95 STAT. 234
PUBLIC LAW 97-34—AUG. 13, 1981 "If the recovery property ceases to be section 38 property within— One full year after the close of the period described in clause (iu) One full year after the close of the period described in clause (iv)
The recapture percentage is For 15-year, 10-year, and 5-year property
For 3-year property
40
0
20
0
"(C) PROPERTY CEASES TO BE PROGRESS EXPENDITURE PROP-
Ante, p. 228.
ERTY.—If, during any taxable year, any recovery property taken into account in determining qualified investment Under section 46(d)(l) ceases to be progress expenditure property (as determined under paragraph (3)) or becomes, with respect to the taxpayer, recovery property of a character other than that expected in determining the applicable percentage under section 46(d)(l)(B)(i), then the tax under this chapter for such taxable year shall be acHusted in accordance with regulations prescribed by the Secretary. "(D) LiMirATiON.—The tax for the taxable year shall be increased under subparagraph (A) only with respect to the credits allowed under section 38 which were used to reduce tax liability. In the case of credits not so used to reduce tax liability, the carrybacks and carryovers under section 46(b) shall be appropriately adjusted. "(E) DEFINITIONS AND SPECIAL RULES.—
Ante, p. 203.
"(i) SECTION 38 RECOVERY PROPERTY.—For purposes of this paragraph, the term 'section 38 recovery property' means any section 38 property which is recovery property (withm the meaning of section 168). (ii) RECAPTURE PERIOD.—For purposes of this paragraph, the term 'recapture period' means, with respect to any recovery property, the period consisting of the first full year after the property is placed in service and the 4 succeeding full years (the 2 succeeding full years in the case of 3-year property). "(iii) CLASSIFICATION OF PROPERTY.—For purposes of this paragraph, property shall be classifed as provided in section 168(c). "(iv) PARAGRAPH (1) NOT TO APPLY.—Paragraph (1)
shall not apply with respect to any recovery property." 26 USC 47.
(2) TECHNICAL AMENDMENTS.—
(A) Subparagraph (D) of section 47(a)(3) is amended to read as follows: "(D) COORDINATION WITH PARAGRAPHS (1) AND (5).—If, after property is placed in service, there is a disposition or other cessation described in pars^aph (1), or a disposition, cessation, or change in expected use described in paragraph (5), then paragraph (1) or (5), as the case may be, shall be applied as if any credit, which was allowable by reason of section 46(d) and which has not been required to be recaptured before such disposition, cessation, or change in use were allowable for the taxable year the property was placed in service." (B) Pars^aph (6) of section 47(a) (as redesignated by paragraph (1) of this subsection) is amended by striking out "paragraph (1) or (3)" and inserting in lieu thereof "paragraph (1), (3), or (5)".
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