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TITLE 26-INTERNAL REVENUE CODE '(B) Effect of election.-If the taxpayer makes an election under this paragraph, then section 48(k) of the Internal Revenue Code of 1954 [subsec. (k) of this section] shall apply to all quali- fied films described in subparagraph (A) with the following modifications: "(I) subparagraph (B) of paragraph (4) shall not apply, but in determining qualified invest- ment under section 46(c)(1) of such Code [sec. tion 46(c)(1) of this title] there shall be used (in lieu of the basis of such property) an amount equal to 40 percent of the aggregate production costs (within the meaning of paragraph (5)(B) of such section 48(k) [subsec. (k)(5)(B) of this sec- tion]), "(ii) paragraph (2) shall be applied by substi. tuting '100 percent' for '66% percent', and "(iii) paragraph (3) and paragraph (5) (other than subparagraph (B)) shall not apply. "(C) Rules relating to 'elections.-An election under this paragraph shall be made not later than the day which is 6 months after the date of the en- act.ment of this Act [Oct. 4, 1976] and shall be made in such manner as the Secretary of the Trea- sury or his delegate shall by regulations prescribe. Such an election may be revoked only with the consent of the Secretary of the Treasury or his delegate. "(D) The taxpayer must consent to join in cer- tain proceedings.-No election may be made under this paragraph or subsection (e)(2) by any taxpay- er unless he consents, under regulations prescribed by the Secretary of the Treasury or his delegate, to treat the determination of the investment credit allowable on each film subject to an election as a separate cause of action, and to join in any judicial proceeding for determining the person entitled to, and the amount of, the credit allowable under sec- tion 38 of the Internal Revenue Code of 1954 [sec- tion 38 of this title] with respect to any film cov- ered by such election. "(3) Election to have credit determined in accor- dance with previous litigation.- "(A) In general.-A taxpayer described in sub- paragraph (B) may elect to have this paragraph apply to all films (whether or not qualified) placed in service in taxable years beginning before Janu- ary 1, 1975, and with respect to which an election under subsection (e)(2) is not made. "(B) Who may elect.-A taxpayer may make an election under this paragraph if he has filed an action In any court of competent jurisdiction, before January 1, 1976, for a determination of such taxpayer's rights to the allowance of a credit against tax under section 38 of the Internal Rev- enue Code of 1954 for any taxable year beginning before January 1, 1975, with respect to any film. "(C) Effect of election.-If the taxpayer makes an election under this paragraph- "(i) paragraphs (1) and (2) of this subsection, and subsection (d) shall not apply to any film placed in service by the taxpayer, and "(it subsection 48(k) of the Internal Revenue Code of 1954 (subsec. (k) of this section] shall not apply to any film placed in service by the taxpayer in any taxable ycar beginning before January 1, 1975, and with respect to which an election under subsection (e)(2) is not made, and the right of the taxpayer to the allowance of a credit against tax under section 38 of such Code with respect to any film placed in service in any taxable year beginning before January 1, 1975, and as to which an election under subsection (e)(2) is not made, shall be determined as though this sec- tion (other than this paragraph) has not been en- acted. "(D) Rules relating to elections.-An election under this paragraph shall be made not later than the day which is 90 days after the date of the en- actment of this Act [Oct. 4, 1976], by filing a noti- fication of such election with the national office of the Internal Revenue Service. Such an election, once made, shall be irrevocable." ENTITLEMENT TO CREDIT Section 804(d) of Pub. L. 91-455 provided that: "Paragraph (1) of section 48(k) of the Internal Rev- enue Code of 1954 (relating to entitlement to credit) [subsec. (k) of this section] shall apply to any motion picture film or video tape placed in service in any tax- able year beginning before January 1, 1975." INCREASE IN BASIS OF PROPERTY PLACED IN SERVICE BEFORE JANUARY 1, 1964 Section 203(a)(2) of Pub. L. 88-272 provided that: "(A) The basis of any section 38 property (as defined in section 48(a) of the Internal Revenue Code of 1954) (section 48(a) of this title] placed in service before January 1, 1964, shall be increased, under regulations prescribed by the Secretary of the Treasury or his del- egate, by an amount equal to 7 percent of the quali- fied investment with respect to such property under section 46(c) of the Internal Revenue Code of 1954 [section 46(c) of this title]. If there has been any in- crease with respect to such property under section 48(g)(2) of such Code [section 48(g)(2) of this title], the increase under the preceding sentence shall be ap- propriately reduced therefor. "(B) If a lessor made the election provided by sec- tion 48(d) of the Internal Revenue Code of 1954 [sec- tion 48(d) of this title] with respect to property placed in service before January 1, 1964- "(I) subparagraph (A) shall not apply with respect to such property, but "(it) under regulations prescribed by the Secretary of the Treasury or his delegate, the deductions oth- erwise allowable under section 162 of such Code [sec- tion 162 of this title] to the lessee for amounts paid to the lessor under the lease (or, if such lessee has purchased such property, the basis of such property) shall be adjusted in a manner consistent with sub- paragraph (A). "(C) The adjustments under this paragraph shall be made as of the first day of the taxpayer's first taxable year which begins after December 31, 1963." SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 46, 47, 49, 167, 185, 861 of this title. § 49. Termination for period beginning April 19, 1969, and ending during 1971 (a) General rule For purposes of this subpart, the term "sec- tion 38 property" does not Include property- (1) the physical construction, reconstruc- tion, o erection of which is begun after April 18, 1969, or (2) which is acquired by the taxpayer after April 18, 1969, other than pre-termination property. This subsection shall not apply to property de- scribed in section 50. (b) Pre-termination property For purposes of this subpart- (1) Binding contracts Any property shall be treated as pre-termi- nation property to the extent that such prop- erty is constructed, reconstructed, erected, or acquired pursuant to a contract which was, on April 18, 1969, and at all times thereafter, binding on the taxpayer. (2) Equipped building rule If- (A) pursuant to a plan of the taxpayer in existence on April 18, 1969 (which plan was Page 79