AMORTIZATION OF EXPENSES INCURRED IN CREATING OR ACQUIRING MUSIC OR MUSIC COPYRIGHTS.

SEC. 207. AMORTIZATION OF EXPENSES INCURRED IN CREATING OR ACQUIRING MUSIC OR MUSIC COPYRIGHTS. (a) In General.—Section 167(g) (relating to depreciation under income forecast method) is amended by adding at the end the following new paragraph: “(8) Special rules for certain musical works and copyrights.—“(A) In general.—If an election is in effect under this paragraph for any taxable year, then, notwithstanding paragraph (1), any expense which—120 STAT. 351“(i) is paid or incurred by the taxpayer in creating or acquiring any applicable musical property placed in service during the taxable year, and “(ii) is otherwise properly chargeable to capital account, shall be amortized ratably over the 5-year period beginning with the month in which the property was placed in service. The preceding sentence shall not apply to any expense which, without regard to this paragraph, would not be allowable as a deduction. “(B) Exclusive method.—Except as provided in this paragraph, no depreciation or amortization deduction shall be allowed with respect to any expense to which subparagraph (A) applies. “(C) Applicable musical property.—For purposes of this paragraph—“(i) In general.—The term ‘applicable musical property’ means any musical composition (including any accompanying words), or any copyright with respect to a musical composition, which is property to which this subsection applies without regard to this paragraph. “(ii) Exceptions.—Such term shall not include any property—“(I) with respect to which expenses are treated as qualified creative expenses to which section 263A(h) applies, “(II) to which a simplified procedure established under section 263A(j)(2) applies, or “(III) which is an amortizable section 197 intangible (as defined in section 197(c)). “(D) Election.—An election under this paragraph shall be made at such time and in such form as the Secretary may prescribe and shall apply to all applicable musical property placed in service during the taxable year for which the election applies. “(E) Termination.—An election may not be made under this paragraph for any taxable year beginning after December 31, 2010.”. (b) Effective Date.—The amendments made by this section shall apply to expenses paid or incurred with respect to property placed in service in taxable years beginning after December 31, 2005.