To amend the Internal Revenue Code of 1986 to permanently extend the 50-percent bonus depreciation added by the Jobs and Growth Tax Relief Reconciliation Act of 2003.

SECTION 1. PERMANENT EXTENSION OF 50-PERCENT BONUS DEPRECIATION.

    (a) In General.--Subparagraph (B) of section 168(k)(4) of the 
Internal Revenue Code of 1986 (relating to special allowance for 
certain property acquired after September 10, 2001, and before January 
1, 2005) is amended to read as follows:
                    ``(B) 50-percent bonus depreciation property.--For 
                purposes of this subsection, the term `50-percent bonus 
                depreciation property' means property described in 
                paragraph (2)(A)(i)--
                            ``(i) the original use of which commences 
                        with the taxpayer after May 5, 2003, and
                            ``(ii) which is acquired by the taxpayer 
                        after May 5, 2003, but only if no written 
                        binding contract for the acquisition was in 
                        effect before May 6, 2003.''
    (b) Repeal of Termination Dates for 30-Percent Bonus Depreciation 
Property.--Subparagraph (A) of section 168(k)(2) of such Code is 
amended by adding ``and'' at the end of clause (ii) and by striking 
clauses (iii) and (iv) and inserting the following new clause:
                            ``(iii) which is--
                                    ``(I) acquired by the taxpayer 
                                after September 10, 2001, but only if 
                                no written binding contract for the 
                                acquisition was in effect before 
                                September 11, 2001, or
                                    ``(II) acquired by the taxpayer 
                                pursuant to a written binding contract 
                                which was entered into after September 
                                10, 2001.''
    (c) Technical Amendments.--
            (1) Paragraph (2) of section 168(k) of such Code is amended 
        by striking subparagraph (B) and by redesignating the 
        succeeding subparagraphs accordingly.
            (2) Clause (i) of section 168(k)(2)(D) of such Code, as 
        redesignated by paragraph (1), is amended by striking ``and 
        before January 1, 2005''.
            (3) The subsection heading for section 168(k) of such Code 
        is amended by striking ``, and Before January 1, 2005''.

SEC. 2. LONG-TERM CONTRACT ACCOUNTING.

    Section 168(k)(2) of the Internal Revenue Code of 1986 is amended 
by adding after subparagraph (F), as redesignated by section 1, the 
following new subparagraph:
                    ``(F) Long-term contract accounting.--The 
                percentage of completion method under section 460 shall 
                be applied as if this subsection had not been 
                enacted.''.

SEC. 3. ELECTION TO INCREASE MINIMUM TAX CREDIT LIMITATION IN LIEU OF 
              BONUS DEPRECIATION.

    (a) In General.--Section 53 of the Internal Revenue Code of 1986 
(relating to credit for prior year minimum tax liability) is amended by 
adding at the end of the following new subsection:
    ``(e) Additional Credit in Lieu of Bonus Depreciation.--
            ``(1) In general.--In the case of a corporation making an 
        election under this subsection for a taxable year, the 
        limitation under subsection (c) shall be increased by an amount 
        equal to the bonus depreciation amount.
            ``(2) Bonus depreciation amount.--For purposes of paragraph 
        (1), the bonus depreciation amount for any taxable year is an 
        amount equal to the product of--
                    ``(A) 35 percent, and
                    ``(B) the excess (if any) of--
                            ``(i) the aggregate amount of depreciation 
                        which would be determined under section 168 for 
                        property placed in service during such taxable 
                        year if no election under this subsection were 
                        made, over
                            ``(ii) the aggregate allowance for 
                        depreciation allowable with respect to such 
                        property placed in service for such taxable 
                        year.
            ``(3) Election.--Section 168(k) (other than paragraph 
        (2)(E) thereof) shall not apply to any property placed in 
        service during a taxable year by a corporation making an 
        election under this subsection for such taxable year. An 
        election under this subsection may only be revoked with the 
        consent of the Secretary.
            ``(4) Credit refundable.--The aggregate increase in the 
        credit allowed by this section for any taxable year by reason 
        of this subsection shall for purposes of this title (other than 
        subsection (b)(2) of this section) be treated as a credit 
        allowed to the taxpayer under subpart C.''.
    (b) Conforming Amendment.--Subsection (k) of section 168 of such 
Code is amended by adding at the end the following new paragraph:
            ``(5) Cross reference.--For an election to claim certain 
        minimum tax credits in lieu of the allowance determined under 
        this subsection, see section 53(e).''.

SEC. 4. EFFECTIVE DATE.

    The amendments made by this Act shall apply to taxable years ending 
after December 31, 2004.

Summary: Amends the Internal Revenue Code to: (1) permanently extend the 50 percent and 30 percent bonus depreciation for certain original use property, including water utility property, computer software, or qualified leasehold improvement property; (2) permit the use of the percentage of completion accounting method for computing certain depreciation allowances; and (3) allow corporate taxpayers to elect an increased refundable alternative minimum tax credit in lieu of taking a bonus depreciation deduction.