IB 

Union Calendar No. 381 

113TH CONGRESS 

2D SESSION H. R. 4718 

[Report No. 113–509] 

To amend the Internal Revenue Code of 1986 to modify and make permanent 

bonus depreciation. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 22, 2014 

Mr. TIBERI (for himself, Mr. SCHOCK, Mr. YOUNG of Indiana, Mr. REED, Mr. 

PAULSEN, Mr. GRIFFIN of Arkansas, Mr. NUNES, Mr. KELLY of Pennsylvania, Mr. BRADY of Texas, Ms. JENKINS, Mr. BOUSTANY, Mr. MARCHANT, Mrs. BLACK, Mr. BUCHANAN, Mr. RENACCI, Mr. GERLACH, Mr. 

REICHERT, Mr. HUIZENGA of Michigan, and Mr. ROSKAM) introduced the 

following bill; which was referred to the Committee on Ways and Means 

JULY 3, 2014 

Additional sponsors: Mr. PRICE of Georgia, Mr. KLINE, Mr. SESSIONS, Mr. 

GARDNER, Mr. STIVERS, Mr. DENHAM, Mr. NEUGEBAUER, and Mr. 

PETERS of Michigan 

JULY 3, 2014 

Reported with an amendment, committed to the Committee of the Whole 

House on the State of the Union, and ordered to be printed 

[Strike out all after the enacting clause and insert the part printed in italic] 

[For text of introduced bill, see copy of bill as introduced on May 22, 2014] 


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A BILL 

To amend the Internal Revenue Code of 1986 to modify 

and make permanent bonus depreciation. 


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

3 SECTION 1. BONUS DEPRECIATION MODIFIED AND MADE 

4 PERMANENT. 

5 (a) MADE PERMANENT; INCLUSION OF QUALIFIED RE6 TAIL IMPROVEMENT PROPERTY.—Section 168(k)(2) of the 

7 Internal Revenue Code of 1986 is amended to read as fol8 lows: 

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

10 this subsection— 

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

12 property’ means property— 

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

14 which has a recovery period of 20 years or 

15 less, 

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

17 defined in section 167(f)(1)(B)) for which a 

18 deduction is allowable under section 167(a) 

19 without regard to this subsection, 

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

21 ‘‘(IV) which is qualified leasehold im22 provement property, or 

23 ‘‘(V) which is qualified retail improve24 ment property, and 


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1 ‘‘(ii) the original use of which com2 mences with the taxpayer. 

3 ‘‘(B) EXCEPTION FOR ALTERNATIVE DEPRE4 CIATION PROPERTY.—The term ‘qualified prop5 erty’ shall not include any property to which the 

6 alternative depreciation system under subsection 

7 (g) applies, determined— 

8 ‘‘(i) without regard to paragraph (7) of 

9 subsection (g) (relating to election to have 

10 system apply), and 

11 ‘‘(ii) after application of section 

12 280F(b) (relating to listed property with 

13 limited business use). 

14 ‘‘(C) SPECIAL RULES.— 

15 ‘‘(i) SALE-LEASEBACKS.—For purposes 

16 of clause (ii) and subparagraph (A)(ii), if 

17 property is— 

18 ‘‘(I) originally placed in service 

19 by a person, and 

20 ‘‘(II) sold and leased back by such 

21 person within 3 months after the date 

22 such property was originally placed in 

23 service, 

24 such property shall be treated as originally 

25 placed in service not earlier than the date 


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1 on which such property is used under the 

2 leaseback referred to in subclause (II). 

3 ‘‘(ii) SYNDICATION.—For purposes of 

4 subparagraph (A)(ii), if— 

5 ‘‘(I) property is originally placed 

6 in service by the lessor of such prop7 erty, 

8 ‘‘(II) such property is sold by 

9 such lessor or any subsequent pur10 chaser within 3 months after the date 

11 such property was originally placed in 

12 service (or, in the case of multiple 

13 units of property subject to the same 

14 lease, within 3 months after the date 

15 the final unit is placed in service, so 

16 long as the period between the time the 

17 first unit is placed in service and the 

18 time the last unit is placed in service 

19 does not exceed 12 months), and 

20 ‘‘(III) the user of such property 

21 after the last sale during such 3-month 

22 period remains the same as when such 

23 property was originally placed in serv24 ice, 


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1 such property shall be treated as originally 

2 placed in service not earlier than the date 

3 of such last sale. 

4 ‘‘(D) COORDINATION WITH SECTION 280F.— 

5 For purposes of section 280F— 

6 ‘‘(i) AUTOMOBILES.—In the case of a 

7 passenger automobile (as defined in section 

8 280F(d)(5)) which is qualified property, the 

9 Secretary shall increase the limitation 

10 under section 280F(a)(1)(A)(i) by $8,000. 

11 ‘‘(ii) LISTED PROPERTY.—The deduc12 tion allowable under paragraph (1) shall be 

13 taken into account in computing any recap14 ture amount under section 280F(b)(2). 

15 ‘‘(iii) INFLATION ADJUSTMENT.— In 

16 the case of any taxable year beginning in a 

17 calendar year after 2014, the $8,000 

18 amount in clause (i) shall be increased by 

19 an amount equal to— 

20 ‘‘(I) such dollar amount, multi21 plied by 

22 ‘‘(II) the automobile price infla23 tion adjustment determined under sec24 tion 280F(d)(7)(B)(i) for the calendar 

25 year in which such taxable year begins 


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1 by substituting ‘2013’ for ‘1987’ in 

2 subclause (II) thereof. 

3 If any increase under the preceding sentence 

4 is not a multiple of $100, such increase 

5 shall be rounded to the nearest multiple of 

6 $100. 

7 ‘‘(E) DEDUCTION ALLOWED IN COMPUTING

8 MINIMUM TAX.—For purposes of determining al9 ternative minimum taxable income under section 

10 55, the deduction under section 167 for qualified 

11 property shall be determined without regard to 

12 any adjustment under section 56.’’. 

13 (b) EXPANSION OF ELECTION TO ACCELERATE AMT

14 CREDITS IN LIEU OF BONUS DEPRECIATION.—Section 

15 168(k)(4) of such Code is amended to read as follows: 

16 ‘‘(4) ELECTION TO ACCELERATE AMT CREDITS IN

17 LIEU OF BONUS DEPRECIATION.— 

18 ‘‘(A) IN GENERAL.—If a corporation elects 

19 to have this paragraph apply for any taxable 

20 year— 

21 ‘‘(i) paragraphs (1)(A), (2)(D)(i), and 

22 (5)(A)(i) shall not apply for such taxable 

23 year, 

24 ‘‘(ii) the applicable depreciation meth25 od used under this section with respect to 


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1 any qualified property shall be the straight 

2 line method, and 

3 ‘‘(iii) the limitation imposed by section 

4 53(c) for such taxable year shall be in5 creased by the bonus depreciation amount 

6 which is determined for such taxable year 

7 under subparagraph (B). 

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

9 purposes of this paragraph— 

10 ‘‘(i) IN GENERAL.—The bonus depre11 ciation amount for any taxable year is an 

12 amount equal to 20 percent of the excess (if 

13 any) of— 

14 ‘‘(I) the aggregate amount of de15 preciation which would be allowed 

16 under this section for qualified prop17 erty placed in service by the taxpayer 

18 during such taxable year if paragraph 

19 (1) applied to all such property, over 

20 ‘‘(II) the aggregate amount of de21 preciation which would be allowed 

22 under this section for qualified prop23 erty placed in service by the taxpayer 

24 during such taxable year if paragraph 


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1 (1) did not apply to any such prop2 erty. 

3 The aggregate amounts determined under 

4 subclauses (I) and (II) shall be determined 

5 without regard to any election made under 

6 subsection (b)(2)(D), (b)(3)(D), or (g)(7) 

7 and without regard to subparagraph 

8 (A)(ii). 

9 ‘‘(ii) LIMITATION.—The bonus depre10 ciation amount for any taxable year shall 

11 not exceed the lesser of— 

12 ‘‘(I) 50 percent of the minimum 

13 tax credit under section 53(b) for the 

14 first taxable year ending after Decem15 ber 31, 2013, or 

16 ‘‘(II) the minimum tax credit 

17 under section 53(b) for such taxable 

18 year determined by taking into ac19 count only the adjusted net minimum 

20 tax for taxable years ending before 

21 January 1, 2014 (determined by treat22 ing credits as allowed on a first-in, 

23 first-out basis). 

24 ‘‘(iii) AGGREGATION RULE.—All cor25 porations which are treated as a single emVerDate Mar 15 2010 01:05 Jul 04, 2014 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6203 E:\BILLS\H4718.RH H4718

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1 ployer under section 52(a) shall be treat2 ed— 

3 ‘‘(I) as 1 taxpayer for purposes of 

4 this paragraph, and 

5 ‘‘(II) as having elected the appli6 cation of this paragraph if any such 

7 corporation so elects. 

8 ‘‘(C) CREDIT REFUNDABLE.—For purposes 

9 of section 6401(b), the aggregate increase in the 

10 credits allowable under part IV of subchapter A 

11 for any taxable year resulting from the applica12 tion of this paragraph shall be treated as allowed 

13 under subpart C of such part (and not any other 

14 subpart). 

15 ‘‘(D) OTHER RULES.— 

16 ‘‘(i) ELECTION.—Any election under 

17 this paragraph may be revoked only with 

18 the consent of the Secretary. 

19 ‘‘(ii) PARTNERSHIPS WITH ELECTING

20 PARTNERS.—In the case of a corporation 

21 which is a partner in a partnership and 

22 which makes an election under subpara23 graph (A) for the taxable year, for purposes 

24 of determining such corporation’s distribuVerDate Mar 15 2010 01:05 Jul 04, 2014 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6203 E:\BILLS\H4718.RH H4718

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1 tive share of partnership items under sec2 tion 702 for such taxable year— 

3 ‘‘(I) paragraphs (1)(A), (2)(D)(i), 

4 and (5)(A)(i) shall not apply, and 

5 ‘‘(II) the applicable depreciation 

6 method used under this section with re7 spect to any qualified property shall be 

8 the straight line method. 

9 ‘‘(iii) CERTAIN PARTNERSHIPS.—In 

10 the case of a partnership in which more 

11 than 50 percent of the capital and profits 

12 interests are owned (directly or indirectly) 

13 at all times during the taxable year by 1 

14 corporation (or by corporations treated as 1 

15 taxpayer under subparagraph (B)(iii)), 

16 each partner shall compute its bonus depre17 ciation amount under clause (i) of subpara18 graph (B) by taking into account its dis19 tributive share of the amounts determined 

20 by the partnership under subclauses (I) and 

21 (II) of such clause for the taxable year of 

22 the partnership ending with or within the 

23 taxable year of the partner.’’. 


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1 (c) SPECIAL RULES FOR TREES AND VINES BEARING

2 FRUITS AND NUTS.—Section 168(k) of such Code is amend3 ed— 

4 (1) by striking paragraph (5), and 

5 (2) by inserting after paragraph (4) the fol6 lowing new paragraph: 

7 ‘‘(5) SPECIAL RULES FOR TREES AND VINES

8 BEARING FRUITS AND NUTS.— 

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

10 or vine bearing fruits or nuts which is planted, 

11 or is grafted to a plant that has already been 

12 planted, by the taxpayer in the ordinary course 

13 of the taxpayer’s farming business (as defined in 

14 section 263A(e)(4))— 

15 ‘‘(i) a depreciation deduction equal to 

16 50 percent of the adjusted basis of such tree 

17 or vine shall be allowed under section 

18 167(a) for the taxable year in which such 

19 tree or vine is so planted or grafted, and 

20 ‘‘(ii) the adjusted basis of such tree or 

21 vine shall be reduced by the amount of such 

22 deduction. 

23 ‘‘(B) ELECTION OUT.—If a taxpayer makes 

24 an election under this subparagraph for any tax25 able year, this paragraph shall not apply to any 


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1 tree or vine planted or grafted during such tax2 able year. An election under this subparagraph 

3 may be revoked only with the consent of the Sec4 retary. 

5 ‘‘(C) ADDITIONAL DEPRECIATION MAY BE

6 CLAIMED ONLY ONCE.—If this paragraph applies 

7 to any tree or vine, such tree or vine shall not 

8 be treated as qualified property in the taxable 

9 year in which placed in service. 

10 ‘‘(D) COORDINATION WITH ELECTION TO AC11 CELERATE AMT CREDITS.—If a corporation 

12 makes an election under paragraph (4) for any 

13 taxable year, the amount under paragraph 

14 (4)(B)(i)(I) for such taxable year shall be in15 creased by the amount determined under sub16 paragraph (A)(i) for such taxable year. 

17 ‘‘(E) DEDUCTION ALLOWED IN COMPUTING

18 MINIMUM TAX.—Rules similar to the rules of 

19 paragraph (2)(E) shall apply for purposes of 

20 this paragraph.’’. 

21 (d) CONFORMING AMENDMENTS.— 

22 (1) Section 168(e)(8) of such Code is amended by 

23 striking subparagraph (D). 

24 (2) Section 168(k) of such Code is amended by 

25 adding at the end the following new paragraph: 


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1 ‘‘(6) ELECTION OUT.—If a taxpayer makes an 

2 election under this paragraph with respect to any 

3 class of property for any taxable year, this subsection 

4 shall not apply to all property in such class placed 

5 in service (or, in the case of paragraph (5), planted 

6 or grafted) during such taxable year. An election 

7 under this paragraph may be revoked only with the 

8 consent of the Secretary.’’. 

9 (3) Section 168(l)(5) of such Code is amended by 

10 striking ‘‘section 168(k)(2)(G)’’ and inserting ‘‘section 

11 168(k)(2)(E)’’. 

12 (4) Section 263A(c) of such Code is amended by 

13 adding at the end the following new paragraph: 

14 ‘‘(7) COORDINATION WITH SECTION 168(k)(5).— 

15 This section shall not apply to any amount allowable 

16 as a deduction by reason of section 168(k)(5) (relat17 ing to special rules for trees and vines bearing fruits 

18 and nuts).’’. 

19 (5) Section 460(c)(6)(B) of such Code is amend20 ed by striking ‘‘which—’’ and all that follows and in21 serting ‘‘which has a recovery period of 7 years or 

22 less.’’. 

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

24 striking ‘‘ACQUIRED AFTER DECEMBER 31, 2007, 


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1 AND BEFORE JANUARY 1, 2014’’ in the heading there2 of. 

3 (e) EFFECTIVE DATES.— 

4 (1) IN GENERAL.—Except as otherwise provided 

5 in this subsection, the amendments made by this sec6 tion shall apply to property placed in service after 

7 December 31, 2013. 

8 (2) EXPANSION OF ELECTION TO ACCELERATE

9 AMT CREDITS IN LIEU OF BONUS DEPRECIATION.— 

10 (A) IN GENERAL.—The amendment made 

11 by subsection (b) (other than so much of such 

12 amendment as relates to section 168(k)(4)(D)(iii) 

13 of such Code, as added by such amendment) shall 

14 apply to taxable years ending after December 31, 

15 2013. 

16 (B) TRANSITIONAL RULE.—In the case of a 

17 taxable year beginning before January 1, 2014, 

18 and ending after December 31, 2013, the bonus 

19 depreciation amount determined under section 

20 168(k)(4) of such Code for such year shall be the 

21 sum of— 

22 (i) such amount determined without 

23 regard to the amendments made by this sec24 tion and— 


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1 (I) by taking into account only 

2 property placed in service before Janu3 ary 1, 2014, and 

4 (II) by multiplying the limitation 

5 under section 168(k)(4)(C)(ii) of such 

6 Code (determined without regard to the 

7 amendments made by this section) by 

8 a fraction the numerator of which is 

9 the number of days in the taxable year 

10 before January 1, 2014, and the de11 nominator of which is the number of 

12 days in the taxable year, and 

13 (ii) such amount determined after tak14 ing into account the amendments made by 

15 this section and— 

16 (I) by taking into account only 

17 property placed in service after Decem18 ber 31, 2013, and 

19 (II) by multiplying the limitation 

20 under section 168(k)(4)(B)(ii) of such 

21 Code (as amended by this section) by a 

22 fraction the numerator of which is the 

23 number of days in the taxable year 

24 after December 31, 2013, and the deVerDate Mar 15 2010 01:05 Jul 04, 2014 Jkt 039200 PO 00000 Frm 00016 Fmt 6652 Sfmt 6203 E:\BILLS\H4718.RH H4718

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1 nominator of which is the number of 

2 days in the taxable year. 

3 (3) SPECIAL RULES FOR CERTAIN TREES AND

4 VINES.—The amendment made by subsection (c)(2) 

5 shall apply to trees and vines planted or grafted after 

6 December 31, 2013. 


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Union Calendar No. 381 

113TH CONGRESS 

2D SESSION H. R. 4718 

[Report No. 113–509] 

A BILL 

modify and make permanent bonus depreciation. 

To amend the Internal Revenue Code of 1986 to 

JULY 3, 2014 

Reported with an amendment, committed to the Comand ordered to be printed mittee of the Whole House on the State of the Union, 


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