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TITLE 26-INTERNAL REVENUE CODE (D) Countries maintaining trade restrictions or engaging in discriminatory acts If, on or after the date of the termination of Proclamation 4074, the President deter- mines that a foreign country-- (i) maintains nontariff trade restric- tions, including variable import fees, which substantially burden the United States commerce in a manner inconsistent with provisions of trade agreements, or (ii) engages in discriminatory or other acts (including tolerance of international cartels) or policies unjustifiably restrict- ing United States commerce, he may provide by Executive order for the application of subparagraph (A) to any arti- cle or class of articles manufactured or pro- duced in such foreign country for such period as may be provided by Executive order. (8) Amortized property Any property with respect to which an elec- tion under section 167(k), 184, or 188 applies shall not be treated as section 38 property. (9) Railroad track In the case of a railroad (including a rail- road switching or terminal company) which uses the retirement-replacement method of accounting for depreciation of its railroad track, the term "section 38 property" includes replacement track material, if- (A) the replacement is made pursuant to a scheduled program for replacement, (B) the replacement is made pursuant to observations by maintenance-of-way person- nel of specific track material needing re- placement, (C) the replacement is made pursuant to the detection by a rail-test car of specific track material needing replacement, or (D) the replacement is made as a result of a casualty. Replacements made as a result of a casualty shall be section 38 property only to the extent that, in the case of each casualty, the qualified investment with respect to the re- placement track material exceeds $50,000. For purposes of this paragraph, the term "track material" includes ties, rail, other track mate- rial, and ballast. (b) New section 38 property For purposes of this subpart, the term "new section 38 property" means section 38 proper- ty- (1) the construction, reconstruction, or erec- tion of which is completed by the taxpayer after December 31, 1961, or (2) acquired after December 31, 1961, if the original use of such property commences with the taxpayer and commences after such date. In applying section 46(c)(1)(A) in the case of property described in paragraph (1), there shall be taken into account only that portion of the basis which is properly attributable to construc- tion, reconstruction, or erection after December 31, 1961. c) Used section 38 property (1) In general For purposes of this subpart, the term "used section 38 property" means section 38 property acquired by purchase after Decem- ber 31, 1961, which is not new section 38 prop- erty. Property shall not be treated as "used section 38 property" if, after its acquisition by the taxpayer, it is used by a person who used such property before such acquisition (or by a person who bears a relationship described in section 179(d)(2)(A) or (B) to a person who used such property before such acquisition). (2) Dollar limitation (A) In general The cost of used section 38 property taken into account under section 46(c)(1)(B) for any taxable year shall not exceed $100,000. If such cost exceeds $100,000, the taxpayer shall select (at such time and in such manner as the Secretary shall by regu- lations prescribe) the items to be taken into account, but only to the extent of an aggre- gate cost of $100,000. Such a selection, once made, may be changed only in the manner, and to the extent, provided by such regula- tions. (B) Married individuals In the case of a husband or wife who files a separate return, the limitation under sub- paragraph (A) shall be $50,000 in lieu of $100,000. This subparagraph shall not apply if the spouse of the taxpayer has no used section 38 property which may be taken into account as qualified investment for the taxable year of such spouse which ends within or with the taxpayer's taxable year. (C) Controlled groups In the case of a controlled group, the $100,000 amount specified under subpara- graph (A) shall be reduced for each compo- nent member of the group by apportioning $100,000 among the component members of such group in accordance with their respec- tive amounts of used section 38 property which may be taken into account. (D) Partnerships In the case of a partnership, the limita- tion contained in subparagraph (A) shall apply with respect to the partnership and with respect to each partner. (3) Definitions For purposes of this subsection- (A) Purchase The term "purchase" has the meaning as- signed to such term by section 179(d)(2). (B) Cost The cost of used section 38 property does not include so much of the basis of such property as is determined by reference to the adjusted basis of other property held at any time by the person acquiring such prop- erty. If property is disposed of (other than by reason of its destruction or damage by fire, storm, shipwreck, or other casualty, or its theft) and used section 38 property simi- lar or related in service or use is acquired as a replacement therefor in a transaction to which the preceding sentence does not apply, the cost of the used section 38 prop- erty acquired shall be its basis reduced by the adjusted basis of the property replaced. The cost of used section 38 property shall not be reduced with respect to the adjusted Page 70