118 STAT. 1602 PUBLIC LAW 108–357—OCT. 22, 2004 (3) SECTION 197 INTANGIBLES.—Section 197(f) (relating to special rules) is amended by adding at the end the following new paragraph: ‘‘(10) TAX EXEMPT USE PROPERTY SUBJECT TO LEASE.—In the case of any section 197 intangible which would be tax exempt use property as defined in subsection (h) of section 168 if such section applied to such intangible, the amortization period under this section shall not be less than 125 percent of the lease term (within the meaning of section 168(i)(3)).’’. (c) LEASE TERM TO INCLUDE RELATED SERVICE CONTRACTS.— Subparagraph (A) of section 168(i)(3) (relating to lease term) is amended by striking ‘‘and’’ at the end of clause (i), by redesignating clause (ii) as clause (iii), and by inserting after clause (i) the following new clause: ‘‘(ii) the term of a lease shall include the term of any service contract or similar arrangement (whether or not treated as a lease under section 7701(e))— ‘‘(I) which is part of the same transaction (or series of related transactions) which includes the lease, and ‘‘(II) which is with respect to the property subject to the lease or substantially similar prop erty, and’’. (d) EXPANSION OF SHORT TERM LEASE EXEMPTION FOR QUALI FIED TECHNOLOGICAL EQUIPMENT.—Subparagraph (A) of section 168(h)(3) is amended by adding at the end the following new sen tence: ‘‘Notwithstanding subsection (i)(3)(A)(i), in determining a lease term for purposes of the preceding sentence, there shall not be taken into account any option of the lessee to renew at the fair market value rent determined at the time of renewal; except that the aggregate period not taken into account by reason of this sentence shall not exceed 24 months.’’. (e) TREATMENT OF CERTAIN INDIAN TRIBAL GOVERNMENTS AS TAX EXEMPT ENTITIES.—Section 168(h)(2)(A) is amended by striking ‘‘and’’ at the end of clause (ii), by striking the period at the end of clause (iii) and inserting ‘‘, and’’, and by inserting at the end the following: ‘‘(iv) any Indian tribal government described in section 7701(a)(40). For purposes of applying this subsection, any Indian tribal government referred to in clause (iv) shall be treated in the same manner as a State.’’. SEC. 848. LIMITATION ON DEDUCTIONS ALLOCABLE TO PROPERTY USED BY GOVERNMENTS OR OTHER TAX EXEMPT ENTI TIES. (a) IN GENERAL.—Subpart C of part II of subchapter E of chapter 1 (relating to taxable year for which deductions taken) is amended by adding at the end the following new section: ‘‘SEC. 470. LIMITATION ON DEDUCTIONS ALLOCABLE TO PROPERTY USED BY GOVERNMENTS OR OTHER TAX EXEMPT ENTI TIES. ‘‘(a) LIMITATION ON LOSSES.—Except as otherwise provided in this section, a tax exempt use loss for any taxable year shall not be allowed.
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