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TITLE 26-INTERNAL REVENUE CODE Subsec. (d). Pub. L. 92-178, § 108 (b) and (c), substi- tuted "section 46(d)(1)" for "section 46(d)"; and desig- nated as par. (1) the present first sentence, redesignat- ed as subpars. (A) and (B) provisions formerly desig- nated cls. (1) and (2), again substituted "section 46(d)(1)" for "section 46(d)" in par. (1) and inserted parenthetical phrase "(other than property described in paragraph (4))" in par. (1), added pars. (2) and (4), incorporated provisions of former second, third, and fourth sentences in provisions designated as par. (3). substituted in par. (3) "the lessee shall be treated for all purposes of this subpart as having acquired a frac- tional portion of such property equal to the fraction determined under paragraph (2)(B) with respect to such property" for "the lessee shall be treated for all purposes of this subpart as having acquired such prop- erty", and struck out former fifth atJ sixth sentences respecting election regarding treatment of leases of suspension period property and section 38 property. See Effective Date of 1971 Amendment note below. 1969-Subsec. (a)(4). Pub. L. 91-172, § 121(d)(2)(A). added provision relating to the percentage of the basis or cost of debt-financed property that may be consid ered in computing qualified investment under sectior 46(c) of this title. Subsec. (c)(2)(C). Pub. L. 91-172, § 401(e)(2), reenact- ed subsection with minor changes and substituted ref- erence to controlled group for reference to affiliated group. Subsec. (c)(3)(C). Pub. L. 91-172, § 401(e)(3), substi- tuted definition of controlled group for definition of affiliated group. Subsec. (d)(2). Pub. L. 91-172. § 401(e)(4). substituted reference to a component member of a controlled group for reference to a member of an affiliated group. 1967-Subsec. (a)(2)(B)(i). Pub. L. 90-26, § 3, added "or is operated under contract with the United States" following "the United States". Subsec. (h)(2). Pub. L. 90-26, § 2(a), limited the defi- nition of suspension period property to section 38 property where the physical construction, reconstruc- tion or erection was begun before May 24, 1967, pursu- ant to an order placed during the suspension period, subject to the proviso that In applying the definition to property the physical construction, reconstruction or erection of which was begun before May 24, 1967, only that portion of the basis properly attributable to construction, reconstruction or erection before May 24, 1967 be taken into account. Subrec. (J). Pub. L. 90-26, § 1, substituted "March 9, 1967" for "December 31, 1967". 1966-Subsec. (a)(2)(B). Pub. L. 89-809 added clause (vii). Subsec. (d). Pub. L. 89-800, § 1(b), added provisions covering the treatment of suspension period property, and the elections to be deemed made in connection therewith. Subsec. (h). Pub. L. 89-800, § l(a), added subsec. (h). Former subsec. (h) redesignated as subsec. (k). Subsecs. (I), (j). Pub. L. 89-800, § 1(a), added subsecs. (I) and (J) Subsec. (k). Pub. L. 89-800, § 1(a), redesignated former subsec. (h) as subsec. (k). 1964--Subsec. (a)(1)(C). Pub. L. 88-272, § 203(c)(2), added subpar. (C). Subsec. (d). Pub. L. 88-272, § 203(a)(3)(A), (b). substi- tuted "except as provided in paragraph (2)" for "if such property was constructed by the lessor (or by a corporation which controls or is controlled by the lessor within the meaning of section 368(c))" in par. (1). "if such property is leased by a corporation which is a member of an affiliated group (within the mean- ing of section 46(a)(5) to another corporation which is a member of the same affiliated group" for "if para- graph (1) does not apply" in par. (2), and deleted pro- visions which stated that if a lessor made an election under this subsection, subsec. (g) would not apply with respect to such property, and deductions otherwise al- lowable under section 162 to the lessee for amounts paid the lessor would be adjusted consistent with subsec. (g). Subsec. (g). Pub. L. 88-272, § 203(a)(1), repealed subsec. (g) which required that the basis of section 38 property be reduced by 7 percent of the qualified in- vestment. EFFECTIVE DATE OF 1976 AMENDMENT Amendment of subsec, (f) by section 802(b)(6) of Pub. L. 94-455 applicable to taxable years beginning after Dec. 31, 1975, see section 802(c) of Pub. L. 94-455, set out as an Effective Date of 1976 Amendment note under section 46 of this title. Section 804(e) of Pub. L. 94-455 provided that: "(1) In general.-The amendments made by sub- sections (a) and (b) [enacting subsec. (k) of this sec- tion and section 47(a)(7) of this title] shall apply to taxable years beginning after December 31, 1974. "(2) Election may also apply to property described in section 50(a).-At the election of the taxpayer, made within 1 year after the date of the enactment of this Act [Oct. 4, 1976) in such manner as the Sec- retary of the Treasury or his delegate may by regu- lations prescribe, the amendmenta, made by subsec- tions (a) and (b) shall also apply to property which is property described in section 50(a) of the Internal Revenue Code of 1954 [section 50(a) of this title] and which is placed in service in taxable years begin- ning before January 1, 1975." Amendment of subsec. (a)(2)(B)(vii) by section 1051(h)(1) of Pub. L. 94--455 applicable to' taxable years beginning after Dec. 31, 1975 with certain excep- tions, see section 1051(i) of Pub. L. 94-455, set out as an Effective Date of 1976 Amendment note under sec- tion 33 of this title. Amendment of subsecs. (a)(2)(B)(vi), (viii), (8), by section 1901(a)(5), (b)(11)(A) of Pub. L. 94-455 applica- ble with respect to taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94-455, set out as an Effective Date of 1976 Amendment note under section 2 of this title. Amendment of subsec. (a)(8) by section 2112(a) of Pub. L. 94-455 applicable to property acquired by the taxpayer after Dec. 31, 1976, and property, the con- struction, reconstruction, or erection of which was completed by the taxpayer after Dec. 31, 1976, (but only to the extent of the basis thereof attributable to construction, reconstruction, or erection after such date), in taxable years beginning after such date, see section 2112(d)(1) of Pub. L. 94-455, set out as an Ef- fective Date of 1976 Amendment note under section 46 of this title. EFFECTIVE AND TERMINATION DATES OF 1975 AMENDMENT Section 301(c)(2) of Pub. L. 94-12, as amended by Pub. L. 94-455, § 801, provided that: "The amendments made by paragraph (1) [amending subsec. (c)(2) of this section] shall apply only to taxable years beginning after December 31, 1974, and before January 1, 1981." Amendment of subsecs. (d)(1) and (d)(2)(A) of this section by Pub. L. 94-12 applicable to taxable years ending after Dec. 31, 1974, see section 305(a) of Pub. L. 94-12, set out as an Effective Date of 1975 Amendment note under section 46 of this title. Section 604(b) of Pub. L. 94-12 provided that: "(1) In general.-The amendments made by sub- section (a) [amending subsec. (a)(2)(B) of this sec- tion] shall apply to property, the construction, re- construction, or erection of which was completed after March 18, 1975, or the acquisition of which by the taxpayer occurred after such date. "(2) Binding contract.-The amendments made by subsection (a) [amending subsec. (a)(2)(B) of this section] shall not apply to property constructed, re- constructed, erected, or acquired pursuant to a con- tract which was on April 1, 1974, and at all times thereafter, binding on the taxpayer. "(3) Certain lease-back transactions, etc.-Where a person who is a party to a binding contract described in paragraph (2) transfers rights in such contract (or in the property to which such contract relates) to another person but a party to such contract retains Page 77