(a) Joint Strike Fighter. The term “Joint Strike Fighter” shall mean the next-generation air combat strike aircraft developed and produced under the Joint Strike Fighter program of the United States government.

(b) Initial Contract or Initial Subcontract. The term “initial contract” shall mean the contract awarded by the United States government to a prime contractor for any phase, including the Engineering and Manufacturing Development Phase, of the Joint Strike Fighter Program to produce the Joint Strike Fighter. The term “initial subcontract” shall mean a contract between a prime contractor and any other contractor, or between two contractors where one of those contractors is under contract with the prime contractor or where the prime contractor or a contractor under contract with the prime contractor has consented to the contract in writing, to produce a product that is designed to be physically attached to or installed in a Joint Strike Fighter under the initial contract.

(c) Joint Strike Fighter Program. The term “Joint Strike Fighter Program” shall mean the multiservice, multinational project conducted by the United States government to develop and produce the next generation of air combat strike aircraft.

(d) Manufactured. The term “manufactured” shall mean the process of developing, converting or conditioning stock in trade or other property properly includible in the inventory of the taxpayer for ultimate use in a Joint Strike Fighter by changing the form, composition, quality, or character of the property, and includes any improvements to property that result in a greater service life or greater functionality than that of the original property. The term “manufactured” shall include the design, engineering and testing activities necessary to develop the property. Property shall be treated as having a greater service life if such property can be used for a longer period than such property could have been used prior to the conversion or conditioning of such property. Property shall be treated as having greater functionality if it has been improved in such a manner that it can be used to perform new or different functions.

(e) Product for Ultimate Use in a Joint Strike Fighter. The term “product for ultimate use in a Joint Strike Fighter” shall mean a product that is properly treated as inventory in the hands of the taxpayer and is designed to be physically installed in or attached to a Joint Strike Fighter. The term “product for ultimate use in a Joint Strike Fighter” shall not include any product that is not designed to form a part of the Joint Strike Fighter. For this purpose, the term “product” shall include any studies, drawings, pilot model or prototype used in connection with the development of the product. For this purpose, the term “inventory” includes any property which is required to be included in the qualified taxpayer's inventory costs under Internal Revenue Code section 263A or that is described in Internal Revenue Code section 1221(1).