602
HR 2264 PP
(15)(A) Subparagraph (A) of section 6416(a)(4)
is amended by striking ‘‘product’’ each place it ap-
pears and inserting ‘‘gasoline’’.
(B) Subparagraph (B) of section 6416(a)(4) is
amended by striking all that follows ‘‘substituting’’
and inserting ‘‘ ‘any gasoline taxable under section
4081’ for ‘aviation fuel’ therein).’’
(16) The third sentence of section 6416(b)(2) is
amended by inserting ‘‘any tax imposed under section
4081 on diesel fuel and’’ after ‘‘in the case of’’.
(17) Sections 6420(c)(5) and 6421(e)(1) are each
amended by striking ‘‘section 4082(b)’’ and inserting
‘‘section 4083(a)’’.
(18) Section 6421(e)(2)(B)(iv), as added in sub-
title A, is amended
(A) by striking ‘‘4091’’ both places it ap-
pears and inserting ‘‘4081’’, and
(B) by striking ‘‘diesel fuel deficit’’ in
subclause (I) and inserting ‘‘deficit’’.
(19) Subsection (b) of section 6427 is amended—
(A) by striking ‘‘if any fuel’’ in paragraph
(1) and inserting ‘‘if any fuel other than gaso-
line (as defined in section 4083(a))’’, and
(B) by striking ‘‘4091’’ each place it ap-
pears and inserting ‘‘4081’’.
603
HR 2264 PP
(20)(A) Paragraph (1) of section 6427(f) is
amended 
by 
striking 
‘‘, 
4091(c)(1)(A), 
or
4091(d)(1)(A)’’ and inserting ‘‘or 4091(c)(1)(A)’’.
(B) Paragraph (2) of section 6427(f) is amended
to read as follows:
‘‘(2) DEFINITIONS.—For purposes of paragraph
(1)—
‘‘(A) REGULAR TAX RATE.—The term ‘regu-
lar tax rate’ means—
‘‘(i) in the case of gasoline or diesel
fuel, the aggregate rate of tax imposed by
section 4081 determined without regard to
subsection (c) thereof, and
‘‘(ii) in the case of aviation fuel, the
aggregate rate of tax imposed by section
4091 determined without regard to sub-
section (c) thereof.
‘‘(B) INCENTIVE TAX RATE.—The term ‘in-
centive tax rate’ means—
‘‘(i) in the case of gasoline or diesel
fuel, the aggregate rate of tax imposed by
section 4081 with respect to fuel described
in subsection (c)(1) thereof, and
‘‘(ii) in the case of aviation fuel, the
aggregate rate of tax imposed by section
604
HR 2264 PP
4091 with respect to fuel described in sub-
section (c)(1)(B) thereof.’’
(21) Subsection (h) of section 6427 is amended
by striking ‘‘section 4082(b)’’ and inserting ‘‘section
4083(a)(2)’’.
(22) Paragraph (3) of section 6427(i) is amend-
ed—
(A) by striking ‘‘GASOHOL’’ in the heading
and inserting ‘‘ALCOHOL MIXTURE’’, and
(B) by striking ‘‘gasoline used to produce
gasohol (as defined in section 4081(c)(1))’’ in
subparagraph (A) and inserting ‘‘gasoline or die-
sel fuel used to produce a qualified alcohol mix-
ture (as defined in section 4081(c)(3))’’.
(23) The heading of paragraph (4) of section
6427(i) is amended by inserting ‘‘4081 OR’’ before
‘‘4091’’.
(24) Subsection (l) of section 6427, as amended
by subpart A, is amended to read as follows:
‘‘(l) NONTAXABLE USES OF DIESEL FUEL AND AVIA-
TION FUEL.—
‘‘(1) IN GENERAL.—Except as provided in sub-
section (k) and in paragraphs (3) and (4) of this sub-
section, if—
605
HR 2264 PP
‘‘(A) any diesel fuel on which tax has been
imposed by section 4081, or
‘‘(B) any aviation fuel on which tax has
been imposed by section 4091,
is used by any person in a nontaxable use, the Sec-
retary shall pay (without interest) to the ultimate
purchaser of such fuel an amount equal to the aggre-
gate amount of tax imposed on such fuel under sec-
tion 4081 or 4091, as the case may be.
‘‘(2) NONTAXABLE USE.—For purposes of this
subsection, the term ‘nontaxable use’ means—
‘‘(A) in the case of diesel fuel, any use
which is exempt from the tax imposed by section
4041(a)(1) other than by reason of the imposi-
tion of tax on any sale thereof, and
‘‘(B) in the case of aviation fuel, any use
which is exempt from the tax imposed by section
4041(c)(1) other than by reason of the imposition
of tax on any sale thereof.
‘‘(3) NO REFUND OF CERTAIN TAXES ON FUEL
USED IN DIESEL-POWERED TRAINS.—Fuel used in a
diesel-powered train shall be treated as a nontaxable
use for purposes of this section, except that paragraph
(1) shall not apply to so much of the tax imposed by
section 4081 as is attributable to the Leaking Under-
606
HR 2264 PP
ground Storage Tank Trust Fund financing rate and
the deficit reduction rate imposed by such section, un-
less such fuel was used by a State or any political
subdivision thereof.
‘‘(4) NO REFUND OF CERTAIN TAXES ON FUELS
USED IN AIRCRAFT.—In the case of fuel used in any
aircraft (other than as supplies for vessels or aircraft,
within the meaning of section 4221(d)(3)), paragraph
(1) also shall not apply to so much of the tax imposed
by section 4091 as is attributable to the Leaking Un-
derground Storage Tank Trust Fund financing rate
and the deficit reduction rate imposed by such sec-
tion. The preceding sentence shall not apply if such
fuel was used by a State or any political subdivision
thereof.’’
(25) Paragraph (1) of section 9503(b) is amend-
ed—
(A) by striking ‘‘gasoline),’’ in subpara-
graph (E) and inserting ‘‘gasoline and diesel
fuel), and’’,
(B) by striking subparagraph (F), and
(C) by redesignating subparagraph (G) as
subparagraph (F).
607
HR 2264 PP
(26)(A) Subparagraph (B) of section 9503(b)(4)
is amended by striking ‘‘, 4081, and 4091’’ and in-
serting ‘‘and 4081’’.
(B) Subparagraph (C) of section 9503(b)(4), as
amended by subtitle A, is amended by striking
‘‘4091’’ and inserting ‘‘4081’’.
(27) Subparagraph (D) of section 9503(c)(6) is
amended by striking ‘‘, 4081, and 4091’’ and insert-
ing ‘‘and 4081’’.
(28) Paragraph (2) of section 9503(e) is amend-
ed—
(A) by striking ‘‘, 4081, and 4091’’ and in-
serting ‘‘and 4081’’, and
(B) by striking ‘‘, 4081, or 4091’’ and in-
serting ‘‘or 4081’’.
(29) Subsection (b) of section 9508 is amended—
(A) by inserting ‘‘and diesel fuel’’ after
‘‘gasoline’’ in paragraph (2),
(B) by striking ‘‘diesel fuel and’’ in para-
graph (3), and
(C) by striking ‘‘4091’’ in the last sentence,
as added by subtitle A, and inserting ‘‘4081’’.
(30) The table of subparts for part III of sub-
chapter A of chapter 32 is amended by striking the
608
HR 2264 PP
items relating to subparts A and B and inserting the
following new items:
‘‘Subpart A. Gasoline and diesel fuel.
‘‘Subpart B. Aviation fuel.’’
(e) EFFECTIVE DATE.—The amendments made by this
section shall take effect on January 1, 1994.
SEC. 8243. FLOOR STOCKS TAX.
(a) IN GENERAL.—There is hereby imposed a floor
stocks tax on diesel fuel held by any person on January
1, 1994, if—
(1) no tax was imposed on such fuel under sec-
tion 4041(a) or 4091 of the Internal Revenue Code of
1986 as in effect on the day before the date of the en-
actment of this Act, and
(2) tax would have been imposed by section 4081
of such Code, as amended by this Act, on any prior
removal, entry, or sale of such fuel had such section
4081 applied to such fuel for periods before such date
of enactment.
(b) RATE OF TAX.—The rate of the tax imposed by
subsection (a) shall be the amount of tax which would be
imposed under section 4081 of the Internal Revenue Code
of 1986 if there were a taxable sale of such fuel on such
date.
(c) LIABILITY AND PAYMENT OF TAX.—
609
HR 2264 PP
(1) LIABILITY FOR TAX.—A person holding the
diesel fuel on January 1, 1994, to which the tax im-
posed by this section applies shall be liable for such
tax.
(2) METHOD OF PAYMENT.—The tax imposed by
this section shall be paid in such manner as the Sec-
retary shall prescribe.
(3) TIME FOR PAYMENT.—The tax imposed by
this section shall be paid on or before July 31, 1994.
(d) DEFINITIONS.—For purposes of this section—
(1) DIESEL FUEL.—The term ‘‘diesel fuel’’ has
the meaning given such term by section 4083(a) of
such Code.
(2) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of the Treasury or his delegate.
(e) EXCEPTIONS.—
(1) PERSONS
ENTITLED
TO
CREDIT
OR
RE-
FUND.—The tax imposed by this section shall not
apply to fuel held by any person exclusively for any
use to the extent a credit or refund of the tax imposed
by section 4081 is allowable for such use.
(2) COMPLIANCE
WITH
DYEING
REQUIRED.—
Paragraph (1) shall not apply to the holder of any
fuel if the holder of such fuel fails to comply with any
610
HR 2264 PP
requirement imposed by the Secretary with respect to
dyeing.
(f) OTHER LAWS APPLICABLE.—All provisions of law,
including penalties, applicable with respect to the taxes im-
posed by section 4081 of such Code shall, insofar as applica-
ble and not inconsistent with the provisions of this section,
apply with respect to the floor stock taxes imposed by this
section to the same extent as if such taxes were imposed
by such section 4081.
Subpart C—Extension of Motor Fuel Tax Rates;
Increased Deposits Into Highway Trust Fund
SEC. 8244. EXTENSION OF MOTOR FUEL TAX RATES; IN-
CREASED DEPOSITS INTO HIGHWAY TRUST
FUND.
(a) IN GENERAL.—Clause (i) of section 4081(a)(2)(B),
as amended by subpart B, is amended—
(1) by striking ‘‘11.5 cents’’ and inserting ‘‘14
cents’’, and
(2) by striking ‘‘17.5 cents’’ and inserting ‘‘20
cents’’.
(b) CONFORMING AMENDMENTS.—
(1) Subparagraph (A) of section 4081(c)(4), as
so amended, is amended to read as follows:
‘‘(A) IN GENERAL.—In the case of the High-
way Trust Fund financing rate, the otherwise
611
HR 2264 PP
applicable rate for gasoline in a qualified alcohol
mixture is—
‘‘(i) 8.6 cents a gallon for 10 percent
gasohol,
‘‘(ii) 9.842 cents a gallon for 7.7 per-
cent gasohol, and
‘‘(iii) 10.922 cents a gallon for 5.7 per-
cent gasohol.
In the case of a mixture none of the alcohol in which
consists of ethanol, clauses (i), (ii), and (iii) shall be
applied by substituting ‘8.0 cents’ for ‘8.6 cents’, ‘9.38
cents’ for ‘9.842 cents’, and ‘10.58 cents’ for ‘10.922’.’’
(2) Paragraph (5) of section 4081(c), as so
amended, is amended—
(A) by striking ‘‘12.1 cents’’ and inserting
‘‘14.6 cents’’, and
(B) by striking ‘‘11.5 cents’’ and inserting
‘‘14.0’’.
(3) Subparagraph (A) of section 4041(m)(1), as
amended by subpart A, is amended to read as follows:
‘‘(A) under subsection (a)(2) the Highway
Trust Fund financing shall be 7 cents per gallon
and the deficit reduction rate shall be 4.3 cents
per gallon, and’’.
612
HR 2264 PP
(4) Clause (ii) of section 4041(a)(1)(C), as so
amended, is amended—
(A) by striking ‘‘The Highway Trust Fund
financing rate’’ and inserting ‘‘So much of the
Highway Trust Fund financing rate as exceeds
2.5 cents per gallon’’, and
(B) by striking ‘‘HIGHWAY RATE’’ in the
heading and inserting ‘‘PORTION OF HIGHWAY
RATE’’.
(5) Paragraph (4) of section 6427(l), as amended
by subpart B, is amended—
(A) by inserting ‘‘2.5 cents per gallon of the
Highway Trust Fund financing rate and’’ after
‘‘attributable to’’, and
(B) by striking ‘‘DEFICIT REDUCTION TAX’’
in the heading and inserting ‘‘PORTION OF TAX’’.
(6) Subsection (b) of section 9503 is amended by
adding at the end thereof the following new para-
graph:
‘‘(6) RETENTION OF CERTAIN TAXES IN GENERAL
FUND.—
‘‘(A) IN
GENERAL.—There shall not be
taken into account under paragraphs (1) and
(2)—
613
HR 2264 PP
‘‘(i) the tax imposed by section 4081
on diesel fuel used in any train, and
‘‘(ii) so much of the nonhighway rec-
reational fuel taxes (as defined in subsection
(c)(6)(D)) as are attributable to 2.5 cents of
the Highway Trust Fund financing rate.
‘‘(B) TRANSFERS
FROM
HIGHWAY
TRUST
FUND.—For purposes of determining the amount
paid from the Highway Trust Fund under sub-
section (c)(6), the Highway Trust Fund financ-
ing rate shall be treated as being 2.5 cents less
than the otherwise applicable rate.’’
(c) INCREASE IN DEPOSITS IN MASS TRANSIT AC-
COUNT.—Paragraph (2) of section 9503(e) is amended by
striking ‘‘1.5 cents’’ and inserting ‘‘2 cents’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall take effect October 1, 1995, but the amendment
made by subsection (c) shall apply only to amounts attrib-
utable to taxes imposed on or after such date.
PART V—COMPLIANCE PROVISIONS
SEC. 8251. MODIFICATIONS TO SUBSTANTIAL UNDERSTATE-
MENT AND RETURN-PREPARER PENALTIES.
(a) REASONABLE BASIS REQUIRED.—
(1) SUBSTANTIAL UNDERSTATEMENT PENALTY.—
Clause (ii) of section 6662(d)(2)(B) (relating to re-
614
HR 2264 PP
duction for understatement due to position of tax-
payer or disclosed item) is amended to read as fol-
lows:
‘‘(ii) any item if—
‘‘(I) the relevant facts affecting the
item’s tax treatment are adequately
disclosed in the return or in a state-
ment attached to the return, and
‘‘(II) there is a reasonable basis
for the tax treatment of such item by
the taxpayer.’’
(b) EFFECTIVE DATE.—The amendments made by this
section shall apply to returns the due dates for which (deter-
mined without regard to extensions) are after December 31,
1993.
SEC. 8252. RETURNS RELATING TO THE CANCELLATION OF
INDEBTEDNESS BY CERTAIN FINANCIAL EN-
TITIES.
(a) IN GENERAL.—Subpart B of part III of subchapter
A of chapter 61 (relating to information concerning trans-
actions with other persons) is amended by adding at the
end thereof the following new section:
615
HR 2264 PP
‘‘SEC. 6050P. RETURNS RELATING TO THE CANCELLATION
OF INDEBTEDNESS BY CERTAIN FINANCIAL
ENTITIES.
‘‘(a) IN GENERAL.—Any applicable financial entity
which discharges (in whole or in part) the indebtedness of
any person during any calendar year shall make a return
(at such time and in such form as the Secretary may by
regulations prescribe) setting forth—
‘‘(1) the name, address, and TIN of each person
whose indebtedness was discharged during such cal-
endar year,
‘‘(2) the date of the discharge and the amount of
the indebtedness discharged, and
‘‘(3) such other information as the Secretary
may prescribe.
‘‘(b) EXCEPTION.—Subsection (a) shall not apply to
any discharge of less than $600.
‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section—
‘‘(1) APPLICABLE FINANCIAL ENTITY.—The term
‘applicable financial entity’ means—
‘‘(A) any financial institution described in
section 581 or 591(a) and any credit union,
‘‘(B) the Federal Deposit Insurance Cor-
poration, the Resolution Trust Corporation, the
National Credit Union Administration, and any
617
HR 2264 PP
The written statement required under the preceding sen-
tence shall be furnished to the person on or before January
31 of the year following the calendar year for which the
return under subsection (a) was made.’’
(b) PENALTIES.—
(1) RETURNS.—Subparagraph (B) of section
6724(d)(1) is amended by redesignating clauses (viii)
through (xv) as clauses (ix) through (xvi), respec-
tively, and by inserting after clause (vii) the following
new clause:
‘‘(viii) section 6050P (relating to re-
turns relating to the cancellation of indebt-
edness by certain financial entities),’’.
(2) STATEMENTS.—Paragraph (2) of section
6724(d) is amended by redesignating subparagraphs
(P) through (S) as subparagraphs (Q) through (T),
respectively, and by inserting after subparagraph (O)
the following new subparagraph:
‘‘(P) section 6050P(d) (relating to returns
relating to the cancellation of indebtedness by
certain financial entities),’’.
(c) CLERICAL AMENDMENT.—The table of sections for
subpart B of part III of subchapter A of chapter 61 is
618
HR 2264 PP
amended by adding at the end thereof the following new
item:
‘‘Sec. 6050P. Returns relating to the cancellation of indebtedness by
certain financial entities.’’
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to discharges of indebtedness after the
date of the enactment of this Act.
PART VI—TREATMENT OF INTANGIBLES
SEC. 8261. AMORTIZATION OF GOODWILL AND CERTAIN
OTHER INTANGIBLES.
(a) GENERAL RULE.—Part VI of subchapter B of
chapter 1 (relating to itemized deductions for individuals
and corporations) is amended by adding at the end thereof
the following new section:
‘‘SEC. 197. AMORTIZATION OF GOODWILL AND CERTAIN
OTHER INTANGIBLES.
‘‘(a) GENERAL RULE.—A taxpayer shall be entitled to
an amortization deduction with respect to any amortizable
section 197 intangible. The amount of such deduction shall
be determined by amortizing 75 percent of the adjusted
basis (for purposes of determining gain) of such intangible
ratably over the 14-year period beginning with the month
in which such intangible was acquired.
‘‘(b) NO OTHER DEPRECIATION OR AMORTIZATION
DEDUCTION ALLOWABLE.—Except as provided in sub-
section (a), no depreciation or amortization deduction shall
619
HR 2264 PP
be allowable with respect to any amortizable section 197
intangible.
‘‘(c) AMORTIZABLE SECTION 197 INTANGIBLE.—For
purposes of this section—
‘‘(1) IN GENERAL.—Except as otherwise provided
in this section, the term ‘amortizable section 197 in-
tangible’ means any section 197 intangible—
‘‘(A) which is acquired by the taxpayer
after the date of the enactment of this section,
and
‘‘(B) which is held in connection with the
conduct of a trade or business or an activity de-
scribed in section 212.
‘‘(2) EXCLUSION
OF
SELF-CREATED
INTANGI-
BLES, ETC.—The term ‘amortizable section 197 intan-
gible’ shall not include any section 197 intangible—
‘‘(A) which is not described in subpara-
graph (D), (E), or (F) of subsection (d)(1), and
‘‘(B) which is created by the taxpayer.
This paragraph shall not apply if the intangible is
created in connection with a transaction (or series of
related transactions) involving the acquisition of as-
sets constituting a trade or business or substantial
portion thereof.
620
HR 2264 PP
‘‘(3) ANTI-CHURNING RULES.—
‘‘For exclusion of intangibles acquired in certain
transactions, see subsection (f)(9).
‘‘(d) SECTION 197 INTANGIBLE.—For purposes of this
section—
‘‘(1) IN GENERAL.—Except as otherwise provided
in this section, the term ‘section 197 intangible’
means—
‘‘(A) goodwill,
‘‘(B) going concern value,
‘‘(C) any of the following intangible items:
‘‘(i) workforce in place including its
composition and terms and conditions (con-
tractual or otherwise) of its employment,
‘‘(ii) business books and records, oper-
ating systems, or any other information
base (including lists or other information
with respect to current or prospective cus-
tomers),
‘‘(iii) any patent, copyright, formula,
process, design, pattern, knowhow, format,
or other similar item,
‘‘(iv) any customer-based intangible,
‘‘(v) any supplier-based intangible,
and
‘‘(vi) any other similar item,
621
HR 2264 PP
‘‘(D) any license, permit, or other right
granted by a governmental unit or an agency or
instrumentality thereof,
‘‘(E) any covenant not to compete (or other
arrangement to the extent such arrangement has
substantially the same effect as a covenant not to
compete) entered into in connection with an ac-
quisition (directly or indirectly) of an interest in
a trade or business or substantial portion there-
of, and
‘‘(F) any franchise, trademark, or trade
name.
‘‘(2) CUSTOMER-BASED INTANGIBLE.—
‘‘(A) IN
GENERAL.—The term ‘customer-
based intangible’ means—
‘‘(i) composition of market,
‘‘(ii) market share, and
‘‘(iii) any other value resulting from
future provision of goods or services pursu-
ant to relationships (contractual or other-
wise) in the ordinary course of business
with customers.
‘‘(B) SPECIAL RULE FOR FINANCIAL INSTI-
TUTIONS.—In the case of a financial institution,
622
HR 2264 PP
the term ‘customer-based intangible’ includes de-
posit base and similar items.
‘‘(3) SUPPLIER-BASED
INTANGIBLE.—The term
‘supplier-based intangible’ means any value resulting
from future acquisitions of goods or services pursuant
to relationships (contractual or otherwise) in the ordi-
nary course of business with suppliers of goods or
services to be used or sold by the taxpayer.
‘‘(e) EXCEPTIONS.—For purposes of this section, the
term ‘section 197 intangible’ shall not include any of the
following:
‘‘(1) FINANCIAL INTERESTS.—Any interest—
‘‘(A) in a corporation, partnership, trust, or
estate, or
‘‘(B) under an existing futures contract, for-
eign currency contract, notional principal con-
tract, or other similar financial contract.
‘‘(2) LAND.—Any interest in land.
‘‘(3) COMPUTER SOFTWARE.—
‘‘(A) IN GENERAL.—Any—
‘‘(i) computer software which is read-
ily available for purchase by the general
public, is subject to a nonexclusive license,
and has not been substantially modified,
and
623
HR 2264 PP
‘‘(ii) other computer software which is
not acquired in a transaction (or series of
related transactions) involving the acquisi-
tion of assets constituting a trade or busi-
ness or substantial portion thereof.
‘‘(B) COMPUTER SOFTWARE DEFINED.—For
purposes of subparagraph (A), the term ‘com-
puter software’ means any program designed to
cause a computer to perform a desired function.
Such term shall not include any data base or
similar item unless the data base or item is in
the public domain and is incidental to the oper-
ation of otherwise qualifying computer software.
‘‘(4) CERTAIN INTERESTS OR RIGHTS ACQUIRED
SEPARATELY.—Any of the following not acquired in
a transaction (or series of related transactions) in-
volving the acquisition of assets constituting a trade
business or substantial portion thereof:
‘‘(A) Any interest in a film, sound record-
ing, video tape, book, or similar property.
‘‘(B) Any right to receive tangible property
or services under a contract or granted by a gov-
ernmental unit or agency or instrumentality
thereof.
‘‘(C) Any interest in a patent or copyright.
624
HR 2264 PP
‘‘(D) To the extent provided in regulations,
any right under a contract (or granted by a gov-
ernmental unit or an agency or instrumentality
thereof) if such right—
‘‘(i) has a fixed duration of less than
14 years, or
‘‘(ii) is fixed as to amount and, with-
out regard to this section, would be recover-
able under a method similar to the unit-of-
production method.
‘‘(5) INTERESTS UNDER LEASES AND DEBT IN-
STRUMENTS.—Any interest under—
‘‘(A) an existing lease of tangible property,
or
‘‘(B) except as provided in subsection
(d)(2)(B), any existing indebtedness.
‘‘(6) TREATMENT
OF
SPORTS
FRANCHISES.—A
franchise to engage in professional football, basketball,
baseball, or other professional sport, and any item ac-
quired in connection with such a franchise.
‘‘(7) MORTGAGE SERVICING.—Any right to serv-
ice indebtedness which is secured by residential real
property unless such right is acquired in a trans-
action (or series of related transactions) involving the
acquisition of assets (other than rights described in
625
HR 2264 PP
this paragraph) constituting a trade or business or
substantial portion thereof.
‘‘(8) CERTAIN
TRANSACTION
COSTS.—Any fees
for professional services, and any transaction costs,
incurred by parties to a transaction with respect to
which any portion of the gain or loss is not recog-
nized under part III of subchapter C.
‘‘(f) SPECIAL RULES.—
‘‘(1) TREATMENT
OF
CERTAIN
DISPOSITIONS,
ETC.—If there is a disposition of any amortizable sec-
tion 197 intangible acquired in a transaction or se-
ries of related transactions (or any such intangible
becomes worthless) and one or more other amortizable
section 197 intangibles acquired in such transaction
or series of related transactions are retained—
‘‘(A) no loss shall be recognized by reason of
such disposition (or such worthlessness), and
‘‘(B) appropriate adjustments to the ad-
justed bases of such retained intangibles shall be
made for any loss not recognized under subpara-
graph (A).
All persons treated as a single taxpayer under section
41(f)(1) shall be so treated for purposes of the preced-
ing sentence.
‘‘(2) TREATMENT OF CERTAIN TRANSFERS.—
626
HR 2264 PP
‘‘(A) IN GENERAL.—In the case of any sec-
tion 197 intangible transferred in a transaction
described in subparagraph (B), the transferee
shall be treated as the transferor for purposes of
applying this section with respect to so much of
the adjusted basis in the hands of the transferee
as does not exceed the adjusted basis in the hands
of the transferor.
‘‘(B) TRANSACTIONS COVERED.—The trans-
actions described in this subparagraph are—
‘‘(i) any transaction described in sec-
tion 332, 351, 361, 721, 731, 1031, or 1033,
and
‘‘(ii) any transaction between members
of the same affiliated group during any tax-
able year for which a consolidated return is
made by such group.
‘‘(3) TREATMENT OF AMOUNTS PAID PURSUANT
TO COVENANTS NOT TO COMPETE, ETC.—Any amount
paid or incurred pursuant to a covenant or arrange-
ment referred to in subsection (d)(1)(E) shall be treat-
ed as an amount chargeable to capital account.
‘‘(4) TREATMENT OF FRANCHISES, ETC.—
627
HR 2264 PP
‘‘(A) FRANCHISE.—The term ‘franchise’ has
the meaning given to such term by section
1253(b)(1).
‘‘(B) TREATMENT OF RENEWALS.—Any re-
newal of a franchise, trademark, or trade name
(or of a license, a permit, or other right referred
to in subsection (d)(1)(D)) shall be treated as an
acquisition. The preceding sentence shall only
apply with respect to costs incurred in connec-
tion with such renewal.
‘‘(C) CERTAIN AMOUNTS NOT TAKEN INTO
ACCOUNT.—Any 
amount 
to 
which 
section
1253(d)(1) applies shall not be taken into ac-
count under this section.
‘‘(5) TREATMENT
OF
CERTAIN
REINSURANCE
TRANSACTIONS.—In the case of any amortizable sec-
tion 197 intangible resulting from an assumption re-
insurance transaction, the amount taken into account
as the adjusted basis of such intangible under this sec-
tion shall be the excess of—
‘‘(A) the amount paid or incurred by the
acquirer under the assumption reinsurance
transaction, over
628
HR 2264 PP
‘‘(B) the amount required to be capitalized
under section 848 in connection with such trans-
action.
Subsection (b) shall not apply to any amount re-
quired to be capitalized under section 848.
‘‘(6) TREATMENT OF CERTAIN SUBLEASES.—For
purposes of this section, a sublease shall be treated in
the same manner as a lease of the underlying prop-
erty involved.
‘‘(7) TREATMENT AS DEPRECIABLE.—For pur-
poses of this chapter, any amortizable section 197 in-
tangible shall be treated as property which is of a
character subject to the allowance for depreciation
provided in section 167.
‘‘(8) TREATMENT OF CERTAIN INCREMENTS IN
VALUE.—This section shall not apply to any incre-
ment in value if, without regard to this section, such
increment is properly taken into account in determin-
ing the cost of property which is not a section 197 in-
tangible.
‘‘(9) ANTI-CHURNING RULES.—For purposes of
this section—
‘‘(A) IN GENERAL.—The term ‘amortizable
section 197 intangible’ shall not include any sec-
tion 197 intangible which is described in sub-
629
HR 2264 PP
paragraph (A) or (B) of subsection (d)(1) (or for
which depreciation or amortization would not
have been allowable but for this section) and
which is acquired by the taxpayer after the date
of the enactment of this section, if—
‘‘(i) the intangible was held or used at
any time on or after July 25, 1991, and on
or before such date of enactment by the tax-
payer or a related person,
‘‘(ii) the intangible was acquired from
a person who held such intangible at any
time on or after July 25, 1991, and on or
before such date of enactment, and, as part
of the transaction, the user of such intangi-
ble does not change, or
‘‘(iii) the taxpayer grants the right to
use such intangible to a person (or a person
related to such person) who held or used
such intangible at any time on or after
July 25, 1991, and on or before such date
of enactment.
For purposes of this subparagraph, the deter-
mination of whether the user of property changes
as part of a transaction shall be determined in
accordance with regulations prescribed by the