Permanent extension of 50-percent bonus depreciation

(a)

In general

Subparagraph (B) of section 168(k)(4) of the Internal Revenue Code of 1986 (relating to special allowance for certain property acquired after September 10, 2001, and before January 1, 2005) is amended to read as follows:

(B)

50-percent bonus depreciation property

For purposes of this subsection, the term 50-percent bonus depreciation property means property described in paragraph (2)(A)(i)— (i)the original use of which commences with the taxpayer after May 5, 2003, and (ii)which is acquired by the taxpayer after May 5, 2003, but only if no written binding contract for the acquisition was in effect before May 6, 2003.

(b)

Repeal of termination dates for 30-percent bonus depreciation property

Subparagraph (A) of section 168(k)(2) of such Code is amended by adding and at the end of clause (ii) and by striking clauses (iii) and (iv) and inserting the following new clause:

(iii)which is— (I)acquired by the taxpayer after September 10, 2001, but only if no written binding contract for the acquisition was in effect before September 11, 2001, or (II)acquired by the taxpayer pursuant to a written binding contract which was entered into after September 10, 2001.

(c)

Technical amendments

(1)Paragraph (2) of section 168(k) of such Code is amended by striking subparagraph (B) and by redesignating the succeeding subparagraphs accordingly. (2)Clause (i) of section 168(k)(2)(D) of such Code, as redesignated by paragraph (1), is amended by striking and before January 1, 2005. (3)The subsection heading for section 168(k) of such Code is amended by striking

, and before january 1, 2005

Long-term contract accounting

Section 168(k)(2) of the Internal Revenue Code of 1986 is amended by adding after subparagraph (F), as redesignated by section 1, the following new subparagraph:

(F)

Long-term contract accounting

The percentage of completion method under section 460 shall be applied as if this subsection had not been enacted.

Election to increase minimum tax credit limitation in lieu of bonus depreciation

(a)

In general

Section 53 of the Internal Revenue Code of 1986 (relating to credit for prior year minimum tax liability) is amended by adding at the end of the following new subsection:

(e)

Additional credit in lieu of bonus depreciation

(1)

In general

In the case of a corporation making an election under this subsection for a taxable year, the limitation under subsection (c) shall be increased by an amount equal to the bonus depreciation amount. (2)

Bonus depreciation amount

For purposes of paragraph (1), the bonus depreciation amount for any taxable year is an amount equal to the product of— (A)35 percent, and (B)the excess (if any) of— (i)the aggregate amount of depreciation which would be determined under section 168 for property placed in service during such taxable year if no election under this subsection were made, over (ii)the aggregate allowance for depreciation allowable with respect to such property placed in service for such taxable year. (3)

Election

Section 168(k) (other than paragraph (2)(E) thereof) shall not apply to any property placed in service during a taxable year by a corporation making an election under this subsection for such taxable year. An election under this subsection may only be revoked with the consent of the Secretary. (4)

Credit refundable

The aggregate increase in the credit allowed by this section for any taxable year by reason of this subsection shall for purposes of this title (other than subsection (b)(2) of this section) be treated as a credit allowed to the taxpayer under subpart C.

(b)

Conforming amendment

Subsection (k) of section 168 of such Code is amended by adding at the end the following new paragraph:

(5)

Cross reference

For an election to claim certain minimum tax credits in lieu of the allowance determined under this subsection, see section 53(e).

Effective date

The amendments made by this Act shall apply to taxable years ending after December 31, 2004.