Common use of 280F Clause in Contracts

280F. 3T Limitations on recovery deductions and the investment tax credit when the business use per- centage of listed property is not greater than 50 percent (tem- porary). (a) In general. Section 280F(b), gen- erally, imposes limitations with re- spect to the amount allowable as an in- vestment tax credit under section 46(a) and the amount allowable as a recov- ery deduction under section 168 in the case of listed property (as defined in § 1.280F–6(b)) if certain business use of the property (referred to as ‘‘qualified business use’’) does not exceed 50 per- cent during a taxable year. Qualified business use generally means use in a trade or business, rather than use in an investment or other activity conducted for the production of income within the meaning of section 212. See § 1.280F–6(d) for the distinction between ‘‘business/ investment use’’ and ‘‘qualified busi- ness use.’’ (b) Limitation on the amount of invest- (1) Denial of investment tax credit hen business use percentage not greater than 50 percent. Listed prop- erty is not treated as section 38 prop- erty to any extent unless the business use percentage (as defined in section 280F(d)(6) and § 1.280F–6(d)(1)) is greater than 50 percent. For example, if a tax- payer uses listed property in a trade or business in the taxable year in which it is placed in service, but the business use percentage is not greater than 50 percent, no investment tax credit is al- lowed for that listed property. If, in the taxable year in which listed property is placed in service, the only business/in- vestment use (as defined in § 1.280F– 6(d)(3)) of that property is qualified business use (as defined in § 1.280F– 6(d)(2)(i)), and the business use percent- age is 55 percent, the investment tax credit is allowed for the 55 percent of the listed property that is treated as section 38 property. The credit allowed is unaffected by any increase in the business use percentage in a subse- quent taxable year.

280F. 3T Limitations on recovery deductions and the investment tax credit when the business use per- centage of listed property is not greater than 50 percent (tem- porary). (a) In general. Section 280F(b), gen- erally, imposes limitations with re- spect to the amount allowable as an in- vestment tax credit under section 46(a) and the amount allowable as a recov- ery deduction under section 168 in the case of listed property (as defined in § 1.280F–6(b)) if certain business use of the property (referred to as ‘‘qualified business use’’) does not exceed 50 per- cent during a taxable year. Qualified business use generally means use in a trade or business, rather than use in an investment or other activity conducted for the production of income within the meaning of section 212. See § 1.280F–6(d) for the distinction between ‘‘business/ investment use’’ and ‘‘qualified busi- ness use.’’ (b) Limitation on the amount of invest-invest- ment tax credit— (1) Denial of investment tax credit hen business use percentage not greater than 50 percent. Listed prop- erty is not treated as section 38 prop- erty to any extent unless the business use percentage (as defined in section 280F(d)(6) and § 1.280F–6(d)(1)) is greater than 50 percent. For example, if a tax- payer uses listed property in a trade or business in the taxable year in which it is placed in service, but the business use percentage is not greater than 50 percent, no investment tax credit is al- lowed for that listed property. If, in the taxable year in which listed property is placed in service, the only business/in- vestment use (as defined in § 1.280F– 6(d)(3)) of that property is qualified business use (as defined in § 1.280F– 6(d)(2)(i)), and the business use percent- age is 55 percent, the investment tax credit is allowed for the 55 percent of the listed property that is treated as section 38 property. The credit allowed is unaffected by any increase in the business use percentage in a subse- quent taxable year.