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TITLE 26-INTERNAL REVENUE CODE (7) Reserves for losses on bad debts of financial in- stitutions In the case of a financial institution to which section 585 or 593 applies, the amount by which the deduction allowable for the tax- able year for a reasonable addition to a re- serve for bad debts exceeds the amount that would have been allowable had the Institu- tion maintained its bad debt reserve for all taxable years on the basis of actual experi- ence. (8) Depletion With respect to each property (as defined in section 614), the excess of the deduction for depletion allowable under section 611 for the taxable year over the adjusted basis of the property at the end of the taxable year (de- termined without regard to the depletion de- duction for the taxable year). (9) Capital gains (A) Individuals In the case of a taxpayer other than a corporation, an amount equal to one-half of the net capital gain for the taxable year. (B) Corporations In the case of a corporation having a net capital gain for the taxable year, an amount equal to the product obtained by multiply- ing the net capital gain by a fraction the numerator of which is the sum of the normal tax rate and the surtax rate under section 11, minus the alternative tax rate under section 1201(a), for the taxable year, and the denominator of which is the sum of the normal tax rate and the surtax rate under section 11 for the taxable year. In the case of a corporation to which section 1201(a) does not apply, the amount under this subparagraph shall be determined under regulations prescribed by the Secre- tary in a manner consistent with the pre- ceding sentence. (C) Preference reduction for timber In the case of a corporation, the amount of the tax preference under subparagraph (B) shall be reduced (but not below zero) by the sum of- (i) one-third of the corporation's timber preference income (as defined in subsec- tion (e)), plus (i) $20,000, but in no event shall this reduction exceed the amount of timber preference income. (10) Amortization of on-the-job training and child care facilities With respect to each item of section 188 property for which an election is in effect under section 188, the amount by which the deduction allowable for the taxable year under such section exceeds the depreciation deduction which would otherwise be allowa- ble under section 167. (11) Intangible drilling costs The excess of the intangible drilling and de- velopment costs described in section 263(c) paid or incurred in connection with oil and gas wells (other than costs incurred in drilling a nonproductive well) allowable under this chapter for the taxable year over the amount which would have been allowable for the tax- able year if such costs had been capitalized and straight line recovery of intangibles (as defined in subsection (d)) had been used with respect to such costs. Paragraphs (1), (3), and (11) shall not apply to a corporation. (b) Excess itemized deductions (1) In general For purposes of paragraph (1) of subsection (a), the amount of the excess itemized deduc- tions for any taxable year is the amount by which the sum of the deductions for the tax- able year other than- (A) deductions allowable in arriving at ad- justed gross income, (B) the standard deduction provided by section 141, (C) the deduction for personal exemptions provided by section 151, (D) the deduction for medical, dental, etc., expenses provided by section 213, and (E) the deduction for casualty losses de- scribed in section 165(c)(3), exceeds 60 percent (but does not exceed 100 percent) of the taxpayer's adjusted gross income for the taxable year. (2) Special rules for trusts and estates In the case of a trust or estate, any deduc- tion allowed or allowable for the taxable year- (A) under section 642(c) (but only to the extent that the amount of the deduction al- lowable under such section is included in the income of the beneficiary under section 662(a)(1) for the taxable year of the benefi- ciary with which or within which the tax- able year of the trust ends); (B) under section 642(d), 642(e), 642(f), 651(a), 661(a), or 691; or (C) for costs paid or incurred in connec- tion with the administration of the trust or estate; shall, for purposes of paragraph (1), be treat- ed as a deduction allowable in arriving at an adjusted gross income. (c) Net leases (1) In general For purposes of this section, property shall be considered to be subject to a net lease for a taxable year if- (A) for such taxable year the sum of the deductions of the lessor with respect to such property which are allowable solely by reason of section 162 (other than rents and reimbursed amounts with respect to such property) is less than 15 percent of the rental income produced by such property, or (B) the lessor is either guaranteed a speci- fied return or is guaranteed in whole or in part against loss of income. (2) Multiple leases of single parcel of real property If a parcel of real property of the taxpayer is leased under two or more leases, paragraph (1)(A) shall, at the election of the taxpayer, be applied by treating all leased portions of such property as subject to a single lease. Page 91