CREATE JOBS Act
Bill: S.197 | Sponsor: Sen. Cruz, Ted (R-TX)
Policy area: Taxation

Summary:
Cost Recovery and Expensing Acceleration to Transform the Economy and Jumpstart Opportunities for Businesses and Startups Act or the CREATE JOBS Act
This bill allows permanent expensing of qualified property (i.e., property with a recovery period of 20 years or less and that is computer software, water utility property, or film, television, or live theatrical production property). It also modifies depreciation provisions for residential rental property and nonresidential real property.
The bill repeals provisions for the amortization of research and experimental expenditures, thus providing for direct expensing of such expenditures.

To amend the Internal Revenue Code of 1986 to permanently allow a tax 
deduction at the time an investment in qualified property is made, and 
                          for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Cost Recovery and Expensing 
Acceleration to Transform the Economy and Jumpstart Opportunities for 
Businesses and Startups Act'' or the ``CREATE JOBS Act''.

SEC. 2. PERMANENT FULL EXPENSING FOR QUALIFIED PROPERTY.

    (a) In General.--Paragraph (6) of section 168(k) of the Internal 
Revenue Code of 1986 is amended to read as follows:
            ``(6) Applicable percentage.--For purposes of this 
        subsection, the term `applicable percentage' means, in the case 
        of property placed in service (or, in the case of a specified 
        plant described in paragraph (5), a plant which is planted or 
        grafted) after September 27, 2017, 100 percent.''.
    (b) Conforming Amendments.--
            (1) Section 168(k) of the Internal Revenue Code of 1986 is 
        amended--
                    (A) in paragraph (2)--
                            (i) in subparagraph (A)--
                                    (I) in clause (i)(V), by inserting 
                                ``and'' at the end,
                                    (II) in clause (ii), by striking 
                                ``clause (ii) of subparagraph (E), 
                                and'' and inserting ``clause (i) of 
                                subparagraph (E).'', and
                                    (III) by striking clause (iii),
                            (ii) in subparagraph (B)--
                                    (I) in clause (i)--
                                            (aa) by striking subclauses 
                                        (II) and (III), and
                                            (bb) by redesignating 
                                        subclauses (IV) through (VI) as 
                                        subclauses (II) through (IV), 
                                        respectively,
                                    (II) by striking clause (ii), and
                                    (III) by redesignating clauses 
                                (iii) and (iv) as clauses (ii) and 
                                (iii), respectively,
                            (iii) in subparagraph (C)--
                                    (I) in clause (i), by striking 
                                ``and subclauses (II) and (III) of 
                                subparagraph (B)(i)'', and
                                    (II) in clause (ii), by striking 
                                ``subparagraph (B)(iii)'' and inserting 
                                ``subparagraph (B)(ii)'', and
                            (iv) in subparagraph (E)--
                                    (I) by striking clause (i), and
                                    (II) by redesignating clauses (ii) 
                                and (iii) as clauses (i) and (ii), 
                                respectively, and
                    (B) in paragraph (5)(A), by striking ``planted 
                before January 1, 2027, or is grafted before such date 
                to a plant that has already been planted,'' and 
                inserting ``planted or grafted''.
            (2) Section 460(c)(6)(B) of such Code is amended by 
        striking ``which'' and all that follows through the period and 
        inserting ``which has a recovery period of 7 years or less.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect as if included in section 13201 of Public Law 115-97.

SEC. 3. NEUTRAL COST RECOVERY DEPRECIATION ADJUSTMENT FOR RESIDENTIAL 
              RENTAL PROPERTY AND NONRESIDENTIAL REAL PROPERTY.

    (a) In General.--Section 168 of the Internal Revenue Code of 1986 
is amended by adding at the end thereof the following new subsection:
    ``(n) Neutral Cost Recovery Depreciation Adjustment for Residential 
Rental Property and Nonresidential Real Property.--
            ``(1) In general.--In the case of any applicable property, 
        the deduction under this section with respect to such property 
        for any taxable year after the taxable year during which the 
        property is placed in service shall be--
                    ``(A) the amount determined under this section for 
                such taxable year without regard to this subsection, 
                multiplied by
                    ``(B) the applicable neutral cost recovery ratio 
                for such taxable year.
            ``(2) Applicable neutral cost recovery ratio.--For purposes 
        of paragraph (1), the applicable neutral cost recovery ratio 
        for the applicable property for any taxable year is the number 
        determined by--
                    ``(A) dividing--
                            ``(i) the gross domestic product deflator 
                        for the calendar quarter ending in such taxable 
                        year which corresponds to the calendar quarter 
                        during which the property was placed in service 
                        by the taxpayer, by
                            ``(ii) the gross domestic product deflator 
                        for the calendar quarter during which the 
                        property was placed in service by the taxpayer, 
                        and
                    ``(B) then multiplying the number determined under 
                subparagraph (A) by the number equal to 1.03 to the nth 
                power where `n' is the number of full years in the 
                period beginning on the 1st day of the calendar quarter 
                during which the property was placed in service by the 
                taxpayer and ending on the day before the beginning of 
                the corresponding calendar quarter ending during such 
                taxable year.
        The applicable neutral cost recovery ratio shall never be less 
        than 1. The applicable neutral cost recovery ratio shall be 
        rounded to the nearest \1/1000\.
            ``(3) Special rule for existing property.--In the case of 
        any applicable property which is placed in service before the 
        date of enactment of this subsection, subparagraphs (A)(ii) and 
        (B) of paragraph (2) shall be applied by substituting `calendar 
        quarter which includes the date of enactment of this 
        subsection' for `calendar quarter during which the property was 
        placed in service by the taxpayer' each place it appears.
            ``(4) Gross domestic product deflator.--For purposes of 
        paragraph (2), the gross domestic product deflator for any 
        calendar quarter is the implicit price deflator for the gross 
        domestic product for such quarter (as shown in the first 
        revision thereof).
            ``(5) Election not to have subsection apply.--This 
        subsection shall not apply to any applicable property if the 
        taxpayer elects not to have this subsection apply to such 
        property. Such an election, once made, shall be irrevocable.
            ``(6) Additional deduction not to affect basis or 
        recapture.--
                    ``(A) In general.--The additional amount determined 
                under this section by reason of this subsection shall 
                not be taken into account in determining the adjusted 
                basis of any applicable property or of any interest in 
                a pass-thru entity which holds such property and shall 
                not be treated as a deduction for depreciation for 
                purposes of sections 1245 and 1250.
                    ``(B) Pass-thru entity defined.--For purposes of 
                subparagraph (A), the term `pass-thru entity' means--
                            ``(i) a regulated investment company,
                            ``(ii) a real estate investment trust,
                            ``(iii) an S corporation,
                            ``(iv) a partnership,
                            ``(v) an estate or trust, and
                            ``(vi) a common trust fund.
            ``(7) Applicable property.--For purposes of this 
        subsection, the term `applicable property' means residential 
        rental property or nonresidential real property (as such terms 
        are defined in subsection (e)(2)).''.
    (b) Minimum Tax Treatment.--Paragraph (1) of section 56(a) of the 
Internal Revenue Code of 1986 is amended by adding at the end thereof 
the following new subparagraph:
                    ``(E) Use of neutral cost recovery ratio.--In the 
                case of property to which section 168(n) applies, the 
                deduction allowable under this paragraph with respect 
                to such property for any taxable year (after the 
                taxable year during which the property is placed in 
                service) shall be--
                            ``(i) the amount so allowable for such 
                        taxable year without regard to this 
                        subparagraph, multiplied by
                            ``(ii) the applicable neutral cost recovery 
                        ratio for such taxable year (as determined 
                        under section 168(n)).
                This subparagraph shall not apply to any property with 
                respect to which there is an election in effect not to 
                have section 168(n) apply.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service before, on, or after the date of 
the enactment of this Act, with respect to taxable years ending on or 
after such date.

SEC. 4. ELIMINATION OF AMORTIZATION OF RESEARCH AND EXPERIMENTAL 
              EXPENDITURES.

    (a) In General.--Subpart A of part III of subtitle C of title I of 
Public Law 115-97 is amended by striking section 13206.
    (b) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act.
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