[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 2000 Introduced in Senate (IS)]







107th CONGRESS
  2d Session
                                S. 2000

  To amend the Internal Revenue Code of 1986 to provide for a special 
depreciation allowance for certain property acquired after December 31, 
                   2001, and before January 1, 2004.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 7, 2002

 Ms. Stabenow introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
  To amend the Internal Revenue Code of 1986 to provide for a special 
depreciation allowance for certain property acquired after December 31, 
                   2001, and before January 1, 2004.

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

SECTION 1. SPECIAL DEPRECIATION ALLOWANCE FOR CERTAIN PROPERTY ACQUIRED 
              AFTER DECEMBER 31, 2001, AND BEFORE JANUARY 1, 2004.

    (a) In General.--Section 168 of the Internal Revenue Code of 1986 
(relating to accelerated cost recovery system) is amended by adding at 
the end the following new subsection:
    ``(k) Special Allowance for Certain Property Acquired After 
December 31, 2001, and Before January 1, 2004.--
            ``(1) Additional allowance.--In the case of any qualified 
        property--
                    ``(A) the depreciation deduction provided by 
                section 167(a) for the taxable year in which such 
                property is placed in service shall include an 
                allowance equal to 30 percent of the adjusted basis of 
                the qualified property, and
                    ``(B) the adjusted basis of the qualified property 
                shall be reduced by the amount of such deduction before 
                computing the amount otherwise allowable as a 
                depreciation deduction under this chapter for such 
                taxable year and any subsequent taxable year.
            ``(2) Qualified property.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `qualified property' 
                means property--
                            ``(i)(I) to which this section applies 
                        which has a recovery period of 20 years or less 
                        or which is water utility property,
                            ``(II) which is computer software (as 
                        defined in section 167(f)(1)(B)) for which a 
                        deduction is allowable under section 167(a) 
                        without regard to this subsection,
                            ``(III) which is qualified leasehold 
                        improvement property, or
                            ``(IV) which is eligible for depreciation 
                        under section 167(g),
                            ``(ii) the original use of which commences 
                        with the taxpayer after December 31, 2001,
                            ``(iii) which is--
                                    ``(I) acquired by the taxpayer 
                                after December 31, 2001, and before 
                                January 1, 2004, but only if no written 
                                binding contract for the acquisition 
                                was in effect before January 1, 2002, 
                                or
                                    ``(II) acquired by the taxpayer 
                                pursuant to a written binding contract 
                                which was entered into after December 
                                31, 2001, and before January 1, 2004, 
                                and
                            ``(iv) which is placed in service by the 
                        taxpayer before January 1, 2004, or, in the 
                        case of property described in subparagraph (B), 
                        before January 1, 2005.
                    ``(B) Certain property having longer production 
                periods treated as qualified property.--
                            ``(i) In general.--The term `qualified 
                        property' includes property--
                                    ``(I) which meets the requirements 
                                of clauses (i), (ii), and (iii) of 
                                subparagraph (A),
                                    ``(II) which has a recovery period 
                                of at least 10 years or is 
                                transportation property, and
                                    ``(III) which is subject to section 
                                263A by reason of clause (ii) or (iii) 
                                of subsection (f)(1)(B) thereof.
                            ``(ii) Only pre-january 1, 2004, basis 
                        eligible for additional allowance.--In the case 
                        of property which is qualified property solely 
                        by reason of clause (i), paragraph (1) shall 
                        apply only to the extent of the adjusted basis 
                        thereof attributable to manufacture, 
                        construction, or production before January 1, 
                        2004.
                            ``(iii) Transportation property.--For 
                        purposes of this subparagraph, the term 
                        `transportation property' means tangible 
                        personal property used in the trade or business 
                        of transporting persons or property.
                    ``(C) Exceptions.--
                            ``(i) Alternative depreciation property.--
                        The term `qualified property' shall not include 
                        any property to which the alternative 
                        depreciation system under subsection (g) 
                        applies, determined--
                                    ``(I) without regard to paragraph 
                                (7) of subsection (g) (relating to 
                                election to have system apply), and
                                    ``(II) after application of section 
                                280F(b) (relating to listed property 
                                with limited business use).
                            ``(ii) Election out.--If a taxpayer makes 
                        an election under this clause with respect to 
                        any class of property for any taxable year, 
                        this subsection shall not apply to all property 
                        in such class placed in service during such 
                        taxable year.
                    ``(D) Special rules.--
                            ``(i) Self-constructed property.--In the 
                        case of a taxpayer manufacturing, constructing, 
                        or producing property for the taxpayer's own 
                        use, the requirements of clause (iii) of 
                        subparagraph (A) shall be treated as met if the 
                        taxpayer begins manufacturing, constructing, or 
                        producing the property after December 31, 2001, 
                        and before January 1, 2004.
                            ``(ii) Sale-leasebacks.--For purposes of 
                        subparagraph (A)(ii), if property--
                                    ``(I) is originally placed in 
                                service after December 31, 2001, by a 
                                person, and
                                    ``(II) sold and leased back by such 
                                person within 3 months after the date 
                                such property was originally placed in 
                                service,
                        such property shall be treated as originally 
                        placed in service not earlier than the date on 
                        which such property is used under the leaseback 
                        referred to in subclause (II).
                    ``(E) Coordination with section 280f.--For purposes 
                of section 280F--
                            ``(i) Automobiles.--In the case of a 
                        passenger automobile (as defined in section 
                        280F(d)(5)) which is qualified property, the 
                        Secretary shall increase the limitation under 
                        section 280F(a)(1)(A)(i) by $4,600.
                            ``(ii) Listed property.--The deduction 
                        allowable under paragraph (1) shall be taken 
                        into account in computing any recapture amount 
                        under section 280F(b)(2).
            ``(3) Qualified leasehold improvement property.--For 
        purposes of this subsection--
                    ``(A) In general.--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 subsection 
                        (h)(7))--
                                    ``(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.
                    ``(B) 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.
                    ``(C) Definitions and special rules.--For purposes 
                of this paragraph--
                            ``(i) Binding commitment to lease treated 
                        as lease.--A binding 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 the preceding sentence, 
                        the term `related persons' means--
                                    ``(I) members of an affiliated 
                                group (as defined in section 1504), and
                                    ``(II) 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.
                    ``(D) Improvements made by lessor.--In the case of 
                an improvement made by the person who was the lessor of 
                such improvement when such improvement was placed in 
                service, such improvement shall be qualified leasehold 
                improvement property (if at all) only so long as such 
                improvement is held by such person.''.
    (b) Allowance Against Alternative Minimum Tax.--
            (1) In general.--Section 56(a)(1)(A) of the Internal 
        Revenue Code of 1986 (relating to depreciation adjustment for 
        alternative minimum tax) is amended by adding at the end the 
        following new clause:
                            ``(iii) Additional allowance for certain 
                        property acquired after december 31, 2001, and 
                        before january 1, 2004.--The deduction under 
                        section 168(k) shall be allowed.''
            (2) Conforming amendment.--Clause (i) of section 
        56(a)(1)(A) of the Internal Revenue Code of 1986 is amended by 
        striking ``clause (ii)'' both places it appears and inserting 
        ``clauses (ii) and (iii)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2001, in taxable 
years ending after such date.
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