Accelerated cost recovery system

Except as otherwise provided in this section, the depreciation deduction provided by section 167(a) for any tangible property shall be determined by using— For purposes of this section— Except as provided in paragraphs (2) and (3), the applicable depreciation method is— Paragraph (1) shall be applied by substituting “150 percent” for “200 percent” in the case of— The applicable depreciation method shall be the straight line method in the case of the following property: Salvage value shall be treated as zero. An election under paragraph (2)(D) 11 See References in Text note below. or (3)(D) may be made with respect to 1 or more classes of property for any taxable year and once made with respect to any class shall apply to all property in such class placed in service during such taxable year. Such an election, once made, shall be irrevocable. For purposes of this section, the applicable recovery period shall be determined in accordance with the following table: In the case of:The applicablerecovery periodis: 3-year property3 years 5-year property5 years 7-year property7 years 10-year property10 years 15-year property15 years 20-year property20 years Water utility property25 years Residential rental property27.5 years Nonresidential real property39 years. Any railroad grading or tunnel bore50 years. For purposes of this section— Except as otherwise provided in this subsection, the applicable convention is the half-year convention. In the case of— Except as provided in regulations, if during any taxable year— For purposes of subparagraph (A), there shall not be taken into account— The half-year convention is a convention which treats all property placed in service during any taxable year (or disposed of during any taxable year) as placed in service (or disposed of) on the mid-point of such taxable year. The mid-month convention is a convention which treats all property placed in service during any month (or disposed of during any month) as placed in service (or disposed of) on the mid-point of such month. The mid-quarter convention is a convention which treats all property placed in service during any quarter of a taxable year (or disposed of during any quarter of a taxable year) as placed in service (or disposed of) on the mid-point of such quarter. For purposes of this section— Except as otherwise provided in this subsection, property shall be classified under the following table: Property shall be treated as:If such property has a class life (in years) of: 3-year property4 or less 5-year propertyMore than 4 but less than 10 7-year property10 or more but less than 16 10-year property16 or more but less than 20 15-year property20 or more but less than 25 20-year property25 or more. The term “residential rental property” means any building or structure if 80 percent or more of the gross rental income from such building or structure for the taxable year is rental income from dwelling units. For purposes of clause (i)— The term “nonresidential real property” means section 1250 property which is not— The term “3-year property” includes— any race horse— The term “5-year property” includes— any property which— The term “7-year property” includes— any property which— The term “10-year property” includes— The term “15-year property” includes— The term “20-year property” means initial clearing and grading land improvements with respect to any electric utility transmission and distribution plant. The term “railroad grading or tunnel bore” means all improvements resulting from excavations (including tunneling), construction of embankments, clearings, diversions of roads and streams, sodding of slopes, and from similar work necessary to provide, construct, reconstruct, alter, protect, improve, replace, or restore a roadbed or right-of-way for railroad track. The term “water utility property” means property— The term “qualified improvement property” means any improvement made by the taxpayer to an interior portion of a building which is nonresidential real property if such improvement is placed in service after the date such building was first placed in service. Such term shall not include any improvement for which the expenditure is attributable to— This section shall not apply to— Any property if— Any public utility property (within the meaning of subsection (i)(10)) if the taxpayer does not use a normalization method of accounting. Any motion picture film or video tape. Any works which result from the fixation of a series of musical, spoken, or other sounds, regardless of the nature of the material (such as discs, tapes, or other phonorecordings) in which such sounds are embodied. Property— Clause (ii) of subparagraph (A) shall not apply to— any property if, for the 1st taxable year in which such property is placed in service— In the case of any property to which this section would apply but for this paragraph, the depreciation deduction under section 167 shall be determined under the provisions of this section as in effect before the amendments made by section 201 of the Tax Reform Act of 1986. In the case of— For purposes of paragraph (1), the alternative depreciation system is depreciation determined by using— In the case of: The recovery period shall be: (i) Property not described in clause (ii) or (iii) The class life. (ii) Personal property with no class life 12 years. (iii) Residential rental property 30 years (iv) Nonresidential real property 40 years (v) Any railroad grading or tunnel bore or water utility property 50 years In the case of any tax-exempt use property subject to a lease, the recovery period used for purposes of paragraph (2) shall (notwithstanding any other subparagraph of this paragraph) in no event be less than 125 percent of the lease term. For purposes of paragraph (2), in the case of property described in any of the following subparagraphs of subsection (e)(3), the class life shall be determined as follows: If property is described in subparagraph: The classlife is: (A)(iii)4 (B)(ii)5 (B)(iii)9.5 (B)(vii)10 (C)(i)10 (C)(iii)22 (C)(iv)14 (D)(i)15 (D)(ii)20 (E)(i)24 (E)(ii)24 (E)(iii)20 (E)(iv)20 (E)(v)30 (E)(vi)35 (E)(vii)20 (F)25 In the case of any qualified technological equipment, the recovery period used for purposes of paragraph (2) shall be 5 years. In the case of any automobile or light general purpose truck, the recovery period used for purposes of paragraph (2) shall be 5 years. In the case of any section 1245 property which is real property with no class life, the recovery period used for purposes of paragraph (2) shall be 40 years. Subparagraph (A) of paragraph (1) shall not apply to— rolling stock which is used within and without the United States and which is— For purposes of this subsection— Except as otherwise provided in this paragraph, the term “tax-exempt bond financed property” means any property to the extent such property is financed (directly or indirectly) by an obligation the interest on which is exempt from tax under section 103(a). For purposes of subparagraph (A), the proceeds of any obligation shall be treated as used to finance property acquired in connection with the issuance of such obligation in the order in which such property is placed in service. The term “tax-exempt bond financed property” shall not include any qualified residential rental project (within the meaning of section 142(a)(7)). If the President determines that a foreign country— For purposes of this subsection, the term “imported property” means any property if— If the taxpayer makes an election under this paragraph with respect to any class of property for any taxable year, the alternative depreciation system under this subsection shall apply to all property in such class placed in service during such taxable year. Notwithstanding the preceding sentence, in the case of nonresidential real property or residential rental property, such election may be made separately with respect to each property. An election under subparagraph (A), once made, shall be irrevocable. The property described in this paragraph shall consist of any nonresidential real property, residential rental property, and qualified improvement property held by an electing real property trade or business (as defined in 163(j)(7)(B)). For purposes of this section— Except as otherwise provided in this subsection, the term “tax-exempt use property” means that portion of any tangible property (other than nonresidential real property) leased to a tax-exempt entity. In the case of nonresidential real property, the term “tax-exempt use property” means that portion of the property leased to a tax-exempt entity in a disqualified lease. For purposes of this subparagraph, the term “disqualified lease” means any lease of the property to a tax-exempt entity, but only if— Clause (i) shall apply to any property only if the portion of such property leased to tax-exempt entities in disqualified leases is more than 35 percent of the property. For purposes of this subparagraph, improvements to a property (other than land) shall not be treated as a separate property. Subclause (IV) of clause (ii) shall not apply to any property which is leased within 3 months after the date such property is first used by the tax-exempt entity (or a related entity). Property shall not be treated as tax-exempt use property merely by reason of a short-term lease. For purposes of clause (i), the term “short-term lease” means any lease the term of which is— The term “tax-exempt use property” shall not include any portion of a property if such portion is predominantly used by the tax-exempt entity (directly or through a partnership of which such entity is a partner) in an unrelated trade or business the income of which is subject to tax under section 511. For purposes of subparagraph (B)(iii), any portion of a property so used shall not be treated as leased to a tax-exempt entity in a disqualified lease. For purposes of this paragraph, the term “nonresidential real property” includes residential rental property. For purposes of this subsection, the term “tax-exempt entity” means— Clause (iii) of subparagraph (A) shall not apply with respect to any property if more than 50 percent of the gross income for the taxable year derived by the foreign person or entity from the use of such property is— For purposes of this paragraph, the term “foreign person or entity” means— For purposes of this subsection, a corporation shall not be treated as an instrumentality of the United States or of any State or political subdivision thereof if— For purposes of this subsection, an organization shall be treated as an organization described in subparagraph (A)(ii) with respect to any property (other than property held by such organization) if such organization was an organization (other than a cooperative described in section 521) exempt from tax imposed by this chapter at any time during the 5-year period ending on the date such property was first used by such organization. The preceding sentence and subparagraph (D)(ii) shall not apply to the Federal Home Loan Mortgage Corporation. In the case of an organization formerly exempt from tax under section 501(a) as an organization described in section 501(c)(12), clause (i) shall not apply to such organization with respect to any property if such organization elects not to be exempt from tax under section 501(a) during the tax-exempt use period with respect to such property. For purposes of subclause (I), the term “tax-exempt use period” means the period beginning with the taxable year in which the property described in subclause (I) is first used by the organization and ending with the close of the 15th taxable year following the last taxable year of the applicable recovery period of such property. Any election under subclause (I), once made, shall be irrevocable. Any organization which is engaged in activities substantially similar to those engaged in by a predecessor organization shall succeed to the treatment under this subparagraph of such predecessor organization. For purposes of this subparagraph, property shall be treated as first used by the organization— For purposes of this section, the term “tax-exempt use property” shall not include any qualified technological equipment if the lease to the tax-exempt entity has a lease term of 5 years or less. 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. For purposes of subparagraph (A), the term “qualified technological equipment” shall not include any property leased to a tax-exempt entity if— Subclause (II) of clause (i) shall not apply to any property which is leased within 3 months after the date such property is first used by the tax-exempt entity (or a related entity). For purposes of this subsection— Any entity not described in subparagraph (A)(i) is related to any other entity if the 2 entities have— For purposes of this subsection— In the case of any property which is leased to a partnership, the determination of whether any portion of such property is tax-exempt use property shall be made by treating each tax-exempt entity partner’s proportionate share (determined under paragraph (6)(C)) of such property as being leased to such partner. Rules similar to the rules of subparagraph (A) shall also apply in the case of any pass-thru entity other than a partnership and in the case of tiered partnerships and other entities. Unless it is otherwise established to the satisfaction of the Secretary, it shall be presumed that the partners of a foreign partnership (and the beneficiaries of any other foreign pass-thru entity) are persons who are not United States persons. For purposes of this subsection, if— For purposes of subparagraph (A), the term “qualified allocation” means any allocation to a tax-exempt entity which— For purposes of subparagraph (A), a tax-exempt entity’s proportionate share of any property owned by a partnership shall be determined on the basis of such entity’s share of partnership items of income or gain (excluding gain allocated under section 704(c)), whichever results in the largest proportionate share. For purposes of clause (i), if a tax-exempt entity’s share of partnership items of income or gain (excluding gain allocated under section 704(c)) may vary during the period such entity is a partner in the partnership, such share shall be the highest share such entity may receive. For purposes of this subsection, in the case of any property which is owned by a partnership which has both a tax-exempt entity and a person who is not a tax-exempt entity as partners, the determination of whether such property is used in an unrelated trade or business of such an entity shall be made without regard to section 514. Rules similar to the rules of subparagraphs (A), (B), (C), and (D) shall also apply in the case of any pass-thru entity other than a partnership and in the case of tiered partnerships and other entities. For purposes of this paragraph and paragraph (5), except as otherwise provided in this subparagraph, any tax-exempt controlled entity shall be treated as a tax-exempt entity. If a tax-exempt controlled entity makes an election under this clause— The term “tax-exempt controlled entity” means any corporation (which is not a tax-exempt entity determined without regard to this subparagraph and paragraph (2)(E)) if 50 percent or more (in value) of the stock in such corporation is held by 1 or more tax-exempt entities (other than a foreign person or entity). For purposes of subclause (I), in the case of a corporation the stock of which is publicly traded on an established securities market, stock held by a tax-exempt entity shall not be taken into account unless such entity holds at least 5 percent (in value) of the stock in such corporation. For purposes of this subclause, related entities (within the meaning of paragraph (4)) shall be treated as 1 entity. For purposes of this clause, a tax-exempt entity shall be treated as holding stock which it holds through application of section 318 (determined without regard to the 50-percent limitation contained in subsection (a)(2)(C) thereof). For purposes of determining whether there is a qualified allocation under subparagraph (B), the regulations prescribed under paragraph (8) for purposes of this paragraph— For purposes of this subsection, the term “lease” includes any grant of a right to use property. The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection. For purposes of this section— Except as provided in this section, the term “class life” means the class life (if any) which would be applicable with respect to any property as of January 1, 1986, under subsection (m) of section 167 (determined without regard to paragraph (4) and as if the taxpayer had made an election under such subsection). The Secretary, through an office established in the Treasury, shall monitor and analyze actual experience with respect to all depreciable assets. The reference in this paragraph to subsection (m) of section 167 shall be treated as a reference to such subsection as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990. The term “qualified technological equipment” means— For purposes of this paragraph— The term “computer or peripheral equipment” means— The term “computer” means a programmable electronically activated device which— The term “related peripheral equipment” means any auxiliary machine (whether on-line or off-line) which is designed to be placed under the control of the central processing unit of a computer. The term “computer or peripheral equipment” shall not include— For purposes of this paragraph, the term “high technology medical equipment” means any electronic, electromechanical, or computer-based high technology equipment used in the screening, monitoring, observation, diagnosis, or treatment of patients in a laboratory, medical, or hospital environment. In determining a lease term— 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))— For purposes of clause (i) of subparagraph (A), in the case of nonresidential real property or residential rental property, there shall not be taken into account any option to renew at fair market value, determined at the time of renewal. Under regulations, a taxpayer may maintain 1 or more general asset accounts for any property to which this section applies. Except as provided in regulations, all proceeds realized on any disposition of property in a general asset account shall be included in income as ordinary income. The Secretary shall, by regulations, provide for the method of determining the deduction allowable under section 167(a) with respect to any tangible property for any taxable year (and the succeeding taxable years) during which such property changes status under this section but continues to be held by the same person. In the case of any addition to (or improvement of) any property— the applicable recovery period for such addition or improvement shall begin on the later of— In the case of any property transferred in a transaction described in subparagraph (B), the transferee shall be treated as the transferor for purposes of computing the depreciation deduction determined under this section with respect to so much of the basis in the hands of the transferee as does not exceed the adjusted basis in the hands of the transferor. In any case where this section as in effect before the amendments made by section 201 of the Tax Reform Act of 1986 applied to the property in the hands of the transferor, the reference in the preceding sentence to this section shall be treated as a reference to this section as so in effect. The transactions described in this subparagraph are— Under regulations, property which is disposed of and then reacquired by the taxpayer shall be treated for purposes of computing the deduction allowable under subsection (a) as if such property had not been disposed of. In the case of any building erected (or improvements made) on leased property, if such building or improvement is property to which this section applies, the depreciation deduction shall be determined under the provisions of this section. An improvement— For treatment of qualified long-term real property constructed or improved in connection with cash or rent reduction from lessor to lessee, see section 110(b). In order to use a normalization method of accounting with respect to any public utility property for purposes of subsection (f)(2)— One way in which the requirements of subparagraph (A) are not met is if the taxpayer, for ratemaking purposes, uses a procedure or adjustment which is inconsistent with the requirements of subparagraph (A). The procedures and adjustments which are to be treated as inconsistent for purposes of clause (i) shall include any procedure or adjustment for ratemaking purposes which uses an estimate or projection of the taxpayer’s tax expense, depreciation expense, or reserve for deferred taxes under subparagraph (A)(ii) unless such estimate or projection is also used, for ratemaking purposes, with respect to the other 2 such items and with respect to the rate base. The Secretary may by regulations prescribe procedures and adjustments (in addition to those specified in clause (ii)) which are to be treated as inconsistent for purposes of clause (i). In the case of any public utility property to which this section does not apply by reason of subsection (f)(2), the allowance for depreciation under section 167(a) shall be an amount computed using the method and period referred to in subparagraph (A)(i). The term “public utility property” means property used predominantly in the trade or business of the furnishing or sale of— The term “research and experimentation” has the same meaning as the term research and experimental has under section 174. The terms “section 1245 property” and “section 1250 property” have the meanings given such terms by sections 1245(a)(3) and 1250(c), respectively. The term “single purpose agricultural or horticultural structure” means— For purposes of this paragraph— The term “single purpose livestock structure” means any enclosure or structure specifically designed, constructed, and used— The term “single purpose horticultural structure” means— An enclosure or structure which provides work space shall be treated as a single purpose agricultural or horticultural structure only if such work space is solely for— The term “livestock” includes poultry. The term “qualified rent-to-own property” means property held by a rent-to-own dealer for purposes of being subject to a rent-to-own contract. The term “rent-to-own dealer” means a person that, in the ordinary course of business, regularly enters into rent-to-own contracts with customers for the use of consumer property, if a substantial portion of those contracts terminate and the property is returned to such person before the receipt of all payments required to transfer ownership of the property from such person to the customer. The term “consumer property” means tangible personal property of a type generally used within the home for personal use. The term “rent-to-own contract” means any lease for the use of consumer property between a rent-to-own dealer and a customer who is an individual which— The term “motorsports entertainment complex” means a racing track facility which— Such term shall include, if owned by the taxpayer who owns the complex and provided for the benefit of patrons of the complex— Such term shall not include any transportation equipment, administrative services assets, warehouses, administrative buildings, hotels, or motels. Such term shall not include any property placed in service after December 31, 2025. The term “Alaska natural gas pipeline” means the natural gas pipeline system located in the State of Alaska which— is— The term “natural gas gathering line” means— the pipe, equipment, and appurtenances used to deliver natural gas from the wellhead or a commonpoint to the point at which such gas first reaches— The term “qualified smart electric meter” means any smart electric meter which— For purposes of subparagraph (A), the term “smart electric meter” means any time-based meter and related communication equipment which is capable of being used by the taxpayer as part of a system that— The term “qualified smart electric grid system” means any smart grid property which— For the purposes of subparagraph (A), the term “smart grid property” means electronics and related equipment that is capable of— For purposes of subsection (a), the applicable recovery period for qualified Indian reservation property shall be determined in accordance with the table contained in paragraph (2) in lieu of the table contained in subsection (c). For purposes of paragraph (1)— In the case of:Theapplicablerecoveryperiod is: 3-year property2 years 5-year property3 years 7-year property4 years 10-year property6 years 15-year property9 years 20-year property12 years Nonresidential real property22 years. For purposes of determining alternative minimum taxable income under section 55, the deduction under subsection (a) for qualified Indian reservation property shall be determined under this section without regard to any adjustment under section 56. For purposes of this subsection— The term “qualified Indian reservation property” means property which is property described in the table in paragraph (2) and which is— The term “qualified Indian reservation property” does not include any property to which the alternative depreciation system under subsection (g) applies, determined— Subparagraph (A)(ii) shall not apply to qualified infrastructure property located outside of the Indian reservation if the purpose of such property is to connect with qualified infrastructure property located within the Indian reservation. For purposes of this subparagraph, the term “qualified infrastructure property” means qualified Indian reservation property (determined without regard to subparagraph (A)(ii)) which— For purposes of this subsection, the rental to others of real property located within an Indian reservation shall be treated as the active conduct of a trade or business within an Indian reservation. For purposes of this subsection, the term “Indian reservation” means a reservation, as defined in— Any reference in this subsection to a provision not contained in this title shall be treated for purposes of this subsection as a reference to such provision as in effect on the date of the enactment of this paragraph. If a taxpayer makes an election under this paragraph with respect to any class of property for any taxable year, paragraph (1) shall not apply to all property in such class placed in service during such taxable year. Such election, once made, shall be irrevocable. This subsection shall not apply to property placed in service after December 31, 2021. In the case of any qualified property— For purposes of this subsection— The term “qualified property” means property— The term “qualified property” includes any property if such property— For purposes of this subparagraph, the term “transportation property” means tangible personal property used in the trade or business of transporting persons or property. This subparagraph shall not apply to any property which is described in subparagraph (C). The term “qualified property” includes property— which is purchased and on which such purchaser, at the time of the contract for purchase, has made a nonrefundable deposit of the lesser of— which has— The term “qualified property” shall not include any property to which the alternative depreciation system under subsection (g) applies, determined— An acquisition of property meets the requirements of this clause if— For purposes of subparagraph (A)(ii), if— For purposes of section 280F— In the case of a passenger automobile (as defined in section 280F(d)(5)) which is qualified property, the Secretary shall increase the limitation under section 280F(a)(1)(A)(i) by $8,000. The deduction allowable under paragraph (1) shall be taken into account in computing any recapture amount under section 280F(b)(2). In the case of a passenger automobile acquired by the taxpayer before September 28, 2017, and placed in service by the taxpayer after September 27, 2017, clause (i) shall be applied by substituting for “$8,000”— For purposes of determining alternative minimum taxable income under section 55, the deduction under section 167 for qualified property shall be determined without regard to any adjustment under section 56. For purposes of subparagraph (A)— In the case of any specified plant which is planted or grafted by the taxpayer in the ordinary course of the taxpayer’s farming business (as defined in section 263A(e)(4)) during a taxable year for which the taxpayer has elected the application of this paragraph— For purposes of this paragraph, the term “specified plant” means— An election under this paragraph may be revoked only with the consent of the Secretary. If this paragraph applies to any specified plant, such specified plant shall not be treated as qualified property in the taxable year in which placed in service. Rules similar to the rules of paragraph (2)(G) shall apply for purposes of this paragraph. If a taxpayer makes an election under this paragraph with respect to any class of property for any taxable year, paragraphs (1) and (2)(F) shall not apply to any qualified property in such class placed in service during such taxable year. An election under this paragraph may be revoked only with the consent of the Secretary. The term “qualified property” shall not include— In the case of qualified property placed in service by the taxpayer during the first taxable year ending after January 19, 2025, if the taxpayer elects to have this paragraph apply for such taxable year, paragraph (1)(A) shall be applied— In the case of any specified plant planted or grafted by the taxpayer during the first taxable year ending after January 19, 2025, if the taxpayer elects to have this paragraph apply for such taxable year, paragraph (5)(A)(i) shall be applied by substituting “40 percent” for “100 percent”. Any election under this paragraph shall be made at such time and in such form and manner as the Secretary may prescribe. In the case of any qualified second generation biofuel plant property— The term “qualified second generation biofuel plant property” means property of a character subject to the allowance for depreciation— Such term shall not include any property to which subsection (k) applies. Such term shall not include any property described in subsection (k)(2)(D). Such term shall not include any property any portion of which is financed with the proceeds of any obligation the interest on which is exempt from tax under section 103. If a taxpayer makes an election under this subparagraph with respect to any class of property for any taxable year, this subsection shall not apply to all property in such class placed in service during such taxable year. For purposes of this subsection, rules similar to the rules of subsection (k)(2)(E) shall apply. For purposes of this subsection, rules similar to the rules of subsection (k)(2)(G) shall apply. For purposes of this subsection, rules similar to the rules under section 179(d)(10) shall apply with respect to any qualified second generation biofuel plant property which ceases to be qualified second generation biofuel plant property. Paragraph (1) shall not apply to any qualified second generation biofuel plant property with respect to which an election has been made under section 179C (relating to election to expense certain refineries). In the case of any qualified reuse and recycling property— For purposes of this subsection— The term “qualified reuse and recycling property” means any reuse and recycling property— which is— The term “qualified reuse and recycling property” shall not include any property to which subsection (k) (determined without regard to paragraph (4) thereof) applies. The term “qualified reuse and recycling property” shall not include any property to which the alternative depreciation system under subsection (g) applies, determined without regard to paragraph (7) of subsection (g) (relating to election to have system apply). If a taxpayer makes an election under this clause with respect to any class of property for any taxable year, this subsection shall not apply to all property in such class placed in service during such taxable year. In the case of a taxpayer manufacturing, constructing, or producing property for the taxpayer’s own use, the requirements of clause (iv) of subparagraph (A) shall be treated as met if the taxpayer begins manufacturing, constructing, or producing the property after August 31, 2008. For purposes of determining alternative minimum taxable income under section 55, the deduction under subsection (a) for qualified reuse and recycling property shall be determined under this section without regard to any adjustment under section 56. For purposes of this subsection— The term “reuse and recycling property” means any machinery and equipment (not including buildings or real estate), along with all appurtenances thereto, including software necessary to operate such equipment, which is used exclusively to collect, distribute, or recycle qualified reuse and recyclable materials. Such term does not include rolling stock or other equipment used to transport reuse and recyclable materials. The term “qualified reuse and recyclable materials” means scrap plastic, scrap glass, scrap textiles, scrap rubber, scrap packaging, recovered fiber, scrap ferrous and nonferrous metals, or electronic scrap generated by an individual or business. For purposes of clause (i), the term “electronic scrap” means— The term “recycling” or “recycle” means that process (including sorting) by which worn or superfluous materials are manufactured or processed into specification grade commodities that are suitable for use as a replacement or substitute for virgin materials in manufacturing tangible consumer and commercial products, including packaging. In the case of any qualified production property of a taxpayer making an election under this subsection— For purposes of this subsection— The term “qualified production property” means that portion of any nonresidential real property— In the case of property acquired by the taxpayer during the period described in subparagraph (A)(v), the requirements of clauses (iv) and (v) of subparagraph (A) shall be treated as satisfied if— For purposes of determining under clause (i)— The term “qualified production property” shall not include that portion of any nonresidential real property which is used for offices, administrative services, lodging, parking, sales activities, research activities, software development or engineering activities, or other functions unrelated to the manufacturing, production, or refining of tangible personal property. The term “qualified production activity” means the manufacturing, production, or refining of a qualified product. The activities of any taxpayer do not constitute manufacturing, production, or refining of a qualified product unless the activities of such taxpayer result in a substantial transformation of the property comprising the product. The term “production” shall not include activities other than agricultural production and chemical production. The term “qualified product” means any tangible personal property if such property is not a food or beverage prepared in the same building as a retail establishment in which such property is sold. For purposes of subparagraph (A)(iv), rules similar to the rules of subsection (k)(2)(E)(iii) shall apply. The Secretary may extend the date under subparagraph (A)(vii) with respect to any property that meets the requirements of clauses (i) through (vi) of subparagraph (A) if the Secretary determines that an act of God (as defined in section 101(1) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980) prevents the taxpayer from placing such property in service before such date. For purposes of determining alternative minimum taxable income under section 55, the deduction under section 167 for qualified production property shall be determined under this section without regard to any adjustment under section 56. For purposes of subsections (k)(7), (l)(3)(D), and (m)(2)(B)(iii)— The term “qualified production property” shall not include any property to which the alternative depreciation system under subsection (g) applies. For purposes of subsection (g)(7)(A), qualified production property to which this subsection applies shall be treated as separate nonresidential real property. If, at any time during the 10-year period beginning on the date that any qualified production property is placed in service by the taxpayer, such property ceases to be used as described in paragraph (2)(A)(ii) and is used by the taxpayer in a productive use not described in paragraph (2)(A)(ii)— section 1245 shall be applied— An election under this subsection for any taxable year shall— Any election made under this subsection, and any specification contained in any such election, may not be revoked except with the consent of the Secretary (and the Secretary shall provide such consent only in extraordinary circumstances). The Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this subsection, including regulations or other guidance—