Page:United States Statutes at Large Volume 54 Part 1.djvu/1036

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PUBLIC LAWS-CH. 757-OCT. 8 , 1940 Validity of certifi- cate. Ante, p. 974; post, p. 1018 . Depreciation deduc- tion. 53 Stat. 14 . 26 U. S. C., Supp. V, § 23(l). Payment by U. S . of unamortized cost of facility. Amortization de- duction. Payments. If taxpayer not en- titled to amortization deduction. 53 Stat. 14. 26 U. S. C., Supp. V, §23 (). Protection of U. S . If taxpayer reim- bursed. Directly. Indirectly. "(3) The certificate provided for in paragraph (1) shall have no effect unless made before whichever of the following dates is the later: (A) The beginning of such construction, reconstruc- tion, erection, or installation, or the date of such acquisition, or (B) the one hundred and twentieth day after the date of the enactment of the Second Revenue Act of 1940. "(g) DEPRECIATION DEDUCTION. -If the adjusted basis of the emer- gency facility computed without regard to subsection (f) of this section is in excess of the adjusted basis computed under such sub- section, the deduction provided by section 23 (1) shall, despite the provisions of subsection (a) of this section, be allowed with respect to such emergency facility as if its adjusted basis were an amount equal to the amount of such excess. "(h) PAYMENT BY UNITED STATES OF UNAMORTIZED COST OF FACILrY.- If an amount is properly includible in the gross income of the taxpayer on account of a payment with respect to an emergency facility and such payment is certified as provided in this paragraph, then, at the election of the taxpayer in its return for the taxable year in which such amount is so includible- "(1) The amortization deduction for the month in which such amount is so includible shall (in lieu of the amount of the deduc- tion for such month computed under subsection (a)) be the amount so includible, but such deduction shall not be in excess of the adjusted basis of the emergency facility as of the end of such month (computed without regard to any amortization deduction for such month). Payments referred to in this para- graph shall be payments the amounts of which are certified, under such regulations as the President may prescribe, by either the Secretary of War or the Secretary of the Navy as compensa- tion to the taxpayer for the unamortized cost of the emergency facility made because- "(A) A contract with the United States involving the use of the facility has been terminated by its terms or by cancellation, or "(B) the taxpayer had reasonable grounds (either from provisions of a contract with the United States involving the use of the facility, or from written or oral representations made under authority of the United States) for anticipating future contracts involving the use of the facility, which future contracts have not been made. "(2) In case the taxpayer is not entitled to any amortization deduction with respect to the emergency facility the deduction allowable under section 23 (1) on account of the month in which such amount is so includible shall be increased by such amount, but such deduction on account of such month shall not be in excess of the adjusted basis of the emergency facility as of the end of such month (computed without regard to any amount allowable, on account of such month, under section 23 (1) or this paragraph). "(i) PROTECTION OF THE UNITED STATES. - If the taxpayer has been or will be reimbursed by the United States for all or a part of the cost of any emergency facility pursuant to any contract with the United States, either- "(l) directly, by a provision therein dealing expressly with such reimbursement, or "(2) indirectly, because the price paid by the United States (sofar as return of cost of the facility is used as a factor in the fixing of such price) is recognized by the contract as including a return of cost greater than the normal exhaustion, wear and tear, 1002 [54 STAT.