113TH CONGRESS 

2D SESSION H. R. 4718 

AN ACT 

To amend the Internal Revenue Code of 1986 to modify 

and make permanent bonus depreciation. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 
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1 SECTION 1. BONUS DEPRECIATION MODIFIED AND MADE 

2 PERMANENT. 

3 (a) MADE PERMANENT; INCLUSION OF QUALIFIED

4 RETAIL IMPROVEMENT PROPERTY.—Section 168(k)(2) of 

5 the Internal Revenue Code of 1986 is amended to read 

6 as follows: 

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

8 this subsection— 

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

10 property’ means property— 

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

12 which has a recovery period of 20 years or 

13 less, 

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

15 defined in section 167(f)(1)(B)) for which 

16 a deduction is allowable under section 

17 167(a) without regard to this subsection, 

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

19 ‘‘(IV) which is qualified leasehold im20 provement property, or 

21 ‘‘(V) which is qualified retail improve22 ment property, and 

23 ‘‘(ii) the original use of which com24 mences with the taxpayer. 

25 ‘‘(B) EXCEPTION FOR ALTERNATIVE DE26 PRECIATION PROPERTY.—The term ‘qualified 
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1 property’ shall not include any property to 

2 which the alternative depreciation system under 

3 subsection (g) applies, determined— 

4 ‘‘(i) without regard to paragraph (7) 

5 of subsection (g) (relating to election to 

6 have system apply), and 

7 ‘‘(ii) after application of section 

8 280F(b) (relating to listed property with 

9 limited business use). 

10 ‘‘(C) SPECIAL RULES.— 

11 ‘‘(i) SALE-LEASEBACKS.—For pur12 poses of clause (ii) and subparagraph 

13 (A)(ii), if property is— 

14 ‘‘(I) originally placed in service 

15 by a person, and 

16 ‘‘(II) sold and leased back by 

17 such person within 3 months after the 

18 date such property was originally 

19 placed in service, 

20 such property shall be treated as originally 

21 placed in service not earlier than the date 

22 on which such property is used under the 

23 leaseback referred to in subclause (II). 

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

25 subparagraph (A)(ii), if— 
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1 ‘‘(I) property is originally placed 

2 in service by the lessor of such prop3 erty, 

4 ‘‘(II) such property is sold by 

5 such lessor or any subsequent pur6 chaser within 3 months after the date 

7 such property was originally placed in 

8 service (or, in the case of multiple 

9 units of property subject to the same 

10 lease, within 3 months after the date 

11 the final unit is placed in service, so 

12 long as the period between the time 

13 the first unit is placed in service and 

14 the time the last unit is placed in 

15 service does not exceed 12 months), 

16 and 

17 ‘‘(III) the user of such property 

18 after the last sale during such 3- 

19 month period remains the same as 

20 when such property was originally 

21 placed in service, 

22 such property shall be treated as originally 

23 placed in service not earlier than the date 

24 of such last sale. 
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1 ‘‘(D) COORDINATION WITH SECTION

2 280F.—For purposes of section 280F— 

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

4 passenger automobile (as defined in section 

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

6 the Secretary shall increase the limitation 

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

8 ‘‘(ii) LISTED PROPERTY.—The deduc9 tion allowable under paragraph (1) shall be 

10 taken into account in computing any re11 capture amount under section 280F(b)(2). 

12 ‘‘(iii) INFLATION ADJUSTMENT.— In 

13 the case of any taxable year beginning in 

14 a calendar year after 2014, the $8,000 

15 amount in clause (i) shall be increased by 

16 an amount equal to— 

17 ‘‘(I) such dollar amount, multi18 plied by 

19 ‘‘(II) the automobile price infla20 tion adjustment determined under sec21 tion 280F(d)(7)(B)(i) for the calendar 

22 year in which such taxable year begins 

23 by substituting ‘2013’ for ‘1987’ in 

24 subclause (II) thereof. 
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1 If any increase under the preceding sen2 tence is not a multiple of $100, such in3 crease shall be rounded to the nearest mul4 tiple of $100. 

5 ‘‘(E) DEDUCTION ALLOWED IN COMPUTING

6 MINIMUM TAX.—For purposes of determining 

7 alternative minimum taxable income under sec8 tion 55, the deduction under section 167 for 

9 qualified property shall be determined without 

10 regard to any adjustment under section 56.’’. 

11 (b) EXPANSION OF ELECTION TO ACCELERATE AMT

12 CREDITS IN LIEU OF BONUS DEPRECIATION.—Section 

13 168(k)(4) of such Code is amended to read as follows: 

14 ‘‘(4) ELECTION TO ACCELERATE AMT CREDITS

15 IN LIEU OF BONUS DEPRECIATION.— 

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

17 to have this paragraph apply for any taxable 

18 year— 

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

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

21 year, 

22 ‘‘(ii) the applicable depreciation meth23 od used under this section with respect to 

24 any qualified property shall be the straight 

25 line method, and 
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1 ‘‘(iii) the limitation imposed by section 

2 53(c) for such taxable year shall be in3 creased by the bonus depreciation amount 

4 which is determined for such taxable year 

5 under subparagraph (B). 

6 ‘‘(B) BONUS DEPRECIATION AMOUNT.— 

7 For purposes of this paragraph— 

8 ‘‘(i) IN GENERAL.—The bonus depre9 ciation amount for any taxable year is an 

10 amount equal to 20 percent of the excess 

11 (if any) of— 

12 ‘‘(I) the aggregate amount of de13 preciation which would be allowed 

14 under this section for qualified prop15 erty placed in service by the taxpayer 

16 during such taxable year if paragraph 

17 (1) applied to all such property, over 

18 ‘‘(II) the aggregate amount of 

19 depreciation which would be allowed 

20 under this section for qualified prop21 erty placed in service by the taxpayer 

22 during such taxable year if paragraph 

23 (1) did not apply to any such prop24 erty. 
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1 The aggregate amounts determined under 

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

3 without regard to any election made under 

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

5 and without regard to subparagraph 

6 (A)(ii). 

7 ‘‘(ii) LIMITATION.—The bonus depre8 ciation amount for any taxable year shall 

9 not exceed the lesser of— 

10 ‘‘(I) 50 percent of the minimum 

11 tax credit under section 53(b) for the 

12 first taxable year ending after Decem13 ber 31, 2013, or 

14 ‘‘(II) the minimum tax credit 

15 under section 53(b) for such taxable 

16 year determined by taking into ac17 count only the adjusted net minimum 

18 tax for taxable years ending before 

19 January 1, 2014 (determined by 

20 treating credits as allowed on a first21 in, first-out basis). 

22 ‘‘(iii) AGGREGATION RULE.—All cor23 porations which are treated as a single em24 ployer under section 52(a) shall be treat25 ed— 
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1 ‘‘(I) as 1 taxpayer for purposes 

2 of this paragraph, and 

3 ‘‘(II) as having elected the appli4 cation of this paragraph if any such 

5 corporation so elects. 

6 ‘‘(C) CREDIT REFUNDABLE.—For pur7 poses of section 6401(b), the aggregate increase 

8 in the credits allowable under part IV of sub9 chapter A for any taxable year resulting from 

10 the application of this paragraph shall be treat11 ed as allowed under subpart C of such part 

12 (and not any other subpart). 

13 ‘‘(D) OTHER RULES.— 

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

15 this paragraph may be revoked only with 

16 the consent of the Secretary. 

17 ‘‘(ii) PARTNERSHIPS WITH ELECTING

18 PARTNERS.—In the case of a corporation 

19 which is a partner in a partnership and 

20 which makes an election under subpara21 graph (A) for the taxable year, for pur22 poses of determining such corporation’s 

23 distributive share of partnership items 

24 under section 702 for such taxable year— 
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1 ‘‘(I) paragraphs (1)(A), 

2 (2)(D)(i), and (5)(A)(i) shall not 

3 apply, and 

4 ‘‘(II) the applicable depreciation 

5 method used under this section with 

6 respect to any qualified property shall 

7 be the straight line method. 

8 ‘‘(iii) CERTAIN PARTNERSHIPS.—In 

9 the case of a partnership in which more 

10 than 50 percent of the capital and profits 

11 interests are owned (directly or indirectly) 

12 at all times during the taxable year by 1 

13 corporation (or by corporations treated as 

14 1 taxpayer under subparagraph (B)(iii)), 

15 each partner shall compute its bonus de16 preciation amount under clause (i) of sub17 paragraph (B) by taking into account its 

18 distributive share of the amounts deter19 mined by the partnership under subclauses 

20 (I) and (II) of such clause for the taxable 

21 year of the partnership ending with or 

22 within the taxable year of the partner.’’. 

23 (c) SPECIAL RULES FOR TREES AND VINES BEARING

24 FRUITS AND NUTS.—Section 168(k) of such Code is 

25 amended— 
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1 (1) by striking paragraph (5), and 

2 (2) by inserting after paragraph (4) the fol3 lowing new paragraph: 

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

5 BEARING FRUITS AND NUTS.— 

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

7 tree or vine bearing fruits or nuts which is 

8 planted, or is grafted to a plant that has al9 ready been planted, by the taxpayer in the ordi10 nary course of the taxpayer’s farming business 

11 (as defined in section 263A(e)(4))— 

12 ‘‘(i) a depreciation deduction equal to 

13 50 percent of the adjusted basis of such 

14 tree or vine shall be allowed under section 

15 167(a) for the taxable year in which such 

16 tree or vine is so planted or grafted, and 

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

18 vine shall be reduced by the amount of 

19 such deduction. 

20 ‘‘(B) ELECTION OUT.—If a taxpayer 

21 makes an election under this subparagraph for 

22 any taxable year, this paragraph shall not apply 

23 to any tree or vine planted or grafted during 

24 such taxable year. An election under this sub-
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1 paragraph may be revoked only with the con2 sent of the Secretary. 

3 ‘‘(C) ADDITIONAL DEPRECIATION MAY BE

4 CLAIMED ONLY ONCE.—If this paragraph ap5 plies to any tree or vine, such tree or vine shall 

6 not be treated as qualified property in the tax7 able year in which placed in service. 

8 ‘‘(D) COORDINATION WITH ELECTION TO

9 ACCELERATE AMT CREDITS.—If a corporation 

10 makes an election under paragraph (4) for any 

11 taxable year, the amount under paragraph 

12 (4)(B)(i)(I) for such taxable year shall be in13 creased by the amount determined under sub14 paragraph (A)(i) for such taxable year. 

15 ‘‘(E) DEDUCTION ALLOWED IN COMPUTING

16 MINIMUM TAX.—Rules similar to the rules of 

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

18 this paragraph.’’. 

19 (d) CONFORMING AMENDMENTS.— 

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

21 by striking subparagraph (D). 

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

23 adding at the end the following new paragraph: 

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

25 election under this paragraph with respect to any 
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1 class of property for any taxable year, this sub2 section shall not apply to all property in such class 

3 placed in service (or, in the case of paragraph (5), 

4 planted or grafted) during such taxable year. An 

5 election under this paragraph may be revoked only 

6 with the consent of the Secretary.’’. 

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

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

9 ‘‘section 168(k)(2)(E)’’. 

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

11 by adding at the end the following new paragraph: 

12 ‘‘(7) COORDINATION WITH SECTION

13 168(k)(5).—This section shall not apply to any 

14 amount allowable as a deduction by reason of section 

15 168(k)(5) (relating to special rules for trees and 

16 vines bearing fruits and nuts).’’. 

17 (5) Section 460(c)(6)(B) of such Code is 

18 amended by striking ‘‘which—’’ and all that follows 

19 and inserting ‘‘which has a recovery period of 7 

20 years or less.’’. 

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

22 striking ‘‘ACQUIRED AFTER DECEMBER 31, 2007, 

23 AND BEFORE JANUARY 1, 2014’’ in the heading 

24 thereof. 

25 (e) EFFECTIVE DATES.— 
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1 (1) IN GENERAL.—Except as otherwise pro2 vided in this subsection, the amendments made by 

3 this section shall apply to property placed in service 

4 after December 31, 2013. 

5 (2) EXPANSION OF ELECTION TO ACCELERATE

6 AMT CREDITS IN LIEU OF BONUS DEPRECIATION.— 

7 (A) IN GENERAL.—The amendment made 

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

9 amendment as relates to section 

10 168(k)(4)(D)(iii) of such Code, as added by 

11 such amendment) shall apply to taxable years 

12 ending after December 31, 2013. 

13 (B) TRANSITIONAL RULE.—In the case of 

14 a taxable year beginning before January 1, 

15 2014, and ending after December 31, 2013, the 

16 bonus depreciation amount determined under 

17 section 168(k)(4) of such Code for such year 

18 shall be the sum of— 

19 (i) such amount determined without 

20 regard to the amendments made by this 

21 section and— 

22 (I) by taking into account only 

23 property placed in service before Jan24 uary 1, 2014, and 
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1 (II) by multiplying the limitation 

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

3 Code (determined without regard to 

4 the amendments made by this section) 

5 by a fraction the numerator of which 

6 is the number of days in the taxable 

7 year before January 1, 2014, and the 

8 denominator of which is the number 

9 of days in the taxable year, and 

10 (ii) such amount determined after 

11 taking into account the amendments made 

12 by this section and— 

13 (I) by taking into account only 

14 property placed in service after De15 cember 31, 2013, and 

16 (II) by multiplying the limitation 

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

18 Code (as amended by this section) by 

19 a fraction the numerator of which is 

20 the number of days in the taxable 

21 year after December 31, 2013, and 

22 the denominator of which is the num23 ber of days in the taxable year. 

24 (3) SPECIAL RULES FOR CERTAIN TREES AND

25 VINES.—The amendment made by subsection (c)(2) 
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1 shall apply to trees and vines planted or grafted 

2 after December 31, 2013. 

3 SEC. 2. BUDGETARY EFFECTS. 

4 (a) STATUTORY PAY-AS-YOU-GO SCORECARDS.—The 

5 budgetary effects of this Act shall not be entered on either 

6 PAYGO scorecard maintained pursuant to section 4(d) of 

7 the Statutory Pay-As-You-Go Act of 2010. 

8 (b) SENATE PAYGO SCORECARDS.—The budgetary 

9 effects of this Act shall not be entered on any PAYGO 

10 scorecard maintained for purposes of section 201 of S. 

11 Con. Res. 21 (110th Congress). 

Passed the House of Representatives July 11, 2014. 

Attest: 

Clerk. 

113TH CONGRESS 

2D SESSION H. R. 4718 

AN ACT 

modify and make permanent bonus depreciation. 

To amend the Internal Revenue Code of 1986 to