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‘‘(B) EXCEPTIONS.—
‘‘(i) 
ALTERNATIVE
DEPRECIATION
PROPERTY.—Such term shall not include
any 
property 
described 
in 
section
168(k)(2)(D)(i).
‘‘(ii) 
TAX-EXEMPT
BOND-FINANCED
PROPERTY.—Such term shall not include
any property any portion of which is fi-
nanced with the proceeds of any obligation
the interest on which is exempt from tax
under section 103.
‘‘(iii) 
QUALIFIED
REVITALIZATION
BUILDINGS.—Such term shall not include
any qualified revitalization building with
respect to which the taxpayer has elected the
application of paragraph (1) or (2) of sec-
tion 1400I(a).
‘‘(iv) ELECTION OUT.—If a taxpayer
makes an election under this clause with re-
spect to any class of property for any tax-
able year, this subsection shall not apply to
all property in such class placed in service
during such taxable year.
‘‘(3) SPECIAL RULES.—For purposes of this sub-
section, rules similar to the rules of subparagraph (E)
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of section 168(k)(2) shall apply, except that such sub-
paragraph shall be applied—
‘‘(A) by substituting ‘August 27, 2005’ for
‘September 10, 2001’ each place it appears there-
in,
‘‘(B) by substituting ‘January 1, 2008’ for
‘January 1, 2005’ in clause (i) thereof, and
‘‘(C) by substituting ‘qualified Gulf Oppor-
tunity Zone property’ for ‘qualified property’ in
clause (iv) thereof.
‘‘(4) ALLOWANCE
AGAINST
ALTERNATIVE
MIN-
IMUM
TAX.—For purposes of this subsection, rules
similar to the rules of section 168(k)(2)(G) shall
apply.
‘‘(5) RECAPTURE.—For purposes of this sub-
section, rules similar to the rules under section
179(d)(10) shall apply with respect to any qualified
Gulf Opportunity Zone property which ceases to be
qualified Gulf Opportunity Zone property.
‘‘(e) INCREASE IN EXPENSING UNDER SECTION 179.—
‘‘(1) IN
GENERAL.—For purposes of section
179—
‘‘(A) the dollar amount in effect under sec-
tion 179(b)(1) for the taxable year shall be in-
creased by the lesser of—
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‘‘(i) $100,000, or
‘‘(ii) the cost of qualified section 179
Gulf Opportunity Zone property placed in
service during the taxable year, and
‘‘(B) the dollar amount in effect under sec-
tion 179(b)(2) for the taxable year shall be in-
creased by the lesser of—
‘‘(i) $600,000, or
‘‘(ii) the cost of qualified section 179
Gulf Opportunity Zone property placed in
service during the taxable year.
‘‘(2) QUALIFIED SECTION 179 GULF OPPORTUNITY
ZONE PROPERTY.—For purposes of this subsection, the
term ‘qualified section 179 Gulf Opportunity Zone
property’ means section 179 property (as defined in
section 179(d)) which is qualified Gulf Opportunity
Zone property (as defined in subsection (d)(2)).
‘‘(3) COORDINATION WITH EMPOWERMENT ZONES
AND RENEWAL COMMUNITIES.—For purposes of sec-
tions 1397A and 1400J, qualified section 179 Gulf
Opportunity Zone property shall not be treated as
qualified zone property or qualified renewal property,
unless the taxpayer elects not to take such qualified
section 179 Gulf Opportunity Zone property into ac-
count for purposes of this subsection.
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‘‘(4) RECAPTURE.—For purposes of this sub-
section, rules similar to the rules under section
179(d)(10) shall apply with respect to any qualified
section 179 Gulf Opportunity Zone property which
ceases to be qualified section 179 Gulf Opportunity
Zone property.
‘‘(f) EXPENSING
FOR
CERTAIN
DEMOLITION
AND
CLEAN-UP COSTS.—
‘‘(1) IN
GENERAL.—A taxpayer may elect to
treat 50 percent of any qualified Gulf Opportunity
Zone clean-up cost as an expense which is not charge-
able to capital account. Any cost so treated shall be
allowed as a deduction for the taxable year in which
such cost is paid or incurred.
‘‘(2) QUALIFIED
GULF
OPPORTUNITY
ZONE
CLEAN-UP COST.—For purposes of this subsection, the
term ‘qualified Gulf Opportunity Zone clean-up cost’
means any amount paid or incurred during the pe-
riod beginning on August 28, 2005, and ending on
December 31, 2007, for the removal of debris from, or
the demolition of structures on, real property which
is located in the Gulf Opportunity Zone and which
is—
‘‘(A) held by the taxpayer for use in a trade
or business or for the production of income, or
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‘‘(B) 
property 
described 
in 
section
1221(a)(1) in the hands of the taxpayer.
For purposes of the preceding sentence, amounts paid
or incurred shall be taken into account only to the ex-
tent that such amount would (but for paragraph (1))
be chargeable to capital account.
‘‘(g) EXTENSION OF EXPENSING FOR ENVIRONMENTAL
REMEDIATION COSTS.—With respect to any qualified envi-
ronmental remediation expenditure (as defined in section
198(b)) paid or incurred on or after August 28, 2005, in
connection with a qualified contaminated site located in the
Gulf Opportunity Zone, section 198 (relating to expensing
of environmental remediation costs) shall be applied—
‘‘(1) in the case of expenditures paid or incurred
on or after August 28, 2005, and before January 1,
2008, by substituting ‘December 31, 2007’ for the date
contained in section 198(h), and
‘‘(2) except as provided in section 198(d)(2), by
treating petroleum products (as defined in section
4612(a)(3)) as a hazardous substance.
‘‘(h) INCREASE IN REHABILITATION CREDIT.—In the
case of qualified rehabilitation expenditures (as defined in
section 47(c)) paid or incurred during the period beginning
on August 28, 2005, and ending on December 31, 2008,
with respect to any qualified rehabilitated building or cer-
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tified historic structure (as defined in section 47(c)) located
in the Gulf Opportunity Zone, subsection (a) of section 47
(relating to rehabilitation credit) shall be applied—
‘‘(1) by substituting ‘13 percent’ for ‘10 percent’
in paragraph (1) thereof, and
‘‘(2) by substituting ‘26 percent’ for ‘20 percent’
in paragraph (2) thereof.
‘‘(i) SPECIAL RULES
FOR SMALL TIMBER PRO-
DUCERS.—
‘‘(1) INCREASED
EXPENSING
FOR
QUALIFIED
TIMBER PROPERTY.—In the case of qualified timber
property any portion of which is located in the Gulf
Opportunity Zone, in that portion of the Rita GO
Zone which is not part of the Gulf Opportunity Zone,
or in the Wilma GO Zone, the limitation under sub-
paragraph (B) of section 194(b)(1) shall be increased
by the lesser of—
‘‘(A) the limitation which would (but for
this subsection) apply under such subparagraph,
or
‘‘(B) the amount of reforestation expendi-
tures (as defined in section 194(c)(3)) paid or
incurred by the taxpayer with respect to such
qualified timber property during the specified
portion of the taxable year.