[Congressional Record Volume 149, Number 64 (Thursday, May 1, 2003)]
[Senate]
[Pages S5665-S5666]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. NICKLES (for himself and Mr. Breaux):
  S. 973. A bill to amend the Internal Revenue Code of 1986 to provide 
a shorter recovery period for the depreciation of certain restaurant 
buildings; to the Committee on Finance.
  Mr. NICKLES. Mr. President, I rise today to introduce legislation to 
provide that restaurant buildings are depreciated over 15 years instead 
of the

[[Page S5666]]

current-law 39 years. My legislation will ensure that the tax laws more 
accurately reflect the true economic life of restaurant buildings.
  Under current law, real estate property and any improvements thereto 
generally must be depreciated over 39 years. However, restaurant 
buildings undergo excessive wear and tear, and are renovated on average 
every 6 to 8 years. Requiring restaurant owners to depreciate these 
renovations over 39 years leads to a mismatch of income and expenses, 
thereby increasing the tax consequence of making such improvements. The 
long depreciation period simply makes no economic sense.
  In recent years, Congress has changed the depreciation schedules for 
competitors of owner-occupied restaurants. For example, convenience 
stores are depreciated over 15 years. In addition, leased properties, 
including leased restaurant space, can take advantage of the temporary 
bonus depreciation incentives contained in the 2001 economic stimulus 
bill.
  I believe that our tax laws should be updated to treat restaurant 
property in a more rational manner. That is why I am introducing 
legislation to reduce the depreciable life of restaurant property from 
39 years to 15 years. My legislation would ensure that all restaurants, 
either leased or owner-occupied, are treated equally. It would also 
ensure a level playing field between restaurants and their competitors. 
By reducing the time period over which all restaurants are depreciated, 
my bill will more accurately align a restaurant's income and expenses. 
According to the National Restaurant Association, enacting this 
legislation would generate an additional $3.7 billion in cash flow for 
restaurants over the next 10 years. This is money that could be 
reinvested and, in turn, generate new jobs.
  I look forward to working with my colleagues to enact my legislation 
that will provide more rational tax-treatment of restaurants on a 
permanent basis. by doing so, we will take an incremental step toward 
modernizing the tax code's outdated depreciation rules.
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