[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1171 Introduced in House (IH)]







104th CONGRESS
  1st Session
                                H. R. 1171

    To amend the Internal Revenue Code of 1986 to provide a shorter 
recovery period for the depreciation of certain leasehold improvements.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 8, 1995

     Mr. Shaw (for himself, Mr. Rangel, Mr. Crane, Mrs. Johnson of 
 Connecticut, Mr. Thomas, Mr. Hancock, Mr. Neal of Massachusetts, Mr. 
  English of Pennsylvania, Mr. Sam Johnson of Texas, and Mr. Herger) 
 introduced the following bill; which was referred to the Committee on 
                             Ways and Means

_______________________________________________________________________

                                 A BILL


 
    To amend the Internal Revenue Code of 1986 to provide a shorter 
recovery period for the depreciation of certain leasehold improvements.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. RECOVERY PERIOD FOR DEPRECIATION OF CERTAIN LEASEHOLD 
              IMPROVEMENTS.

    (a) In General.--Subsection (c) of section 168 of the Internal 
Revenue Code of 1986 (defining applicable recovery period) is amended 
by adding at the end the following new paragraph:
            ``(3) Qualified leasehold improvement property.--
                    ``(A) In general.--In the case of qualified 
                leasehold improvement property, the applicable recovery 
                period shall be 10 years.
                    ``(B) Qualified leasehold improvement property 
                defined.--For purposes of this paragraph, the term 
                `qualified leasehold improvement property' means any 
                improvement to an interior portion of a building which 
                is nonresidential real property if--
                            ``(i) such improvement is made under or 
                        pursuant to a lease (as defined in paragraph 
                        (7) of subsection 168 (h))--
                                    ``(I) by the lessee (or any 
                                sublessee) of such portion, or
                                    ``(II) by the lessor of such 
                                portion,
                            ``(ii) such portion is to be occupied 
                        exclusively by the lessee (or any sublessee) of 
                        such portion, and
                            ``(iii) such improvement is placed in 
                        service more than 3 years after the date the 
                        building was first placed in service.
                    ``(C) Certain improvements not included.--Such term 
                shall not include any improvement for which the 
                expenditure is attributable to--
                            ``(i) the enlargement of the building,
                            ``(ii) any elevator or escalator,
                            ``(iii) any structural component benefiting 
                        a common area, and
                            ``(iv) the internal structural framework of 
                        the building.
                    ``(D) Definitions and special rules.--For purposes 
                of this paragraph--
                            ``(i) Commitment to lease treated as 
                        lease.--A commitment to enter into a lease 
                        shall be treated as a lease, and the parties to 
                        such commitment shall be treated as lessor and 
                        lessee, respectively.
                            ``(ii) Related persons.--A lease between 
                        related persons shall not be considered a 
                        lease. For purposes of this subparagraph, 
                        related persons means members of an affiliated 
                        group (as defined in section 1504), or persons 
                        having a relationship described in subsection 
                        (b) of section 267 except that, for purposes of 
                        this clause, the phrase `80 percent or more' 
                        shall be substituted for the phrase `more than 
                        50 percent' each place it appears in such 
                        subsection.
                    ``(E) Recovery period also used for minimum tax, 
                etc.--The recovery period determined under this 
                paragraph shall also apply for purposes of subsection 
                (g).''
    (b) Conforming Amendments.--
            (1) Subsection (b) of section 168 of the Internal Revenue 
        Code of 1986 (applying the straight line method to certain 
        property) is amended by adding the following new subparagraph 
        (F):
                    ``(F) Qualified leasehold improvement property.''
    (c) Effective Date.--The amendment made by this section shall apply 
to qualified leasehold improvement property placed in service after the 
date of the enactment of this Act.
                                 <all>