WTC Records Folder 0140 label, 2001

NYC 9/11 Public Portal Document

Accelerate all tenant leasehold improvements from 39 to 10 years. Repairing the buildings surrounding the World Trade Center will

require a tremendous amount of new leasehold improvement expenditures. This proposal would affect all tenant leasehold improvements. [ IRC§ 168(i) 8.]

Accelerate the depreciation of building improvements, such as roofs, HVAC, elevators, and escalators to 20 years. These items are currently treated the same as 39-year MACRS nonresidential real property . [IRC§ 168 (i) (6).]

Shorten the depreciation of electric or gas transmission and distribution property from 15 to seven years. [IRC§ 168(e)(1) + (3), IRC§ 168 (i)(10).]

Expanded Business Expense Deduction

Taxpayers could deduct as a business expense costs related to new buildings or other property in New York City. Also allowed would be costs to repair, remove, replace or improve property at the disaster site. This deductibility would be a limited exception to the capitalization requirements of Internal Revenue Code sections 263 and 280B. Costs to purchase replacement property would be fully deductible without regard to the basis limitation rules of section 1033. Generally, costs must be incurred after September 11, 2001, and no later than December 31, 2006.

Shortened Amortization for Business Expenses

Certain expenses such as planning costs, land use approval costs, design and architectural fees, local fees charged to building owners (utility hookups, roads and sewers) and other pre-construction costs would be amortized over a short period of, for example, five years for Federal tax purposes.

Reasons for Change: Accelerated depreciation, enhanced deductibility of business expenses, and shorter amortization periods would provide significant incentives to replace and upgrade buildings damaged or destroyed in the vicinity of the World Trade Center. The benefits would assist businesses in a number of ways. This tax relief will spur investment in infrastructure and buildings because accelerated depreciation provides for faster recovery of cost. Deductibility of business expenses benefits taxpayers because such expenses are subtracted directly from gross income. Shorter amortization periods are advantageous because it

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