To amend the Internal Revenue Code of 1986 to allow the expensing of certain real property.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Small Business Capitol Expansion and 
Improvement Act of 2008''.

SEC. 2. EXPENSING FOR CERTAIN REAL PROPERTY.

    (a) In General.--Part VI of subchapter B of chapter 1 is amended by 
inserting after section 179E the following new section:

``SEC. 179F. ELECTION TO EXPENSE CERTAIN REAL PROPERTY.

    ``(a) Treatment as Expenses.--In the case of a taxpayer described 
in subsection (e), the taxpayer may elect to treat the cost of any 
qualified real property as an expense which is not chargeable to 
capital account. Any cost so treated shall be allowed as a deduction 
for the taxable year in which the qualified real property is placed in 
service.
    ``(b) Limitation.--
            ``(1) In general.--The aggregate cost which may be taken 
        into account under subsection (a) for any taxable year shall 
        not exceed $125,000.
            ``(2) Inflation adjustment.--
                    ``(A) In general.--In the case of any taxable year 
                beginning in a calendar year after 2009, the $125,000 
                amount in paragraph (1) shall be increased by an amount 
                equal to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for the 
                        calendar year in which the taxable year begins, 
                        by substituting `calendar year 2008' for 
                        `calendar year 1992' in subparagraph (B) 
                        thereof.
                    ``(B) Rounding.--If any amount as adjusted under 
                subparagraph (A) is not a multiple of $1,000, such 
                amount shall be rounded to the nearest multiple of 
                $1,000.
    ``(c) Election.--
            ``(1) In general.--An election under this section for any 
        taxable year shall be made on the taxpayer's return of the tax 
        imposed by this chapter for the taxable year. Such election 
        shall specify the qualified real property to which the election 
        applies and shall be made in such manner as the Secretary may 
        by regulations prescribe.
            ``(2) Election irrevocable.--Any election made under this 
        section may not be revoked except with the consent of the 
        Secretary.
    ``(d) Qualified Real Property.--For purposes of this section, the 
term `qualified real property' means section 1250 property (as defined 
by section 1250(c)) located in the United States--
            ``(1) the original use of which commences with the 
        taxpayer, and
            ``(2) which is placed in service by the taxpayer after the 
        date of the enactment of this section.
    ``(e) Taxpayer Described.--
            ``(1) In general.--A taxpayer is described in this 
        subsection if, for the immediately prior taxable year, the 
        taxpayer (or any predecessor) met the $5,000,000 gross receipts 
        test of paragraph (2).
            ``(2) $5,000,000 gross receipts test.--For purposes of 
        paragraph (1)--
                    ``(A) In general.--A taxpayer meets the $5,000,000 
                gross receipts test of this paragraph for a taxable 
                year if the average annual gross receipts of the 
                taxpayer for the 3-taxable-year period ending with such 
                taxable year does not exceed $5,000,000.
                    ``(B) Aggregation rules.--All persons treated as a 
                single employer under subsection (a) or (b) of section 
                52 or subsection (m) or (o) of section 414 shall be 
                treated as one person for purposes of subparagraph (A).
                    ``(C) Not in existence for entire 3-year period.--
                If the taxpayer was not in existence for the entire 3-
                year period referred to in subparagraph (A), such 
                paragraph shall be applied on the basis of the period 
                during which the taxpayer (or trade or business) was in 
                existence.
                    ``(D) Special rules.--For purposes of subparagraph 
                (A), the rules of paragraph (3) of section 448(c) shall 
                apply.
    ``(f) Reporting.--No deduction shall be allowed under subsection 
(a) to any taxpayer for any taxable year unless the taxpayer files with 
the Secretary a report containing such information as the Secretary 
shall require.''.
    (b) Conforming Amendments.--
            (1) Section 263(a)(1) is amended by striking ``or'' at the 
        end of subparagraph (K), by striking the period at the end of 
        subparagraph (L) and inserting ``, or'', and by inserting after 
        subparagraph (L) the following new subparagraph:
                    ``(M) expenditures for which a deduction is allowed 
                under section 179F.''.
            (2) Section 312(k)(3)(B) is amended by striking ``or 179E'' 
        each place it appears in the heading and text thereof and 
        inserting ``179E, or 179F''.
            (3) The table of sections for part VI of subchapter B of 
        chapter 1 is amended by inserting after the item relating to 
        section 179E the following new item:

``Sec. 179F. Election to expense certain real property.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to costs paid or incurred after the date of the enactment of this 
Act.

Summary: Small Business Capitol sic Expansion and Improvement Act of 2008 - Amends the Internal Revenue Code to allow employers whose average annual gross receipts over a three-year period do not exceed $5 million an election to expense up to $125,000 of the cost of depreciable real property.