I 
108TH CONGRESS 
1ST SESSION H. R. 1232
To amend the Internal Revenue Code of 1986 to shorten the recovery period 
for the depreciation of certain property. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 12, 2003
Mr. DREIER 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 shorten 
the recovery period for the depreciation of certain property.
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 ‘‘Technology Investment 
Incentive Act of 2003’’. 
SEC. 2. EXPENSING OF SOFTWARE AND QUALIFIED TECH-
NOLOGICAL EQUIPMENT. 
(a) IN GENERAL.—Part VI of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 is amended 
by inserting after section 179A the following new section:
‘‘SEC. 179B. EXPENSING OF SOFTWARE AND QUALIFIED 
TECHNOLOGICAL EQUIPMENT. 
‘‘(a) TREATMENT AS EXPENSES.—A taxpayer may 
elect to treat the cost of any section 179B property as 
an expense which is not chargeable to capital account. Any 
cost so treated shall be allowed as a deduction for the tax-
able year in which the section 179B property is placed 
in service. 
‘‘(b) SECTION 179B PROPERTY.—For purposes of 
this section—
‘‘(1) IN
GENERAL.—The term ‘section 179B 
property’ means property—
‘‘(A)(i) which is qualified technological 
equipment (as defined in section 168(i)(2)) to 
which section 168 applies, or 
‘‘(ii) which is qualified computer software 
to which section 167 applies, 
‘‘(B) which is section 1245 property (as 
defined in section 1245(a)(3)), 
‘‘(C) which is acquired by purchase (as de-
fined in section 179(b)(2)) after the date of the 
enactment of this section and before September 
11, 2004, for use in the active conduct of a 
trade or business, and 
‘‘(D) which is placed in service on or be-
fore September 11, 2004.
‘‘(2) QUALIFIED COMPUTER SOFTWARE.—The 
term ‘qualified computer software’ means computer 
software (as defined in section 197(e)(3)(B)) which 
is described in section 197(e)(3)(A)(i). 
‘‘(c) PROPERTY
USED
OUTSIDE
THE
UNITED 
STATES NOT QUALIFIED.—No deduction shall be allowed 
under subsection (a) with respect to property which is 
used predominantly outside the United States or with re-
spect to the portion of the cost of any property taken into 
account under section 179. 
‘‘(d) BASIS REDUCTION.—
‘‘(1) IN GENERAL.—For purposes of this title, 
the basis of any property shall be reduced by the 
amount of the deduction with respect to such prop-
erty which is allowed by subsection (a). 
‘‘(2) ORDINARY
INCOME
RECAPTURE.—For 
purposes of section 1245, the amount of the deduc-
tion allowable under subsection (a) with respect to 
any property that is of a character subject to the al-
lowance for depreciation shall be treated as a deduc-
tion allowed for depreciation under section 167.’’. 
(b) CONFORMING AMENDMENTS.—
(1) Section 263(a)(1) of such Code is amended 
by striking ‘‘or’’ at the end of subparagraph (G), by 
striking the period at the end of subparagraph (H)
and inserting ‘‘, or’’, and by inserting after subpara-
graph (H) the following new subparagraph: 
‘‘(I) expenditures for which a deduction is 
allowed under section 179B.’’. 
(2) Section 312(k)(3)(B) of such Code is 
amended by striking ‘‘or 179A’’ each place it ap-
pears in the heading and text and inserting ‘‘, 179A, 
or 179B’’. 
(3) Section 1016(a) of such Code is amended 
by striking ‘‘and’’ at the end of paragraph (29), by 
striking the period at the end of paragraph (30) and 
inserting ‘‘, and’’, and by inserting after paragraph 
(30) the following new paragraph: 
‘‘(31) to the extent provided in section 
179B(d)(1),’’. 
(4) Section 1245(a) of such Code is amended 
by inserting ‘‘179B,’’ after ‘‘179A,’’ both places it 
appears in paragraphs (2)(C) and (3)(C). 
(5) The table of contents for subpart B of part 
IV of subchapter A of chapter 1 of such Code is 
amended by inserting after the item relating to sec-
tion 179A the following new item:
‘‘Sec. 179B. Expensing of software and qualified technological 
equipment.’’.
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending after the 
date of the enactment of this Act. 
SEC. 
3. 
3-YEAR 
DEPRECIATION 
OF 
WIRELESS 
TELE-
COMMUNICATIONS EQUIPMENT, ADVANCED 
SERVICES EQUIPMENT, NETWORK OR NET-
WORK SYSTEM EQUIPMENT, AND RESEARCH 
EXPENSES FOR SOFTWARE DEVELOPMENT. 
(a) IN GENERAL.—Subsection (e) of section 168 of 
the Internal Revenue Code of 1986 (relating to classifica-
tion of property) is amended by adding after paragraph 
(5) the following new paragraph: 
‘‘(6) CERTAIN PROPERTY TREATED AS 3-YEAR 
PROPERTY.—
‘‘(A) IN
GENERAL.—The term ‘3-year 
property’ includes property—
‘‘(i) described in subparagraph (B), 
(C), or (D), 
‘‘(ii) acquired by purchase (as defined 
in section 179(b)(2)) after the date of the 
enactment of this paragraph and on or be-
fore September 11, 2004, and 
‘‘(iii) placed in service on or before 
September 11, 2004.
‘‘(B) 
WIRELESS
TELECOMMUNICATIONS 
EQUIPMENT.—Property is described in this sub-
paragraph if such property is equipment used 
in the transmission, reception, coordination, or 
switching of wireless telecommunications serv-
ice. 
‘‘(C) ADVANCED SERVICES EQUIPMENT.—
Property is described in this subparagraph if 
such property is equipment (excluding cabling) 
used in the provision of Internet or electronic 
communications access services or support, or 
which supports access to electronic media and 
data and associated communications support, 
provided that such services or support, con-
stitute or directly contribute to the provisions of 
advanced telecommunications capability. 
‘‘(D) NETWORK
OR
NETWORK
SYSTEM 
EQUIPMENT.—Property is described in this sub-
paragraph if such property is information tech-
nology equipment, including computer servers, 
hubs, bridges, switches and routers, which are 
interconnected so as to enable computers and 
peripherals to communicate with each other ei-
ther individually or as a single unit.
‘‘(E) TREATMENT
UNDER
ALTERNATIVE 
SYSTEM.—Property treated as 3-year property 
by this paragraph shall be treated as having a 
class life of 3 years for purposes of subsection 
(g).’’
(b) RESEARCH EXPENSES FOR SOFTWARE DEVELOP-
MENT.—Subsection (b) of section 174 of such Code is 
amended by adding at the end the following new para-
graph: 
‘‘(3) EXPENDITURES FOR SOFTWARE DEVELOP-
MENT.—Paragraph (1) shall be applied by sub-
stituting ‘36 months’ for ‘60 months’ in the case of 
expenditures for software development which are 
made after the date of the enactment of this para-
graph and before September 11, 2004.’’
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending after the 
date of the enactment of this Act.
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