PUBLIC LAW 105-34—AUG. 5, 1997 111 STAT. 901 of the State or which remains unused as of Jsinuary 1, 2010, or (B) if such State ceases to be a non-Amtrak State, the portion of such payment (and any interest thereon) remaining as of the date of the cessation. Rules similar to the rules of subsection (a)(2)(B) shall apply for purposes of this paragraph. (d) TAX CONSEQUENCES.— (1) REDUCTION IN CARRYOVERS.— If the Corporation elects the application of this section, the Corporation's existing qualified carryovers shall be reduced by an amount equal to the amount determined under subsection (a)(3) divided by 0.35. (2) REDUCTION IN TAX PAID BY RAILROAD PREDECESSORS. — (A) IN GENERAL.— The Secretary of the Treasury or his delegate shall appropriately adjust the tax account of each railroad predecessor to reduce the net tax liability of such predecessor for taxable years beginning in the carryback period which is offset by reason of the application of this section. (B) FIFO ORDERING RULE.—The Secretary shall make the adjustments under subparagraph (A) first for the earU- est year in the carryback period and then for each subsequent year in such period. (C) No EFFECT ON OTHER TAXPAYERS. —In no event shall any taxpayer other than the Corporation be allowed a refund or credit by reason of this section. (D) WAIVER OF LIMITATIONS. — If the adjustment under subparagraph (A) is barred by the operation of any law or rule of law, such law or rule of law shall be waived solely for purposes of making such adjustment. (3) TAX TREATMENT OF EXPENDITURES.— With respect to any payment by the Corporation of qualified expenses described in subsection (e)(l)(A) during any taxable year from the amount of any refund of the payment described in subsection (a)(1)— (A) no deduction shall be allowed to the Corporation with respect to any amoiuit paid or incurred which is attributable to such amount, and (B) the basis of any property shall be reduced by the portion of the cost of such property which is attributable to such amount. (4) PAYMENTS TO A NON-AMTRAK STATE.— N O deduction shall be allowed to the Corporation under chapter 1 of the Internal Revenue Code of 1986 for any payment to a non-Amtrak State required under subsection (a)(2)(A)(ii). (e) DEFINITIONS.— For purposes of this section— (1) QUALIFIED EXPENSES. —The term "qualified expenses" means expenses incurred for— (A) in the case of the Corporation— (i) the acquisition of equipment, rolling stock, and other capital improvements, the upgradiag of maintenance facilities, and the maintenance of existing equipment, in intercity passenger rail service, and (ii) the payment of interest and principal on obligations incurred for such acquisition, upgrading, and maintenance, and (B) in the case of a non-Amtrak State—
�
