I
106TH CONGRESS
1ST SESSION
H. R. 179
To allow a deduction from gross income for year 2000 computer conversion
costs of small businesses.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 6, 1999
Mrs. THURMAN introduced the following bill; which was referred to the
Committee on Ways and Means
A BILL
To allow a deduction from gross income for year 2000
computer conversion costs of small businesses.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Businesses Undergoing
the Glitch (BUG) Act’’.
SEC. 2. DEDUCTION FOR COSTS OF MAKING COMPUTERS
AND COMPUTER SOFTWARE YEAR 2000 COM-
PLIANT.
(a) IN GENERAL.—
(1) PROPERTY PLACED IN SERVICE IN 1999.—
A taxpayer may elect to treat the cost of a business
Y2K asset placed in service during the taxpayer’s
first taxable year beginning in 1999 as an expense
which is not chargeable to capital account. The cost
so treated shall be allowed as a deduction from gross
income for purposes of the Internal Revenue Code of
1986.
(2) PROPERTY PLACED IN SERVICE IN 1997 OR
1998.—A taxpayer may elect to deduct from gross in-
come an amount equal to the unrecovered basis of
a business Y2K asset placed in service during the 2
taxable years preceding the first taxable year begin-
ning in 1999 and which is otherwise subject to de-
preciation under such Code.
(b) LIMITATIONS.—
(1) IN GENERAL.—The aggregate amount al-
lowed as a deduction under subsection (a) shall not
exceed $40,000.
(2) APPLICATION OF BUSINESS LIMITATIONS OF
SECTION 179.—Rules similar to the rules of para-
graphs (2), (3), and (4) of section 179(b) of such
Code shall apply for purposes of this section. For
purposes of the preceding sentence, the cost of prop-
erty to which the limitation in paragraph (2) of such
section 179(b) applies shall be the sum of—
(A) the amounts elected under subsection
(a)(1) with respect to property placed in service
during the taxpayer’s first taxable year begin-
ning in 1999, and
(B) the amounts elected under subsection
(a)(2) with respect to the unrecovered basis of
business Y2K assets placed in service during
the 2 taxable years preceding the first taxable
year beginning in 1999.
(c) DEFINITIONS.—For purposes of this section—
(1) BUSINESS Y2K ASSET.—The term ‘‘business
Y2K asset’’ means an asset acquired by purchase for
use in the active conduct of a trade or business
which is—
(A) any computer acquired to replace a
computer where such replacement is necessary
because of the year 2000 computer conversion
problem, and
(B) any of the following items which are of
a character subject to the allowance for depre-
ciation under such Code:
(i) the modification of computer soft-
ware to address the year 2000 computer
conversion problem, and
(ii) computer software which is year
2000 compliant acquired to replace com-
puter software which is not so compliant.
(2) COMPUTER.—The term ‘‘computer’’ means
a computer or peripheral equipment (as defined by
section 168(i)(2)(B)) of such Code.
(3) COMPUTER
SOFTWARE.—The term ‘‘com-
puter software’’ has the meaning given to such term
by section 167(f) of such Code.
(4) UNRECOVERED
BASIS.—The term ‘‘unre-
covered basis’’ means the adjusted basis of the busi-
ness Y2K asset determined as of the close of the last
taxable year beginning before January 1, 1999.
(d) SPECIAL RULES.—
(1) IN GENERAL.—Rules similar to the rules of
subsections (c) and (d) (other than paragraph (1)
thereof) of section 179 of such Code shall apply for
purposes of this section.
(2) TREATMENT AS DEDUCTION UNDER SEC-
TION 179.—For purposes of the Internal Revenue
Code of 1986, the deduction allowed under this sec-
tion shall be treated in the same manner as a deduc-
tion allowed under section 179 of such Code.
(3) ORDERING RULE.—For purposes of section
179 of such Code, subsection (b)(3)(C) of such sec-
tion shall be applied without regard to the deduction
allowed under this section.
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