II 

118TH CONGRESS 

1ST SESSION S. 314 

To amend the Internal Revenue Code of 1986 to permanently allow a tax 

deduction at the time an investment in qualified property is made, 

and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 9, 2023 

Mr. CRUZ 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 permanently 

allow a tax deduction at the time an investment in qualified property is made, and for other purposes. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Cost Recovery and Ex5 pensing Acceleration to Transform the Economy and 

6 Jumpstart Opportunities for Businesses and Startups 

7 Act’’ or the ‘‘CREATE JOBS Act’’. 


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1 SEC. 2. PERMANENT FULL EXPENSING FOR QUALIFIED 

2 PROPERTY. 

3 (a) IN GENERAL.—Paragraph (6) of section 168(k) 

4 of the Internal Revenue Code of 1986 is amended to read 

5 as follows: 

6 ‘‘(6) APPLICABLE PERCENTAGE.—For purposes 

7 of this subsection, the term ‘applicable percentage’ 

8 means, in the case of property placed in service (or, 

9 in the case of a specified plant described in para10 graph (5), a plant which is planted or grafted) after 

11 September 27, 2017, 100 percent.’’. 

12 (b) CONFORMING AMENDMENTS.— 

13 (1) Section 168(k) of the Internal Revenue 

14 Code of 1986 is amended— 

15 (A) in paragraph (2)— 

16 (i) in subparagraph (A)— 

17 (I) in clause (i)(V), by inserting 

18 ‘‘and’’ at the end, 

19 (II) in clause (ii), by striking 

20 ‘‘clause (ii) of subparagraph (E), 

21 and’’ and inserting ‘‘clause (i) of sub22 paragraph (E).’’, and 

23 (III) by striking clause (iii), 

24 (ii) in subparagraph (B)— 

25 (I) in clause (i)— 


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1 (aa) by striking subclauses 

2 (II) and (III), and 

3 (bb) by redesignating sub4 clauses (IV) through (VI) as sub5 clauses (II) through (IV), respec6 tively, 

7 (II) by striking clause (ii), and 

8 (III) by redesignating clauses 

9 (iii) and (iv) as clauses (ii) and (iii), 

10 respectively, 

11 (iii) in subparagraph (C)— 

12 (I) in clause (i), by striking ‘‘and 

13 subclauses (II) and (III) of subpara14 graph (B)(i)’’, and 

15 (II) in clause (ii), by striking 

16 ‘‘subparagraph (B)(iii)’’ and inserting 

17 ‘‘subparagraph (B)(ii)’’, and 

18 (iv) in subparagraph (E)— 

19 (I) by striking clause (i), and 

20 (II) by redesignating clauses (ii) 

21 and (iii) as clauses (i) and (ii), respec22 tively, and 

23 (B) in paragraph (5)(A), by striking 

24 ‘‘planted before January 1, 2027, or is grafted 

25 before such date to a plant that has already 


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1 been planted,’’ and inserting ‘‘planted or graft2 ed’’. 

3 (2) Section 460(c)(6)(B) of such Code is 

4 amended by striking ‘‘which’’ and all that follows 

5 through the period and inserting ‘‘which has a recov6 ery period of 7 years or less.’’. 

7 (c) EFFECTIVE DATE.—The amendments made by 

8 this section shall take effect as if included in section 

9 13201 of Public Law 115–97. 

10 SEC. 3. NEUTRAL COST RECOVERY DEPRECIATION ADJUST11 MENT FOR RESIDENTIAL RENTAL PROPERTY 

12 AND NONRESIDENTIAL REAL PROPERTY. 

13 (a) IN GENERAL.—Section 168 of the Internal Rev14 enue Code of 1986 is amended by adding at the end there15 of the following new subsection: 

16 ‘‘(n) NEUTRAL COST RECOVERY DEPRECIATION AD17 JUSTMENT FOR RESIDENTIAL RENTAL PROPERTY AND

18 NONRESIDENTIAL REAL PROPERTY.— 

19 ‘‘(1) IN GENERAL.—In the case of any applica20 ble property, the deduction under this section with 

21 respect to such property for any taxable year after 

22 the taxable year during which the property is placed 

23 in service shall be— 


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1 ‘‘(A) the amount determined under this 

2 section for such taxable year without regard to 

3 this subsection, multiplied by 

4 ‘‘(B) the applicable neutral cost recovery 

5 ratio for such taxable year. 

6 ‘‘(2) APPLICABLE NEUTRAL COST RECOVERY

7 RATIO.—For purposes of paragraph (1), the applica8 ble neutral cost recovery ratio for the applicable 

9 property for any taxable year is the number deter10 mined by— 

11 ‘‘(A) dividing— 

12 ‘‘(i) the gross domestic product 

13 deflator for the calendar quarter ending in 

14 such taxable year which corresponds to the 

15 calendar quarter during which the property 

16 was placed in service by the taxpayer, by 

17 ‘‘(ii) the gross domestic product 

18 deflator for the calendar quarter during 

19 which the property was placed in service by 

20 the taxpayer, and 

21 ‘‘(B) then multiplying the number deter22 mined under subparagraph (A) by the number 

23 equal to 1.03 to the nth power where ‘n’ is the 

24 number of full years in the period beginning on 

25 the 1st day of the calendar quarter during 


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1 which the property was placed in service by the 

2 taxpayer and ending on the day before the be3 ginning of the corresponding calendar quarter 

4 ending during such taxable year. 

5 The applicable neutral cost recovery ratio shall never 

6 be less than 1. The applicable neutral cost recovery 

ratio shall be rounded to the nearest 1 7 ⁄1000. 

8 ‘‘(3) SPECIAL RULE FOR EXISTING PROP9 ERTY.—In the case of any applicable property which 

10 is placed in service before the date of enactment of 

11 this subsection, subparagraphs (A)(ii) and (B) of 

12 paragraph (2) shall be applied by substituting ‘cal13 endar quarter which includes the date of enactment 

14 of this subsection’ for ‘calendar quarter during 

15 which the property was placed in service by the tax16 payer’ each place it appears. 

17 ‘‘(4) GROSS DOMESTIC PRODUCT DEFLATOR.— 

18 For purposes of paragraph (2), the gross domestic 

19 product deflator for any calendar quarter is the im20 plicit price deflator for the gross domestic product 

21 for such quarter (as shown in the first revision 

22 thereof). 

23 ‘‘(5) ELECTION NOT TO HAVE SUBSECTION

24 APPLY.—This subsection shall not apply to any ap25 plicable property if the taxpayer elects not to have 


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1 this subsection apply to such property. Such an elec2 tion, once made, shall be irrevocable. 

3 ‘‘(6) ADDITIONAL DEDUCTION NOT TO AFFECT

4 BASIS OR RECAPTURE.— 

5 ‘‘(A) IN GENERAL.—The additional 

6 amount determined under this section by reason 

7 of this subsection shall not be taken into ac8 count in determining the adjusted basis of any 

9 applicable property or of any interest in a pass10 thru entity which holds such property and shall 

11 not be treated as a deduction for depreciation 

12 for purposes of sections 1245 and 1250. 

13 ‘‘(B) PASS-THRU ENTITY DEFINED.—For 

14 purposes of subparagraph (A), the term ‘pass15 thru entity’ means— 

16 ‘‘(i) a regulated investment company, 

17 ‘‘(ii) a real estate investment trust, 

18 ‘‘(iii) an S corporation, 

19 ‘‘(iv) a partnership, 

20 ‘‘(v) an estate or trust, and 

21 ‘‘(vi) a common trust fund. 

22 ‘‘(7) APPLICABLE PROPERTY.—For purposes of 

23 this subsection, the term ‘applicable property’ means 

24 residential rental property or nonresidential real 


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1 property (as such terms are defined in subsection 

2 (e)(2)).’’. 

3 (b) MINIMUM TAX TREATMENT.—Paragraph (1) of 

4 section 56(a) of the Internal Revenue Code of 1986 is 

5 amended by adding at the end thereof the following new 

6 subparagraph: 

7 ‘‘(E) USE OF NEUTRAL COST RECOVERY

8 RATIO.—In the case of property to which sec9 tion 168(n) applies, the deduction allowable 

10 under this paragraph with respect to such prop11 erty for any taxable year (after the taxable year 

12 during which the property is placed in service) 

13 shall be— 

14 ‘‘(i) the amount so allowable for such 

15 taxable year without regard to this sub16 paragraph, multiplied by 

17 ‘‘(ii) the applicable neutral cost recov18 ery ratio for such taxable year (as deter19 mined under section 168(n)). 

20 This subparagraph shall not apply to any prop21 erty with respect to which there is an election 

22 in effect not to have section 168(n) apply.’’. 

23 (c) EFFECTIVE DATE.—The amendments made by 

24 this section shall apply to property placed in service beVerDate Sep 11 2014 05:41 Feb 17, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S314.IS S314

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1 fore, on, or after the date of the enactment of this Act, 

2 with respect to taxable years ending on or after such date. 

3 SEC. 4. ELIMINATION OF AMORTIZATION OF RESEARCH 

4 AND EXPERIMENTAL EXPENDITURES. 

5 (a) IN GENERAL.—Section 174 of the Internal Rev6 enue Code of 1986 is amended to read as follows: 

7 ‘‘SEC. 174. RESEARCH AND EXPERIMENTAL EXPENDITURES. 

8 ‘‘(a) TREATMENT AS EXPENSES.— 

9 ‘‘(1) IN GENERAL.—A taxpayer may treat re10 search or experimental expenditures which are paid 

11 or incurred by him during the taxable year in con12 nection with his trade or business as expenses which 

13 are not chargeable to capital account. The expendi14 tures so treated shall be allowed as a deduction. 

15 ‘‘(2) WHEN METHOD MAY BE ADOPTED.— 

16 ‘‘(A) WITHOUT CONSENT.—A taxpayer 

17 may, without the consent of the Secretary, 

18 adopt the method provided in this subsection 

19 for his first taxable year for which expenditures 

20 described in paragraph (1) are paid or incurred. 

21 ‘‘(B) WITH CONSENT.—A taxpayer may, 

22 with the consent of the Secretary, adopt at any 

23 time the method provided in this subsection. 

24 ‘‘(3) SCOPE.—The method adopted under this 

25 subsection shall apply to all expenditures described 


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1 in paragraph (1). The method adopted shall be ad2 hered to in computing taxable income for the taxable 

3 year and for all subsequent taxable years unless, 

4 with the approval of the Secretary, a change to a 

5 different method is authorized with respect to part 

6 or all of such expenditures. 

7 ‘‘(b) AMORTIZATION OF CERTAIN RESEARCH AND

8 EXPERIMENTAL EXPENDITURES.— 

9 ‘‘(1) IN GENERAL.—At the election of the tax10 payer, made in accordance with regulations pre11 scribed by the Secretary, research or experimental 

12 expenditures which are— 

13 ‘‘(A) paid or incurred by the taxpayer in 

14 connection with his trade or business, 

15 ‘‘(B) not treated as expenses under sub16 section (a), and 

17 ‘‘(C) chargeable to capital account but not 

18 chargeable to property of a character which is 

19 subject to the allowance under section 167 (re20 lating to allowance for depreciation, etc.) or sec21 tion 611 (relating to allowance for depletion), 

22 may be treated as deferred expenses. In computing 

23 taxable income, such deferred expenses shall be al24 lowed as a deduction ratably over such period of not 

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1 payer (beginning with the month in which the tax2 payer first realizes benefits from such expenditures). 

3 Such deferred expenses are expenditures properly 

4 chargeable to capital account for purposes of section 

5 1016(a)(1) (relating to adjustments to basis of prop6 erty). 

7 ‘‘(2) TIME FOR AND SCOPE OF ELECTION.—The 

8 election provided by paragraph (1) may be made for 

9 any taxable year, but only if made not later than the 

10 time prescribed by law for filing the return for such 

11 taxable year (including extensions thereof). The 

12 method so elected, and the period selected by the 

13 taxpayer, shall be adhered to in computing taxable 

14 income for the taxable year for which the election is 

15 made and for all subsequent taxable years unless, 

16 with the approval of the Secretary, a change to a 

17 different method (or to a different period) is author18 ized with respect to part or all of such expenditures. 

19 The election shall not apply to any expenditure paid 

20 or incurred during any taxable year before the tax21 able year for which the taxpayer makes the election. 

22 ‘‘(c) LAND AND OTHER PROPERTY.—This section 

23 shall not apply to any expenditure for the acquisition or 

24 improvement of land, or for the acquisition or improve25 ment of property to be used in connection with the reVerDate Sep 11 2014 05:41 Feb 17, 2023 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S314.IS S314

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1 search or experimentation and of a character which is sub2 ject to the allowance under section 167 (relating to allow3 ance for depreciation, etc.) or section 611 (relating to al4 lowance for depletion); but for purposes of this section al5 lowances under section 167, and allowances under section 

6 611, shall be considered as expenditures. 

7 ‘‘(d) EXPLORATION EXPENDITURES.—This section 

8 shall not apply to any expenditure paid or incurred for 

9 the purpose of ascertaining the existence, location, extent, 

10 or quality of any deposit of ore or other mineral (including 

11 oil and gas). 

12 ‘‘(e) ONLY REASONABLE RESEARCH EXPENDITURES

13 ELIGIBLE.—This section shall apply to a research or ex14 perimental expenditure only to the extent that the amount 

15 thereof is reasonable under the circumstances. 

16 ‘‘(f) CROSS REFERENCES.— 

17 ‘‘(1) For adjustments to basis of property for 

18 amounts allowed as deductions as deferred expenses 

19 under subsection (b), see section 1016(a)(14). 

20 ‘‘(2) For election of 10-year amortization of ex21 penditures allowable as a deduction under subsection 

22 (a), see section 59(e).’’. 

23 (b) CLERICAL AMENDMENT.—The table of sections 

24 for part VI of subchapter B of chapter 1 of such Code 


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1 is amended by striking the item relating to section 174 

2 and inserting the following new item: 

‘‘Sec. 174. Research and experimental expenditures’’. 

3 (c) CONFORMING AMENDMENTS.— 

4 (1) Section 41(d)(1)(A) of such Code is amend5 ed by striking ‘‘specified research or experimental 

6 expenditures under section 174’’ and inserting ‘‘ex7 penses under section 174’’. 

8 (2) Section 280C(c) of such Code is amended to 

9 read as follows: 

10 ‘‘(c) CREDIT FOR INCREASING RESEARCH ACTIVI11 TIES.— 

12 ‘‘(1) IN GENERAL.—No deduction shall be al13 lowed for that portion of the qualified research ex14 penses (as defined in section 41(b)) or basic re15 search expenses (as defined in section 41(e)(2)) oth16 erwise allowable as a deduction for the taxable year 

17 which is equal to the amount of the credit deter18 mined for such taxable year under section 41(a). 

19 ‘‘(2) SIMILAR RULE WHERE TAXPAYER CAP20 ITALIZES RATHER THAN DEDUCTS EXPENSES.—If— 

21 ‘‘(A) the amount of the credit determined 

22 for the taxable year under section 41(a)(1), ex23 ceeds 

24 ‘‘(B) the amount allowable as a deduction 

25 for such taxable year for qualified research exVerDate Sep 11 2014 05:41 Feb 17, 2023 Jkt 039200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6201 E:\BILLS\S314.IS S314

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1 penses or basic research expenses (determined 

2 without regard to paragraph (1)), 

3 the amount chargeable to capital account for the 

4 taxable year for such expenses shall be reduced by 

5 the amount of such excess. 

6 ‘‘(3) ELECTION OF REDUCED CREDIT.— 

7 ‘‘(A) IN GENERAL.—In the case of any 

8 taxable year for which an election is made 

9 under this paragraph— 

10 ‘‘(i) paragraphs (1) and (2) shall not 

11 apply, and 

12 ‘‘(ii) the amount of the credit under 

13 section 41(a) shall be the amount deter14 mined under subparagraph (B). 

15 ‘‘(B) AMOUNT OF REDUCED CREDIT.—The 

16 amount of credit determined under this sub17 paragraph for any taxable year shall be the 

18 amount equal to the excess of— 

19 ‘‘(i) the amount of credit determined 

20 under section 41(a) without regard to this 

21 paragraph, over 

22 ‘‘(ii) the product of— 

23 ‘‘(I) the amount described in 

24 clause (i), and 


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1 ‘‘(II) the rate of tax under sec2 tion 11(b). 

3 ‘‘(C) ELECTION.—An election under this 

4 paragraph for any taxable year shall be made 

5 not later than the time for filing the return of 

6 tax for such year (including extensions), shall 

7 be made on such return, and shall be made in 

8 such manner as the Secretary may prescribe. 

9 Such an election, once made, shall be irrev10 ocable. 

11 ‘‘(4) CONTROLLED GROUPS.—Paragraph (3) of 

12 subsection (b) shall apply for purposes of this sub13 section.’’. 

14 (d) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply to amounts paid or incurred in tax16 able years beginning after December 31, 2021. 

Æ 


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