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‘‘(2) to provide for the application of this sec-
tion to any security which is a hedge which cannot
be identified with a specific security, position, right
to income, or liability.’’
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (1) of section 988(d) is amend-
ed—
(A) by striking ‘‘section 1256’’ and insert-
ing ‘‘section 475 or 1256’’, and
(B) by striking ‘‘1092 and 1256’’ and in-
serting ‘‘475, 1092, and 1256’’.
(2) The table of sections for subpart D of part
II of subchapter E of chapter 1 is amended by add-
ing at the end thereof the following new item:
‘‘Sec. 475. Mark to market accounting method for dealers in secu-
rities.’’
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by
this section shall apply to all taxable years ending on
or after December 31, 1994.
(2) CHANGE IN METHOD OF ACCOUNTING.—In
the case of any taxpayer required by this section to
change its method of accounting for any taxable
year—
(A) such change shall be treated as initi-
ated by the taxpayer,
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(B) such change shall be treated as made
with the consent of the Secretary, and
(C) the net amount of the adjustments re-
quired to be taken into account by the taxpayer
under section 481 of the Internal Revenue Code
of 1986 shall be taken into account ratably over
the 4-taxable year period beginning with the
first taxable year ending on or after Decem-
ber 31, 1994.
SEC. 
842. INCREASE 
IN 
RECOVERY 
PERIOD 
FOR
NONRESIDENTIAL REAL PROPERTY.
(a) GENERAL RULE.—Paragraph (1) of section
168(c) (relating to applicable recovery period) is amended
by striking the item relating to nonresidential real prop-
erty and inserting the following:
‘‘Nonresidential real property ..................................................
40 years.’’.
(b) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendment made by subsection (a)
shall apply to property placed in service by the tax-
payer after December 31, 1994.
(2) EXCEPTION.—The amendments made by
this section shall not apply to property placed in
service by the taxpayer before January 1, 1996, if—
(A) the taxpayer or a qualified person en-
tered into a binding written contract to pur-
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chase or construct such property before Decem-
ber 31, 1994, or
(B) the construction of such property was
commenced by or for the taxpayer or a qualified
person before December 31, 1994.
For purposes of this paragraph, the term ‘‘qualified
person’’ means any person who transfers his rights
in such a contract or such property to the taxpayer
but only if the property is not placed in service by
such person before such rights are transferred to the
taxpayer.
SEC. 843. TAXATION OF INCOME OF CONTROLLED FOREIGN
CORPORATIONS 
ATTRIBUTABLE 
TO 
IM-
PORTED PROPERTY.
(a) GENERAL RULE.—Subsection (a) of section 954
(defining foreign base company income) is amended by
striking ‘‘and’’ at the end of paragraph (4), by striking
the period at the end of paragraph (5) and inserting ‘‘,
and’’, and by adding at the end thereof the following new
paragraph:
‘‘(6) imported property income for the taxable
year (determined under subsection (h) and reduced
as provided in subsection (b)(5)).’’
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(b) DEFINITION
OF
IMPORTED
PROPERTY
IN-
COME.—Section 954 is amended by adding at the end
thereof the following new subsection:
‘‘(h) IMPORTED PROPERTY INCOME.—
‘‘(1) IN GENERAL.—For purposes of subsection
(a)(6), the term ‘imported property income’ means
income (whether in the form of profits, commissions,
fees, or otherwise) derived in connection with—
‘‘(A) manufacturing, producing, growing,
or extracting imported property,
‘‘(B) the sale, exchange, or other disposi-
tion of imported property, or
‘‘(C) the lease, rental, or licensing of im-
ported property.
Such term shall not include any foreign oil and gas
extraction income (within the meaning of section
907(c)) or any foreign oil related income (within the
meaning of section 907(c)).
‘‘(2) IMPORTED PROPERTY.—For purposes of
this subsection—
‘‘(A) IN GENERAL.—Except as otherwise
provided in this paragraph, the term ‘imported
property’ means property which is imported
into the United States by the controlled foreign
corporation or a related person.
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‘‘(B) IMPORTED PROPERTY INCLUDES CER-
TAIN
PROPERTY
IMPORTED
BY
UNRELATED
PERSONS.—The term ‘imported property’ in-
cludes any property imported into the United
States by an unrelated person if, when such
property was sold to the unrelated person by
the controlled foreign corporation (or a related
person), it was reasonable to expect that—
‘‘(i) such property would be imported
into the United States, or
‘‘(ii) such property would be used as
a component in other property which would
be imported into the United States.
‘‘(C) EXCEPTION FOR PROPERTY SUBSE-
QUENTLY
EXPORTED.—The term ‘imported
property’ does not include any property which is
imported into the United States and which—
‘‘(i) before substantial use in the
United States, is sold, leased, or rented by
the controlled foreign corporation or a re-
lated person for direct use, consumption,
or disposition outside the United States, or
‘‘(ii) is used by the controlled foreign
corporation or a related person as a com-
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ponent in other property which is so sold,
leased, or rented.
‘‘(3) DEFINITIONS AND SPECIAL RULES.—
‘‘(A) IMPORT.—For purposes of this sub-
section, the term ‘import’ means entering, or
withdrawal from warehouse, for consumption or
use. Such term includes any grant of the right
to use an intangible (as defined in section
936(b)(3)(B)) in the United States.
‘‘(B) UNRELATED PERSON.—For purposes
of this subsection, the term ‘unrelated person’
means any person who is not a related person
with respect to the controlled foreign corpora-
tion.
‘‘(C) COORDINATION WITH FOREIGN BASE
COMPANY SALES INCOME.—For purposes of this
section, the term ‘foreign base company sales
income’ shall not include any imported property
income.’’
(c) SEPARATE APPLICATION
OF LIMITATIONS
ON
FOREIGN TAX CREDIT FOR IMPORTED PROPERTY IN-
COME.—
(1) IN
GENERAL.—Paragraph (1) of section
904(d) (relating to separate application of section
with respect to certain categories of income) is
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amended by striking ‘‘and’’ at the end of subpara-
graph (H), by redesignating subparagraph (I) as
subparagraph (J), and by inserting after subpara-
graph (H) the following new subparagraph:
‘‘(I) imported property income, and’’.
(2) IMPORTED PROPERTY INCOME DEFINED.—
Paragraph (2) of section 904(d) is amended by re-
designating subparagraphs (H) and (I) as subpara-
graphs (I) and (J), respectively, and by inserting
after subparagraph (G) the following new subpara-
graph:
‘‘(H) IMPORTED PROPERTY INCOME.—The
term ‘imported property income’ means any in-
come received or accrued by any person which
is of a kind which would be imported property
income (as defined in section 954(h)).’’
(3) LOOK-THRU RULES TO APPLY.—Subpara-
graph (F) of section 904(d)(3) is amended by strik-
ing ‘‘or (E)’’ and inserting ‘‘(E), or (H)’’.
(d) TECHNICAL AMENDMENTS.—
(1) Clause (iii) of section 952(c)(1)(B) (relating
to certain prior year deficits may be taken into ac-
count) is amended by inserting the following
subclause after subclause (II) (and by redesignating
the following subclauses accordingly):