104 STAT. 1388-538 PUBLIC LAW 101-508 —NOV. 5, 1990 of the preceding sentence, the determination of the beginning of the holding period shall be made without regard to any reconstruction by the taxpayer in connection with the rehabilitation. " (ii) SPECIAL RULE FOR PHASED REHABILITATION. — In the case of any rehabilitation which may reasonably be expected to be completed in phases set forth in architectural plans and specifications completed before the rehabilitation begins, clause (i) shall be applied by substituting '60-month period' for '24-month period. "(iii) LESSEES.— The Secretary shall prescribe by regulation rules for applying this subparagraph to lessees. "(D) RECONSTRUCTION. — Rehabilitation includes reconstruction. "(2) QuAUFiED REHABILITATION EXPENDITURE DEFINED. — ' (A) IN GENERAL.—The term 'qualified rehabilitation expenditure' means any amount properly chargeable to capital account— "(i) for property for which depreciation is allowable under section 168 and which is— "(I) nonresidential real property, "(II) residential rental property, "(III) real property which has a class life of more than 12.5 years, or "(IV) an addition or improvement to property described in subclause (I), (II), or (III), and "(ii) in connection with the rehabilitation of a qualified rehabilitated building. "(B) CERTAIN EXPENDITURES NOT INCLUDED.— The term 'qualified rehabilitation expenditure' does not include— "(i) STRAIGHT UNE DEPRECIATION MUST BE USED. —Any expenditure with respect to which the tsixpayer does not use the straight line method over a recovery period determined under subsection (c) or (g) of section 168. The preceding sentence shall not apply to any expenditure to the extent the alternative depreciation system of section 168(g) applies to such expenditure by reason of subparagraph (B) or (C) of section 168(g)(l). "(ii) COST OF ACQUISITION. —The cost of acquiring any building or interest therein. "(iii) ENLARGEMENTS.—Any expenditure attributeble to the enlargement of an existing building. "(iv) CERTIFIED HISTORIC STRUCTURE, ETC. — Any expenditure attributeble to the rehabilitation of a certified historic structure or a building in a registered historic district, unless the rehabilitation is a certified rehabilitation (within the meaning of subparagraph (O). The preceding sentence shall not apply to a building in a registered historic district if— "(I) such building was not a certified historic structure, "(II) the Secretary of the Interior certified to the Secretary that such building is not of historic significance to the district, and "(III) if the certification referred to in subclause (II) occurs after the beginning of the rehabilitetion
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