[Congressional Record Volume 154, Number 9 (Tuesday, January 22, 2008)]
[Senate]
[Pages S97-S105]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SPECTER:
  S. 2539. 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; to the Committee on Finance.
  Mr. SPECTER. I have sought recognition to introduce two bills with a 
view to aiding an emergency economic stimulus package. I am pleased to 
see that the President and the Democratic leaders of the House of 
Representatives and the Senate have stated their intentions to work 
together to provide an economic stimulus package. There is no doubt, 
based upon what is happening in markets around the world, that there is 
an urgent need for such a package.
  It has been well known that the American people have not looked 
kindly on what is happening in Washington, DC. The approval ratings of 
the President are low. The approval ratings of the Congress are low. It 
appears sometimes as if it is a race to the bottom as to who is going 
to be the lowest the fastest.
  But now I think we have an opportunity, in the face of an emergency--
what may accurately be described as a real crisis--to take some 
effective action. It is my hope we will move with dispatch, with all 
due deliberation. We have the finest economic minds at work on the 
issue. There have been a lot of studies, and with our background of 
knowledge we are in a position to move.
  There is no doubt the Congress can move promptly when the Congress 
has the will to do so with the President. Congress and the President 
have the capacity to move promptly. It is only a question of the will. 
I think this is an opportunity for the Federal Government to redeem 
itself in the eyes of the American people by acting.
  I am pleased to see that Federal Reserve Chairman Bernanke has acted 
this morning to drop interest rates by three-quarters of a percentage 
point to 3.5 percent. The Chairman of the Fed does not quite go so far 
as to say we are in a recession, but he has pretty dire news saying:

       The committee took this action in view of a weakening of 
     the economic outlook and increasing downside risks to growth. 
     While strains in short-term funding markets have eased 
     somewhat, broader financial market conditions have continued 
     to deteriorate and credit has tightened further for some 
     businesses and households.

  I think it is really an understatement. I think the credit market is 
a shambles, that if you look at the indicators in terms of borrowing on 
a variety of sources, credit is simply not there.
  Many had urged the Fed to lower the rate to 3 percent. Candidly, that 
would have been my choice. But I think three-quarters of a percent is 
decisive action, and that should be the starting point for an economic 
package from Congress.
  I appreciate the fact that the President has honored the wishes of 
the leaders of the Democrats in Congress to await specifics until there 
has been a meeting and a rejoinder of action. But I think the time has 
come now to be specific.
  The two legislative proposals which I am suggesting today deal with 
depreciation schedules. Currently, there are depreciation schedules on 
the 3-, 5-, and 7-year mark which my legislation would expense--or, 
that is, depreciate--in the year when the expenditure is made. 
Calculating the cost of this legislation over a 10-year period, the 
Joint Committee on Taxation should find that it will not cost a great 
deal on the books.
  The second bill which I am introducing would give a bonus 
depreciation

[[Page S98]]

of 50 percent on items purchased on all depreciation schedules. The 
bonus of 50 percent in 2008 or 50 percent in 2009, if the purchases are 
made in either of these 2 years, will be a considerable stimulus.
  These are not original ideas of mine; these ideas have been proposed 
from a variety of sources, including a commentary article from The Wall 
Street Journal dated January 12, 2008. The ideas were forwarded last 
week to the Secretary of Treasury, Secretary Paulson, and the Chairman 
of the Council of Economic Advisers, Edward Lazear.
  It is my hope we will move promptly with an economic stimulus 
package. It is my hope that while there may be divergent views and many 
different points of view, that the efforts are being focused to the 
maximum extent possible on progrowth ideas.
  There is no doubt we have a very serious problem with credit today. 
What the Federal Reserve has done in lowering the rate three-quarters 
of a percent to 3.5 percent is a significant start, but more needs to 
be done on seeing to it that credit is available in our economy.
  Mr. President, I have sought recognition to introduce two pieces of 
legislation designed to provide immediate economic stimulus for an 
economy hindered by a housing crisis, rising oil prices, unemployment, 
sagging stock markets, and battered consumer confidence. Both bills I 
am introducing today, S. 2539 and S. 2540, provide incentives for firms 
to place new equipment and other assets into use, thus creating new job 
opportunities. Specifically, my proposals allow firms to deduct, or 
expense, a greater share of new equipment in the year placed in 
service. The need for aggressive action is becoming more apparent with 
each passing day.
  There is increasing sentiment that timely action is needed by 
Congress to stimulate growth beyond what the Federal Reserve can 
achieve through lower interest rates. Many experts, including former 
Federal Reserve chairman Alan Greenspan and former Treasury Secretary 
Lawrence H. Summers, have indicated that the U.S. economy is not faring 
well and that a recession may be in our future.
  Meanwhile, Federal Reserve Chairman Ben Bernanke has been hesitant to 
classify the deteriorating economy as being in recession. However, in 
response to an international stock sell-off and the likelihood of a 
sharp drop in America, the Federal Reserve cut its benchmark short-term 
interest rate by \3/4\ of a percentage point to 3.5 percent this 
morning, Tuesday January 22, 2007. In a statement, the Federal Reserve 
said: ``The committee took this action in view of a weakening of the 
economic outlook and increasing downside risks to growth. While strains 
in short-term funding markets have eased somewhat, broader financial 
market conditions have continued to deteriorate and credit has 
tightened further for some businesses and households.''
  Our current economic difficulties were accentuated with the subprime 
mortgage crisis. With interest rates at all-time lows, lenders 
increasingly offered mortgages to those who previously either would not 
have qualified for a mortgage or could not have afforded the payments 
on a mortgage. Many borrowers with adjustable rate, interest-only or 
no-down-payment mortgages have been unable to keep up with their 
monthly mortgage payments that have reset to higher rates. The 
implications of the subprime mortgage crisis have now spread beyond the 
housing sector.
  A mere 18,000 jobs were added in December, falling significantly 
short from the 70,000 that were projected by industry analysts. 
According to the Labor Department's monthly report, the unemployment 
rate also jumped to 5 percent, up from November's 4.7 percent. Our 
economy has not seen that level of unemployment in 2 years. On January 
2, 2007, crude oil prices hit the $100 per barrel milestone for the 
first time. The high cost of energy continues to drive up the cost of 
doing business. This also means a higher cost of living for American 
consumers. The Consumer Price Index increased 0.8 percent in November, 
its largest advance since September 2005. A weak holiday shopping 
season also suggests that consumer confidence is low. According to the 
International Council of Shopping Centers, sales growth for retailers 
was the lowest in 7 years.
  On Friday, January 18, 2008, the President made clear that timely 
action is needed during a televised address with his economic advisors. 
The President outlined a broad framework for an economic stimulus 
package, one that: is big enough to make a difference; is built on 
broad-based tax relief; is temporary and takes effect right away; and 
does not include any tax increases. Specifically, the President called 
for Congress to enact temporary tax relief consisting of rebate checks 
for individuals and investment incentives for businesses. He has tasked 
Treasury Secretary Henry Paulson and Ed Lazear, Chairman of the Council 
on Economic Advisors, to work with Congress on agreeing on details of a 
package.

  Many in Congress are floating ideas for a package to kick-start the 
economy, including boosting spending for extending unemployment 
benefits and providing States with fiscal relief. No matter what the 
final product, it is my belief that any package passed into law should 
include tax incentives to spur immediate business investment. The two 
bills I introduce today are designed to help firms acquire new capital 
and expand their operations. Incentives for investment will lead to job 
creation and help dampen the threat of a recession. In the long-term, 
investment incentives will lead to increased growth. On January 16, 
2008, I wrote to Edward Lazear, Chairman of the President's Council of 
Economic Advisors, urging him to consider these proposals as 
cornerstones of any economic stimulus package. I sent a similar letter 
to Treasury Secretary Hank Paulson on January 18, 2008.
  My first piece of legislation provides 2 years of ``bonus 
depreciation'' for all sectors of the economy. Specifically, firms 
would be allowed to expense 50 percent of the cost of new equipment in 
the first year the asset is put to use. Remaining value would be 
deducted over the course of its useful life by using the Internal 
Revenue Code depreciation schedules. By allowing firms to expense a 
greater share of the value of an asset in the first year, this proposal 
frees up additional resources for firms to hire more workers and expand 
their operations.
  In the long-run, the cost of this proposal is minimal because it 
simply accelerates a tax benefit that is due over time. This proposal 
does not create a new deduction. However, because this proposal will 
affect assets depreciated on schedules longer than 10 years, this bill 
will have a static revenue cost over a 10-year scoring period.
  The second piece of legislation I offer today will allow a variety of 
sectors to take advantage of one-hundred percent up-front expensing for 
new assets that are placed into service during tax years 2008 and 2009. 
Specifically, this legislation would allow all equipment which is 
currently depreciated on the 3-, 5-, and 7-year schedules to be fully 
expensed in year one. Under current law, when a company buys an asset 
that will last longer than 1 year, the company cannot, under most 
circumstances, deduct the entire cost and enjoy an immediate tax 
benefit. Instead, the company must depreciate the cost over the useful 
life of the asset, taking a tax deduction for a part of the cost each 
year. While the company will get to deduct the full cost of the asset, 
delaying this benefit is a disadvantage to the company. By allowing 
firms to deduct the cost of a new asset in year one, expensing spurs 
new investments quickly, which helps to drive immediate job creation.
  The assets that currently depreciate on these schedules are so varied 
that virtually every sector of the economy would be able to take 
advantage of this benefit and expand their businesses. Some of the 
assets and sectors on these schedules include office equipment, 
transportation equipment, agriculture, textiles, furniture 
manufacturing, steel products and high-tech manufacturing. I have 
included at the conclusion of this statement a full list of the asset 
classes impacted by this bill.

  One particular advantage to this legislation is the minimal cost 
impact as viewed by the Joint Committee on Taxation, the Congressional 
unit which investigates the operation and effects of internal revenue 
taxes and the administration of such taxes. Because revenue legislation 
is scored over a 10-year

[[Page S99]]

window and the tax benefit inferred by this bill still occurs within 
that span, quicker, it is my belief that the revenue impact will be 
negligible. This point is of particular importance in the 110th 
Congress because of PAYGO scoring rules that require offsetting revenue 
raising provisions to be included in order to ``pay for'' tax relief.
  A January 12, 2008, op-ed in the Wall Street Journal entitled ``The 
JFK Stimulus Plan,'' by Ernest S. Christian and Gary A. Robbins, 
provides an excellent argument for the approach I have identified with 
these two bills. According to Mr. Christian and Mr. Robbins, ``More 
investment means more productivity--and 80 percent of the net benefit 
from increased productivity goes to labor. Expensing is a no-risk tax 
cut. It worked four times in the 1960s and 1970s. It worked in 1981-
1982 and again in 2002-2004.'' They cite a 2001 analysis conducted by 
the Institute for Policy Innovation: ``Each $1 of tax cut from first-
year expensing produces about $9 of additional GDP growth.'' A copy of 
the op-ed is included for the Record.
  To address a short-run need for economic stimulus, I urge my 
colleagues to support this legislation as Congress begins making 
important decisions on how best to address our slumping economy. These 
bills are supported by the U.S. Chamber of Commerce, the National 
Association of Manufacturers, Americans for Tax Reform, and the 
National Restaurant Association.
  In the long run, it is my belief that Congress should consider taking 
steps to both enhance and make expensing tax benefits permanent. There 
are strong arguments for allowing all businesses to deduct these costs 
fully in the year paid instead of requiring them to collect a benefit 
over a long amount of time. In addition to the issue of providing tax 
incentives for businesses to invest in new growth capital, I believe it 
will also be important in the long-run to provide sustained relief for 
American taxpayers. The President has acknowledged that while passing a 
new growth package is our most pressing economic priority, Congress 
needs to turn next to making sure that tax relief that is now in place 
is not taken away.
  I look forward to working with my colleagues to rapidly enact a 
bipartisan fiscal stimulus package to help our sluggish economy.
  Mr. President I ask unanimous consent that the text of the bills of 
supporting material be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 2539

       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

[[Page S100]]

       ``(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.
                                  ____


                                S. 2540

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 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

[[Page S101]]

     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.

     TABLE OF ASSET CLASSES AND DEPRECIATION SCHEDULES--*INFORMATION ACQUIRED FROM INTERNAL REVENUE SERVICE
----------------------------------------------------------------------------------------------------------------
                                                                                                     General
                                                                                       Class      Depreciation
                 Asset Class                      Description of assets included      Life (in    Schedule (in
                                                                                       years)        years)
----------------------------------------------------------------------------------------------------------------
00.11........................................  Office Furniture, Fixtures, and              10                 7
                                                Equipment: Includes furniture and
                                                fixtures that are not a structural
                                                component of a building. Includes
                                                such assets as desks, files, safes,
                                                and communications equipment. Does
                                                not include communications
                                                equipment that is included in other
                                                classes.
00.12........................................  Information Systems: Includes                 6                 5
                                                Computers and their peripheral
                                                equipment used in administering
                                                normal business transactions and
                                                the maintenance of business
                                                records, their retrieval and
                                                analysis. Information Systems are
                                                defined as:
                                               (1) Computers: A computer is a
                                                programmable electronically
                                                activated device capable of
                                                accepting information, applying
                                                prescribed processes to the
                                                information, and supplying the
                                                results of these processes with or
                                                without human intervention. It
                                                usually consists of a central
                                                processing unit containing
                                                extensive storage, logic
                                                arithmetic, and control
                                                capabilities. Excluded from this
                                                category are adding machines,
                                                electronic desk calculators, etc.,
                                                and other equipment described in
                                                class 00.13.
                                               (2) Peripheral equipment consists of
                                                the auxiliary machines which are
                                                designed to be placed under control
                                                of the central processing unit.
                                                Nonlimiting examples are: Card
                                                readers, card punches, magnetic
                                                tape feeds, high speed printers,
                                                optical character readers, tape
                                                cassettes, mass storage units,
                                                paper tape equipment, keypunches,
                                                data entry devices, teleprinters,
                                                terminals, tape drives, disc
                                                drives, disc files, disc packs,
                                                visual image projector tubes, card
                                                sorters, plotters, and collators.
                                                Peripheral equipment may be used on-
                                                line or off-line. Does not include
                                                equipment that is an integral part
                                                of other capital equipment that is
                                                included in other classes of
                                                economic activity, i.e., computers
                                                used primarily for process or
                                                production control switching,
                                                channeling, and automating
                                                distributive trades and services
                                                such as point of sale (POS)
                                                computer systems. Also does not
                                                include equipment of a kind used
                                                primarily for amusement or
                                                entertainment of the user.
00.13........................................  Data Handling Equipment; except               6                 5
                                                Computers: Includes only
                                                typewriters, calculators, adding
                                                and accounting machines, copiers,
                                                and duplicating equipment..
00.21........................................  Airplanes (airframes and engines),            6                 5
                                                except those used in commercial or
                                                contract carrying of passengers or
                                                freight, and all helicopters
                                                (airframes and engines).
00.22........................................  Automobiles, Taxis..................          3                 5
00.23........................................  Buses...............................          9                 5
00.241.......................................  Light General Purpose Trucks:                 4                 5
                                                Includes trucks for use over the
                                                road (actual weight less than
                                                13,000 pounds).
00.242.......................................  Heavy General purpose Trucks:                 6                 5
                                                Includes heavy general purpose
                                                trucks, concrete ready mix-trucks,
                                                and ore trucks, for use over the
                                                road (actual unloaded weight 13,000
                                                pounds or more).
00.25........................................  Railroad Cars and Locomotives,               15                 7
                                                except those owned by railroad
                                                transportation companies.
00.26........................................  Tractor units for Use Over-The-Road.          4                 3
00.27........................................  Trailers and Trailer-Mounted                  6                 5
                                                Containers.
01.1.........................................  Agriculture: Includes machinery and          10                 7
                                                equipment, grain bins, and fences
                                                but no other land improvements,
                                                that are used in the production of
                                                crops or plants, vines, and trees;
                                                livestock; the operation of farm
                                                dairies, nurseries, greenhouses,
                                                sod farms, mushroom cellars,
                                                cranberry bogs, apiaries and fur
                                                farms; the performance of
                                                agriculture, animal husbandry, and
                                                horticultural services.
01.11........................................  Cotton Ginning Assets...............         12                 7
01.21........................................  Cattle, Breeding or Dairy...........          7                 5
01.221.......................................  Any breeding or work horse that is           10                 7
                                                more than 12 years old at the time
                                                it is placed in service.
01.222.......................................  Any breeding or work horse that is           10                 3
                                                more than 12 years old at the time
                                                it is placed in service.
01.223.......................................  Any race horse that is more than 2           10                 3
                                                years old at the time it is placed
                                                in service.
01.224.......................................  Any race horse that is more than 12          10                 3
                                                years old at the time it is placed
                                                in service and that is neither a
                                                race horse nor a horse described in
                                                class 01.222.
01.225.......................................  Any horse not described in classes           10                 7
                                                01.221, 01.222, 01.223, or 01.224.
01.23........................................  Hogs, Breeding......................          3                 3
01.24........................................  Sheep and Goats, Breeding...........          5                 5
10.0.........................................  Mining: Includes assets used in the          10                 7
                                                mining and quarrying of metallic
                                                and nonmetallic minerals (including
                                                sand, gravel, stone, and clay) and
                                                the milling, beneficiation and
                                                other primary preparation of such
                                                materials.
13.0.........................................  Offshore Drilling: Includes assets           .5                 5
                                                used in offshore drilling for oil
                                                and gas such as floating, self-
                                                propelled and other drilling
                                                vessels, barges, platforms, and
                                                drilling equipment and support
                                                vessels such as tenders, barges,
                                                towboats and crewboats. Excludes
                                                oil and gas production assets.
13.1.........................................  Drilling of Oil and Gas Wells:                6                 5
                                                Includes assets used in the
                                                drilling of onshore oil and gas
                                                wells and the provision of
                                                geophysical and other exploration
                                                services; and the provision of such
                                                oil and gas field services as
                                                chemical treatment, plugging and
                                                abandoning of wells and cementing
                                                or perforating well casings. Does
                                                not include assets used in the
                                                performance of any of these
                                                activities and services by
                                                integrated petroleum and natural
                                                gas producers for their own account.
13.2.........................................  Exploration for and Production of            14                 7
                                                Petroleum and Natural Gas Deposits:
                                                Includes assets used by petroleum
                                                and natural gas producers for
                                                drilling of wells and production of
                                                petroleum and natural gas,
                                                including gathering pipelines and
                                                related storage facilities. Also
                                                includes petroleum and natural gas
                                                offshore transportation facilities
                                                used by producers and others
                                                consisting of platforms (other than
                                                drilling platforms classified in
                                                Class 13.0), compression or pumping
                                                equipment, and gathering and
                                                transmission lines to the first
                                                onshore transshipment facility. The
                                                assets used in the first onshore
                                                transshipment facility are also
                                                included and consist of separation
                                                equipment (used for separation of
                                                natural gas, liquids, and in Class
                                                49.23), and liquid holding or
                                                storage facilities (other than
                                                those classified in Class 49.25).
                                                Does not include support vessels.
15.0.........................................  Construction: Includes assets used            6                 5
                                                in construction by general
                                                building, special trade, heavy and
                                                marine construction contractors,
                                                operative and investment builders,
                                                real estate subdividers and
                                                developers, and others except
                                                railroads.
20.4.........................................  Manufacture of Other Food and                12                 7
                                                Kindred Products: Includes assets
                                                used in the production of foods and
                                                beverages not included in classes
                                                20.1, 20.2 and 20.3.
20.5.........................................  Manufacture of Food and Beverages--           4                 3
                                                Special Handling Devices: Includes
                                                assets defined as specialized
                                                materials handling devices such as
                                                returnable pallets, palletized
                                                containers, and fish processing
                                                equipment including boxes, baskets,
                                                carts, and flaking trays used in
                                                activities as defined in classes
                                                20.1, 20.2, 20.3 and 20.4. Does not
                                                include general purpose small tools
                                                such as wrenches and drills, both
                                                hand and power-driven, and other
                                                general purpose equipment such as
                                                conveyors, transfer equipment, and
                                                materials handling devices.
21.0.........................................  Manufacture of Tobacco and Tobacco           15                 7
                                                Products: Includes assets used in
                                                the production of cigarettes,
                                                cigars, smoking and chewing
                                                tobacco, snuff, and other tobacco
                                                products.
22.1.........................................  Manufacture of Knitted Goods:               7.5                 5
                                                Includes assets used in the
                                                production of knitted and netted
                                                fabrics and lace. Assets used in
                                                yarn preparation, bleaching,
                                                dyeing, printing, and other similar
                                                finishing processes, texturing, and
                                                packaging, are elsewhere classified.
22.2.........................................  Manufacture of Yarn, Thread, and             11                 7
                                                Woven Fabric: Includes assets used
                                                in the production of spun yarns
                                                including the preparing, blending,
                                                spinning, and twisting of fibers
                                                into yarns and threads, the
                                                preparation of yarns such as
                                                twisting, warping, and winding, the
                                                production of covered elastic yarn
                                                and thread, cordage, woven fabric,
                                                tire fabric, braided fabric,
                                                twisted jut for packaging,
                                                mattresses, pads, sheets, and
                                                industrial belts, and the
                                                processing of textile mill waste to
                                                recover fibers, flocks, and
                                                shoddies. Assets used to
                                                manufacture carpets, man-made
                                                fibers, and nonwovens, and assets
                                                used in texturing, bleaching,
                                                dyeing, printing, and other similar
                                                finishing processes, are elsewhere
                                                classified.
22.3.........................................  Manufacture of Carpets and Dyeing,            9                 5
                                                Finishing, and Packaging of Textile
                                                Products and Manufacture of Medical
                                                and Dental Supplies: Includes
                                                assets used in the production of
                                                carpets, rugs, mats, woven carpet
                                                backing, chenille, and other tufted
                                                products, and assets used in the
                                                joining together of backing with
                                                carpet yarn or fabric. Includes
                                                assets used in washing, scouring,
                                                bleaching, dyeing, printing,
                                                drying, and similar finishing
                                                processes applied to textile
                                                fabrics, yarns, threads, and other
                                                textile goods. Includes assets used
                                                in the production and packaging of
                                                textile products, other than
                                                apparel, by creasing, forming,
                                                trimming, cutting, and sewing, such
                                                as the preparation of carpet and
                                                fabric samples, or similar joining
                                                together processes (other than the
                                                production of scrim reinforced
                                                paper products and laminated paper
                                                products) such as the sewing and
                                                folding of hosiery and panty hose,
                                                and the creasing, folding,
                                                trimming, and cutting of fabrics to
                                                produce nonwoven products, such as
                                                disposable diapers and sanitary
                                                products. Also includes assets used
                                                in the production of medical and
                                                dental supplies other than drugs
                                                and medicines. Assets used in the
                                                manufacture of nonwoven carpet
                                                backing, and hard surface floor
                                                covering such as tile, rubber, and
                                                cork, are elsewhere classified.

[[Page S102]]

 
22.4.........................................  Manufacture of Textile Yarns:                 8                 5
                                                Includes assets used in the
                                                processing of yarns to impart bulk
                                                and/or stretch properties to the
                                                yarn. The principal machines
                                                involved are falsetwist, draw, beam-
                                                to-beam, and stuffer box texturing
                                                equipment and related highspeed
                                                twisters and winders. Assets, as
                                                described above, which are used to
                                                further process man-made fibers are
                                                elsewhere classified when located
                                                in the same plant in an integrated
                                                operation with man-made fiber
                                                producing assets. Assets used to
                                                manufacture man-made fibers and
                                                assets used in bleaching, dyeing,
                                                printing, and other similar
                                                finishing processes, are elsewhere
                                                classified.
22.5.........................................  Manufacture of Nonwoven Fabrics:             10                 7
                                                Includes assets used in the
                                                production of nonwoven fabrics,
                                                felt goods including felt hats,
                                                padding, batting, wadding, oakum,
                                                and fillings, from new materials
                                                and from textile mill waste.
                                                Nonwoven fabrics are defined as
                                                fabrics (other than reinforced and
                                                laminated composites consisting of
                                                nonwovens and other products)
                                                manufactured by bonding natural and/
                                                or synthetic fibers and/or
                                                filaments by means of induced
                                                mechanical interlocking, fluid
                                                entanglement, chemical adhesion,
                                                thermal or solvent reaction, or by
                                                combination thereof other than
                                                natural hydration bonding as occurs
                                                with natural cellulose fibers. Such
                                                means include resin bonding, web
                                                bonding, and melt bonding.
                                                Specifically includes assets used
                                                to make flocked and needle punched
                                                products other than carpets and
                                                rugs. Assets, as described above,
                                                which are used to manufacture
                                                nonwovens are elsewhere classified
                                                when located in the same plant in
                                                an integrated operation with man-
                                                made fiber producing assets. Assets
                                                used to manufacture man-made fibers
                                                and assets used in bleaching,
                                                dyeing, printing, and other similar
                                                finishing processes, are elsewhere
                                                classified.
23.0.........................................  Manufacture of Apparel and Other              9                 5
                                                Finished Products: Includes assets
                                                used in the production of clothing
                                                and fabricated textile products by
                                                the cutting and sewing of woven
                                                fabrics, other textile products,
                                                and furs; but does not include
                                                assets used in the manufacture of
                                                apparel from rubber and leather.
24.1.........................................  Cutting of Tiber: Includes logging            6                 5
                                                machinery and equipment and
                                                roadbuilding equipment used by
                                                logging and sawmill operators and
                                                pulp manufacturers for their own
                                                account.
24.2.........................................  Sawing of Dimensional Stock from             10                 7
                                                Logs: Includes machinery and
                                                equipment installed in permanent of
                                                well established sawmills.
24.3.........................................  Sawing of Dimensional Stock from              6                 5
                                                Logs: Includes machinery and
                                                equipment in sawmills characterized
                                                by temporary foundations and a
                                                lack, or minimum amount, of
                                                lumberhandling, drying, and residue
                                                disposal equipment and facilities.
24.4.........................................  Manufacture of Wood Products, and            10                 7
                                                Furniture: Includes assets used in
                                                the production of plywood,
                                                hardboard, flooring, veneers,
                                                furniture, and other wood products,
                                                including the treatment of poles
                                                and timber.
26.1.........................................  Manufacture of Pulp and Paper:               13                 7
                                                Includes assets for pulp materials
                                                handling and storage, pulpmill
                                                processing, bleach processing,
                                                paper and paperboard manufacturing,
                                                and on-line finishing. Includes
                                                pollution control assets and all
                                                land improvements associated with
                                                the factory site or production
                                                process such as effluent ponds and
                                                canals, provided such improvements
                                                are depreciable but does not
                                                include building and structural
                                                components as defined in section
                                                1.4801(e)(1) of the regulations.
                                                Includes steam and chemical
                                                recovery boiler systems, with any
                                                rated capacity, used for the
                                                recovery and regeneration of
                                                chemicals used in manufacturing.
                                                Does not included assets used
                                                either in pulpwood logging, or in
                                                the manufacture of hardboard.
26.2.........................................  Manufacture of Converted Paper,              10                 7
                                                Paperboard, and Pulp Products:
                                                Includes assets used for
                                                modification, or remanufacture of
                                                paper and pulp into converted
                                                products, such as paper coated off
                                                the paper machine, paper bags,
                                                paper boxes, cartons and envelopes.
                                                Does not include assets used for
                                                manufacture of nonwovens that are
                                                elsewhere classified.
27.0.........................................  Printing, Publishing, and Allied             11                 7
                                                Industries: Includes assets used in
                                                printing by one or more processes,
                                                such as letter-press, lithography,
                                                gravure, or screen; the performance
                                                of services for the printing trade,
                                                such as bookbinding, typesetting,
                                                engraving, photo-engraving, and
                                                electrotyping and the publication
                                                of newspapers, books, and
                                                periodicals.
28.0.........................................  Manufacture of Chemicals and Allied         9.5                 5
                                                Products: Includes assets used to
                                                manufacture basic organic and
                                                inorganic chemicals; chemical
                                                products to be used in further
                                                manufacture, such as synthetic
                                                fibers and plastics materials; and
                                                finished chemical products.
                                                Includes assets used to further
                                                process man-made fibers, to
                                                manufacture plastic film, and to
                                                manufacture nonwoven fabrics, when
                                                such assets are located in the same
                                                plant in an integrated operation
                                                with chemical products producing
                                                assets. Also includes assets used
                                                to manufacture photographic
                                                supplies, such as film,
                                                photographic paper, sensitized
                                                photographic paper, and developing
                                                chemicals. Includes all land
                                                improvements associated with plant
                                                site or production processes, such
                                                as effluent ponds and canals,
                                                provided such land improvements are
                                                depreciable but does not include
                                                building and structural components
                                                as defined in section 1.48-1(e) of
                                                the regulations. Does not include
                                                assets used in the manufacture of
                                                finished rubber and plastic
                                                products or in the production of
                                                natural gas products, butane,
                                                propane, and by-products of natural
                                                gas production plants.
30.1.........................................  Manufacture of Rubber Products:              14                 7
                                                Includes assets used for the
                                                production of products from
                                                natural, synthetic, or reclaimed
                                                rubber, gutta percha, balata, or
                                                gutta siak, such as tires tubes,
                                                rubber footwear, mechanical rubber
                                                goods, heels and soles, flooring,
                                                and rubber sundries; and in the
                                                recapping, retreading, and
                                                rebuilding of tires.
30.11........................................  Manufacture of Rubber Products--              4                 3
                                                Special Tools and Devices: Includes
                                                assets defined as special tools,
                                                such as jigs, dies, mandrels,
                                                molds, lasts, patterns, specialty
                                                containers, pallets, shells; and
                                                tire molds, and accessory parts
                                                such as rings and insert plates
                                                used in activities as defined in
                                                class 30.1. Does not include tire
                                                building drums and accessory parts
                                                and general purpose small tools
                                                such as wrenches and drills, both
                                                power and hand-driven, and other
                                                general purpose equipment such as
                                                conveyors and transfer equipment.
30.2.........................................  Manufacture of Finished Plastic              11                 7
                                                Products: Includes assets used in
                                                the manufacture of plastics
                                                products and the molding of primary
                                                plastics for the trade. Does not
                                                include assets used in the
                                                manufacture of basic plastics
                                                materials nor the manufacture of
                                                phonograph records.
30.21........................................  Manufacture of Finished Products--          3.5                 3
                                                Special Tools: Includes assets
                                                defined as special tools, such as
                                                jigs, dies, fixtures, molds,
                                                patterns, gauges, and specialty
                                                transfer and shipping devices, used
                                                in activities as defined in class
                                                30.2. Special tools are
                                                specifically designed for the
                                                production or processing of
                                                particular parts and have no
                                                significant utilitarian value and
                                                cannot be adapted to further or
                                                different use after changes or
                                                improvements are made in the model
                                                design of the particular part
                                                produced by the special tools. Does
                                                not include general purpose small
                                                tools such as wrenches and drills,
                                                both hand and power-driven, and
                                                other general purpose equipment
                                                such as conveyors, transfer
                                                equipment, and materials handling
                                                devices.
31.0.........................................  Manufacture of Leather and Leather           11                 7
                                                Products: Includes assets used in
                                                the tanning, currying, and
                                                finishing of hides and skins; the
                                                processing of fur pelts; and the
                                                manufacture of finished leather
                                                products, such as footwear,
                                                belting, apparel, and luggage.
32.1.........................................  Manufacture of Glass Products:               14                 7
                                                Includes assets used in the
                                                production of flat, blown, or
                                                pressed products of glass, such as
                                                float and window glass, glass
                                                containers, glassware and
                                                fiberglass. Does not include assets
                                                used in the manufacture of lenses.
32.11........................................  Manufacture of Glass Products--             2.5                 3
                                                Special Tools: Includes assets
                                                defined as special tools such as
                                                molds, patterns, pallets, and
                                                specialty transfer and shipping
                                                devices such as steel racks to
                                                transport automotive glass, used in
                                                activities as defined in class
                                                32.1. Special tools are
                                                specifically designed for the
                                                production or processing of
                                                particular parts and have no
                                                significant utilitarian value and
                                                cannot be adapted to further or
                                                different use after changes or
                                                improvements are made in the model
                                                design of the particular part
                                                produced by the special tools. Does
                                                not include general purpose small
                                                tools such as wrenches and drills,
                                                both hand and power-driven, and
                                                other general purpose equipment
                                                such as conveyors, transfer
                                                equipment, and materials handling
                                                devices.
32.3.........................................  Manufacture of Other Stone and Clay          15                 7
                                                Products: Includes assets used in
                                                the manufacture of products from
                                                materials in the form of clay and
                                                stone, such as brick, tile, and
                                                pipe; pottery and related products,
                                                such as vitreous-china, plumbing
                                                fixtures, earthenware and ceramic
                                                insulating materials; and also
                                                includes assets used in manufacture
                                                of concrete and concrete products.
                                                Does not include assets used in any
                                                mining or extraction processes.
33.2.........................................  Manufacture of Primary Nonferrous            14                 7
                                                Metals: Includes assets used in the
                                                smelting, refining, and
                                                electrolysis of nonferrous metals
                                                from ore, pig, or scrap, the
                                                rolling, drawing, and alloying of
                                                nonferrous metals; the manufacture
                                                of castings, forgings, and other
                                                basic products of nonferrous
                                                metals; and the manufacture of
                                                nails, spikes, structural shapes,
                                                tubing, wire, and cable.
33.21........................................  Manufacture of Primary Nonferrous           6.5                 5
                                                Metals--Special Tools: Includes
                                                assets defined as special tools
                                                such as dies, jigs, molds,
                                                patterns, fixtures, gauges and
                                                drawings concerning such special
                                                tools used in the activities as
                                                defined in class 33.2, Manufacture
                                                of Primary Nonferrous Metals.
                                                Special tools are specifically
                                                designed for the production or
                                                processing of particular products
                                                or parts and have no significant
                                                utilitarian value and cannot be
                                                adapted to further or different use
                                                after changes or improvements are
                                                made in the model design of the
                                                particular part produced by the
                                                special tools. Does not include
                                                general purpose small tools such as
                                                wrenches and drills, both hand and
                                                power-driven, and other general
                                                purpose equipment such as
                                                conveyors, transfer equipment, and
                                                materials handling devices. Rolls,
                                                mandrels and refractories are not
                                                included in class 33.21 but are
                                                included in class 33.2.
33.3.........................................  Manufacture of Foundry Products:             14                 7
                                                Includes assets used in the casting
                                                of iron and steel, including
                                                related operations such as molding
                                                and coremaking. Also includes
                                                assets used in the finishing of
                                                castings and patternmaking when
                                                performed at the foundry, all
                                                special tools and related land
                                                improvements.
33.4.........................................  Manufacture of Primary Steel Mill            15                 7
                                                Products: Includes assets used in
                                                the smelting, reduction, and
                                                refining of iron and steel from
                                                ore, pig, or scrap; the rolling,
                                                drawing and alloying of steel; the
                                                manufacture of nails, spikes,
                                                structural shapes, tubing, wire,
                                                and cable. Includes assets used by
                                                steel service centers, ferrous
                                                metal forges, and assets used in
                                                coke production, regardless of
                                                ownership. Also includes related
                                                land improvements and all special
                                                tools used in the above activities.
34.0.........................................  Manufacture of Fabricated Metal              12                 7
                                                Products: Includes assets used in
                                                the production of metal cans,
                                                tinware, fabricated structural
                                                metal products, metal stampings,
                                                and other ferrous and nonferrous
                                                metal and wire products not
                                                elsewhere classified. Does not
                                                include assets used to manufacture
                                                non-electric heating apparatus.
34.01........................................  Manufacture of Fabricated Metal               3                 3
                                                Products--Special Tools: Includes
                                                assets defined as special tools
                                                such as dies, jigs, molds,
                                                patterns, fixtures, gauges, and
                                                returnable containers and drawings
                                                concerning such special tools used
                                                in the activities as defined in
                                                class 34.0. Special tools are
                                                specifically designed for the
                                                production or processing of
                                                particular machine components,
                                                products, or parts, and have no
                                                significant utilitarian value and
                                                cannot be adapted to further or
                                                different use after changes or
                                                improvements are made in the model
                                                design of the particular part
                                                produced by the special tools. Does
                                                not include general small tools
                                                such as wrenches and drills, both
                                                hand and power-driven, and other
                                                general purpose equipment such as
                                                conveyors, transfer equipment, and
                                                materials handling devices.
35.0.........................................  Manufacture of Electrical and Non-           10                 7
                                                Electrical Machinery and Other
                                                Mechanical Products: Includes
                                                assets used to manufacture or
                                                rebuild finished machinery and
                                                equipment and replacement parts
                                                thereof such as machine tools,
                                                general industrial and special
                                                industry machinery, electrical
                                                power generation, transmission, and
                                                distribution systems, space
                                                heating, cooling, and refrigeration
                                                systems, commercial and home
                                                appliances, farm and garden
                                                machinery, construction machinery,
                                                mining and oil field machinery,
                                                internal combustion engines except
                                                those elsewhere classified),
                                                turbines (except those that power
                                                airborne vehicles), batteries,
                                                lamps and lighting fixtures, carbon
                                                and graphite products, and
                                                electromechanical and mechanical
                                                products including business
                                                machines, instruments, watches and
                                                clocks, vending and amusement
                                                machines, photographic equipment,
                                                medical and dental equipment and
                                                appliances, and ophthalmic goods.
                                                Includes assets used by
                                                manufacturers or rebuilders of such
                                                finished machinery and equipment in
                                                activities elsewhere classified
                                                such as the manufacture of
                                                castings, forging, rubber and
                                                plastic products, electronic
                                                subassemblies or other
                                                manufacturing activities if the
                                                interim products are used by the
                                                same manufacturer primarily in the
                                                manufacture, assembly or rebuilding
                                                of such finished machinery and
                                                equipment. Does not include assets
                                                used in mining, assets used in the
                                                manufacture of primary ferrous and
                                                nonferrous metals, assets included
                                                in class 00.11 through 00.4 and
                                                assets elsewhere classified.

[[Page S103]]

 
36.0.........................................  Manufacture of Electronic                     6                 5
                                                Components, Products, and Systems:
                                                Includes assets used in the
                                                manufacture of electronic
                                                communication computation,
                                                instrumentation and control system,
                                                including airborne applications;
                                                also includes assets used in the
                                                manufacture of electronic products
                                                such as frequency and amplitude
                                                modulated transmitters and
                                                receivers, electronic switching
                                                stations, television cameras, video
                                                recorders, record players and tape
                                                recorders, computers and computer
                                                peripheral machines, and electronic
                                                instruments, watches, and clocks;
                                                also includes assets used in the
                                                manufacture of components, provided
                                                their primary use is products and
                                                systems defined above such as
                                                electron tubes, capacitors, coils,
                                                resistors, printed circuit
                                                substrates, switches, harness
                                                cables, lasers, fiber optic
                                                devices, and magnetic media
                                                devices. Specifically excludes
                                                assets used to manufacture
                                                electronic products and components,
                                                photocopiers, typewriters, postage
                                                meters and other electromechanical
                                                and mechanical business machines
                                                and instruments that are elsewhere
                                                classified. Does not include
                                                semiconductor manufacturing
                                                equipment included in class 36.1.
36.1.........................................  Any Semiconductor Manufacturing               5                 5
                                                Equipment.
37.11........................................  Manufacture of Motor Vehicles:               12                 7
                                                Includes assets used in the
                                                manufacture and assembly of
                                                finished automobiles, trucks,
                                                trailers, motor homes, and buses.
                                                Does not include assets used in
                                                mining, printing and publishing,
                                                production of primary metals,
                                                electricity, or steam, or the
                                                manufacture of glass, industrial
                                                chemicals, batteries, or rubber
                                                products, which are classified
                                                other than those excluded above,
                                                where such activities are
                                                incidental to and an integral part
                                                of the manufacture and assembly of
                                                finished motor vehicles such as the
                                                manufacture of parts and
                                                subassemblies of fabricated metal
                                                products, electrical equipment,
                                                textiles, plastics, leather, and
                                                foundry and forging operations.
                                                Does not include any assets not
                                                classified in manufacturing
                                                activity classes, e.g., does not
                                                include any assets classified in
                                                assets guideline classes 00.11
                                                through 00.4. Activities will be
                                                considered incidental to the
                                                manufacture and assembly of
                                                finished motor vehicles only in 75
                                                percent or more of the value of the
                                                products produced under one roof
                                                are used for the manufacture and
                                                assembly of finished motor
                                                vehicles. Parts that are produced
                                                as a normal replacement stock
                                                complement in connection with the
                                                manufacture and assembly of
                                                finished motor vehicles are
                                                considered used for the manufacture
                                                assembly of finished motor
                                                vehicles. Does not include assets
                                                used in the manufacture of
                                                component parts if these assets are
                                                used by taxpayers not engaged in
                                                the assembly of finished motor
                                                vehicles.
37.12........................................  Manufacture of Motor Vehicles--               3                 3
                                                Special Tools: Includes assets
                                                defined as special tools, such as
                                                jigs, dies, fixtures, molds,
                                                patterns, gauges, and specialty
                                                transfer and shipping devices,
                                                owned by manufacturers of finished
                                                motor vehicles and used in
                                                qualified activities as defined in
                                                class 37.11. Special tools are
                                                specifically designed for the
                                                production or processing of
                                                particular motor vehicle components
                                                and have no significant utilitarian
                                                value, and cannot be adapted to
                                                further or different use, after
                                                changes or improvement are made in
                                                the model design of the particular
                                                part produced by the special tools.
                                                Does not include general purpose
                                                small tools such as wrenches and
                                                drills, both hand and power-driven,
                                                and other general purpose equipment
                                                such as conveyors, transfer
                                                equipment, and materials handling
                                                devices.
37.2.........................................  Manufacture of Aerospace Products:           10                 7
                                                Includes assets used in the
                                                manufacture and assembly of
                                                airborne vehicles and their
                                                component parts including
                                                hydraulic, pneumatic, electrical,
                                                and mechanical systems. Does not
                                                include assets used in the
                                                production of electronic airborne
                                                detection, guidance, control,
                                                radiation, computation, test
                                                navigation, and communication
                                                equipment or the components thereof.
37.31........................................  Ship and Boat Building Machinery and         12                 7
                                                Equipment: Includes assets used in
                                                the manufacture and repair of
                                                ships, boats, caissons, marine
                                                drilling rigs, and special
                                                fabrications not included in assets
                                                classes 37.32 and 37.33.
                                                Specifically includes all
                                                manufacturing and repairing
                                                machinery and equipment, including
                                                machinery and equipment used in the
                                                operation of assets included in
                                                assets class 37.32. Excludes
                                                building and their structural
                                                components.
37.33........................................  Ship and Boat Building--Special             6.5                 5
                                                Tools: Includes assets defined as
                                                special tools such as dies, jigs,
                                                molds, patterns fixtures, gauges,
                                                and drawings concerning such
                                                special tools used in the
                                                activities defined in classes 37.31
                                                and 37.32. Special tools are
                                                specifically designed for the
                                                production or processing particular
                                                machine components, products or
                                                parts, and have no significant
                                                utilitarian value and cannot be
                                                adapted to further or different use
                                                after changes or improvements are
                                                made in the model design of the
                                                particular part produced by the
                                                special tools. Does not include
                                                general purpose small tools such as
                                                wrenches and drills, both hand and
                                                power-driven, and other general
                                                purpose equipment such as
                                                conveyors, transfer equipment, and
                                                materials handling devices.
37.41........................................  Manufacture of Locomotives: Includes       11.5                 7
                                                assets used in building or
                                                rebuilding railroad locomotives
                                                (including mining and industrial
                                                locomotives). Does not include
                                                assets of railroad transportation
                                                companies or assets of companies
                                                which manufacture components of
                                                locomotives but do not manufacture
                                                finished locomotives.
37.42........................................  Manufacture of Railroad Cars:                12                 7
                                                Includes assets used in building or
                                                rebuilding railroad freight or
                                                passenger cars (including rail
                                                transit cars). Does not include
                                                assets of railroad transportation
                                                companies or assets of companies
                                                which manufacture components of
                                                railroad cars but do not
                                                manufacture finished railroad cars.
39.0.........................................  Manufacture of Athletic, Jewelry,            12                 7
                                                and Other Goods: Includes assets
                                                used in the production of jewelry;
                                                musical instruments; toys and
                                                sporting goods; motion picture and
                                                television films and tapes; and
                                                pens, pencils, office and art
                                                supplies, brooms, brushes, caskets,
                                                etc.
                                               Railroad Transportation: Classes
                                                with the prefix 40 include the
                                                assets identified below that are
                                                used in the commercial and contract
                                                carrying of passengers and freight
                                                by rail. Assets of electrified
                                                railroads will be classified in a
                                                manner corresponding to that set
                                                forth below for railroads not
                                                independently operated as electric
                                                lines. Excludes the assets included
                                                in classes with the prefix
                                                beginning 00.1 and 00.2 above, and
                                                also excludes and non-depreciable
                                                assets included in Interstate
                                                Commerce Commission accounts
                                                enumerated for this class.
40.1.........................................  Railroad Machinery and Equipment:            14                 7
                                                Includes assets classified in the
                                                following Interstate Commerce
                                                Commission accounts:
                                               Roadway accounts:
                                               (16) Station and office buildings
                                                (freight handling machinery and
                                                equipment only)
                                               (25) TOFC/COFC terminals (freight
                                                handling machinery and equipment
                                                only)
                                               (26) Communication systems
                                               (27) Signals and interlockers
                                               (37) Roadway machines
                                               (44) Shop machinery
                                               Equipment accounts:
                                               (52) Locomotives
                                               (53) Freight train cars
                                               (54) Passenger train cars
                                               (57)Work equipment
40.4.........................................  Railroad Track......................         10                 7
41.0.........................................  Motor Transport--Passengers:                  8                 5
                                                Includes assets used in the
                                                commercial and contract carrying of
                                                freight by road, except the
                                                transportation assets included in
                                                classes with the prefix 00.2.
45.0.........................................  Air Transport: Includes assets               12                 7
                                                (except helicopters) used in
                                                commercial and contract carrying of
                                                passengers and freight by air. For
                                                purposes of section 1.167(a)-
                                                11(d)(2)(iv)(a) of the regulations,
                                                expenditures for ``repair,
                                                maintenance, rehabilitation, or
                                                improvement,'' shall consist of
                                                direct maintenance expenses
                                                (irrespective of airworthiness
                                                provisions or charges) as defined
                                                by Civil Aeronautics Board uniform
                                                accounts 5200, maintenance burden
                                                (exclusive of expenses pertaining
                                                to maintenance buildings and
                                                improvements) as defined by Civil
                                                Aeronautics Board accounts 5300,
                                                and expenditures which are not
                                                ``excluded additions'' as defined
                                                in section 1.167(a)-11(d)(2)(vi) of
                                                the regulations and which would be
                                                charged to property and equipment
                                                accounts in the Civil Aeronautics
                                                Board uniform system of accounts.
45.1.........................................  Air Transport (restricted): Includes          6                 5
                                                each assets described in the
                                                description of class 45.0 which was
                                                held by the taxpayer on April 15,
                                                1976, or is acquired by the
                                                taxpayer pursuant to a contract
                                                which was, on April 15, 1976, and
                                                at all times thereafter, binding on
                                                the taxpayer. This criterion of
                                                classification based on binding
                                                contact concept is to be applied in
                                                the same manner as under the
                                                general rules expressed in section
                                                49(b)(1), (4), (5) and (8) of the
                                                Code (as in effect prior to its
                                                repeal by the Revenue Act of 1978,
                                                section 312(c)(1), (d), 1978-3 C.B.
                                                1, 60).
48.121.......................................  Computer-based Telephone Central            9.5                 5
                                                Office Switching Equipment:
                                                Includes equipment whose function
                                                are those of a computer of
                                                peripheral equipment (as defined in
                                                section 168(i)(2)(B) of the Code)
                                                used in its capacity as telephone
                                                central office equipment. Does not
                                                include private exchange (PBX)
                                                equipment.
48.13........................................  Telephone Station Equipment:                 10                 7
                                                Includes such station apparatus and
                                                connections and teletypewriters,
                                                telephones, booths, private
                                                exchanges, and comparable equipment
                                                as defined in Federal Communication
                                                Commission Part 31 Account Nos 231,
                                                232, and 234.
48.2.........................................  Radio and Television Broadcastings:           6                 5
                                                Includes assets used in radio and
                                                television broadcasting, except
                                                transmitting towers..
                                               Telegraph, Ocean Cable, and
                                                Satellite Communications (TOCSC)
                                                includes communications-related
                                                assets used to provide domestic and
                                                international radio-telegraph, wire-
                                                telegraph, ocean-cable, and
                                                satellite communications services;
                                                also includes related land
                                                improvements. If property described
                                                in Classes 48.31-48.45 is
                                                comparable to telephone
                                                distribution plant described in
                                                Class 48.14 and used for 2-way
                                                exchange of voice and data
                                                communication which is the
                                                equivalent of telephone
                                                communication, such property is
                                                assigned a class life of 24 years
                                                under this revenue procedure.
                                                Comparable equipment does not
                                                include cable television equipment
                                                used primarily for 1-way
                                                communication.
48.32........................................  TOCSC--High Frequency Radio and              13                 7
                                                Microwave Systems: Includes assets
                                                such as transmitters and receivers,
                                                antenna supporting structure,
                                                antennas, transmission lines from
                                                equipment to antenna, transmitter
                                                cooling systems, and control and
                                                amplification equipment. Does not
                                                include cable and long-line systems.
48.35........................................  TOCSC--Computerized Switching,             10.5                 7
                                                Channeling, and Associated Control
                                                Equipment: Includes central office
                                                switching computers, interfacing
                                                computers, other associated
                                                specialized control equipment, and
                                                site improvements.
48.36........................................  TOCSC--Satellite Ground Segment              10                 7
                                                Property: Includes assets such as
                                                fixed earth station equipment,
                                                antennas, satellite communications
                                                equipment, and interface equipment
                                                used in satellite communications.
                                                Does not include general purpose
                                                equipment or equipment used in
                                                satellite space segment property.
48.37........................................  TOCSC--Satellite Space Segment                8                 5
                                                Property: Includes satellites and
                                                equipment used for telemetry,
                                                tracking, control, and monitoring
                                                when used in satellite
                                                communications.
48.38........................................  TOCSC--Equipment Installed on                10                 7
                                                Customer's Premises: Includes
                                                assets installed on customer's
                                                premises, such as computers,
                                                terminal equipment, power
                                                generation and distribution
                                                systems, private switching center,
                                                teleprinters, facsimile equipment
                                                and other associated and related
                                                equipment.
48.39........................................  TOCSC--Support and Service                 13.5                 7
                                                Equipment: Includes assets used to
                                                support but not engage in
                                                communications. Includes store,
                                                warehouse and shop tools and test
                                                and laboratory assets.
                                               Cable Television (CATV): Includes
                                                communications-related assets used
                                                to provide cable television
                                                community antenna television
                                                services. Does not include assets
                                                used to provide subscribers with
                                                two-way communications services.
48.41........................................  CATV--Headend: Includes assets such          11                 7
                                                as towers, antennas, preamplifiers,
                                                converters, modulation equipment,
                                                and program non-duplication
                                                systems. Does not include headend
                                                building and program origination
                                                assets.
48.42........................................  CATV--Subscriber Connection and              10                 7
                                                Distribution Systems: Includes
                                                assets such as trunk and feeder
                                                cable, connecting hardware,
                                                amplifiers, power equipment,
                                                passive devices, direction taps,
                                                pedestals, pressure taps, drop
                                                cables, matching transformers,
                                                multiple set connector equipment,
                                                and converters.
48.43........................................  CATV--Program Origination: Includes           9                 5
                                                assets such as cameras, film
                                                chains, video tape recorders,
                                                lighting, and remote location
                                                equipment excluding vehicles. Does
                                                not include buildings and their
                                                structural components.
48.44........................................  CATV--Service and Test: Includes            8.5                 5
                                                assets such as oscilloscopes, field
                                                strength meters, spectrum
                                                analyzers, and cable testing
                                                equipment, but does not include
                                                vehicles.

[[Page S104]]

 
48.45........................................  CATV--Microwave Systems: Includes           9.5                 5
                                                assets such as towers, antennas,
                                                transmitting and receiving
                                                equipment, and broadband microwave
                                                assets used in the provision of
                                                cable television services. Does not
                                                include assets used in the
                                                provision of common carrier
                                                services.
49.121.......................................  Electric Utility Nuclear Fuel                 5                 5
                                                Assemblies: Includes initial core
                                                and replacement core nuclear fuel
                                                assemblies (i.e., the composite of
                                                fabricated nuclear fuel and
                                                container) when used in a boiling
                                                water, pressurized water, or high
                                                temperature gas reactor used in the
                                                production of electricity. Does not
                                                include nuclear fuel assemblies
                                                used in breader reactors.
49.222.......................................  Gas Utility Substitute Natural Gas           14                 7
                                                (SNG) Production Plant (naphtha or
                                                lighter hydrocarbon feedstocks):
                                                Includes assets used in the
                                                catalytic conversion of feedstocks
                                                or naphtha or lighter hydrocarbons
                                                to a gaseous fuel which is
                                                completely interchangeable with
                                                domestic natural gas.
49.23........................................  Natural Gas Production Plant........         14                 7
49.5.........................................  Waste Reduction and Resource                 10                 7
                                                Recovery Plants: Includes assets
                                                used in the conversion of refuse or
                                                other solid waste or biomass to
                                                heat or to a solid, liquid, or
                                                gaseous fuel. Also includes all
                                                process plant equipment and
                                                structures at the site used to
                                                receive, handle, collect, and
                                                process refuse or other solid waste
                                                or biomass in a waterwall,
                                                combustion system, oil or gas
                                                pyrolysis system, or refuse derived
                                                fuel system to create hot water,
                                                gas steam and electricity. Includes
                                                material recovery and support
                                                assets used in refuse or solid
                                                refuse or solid waste receiving,
                                                collecting, handling, sorting,
                                                shredding, classifying, and
                                                separation systems. Does not
                                                include any package boilers, or
                                                electric generators and related
                                                assets such as electricity, hot
                                                water, steam and manufactured gas
                                                production plants classified in
                                                classes 00.4, 49.13, 49.221, and
                                                49.4. Does include, however, all
                                                other utilities such as water
                                                supply and treatment facilities,
                                                ash handling and other related land
                                                improvements of a waste reduction
                                                and resource recovery plant.
57.0.........................................  Distributive Trades and Services:             9                 5
                                                Includes assets used in wholesale
                                                and retail trade, and personal and
                                                professional services. Includes
                                                section 1245 assets used in
                                                marketing petroleum and petroleum
                                                products.
79.0.........................................  Recreation: Includes assets used in          10                 7
                                                the provision of entertainment
                                                services on payment of a fee or
                                                admission charge, as in the
                                                operation of bowling alleys,
                                                billiard and pool establishments,
                                                theaters, concert halls, and
                                                miniature golf courses. Does not
                                                include amusement and theme parks
                                                and assets which consist primarily
                                                of specialized land improvements or
                                                structures, such as golf courses,
                                                sports stadia, racetracks, ski
                                                slopes, and buildings which house
                                                the assets used in entertainment
                                                services.
80.0.........................................  Theme and Amusement Parks: Includes        12.5                 7
                                                assets used in the provision of
                                                rides, attractions, and amusements
                                                in activities defined as theme and
                                                amusement parks, and includes
                                                appurtenances associated with a
                                                ride, attraction, amusement or
                                                theme setting within the park such
                                                as ticket booths, facades, shop
                                                interiors, and props, special
                                                purpose structures, and buildings
                                                other than warehouses,
                                                administration buildings, hotels,
                                                and motels. Includes all land
                                                improvements for or in support of
                                                park activities (e.g., parking
                                                lots, sidewalks, waterways,
                                                bridges, fences, landscaping,
                                                etc.), and support functions (e.g.,
                                                food and beverage retailing,
                                                souvenir vending and other
                                                nonlodging accommodations) if owned
                                                by the park and provided
                                                exclusively for the benefit of park
                                                patrons. Theme and amusement parks
                                                are defined as combinations of
                                                amusements, rides, and attractions
                                                which are permanently situated on
                                                park land and open to the public
                                                for the price of admission. This
                                                guideline class is a composite of
                                                all assets used in this industry
                                                except transportation equipment
                                                (general purpose trucks, cars,
                                                airplanes, etc., which are included
                                                in asset guideline classes with the
                                                prefix 00.2), assets used in the
                                                provision of administrative
                                                services (asset classes with the
                                                prefix 00.1) and warehouses,
                                                administration buildings, hotels
                                                and motels.
----------------------------------------------------------------------------------------------------------------

          [From the Wall Street Journal Online, Jan. 12, 2008]

                         The JFK Stimulus Plan

              (By Ernest S. Christian and Gary A. Robbins)

       Got an economic downturn? Need a stimulus package? Why not 
     adopt full or partial first-year expensing (or its cousin, 
     the investment tax credit), which has come to the rescue many 
     times since 1962, when President John F. Kennedy first 
     administered this type of remedy to the economy?
       By allowing more of the cost of machinery and equipment to 
     be deducted more quickly, first-year expensing causes new 
     investment to be made sooner. More investment means more 
     productivity--and 80% of the net benefit from increased 
     productivity goes to labor. Expensing is a no-risk tax cut. 
     It worked four times in the 1960s and 1970s. It worked in 
     1981-1982 and again in 2002-2004.
       It also has bipartisan appeal. Democrat Dan Rostenkowski 
     proposed it in 1981, when he was Chairman of the House Ways 
     and Means Committee. More recently, Democrat Max Baucus, the 
     current Chairman of the Senate Finance Committee, was the 
     Senate sponsor of 30% partial expensing in 2002.
       During the recession that started in 2000, the economy did 
     not respond much to a Keynesian tax cut in 2001, consisting 
     mostly of a new 10% bottom bracket for individuals and a 
     child credit. In the first quarter of 2001, real investment 
     began falling at an annual rate of 6%. The decline was 
     stopped by the 30% partial expensing enacted in the spring of 
     2002. Investment started rising again at a real annual rate 
     of 9% beginning with the enactment in 2003 of 50% partial 
     expensing, in combination with lower rates of tax on capital 
     gains and dividends.
       Expensing is the favorite of tightfisted budgeters because 
     ultimately it pays for most of its cost. This is true even 
     when the Treasury uses old-fashioned static revenue estimates 
     that do not take into account feedback revenues from the 
     large amount of induced economic growth. Expensing is the 
     low-cost remedy because it does not create any new 
     deductions, but merely accelerates forward in time currently 
     allowable depreciation write-offs.
       Much of the revenue payback starts quickly. In the case of 
     a full, first-year deduction for the cost of equipment with a 
     five-year depreciation life, the Treasury gets 52% of its 
     money back in the first two years. The economy gets a boost 
     even quicker.
       In terms of the real benefit from capital investment--
     induced economic growth and higher living standards--first-
     year expensing produces enormous bang for the buck. 
     Experience in 2003-2004 shows that new orders for 
     manufacturing equipment and other business durables begin to 
     be placed within weeks of the enactment date. Small 
     businesses and other producers will not order what they do 
     not need. But when the price goes down (which is the effect 
     of expensing), they can afford to order what they do need 
     more quickly, and in larger volumes.
       An analysis for the Institute for Policy Innovation in 2001 
     concluded that, over time, each $1 of tax cut from first-year 
     expensing produces about $9 of additional GDP growth. The 
     high ratio occurs in large part because more capital 
     investment leads to more employment and higher wages.
       Expensing is not the favorite of the financial accountants 
     who treat it as a tax deferral rather than a tax cut--and for 
     that reason it is probably also not the favorite of some 
     corporate financial officers. But it ranks very high with 
     economists, tax reformers and many members of Congress. In 
     fact, first-year expensing is not a stimulant for emergency 
     use only. It is the correct way to treat capital investment 
     and is, therefore, a key component of all mainstream tax-
     reform proposals.
       A surefire economic stimulus with an exceptional pedigree 
     that ultimately pays for most of its cost and can get enacted 
     ought to be at the top of the list for inclusion in President 
     George Bush's upcoming State of the Union message. It ought 
     also to be made a permanent part of the tax code.
       Although essentially revenue neutral in the long run, full 
     and permanent fist-year expensing is not ``free'' from a 
     budget-accounting standpoint. The static revenue cost may on 
     average be as much as $80 billion per year until it is paid 
     back. But these sums do not take into account feedbacks, and 
     are relatively small compared to all the money that simply 
     falls through the cracks on the spending side of the budget. 
     And then there are all the earmarks and other waste.
       Surely Congress and the administration can find enough 
     money to finance the temporary cost of a much needed tax 
     reform that will make the American people at least $2.5 
     trillion better off through economic growth.
                                  ____

                                               Chamber of Commerce


                              of the United States of America,

                                 Washington, DC, January 15, 2008.
     Hon. Arlen Specter,
     U.S. Senate,
     Washington, DC.
       Dear Senator Specter: The U.S. Chamber of Commerce, the 
     world's largest business federation representing more than 
     three million businesses and organizations of every size, 
     sector, and region, appreciates the introduction of your 
     legislative proposals that would accelerate cost recovery, 
     The Chamber believes that provisions such as these that 
     promote economic growth should be included in any tax 
     legislation that moves this year.
       The Chamber recognizes that the U.S. economy has weakened 
     and believes that a tax package to combat this economic 
     deterioration should encourage broad based activity. Your 
     accelerated cost recovery proposals would, in the short run, 
     act as an insurance policy by encouraging immediate 
     investment, and, in the long run, would increase productivity 
     and further the prospects for long-term economic growth.
       Thank you for your leadership on this issue. The Chamber 
     looks forward to working with you to ensure that it is 
     considered in the coming debate on the economy.
           Sincerely,

                                              R. Bruce Josten,

                                         Executive Vice President,
     Government Affairs.
                                  ____



                                                  U.S. Senate,

                                 Washington, DC, January 18, 2008.
     Hon. Henry M. Paulson, Jr.,
     Secretary, Department of the Treasury, Washington, DC.
       Dear Secretary Paulson: I am writing to bring to your 
     attention two pieces of legislation which I plan to introduce 
     when the Senate returns on Tuesday, January 22, 2008, to 
     provide immediate economic stimulus for an economy hindered 
     by a housing crisis, rising oil prices, unemployment, sagging 
     stock markets, and battered consumer confidence. Both are 
     designed to spur new business investments through the use of 
     partial- and full-expensing. By allowing firms to expense a 
     greater share of the value of an asset in the first year, 
     these proposals free up additional resources for firms to 
     hire more workers and expand their operations.
       The first bill provides two years of ``bonus depreciation'' 
     for all sectors of the economy.

[[Page S105]]

     Specifically, firms would be allowed to expense fifty percent 
     of the cost of new equipment in the first year the asset is 
     put to use. Remaining value would be deducted over the course 
     of its useful life by using the Internal Revenue Code 
     depreciation schedules.
       The second bill allows a variety of sectors to take 
     advantage of one-hundred percent up-front expensing for new 
     assets that are placed into service during tax years 2008 and 
     2009. Specifically, this legislation would allow all 
     equipment which is currently depreciated on the three-, five-
     , and seven-year schedules to be fully expensed in year one. 
     One particular advantage to this legislation is the minimal 
     cost impact as viewed by the Joint Committee on Taxation. 
     Because revenue legislation is scored over a ten-year window 
     and the tax benefit inferred by this bill still occurs within 
     that span (only quicker), the revenue impact will be 
     negligible.
       I believe that these proposals should be the cornerstone of 
     any economic stimulus package crafted by the Administration 
     and/or Congress. To that end, I urge you to review these 
     proposals and include them in any potential stimulus package.
       Thank you for your attention to this important matter.
           Sincerely,
     Arlen Specter.
                                  ____



                                                  U.S. Senate,

                                 Washington, DC, January 16, 2008.
     Hon. Edward P. Lazear,
     Chairman, Council of Economic Advisers,
     Washington, DC.
       Dear Chairman Lazear: I am writing to bring to your 
     attention two pieces of legislation which I plan to introduce 
     when the Senate returns on Tuesday, January 22, 2008, to 
     provide immediate economic stimulus for an economy hindered 
     by a housing crisis, rising oil prices, unemployment, sagging 
     stock markets, and battered consumer confidence. Both are 
     designed to spur new business investments through the use of 
     partial- and full-expensing. By allowing firms to expense a 
     greater share of the value of an asset in the first year, 
     these proposals free up additional resources for firms to 
     hire more workers and expand their operations.
       The first bill provides two years of ``bonus depreciation'' 
     for all sectors of the economy. Specifically, firms would be 
     allowed to expense fifty percent of the cost of new equipment 
     in the first year the asset is put to use. Remaining value 
     would be deducted over the course of its useful life by using 
     the Internal Revenue Code depreciation schedules.
       The second bill allows a variety of sectors to take 
     advantage of 100 percent up-front expensing for new assets 
     that are placed into service during tax years 2008 and 2009. 
     Specifically, this legislation would allow all equipment 
     which is currently depreciated on the three-, five-, and 
     seven-year schedules to be fully expensed in year one. One 
     particular advantage to this legislation is the minimal cost 
     impact as viewed by the Joint Committee on Taxation. Because 
     revenue legislation is scored over a ten-year window and the 
     tax benefit ihferred by this bill still occurs within that 
     span (only quicker), the revenue impact will be negligible.
       I believe that these proposals should be the cornerstone of 
     any economic stimulus package crafted by the Administration 
     and/or Congress. To that end, I urge you to review these 
     proposals and include them in any potential stimulus package 
     drafted by the Administration.
       Thank you for your attention to this important matter.
           Sincerely,
     Arlen Specter.
                                  ____



                              National Restaurant Association,

                                 Washington, DC, January 18, 2008.
       Dear Senator Specter: The National Restaurant Association, 
     founded in 1919, is the leading business association for the 
     restaurant industry, which is comprised of 945,000 restaurant 
     and foodservice outlets and a work force of 13.1 million 
     employees, generating estimated sales of $558 billion in 
     2008.
       Not only are restaurants the cornerstone of the economy, 
     they are also the cornerstone of career opportunities and 
     community involvement. Nearly half of all American adults 
     have worked in a restaurant and 32 percent of adults got 
     their first job experience in a restaurant. Eight out of 10 
     salaried employees in restaurants started as hourly employees 
     and the restaurant industry employs more minority managers 
     than any other industry. Furthermore, more than one in nine 
     restaurants are involved in some type of charitable activity.
       We commend you for introducing this legislation that would 
     help stimulate the economy by allowing businesses, like 
     restaurants, to use partial- and full-expensing and spur on 
     new investments. Under current law, when a company buys an 
     asset that will last longer than one year, the company 
     cannot, under most circumstances, deduct the entire cost and 
     enjoy an immediate tax benefit. Instead, the company must 
     depreciate the cost over the useful life of the asset, taking 
     a tax deduction for a part of the cost each year. By allowing 
     firms to deduct the cost of a new asset in year one, 
     expensing spurs new investments quickly and drives immediate 
     job creation.
       It is clear an economic stimulus package is needed quickly 
     to help the U.S. economy. Restaurants are in the unique 
     position to help by creating more demand for projects that 
     will bring increased opportunity for new construction and 
     improvements to our businesses. The restaurant industry will 
     quickly respond to signals and take advantage of bonus 
     depreciation periods, as we have done in the past, should 
     such provisions be enacted into law.
       Restaurants also have a great opportunity to create more 
     jobs for Americans. Not only will we build new locations and 
     improve existing ones, thereby creating more jobs within the 
     restaurant industry, but we can also generate jobs in other 
     sectors of the economy. According to the Bureau of Economic 
     Analysis, every dollar spent in the construction industry 
     generates an additional $2.39 in spending in the rest of the 
     economy, while every $1 million spent in the construction 
     industry creates more than 28 jobs in the overall economy.
       Again, we commend you and support your efforts with these 
     two pieces of legislation. We look forward to working with 
     you as discussions quickly move forward to craft an economic 
     stimulus package for the country.
           Sincerely,

                                                     John Gay,

                                            Senior Vice President,
                             Government Affairs and Public Policy.
                                 ______