II 

117TH CONGRESS 

2D SESSION S. 4012 

To amend the Internal Revenue Code of 1986 to modify the depreciation 

of nonresidential real property and residential rental property. 

IN THE SENATE OF THE UNITED STATES 

APRIL 6, 2022 

Mr. BRAUN 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 modify 

the depreciation of nonresidential real property and residential rental property. 

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 ‘‘Renewing Investment 

5 in American Workers and Supply Chains Act’’. 

6 SEC. 2. MODIFICATION OF DEPRECIATION OF NONRESI7 DENTIAL REAL PROPERTY AND RESIDENTIAL 

8 RENTAL PROPERTY. 

9 (a) 20-YEAR RECOVERY PERIOD.— 


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1 (1) IN GENERAL.—Section 168(e)(3)(F) of the 

2 Internal Revenue Code of 1986 is amended to read 

3 as follows: 

4 ‘‘(F) 20-YEAR PROPERTY.—The term ‘20- 

5 year property’ means— 

6 ‘‘(i) initial clearing and grading land 

7 improvements with respect to any electric 

8 utility transmission and distribution plant, 

9 ‘‘(ii) any nonresidential real property, 

10 and 

11 ‘‘(iii) any residential rental property.’’. 

12 (2) BONUS DEPRECIATION NOT APPLICABLE.— 

13 Section 168(k)(2)(A)(i)(I) of such Code is amended 

14 by inserting ‘‘(other than nonresidential real prop15 erty and residential rental property)’’ before the 

16 comma at the end. 

17 (3) CONFORMING AMENDMENT.—The table con18 tained in section 168(c) of such Code is amended— 

19 (A) by striking the row relating to residen20 tial rental property, and 

21 (B) by striking the row relating to nonresi22 dential real property. 

23 (b) ADJUSTMENT OF DEDUCTION TO PROVIDE NEU24 TRAL COST RECOVERY.—Section 168 of such Code is 


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1 amended by adding at the end the following new sub2 section: 

3 ‘‘(n) NEUTRAL COST RECOVERY FOR NONRESIDEN4 TIAL REAL PROPERTY AND RESIDENTIAL RENTAL PROP5 ERTY.— 

6 ‘‘(1) IN GENERAL.—The deduction otherwise 

7 provided under section 167(a) with respect to non8 residential real property and residential rental prop9 erty for any taxable year shall be equal to the prod10 uct of such amount (determined without regard to 

11 this subsection) multiplied by the applicable neutral 

12 cost recovery ratio with respect to such property for 

13 such taxable year. 

14 ‘‘(2) NEUTRAL COST RECOVERY RATIO.—For 

15 purposes of paragraph (1), the term ‘applicable neu16 tral cost recovery ratio’ means, with respect to any 

17 property for any taxable year, the product (not less 

18 than 1 and rounded to the nearest 0.001) of— 

19 ‘‘(A) the quotient of— 

20 ‘‘(i) the gross domestic product 

21 deflator (as determined by the Bureau of 

22 Economic Analysis) for the calendar quar23 ter ending in such taxable year which cor24 responds to the calendar quarter during 


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1 which such property was placed in service 

2 by the taxpayer, divided by 

3 ‘‘(ii) the gross domestic product 

4 deflator (as determined by the Bureau of 

5 Economic Analysis) for the calendar quar6 ter during which such property was placed 

7 in service by the taxpayer, multiplied by 

8 ‘‘(B) 1.03 to the nth power, where ‘n’ is 

9 the number of full years in the period beginning 

10 on the 1st day of the calendar quarter during 

11 which such property was placed in service by 

12 the taxpayer and ending on the day before the 

13 beginning of the corresponding calendar quarter 

14 ending during such taxable year. 

15 ‘‘(3) APPLICATION TO PROPERTY PLACED IN

16 SERVICE BEFORE DATE OF ENACTMENT.—In the 

17 case of nonresidential real property or residential 

18 rental property which is placed in service before the 

19 date of enactment of this subsection, subparagraphs 

20 (A)(i), (A)(ii), and (B) of paragraph (2) shall each 

21 be applied by substituting ‘calendar quarter which 

22 includes the date of enactment of this subsection’ for 

23 ‘calendar quarter during which such property was 

24 placed in service by the taxpayer’. 


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1 ‘‘(4) ADDITIONAL DEDUCTION NOT TO AFFECT

2 BASIS OR RECAPTURE.— 

3 ‘‘(A) IN GENERAL.—The additional 

4 amount determined under this section by reason 

5 of this subsection shall not be taken into ac6 count in determining the adjusted basis of any 

7 applicable property or of any interest in a pass8 thru entity which holds such property and shall 

9 not be treated as a deduction for depreciation 

10 for purposes of sections 1245 and 1250. 

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

12 purposes of subparagraph (A), the term ‘pass13 thru entity’ means— 

14 ‘‘(i) a regulated investment company, 

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

16 ‘‘(iii) an S corporation, 

17 ‘‘(iv) a partnership, 

18 ‘‘(v) an estate or trust, and 

19 ‘‘(vi) a common trust fund.’’. 

20 (c) EFFECTIVE DATES.— 

21 (1) 20-YEAR RECOVERY PERIOD.—The amend22 ments made by subsection (a) shall apply to prop23 erty placed in service after the date of the enactment 

24 of this Act, in taxable years ending after such date. 


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1 (2) NEUTRAL COST RECOVERY.—The amend2 ments made by subsection (b) shall apply to taxable 

3 years ending after the date of the enactment of this 

4 Act. 

Æ 


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