Recovery period for depreciation of certain restaurant buildings

(a)

10-Year recovery period

Subparagraph (D) of section 168(e)(3) of the Internal Revenue Code of 1986 (relating to 10-year property) is amended by striking and at the end of clause (i), by striking the period at the end of clause (ii) and inserting , and, and by adding at the end the following new clause:

(iii)in the case of any non-franchise small business, any section 1250 property which is a retail restaurant facility.

(b)

Definitions

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

(8)

Non-franchise small business

The term non-franchise small business means, with respect to any taxable year, any corporation, partnership, or sole proprietorship which— (A)is not a party to any franchise (within the meaning of section 1253(b)(1)) related to the furnishing of prepared meals which is in effect at any time during such year, and (B)meets the gross receipts test of section 448(c) for the prior taxable year (or, in the case of a sole proprietorship, which would meet such test if such proprietorship were a corporation). (9)

Retail restaurant facility

The term retail restaurant facility means any building if more than 50 percent of the building’s square footage is devoted to preparation of, and seating for on-premises consumption of, prepared meals.

(c)

Alternative system

The table contained in section 168(g)(3)(B) of such Code is amended by inserting after the item relating to subparagraph (D)(ii) the following new item:

(D)(iii)15

(d)

Effective date

The amendments made by this section shall apply to property placed in service, and improvements made, after December 31, 2005.