A bill to amend the Internal Revenue Code of 1954 to encourage the rehabilitation of railroad track.

Amends the Internal Revenue Code to permit the amortization of leased track materials based on a 60-month period. Defines "leased track materials" as any depreciable railroad track material leased to a domestic common carrier by railroad. Specifies the amount of such deduction. Provides that such deduction shall be in lieu of a depreciation deduction.

Qualifies leased track materials for the investment tax credit. Allows the credit to noncorporate lessors of such materials.

Exempts the leasing of railroad track materials from the limitation on the deduction for losses of amounts considered at risk. Treats such materials as trade or business property for purposes of Internal Revenue Code provisions which extend special capital gains or ordinary loss treatment to the sale or exchange of trade or business property. Exempts depreciation deductions taken with respect to such property from recapture. Makes inapplicable to leased track materials the limitation on the deduction of interest on investment indebtedness. Removes gain from the sale or exchange of leased track materials as an item of tax preference for purposes of the minimum tax.