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TITLE 26-INTERNAL REVENUE CODE (3) Elimination of 15-percent test after 5 years in case of real property At the election of the taxpayer, paragraph (1)(A) shall not apply with respect to real property of the taxpayer which has been in use for more than 5 years. (4) Elections An election under paragraph (2) or (3) shall be made at such time and in such manner as the Secretary prescribes by regulations. (d) Straight line recovery of intangibles defined For purposes of paragraph (11) of subsection (a)- (1) In general The term "straight line recovery of Intangi- bles", when used with respect to intangible drilling and development costs for any well, means (except in the case of an election under paragraph (2)) ratable amortization of such costs over the 120-month period begin- ning with the month in which production from such well begins. (2) Election If the taxpayer elects, at such time and in such manner as the Secretary may by regula- tions prescribe, with respect to the intangible drilling and development costs for any well, the term "straight line recovery of intangi- bles" means any method which would be per- mitted for purposes of determining cost de- pletion with respect to such wll and which is selected by the taxpayer for purposes of sub- section (a)(11). (e) Timber preference income defined For purposes of this part, the term "timber preference income" means the sum of- (1) the gains referred to in section 631(a) and section 631(b), (2) long-term capital gains on timber, and (3) gains on the sale of timber included in paragraph 1231(b)(1), multiplied by the fraction determined in para- graph 57(a)(9)(B). (Added Pub. L. 91-172, title III, § 301(a), Dec. 30, 1969, 83 Stat. 581, and amended Pub. L. 92- 178, title III, §§303(b), 304(a)(1), (b)(1), (d), Dec. 10, 1971, 85 Stat. 522-524; Pub. L. 94-455, title III, § 301(c)(1)-(4)(A), (C), title XIX, §§ 1901(b)(33)(A), (B), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1550-1552, 1800, 1834.) AMENDMENTS 1976-Subsec. (a)(1). Pub. L. 94-455, § 301(c)(1)(A), substituted "An amount equal to the excess itemized deductions" for "The amount of the excess investment interest". Subsec. (a)(3). Pub. L. 94-455, § 301(c)(1)(C), substi- tuted in par. catchline "leased personal property" for "personal property subject to a net lease", divided ex- isting provisions into introductory matter and subpars. (A) and (B), and in those provisions as so divided, sub- stituted "subject to a lease" for "subject of a net lease" in the introductory matter, and "depreciation" for "exhaustion, wear and tear, obsolescence," in subpar. (A), and added provisions relating to determi- nation of useful life with respect to section 167(m)(1), following subpar. (B). Subsec. (a)(9)(A). Pub. L. 94-455, § 1901(b)(33)(A), substituted "the net capital gain" for "the amount by which the net long-term capital gain exceeds the net short-term capital loss". Subsec. (a)(9)(B). Pub. L. 94-455, §§ 1901(b)(33)(B), 1906(b)(13)(A), substituted "having a net capital gain for the taxable year, an amount equal to the product obtained by multiplying the net capital gain" for ", if the net long-term capital gain exceeds the net short. term capital loss for the taxable year, an amount equal to the product obtained by multiplying such excess" and struck out "or his delegate" following "Secretary". Subsec. (a)(9)(C). Pub. L. 94-455, § 301(c)(4)(A), added subsec. (a)(9)(C). Subsec. (a)(11). Pub. L. 94-455, § 301(c)(1)(B), added subsec. (a)(11). Subsec. (a). Closing Provisions. Pub. L. 94-455, § 301(c)(1)(B), struck out provisions following num. bered paragraphs relating to the taxable years in which par. (1) shall apply and to the types of corpora. tions to which pars. (1) and (3) shall apply. Subsec. (b). Pub. L. 94-455, § 301(c)(2), among other changes, substituted provisions relating to computa- tion of excess itemized deductions for provisions relat- ing to computation of excess investment interest. Subsec. (c)(4). Pub. L. 94-455, § 1906(b)(13)(A), struck out "or his delegate" following "Secretary". Subsec. (d). Pub. L. 94-455, § 301(c)(3), added subsec. (d). Subsec. (e). Pub. L. 94-455, § 301(c)(4)(C), added subsec. (e). 1971-Subsec. (a)(10). Pub. L. 92-178, § 303(b), added par. (10). Subsec. (b)(1). Pub. L. 92-178, § 304(b)(1), substituted "exceeds the sum of-A) the net investment income for the taxable year, and (B) the amount (if any) by which the deductions allowable under sections 162, 163, 164(a)(1) or (2), and 212 attributable to property of the taxpayer subject to a net lease exceeds the gross rental income produced by such property for the taxable year" for "exceeds the net investment income for the taxable year". Subsec. (b)(2)(C). Pub. L. 92-178, § 304(d), included reference to section 162. Subsec. (c). Pub. L. 92-178, § 304(a)(1), designated ex- isting provisions as par. (1), redesignated cls. (1) and (2) as subpars. (A) and (B), inserted in cl. (A) the words "of the lessor" following "deductions" and par. enthetical phrase "(other than rents and reimbursed amounts with respect to such property)" following "section 162", and added pars. (2) and (3). EFFECTIVE DATE AND APPLICABILITY OF 1976 AMENDMENT Amendment of subsecs. (a)(1), (3), (9), (11), (b), (d), and (e) by section 301(c)(1)(A), (B), (2), (3), (4)(A), (C) of Pub. L. 94-455 applicable to items of tax preference for taxable years beginning after Dec. 31, 1975, with certain exceptions, see section 301(g) of Pub. L. 94-455, set out as an Effective Date of 1976 Amendment note under section 56 of this title. Amendment of subsec. (a)(9) by section 1901(b)(33) (A), (B) of Pub. L. 94-455 applicable 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. EFFECTIVE DATE OF 1971 AMENDMENT Enactment of subsee. (a)(10) of this section by Pub. L. 92-178 applicable to taxable years ending after Dec. 31, 1971, see section 303(d) of Pub. L. 92-178, set out as an Effective Date note under section 188 of this title, Section 304(e) of Pub. L. 92-178 provided that: "The amendments made by this section to section 57 of the Internal Revenue Code of 1954 [this section] shall apply to taxable years beginning after December 31, 1969. The amendments made by this section to section 163 of such Code shall apply to taxable years begin- ning after December 31, 1971." EFFECTIVE DATE Section applicable to taxable years ending after Dec. 31, 1969, see section 301(c) of Pub. L. 91-172, set out as an Effective Date note under section 56 of this title. Page 92