(1) Depreciation
(A) In general
(i) Property other than certain personal property
Except as provided in clause (ii), the depreciation deduction allowable under section 167 with respect to any tangible property placed in service after
(ii) 150-percent declining balance method for certain property
(I) the 150 percent declining balance method,
(II) switching to the straight line method for the 1st taxable year for which using the straight line method with respect to the adjusted basis as of the beginning of the year will yield a higher allowance.
(B) Exception for certain property
This paragraph shall not apply to property described in paragraph (1), (2), (3), or (4) of , or in .
(C) Coordination with transitional rules
(i) In general
This paragraph shall not apply to property placed in service after
(ii) Treatment of certain property placed in service before 1987
This paragraph shall apply to any property to which the amendments made by section 201 of the Tax Reform Act of 1986 apply by reason of an election under of such Act without regard to the requirement of subparagraph (A) that the property be placed in service after
(D) Normalization rules
With respect to public utility property described in , the Secretary shall prescribe the requirements of a normalization method of accounting for this section.
(2) Mining exploration and development costs
(A) In general
With respect to each mine or other natural deposit (other than an oil, gas, or geothermal well) of the taxpayer, the amount allowable as a deduction under or 617(a) (determined without regard to ) in computing the regular tax for costs paid or incurred after
(B) Loss allowed
If a loss is sustained with respect to any property described in subparagraph (A), a deduction shall be allowed for the expenditures described in subparagraph (A) for the taxable year in which such loss is sustained in an amount equal to the lesser of—
(i) the amount allowable under for the expenditures if they had remained capitalized, or
(ii) the amount of such expenditures which have not previously been amortized under subparagraph (A).
(3) Treatment of certain long-term contracts
In the case of any long-term contract entered into by the taxpayer on or after
(4) Alternative tax net operating loss deduction
The alternative tax net operating loss deduction shall be allowed in lieu of the net operating loss deduction allowed under section 172.
(5) Pollution control facilities
In the case of any certified pollution control facility placed in service after
(6) Adjusted basis
The adjusted basis of any property to which paragraph (1) or (5) applies (or with respect to which there are any expenditures to which paragraph (2) or subsection (b)(2) applies) shall be determined on the basis of the treatment prescribed in paragraph (1), (2), or (5), or subsection (b)(2), whichever applies.
(7) Section 87 not applicable
Section 87 (relating to alcohol fuel credit) shall not apply.
(1) Limitation on deductions
(A) In general
No deduction shall be allowed—
(i) for any miscellaneous itemized deduction (as defined in ), or
(ii) for any taxes described in paragraph (1), (2), or (3) of or clause (ii) of .
(B) Interest
In determining the amount allowable as a deduction for interest, subsections (d) and (h) of section 163 shall apply, except that—
(i) in lieu of the exception under , the term “personal interest” shall not include any qualified housing interest (as defined in subsection (e)),
(ii) interest on any specified private activity bond (and any amount treated as interest on a specified private activity bond under ), and any deduction referred to in , shall be treated as includible in gross income (or as deductible) for purposes of applying ,
(iii) in lieu of the exception under , the term “investment interest” shall not include any qualified housing interest (as defined in subsection (e)), and
(iv) the adjustments of this section and sections 57 and 58 shall apply in determining net investment income under .
(C) Treatment of certain recoveries
No recovery of any tax to which subparagraph (A)(ii) applied shall be included in gross income for purposes of determining alternative minimum taxable income.
(D) Standard deduction and deduction for personal exemptions not allowed
The standard deduction under , the deduction for personal exemptions under section 151, and the deduction under shall not be allowed.
(E) Section 68 not applicable
Section 68 shall not apply.
(2) Circulation and research and experimental expenditures
(A) In general
The amount allowable as a deduction under section 173 or 174(a) in computing the regular tax for amounts paid or incurred after
(i) in the case of circulation expenditures described in section 173, shall be amortized ratably over the 3-year period beginning with the taxable year in which the expenditures were made, or
(ii) in the case of research and experimental expenditures described in , shall be amortized ratably over the 10-year period beginning with the taxable year in which the expenditures were made.
(B) Loss allowed
If a loss is sustained with respect to any property described in subparagraph (A), a deduction shall be allowed for the expenditures described in subparagraph (A) for the taxable year in which such loss is sustained in an amount equal to the lesser of—
(i) the amount allowable under for the expenditures if they had remained capitalized, or
(ii) the amount of such expenditures which have not previously been amortized under subparagraph (A).
(C) Exception for certain research and experimental expenditures
If the taxpayer materially participates (within the meaning of ) in an activity, this paragraph shall not apply to any amount allowable as a deduction under for expenditures paid or incurred in connection with such activity.
(3) Treatment of incentive stock options
Section 421 shall not apply to the transfer of stock acquired pursuant to the exercise of an incentive stock option (as defined in section 422). Section 422(c)(2) shall apply in any case where the disposition and the inclusion for purposes of this part are within the same taxable year and such section shall not apply in any other case. The adjusted basis of any stock so acquired shall be determined on the basis of the treatment prescribed by this paragraph.
(1) In general
For purposes of subsection (a)(4), the term “alternative tax net operating loss deduction” means the net operating loss deduction allowable for the taxable year under section 172, except that—
(A) the amount of such deduction shall not exceed the sum of—
the amount of such deduction shall not exceed the sum of—
(i) the lesser of—
the lesser of—
(I) the amount of such deduction attributable to net operating losses (other than the deduction described in clause (ii)(I)), or
(II) 90 percent of alternative minimum taxable income determined without regard to such deduction and the deduction under section 199,
(ii) the lesser of—
the lesser of—
(I) the amount of such deduction attributable to an applicable net operating loss with respect to which an election is made under (as in effect before its repeal by the Tax Increase Prevention Act of 2014), or
(II) alternative minimum taxable income determined without regard to such deduction and the deduction under section 199
(B) in determining the amount of such deduction—
in determining the amount of such deduction—
(i) the net operating loss (within the meaning of ) for any loss year shall be adjusted as provided in paragraph (2), and
(ii) appropriate adjustments in the application of shall be made to take into account the limitation of subparagraph (A).
(2) Adjustments to net operating loss computation
(A) Post-1986 loss years
In the case of a loss year beginning after
(i) be determined with the adjustments provided in this section and section 58, and
(ii) be reduced by the items of tax preference determined under section 57 for such year.
(B) Pre-1987 years
In the case of loss years beginning before
(1) In general
The term “qualified housing interest” means interest which is qualified residence interest (as defined in section 163(h)(3)) and is paid or accrued during the taxable year on indebtedness which is incurred in acquiring, constructing, or substantially improving any property which—
(A) is the principal residence (within the meaning of section 121) of the taxpayer at the time such interest accrues, or
(B) is a qualified dwelling which is a qualified residence (within the meaning of ).
Such term also includes interest on any indebtedness resulting from the refinancing of indebtedness meeting the requirements of the preceding sentence; but only to the extent that the amount of the indebtedness resulting from such refinancing does not exceed the amount of the refinanced indebtedness immediately before the refinancing.
(2) Qualified dwelling
The term “qualified dwelling” means any—
(A) house,
(B) apartment,
(C) condominium, or
(D) mobile home not used on a transient basis (within the meaning of ),
including all structures or other property appurtenant thereto.
(3) Special rule for indebtedness incurred before
The term “qualified housing interest” includes interest which is qualified residence interest (as defined in section 163(h)(3)) and is paid or accrued on indebtedness which—
(A) was incurred by the taxpayer before
(B) is secured by property which, at the time such indebtedness was incurred, was—
is secured by property which, at the time such indebtedness was incurred, was—
(i) the principal residence (within the meaning of section 121) of the taxpayer, or
(ii) a qualified dwelling used by the taxpayer (or any member of his family (within the meaning of )).