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TITLE 26-INTERNAL REVENUE CODE such property shall be treated as pre-termi- nation property in the hands of the distri- butee. (8) Property acquired from affiliated corporation In the case of property acquired by a corpo- ration which is a member of an affiliated group from another member of the same group- (A) such corporation shall be treated as having acquired such property on the date on which it was acquired by such other member, (B) such corporation shall be treated as having entered into a binding contract for the construction, reconstruction, erection, or acquisition of such property on the date on which such other member entered into a contract for the construction, reconstruc- tion, erection, or acquisition of such proper- ty, and (C) such corporation shall be treated as having commenced the construction, recon- struction, or erection of such property on the date on which such other member com- menced such construction, recontruction, or erection. For the purposes of this subsection and sub- section (c), a contract between two corpora- tions which are members of the same affili- ated group shall not be treated as a binding contract as between such corporations, unless, at all times after June 30, 1969, and prior to the completion of performance of such contract, such corporations are not members of the same affiliated group. For purposes of the preceding sentences, the temi "affiliated group" has the meaning assigned to it by section 1504(a), except that all corpo- rations shall be treated as includible corpora- tions (without any exclusion inder section 1504(b)). (9) Barges for ocean-going vessels Barges specifically designed and construct- ed, reconstructed, erected, or acquired for use with ocean-going vessels which are designed to carry barges and which are pre-termina- tion property, but not in excess of- (A) the number to be used with such ves- sels specified in applications for mortgage or construction loan insurance filed with the Secretary of Commerce on or before April 18, 1969, under title XI of the Mer- chant Marine Act, 1936, or (B) if subparagraph (A) does not apply and if more than 50 percent of the barges which the taxpayer establishes as necessary to the initial planned use of such vessels are pre-termination property (determined with- out regard to this paragraph), the number which the taxpayer establishes as so neces- sary, together with the machinery and equipment to be installed on such barges and necessary for their planned use, shall be treated as pre- termination property. (10) Certain new-design products Where- (A) on April 18, 1969, the taxpayer had undertaken a project to produce a product of a new design pursuant to binding con- tracts in effect on such date which- (I) were fixed-price contracts (except for provisions requiring or permitting price changes resulting from changes in rates of pay or costs of materials), and (ii) covered more than 50 percent of the entire production of such design to be de- livered by the taxpayer before January 1, 1973, and (B) on or before April 18, 1969, more than 50 percent of the aggregate adjusted basis of all property of a character subject to the allowance for depreciation required to carry out such binding contracts was property the construction, reconstruction, or erection of which had been begun by the taxpayer, or had been acquired by the taxpayer (or was under a binding contract for such construc- tion, reconstruction, erection, or acquisi- tion), then all tangible personal property placed in service by the taxpayer before January 1, 1972, which is required to carry out such binding contracts shall be deemed to be pre- termination property, For purposes of sub- paragraph (B) of the preceding sentence, Jigs, dies, templates, and similar items which can be used only for the manufacture or assembly of the production under the project and which were described in written engineering and internal financial plans. of the taxpayer in existence on April 18, 1969, shall be treated as property which on such date was under a binding contract for construction, () Leased property In the case of property which is leased after April 18, 1969 (other than pursuant to a bind- ing contract to lease entered into before April 19, 1969), which is section 38 property with re- spect to the lessor but is property which would not be section 38 property because of the appli- cation of subsection (a) if acquired by the lessee, and which is property of the same kind which the lessor ordinarily sold to customers before April 19, 1969, or ordinarily leased before such date and made an election under section 48(d), such property shall not be section 38 property with respect to either the lessor or the lessee. (Added Pub. L. 91-172, title VII, § 703(a), Dec. 30, 1969, 83 Stat 660, and amended Pub. L, 92- 178, title I, § 101(b)(1)-(4), Dec. 10, 1971, 85 Stat. 498, 499.) REFERENCES IN TEXT The Merchant Marine Act, 1936, referred to in subsec. (b)(9)(A), Is act June 29, 1936, ch. 858, 49 Stat. 1985, as amended, which is classified principally to chapter 27 (§ 1101 et seq.) of Title 46, Shipping. Title XI of the Merchant Marine Act, 1936, Is classified gen- erally to subchapter XI (§ 1271 et seq.) of chapter 27 of Title 46. For complete classification of this Act to the Code, see section 1245 of Title 46 and Tables volume. AMENDMiNTS 1971-Pub. L. 92-178, § 101(b)(4), substituted "Termi- nation for period beginning April 19, 1969, and ending during 1971" for "Termination of credit" as section heading. Page 82