- 88 -
contained transitional rules that excepted “transition property”
from the repeal of the ITC.97 Sec. 49(b). Section 49(e) defined
“transition property” as:
SEC. 49(e). Transition Property.--For purposes of
this section--
(1) Transition property.--The term
“transition property” means any property placed in
service after December 31, 1985, and to which the
amendments made by section 201[98] of the Tax
Reform Act of 1986 do not apply, except that in
making such determination--
(A) section 203(a)(1)(A) of such Act
shall be applied by substituting “1985” for
“1986”,
(B) sections 203(b)(1) and 204(a)(3) of
such Act shall be applied by substituting
“December 31, 1985” for “March 1, 1986”,
(C) in the case of transition property
with a class life of less than 7 years--
97 The transitional rules were intended to provide relief to
taxpayers who may have committed to post-1985 investments in
qualifying property in reliance on the availability of the
credit. See Newhouse Broad. Corp. v. Commissioner, T.C. Memo.
2000-270. The House Ways and Means Committee made the following
observation with respect to the repeal of the ITC:
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.
H. Conf. Rept. 99-426, at 146 (1985), 1986-3 C.B. (Vol. 2) 1,
146.
98 TRA sec. 201, 100 Stat. 2121, amended sec. 168, which
relates to the accelerated cost recovery system.
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