PUBLIC LAW 99-514—OCT. 22, 1986
100 STAT. 2355
"(3) INTEREST RELATING TO PROPERTY USED TO PRODUCE PROP-
ERTY.—This subsection shall apply to any interest on indebtedness incurred or continued in connection with property used to produce property to which this subsection applies to the extent such interest is allocable to the produced property. "(4) DEFINITIONS.—For purposes of this subsection— "(A) LONG USEFUL LIFE.—Property has a long useful life if
- V., such property is—
"(i) real property, or "(ii) property with a class life of 20 years or more (as determined under section 168). "(B) PRODUCTION PERIOD.—The term 'production period' means, when used with respect to any property, the period— "(i) beginning on the date on which production of the property begins, and "(ii) ending on the date on which the property is ready to be placed in service or is ready to be held for sale. "(C) PRODUCTION EXPENDITURES.—The term 'production expenditures' means the costs (whether or not incurred during the production period) required to be capitalized under subsection (a) with respect to the property. "(g) PRODUCTION.—For purposes of this section— "(1) IN GENERAL.—The term 'produce' includes construct, build, install, manufacture, develop, or improve. "(2) TREATMENT OF PROPERTY PRODUCED UNDER CONTRACT FOR
THE TAXPAYER.—The taxpayer shall be treated as producing any property produced for the taxpayer under a contract with the taxpayer; except that only costs paid or incurred by the taxpayer (whether under such contract or otherwise) shall be taken into account in applying subsection (a) to the taxpayer. "(h) REGULATIONS.—The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section, including— "(1) regulations to prevent the use of related parties, passthru entities, or intermediaries to avoid the application of this section, and "(2) regulations providing for simplified procedures for the application of this section in the case of property described in subsection (b)(2)." (b) TECHNICAL AMENDMENTS.—
(1) Section 189 is hereby repealed. (2)(A) Section 280 is hereby repealed. (B) Paragraph (5) of section 48(r) (defining sound recording) is amended to read as follows: "(5) SOUND RECORDING.—For purposes of this subsection, the term 'sound recording' means works which result from the fixation of a series of musical, spoken, or other sounds, regardless of the nature of the material objects (such as discs, tapes, or other phonorecordings) in which such sounds are embodied." (3) Section 312(n)(l) is amended— (A) by striking out "(determined without regard to section 189) in subparagraph (B)", and (B) by striking out subparagraph (C) and inserting in lieu thereof:
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