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(III) by inserting after subpara-
graph (E) the following new subpara-
graph: 
‘‘(F) any property described in paragraph 
(8),’’, and 
(ii) by adding at the end the following 
new paragraph: 
‘‘(8) ELECTING REAL PROPERTY TRADE OR BUSI-
NESS.—The property described in this paragraph 
shall consist of any nonresidential real property, resi-
dential rental property, and qualified improvement 
property held by an electing real property trade or 
business (as defined in 163(j)(7)(B)).’’. 
(B) QUALIFIED IMPROVEMENT PROPERTY.— 
The table contained in subparagraph (B) of sec-
tion 168(g)(3) is amended— 
(i) by inserting after the item relating 
to subparagraph (D)(ii) the following new 
item: 
‘‘(D)(v) ................................................................................................
20’’. 
, and 
(ii) by striking the item relating to 
subparagraph (E)(iv) and all that follows 
through the item relating to subparagraph 
(E)(ix) and inserting the following: 
‘‘(E)(iv) ...............................................................................................
(E)(v) ..................................................................................................
(E)(vi) .................................................................................................
35’’.
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† HR 1 EAS 
(C) APPLICABLE
RECOVERY
PERIOD
FOR 
RESIDENTIAL
RENTAL
PROPERTY.—The table 
contained in subparagraph (C) of section 
168(g)(2) is amended by striking clauses (iii) 
and (iv) and inserting the following: 
‘‘(iii) Residential rental property ....................................................
30 years
(iv) Nonresidential real property .....................................................
40 years
(v) Any railroad grading or tunnel bore or water utility prop-
erty ..................................................................................................
50 years’’. 
(5) CONFORMING AMENDMENTS.— 
(A) Clause (i) of section 168(k)(2)(A) is 
amended— 
(i) in subclause (II), by inserting ‘‘or’’ 
after the comma, 
(ii) in subclause (III), by striking ‘‘or’’ 
at the end, and 
(iii) by striking subclause (IV). 
(B) Section 168 is amended— 
(i) in subsection (e), as amended by 
paragraph (2)(B), by adding at the end the 
following: 
‘‘(6) QUALIFIED IMPROVEMENT PROPERTY.— 
‘‘(A) IN GENERAL.—The term ‘qualified im-
provement property’ means any improvement to 
an interior portion of a building which is non-
residential real property if such improvement is 
placed in service after the date such building was 
first placed in service.
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† HR 1 EAS 
‘‘(B) CERTAIN
IMPROVEMENTS
NOT
IN-
CLUDED.—Such term shall not include any im-
provement for which the expenditure is attrib-
utable to— 
‘‘(i) the enlargement of the building, 
‘‘(ii) any elevator or escalator, or 
‘‘(iii) the internal structural frame-
work of the building.’’. 
(ii) in subsection (k), by striking para-
graph (3). 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section shall 
apply to property placed in service after December 
31, 2017. 
(2) AMENDMENTS RELATED TO ELECTING REAL 
PROPERTY TRADE OR BUSINESS.—The amendments 
made by subsection (b)(4)(A) shall apply to taxable 
years beginning after December 31, 2017. 
SEC. 13205. USE OF ALTERNATIVE DEPRECIATION SYSTEM 
FOR ELECTING FARMING BUSINESSES. 
(a) IN GENERAL.—Section 168(g)(1), as amended by 
section 13204, is amended by striking ‘‘and’’ at the end of 
subparagraph (E), by inserting ‘‘and’’ at the end of sub-
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† HR 1 EAS 
paragraph (F), and by inserting after subparagraph (F) 
the following new subparagraph: 
‘‘(G) any property with a recovery period of 
10 years or more which is held by an electing 
farming 
business 
(as 
defined 
in 
section 
163(j)(7)(C)),’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after Decem-
ber 31, 2017. 
SEC. 13206. AMORTIZATION OF RESEARCH AND EXPERI-
MENTAL EXPENDITURES. 
(a) IN GENERAL.—Section 174 is amended to read as 
follows: 
‘‘SEC. 174. AMORTIZATION OF RESEARCH AND EXPERI-
MENTAL EXPENDITURES. 
‘‘(a) IN GENERAL.—In the case of a taxpayer’s speci-
fied research or experimental expenditures for any taxable 
year— 
‘‘(1) except as provided in paragraph (2), no de-
duction shall be allowed for such expenditures, and 
‘‘(2) the taxpayer shall— 
‘‘(A) charge such expenditures to capital ac-
count, and 
‘‘(B) be allowed an amortization deduction 
of such expenditures ratably over the 5-year pe-
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† HR 1 EAS 
riod (15-year period in the case of any specified 
research or experimental expenditures which are 
attributable to foreign research (within the 
meaning of section 41(d)(4)(F))) beginning with 
the midpoint of the taxable year in which such 
expenditures are paid or incurred. 
‘‘(b) SPECIFIED RESEARCH OR EXPERIMENTAL EX-
PENDITURES.—For purposes of this section, the term ‘speci-
fied research or experimental expenditures’ means, with re-
spect to any taxable year, research or experimental expendi-
tures which are paid or incurred by the taxpayer during 
such taxable year in connection with the taxpayer’s trade 
or business. 
‘‘(c) SPECIAL RULES.— 
‘‘(1) LAND AND OTHER PROPERTY.—This section 
shall not apply to any expenditure for the acquisition 
or improvement of land, or for the acquisition or im-
provement of property to be used in connection with 
the research or experimentation and of a character 
which is subject to the allowance under section 167 
(relating to allowance for depreciation, etc.) or section 
611 (relating to allowance for depletion); but for pur-
poses of this section allowances under section 167, 
and allowances under section 611, shall be considered 
as expenditures.
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† HR 1 EAS 
‘‘(2) EXPLORATION
EXPENDITURES.—This sec-
tion shall not apply to any expenditure paid or in-
curred for the purpose of ascertaining the existence, 
location, extent, or quality of any deposit of ore or 
other mineral (including oil and gas). 
‘‘(3) SOFTWARE
DEVELOPMENT.—For purposes 
of this section, any amount paid or incurred in con-
nection with the development of any software shall be 
treated as a research or experimental expenditure. 
‘‘(d) TREATMENT UPON DISPOSITION, RETIREMENT, 
OR ABANDONMENT.—If any property with respect to which 
specified research or experimental expenditures are paid or 
incurred is disposed, retired, or abandoned during the pe-
riod during which such expenditures are allowed as an am-
ortization deduction under this section, no deduction shall 
be allowed with respect to such expenditures on account of 
such disposition, retirement, or abandonment and such am-
ortization deduction shall continue with respect to such ex-
penditures.’’. 
(b) CHANGE
IN
METHOD
OF
ACCOUNTING.—The 
amendments made by subsection (a) shall be treated as a 
change in method of accounting for purposes of section 481 
of the Internal Revenue Code of 1986 and— 
(1) such change shall be treated as initiated by 
the taxpayer,