395 
under this section shall be imposed only on that portion 
of the customs value of such article that is dutiable under 
such heading or subheading. 
‘‘(d) IMPORTS FOR PERSONAL CONSUMPTION.—The 
import tax imposed by this section shall not apply to any 
article entered into the United States duty free under sub-
chapters I through VII of chapter 98 of the Tariff Sched-
ules of the United States. 
‘‘(e) EXCEPTION FOR CERTAIN COMMODITIES AND 
PRODUCTS.—The import tax imposed by this section shall 
not apply to petroleum, petroleum products or such com-
modities or products as the President shall by Executive 
Order determine to be in short supply and vital to national 
security. 
‘‘SEC. 287. IMPOSITION OF TAX ON IMPORT OF SERVICES. 
‘‘(a) GENERAL RULE.—There is hereby imposed a 
tax equal to 11 percent of the cost of all services treated 
as imported into the United States during the taxable year 
of the service recipient. 
‘‘(b) LIABILITY FOR THE TAX.—The tax on the im-
port of services imposed by subsection (a) shall be paid 
by the person who receives the imported services. The tax 
shall be payable as if it were an addition to the business 
tax imposed by section 201. 
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‘‘(c) IMPORTED SERVICES.—For purposes of this sec-
tion, services shall be treated as imported if they are treat-
ed as imported under section 267 (general rules on import 
of services) or section 270 (related to insurance). 
‘‘(d) SPECIAL RULE FOR INSURANCE.—The seller of 
insurance that is treated as imported under section 270 
shall be liable for the collection of the tax imposed by sub-
section (a) on the insurance and for paying such tax to 
the Secretary. The first sentence of subsection (b) (relat-
ing to the person liable for the tax) shall apply to insur-
ance only to the extent that the seller of the insurance 
services does not collect such tax. 
‘‘SEC. 288. GENERAL RULES FOR THE IMPORT TAX. 
‘‘(a) IMPORT TAX.—‘Import tax’ means the tax im-
posed by section 286 on the import of property and the 
tax imposed by section 287 on the import of services. 
‘‘(b) NO PAYROLL TAX CREDIT.—The payroll tax 
credit shall not be allowed against the import tax. 
‘‘Subchapter N—Transition Rules 
‘‘Sec. 290. Amortization of transition basis. 
‘‘Sec. 291. Sales of transition basis property. 
‘‘Sec. 292. Safe harbor leases. 
‘‘Sec. 293. Carryovers. 
‘‘Sec. 294. Section 481 adjustments. 
‘‘SEC. 290. AMORTIZATION OF TRANSITION BASIS. 
‘‘(a) TRANSITION BASIS DEDUCTION.—The ‘transi-
tion basis deduction’ for a taxable year is the sum of the 
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397 
amortization allowance determined under this section for 
the taxable year. 
‘‘(b) AMORTIZATION RULES.—The amortization al-
lowance for each category of amortizable basis shall be de-
termined by amortizing the amortizable basis of such cat-
egory ratably over the amortization period for the category 
beginning January 1, 2007. 
‘‘(c) AMORTIZATION PERIOD.—The amortization pe-
riods shall be determined in accordance with the following 
table: 
‘‘
In the case of: 
The amortization period is: 
Category I basis ....................................................
15 years
Category II basis ...................................................
30 years
Category III basis .................................................
40 years
Unrecovered inventory costs ..................................
5 years
‘‘(d) CATEGORIES.— 
‘‘(1) CATEGORY I BASIS.—‘Category I basis’ is 
the sum of the unrecovered bases as of January 1, 
2007, of all depreciable property placed in service 
prior to January 1, 2007, and the unamortized por-
tion of amortizable costs incurred before January 1, 
2007, if— 
‘‘(A) cost recovery or amortization began 
before January 1, 2007, and 
‘‘(B) the remaining recovery period or am-
ortization period as of January 1, 2007, is less 
than 15 years. 
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398 
‘‘(2) CATEGORY II BASIS.—‘Category II basis’ 
is the sum of the unrecovered bases as of January 
1, 2007, of all depreciable property placed in service 
prior to January 1, 2007, and the unamortized por-
tion of amortizable costs incurred before January 1, 
2007, if— 
‘‘(A) cost recovery or amortization began 
before January 1, 2007, and 
‘‘(B) the remaining recovery period or am-
ortization period as of January 1, 2007, is 15 
years or more. 
‘‘(3) CATEGORY III BASIS.—‘Category III basis’ 
is the sum of the adjusted basis of each asset satis-
fying the following requirements: 
‘‘(A) The asset was placed in service prior 
to January 1, 2007. 
‘‘(B) The asset was used in a business ac-
tivity in 2007. 
‘‘(C) The cost of the asset was capitalized 
and not depreciable or otherwise recoverable 
under the Internal Revenue Code of 1986. 
‘‘(D) The cost of the asset would have con-
stituted deductible expenses under the business 
tax if such cost had been incurred after 2006. 
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399 
‘‘(4) UNRECOVERED INVENTORY COSTS.—‘Un-
recovered inventory costs’ means the cost of goods 
sold (as determined under the Internal Revenue 
Code of 1986) if a business entity sold all of its in-
ventory (including inventory being produced) on the 
effective date of the business tax. 
‘‘(e) RULES OF APPLICATION.— 
‘‘(1) REMAINING RECOVERY PERIOD.— 
‘‘(A) TIME OF MEASURE.—The remaining 
recovery period shall be determined as of De-
cember 31, 2006, and shall include each taxable 
year ending after such date in which a deduc-
tion would have been allowed under the Internal 
Revenue Code of 1986. 
‘‘(B) ACCOUNTING METHOD.—The remain-
ing recovery period shall be determined using 
the cost recovery method and rules applicable 
for determining taxable income under the Inter-
nal Revenue Code of 1986. 
‘‘(2) DEPLETABLE ASSETS.—Under rules pre-
scribed by the Secretary, this section shall apply to 
the remaining cost basis of depletable property and 
to other property for which a cost recovery method 
other than one based on time is used. 
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‘‘SEC. 291. SALES OF TRANSITION BASIS PROPERTY. 
‘‘(a) IN GENERAL.—Except as provided in subsection 
(b), for purposes of determining the tax consequences of 
a sale, retirement, casualty or conversion to personal use 
of an asset whose basis or cost is taken into account under 
section 90, the amount to be amortized shall be treated 
as fully deducted upon the adoption of the business tax. 
‘‘(b) SUBSTANTIAL SALES.— 
‘‘(1) IN GENERAL.—In the case of a substantial 
sale of assets to which the amortization rules of sec-
tion 90 apply, the purchaser and seller may jointly 
elect to have the purchaser assume the amortization 
deductions attributable to such assets, in which 
case— 
‘‘(A) the seller’s taxable receipts from such 
sale shall be reduced by the amount of 
unamortized basis or cost assumed by the pur-
chaser, 
‘‘(B) the purchaser may treat as a cost of 
a business purchase only the portion of the pur-
chase price in excess of the amount of 
unamortized basis or cost assumed, 
‘‘(C) the unamortized basis or cost as-
sumed shall continue to be amortized in the 
manner amortized by the seller. 
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