118 STAT. 1657 PUBLIC LAW 108–357—OCT. 22, 2004 (6) The table of sections of subpart D of part III of sub chapter N of chapter 1 is amended by adding at the end the following new item: ‘‘Sec. 937. Residence and source rules involving possessions.’’. (d) EFFECTIVE DATE.— (1) IN GENERAL.—Except as otherwise provided in this sub section, the amendments made by this section shall apply to taxable years ending after the date of the enactment of this Act. (2) 183 DAY RULE.—Section 937(a)(1) of the Internal Rev enue Code of 1986 (as added by this section) shall apply to taxable years beginning after the date of the enactment of this Act. (3) SOURCING.—Section 937(b)(2) of such Code (as so added) shall apply to income earned after the date of the enactment of this Act. SEC. 909. SALES OR DISPOSITIONS TO IMPLEMENT FEDERAL ENERGY REGULATORY COMMISSION OR STATE ELECTRIC RESTRUCTURING POLICY. (a) IN GENERAL.—Section 451 (relating to general rule for tax able year of inclusion) is amended by adding at the end the following new subsection: ‘‘(i) SPECIAL RULE FOR SALES OR DISPOSITIONS TO IMPLEMENT FEDERAL ENERGY REGULATORY COMMISSION OR STATE ELECTRIC RESTRUCTURING POLICY.— ‘‘(1) IN GENERAL.—In the case of any qualifying electric transmission transaction for which the taxpayer elects the application of this section, qualified gain from such transaction shall be recognized— ‘‘(A) in the taxable year which includes the date of such transaction to the extent the amount realized from such transaction exceeds— ‘‘(i) the cost of exempt utility property which is purchased by the taxpayer during the 4 year period beginning on such date, reduced (but not below zero) by ‘‘(ii) any portion of such cost previously taken into account under this subsection, and ‘‘(B) ratably over the 8 taxable year period beginning with the taxable year which includes the date of such transaction, in the case of any such gain not recognized under subparagraph (A). ‘‘(2) QUALIFIED GAIN.—For purposes of this subsection, the term ‘qualified gain’ means, with respect to any qualifying electric transmission transaction in any taxable year— ‘‘(A) any ordinary income derived from such transaction which would be required to be recognized under section 1245 or 1250 for such taxable year (determined without regard to this subsection), and ‘‘(B) any income derived from such transaction in excess of the amount described in subparagraph (A) which is required to be included in gross income for such taxable year (determined without regard to this subsection). ‘‘(3) QUALIFYING ELECTRIC TRANSMISSION TRANSACTION.— For purposes of this subsection, the term ‘qualifying electric 26 USC 937 note.
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