EXTENSION OF 15-YEAR STRAIGHT-LINE COST RECOVERY FOR QUALIFIED LEASEHOLD IMPROVEMENTS AND QUALIFIED RESTAURANT IMPROVEMENTS; 15-YEAR STRAIGHT-LINE COST RECOVERY FOR CERTAIN IMPROVEMENTS TO RETAIL SPACE.

SEC. 305. EXTENSION OF 15-YEAR STRAIGHT-LINE COST RECOVERY FOR QUALIFIED LEASEHOLD IMPROVEMENTS AND QUALIFIED RESTAURANT IMPROVEMENTS; 15-YEAR STRAIGHT-LINE COST RECOVERY FOR CERTAIN IMPROVEMENTS TO RETAIL SPACE.(a) Extension of Leasehold and Restaurant Improvements.—(1) In general.—Clauses (iv) and (v) of section 168(e)(3)(E) (relating to 15-year property) are each amended by striking “January 1, 2008” and inserting “January 1, 2010”.(2) Effective date.—The amendments made by this subsection shall apply to property placed in service after December 31, 2007.(b) Treatment To Include New Construction.—(1) In general.—Paragraph (7) of section 168(e) (relating to classification of property) is amended to read as follows:“(7) Qualified restaurant property.—“(A) In general.—The term ‘qualified restaurant property’ means any section 1250 property which is—“(i) a building, if such building is placed in service after December 31, 2008, and before January 1, 2010, or“(ii) an improvement to a building,if more than 50 percent of the building’s square footage is devoted to preparation of, and seating for on-premises consumption of, prepared meals.“(B) Exclusion from bonus depreciation.—Property described in this paragraph shall not be considered qualified property for purposes of subsection (k).”.(2) Effective date.—The amendment made by this subsection shall apply to property placed in service after December 31, 2008.(c) Recovery Period for Depreciation of Certain Improvements to Retail Space.—(1) 15-year recovery period.—Section 168(e)(3)(E) (relating to 15-year property) is amended by striking “and” at the end of clause (vii), by striking the period at the end of clause (viii) and inserting “, and”, and by adding at the end the following new clause:“(ix) any qualified retail improvement property placed in service after December 31, 2008, and before January 1, 2010.”.(2) Qualified retail improvement property.—Section 168(e) is amended by adding at the end the following new paragraph:“(8) Qualified retail improvement property.—122 STAT. 3868“(A) In general.—The term ‘qualified retail improvement property’ means any improvement to an interior portion of a building which is nonresidential real property if—“(i) such portion is open to the general public and is used in the retail trade or business of selling tangible personal property to the general public, and“(ii) such improvement is placed in service more than 3 years after the date the building was first placed in service.“(B) Improvements made by owner.—In the case of an improvement made by the owner of such improvement, such improvement shall be qualified retail improvement property (if at all) only so long as such improvement is held by such owner. Rules similar to the rules under paragraph (6)(B) shall apply for purposes of the preceding sentence.“(C) 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 benefitting a common area, or“(iv) the internal structural framework of the building.“(D) Exclusion from bonus depreciation.—Property described in this paragraph shall not be considered qualified property for purposes of subsection (k).“(E) Termination.—Such term shall not include any improvement placed in service after December 31, 2009.”.(3) Requirement to use straight line method.—Section 168(b)(3) is amended by adding at the end the following new subparagraph:“(I) Qualified retail improvement property described in subsection (e)(8).”.(4) Alternative system.—The table contained in section 168(g)(3)(B) is amended by inserting after the item relating to subparagraph (E)(viii) the following new item:“ “(E)(ix)39”. (5) Effective date.—The amendments made by this subsection shall apply to property placed in service after December 31, 2008.