(B) by striking ‘‘January 1, 2006’’ (as in
effect before the amendment made by subpara-
graph (A)) and inserting ‘‘January 1, 2007’’.
(2) PORTION
OF
BASIS
TAKEN
INTO
AC-
COUNT.—
(A) Subparagraphs (B)(ii) and (D)(i) of
section 168(k)(2) are each amended by striking
‘‘September 11, 2004’’ each place it appears in
the text and inserting ‘‘January 1, 2006’’.
(B) Clause (ii) of section 168(k)(2)(B) is
amended by striking ‘‘PRE-SEPTEMBER
11,
2004’’ in the heading and inserting ‘‘PRE-JANU-
ARY 1, 2006’’.
(3) ACQUISITION DATE.—Clause (iii) of section
168(k)(2)(A) is amended by striking ‘‘September 11,
2004’’ each place it appears and inserting ‘‘January
1, 2006’’.
(4) 
ELECTION.—Clause 
(iii) 
of 
section
168(k)(2)(C) is amended by adding at the end the
following: ‘‘The preceding sentence shall be applied
separately with respect to property treated as quali-
fied property by paragraph (4) and other qualified
property.’’.
(c) CONFORMING AMENDMENTS.—
(1) The subsection heading for section 168(k) is
amended by striking ‘‘SEPTEMBER 11, 2004’’ and
inserting ‘‘JANUARY 1, 2006’’.
(2) The heading for clause (i) of section
1400L(b)(2)(C) is amended by striking ‘‘30-PER-
CENT ADDITIONAL ALLOWABLE PROPERTY’’ and in-
serting ‘‘BONUS DEPRECIATION PROPERTY UNDER
SECTION 168(k)’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after the
date of the enactment of this Act.
SEC. 202. INCREASED EXPENSING FOR SMALL BUSINESS.
(a) IN GENERAL.—Paragraph (1) of section 179(b)
(relating to dollar limitation) is amended to read as fol-
lows:
‘‘(1) DOLLAR LIMITATION.—The aggregate cost
which may be taken into account under subsection
(a) for any taxable year shall not exceed $25,000
($100,000 in the case of taxable years beginning
after 2002 and before 2008).’’.
(b) INCREASE
IN
QUALIFYING
INVESTMENT
AT
WHICH PHASEOUT BEGINS.—Paragraph (2) of section
179(b) (relating to reduction in limitation) is amended by
inserting ‘‘($400,000 in the case of taxable years begin-
ning after 2002 and before 2008)’’ after ‘‘$200,000’’.
(c) OFF-THE-SHELF COMPUTER SOFTWARE.—Para-
graph (1) of section 179(d) (defining section 179 prop-
erty) is amended to read as follows:
‘‘(1) SECTION 179 PROPERTY.—For purposes of
this section, the term ‘section 179 property’ means
property—
‘‘(A) which is—
‘‘(i) tangible property (to which sec-
tion 168 applies), or
‘‘(ii) computer software (as defined in
section 197(e)(3)(B)) which is described in
section 197(e)(3)(A)(i), to which section
167 applies, and which is placed in service
in a taxable year beginning after 2002 and
before 2008,
‘‘(B) which is section 1245 property (as
defined in section 1245(a)(3)), and
‘‘(C) which is acquired by purchase for use
in the active conduct of a trade or business.
Such term shall not include any property described
in section 50(b) and shall not include air condi-
tioning or heating units.’’.
(d) ADJUSTMENT OF DOLLAR LIMIT AND PHASEOUT
THRESHOLD FOR INFLATION.—Subsection (b) of section
179 (relating to limitations) is amended by adding at the
end the following new paragraph:
‘‘(5) INFLATION ADJUSTMENTS.—
‘‘(A) IN
GENERAL.—In the case of any
taxable year beginning in a calendar year after
2003 and before 2008, the $100,000 and
$400,000 amounts in paragraphs (1) and (2)
shall each be increased by an amount equal
to—
‘‘(i) such dollar amount, multiplied by
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for the cal-
endar year in which the taxable year be-
gins, by substituting ‘calendar year 2002’
for ‘calendar year 1992’ in subparagraph
(B) thereof.
‘‘(B) ROUNDING.—
‘‘(i) DOLLAR
LIMITATION.—If the
amount in paragraph (1) as increased
under subparagraph (A) is not a multiple
of $1,000, such amount shall be rounded
to the nearest multiple of $1,000.
‘‘(ii) PHASEOUT
AMOUNT.—If the
amount in paragraph (2) as increased
under subparagraph (A) is not a multiple
of $10,000, such amount shall be rounded
to the nearest multiple of $10,000.’’.
(e) REVOCATION OF ELECTION.—Paragraph (2) of
section 179(c) (relating to election irrevocable) is amended
to read as follows:
‘‘(2) REVOCATION OF ELECTION.—An election
under paragraph (1) with respect to any taxable
year beginning after 2002 and before 2008, and any
specification contained in any such election, may be
revoked by the taxpayer with respect to any prop-
erty. Such revocation, once made, shall be irrev-
ocable.’’.
(f) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2002.
SEC. 203. 5-YEAR CARRYBACK OF CERTAIN NET OPERATING
LOSSES.
(a) IN GENERAL.—Subparagraph (H) of section
172(b)(1) is amended—
(1) by inserting ‘‘5-YEAR CARRYBACK OF CER-
TAIN LOSSES.—’’ after ‘‘(H)’’, and
(2) by striking ‘‘or 2002’’ and inserting ‘‘,
2002, 2003, 2004 or 2005’’.