To amend the Internal Revenue Code of 1986 to classify qualified rental office furniture as 5-year property for purposes of depreciation.

April 3, 2003

Mr. COLLINS introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to classify qualified rental office furniture as 5-year property for purposes of depreciation.

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

SECTION 1. CLASSIFICATION OF QUALIFIED RENTAL OFFICE FURNITURE.

(a) IN GENERAL- Subparagraph (B) of section 168(e)(3) of the Internal Revenue Code of 1986 (relating to 5-year property) is amended by striking `and' at the end of clause (v), by striking the period at the end of clause (vi) and inserting `, and,' and by adding at the end the following:

`(vii) any qualified rental office furniture.'

(b) ALTERNATIVE SYSTEM- The table contained in section 168(g)(3)(B) of the Internal Revenue Code of 1986 is amended by inserting after the third item the following:

9'.

(c) DEFINITION OF QUALIFIED RENTAL OFFICE FURNITURE- Subsection (i) of section 168 of the Internal Revenue Code of 1986 is amended by adding at the end the following:

`(15) QUALIFIED RENTAL OFFICE FURNITURE-

`(A) IN GENERAL- The term `qualified rental office furniture' means office furniture held by an office furniture rental dealer primarily for purposes of leasing to customers by means of a short-term office furniture rental contract.

`(B) OFFICE FURNITURE RENTAL DEALER- The term `office furniture rental dealer' means a person that, in the ordinary course of business, regularly enters into short-term office furniture rental contracts with customers for the use of office furniture.

`(C) SHORT-TERM OFFICE FURNITURE RENTAL CONTRACT- The term `short-term office furniture rental contract' means any lease with a term of 18 months or less, between unrelated parties, for the use of office furniture.'.

(d) OPTIONS TO RENEW NOT TO BE AUTOMATICALLY TAKEN INTO ACCOUNT- Paragraph (3) of subsection (i) of section 168 of the Internal Revenue Code of 1986 is amended by adding at the end the following:

`(C) SPECIAL RULE FOR OPTIONS ON SHORT-TERM OFFICE FURNITURE RENTAL CONTRACTS- For purposes of clause (i) of subparagraph (A), in the case of a short-term office furniture rental contract, there shall not be taken into account any option to renew at a price equal to or in excess of the price applicable to the initial term of the lease.'.

(e) APPLICABILITY-

(1) IN GENERAL- Except as provided in paragraph (2), the amendments made by this section shall apply to property placed in service on or after the date of the enactment of this Act.

(2) TRANSITION RULE-

(A) IN GENERAL- A taxpayer may elect (in such form and manner as the Secretary of the Treasury may prescribe) to have the amendments made by this section apply to property placed in service before the date of the enactment of this section.

(B) METHOD OF ACCOUNTING- For purposes of section 481, an election under subparagraph (A) shall be treated as a change in method of accounting made with the consent of the Secretary of the Treasury and any adjustment necessary by reason of such change shall be included in the year of the change.

(C) ELECTION DEEMED MADE- For purposes of subparagraph (A), a taxpayer which has consistently treated qualified rental office furniture (as defined in section 168(i)(15) of the Internal Revenue Code of 1986) as 5-year property shall be treated as having made the election under such subparagraph with respect to the property.

END