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03-19-02
RTO Online
On March 9th, President Bush signed into law the Job
Creation and Worker Assistance Act of 2002 (Public Law No: 107-147.) An
economic stimulus bill aimed at increasing business and consumer spending.
This new law would seem to have tremendous advantages to the
Rent to Own industry. Specifically as it relates to accelerated depreciation of
rental merchandise purchased after Sept. 11th 2001. Below is an excerpt from
Public Law 107-147...
SPECIAL ALLOWANCE FOR CERTAIN PROPERTY ACQUIRED AFTER SEPTEMBER
10, 2001, AND BEFORE SEPTEMBER 11, 2004-
(1) ADDITIONAL ALLOWANCE- In the case of any qualified
property--
(A) the depreciation deduction provided by section 167(a)
for the taxable year in which such property is placed in service shall
include an allowance equal to 30 percent of the adjusted basis of the
qualified property, and
(B) the adjusted basis of the qualified property shall be reduced by the
amount of such deduction before computing the amount otherwise allowable
as a depreciation deduction under this chapter for such taxable year and
any subsequent taxable year.
We have included the "Title 1
Business Provisions" below
Or you can view the entire text of the bill by following this link
Entire
Bill Text and links to H.R. 3090 status and history
Disclaimer: We are (thankfully) not lawyers or accountants. We
believe this law provides incentives for Rent to Own companies. Please review
this information with your CPA before taking any action.
H.R. 3090
Job Creation and Worker Assistance Act of 2002 (Enrolled Bill
(Sent to President))
TITLE I--BUSINESS PROVISIONS
SEC. 101. SPECIAL DEPRECIATION ALLOWANCE FOR CERTAIN PROPERTY ACQUIRED AFTER
SEPTEMBER 10, 2001, AND BEFORE SEPTEMBER 11, 2004.
a) IN GENERAL- Section 168 (relating to accelerated cost recovery system) is
amended by adding at the end the following new subsection:
`(k) SPECIAL ALLOWANCE FOR CERTAIN PROPERTY ACQUIRED AFTER SEPTEMBER 10, 2001,
AND BEFORE SEPTEMBER 11, 2004-
`(1) ADDITIONAL ALLOWANCE- In the case of any qualified property--
`(A) the depreciation deduction provided by section 167(a) for the taxable
year in which such property is placed in service shall include an
allowance equal to 30 percent of the adjusted basis of the qualified
property, and
`(B) the adjusted basis of the qualified property shall be reduced by the
amount of such deduction before computing the amount otherwise allowable
as a depreciation deduction under this chapter for such taxable year and
any subsequent taxable year.
`(2) QUALIFIED PROPERTY- For purposes of this subsection--
`(A) IN GENERAL- The term `qualified property' means property--
`(i)(I) to which this section applies which has a recovery period of 20
years or less,
`(II) which is computer software (as defined in section 167(f)(1)(B))
for which a deduction is allowable under section 167(a) without regard
to this subsection,
`(III) which is water utility property, or
`(IV) which is qualified leasehold improvement property,
`(ii) the original use of which commences with the taxpayer after
September 10, 2001,
`(I) acquired by the taxpayer after September 10, 2001, and before
September 11, 2004, but only if no written binding contract for the
acquisition was in effect before September 11, 2001, or
`(II) acquired by the taxpayer pursuant to a written binding contract
which was entered into after September 10, 2001, and before September
11, 2004, and
`(iv) which is placed in service by the taxpayer before January 1, 2005,
or, in the case of property described in subparagraph (B), before
January 1, 2006.
`(B) CERTAIN PROPERTY HAVING LONGER PRODUCTION PERIODS TREATED AS
QUALIFIED PROPERTY-
`(i) IN GENERAL- The term `qualified property' includes property--
`(I) which meets the requirements of clauses (i), (ii), and (iii) of
subparagraph (A),
`(II) which has a recovery period of at least 10 years or is
transportation property, and
`(III) which is subject to section 263A by reason of clause (ii) or
(iii) of subsection (f)(1)(B) thereof.
`(ii) ONLY PRE-SEPTEMBER 11, 2004, BASIS ELIGIBLE FOR ADDITIONAL
ALLOWANCE- In the case of property which is qualified property solely by
reason of clause (i), paragraph (1) shall apply only to the extent of
the adjusted basis thereof attributable to manufacture, construction, or
production before September 11, 2004.
`(iii) TRANSPORTATION PROPERTY- For purposes of this subparagraph, the
term `transportation property' means tangible personal property used in
the trade or business of transporting persons or property.
`(i) ALTERNATIVE DEPRECIATION PROPERTY- The term `qualified property'
shall not include any property to which the alternative depreciation
system under subsection (g) applies, determined--
`(I) without regard to paragraph (7) of subsection (g) (relating to
election to have system apply), and
`(II) after application of section 280F(b) (relating to listed
property with limited business use).
`(ii) QUALIFIED NEW YORK LIBERTY ZONE LEASEHOLD IMPROVEMENT PROPERTY-
The term `qualified property' shall not include any qualified New York
Liberty Zone leasehold improvement property (as defined in section
1400L(c)(2)).
`(iii) ELECTION OUT- If a taxpayer makes an election under this clause
with respect to any class of property for any taxable year, this
subsection shall not apply to all property in such class placed in
service during such taxable year.
`(i) SELF-CONSTRUCTED PROPERTY- In the case of a taxpayer manufacturing,
constructing, or producing property for the taxpayer's own use, the
requirements of clause (iii) of subparagraph (A) shall be treated as met
if the taxpayer begins manufacturing, constructing, or producing the
property after September 10, 2001, and before September 11, 2004.
`(ii) SALE-LEASEBACKS- For purposes of subparagraph (A)(ii), if
property--
`(I) is originally placed in service after September 10, 2001, by a
person, and
`(II) sold and leased back by such person within 3 months after the
date such property was originally placed in service,
such property shall be treated as originally placed in service not
earlier than the date on which such property is used under the leaseback
referred to in subclause (II).
`(E) COORDINATION WITH SECTION 280F- For purposes of section 280F--
`(i) AUTOMOBILES- In the case of a passenger automobile (as defined in
section 280F(d)(5)) which is qualified property, the Secretary shall
increase the limitation under section 280F(a)(1)(A)(i) by $4,600.
`(ii) LISTED PROPERTY- The deduction allowable under paragraph (1) shall
be taken into account in computing any recapture amount under section
280F(b)(2).
`(F) DEDUCTION ALLOWED IN COMPUTING MINIUMUM TAX- For purposes of
determining alternative minimum taxable income under section 55, the
deduction under subsection (a) for qualified property shall be determined
under this section without regard to any adjustment under section 56.
`(3) QUALIFIED LEASEHOLD IMPROVEMENT PROPERTY- For purposes of this
subsection--
`(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.'.
(b) EFFECTIVE DATE- The amendments made by this section shall apply to
property placed in service after September 10, 2001, in taxable years ending
after such date.
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