WTC Records Folder 0140 label, 2001

NYC 9/11 Public Portal Document

Credit Component. The credit amounts would be 15 percent for the SMART Whole Building, 10 percent for the SMART Base Building, and 10 percent for the SMART Tenant Space. Credits would increase 5 percent for each component if a newly constructed building was located in the area below 14" Street in Manhattan. It would apply the same square footage cost caps at $150 per square foot for base building and $75 per square foot for tenant space. Allowable costs would include, for example, enhanced fiber optics or digital cable, high-speed Internet connections, and special computer rooms. The credit would apply to property placed in service on or after September 11, 2001, and before December 31, 2006.

Reasons for Change: This proposal would encourage high technology businesses, such as computer companies, financial services firms and other companies to locate or expand in lower Manhattan. State-of-the-art wiring and computer networking systems are essential components of nearly all businesses, especially the financial services industry. This would provide tax incentives to encourage building developers to rehabilitate and construct buildings to include these building improvements.

> Accelerate Certain Expenses of Amortization

Proposal: 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.

Proposal: Taxpayers would be entitled to deduct as a business expense, costs related to new buildings or other property. 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 will be fully deductible without regard to basis limitation rules of section 1033. Generally, the costs must be incurred after September 11, 2001, and no later than December 31, 2006.

Reasons for Change: Deductibility of business expenses benefits taxpayers because such expenses are subtracted directly from gross income. In addition, shorter amortization periods are advantageous because it serves to increase income in the short-run. Again, this would stimulate redevelopment and construction in the affected area.

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NYC-WTC 000136697