ADDITIONAL FIRST-YEAR DEPRECIATION ALLOWANCE FOR SMALL BUSINESS.

SEC. 204. ADDITIONAL FIRST-YEAR DEPRECIATION ALLOWANCE FOR SMALL BUSINESS. (a) In General.—Part VI of subchapter B of chapter 1 of the Internal Revenue Code of 1954 (relating to itemized deductions for individuals and corporations) is amended by adding after section 178 (as added by section 15 of this Act) the following new section: “SEC. 179. ADDITIONAL FIRST-YEAR DEPRECIATION ALLOWANCE FOR SMALL BUSINESS “(a) General Rule.—In the case of section 179 property, the term ‘reasonable allowance’ as used in section 167 (a) may, at the election of the taxpayer, include an allowance, for the first taxable year for which a deduction is allowable under section 167 to the taxpayer with respect to such property, of 20 percent of the cost of such property. (b) Dollar Limitation.—If in any one taxable year the cost of section 179 property with respect to which the taxpayer may elect an allowance under subsection (a) for such taxable year exceeds $10,000, then subsection (a) shall apply with respect to those items selected by the taxpayer, but only to the extent of an aggregate cost of $10,000. In the case of a husband and wife who file a joint return under section 6013 for the taxable year, the limitation under the preceding sentence shall be $20,000 in lieu of $10,000. “(c) Election.— “(1) In general.—The election under this section for any taxable year shall be made within the time prescribed by law (including extensions thereof) for filing the return for such taxable year. The election shall be made in such manner as the Secretary or his delegate may by regulations prescribe. “(2) Election irrevocable.—Any election made under this section may not be revoked except with the consent of the Secretary or his delegate. “(d) Definitions and Special Rules.— “(1) Section 179 property.— For purposes of this section, the term ‘section 179 property’ means tangible personal property— “(A) of a character subject to the allowance for depreciation under section 167, “(B) acquired by purchase after December 31, 1957, for use in a trade or business or for holding for production of income, and “(C) with a useful life (determined at the time of such acquisition) of 6 years or more. “(2) Purchase defined.— For purposes of paragraph (1), the term ‘purchase’ means any acquisition of property, but only if— “(A) the property is not acquired from a person whose relationship to the person acquiring it would result in the disallowance of losses under section 267 or 707 (b) (but, in applying section 267 (b) and (c) for purposes of this section, paragraph (4) of section 267 (c) shall be treated as providing that the family of an individual shall include only his spouse, ancestors, and lineal descendants), “(B) the property is not acquired by one member of an affiliated group from another member of the same affiliated group, and 72 Stat. 1680 “(C) the basis of the property in the hands of the person acquiring it is not determined— “(i) in whole or in part by reference to the adjusted basis of such property in the hands of the person from whom acquired, or “(ii) under section 1014 (a) (relating to property acquired from a decedent). “(3) Cost.—For purposes of this section, the cost of property does not include so much of the basis of such property as is determined by reference to the basis of other property held at any time by the person acquiring such property. “(4) Section not to apply to trusts.—This section shall not apply to trusts. “(5) Estates.—In the case of an estate, any amount apportioned to an heir, legatee, or devisee under section 167 (g) shall not be taken into account in applying subsection (b) of this section to section 179 property of such heir, legatee, or devisee not held by such estate. “(6) Dollar limitation of affiliated group.— For purposes of subsection (b) of this section— “(A) all members of an affiliated group shall be treated as one taxpayer, and “(B) the Secretary or his delegate shall apportion the dollar limitation contained in such subsection (b) among the members of such affiliated group in such manner as he shall by regulations prescribe. “(7) Affiliated group defined.—For purposes of paragraphs (2) and (6), the term ‘affiliated group’ has the meaning assigned to it by section 1504, except that, for such purposes, the phrase ‘more than 50 percent’ shall be substituted for the phrase ‘at least 80 percent’ each place it appears in section 1504 (a). “(8) Adjustment to basis; when made.—In applying section 167 (f), the adjustment under section 1016 (a) (2) resulting by reason of an election made under this section with respect to any section 179 property shall be made before any other deduction allowed by section 167 (a) is computed. “(e) Regulations.—The Secretary or his delegate shall prescribe such regulations as may be necessary to carry out the purposes of this section.” (b) Technical Amendment.—The table of sections for such part VI is amended by adding at the end thereof the following new item: “Sec. 179. Additional first-year depreciation allowance for small business.” (c) Effective Date.—The amendments made by this section shall apply with respect to taxable years ending after June 30, 1958.