- 14 -
year (qualifying property). The amount of the credit depended
upon the useful life of the qualifying property. The maximum
credit was 10 percent of the cost of qualifying property with a
useful life of 7 years or more. The credit was repealed by
section 211 of TRA of 1986, 100 Stat. 2166, which added section
494 to the Internal Revenue Code. Section 49(a), made the
investment credit inapplicable to property placed in service
after December 31, 1985. Because TRA of 1986 did not become law
until October 22, 1986, the repeal of the investment credit was
necessarily retroactive. Therefore, the Act contains a number of
transitional rules to provide relief for taxpayers who may have
committed to post-1985 investments in qualifying property in
reliance on the availability of the credit.5 Pursuant to section
49(b)(1), the section 49(a) repeal of the credit does not apply
4 Sec. 11813 of the Omnibus Budget Reconciliation Act of 1990,
Pub. L. 101-508, 104 Stat. 1388-536, repealed sec. 49 and
replaced it with existing sec. 49 (at-risk rules).
5 See H. Rept. 99-426 at 146 (1985), 1986-3 C.B. (Vol. 2) 1,
146, in which the House Ways and Means Committee makes the
following observation with respect to the repeal of the then
existing cost recovery rules, including the investment tax
credit:
The committee is aware that commitments have
already been made on the basis of present law capital
cost recovery rules. The committee bill provides for
equitable transition rules in such cases, which are
estimated to cover more than 50 percent of the new
personal property to be placed in service in the first
year the bill is effective.
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