In general.—

General transitional rule.—

The amendments made by this section and section 201 [amending this section and sections 48, 167, 168, 178, 179, 280F, 291, 312, 465, 467, 514, 751, 1245, 4162, 6111, and 7701 of this title] shall not apply to any property placed in service before January 1, 1994, if such property is placed in service as part of—

1. “(A)
   a rehabilitation which was completed pursuant to a written contract which was binding on March 1, 1986, or
2. “(B)

   a rehabilitation incurred in connection with property (including any leasehold interest) acquired before March 2, 1986, or acquired on or after such date pursuant to a written contract that was binding on March 1, 1986, if—

   1. “(i)
      parts 1 and 2 of the Historic Preservation Certification Application were filed with the Department of the Interior (or its designee) before March 2, 1986, or
   2. “(ii)
      the lesser of $1,000,000 or 5 percent of the cost of the rehabilitation is incurred before March 2, 1986, or is required to be incurred pursuant to a written contract which was binding on March 1, 1986.

Certain additional rehabilitations.—

The amendments made by this section and section 201 [amending this section and sections 48, 167, 168, 178, 179, 280F, 291, 312, 465, 467, 514, 751, 1245, 4162, 6111, and 7701 of this title] shall not apply to—

1. “(A)
   the rehabilitation of 8 bathhouses within the Hot Springs National Park or of buildings in the Central Avenue Historic District at such Park,
2. “(B)
   the rehabilitation of the Upper Pontalba Building in New Orleans, Louisiana,
3. “(C)
   the rehabilitation of at least 60 buildings listed on the National Register at the Frankford Arsenal,
4. “(D)
   the rehabilitation of De Baliveriere Arcade, St. Louis Centre, and Drake Apartments in Missouri,
5. “(E)
   the rehabilitation of The Tides in Bristol, Rhode Island,
6. “(F)
   the rehabilitation and renovation of the Outlet Company building and garage in Providence, Rhode Island,
7. “(G)
   the rehabilitation of 10 structures in Harrisburg, Pennsylvania, with respect to which the Harristown Development Corporation was designated redeveloper and received an option to acquire title to the entire project site for $1 on June 27, 1984,
8. “(H)
   the rehabilitation of a project involving the renovation of 3 historic structures on the Minneapolis riverfront, with respect to which the developer of the project entered into a redevelopment agreement with a municipality dated January 4, 1985, and industrial development bonds were sold in 3 separate issues in May, July, and October 1985,
9. “(I)
   the rehabilitation of a bank’s main office facilities of approximately 120,000 square feet, in connection with which the bank’s board of directors authorized a $3,300,000 expenditure for the renovation and retrofit on March 20, 1984,
10. “(J)
    the rehabilitation of 10 warehouse buildings built between 1906 and 1910 and purchased under a contract dated February 17, 1986,
11. “(K)
    the rehabilitation of a facility which is customarily used for conventions and sporting events if an analysis of operations and recommendations of utilization of such facility was prepared by a certified public accounting firm pursuant to an engagement authorized on March 6, 1984, and presented on June 11, 1984, to officials of the city in which such facility is located,
12. “(L)
    Mount Vernon Mills in Columbia, South Carolina,
13. “(M)
    the Barbara Jordan II Apartments,
14. “(N)
    the rehabilitation of the Federal Building and Post Office, 120 Hanover Street, Manchester, New Hampshire,
15. “(O)
    the rehabilitation of the Charleston Waterfront project in South Carolina,
16. “(P)
    the Hayes Mansion in San Jose, California,
17. “(Q)
    the renovation of a facility owned by the National Railroad Passenger Corporation (‘Amtrak’) for which project Amtrak engaged a development team by letter agreement dated August 23, 1985, as modified by letter agreement dated September 9, 1985,
18. “(R)
    the rehabilitation of a structure or its components which is listed in the National Register of Historic Places, is located in Allegheny County, Pennsylvania, will be substantially rehabilitated (as defined in section 48(g)(1)(C) prior to amendment by this Act), prior to December 31, 1989; and was previously utilized as a market and an auto dealership,
19. “(S)
    The Bellevue Stratford Hotel in Philadelphia, Pennsylvania,
20. “(T)
    the Dixon Mill Housing project in Jersey City, New Jersey,
21. “(U)
    Motor Square Garden,
22. “(V)
    the Blackstone Apartments, and the Shriver-Johnson building, in Sioux Falls, South Dakota,
23. “(W)
    the Holy Name Academy in Spokane, Washington,
24. “(X)
    the Nike/Clemson Mill in Exeter, New Hampshire,
25. “(Y)
    the Central Bank Building in Grand Rapids, Michigan, and
26. “(Z)
    the Heritage Hotel, in the City of Marquette, Michigan.

Additional rehabilitations.—

The amendments made by this section and section 201 [amending sections 46, 48, 167, 168, 178, 179, 280F, 291, 312, 465, 467, 514, 751, 1245, 4162, 6111, and 7701 of this title] shall not apply to—

1. “(A)
   the Fort Worth Town Square Project in Texas,
2. “(B)
   the American Youth Hostel in New York, New York,
3. “(C)
   The Riverwest Loft Development (including all three phases, two of which do not involve rehabilitations),
4. “(D)
   the Gaslamp Quarter Historic District in California,
5. “(E)
   the Eberhardt & Ober Brewery, in Pennsylvania,
6. “(F)
   the Captain’s Walk Limited Partnership-Harris Place Development, in Connecticut,
7. “(G)
   the Velvet Mills in Connecticut,
8. “(H)
   the Roycroft Inn, in New York,
9. “(I)
   Old Main Village, in Mankato, Minnesota,
10. “(J)
    the Washburn-Crosby A Mill, in Minneapolis, Minnesota,
11. “(K)
    the Marble Arcade office building in Lakeland, Florida,
12. “(L)
    the Willard Hotel, in Washington, D.C.,
13. “(M)
    the H. P. Lau Building in Lincoln, Nebraska,
14. “(N)
    the Starks Building, in Louisville, Kentucky,
15. “(O)
    the Bellevue High School, in Bellevue, Kentucky,
16. “(P)
    the Major Hampden Smith House, in Owensboro, Kentucky,
17. “(Q)
    the Doe Run Inn, in Brandenburg, Kentucky,
18. “(R)
    the State National Bank, in Frankfort, Kentucky,
19. “(S)
    the Captain Jack House, in Fleming, Kentucky,
20. “(T)
    the Elizabeth Arlinghaus House, in Covington, Kentucky,
21. “(U)
    Limerick Shamrock, in Louisville, Kentucky,
22. “(V)
    the Robert Mills Project, in South Carolina,
23. “(W)
    the 620 Project, consisting of 3 buildings, in Kentucky,
24. “(X)
    the Warrior Hotel, Ltd., the first two floors of the Martin Hotel, and the 105,000 square foot warehouse constructed in 1910, all in Sioux City, Iowa,
25. “(Y)
    the waterpark condominium residential project, to the extent of $2 million of expenditures,
26. “(Z)
    the Bigelow-Hartford Carpet Mill in Enfield, Connecticut,
27. “(AA)
    properties abutting 125th street in New York County from 7th Avenue west to Morningside and the pier area on the Hudson River at the end of such 125th Street,
28. “(BB)
    the City of Los Angeles Central Library project pursuant to an agreement dated December 28, 1983,
29. “(CC)
    the Warehouse Row project in Chattanooga, Tennessee,
30. “(DD)
    any project described in section 204(a)(1)(F) of this Act [26 U.S.C. 168 note],
31. “(EE)
    the Wood Street Commons project in Pittsburgh, Pennsylvania,
32. “(FF)
    any project described in section 803(d)(6) of this Act [26 U.S.C. 263A note],
33. “(GG)
    Union Station, Indianapolis, Indiana,
34. “(HH)
    the Mattress Factory project in Pittsburgh, Pennsylvania,
35. “(II)
    Union Station in Providence, Rhode Island,
36. “(JJ)
    South Pack Plaza, Asheville, North Carolina,
37. “(KK)
    Old Louisville Trust Project, Louisville, Kentucky,
38. “(LL)
    Stewarts Rehabilitation Project, Louisville, Kentucky,
39. “(MM)
    Bernheim Officenter, Louisville, Kentucky,
40. “(NN)
    Springville Mill Project, Rockville, Connecticut, and
41. “(OO)
    the D.J. Stewart Company Building, State and Main Streets, Rockford, Illinois.

Reduction in credit for property under transitional rules.—

In the case of property placed in service after December 31, 1986, and to which the amendments made by this section [amending this section and sections 47 and 48 of this title] do not apply, subparagraph (A) of section 46(b)(4) of the Internal Revenue Code of 1954 [now 1986] (as in effect before the enactment of this Act) shall be applied—

1. “(A)
   by substituting ‘10 percent’ for ‘15 percent’, and
2. “(B)
   by substituting ‘13 percent’ for ‘20 percent’.

Expensing of rehabilitation expenses for the frankford arsenal.—

In the case of any expenditures paid or incurred in connection with improvements (including repairs and maintenance) of the Frankford Arsenal pursuant to a contract and partnership agreement during the 8-year period specified in the contract or agreement, all such expenditures to be made during the period 1986 through and including 1993 shall—

1. “(A)
   be treated as made (and allowable as a deduction) during 1986,
2. “(B)
   be treated as qualified rehabilitation expenditures made during 1986, and
3. “(C)

   be allocated in accordance with the partnership agreement regardless of when the interest in the partnership was acquired, except that—

   1. “(i)
      if the taxpayer is not the original holder of such interest, no person (other than the taxpayer) had claimed any benefits by reason of this paragraph,
   2. “(ii)

      no interest under section 6611 of the 1986 Code on any refund of income taxes which is solely attributable to this paragraph shall be paid for the period—

      1. “(I)
         beginning on the date which is 45 days after the later of April 15, 1987, or the date on which the return for such taxes was filed, and
      2. “(II)
         ending on the date the taxpayer acquired the interest in the partnership, and
   3. “(iii)
      if the expenditures to be made under this provision are not paid or incurred before January 1, 1994, then the tax imposed by chapter 1 of such Code for the taxpayer’s last taxable year beginning in 1993 shall be increased by the amount of the tax benefits by reason of this paragraph which are attributable to the expenditures not so paid or incurred.

Special rule.—

In general.—

Amendments may be elected retroactively.—

General rule.—

Special rule for periods beginning before march 1, 1980.—

1. “(A)

   In general.—

   Subject to the provisions of paragraphs (3) and (4), notwithstanding the provisions of sections 167(l) and 46(f) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] and of any regulations prescribed by the Secretary of the Treasury (or his delegate) under such sections, the use for ratemaking purposes or for reflecting operating results in the taxpayer’s regulated books of account, for any period before March 1, 1980, of—

   1. “(i)
      any estimates or projections relating to the amounts of the taxpayer’s tax expense, depreciation expense, deferred tax reserve, credit allowable under section 38 of such code, or rate base, or
   2. “(ii)
      any adjustments to the taxpayer’s rate of return,

   shall not be treated as inconsistent with the requirements of subparagraph (G) of such section 167(l)(3) nor inconsistent with the requirements of paragraph (1) or (2) of such section 46(f), where such estimates or projections, or such rate of return adjustments, were included in a qualified order.
2. “(B)

   Qualified order defined.—

   For purposes of this subsection, the term “qualified order” means an order—

   1. “(i)
      by a public utility commission which was entered before March 13, 1980,
   2. “(ii)
      which used the estimates, projections, or rate of return adjustments referred to in subparagraph (A) to determine the amount of the rates to be collected by the taxpayer or the amount of a refund with respect to rates previously collected, and
   3. “(iii)
      which ordered such rates to be collected or refunds to be made (whether or not such order actually was implemented or enforced).

Limitations on application of paragraph (2).—

1. “(A)

   Paragraph (2) not to apply to amounts actually flowed through.—

   Paragraph (2) shall not apply to the amount of any—

   1. “(i)
      rate reduction, or
   2. “(ii)
      refund,

   which was actually made pursuant to a qualified order.
2. “(B)

   Taxpayer must enter into closing agreement before paragraph (2) applies.—

   Paragraph (2) shall not apply to any taxpayer unless, before the later of—

   1. “(i)
      July 1, 1983, or
   2. “(ii)
      6 months after the refunds or rate reductions are actually made pursuant to a qualified order.

   the taxpayer enters into a closing agreement (within the meaning of section 7121 of the Internal Revenue Code of 1986) which provides for the payment by the taxpayer of the amount of which paragraph (2) does not apply by reason of subparagraph (A).

Special rules relating to payment of refunds or interest by the united states or the taxpayer.—

1. “(A)

   Refund defined.—

   For purposes of this subsection, the term “refund” shall include any credit allowed by the taxpayer under a qualified order but shall not include interest payable with respect to any refund (or credit) under such order.
2. “(B)

   No interest payable by united states.—

   No interest shall be payable under section 6611 of the Internal Revenue Code of 1986 on any overpayment of tax which is attributable to the application of paragraph (2).
3. “(C)

   Payments may be made in two equal installments.—

   1. “(i)

      In general.—

      The taxpayer may make any payment required by reason of paragraph (3) in 2 equal installments, the first installment being due on the last date on which a taxpayer may enter into a closing agreement under paragraph (3)(B), and the second payment being due 1 year after the last date for the first payment.
   2. “(ii)

      Interest payments.—

      For purposes of section 6601 of such Code, the last date prescribed for payment with respect to any payment required by reason of paragraph (3) shall be the last date on which such payment is due under clause (i).

No inference.—

In general.—

Progress expenditures.—

Petroleum storage facilities.—

Noncorporate lessors.—

At risk rules.—

1. “(A)

   In general.—

   The amendment made by subsection (f) [amending this section and section 47 of this title] shall not apply to—

   1. “(i)
      property placed in service by the taxpayer on or before February 18, 1981, and
   2. “(ii)
      property placed in service by the taxpayer after February 18, 1981, where such property is acquired by the taxpayer pursuant to a binding contract entered into on or before that date.
2. “(B)

   Binding contract.—

   For purposes of subparagraph (A)(ii), property acquired pursuant to a binding contract shall, under regulations prescribed by the Secretary, include property acquired in a manner so that it would have qualified as pretermination property under section 49(b) (as in effect before its repeal by the Revenue Act of 1978) [Pub. L. 95–600].

Leased rolling stock.—

In general.—

Transitional rule.—

The amendments made by this section shall not apply with respect to any rehabilitation of a building if—

1. “(A)
   the physical work on such rehabilitation began before January 1, 1982, and
2. “(B)
   such building does not meet the requirements of paragraph (1) of section 48(g) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as amended by this Act [Pub. L. 97–34]).”

General rule.—

Exceptions.—

1. “(A)
   Section 301(e) of the Tax Reduction Act of 1975 [set out below], as added by subsection (d), shall apply for taxable years beginning after December 31, 1976.
2. “(B)
   The amendments made by subsections (a) and (b)(1) shall apply for taxable years beginning after December 31, 1975.
3. “(C)
   The amendments made by subsections (b)(4) and (f) shall apply for years beginning after December 31, 1975.”

In general.—

Section 46(g)(4).—