[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1087 Introduced in Senate (IS)]
107th CONGRESS
1st Session
S. 1087
To amend the Internal Revenue Code of 1986 to provide a shorter
recovery period for the depreciation of certain leasehold improvements.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 22, 2001
Mr. Conrad (for himself, Mr. Nickles, Mr. Breaux, Mr. Dorgan, Mr.
Fitzgerald, Mr. Hatch, Mr. Helms, Mr. Hutchinson, Mr. Johnson, Mr. Kyl,
Mr. Schumer, Mr. Torricelli, and Mrs. Lincoln) introduced the following
bill; which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide a shorter
recovery period for the depreciation of certain leasehold improvements.
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 ``Business Property Economic
Revitalization Act of 2001''.
SEC. 2. RECOVERY PERIOD FOR DEPRECIATION OF CERTAIN LEASEHOLD
IMPROVEMENTS.
(a) 10-Year Recovery Period.--Subparagraph (D) of section 168(e)(3)
of the Internal Revenue Code of 1986 (relating to 10-year property) is
amended by striking ``and'' at the end of clause (i), by striking the
period at the end of clause (ii) and inserting ``, and'', and by adding
at the end the following new clause:
``(iii) any qualified leasehold improvement
property.''.
(b) Qualified Leasehold Improvement Property.--Subsection (e) of
section 168 of such Code is amended by adding at the end the following
new paragraph:
``(6) Qualified leasehold improvement property.--
``(A) In general.--The term `qualified leasehold
improvement property' means any improvement to an
interior portion of a building which is nonresidential
real property if--
``(i) such improvement is made under or
pursuant to a lease (as defined in subsection
(h)(7))--
``(I) by the lessee (or any
sublessee) of such portion, or
``(II) by the lessor of such
portion,
``(ii) such portion is to be occupied
exclusively by the lessee (or any sublessee) of
such portion, and
``(iii) such improvement is placed in
service more than 3 years after the date the
building was first placed in service.
``(B) Certain improvements not included.--Such term
shall not include any improvement for which the
expenditure is attributable to--
``(i) the enlargement of the building,
``(ii) any elevator or escalator,
``(iii) any structural component benefiting
a common area, and
``(iv) the internal structural framework of
the building.
``(C) Definitions and special rules.--For purposes
of this paragraph--
``(i) Commitment to lease treated as
lease.--A commitment to enter into a lease
shall be treated as a lease, and the parties to
such commitment shall be treated as lessor and
lessee, respectively.
``(ii) Related persons.--A lease between
related persons shall not be considered a
lease. For purposes of the preceding sentence,
the term `related persons' means--
``(I) members of an affiliated
group (as defined in section 1504), and
``(II) persons having a
relationship described in subsection
(b) of section 267; except that, for
purposes of this clause, the phrase `80
percent or more' shall be substituted
for the phrase `more than 50 percent'
each place it appears in such
subsection.
``(D) Improvements made by lessor.--
``(i) In general.--In the case of an
improvement made by the person who was the
lessor of such improvement when such
improvement was placed in service, such
improvement shall be qualified leasehold
improvement property (if at all) only so long
as such improvement is held by such person.
``(ii) Exception for changes in form of
business.--Property shall not cease to be
qualified leasehold improvement property under
clause (i) by reason of--
``(I) death,
``(II) a transaction to which
section 381(a) applies,
``(III) a mere change in the form
of conducting the trade or business so
long as the property is retained in
such trade or business as qualified
leasehold improvement property and the
taxpayer retains a substantial interest
in such trade or business,
``(IV) the acquisition of such
property in an exchange described in
section 1031, 1033, 1038, or 1039 to
the extent that the basis of such
property includes an amount
representing the adjusted basis of
other property owned by the taxpayer or
a related person, or
``(V) the acquisition of such
property by the taxpayer in a
transaction described in section 332,
351, 361, 721, or 731 (or the
acquisition of such property by the
taxpayer from the transferee or
acquiring corporation in a transaction
described in such section), to the
extent that the basis of the property
in the hands of the taxpayer is
determined by reference to its basis in
the hands of the transferor or
distributor.
``(iii) Related person.--For purposes of
this subparagraph, a person (hereafter in this
clause referred to as the `related person') is
related to any person if the related person
bears a relationship to such person specified
in section 267(b) or 707(b)(1), or the related
person and such person are engaged in trades or
businesses under common control (within the
meaning of subsections (a) and (b) of section
52).''.
(c) Requirement To Use Straight Line Method.--Paragraph (3) of
section 168(b) of such Code is amended by adding at the end the
following new subparagraph:
``(G) Qualified leasehold improvement property
described in subsection (e)(6).''.
(d) Alternative System.--The table contained in section
168(g)(3)(B) of such Code is amended by inserting after the item
relating to subparagraph (D)(ii) the following new item:
``(D)(iii)......................................... 10''.
(e) Effective Date.--The amendments made by this section shall
apply to qualified leasehold improvement property placed in service
after the date of the enactment of this Act.
<all>
Introduced in Senate
Sponsor introductory remarks on measure. (CR S6665)
Read twice and referred to the Committee on Finance. (text of measure as introduced: CR S6665-6666)
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