I
107TH CONGRESS
1ST SESSION
H. R. 3373
To amend the Internal Revenue Code of 1986 to provide tax benefits for
the recovery of the area of New York City damaged in the September
11, 2001, terrorist attacks.
IN THE HOUSE OF REPRESENTATIVES
NOVEMBER 29, 2001
Mr. HOUGHTON (for himself, Mr. RANGEL, Mr. FOSSELLA, Mr. GILMAN, Mr.
TOWNS, Mrs. MCCARTHY of New York, Mr. QUINN, Mr. KING, Mrs.
KELLY, Mr. SWEENEY, Mr. REYNOLDS, Mr. SERRANO, Mr. WALSH, Mr.
MCHUGH, Mr. GRUCCI, Mr. ENGEL, and Mr. HINCHEY) 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
tax benefits for the recovery of the area of New York
City damaged in the September 11, 2001, terrorist at-
tacks.
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 ‘‘New York Liberty
Zone Tax Relief Act of 2001’’.
SEC. 2. TAX BENEFITS FOR AREA OF NEW YORK CITY DAM-
AGED 
IN 
TERRORIST 
ATTACKS 
ON 
SEP-
TEMBER 11, 2001.
(a) IN GENERAL.—Chapter 1 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the
following new subchapter:
‘‘Subchapter Y—New York Liberty Zone
Benefits
‘‘Sec. 1400L. Tax benefits for New York Liberty Zone.
‘‘SEC. 1400L. TAX BENEFITS FOR NEW YORK LIBERTY ZONE.
‘‘(a) SPECIAL ALLOWANCE FOR CERTAIN PROPERTY
ACQUIRED AFTER SEPTEMBER 10, 2001.—
‘‘(1) ADDITIONAL ALLOWANCE.—In the case of
any qualified New York Liberty Zone property—
‘‘(A) the depreciation deduction provided
by section 167(a) for the taxable year in which
such property is placed in service shall include
an allowance equal to 30 percent of the ad-
justed basis of such property, and
‘‘(B) the adjusted basis of the qualified
New York Liberty Zone property shall be re-
duced by the amount of such deduction before
computing the amount otherwise allowable as a
depreciation deduction under this chapter for
such taxable year and any subsequent taxable
year.
‘‘(2) QUALIFIED
NEW
YORK
LIBERTY
ZONE
PROPERTY.—For purposes of this subsection—
‘‘(A) IN
GENERAL.—The term ‘qualified
New York Liberty Zone property’ means
property—
‘‘(i)(I) to which section 168 applies
(other than railroad grading and tunnel
bores), or
‘‘(II) which is computer software (as
defined in section 167(f)(1)(B)) for which
a deduction is allowable under section
167(a) without regard to this subsection,
‘‘(ii) substantially all of the use of
which is in the New York Liberty Zone
and is in the active conduct of a trade or
business by the taxpayer in such Zone,
‘‘(iii) the original use of which in the
New York Liberty Zone commences with
the taxpayer after September 10, 2001,
and
‘‘(iv) which is acquired by the tax-
payer by purchase (as defined in section
179(d)) after September 10, 2001, and
placed in service by the taxpayer on or be-
fore the termination date, but only if no
written binding contract for the acquisition
was in effect before September 11, 2001.
The term ‘termination date’ means December
31, 2006 (December 31, 2009, in the case of
nonresidential real property and residential
rental property).
‘‘(B) EXCEPTIONS.—
‘‘(i) 
ALTERNATIVE
DEPRECIATION
PROPERTY.—The term ‘qualified New York
Liberty Zone property’ shall not include
any property to which the alternative de-
preciation system under section 168(g) ap-
plies, determined—
‘‘(I) without regard to paragraph
(7) of section 168(g) (relating to elec-
tion to have system apply), and
‘‘(II) after application of section
280F(b) (relating to listed property
with limited business use).
‘‘(ii) ELECTION OUT.—If a taxpayer
makes an election under this clause with
respect to any class of property for any
taxable year, this subsection shall not
apply to all property in such class placed
in service during such taxable year.
‘‘(C) SPECIAL RULES RELATING TO ORIGI-
NAL USE.—
‘‘(i) 
SELF-CONSTRUCTED
PROP-
ERTY.—In the case of a taxpayer manufac-
turing, constructing, or producing property
for the taxpayer’s own use, the require-
ments of clause (iv) of subparagraph (A)
shall be treated as met if the taxpayer be-
gins manufacturing, constructing, or pro-
ducing the property after September 10,
2001, and before the termination date.
‘‘(ii) SALE-LEASEBACKS.—For pur-
poses 
of 
subparagraph 
(A)(iii), 
if
property—
‘‘(I) is originally placed in service
after September 10, 2001, by a per-
son, and
‘‘(II) sold and leased back by
such person within 3 months after the
date such property was originally
placed in service,
such property shall be treated as originally
placed in service not earlier than the date
on which such property is used under the
leaseback referred to in subclause (II).
‘‘(D) ALLOWANCE AGAINST ALTERNATIVE
MINIMUM TAX.—The deduction allowed by this
subsection shall be allowed in determining alter-
native minimum taxable income for purposes of
the tax imposed by section 55.
‘‘(b) 5-YEAR RECOVERY PERIOD FOR DEPRECIATION
OF CERTAIN LEASEHOLD IMPROVEMENTS.—
‘‘(1) IN
GENERAL.—For purposes of section
168, the term ‘5-year property’ includes any quali-
fied leasehold improvement property.
‘‘(2) QUALIFIED
LEASEHOLD
IMPROVEMENT
PROPERTY.—For purposes of this subsection—
‘‘(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 building is located in the
New York Liberty Zone,
‘‘(ii) such improvement is made under
or pursuant to a lease (as defined in sec-
tion 168(h)(7))—
‘‘(I) by the lessee (or any subles-
see) of such portion, or
‘‘(II) by the lessor of such por-
tion,