I 
108TH CONGRESS 
1ST SESSION H. R. 1126
To amend the Internal Revenue Code of 1986 to expand the expense treat-
ment for small businesses and to reduce the depreciation recovery period 
for restaurant buildings and franchise operations, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 6, 2003
Ms. GRANGER (for herself, Mr. WYNN, Mr. FROST, Mr. SCHROCK, Mr. CAN-
NON, Ms. ROS-LEHTINEN, Mr. BOEHNER, Ms. GINNY BROWN-WAITE of 
Florida, Mr. ISAKSON, and Mr. CANTOR) 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 expand 
the expense treatment for small businesses and to reduce 
the depreciation recovery period for restaurant buildings 
and franchise operations, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Small Business Tax Fairness Act of 2003’’. 
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
ment or repeal is expressed in terms of an amendment 
to, or repeal of, a section or other provision, the reference 
shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986. 
SEC. 2. EXPANSION OF EXPENSE TREATMENT FOR SMALL 
BUSINESSES. 
(a) IN GENERAL.—Section 179(b)(1) is amended to 
read as follows: 
‘‘(1) DOLLAR LIMITATION.—
‘‘(A) IN
GENERAL.—The aggregate cost 
which may be taken into account under sub-
section (a) for any taxable year shall not exceed 
$100,000. 
‘‘(B) INFLATION
ADJUSTMENT.—In the 
case of any taxable year beginning in a calendar 
year after 2003, the dollar amount contained in 
subparagraph (A) shall 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.
If any amount as adjusted under this subpara-
graph is not a multiple of $1,000, such amount 
shall be rounded to the nearest multiple of 
$1,000.’’. 
(b) EXPANSION OF PHASE-OUT OF LIMITATION.—
Section 179(b)(2) is amended to read as follows: 
‘‘(2) REDUCTION IN LIMITATION.—
‘‘(A) IN GENERAL.—The limitation under 
paragraph (1) for any taxable year shall be re-
duced (but not below zero) by the amount by 
which the cost of section 179 property for 
which a deduction is allowable (without regard 
to this subsection) under subsection (a) for 
such taxable year exceeds $400,000. 
‘‘(B) INFLATION
ADJUSTMENT.—In the 
case of any taxable year beginning in a calendar 
year after 2003, the dollar amount contained in 
subparagraph (A) shall 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. 
If any amount as adjusted under this subpara-
graph is not a multiple of $10,000, such 
amount shall be rounded to the nearest multiple 
of $10,000.’’. 
(c) TIME OF DEDUCTION.—The second sentence of 
section 179(a) (relating to election to expense certain de-
preciable business assets) is amended by inserting ‘‘(or, 
if the taxpayer elects, the preceding taxable year if the 
property was purchased in such preceding year)’’ after 
‘‘service’’. 
(d) COMPUTER SOFTWARE ELIGIBLE FOR EXPENS-
ING.—
(1) IN GENERAL.—The heading and first sen-
tence of section 179(d)(1) are 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 section 
168 applies, or
‘‘(ii) computer software (as defined in 
section 197(e)(3)(B)) to which section 167 
applies,
‘‘(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.’’. 
(2) NO
COMPUTER
SOFTWARE
INCLUDED
AS 
SECTION 197 INTANGIBLE.—
(A) IN GENERAL.—Section 197(e)(3)(A) is 
amended to read as follows: 
‘‘(A) IN
GENERAL.—Any computer soft-
ware.’’. 
(B) CONFORMING
AMENDMENT.—Section 
167(f)(1)(B) is amended by striking ‘‘; except 
that such term shall not include any such soft-
ware which is an amortizable section 197 intan-
gible’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2002.
SEC. 3. DEPRECIATION RECOVERY PERIOD FOR RES-
TAURANT BUILDINGS AND FRANCHISE OPER-
ATIONS. 
(a) 
15-YEAR
RECOVERY
PERIOD.—Section 
168(e)(3)(E) (relating to 15-year property) is amended by 
striking ‘‘and’’ at the end of clause (ii), by striking the 
period at the end of clause (iii) and inserting a comma, 
and by adding at the end the following new clause: 
‘‘(iv) any section 1250 property which 
is a retail restaurant facility or an im-
provement thereto.’’. 
(b) RETAIL RESTAURANT FACILITY.—Section 168(e) 
(relating to classification of property) is amended by add-
ing at the end the following new paragraph: 
‘‘(6) RETAIL
RESTAURANT
FACILITY.—The 
term ‘retail restaurant facility’ means any building 
if—
‘‘(A) more than 50 percent of the build-
ing’s square footage is devoted to preparation 
of, and seating for on-premises consumption of, 
prepared meals, and 
‘‘(B) the building is owned by—
‘‘(i) the person operating the meal 
preparation facility in such building, or 
‘‘(ii) a person who is related (within 
the 
meaning 
of 
section 
267(b) 
or
707(b)(1)) to the person described in 
clause (i).’’. 
(c) ALTERNATIVE SYSTEM.—The table contained in 
section 168(g)(3)(B) is amended by inserting after the 
item relating to subparagraph (E)(iii) the following new 
item:
‘‘(E)(iv) .....................................................................................................
15’’.
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
the date of the enactment of this Act and to all improve-
ments made after the date of enactment.
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