To amend the Internal Revenue Code of 1986 to repeal certain limitations on the expensing of section 179 property, to allow taxpayers to elect shorter recovery periods for purposes of determining the deduction for depreciation, and for other purposes.

October 25, 2005

Mr. SESSIONS (for himself, Mr. TIAHRT, Mr. TERRY, Mr. FLAKE, and Mr. SWEENEY) introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to repeal certain limitations on the expensing of section 179 property, to allow taxpayers to elect shorter recovery periods for purposes of determining the deduction for depreciation, 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 `Expensing Property Expands our Nation's Strong Economy Act of 2005' or as the `EXPENSE Act of 2005'.

SEC. 2. REPEAL OF CERTAIN LIMITATIONS ON THE EXPENSING OF SECTION 179 PROPERTY.

(a) In General- Section 179 of the Internal Revenue Code of 1986 is amended by striking subsection (b) and by redesignating subsections (c) and (d) as subsections (b) and (c), respectively.

(b) Conforming Amendments-

(1) Subsection (c) of section 179 of such Code, as redesignated by subsection (a), is amended by striking paragraphs (6) and (8), and by redesignating paragraphs (7), (9), and (10) as paragraphs (6), (7), and (8), respectively.

(2) Paragraph (6) of section 179 of such Code, as redesignated by paragraph (1) and subsection (a), is amended by striking `paragraphs (2) and (6)' and inserting `paragraph (2)'.

(3) Sections 42(d)(2)(B)(i), 1397D(d)(1), 1400B(b)(4)(A)(i) and 1400F(b)(4)(A)(i) of such Code are each amended by striking `section 179(d)(2)' and inserting `section 179(c)(2)'.

(4) Subclause (I) of section 42(d)(2)(D)(iii) of such Code is amended--

(A) by striking `section 179(d)' and inserting `section 179(c)', and

(B) by striking `section 179(d)(7)' and inserting `section 179(c)(6)'.

(5)(A) Subpart B of part III of subchapter U of chapter 1 of such Code is hereby repealed.

(B) The table of subparts for such part III is amended by striking the item relating to subpart B.

(6)(A) Part III of subchapter X of chapter 1 of such Code is amended by striking section 1400J.

(B) The table of sections for such part is amended by striking the item relating to section 1400J.

(C) Paragraph (3) of section 1400E(b) of such Code is amended by striking `sections 1400F and 1400J' and inserting `section 1400F'.

(7) Clause (iv) of section 1400L(b)(2)(A) of such Code is amended by striking `section 179(d)' and inserting `section 179(c)'.

(8) Section 1400L of such Code is amended by striking subsection (f).

(c) Effective Date- The amendments made by this section shall apply to property placed in service during taxable years ending on or after the date of the enactment of this Act.

SEC. 3. ELECTION OF SHORTER RECOVERY PERIOD FOR PURPOSE OF DETERMINING DEPRECIATION DEDUCTION.

(a) In General- Section 168 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

`(l) Election of Shorter Recovery Period-

`(1) IN GENERAL- Notwithstanding subsections (c), (e), (g), and (j), for purposes of subsection (a), the applicable recovery period for any property placed in service during a taxable year ending on or after the date of the enactment of this subsection shall not exceed any period of 2 or more years elected by the taxpayer with respect to such property.

`(2) ELECTION- An election made under this subsection shall be made at such time and in such form and manner as the Secretary may require. An election under this subsection, once made, shall apply to the taxable year for which made and all subsequent taxable years unless revoked with the consent of the Secretary.

`(3) TRANSITION RULE- In the case of any property placed in service during a taxable year ending before the date of the enactment of this subsection, paragraph (1) shall apply with respect to the adjusted basis of such property in the same manner as if such property (with such adjusted basis) were placed in service on the first day of the taxable year which includes the date of the enactment of this subsection. The application of this paragraph shall not be treated as a change in method of accounting for purposes of section 481.'.

(b) Effective Date- The amendment made by this section shall apply to property placed in service before, on, or after the date of the enactment of this Act.

END