COMPARISON OF THE TAX INCENTIVES FOR NEW YORK CITY

UNDER CONSIDERATION BY THE HOUSE AND SENATE

Prepared by the Staff

of the

JOINT COMMITTEE ON TAXATION

December 14, 2001

JCX-89-01
1

INTRODUCTION

This document, 1 prepared by the staff of the Joint Committee on Taxation, compares the tax incentives for New York City that 

have been considered by the House of Representatives and the Senate. The House bill provisions refer to those provisions contained 

in Title III of H.R. 2884, the "Victims of Terrorism Tax Relief Act of 2001," which was passed by the House of Representatives on 

December 13, 2001. The Senate amendment refers to those provisions contained in an amendment in the nature of a substitute offered 

by Senator Baucus (amendment #2125) during the Senate consideration of H.R. 3090.

 

1

 This document may be cited as follows: Joint Committee on Taxation, "Comparison of the Tax Incentives for New York 

City Under Consideration by the House and Senate," (JCX-89-01), December 14, 2001.
2

COMPARISON OF THE TAX RELIEF PACKAGES FOR NEW YORK CITY AND OTHER DISTRESSED AREAS

ITEM HOUSE BILL SENATE AMENDMENT POSSIBLE COMPROMISE

1. Special depreciation allowance 

for certain property (sec. 301(a) of 

the House bill)

30-percent bonus depreciation 

deduction available through 2006 

(2009 for buildings and residential 

rental property) for all tangible 

property and computer software 

used in NY Liberty Zone.2

No provision.

2. Treatment of leasehold 

improvements (sec. 301(b) of the 

House bill)

Shortens the depreciation recovery 

period through 2006 for leasehold 

improvements in the NY Liberty 

Zone to 5 years (but the 

improvements are not eligible for 

bonus depreciation). 

No provision. 

3. Temporary increase in section 

179 expensing (sec. 301(c) of the 

House bill)

Increases section 179 expensing by 

$35,000 (and reduces the 

phasedown by 50%) for qualifying 

NY Liberty Zone property 

purchased before 2007.

No provision.

4. Expansion of Work Opportunity 

Tax Credit targeted categories to 

include certain employees in New 

York City (sec. 301 of the Senate 

amendment)

No provision. Creates a new targeted group of 

individuals employed by businesses 

in the NY Recovery Zone or who 

are employed within New York City 

due to destruction or damage to 

workplaces within the NY Zone; 

maximum credit is $4,800 (40% of 

first $12,000 of wages) for wages 

paid after Sept. 10, 2001, and 

through 2002.

 

2

 The “New York Liberty Zone” is defined as the area located on or south of Canal St., East Broadway (east of its intersection 

with Canal Street), or Grand Street (east of its intersection with East Broadway) in Manhattan. The Senate amendment uses the term 

“New York Recovery Zone” in referring to this area. 
3

ITEM HOUSE BILL SENATE AMENDMENT POSSIBLE COMPROMISE

5. Authorize issuance of tax-exempt 

private activity bonds for rebuilding 

the portion of New York City 

damaged in the Sept. 11, 2001 

terrorist attack (sec. 301(d) of the 

House bill and sec. 302 of Senate 

amendment)

Authorizes issuance during 2002-

04 of $15 billion of tax-exempt 

private activity bonds to finance 

construction and rehabilitation of 

commercial and residential rental 

property in the NY Liberty Zone 

(eligible for MACRS and bonus 

depreciation); if the $15 billion 

cannot be used in the zone, up to 

$7 billion can be used elsewhere in 

New York City.

Similar to the House bill (though 

the property would not be subject to 

MACRS and the bonus 

depreciation), but the bonds must be 

issued during 2002 (subject to 

limited carryforward of unused 

authority). In addition, the bank 

carrying cost exception is waived 

with respect to such bonds.

6. Incentive for reinvestment in 

New York City (sec. 301(e) of the 

House bill and sec. 303 of the Senate 

amendment)

Extends the period under sec. 1033 

to replace property destroyed in the 

NY Liberty Zone to 5 years (i.e., 

through 2006) so long as the 

replacement property is used in 

New York City.

Allows a taxpayer to ignore 

insurance proceeds (and thus claim 

a loss) with respect to property 

damaged or destroyed in the NY 

Recovery Zone if qualified 

replacement property is purchased 

in New York City before 2007.

7. Reenact exceptions for qualified 

mortgage bond financed loans to 

victims of Presidential declared 

disasters (sec. 304 of Senate 

amendment)

No provision. Reenacts exception for qualified 

mortgage bond-financed loans made 

during two-year period following a 

Presidential disaster declaration; 

size limit for home improvement 

loans increased from $15,000 to 

$25,000 for repair or replacement of 

damaged or destroyed housing; 

available for bonds issued in 2002.

8. One-year expansion of authority 

for Indian tribes to issue tax-exempt 

private activity bonds (sec. 305 of 

the Senate amendment)

No provision. Permits qualified Indian tribal 

governments to issue up to $10 

million of tax-exempt private 

activity bonds during 2002 for (1) 

residential rental projects, (2) 

qualified mortgage bonds, and (3) 

businesses that would qualify as 

enterprise zone businesses.