[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 2539 Introduced in Senate (IS)]







110th CONGRESS
  2d Session
                                S. 2539

    To amend the Internal Revenue Code of 1986 to provide a special 
 depreciation allowance for certain property placed in service during 
                             2008 and 2009.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

             January 22 (legislative day, January 3), 2008

  Mr. Specter 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 placed in service during 
                             2008 and 2009.

    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 PLACED 
              IN SERVICE DURING 2008 AND 2009.

    (a) In General.--Subsection (k) of section 168 of the Internal 
Revenue Code of 1986 is amended to read as follows:
    ``(k) 50 Percent Bonus Depreciation for Certain Property.--
            ``(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 50 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 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 water utility property,
                            ``(IV) which is qualified leasehold 
                        improvement property,
                            ``(V) which is qualified restaurant 
                        property (as defined in subsection (e)(7), but 
                        without regard to subparagraph (A) thereof), or
                            ``(VI) which is qualified retail 
                        improvement property,
                            ``(ii) the original use of which commences 
                        with the taxpayer on or after the starting 
                        date,
                            ``(iii) which is--
                                    ``(I) acquired by the taxpayer on 
                                or after the starting date and before 
                                the ending date, but only if no written 
                                binding contract for the acquisition 
                                was in effect before the starting date, 
                                or
                                    ``(II) acquired by the taxpayer 
                                pursuant to a written binding contract 
                                which was entered into on or after the 
                                starting date and before the ending 
                                date, and
                            ``(iv) which is placed in service by the 
                        taxpayer before the ending date, or, in the 
                        case of property described in subparagraph (B) 
                        or (C), before the date that is 1 year after 
                        the ending date.
                    ``(B) Certain property having longer production 
                periods treated as qualified property.--
                            ``(i) In general.--The term `qualified 
                        property' includes any property if such 
                        property--
                                    ``(I) meets the requirements of 
                                clauses (i), (ii), and (iii) of 
                                subparagraph (A),
                                    ``(II) has a recovery period of at 
                                least 10 years or is transportation 
                                property,
                                    ``(III) is subject to section 263A, 
                                and
                                    ``(IV) meets the requirements of 
                                clause (ii) or (iii) of section 
                                263A(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-ending date 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 the ending 
                        date.
                            ``(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.
                            ``(iv) Application of subparagraph.--This 
                        subparagraph shall not apply to any property 
                        which is described in subparagraph (C).
                    ``(C) Certain aircraft.--The term `qualified 
                property' includes property--
                            ``(i) which meets the requirements of 
                        clauses (ii) and (iii) of subparagraph (A),
                            ``(ii) which is an aircraft which is not a 
                        transportation property (as defined in 
                        subparagraph (B)(iii)) other than for 
                        agricultural or firefighting purposes,
                            ``(iii) which is purchased and on which 
                        such purchaser, at the time of the contract for 
                        purchase, has made a nonrefundable deposit of 
                        the lesser of--
                                    ``(I) 10 percent of the cost, or
                                    ``(II) $100,000, and
                            ``(iv) which has--
                                    ``(I) an estimated production 
                                period exceeding 4 months, and
                                    ``(II) a cost exceeding $200,000.
            ``(3) Exceptions.--
                    ``(A) Alternative depreciation property.--This 
                subsection shall not apply to 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).
                    ``(B) Election out.--If a taxpayer makes an 
                election under this subparagraph 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.
            ``(4) Special rules.--
                    ``(A) Self-constructed property.--In the case of a 
                taxpayer manufacturing, constructing, or producing 
                property for the taxpayer's own use, the requirements 
                of paragraph (2)(A)(iii) shall be treated as met if the 
                taxpayer begins manufacturing, constructing, or 
                producing the property after the starting date and 
                before the ending date.
                    ``(B) Sale-leasebacks.--For purposes of 
                subparagraph (C) and paragraph (2)(A)(ii), if property 
                is--
                            ``(i) originally placed in service on or 
                        after the starting date 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).
                    ``(C) Syndication.--For purposes of paragraph 
                (2)(A)(ii), if--
                            ``(i) property is originally placed in 
                        service on or after the starting date by the 
                        lessor of such property,
                            ``(ii) such property is sold by such lessor 
                        or any subsequent purchaser within 3 months 
                        after the date such property was originally 
                        placed in service (or, in the case of multiple 
                        units of property subject to the same lease, 
                        within 3 months after the date the final unit 
                        is placed in service, so long as the period 
                        between the time the first unit is placed in 
                        service and the time the last unit is placed in 
                        service does not exceed 12 months), and
                            ``(iii) the user of such property after the 
                        last sale during such 3-month period remains 
                        the same as when such property was originally 
                        placed in service,
                such property shall be treated as originally placed in 
                service not earlier than the date of such last sale.
                    ``(D) Limitations related to users and related 
                parties.--This subsection shall not apply to any 
                property if--
                            ``(i) the user of such property (as of the 
                        date on which such property is originally 
                        placed in service) or a person which is related 
                        (within the meaning of section 267(b) or 
                        707(b)) to such user or to the taxpayer had a 
                        written binding contract in effect for the 
                        acquisition of such property at any time before 
                        the starting date, or
                            ``(ii) in the case of property 
                        manufactured, constructed, or produced for such 
                        user's or person's own use, the manufacture, 
                        construction, or production of such property 
                        began at any time before the starting date.
            ``(5) Coordination with section 280f.--For purposes of 
        section 280F--
                    ``(A) 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 $7,650.
                    ``(B) Listed property.--The deduction allowable 
                under paragraph (1) shall be taken into account in 
                computing any recapture amount under section 
                280F(b)(2).
            ``(6) 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.
            ``(7) Starting date; ending date.--For purposes of this 
        paragraph--
                    ``(A) Starting date.--The term `starting date' 
                means January 1, 2008.
                    ``(B) Ending date.--The term `ending date' means 
                January 1, 2010.
            ``(8) 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 
                        benefitting a common area, and
                            ``(iv) the internal structural framework of 
                        the building.
                    ``(C) Definitions and special rules.--For purposes 
                of this paragraph--
                            ``(i) Commitment to lease treated as 
                        lease.--A 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.
            ``(9) Qualified retail improvement property.--
                    ``(A) In general.--The term `qualified retail 
                improvement property' means any improvement to an 
                interior portion of a building which is nonresidential 
                real property if--
                            ``(i) such portion is open to the general 
                        public and is used in the trade or business of 
                        selling tangible personal property or services 
                        to the general public, and
                            ``(ii) 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, or
                            ``(iii) the internal structural framework 
                        of the building.''.
    (b) Coordination With Cellulosic Biomass Ethanol Plant Property.--
Paragraph (4) of section 168(l) of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new subparagraph:
                    ``(D) Bonus depreciation property.--Such term shall 
                not include any property to which subsection (k) 
                applies.''.
    (c) Conforming Amendments.--
            (1) Section 168(e)(6) of the Internal Revenue Code of 1986 
        is amended by striking ``section 168(k)(3)'' and inserting 
        ``section 168(k)(8)''.
            (2) Section 168(l) of such Code is amended--
                    (A) in paragraph (4), by striking 
                ``168(k)(2)(D)(i)'' and inserting ``169(k)(3)(A)''.
                    (B) by striking paragraph (5) and inserting the 
                following:
            ``(5) Special rules.--For purposes of this subsection, 
        rules similar to the rules of paragraph (4) of section 168(k) 
        shall apply, except that in applying such paragraph--
                    ``(A) the starting date shall be one day after the 
                date of the enactment of subsection (l),
                    ``(B) the ending date shall be January 1, 2013, and
                    ``(C) `qualified cellulosic biomass ethanol plant 
                property' shall be substituted for `qualified property' 
                in clause (iv) thereof.'', and
                    (C) in paragraph (6), by striking ``168(k)(2)(G)'' 
                and inserting ``168(k)(6)''.
            (3) Section 1400L(b)(2) of such Code is amended--
                    (A) in subparagraph (A)(i)(I), by inserting 
                ``(determined without regard to subclauses (V) and (VI) 
                thereof)'' after ``168(k)(2)(A)(i)'',
                    (B) in subparagraph (C)(ii), by striking 
                ``168(k)(2)(D)(i)'' and inserting ``168(k)(3)(A)'',
                    (C) in subparagraph (C)(iv), by striking 
                ``168(k)(2)(D)(iii)'' and inserting ``168(k)(3)(B)'', 
                and
                    (D) in subparagraph (E), by striking 
                ``168(k)(2)(G)'' and inserting ``168(k)(6)''.
            (4) Section 1400L(c) of such Code is amended--
                    (A) in paragraph (2), by striking ``168(k)(3)'' and 
                inserting ``168(k)(8)'', and
                    (B) in paragraph (5), by striking 
                ``168(k)(2)(D)(iii)'' and inserting ``168(k)(3)(B)''.
            (5) Section 1400N(d) of such Code is amended--
                    (A) in paragraph (2)(A)(i)(I), by inserting 
                ``(determined without regard to subclauses (V) and (VI) 
                thereof)'' after ``168(k)(2)(A)(i)'', and
                    (B) in paragraph (2)(B)(i), by striking 
                ``168(k)(2)(D)(i)'' and inserting ``168(k)(3)(A)'',
                    (C) by striking paragraph (3) and inserting the 
                following:
            ``(5) Special rules.--For purposes of this subsection, 
        rules similar to the rules of paragraph (4) of section 168(k) 
        shall apply, except that in applying such paragraph--
                    ``(A) the starting date shall be August 28, 2005,
                    ``(B) the ending date shall be January 1, 2008, and
                    ``(C) `qualified Gulf Opportunity Zone property' 
                shall be substituted for `qualified property' in clause 
                (iv) thereof.'', and
                    (D) in paragraph (4), by striking ``168(k)(2)(G)'' 
                and inserting ``168(k)(6)'', and
                    (E) in paragraph (6)(B)(ii)(II), by inserting 
                ``(determined without regard to subclauses (V) and (VI) 
                thereof)'' after ``168(k)(2)(A)(i)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2007.
                                 <all>