[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 1632 Introduced in Senate (IS)]








109th CONGRESS
  1st Session
                                S. 1632

    To amend the Internal Revenue Code of 1986 to provide a special 
depreciation allowance for certain property acquired during the 3-year 
                   period beginning August 29, 2005.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 8, 2005

   Mr. Smith 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 a special 
depreciation allowance for certain property acquired during the 3-year 
                   period beginning August 29, 2005.

    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 AUGUST 28, 2005, AND BEFORE DECEMBER 31, 2008.

    (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:
    ``(l) Special Allowance for Certain Property Acquired After August 
28, 2005, and Before December 31, 2008.--
            ``(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,
                            ``(II) which is water utility property, or
                            ``(III) 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,
                            ``(ii) the original use of which commences 
                        with the taxpayer after August 28, 2005,
                            ``(iii) which is--
                                    ``(I) acquired by the taxpayer 
                                after August 28, 2005, and before 
                                December 31, 2008, but only if no 
                                written binding contract for the 
                                acquisition was in effect before August 
                                29, 2005, or
                                    ``(II) acquired by the taxpayer 
                                pursuant to a written binding contract 
                                which was entered into after August 28, 
                                2005, and before December 31, 2008, and
                            ``(iv) which is placed in service by the 
                        taxpayer before January 1, 2009, or, in the 
                        case of property described in subparagraph (B), 
                        before January 1, 2010.
                    ``(B) Certain property having longer depreciation 
                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,
                                    ``(III) which is subject to section 
                                263A, and
                                    ``(IV) meets the requirements of 
                                clause (ii) or (iii) of subsection 
                                (f)(1)(B) (determined as if such 
                                clauses also apply to property which 
                                has a long useful life (within the 
                                meaning of section 263A(f))).
                            ``(ii) Only pre-december 31, 2008, 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 December 31, 
                        2008.
                            ``(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.
                            ``(iii) Qualified leasehold improvement 
                        property.--The term `qualified property' shall 
                        not include any qualified leasehold improvement 
                        property (as defined in section 168(e)(6)).
                    ``(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 August 28, 2005, 
                        and before December 31, 2008.
                            ``(ii) Sale-leasebacks.--For purposes of 
                        subparagraph (A)(ii), if property--
                                    ``(I) is originally placed in 
                                service after August 28, 2005, 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).
                    ``(F) Deduction allowed in computing minimum tax.--
                For purposes of determining alternative minimum taxable 
                income under section 55, the deduction under subsection 
                (a) for qualified property shall be determined under 
                this section without regard to any adjustment under 
                section 56.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to property placed in service after August 28, 2005, in taxable 
years ending after such date.
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