payment de- scribed in subparagraph (B) of the preceding Page 59