[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4184 Introduced in House (IH)]







106th CONGRESS
  2d Session
                                H. R. 4184

      To amend the Internal Revenue Code of 1986 to implement the 
 recommendation of the National Taxpayer Advocate that the depreciable 
    life of computer software correspond to its actual useful life.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 5, 2000

 Mr. Cox (for himself, Mr. Dreier, Mr. Davis of Virginia, and Mr. Sam 
Johnson of Texas) 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 implement the 
 recommendation of the National Taxpayer Advocate that the depreciable 
    life of computer software correspond to its actual useful life.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Fairness in Amortization of Software 
Tax Act of 2000''.

SEC. 2. FINDINGS AND PURPOSE.

    (a) Findings.--The Congress finds that:
            (1) Current tax law requires off-the-shelf or downloaded 
        computer software to be depreciated over 3 years, and all other 
        software to be amortized over 15 years; but in reality software 
        must be upgraded constantly.
            (2) The current tax policy discourages businesses from 
        making necessary upgrades to computer software and inhibits 
        their competing effectively in the new economy.
            (3) The National Taxpayer Advocate's Annual Report to 
        Congress for 1999 recommends amending section 179 of the tax 
        code to allow taxpayers to deduct software purchases in the 
        year in which the software is placed in service.
            (4) Allowing taxpayers engaged in a trade or business to 
        expense software will significantly ease the administrative 
        burdens that the current law imposes, since records of software 
        purchases and their depreciable lives will correspond to the 
        software's actual useful life.
            (5) The National Taxpayer Advocate has reported to Congress 
        that as a result of the complexity of existing tax law, the 
        existing 3-year depreciation period is overlooked by many 
        taxpayers. Simplifying deductions for business software would 
        also have the beneficial effect of increasing taxpayer 
        compliance.
    (b) Purpose.--It is the purpose of this Act to--
            (1) provide immediate expensing of software, up to the 
        $20,000 limit now provided in section 179 of the tax code, and
            (2) provide a 3-year depreciation period for all other 
        software, down from the current 15 years.

SEC. 3. ALL COMPUTER SOFTWARE ELIGIBLE FOR EXPENSING.

    (a) In General.--The heading and first sentence of paragraph (1) of 
section 179(d) of the Internal Revenue Code of 1986 (relating to 
section 179 property) are amended to read as follows:
            ``(1) Section 179 property.--For purposes of this section, 
        the term `section 179 property' means property--
                    ``(A) which is--
                            ``(i) tangible property (to which section 
                        168 applies), or
                            ``(ii) computer software (as defined in 
                        section 197(e)(3)(B)) to which section 167 
                        applies,
                    ``(B) which is section 1245 property (as defined in 
                section 1245(a)(3)), and
                    ``(C) which is acquired by purchase for use in the 
                active conduct of a trade or business.''.
    (b) No Computer Software Included as Section 197 Intangible.--
            (1) In general.--Subparagraph (A) of section 197(e)(3) of 
        such Code is amended to read as follows:
                    ``(A) In general.--Any computer software.''
            (2) Conforming amendment.--Subparagraph (B) of section 
        167(f)(1) of such Code is amended by striking ``; except that 
        such term shall not include any such software which is an 
        amortizable section 197 intangible''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2000.
                                 <all>