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"qualified investment" means with respect to any taxable year the
aggregate of the applicable percentage of the basis of each new
section 38 property, as defined in section 48(b), placed in serv-
ice by the taxpayer during such year plus the applicable percent-
age of the cost of each used section 38 property, as defined in
section 48(c)(1), placed in service by the taxpayer during such
year. Section 38 property is defined to include "tangible per-
sonal property (other than an air conditioning or heating unit)".
Sec. 48(a)(1)(A). The term "section 38 property" "includes only
recovery property (within the meaning of section 168 * * *) and
any other property with respect to which depreciation * * * is
allowable and having a useful life * * * of 3 years or more."
Sec. 48(a). Petitioners have not established that (1) they
placed section 38 property in service during 1986 or (2) either
(a) their basis in new section 38 property or (b) the cost of
used section 38 property.45
In addition, section 49(a) disallows the regular percentage
of the qualified investment determined under section 46(c) for
property placed in service after December 31, 1985. Section
49(b)(1) provides an exception to that disallowance for transi-
45 Although it is possible that certain of the properties that
the parties stipulated had minimum bases of $22,102 and that
petitioners placed in service during 1986 do, in fact, fit within
the definition of sec. 38 property, the record before us does not
permit us to make such a determination. For example, petitioners
have not even established what properties are covered by that
stipulation, let alone whether such properties, whatever they
are, constitute sec. 38 property.
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