SPECIAL DEPRECIATION ALLOWANCE FOR QUALIFIED DISASTER PROPERTY.

SEC. 710. SPECIAL DEPRECIATION ALLOWANCE FOR QUALIFIED DISASTER PROPERTY.(a) In General.—Section 168, as amended by this Act, is amended by adding at the end the following new subsection:“(n) Special Allowance for Qualified Disaster Assistance Property.—“(1) In general.—In the case of any qualified disaster assistance 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 50 percent of the adjusted basis of the qualified disaster assistance property, and“(B) the adjusted basis of the qualified disaster assistance 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 disaster assistance property.—For purposes of this subsection—“(A) In general.—The term ‘qualified disaster assistance property’ means any property—“(i)(I) which is described in subsection (k)(2)(A)(i), or“(II) which is nonresidential real property or residential rental property,“(ii) substantially all of the use of which is—“(I) in a disaster area with respect to a federally declared disaster occurring before January 1, 2010, and“(II) in the active conduct of a trade or business by the taxpayer in such disaster area,“(iii) which—122 STAT. 3927“(I) rehabilitates property damaged, or replaces property destroyed or condemned, as a result of such federally declared disaster, except that, for purposes of this clause, property shall be treated as replacing property destroyed or condemned if, as part of an integrated plan, such property replaces property which is included in a continuous area which includes real property destroyed or condemned, and“(II) is similar in nature to, and located in the same county as, the property being rehabilitated or replaced,“(iv) the original use of which in such disaster area commences with an eligible taxpayer on or after the applicable disaster date,“(v) which is acquired by such eligible taxpayer by purchase (as defined in section 179(d)) on or after the applicable disaster date, but only if no written binding contract for the acquisition was in effect before such date, and“(vi) which is placed in service by such eligible taxpayer on or before the date which is the last day of the third calendar year following the applicable disaster date (the fourth calendar year in the case of nonresidential real property and residential rental property).“(B) Exceptions.—“(i) Other bonus depreciation property.—The term ‘qualified disaster assistance property’ shall not include—“(I) any property to which subsection (k) (determined without regard to paragraph (4)), (l), or (m) applies,“(II) any property to which section 1400N(d) applies, and“(III) any property described in section 1400N(p)(3).“(ii) Alternative depreciation property.—The term ‘qualified disaster assistance property’ shall not include any property to which the alternative depreciation system under subsection (g) applies, determined without regard to paragraph (7) of subsection (g) (relating to election to have system apply).“(iii) Tax-exempt bond financed property.—Such term shall not include any property any portion of which is financed with the proceeds of any obligation the interest on which is exempt from tax under section 103.“(iv) Qualified revitalization buildings.—Such term shall not include any qualified revitalization building with respect to which the taxpayer has elected the application of paragraph (1) or (2) of section 1400I(a).“(v) 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 122 STAT. 3928 not apply to all property in such class placed in service during such taxable year.“(C) Special rules.—For purposes of this subsection, rules similar to the rules of subparagraph (E) of subsection (k)(2) shall apply, except that such subparagraph shall be applied—“(i) by substituting ‘the applicable disaster date’ for ‘December 31, 2007’ each place it appears therein,“(ii) without regard to ‘and before January 1, 2009’ in clause (i) thereof, and“(iii) by substituting ‘qualified disaster assistance property’ for ‘qualified property’ in clause (iv) thereof.“(D) Allowance against alternative minimum tax.—For purposes of this subsection, rules similar to the rules of subsection (k)(2)(G) shall apply.“(3) Other definitions.—For purposes of this subsection—“(A) Applicable disaster date.—The term ‘applicable disaster date’ means, with respect to any federally declared disaster, the date on which such federally declared disaster occurs.“(B) Federally declared disaster.—The term ‘federally declared disaster’ has the meaning given such term under section 165(h)(3)(C)(i).“(C) Disaster area.—The term ‘disaster area’ has the meaning given such term under section 165(h)(3)(C)(ii).“(D) Eligible taxpayer.—The term ‘eligible taxpayer’ means a taxpayer who has suffered an economic loss attributable to a federally declared disaster.“(4) Recapture.—For purposes of this subsection, rules similar to the rules under section 179(d)(10) shall apply with respect to any qualified disaster assistance property which ceases to be qualified disaster assistance property.”.(b) Effective Date.—The amendment made by this section shall apply to property placed in service after December 31, 2007, with respect disasters declared after such date.