PUBLIC LAW 97-34—AUG. 13, 1981
95 STAT. 237
the date the physical work on the rehabilitation began and the date the building was first placed in service. "(C) SUBSTANTIALLY REHABIUTATED DEFINED.—
"(i) IN GENERAL.—For purposes of subparagraph (A)(i), a building shall be treated as having been substantially rehabilitated only if the qualified rehabilitation expenditures during the 24-month period ending on the last day of the taxable year exceed the greater of— "(I) the adjusted basis of such property, or "(II) $5,000. The adjusted basis of the property shall be determined as of the beginning of the first day of such 24-month period, or of the holding period of the property (within the meaning of section 1250(e)), whichever is later. 26 USC 1250. "(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 provision to lessees. "(D) RECONSTRUCTION.—Rehabilitation includes reconstruction. "(2) QUALIFIED REHABILITATION EXPENDITURE DEFINED.—
(A) IN GENERAL.—The term 'qualified rehabilitation expenditure' means any amount properly chargeable to capital account which is incurred after December 31, 1981— "(i) for property (or additions or improvements to property) which have a recovery period (within the meaning of section 168) of 15 years, and Ante, p. 203. "(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) ACCELERATED METHODS OF DEPRECIATION MAY NOT
BE USED.—Any expenditures with respect to which an election has not been made under section 168(b)(3) (to use the straight-line method of depreciation). "(ii) COST OF ACQUISITION.—The cost of acquiring any building or interest therein. "(iii) ENLARGEMENTS.—Any expenditure attributable to the enlargement of an existing building. "(iv)
CERTIFIED
HISTORIC STRUCTURE, ETC.—Any
expenditure attributable 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 (C)). 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 rehabilitation of such building, the taxpayer certifies to the Secre-
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