II 110th CONGRESS 2d Session S. 2540 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 to provide expensing for certain property placed in service during 2008 and 2009.

1.

Expensing for certain property placed in service during 2008 and 2009

(a)

In general

Section 168 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection: (m)

Special allowance for certain qualified property placed in service during 2008 and 2009

(1)

In general

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 100 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, the term qualified property means property— (A)which is 3-year property, 5-year property, or 7-year property, (B)the original use of which commences with the taxpayer on or after the starting date, (C)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 (D)which is placed in service by the taxpayer before the ending date. (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)(C) 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)(B), 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)(B), 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. . (b)

Effective date

The amendment made by this section shall apply to property placed in service after December 31, 2007.