II

107TH CONGRESS

1ST SESSION S. 1322

To amend the Internal Revenue Code of 1986 to classify qualified rental

office furniture as 5-year property for purposes of depreciation.

IN THE SENATE OF THE UNITED STATES

AUGUST 2, 2001

Mr. FITZGERALD introduced the following bill; which was read twice and

referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to classify

qualified rental office furniture as 5-year property for

purposes of depreciation.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. CLASSIFICATION OF QUALIFIED RENTAL OF4 FICE FURNITURE.

5 (a) IN GENERAL.—Subparagraph (B) of section

6 168(e)(3) of the Internal Revenue Code of 1986 (relating

7 to 5-year property) is amended by striking ‘‘and’’ at the

8 end of clause (v), by striking the period at the end of

9 clause (vi) and inserting ‘‘, and,’’ and by adding at the

10 end the following:
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1 ‘‘(vii) any qualified rental office fur2 niture.’’

3 (b) ALTERNATIVE SYSTEM.—The table contained in

4 section 168(g)(3)(B) of the Internal Revenue Code of

5 1986 is amended by inserting after the third item the fol6 lowing:

‘‘(B)(vii) .................................................................................................... 9’’.

7 (c) DEFINITION OF QUALIFIED RENTAL OFFICE

8 FURNITURE.—Subsection (i) of section 168 of the Inter9 nal Revenue Code of 1986 is amended by adding at the

10 end the following:

11 ‘‘(15) QUALIFIED RENTAL OFFICE FUR12 NITURE.—

13 ‘‘(A) IN GENERAL.—The term ‘qualified

14 rental office furniture’ means office furniture

15 held by an office furniture rental dealer pri16 marily for purposes of leasing to customers by

17 means of a short-term office furniture rental

18 contract.

19 ‘‘(B) OFFICE FURNITURE RENTAL DEAL20 ER.—The term ‘office furniture rental dealer’

21 means a person that, in the ordinary course of

22 business, regularly enters into short-term office

23 furniture rental contracts with customers for

24 the use of office furniture.
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1 ‘‘(C) SHORT-TERM OFFICE FURNITURE

2 RENTAL CONTRACT.—The term ‘short-term of3 fice furniture rental contract’ means any lease

4 with a term of 18 months or less, between unre5 lated parties, for the use of office furniture.’’.

6 (d) OPTIONS TO RENEW NOT TO BE AUTOMATI7 CALLY TAKEN INTO ACCOUNT.—Paragraph (3) of sub8 section (i) of section 168 of the Internal Revenue Code

9 of 1986 is amended by adding at the end the following:

10 ‘‘(C) SPECIAL RULE FOR OPTIONS ON

11 SHORT-TERM OFFICE FURNITURE RENTAL CON12 TRACTS.—For purposes of clause (i) of sub13 paragraph (A), in the case of a short-term of14 fice furniture rental contract, there shall not be

15 taken into account any option to renew at a

16 price equal to or in excess of the price applica17 ble to the initial term of the lease.’’.

18 (e) APPLICABILITY.—

19 (1) IN GENERAL.—Except as provided in para20 graph (2), the amendments made by this section

21 shall apply to property placed in service on or after

22 the date of the enactment of this Act.

23 (2) TRANSITION RULE.—

24 (A) IN GENERAL.—A taxpayer may elect

25 (in such form and manner as the Secretary of
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1 the Treasury may prescribe) to have the

2 amendments made by this section apply to

3 property placed in service before the date of the

4 enactment of this section.

5 (B) METHOD OF ACCOUNTING.—For pur6 poses of section 481, an election under subpara7 graph (A) shall be treated as a change in meth8 od of accounting made with the consent of the

9 Secretary of the Treasury and any adjustment

10 necessary by reason of such change shall be in11 cluded in the year of the change.

12 (C) ELECTION DEEMED MADE.—For pur13 poses of subparagraph (A), a taxpayer which

14 has consistently treated qualified rental office

15 furniture (as defined in section 168(i)(15) of

16 the Internal Revenue Code of 1986) as 5-year

17 property shall be treated as having made the

18 election under such subparagraph with respect

19 to the property.

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