,i #aaith ,,congress #ast ,session ,h4 ,r4 #cifg ,,in ,,the ,,house ,,of ,,representatives ,june #ab1 #bjbe,mr4 ,grothman 7for himself1 ,mr4 ,mann1 ,mr4 ,rose1 and ,mr4 ,rulli7 introduced the following bill2 which was referred to the ,committee on ,ways and ,means ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to permanently allow a tax deduction at the time an investment in qualified property is made1 and for other purposes4 #a4 ,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 ,act4 #b4 ,permanent full expensing for qualified property 7a7 ,in general ,paragraph 7#f7 of section #afh7k7 of the ,internal ,revenue ,code of #aihf is amended to read as follows3 7#f7 ,applicable percentage ,for purposes of this subsection1 the term applicable percentage means1 in the case of property placed in service 7or1 in the case of a specified plant described in paragraph 7#e71 a plant which is planted or grafted7 after ,september #bg1 #bjag1 #ajj percent4 4 7b7 ,conforming amendments 7#a7 ,section #afh7k7 of the ,internal ,revenue ,code of #aihf is amended-- 7,a7 in paragraph 7#b7-- 7i7 in subparagraph 7,a7-- 7,i7 in clause 7i77,v71 by inserting and at the end1 7,,ii7 in clause 7ii71 by striking clause 7ii7 of subparagraph 7,e71 and and inserting clause 7i7 of subparagraph 7,e741 and 7,,iii7 by striking clause 7iii71 7ii7 in subparagraph 7,b7-- 7,i7 in clause 7i7-- 7aa7 by striking subclauses 7,,ii7 and 7,,iii71 and 7bb7 by redesignating subclauses 7,,iv7 through 7,,vi7 as subclauses 7,,ii7 through 7,,iv71 respectively1 7,,ii7 by striking clause 7ii71 and 7,,iii7 by redesignating clauses 7iii7 and 7iv7 as clauses 7ii7 and 7iii71 respectively1 7iii7 in subparagraph 7,c7-- 7,i7 in clause 7i71 by striking and subclauses 7,,ii7 and 7,,iii7 of subparagraph 7,b77i71 and 7,,ii7 in clause 7ii71 by striking subparagraph 7,b77iii7 and inserting subparagraph 7,b77ii71 and 7iv7 in subparagraph 7,e7-- 7,i7 by striking clause 7i71 and 7,,ii7 by redesignating clauses 7ii7 and 7iii7 as clauses 7i7 and 7ii71 respectively1 and 7,b7 in paragraph 7#e77;,a71 by striking planted before ,january #a1 #bjbg1 or is grafted before such date to a plant that has already been planted1 and inserting planted or grafted4 7#b7 ,section #dfj7;c77#f77;,b7 of such ,code is amended by striking which and all that follows through the period and inserting which has a recovery period of #g years or less44 7c7 ,effective date ,the amendments made by this section shall take effect as if included in section #acbja of ,public ,law #aae-ig4 #c4 ,neutral cost recovery depreciation adjustment for residential rental property and nonresidential real property 7a7 ,in general ,section #afh of the ,internal ,revenue ,code of #aihf is amended by adding at the end thereof the following new subsection3 7n7 ,neutral cost recovery depreciation adjustment for residential rental property and nonresidential real property 7#a7 ,in general ,in the case of any applicable property1 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-- 7,a7 the amount determined under this section for such taxable year without regard to this subsection1 multiplied by 7,b7 the applicable neutral cost recovery ratio for such taxable year4 7#b7 ,applicable neutral cost recovery ratio ,for purposes of paragraph 7#a71 the applicable neutral cost recovery ratio for the applicable property for any taxable year is the number determined by-- 7,a7 dividing-- 7i7 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 taxpayer1 by 7ii7 the gross domestic product deflator for the calendar quarter during which the property was placed in service by the taxpayer1 and 7,b7 then multiplying the number determined under subparagraph 7,a7 by the number equal to #a4jc to the nth power where n is the number of full years in the period beginning on the #ast 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 year4 ,the applicable neutral cost recovery ratio shall never be less than #a4 ,the applicable neutral cost recovery ratio shall be rounded to the nearest #a_/ajjj4 7#c7 ,special rule for existing property ,in the case of any applicable property which is placed in service before the date of enactment of this subsection1 subparagraphs 7,a77ii7 and 7,b7 of paragraph 7#b7 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 appears4 7#d7 ,gross domestic product deflator ,for purposes of paragraph 7#b71 the gross domestic product deflator for any calendar quarter is the implicit price deflator for the gross domestic product for such quarter 7as shown in the first revision thereof74 7#e7 ,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 property4 ,such an election1 once made1 shall be irrevocable4 7#f7 ,additional deduction not to affect basis or recapture 7,a7 ,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 #abde and #abej4 7,b7 ,pass-thru entity defined ,for purposes of subparagraph 7,a71 the term pass-thru entity means-- 7i7 a regulated investment company1 7ii7 a real estate investment trust1 7iii7 an ,s corporation1 7iv7 a partnership1 7v7 an estate or trust1 and 7vi7 a common trust fund4 7#g7 ,applicable property ,for purposes of this subsection1 the term applicable property means residential rental property or nonresidential real property 7as such terms are defined in subsection 7e77#b774 4 7b7 ,minimum tax treatment ,paragraph 7#a7 of section #ef7;a7 of the ,internal ,revenue ,code of #aihf is amended by adding at the end thereof the following new subparagraph3 7,e7 ,use of neutral cost recovery ratio ,in the case of property to which section #afh7n7 applies1 the deduction allowable under this paragraph with respect to such property for any taxable year 7after the taxable year during which the property is placed in service7 shall be-- 7i7 the amount so allowable for such taxable year without regard to this subparagraph1 multiplied by 7ii7 the applicable neutral cost recovery ratio for such taxable year 7as determined under section #afh7n774 ,this subparagraph shall not apply to any property with respect to which there is an election in effect not to have section #afh7n7 apply4 4 7c7 ,effective date ,the amendments made by this section shall apply to property placed in service before1 on1 or after the date of the enactment of this ,act1 with respect to taxable years ending on or after such date4 #d4 ,elimination of amortization of research and experimental expenditures 7a7 ,in general ,section #agd of the ,internal ,revenue ,code of #aihf is amended to read as follows3 #agd4 ,research and experimental expenditures 7a7 ,treatment as ,expenses 7#a7 ,in general ,a taxpayer may treat research or experimental expenditures which are paid or incurred by him during the taxable year in connection with his trade or business as expenses which are not chargeable to capital account4 ,the expenditures so treated shall be allowed as a deduction4 7#b7 ,when method may be adopted 7,a7 ,without consent ,a taxpayer may1 without the consent of the ,secretary1 adopt the method provided in this subsection for his first taxable year for which expenditures described in paragraph 7#a7 are paid or incurred4 7,b7 ,with consent ,a taxpayer may1 with the consent of the ,secretary1 adopt at any time the method provided in this subsection4 7#c7 ,scope ,the method adopted under this subsection shall apply to all expenditures described in paragraph 7#a74 ,the method adopted shall be adhered to in computing taxable income for the taxable year and for all subsequent taxable years unless1 with the approval of the ,secretary1 a change to a different method is authorized with respect to part or all of such expenditures4 7b7 ,amortization of ,certain ,research and ,experimental ,expenditures 7#a7 ,in general ,at the election of the taxpayer1 made in accordance with regulations prescribed by the ,secretary1 research or experimental expenditures which are-- 7,a7 paid or incurred by the taxpayer in connection with his trade or business1 7,b7 not treated as expenses under subsection 7a71 and 7,c7 chargeable to capital account but not chargeable to property of a character which is subject to the allowance under section #afg 7relating to allowance for depreciation1 etc47 or section #faa 7relating to allowance for depletion71 may be treated as deferred expenses4 ,in computing taxable income1 such deferred expenses shall be allowed as a deduction ratably over such period of not less than #fj months as may be selected by the taxpayer 7beginning with the month in which the taxpayer first realizes benefits from such expenditures74 ,such deferred expenses are expenditures properly chargeable to capital account for purposes of section #ajaf7;a77#a7 7relating to adjustments to basis of property74 7#b7 ,time for and scope of election ,the election provided by paragraph 7#a7 may be made for any taxable year1 but only if made not later than the time prescribed by law for filing the return for such taxable year 7including extensions thereof74 ,the method so elected1 and the period selected by the taxpayer1 shall be adhered to in computing taxable income for the taxable year for which the election is made and for all subsequent taxable years unless1 with the approval of the ,secretary1 a change to a different method 7or to a different period7 is authorized with respect to part or all of such expenditures4 ,the election shall not apply to any expenditure paid or incurred during any taxable year before the taxable year for which the taxpayer makes the election4 7c7 ,land and other property ,this section shall not apply to any expenditure for the acquisition or improvement of land1 or for the acquisition or improvement of property to be used in connection with the research or experimentation and of a character which is subject to the allowance under section #afg 7relating to allowance for depreciation1 etc47 or section #faa 7relating to allowance for depletion72 but for purposes of this section allowances under section #afg1 and allowances under section #faa1 shall be considered as expenditures4 7d7 ,exploration expenditures ,this section shall not apply to any expenditure paid or incurred for the purpose of ascertaining the existence1 location1 extent1 or quality of any deposit of ore or other mineral 7including oil and gas74 7e7 ,only ,reasonable ,research ,expenditures ,eligible ,this section shall apply to a research or experimental expenditure only to the extent that the amount thereof is reasonable under the circumstances4 7f7 ,cross ,references 7#a7 ,for adjustments to basis of property for amounts allowed as deductions as deferred expenses under subsection 7b71 see section #ajaf7;a77#ad74 7#b7 ,for election of #aj-year amortization of expenditures allowable as a deduction under subsection 7a71 see section #ei7;e74 4 7b7 ,clerical ,amendment ,the table of sections for part ,,vi of subchapter ,b of chapter #a of such ,code is amended by striking the item relating to section #agd and inserting the following new item3 ,sec4 #agd4 ,research and experimental expenditures 4 7c7 ,conforming ,amendments 7#a7 ,section #da7;d77#a77;,a7 of such ,code is amended by striking specified research or experimental expenditures under section #agd and inserting expenses under section #agd4 7#b7 ,section #bhj;,c7c7 of such ,code is amended to read as follows3 7c7 ,credit for ,increasing ,research ,activities 7#a7 ,in general ,no deduction shall be allowed for that portion of the qualified research expenses 7as defined in section #da7;b77 or basic research expenses 7as defined in section #da7;e77#b77 otherwise allowable as a deduction for the taxable year which is equal to the amount of the credit determined for such taxable year under section #da7;a74 7#b7 ,similar rule where taxpayer capitalizes rather than deducts expenses ,if-- 7,a7 the amount of the credit determined for the taxable year under section #da7;a77#a71 exceeds 7,b7 the amount allowable as a deduction for such taxable year for qualified research expenses or basic research expenses 7determined without regard to paragraph 7#a771 the amount chargeable to capital account for the taxable year for such expenses shall be reduced by the amount of such excess4 7#c7 ,election of reduced credit 7,a7 ,in general ,in the case of any taxable year for which an election is made under this paragraph-- 7i7 paragraphs 7#a7 and 7#b7 shall not apply1 and 7ii7 the amount of the credit under section #da7;a7 shall be the amount determined under subparagraph 7,b74 7,b7 ,amount of reduced credit ,the amount of credit determined under this subparagraph for any taxable year shall be the amount equal to the excess of-- 7i7 the amount of credit determined under section #da7;a7 without regard to this paragraph1 over 7ii7 the product of-- 7,i7 the amount described in clause 7i71 and 7,,ii7 the rate of tax under section #aa7;b74 7,c7 ,election ,an election under this paragraph for any taxable year shall be made not later than the time for filing the return of tax for such year 7including extensions71 shall be made on such return1 and shall be made in such manner as the ,secretary may prescribe4 ,such an election1 once made1 shall be irrevocable4 7#d7 ,controlled groups ,paragraph 7#c7 of subsection 7b7 shall apply for purposes of this subsection4 4 7d7 ,effective date ,the amendments made by this section shall apply to amounts paid or incurred in taxable years beginning after ,december #ca1 #bjba4