I 

109TH CONGRESS 

1ST SESSION H. R. 2319 

To amend the Internal Revenue Code of 1986 to allow taxpayers to expense 

property eligible for bonus depreciation. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 12, 2005 

Mr. WELLER introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to allow 

taxpayers to expense property eligible for bonus 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. EXPENSING OF PROPERTY ELIGIBLE FOR 

4 BONUS DEPRECIATION. 

5 (a) IN GENERAL.—So much of subsection (k) of sec6 tion 168 of the Internal Revenue Code of 1986 (relating 

7 to special allowance for certain property acquired after 

8 September 10, 2001, and before January 1, 2005) as pre9 cedes paragraph (2)(D) thereof is amended to read as fol10 lows: 
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1 ‘‘(k) EXPENSING OF CERTAIN PROPERTY ACQUIRED

2 AFTER MAY 12, 2005.— 

3 ‘‘(1) IN GENERAL.—In the case of any qualified 

4 property— 

5 ‘‘(A) the depreciation deduction provided 

6 by section 167(a) for the taxable year in which 

7 such property is placed in service shall include 

8 an allowance equal to 100 percent of the ad9 justed basis of the qualified property, and 

10 ‘‘(B) the adjusted basis of the qualified 

11 property shall be reduced by the amount of 

12 such deduction before computing the amount 

13 otherwise allowable as a depreciation deduction 

14 under this chapter for such taxable year and 

15 any subsequent taxable year. 

16 ‘‘(2) QUALIFIED PROPERTY.— For purposes of 

17 this subsection— 

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

19 property’ means property— 

20 ‘‘(i)(I) to which this section applies 

21 which has a recovery period of 20 years or 

22 less, 

23 ‘‘(II) which is computer software (as 

24 defined in section 167(f)(1)(B)) for which 
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1 a deduction is allowable under section 

2 167(a) without regard to this subsection, 

3 ‘‘(III) which is water utility property, 

4 or 

5 ‘‘(IV) which is qualified leasehold im6 provement property, 

7 ‘‘(ii) the original use of which com8 mences with the taxpayer after May 12, 

9 2005, 

10 ‘‘(iii) which is acquired by the tax11 payer after such date, but only if no writ12 ten binding contract for the acquisition 

13 was in effect on or before such date. 

14 ‘‘(B) CERTAIN AIRCRAFT.—The term 

15 ‘qualified property’ includes property— 

16 ‘‘(i) which meets the requirements of 

17 clauses (ii) and (iii) of subparagraph (A), 

18 ‘‘(ii) which is an aircraft which is not 

19 used in the trade or business of trans20 porting persons or property other than for 

21 agricultural or firefighting purposes, 

22 ‘‘(iii) which is purchased and on which 

23 such purchaser, at the time of the contract 

24 for purchase, has made a nonrefundable 

25 deposit of the lesser of— 
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1 ‘‘(I) 10 percent of the cost, or 

2 ‘‘(II) $100,000, and 

3 ‘‘(iv) which has— 

4 ‘‘(I) an estimated production pe5 riod exceeding 4 months, and 

6 ‘‘(II) a cost exceeding 

7 $200,000.’’. 

8 (b) TECHNICAL AMENDMENTS.— 

9 (1) Paragraph (2) of section 168(k) of such 

10 Code is amended by redesignating subparagraphs 

11 (D), (E), (F), and (G) as subparagraphs (C), (D), 

12 (E), and (F), respectively. 

13 (2) Subparagraph (C) of section 168(k)(2) of 

14 such Code, as redesignated by paragraph (1), is 

15 amended by striking the last sentence of clause (iii), 

16 by striking clause (ii), and by redesignating clause 

17 (iii) as clause (ii). 

18 (3) Clause (i) of section 168(k)(2)(D) of such 

19 Code, as so redesignated, is amended by striking 

20 ‘‘and before January 1, 2005’’. 

21 (4) Subparagraph (D) of section 168(k)(2) of 

22 such Code, as so redesignated, is amended by strik23 ing ‘‘September 10, 2001’’ each place it appears and 

24 inserting. 
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1 (5) Clause (i) of section 168(k)(2)(E) of such 

2 Code, as so redesignated, is amended by striking 

3 ‘‘$4,600’’ and inserting ‘‘$14,540’’. 

4 (6) Section 168(k) of such Code is amended by 

5 striking paragraph (4). 

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

7 this section shall apply to property placed in service after 

8 May 12, 2005. 

9 SEC. 2. LONG-TERM CONTRACT ACCOUNTING. 

10 (a) IN GENERAL.—Section 168(k)(2) of the Internal 

11 Revenue Code of 1986 is amended by adding after sub12 paragraph (F), as redesignated by section 1, the following 

13 new subparagraph: 

14 ‘‘(F) LONG-TERM CONTRACT ACCOUNT15 ING.—The percentage of completion method 

16 under section 460 shall be applied as if this 

17 subsection had not been enacted.’’. 

18 SEC. 3. ELECTION TO INCREASE MINIMUM TAX CREDIT 

19 LIMITATION IN LIEU OF BONUS DEPRECIA20 TION. 

21 (a) IN GENERAL.—Section 53 of the Internal Rev22 enue Code of 1986 (relating to credit for prior year min23 imum tax liability) is amended by adding at the end of 

24 the following new subsection: 
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1 ‘‘(e) ADDITIONAL CREDIT IN LIEU OF BONUS DE2 PRECIATION.— 

3 ‘‘(1) IN GENERAL.—In the case of a corpora4 tion making an election under this subsection for a 

5 taxable year, the limitation under subsection (c) 

6 shall be increased by an amount equal to the bonus 

7 depreciation amount. 

8 ‘‘(2) BONUS DEPRECIATION AMOUNT.—For 

9 purposes of paragraph (1), the bonus depreciation 

10 amount for any taxable year is an amount equal to 

11 the product of— 

12 ‘‘(A) 35 percent, and 

13 ‘‘(B) the excess (if any) of— 

14 ‘‘(i) the aggregate amount of depre15 ciation which would be determined under 

16 section 167 for property placed in service 

17 during such taxable year if no election 

18 under this subsection were made, over 

19 ‘‘(ii) the aggregate allowance for de20 preciation allowable with respect to such 

21 property placed in service for such taxable 

22 year. 

23 ‘‘(3) ELECTION.—Section 168(k) (other than 

24 paragraph (2)(E) thereof) shall not apply to any 

25 property placed in service during a taxable year by 
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1 a corporation making an election under this sub2 section for such taxable year. An election under this 

3 subsection may only be revoked with the consent of 

4 the Secretary. 

5 ‘‘(4) CREDIT REFUNDABLE.—The aggregate in6 crease in the credit allowed by this section for any 

7 taxable year by reason of this subsection shall for 

8 purposes of this title (other than subsection (b)(2) 

9 of this section) be treated as a credit allowed to the 

10 taxpayer under subpart C.’’. 

11 (b) CONFORMING AMENDMENTS.—Subsection (k) of 

12 section 168 of such Code is amended by adding at the 

13 end the following new paragraph: 

14 ‘‘(4) CROSS REFERENCE.—For an election to 

15 claim certain minimum tax credits in lieu of the al16 lowance determined under this subsection, see sec17 tion 53(e).’’. 

18 SEC. 4. EFFECTIVE DATE. 

19 The amendments made by this Act shall apply to tax20 able years ending after May 12, 2005. 

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