I
107TH CONGRESS
1ST SESSION
H. R. 1030
To amend the Internal Revenue Code of 1986 to provide a shorter recovery
period for the depreciation of certain leasehold improvements.
IN THE HOUSE OF REPRESENTATIVES
MARCH 14, 2001
Mr. SHAW (for himself, Mr. RANGEL, Mrs. JOHNSON of Connecticut, Mr.
STARK, Mr. HOUGHTON, Mr. MATSUI, Mr. HERGER, Mr. COYNE, Mr.
RAMSTAD, Mr. CARDIN, Mr. CAMP, Mr. LEWIS of Georgia, Mr. JOHNSON
of Texas, Mr. NEAL, Mr. ENGLISH, Mr. BECERRA, Mr. WATKINS, Mrs.
THURMAN, Mr. HAYWORTH, Mr. MCINNIS, Mr. FOLEY, Mr. POMEROY,
Mr. RILEY, Mrs. KELLY of New York, Mr. NETHERCUTT, Mr. GARY
MILLER of California, Mr. GOODE, Mr. DOYLE, Mr. GREEN of Wisconsin,
Mr. STUMP, Mr. SHOWS, Mr. BLUMENAUER, Mr. FILNER, Mr. BENTSEN,
Mr. GUTKNECHT, Mr. CLEMENT, Mr. TERRY, Mr. UDALL of New Mex-
ico, Mr. DICKS, Mr. BONIOR, Mr. TOM DAVIS of Virginia, Mr. EHRLICH,
Ms. PRYCE, Mrs. MYRICK, Mr. CHAMBLISS, Mr. BUYER, Mr. SANDLIN,
Mr. DOOLITTLE, Mr. LARSON, Mr. MILLER of Florida, Mr. REYNOLDS,
Mr. DEUTSCH, Mr. ISAKSON, Mr. DAVIS of Florida, Mr. WELDON of
Florida, Mr. GREENWOOD, Mr. KOLBE, Mr. COX, Mr. WEXLER, Mr.
FROST, Mr. WATT, Mr. SOUDER, Mr. MALONEY, Mr. HALL of Ohio, Ms.
CARSON, and Mr. GREEN of Texas) 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 provide
a shorter recovery period for the depreciation of certain
leasehold improvements.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. RECOVERY PERIOD FOR DEPRECIATION OF
CERTAIN LEASEHOLD IMPROVEMENTS.
(a) 10-YEAR
RECOVERY
PERIOD.—Subparagraph
(D) of section 168(e)(3) of the Internal Revenue Code of
1986 (relating to 10-year property) is amended by striking
‘‘and’’ at the end of clause (i), by striking the period at
the end of clause (ii) and inserting ‘‘, and’’, and by adding
at the end the following new clause:
‘‘(iii) any qualified leasehold improve-
ment property.’’.
(b) QUALIFIED LEASEHOLD IMPROVEMENT PROP-
ERTY.—Subsection (e) of section 168 of such Code is
amended by adding at the end the following new para-
graph:
‘‘(6) QUALIFIED
LEASEHOLD
IMPROVEMENT
PROPERTY.—
‘‘(A) IN
GENERAL.—The term ‘qualified
leasehold improvement property’ means any im-
provement to an interior portion of a building
which is nonresidential real property if—
‘‘(i) such improvement is made under
or pursuant to a lease (as defined in sub-
section (h)(7))—
‘‘(I) by the lessee (or any subles-
see) of such portion, or
‘‘(II) by the lessor of such por-
tion,
‘‘(ii) such portion is to be occupied ex-
clusively by the lessee (or any sublessee) of
such portion, and
‘‘(iii) such improvement is placed in
service more than 3 years after the date
the building was first placed in service.
‘‘(B) CERTAIN
IMPROVEMENTS
NOT
IN-
CLUDED.—Such term shall not include any im-
provement for which the expenditure is attrib-
utable to—
‘‘(i) the enlargement of the building,
‘‘(ii) any elevator or escalator,
‘‘(iii) any structural component bene-
fiting a common area, and
‘‘(iv) the internal structural frame-
work of the building.
‘‘(C) DEFINITIONS AND SPECIAL RULES.—
For purposes of this paragraph—
‘‘(i) COMMITMENT TO LEASE TREAT-
ED
AS
LEASE.—A commitment to enter
into a lease shall be treated as a lease, and
the parties to such commitment shall be
treated as lessor and lessee, respectively.
‘‘(ii) RELATED PERSONS.—A lease be-
tween related persons shall not be consid-
ered a lease. For purposes of the preceding
sentence, 
the 
term 
‘related 
persons’
means—
‘‘(I) members of an affiliated
group (as defined in section 1504),
and
‘‘(II) persons having a relation-
ship described in subsection (b) of
section 267; except that, for purposes
of this clause, the phrase ‘80 percent
or more’ shall be substituted for the
phrase ‘more than 50 percent’ each
place it appears in such subsection.
‘‘(D) IMPROVEMENTS MADE BY LESSOR.—
‘‘(i) IN GENERAL.—In the case of an
improvement made by the person who was
the lessor of such improvement when such
improvement was placed in service, such
improvement shall be qualified leasehold
improvement property (if at all) only so
long as such improvement is held by such
person.