WTC Records Folder 0140 label, 2001

NYC 9/11 Public Portal Document

> Accelerated Depreciation Benefits for Individuals and Businesses

Change the current depreciation treatment for new structures (nonresidential real property) from 39 to 20 years. [IRC§ 168(c).]

Accelerate all tenant leasehold improvements from 39 to 10 years. Repairing the buildings for surrounding the Twin Towers occupancy the 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 to seven years from 15 years. [IRC§ 168(e)(1) + (3), IRC§ 168 (i)(10).]

Reasons for Change: Accelerated depreciation would provide significant incentives to replace and upgrade buildings damaged or destroyed in the vicinity of the World Trade Center. The benefits would assist taxpayers in a number of ways. First, this will spur investment in infrastructure and buildings because accelerated depreciation provides for faster recovery of cost. Second, for certain taxpayers such as small businesses, these tax changes would also provide access to much needed capital. Shortening the depreciation life of utility property would also benefit consumers by lower utility bills as utilities experience a reduced cost of replacing damaged or destroyed infrastructure.

➢ insurance Proceeds Election

Proposal: Taxpayers could elect whether to consider insurance proceeds covering property losses in connection with the World Trade Center disaster in defining an uncompensated loss under Internal Revenue Code section 165(a). Generally, such proceeds would not be considered to the extent that (i) the proceeds compensate the taxpayer for a loss incurred under a federally declared disaster area as determined by the President and (ii), such proceeds are used by the taxpayer to acquire trade or business property in New York City no later than December 31, 2006. If such election is made, the tax basis of the acquired trade or business property must be reduced by the amount of insurance proceeds so used.

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NYC-WTC 000136692