[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 962 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                 S. 962

     To allow a deduction from gross income for year 2000 computer 
                 conversion costs of small businesses.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 5, 1999

  Mr. Leahy (for himself and Mr. Dodd) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
     To allow a deduction from gross income for year 2000 computer 
                 conversion costs of small businesses.

    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 ``Small Business Y2K Compliance Act of 
1999''.

SEC. 2. DEDUCTION FOR COSTS OF MAKING COMPUTERS AND COMPUTER SOFTWARE 
              YEAR 2000 COMPLIANT.

    (a) In General.--
            (1) Property placed in service in 1999.--A taxpayer may 
        elect to treat the cost of a business Y2K asset placed in 
        service during the taxpayer's first taxable year beginning in 
        1999 as an expense which is not chargeable to capital account. 
        The cost so treated shall be allowed as a deduction from gross 
        income for purposes of the Internal Revenue Code of 1986.
            (2) Property placed in service in 1997 or 1998.--A taxpayer 
        may elect to deduct from gross income an amount equal to the 
        unrecovered basis of a business Y2K asset placed in service 
        during the 2 taxable years preceding the first taxable year 
        beginning in 1999 and which is otherwise subject to 
        depreciation under such Code.
    (b) Limitations.--
            (1) In general.--The aggregate amount allowed as a 
        deduction under subsection (a) shall not exceed $40,000.
            (2) Application of business limitations of section 179.--
        Rules similar to the rules of paragraphs (2), (3), and (4) of 
        section 179(b) of such Code shall apply for purposes of this 
        section. For purposes of the preceding sentence, the cost of 
        property to which the limitation in paragraph (2) of such 
        section 179(b) applies shall be the sum of--
                    (A) the amounts elected under subsection (a)(1) 
                with respect to property placed in service during the 
                taxpayer's first taxable year beginning in 1999, and
                    (B) the amounts elected under subsection (a)(2) 
                with respect to the unrecovered basis of business Y2K 
                assets placed in service during the 2 taxable years 
                preceding the first taxable year beginning in 1999.
    (c) Definitions.--For purposes of this section--
            (1) Business y2k asset.--The term ``business Y2K asset'' 
        means an asset acquired by purchase for use in the active 
        conduct of a trade or business which is--
                    (A) any computer acquired to replace a computer 
                where such replacement is necessary because of the year 
                2000 computer conversion problem, and
                    (B) any of the following items which are of a 
                character subject to the allowance for depreciation 
                under such Code:
                            (i) the modification of computer software 
                        to address the year 2000 computer conversion 
                        problem, and
                            (ii) computer software which is year 2000 
                        compliant acquired to replace computer software 
                        which is not so compliant.
            (2) Computer.--The term ``computer'' means a computer or 
        peripheral equipment (as defined by section 168(i)(2)(B)) of 
        such Code.
            (3) Computer software.--The term ``computer software'' has 
        the meaning given to such term by section 167(f) of such Code.
            (4) Unrecovered basis.--The term ``unrecovered basis'' 
        means the adjusted basis of the business Y2K asset determined 
        as of the close of the last taxable year beginning before 
        January 1, 1999.
    (d) Special Rules.--
            (1) In general.--Rules similar to the rules of subsections 
        (c) and (d) (other than paragraph (1) thereof) of section 179 
        of such Code shall apply for purposes of this section.
            (2) Treatment as deduction under section 179.--For purposes 
        of the Internal Revenue Code of 1986, the deduction allowed 
        under this section shall be treated in the same manner as a 
        deduction allowed under section 179 of such Code.
            (3) Ordering rule.--For purposes of section 179 of such 
        Code, subsection (b)(3)(C) of such section shall be applied 
        without regard to the deduction allowed under this section.
                                 <all>