119-hr3967

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3967 Introduced in House

    (IH) ]

<DOC>

119th CONGRESS
 1st Session
 H. R. 3967

 To amend the Internal Revenue Code of 1986 to permanently allow a tax 
deduction at the time an investment in qualified property is made, and 
 for other purposes.

_______________________________________________________________________

 IN THE HOUSE OF REPRESENTATIVES

 June 12, 2025

 Mr. Grothman (for himself, Mr. Mann, Mr. Rose, and Mr. Rulli) 
 introduced the following bill; which was referred to the Committee on 
 Ways and Means

_______________________________________________________________________

 A BILL

 To amend the Internal Revenue Code of 1986 to permanently allow a tax 
deduction at the time an investment in qualified property is made, and 
 for other purposes.

 Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

 This Act may be cited as the ``Cost Recovery and Expensing 
Acceleration to Transform the Economy and Jumpstart Opportunities for 
Businesses and Startups Act'' or the ``CREATE JOBS Act''.

SEC. 2. PERMANENT FULL EXPENSING FOR QUALIFIED PROPERTY.

    (a) In General.--Paragraph

    (6) of 

section 168

    (k) of the Internal 
Revenue Code of 1986 is amended to read as follows:
 ``

    (6) Applicable percentage.--For purposes of this 
 subsection, the term `applicable percentage' means, in the case 
 of property placed in service (or, in the case of a specified 
 plant described in paragraph

    (5) , a plant which is planted or 
 grafted) after September 27, 2017, 100 percent.''.

    (b) Conforming Amendments.--

    (1) Section 168

    (k) of the Internal Revenue Code of 1986 is 
 amended--
        (A) in paragraph

    (2) --
            (i) in subparagraph
        (A) --
            (I) in clause
            (i) 
            (V) , by inserting 
 ``and'' at the end,
            (II) in clause
            (ii) , by striking 
 ``clause
            (ii) of subparagraph
        (E) , 
 and'' and inserting ``clause
            (i) of 
 subparagraph
        (E) .'', and
            (III) by striking clause
            (iii) ,
            (ii) in subparagraph
        (B) --
            (I) in clause
            (i) --

    (aa) by striking subclauses
            (II) and
            (III) , and

    (bb) by redesignating 
 subclauses
            (IV) through
            (VI) as 
 subclauses
            (II) through
            (IV) , 
 respectively,
            (II) by striking clause
            (ii) , and
            (III) by redesignating clauses
            (iii) and
            (iv) as clauses
            (ii) and
            (iii) , respectively,
            (iii) in subparagraph
            (C) --
            (I) in clause
            (i) , by striking 
 ``and subclauses
            (II) and
            (III) of 
 subparagraph
        (B)
            (i) '', and
            (II) in clause
            (ii) , by striking 
 ``subparagraph
        (B)
            (iii) '' and inserting 
 ``subparagraph
        (B)
            (ii) '', and
            (iv) in subparagraph
        (E) --
            (I) by striking clause
            (i) , and
            (II) by redesignating clauses
            (ii) and
            (iii) as clauses
            (i) and
            (ii) , 
 respectively, and
        (B) in paragraph

    (5)
        (A) , by striking ``planted 
 before January 1, 2027, or is grafted before such date 
 to a plant that has already been planted,'' and 
 inserting ``planted or grafted''.

    (2) Section 460
            (c) (6)
        (B) of such Code is amended by 
 striking ``which'' and all that follows through the period and 
 inserting ``which has a recovery period of 7 years or less.''.
            (c) Effective Date.--The amendments made by this section shall take 
effect as if included in 

section 13201 of Public Law 115-97.

SEC. 3. NEUTRAL COST RECOVERY DEPRECIATION ADJUSTMENT FOR RESIDENTIAL 
 RENTAL PROPERTY AND NONRESIDENTIAL REAL PROPERTY.

    (a) In General.--

Section 168 of the Internal Revenue Code of 1986 
is amended by adding at the end thereof the following new subsection:
 ``

    (n) Neutral Cost Recovery Depreciation Adjustment for Residential 
Rental Property and Nonresidential Real Property.--
 ``

    (1) In general.--In the case of any applicable property, 
 the deduction under this section with respect to such property 
 for any taxable year after the taxable year during which the 
 property is placed in service shall be--
 ``
        (A) the amount determined under this section for 
 such taxable year without regard to this subsection, 
 multiplied by
 ``
        (B) the applicable neutral cost recovery ratio 
 for such taxable year.
 ``

    (2) Applicable neutral cost recovery ratio.--For purposes 
 of paragraph

    (1) , the applicable neutral cost recovery ratio 
 for the applicable property for any taxable year is the number 
 determined by--
 ``
        (A) dividing--
 ``
            (i) the gross domestic product deflator 
 for the calendar quarter ending in such taxable 
 year which corresponds to the calendar quarter 
 during which the property was placed in service 
 by the taxpayer, by
 ``
            (ii) the gross domestic product deflator 
 for the calendar quarter during which the 
 property was placed in service by the taxpayer, 
 and
 ``
        (B) then multiplying the number determined under 
 subparagraph
        (A) by the number equal to 1.03 to the nth 
 power where `n' is the number of full years in the 
 period beginning on the 1st day of the calendar quarter 
 during which the property was placed in service by the 
 taxpayer and ending on the day before the beginning of 
 the corresponding calendar quarter ending during such 
 taxable year.
 The applicable neutral cost recovery ratio shall never be less 
 than 1. The applicable neutral cost recovery ratio shall be 
 rounded to the nearest \1/1000\.
 ``

    (3) Special rule for existing property.--In the case of 
 any applicable property which is placed in service before the 
 date of enactment of this subsection, subparagraphs
        (A)
            (ii) and
        (B) of paragraph

    (2) shall be applied by substituting `calendar 
 quarter which includes the date of enactment of this 
 subsection' for `calendar quarter during which the property was 
 placed in service by the taxpayer' each place it appears.
 ``

    (4) Gross domestic product deflator.--For purposes of 
 paragraph

    (2) , the gross domestic product deflator for any 
 calendar quarter is the implicit price deflator for the gross 
 domestic product for such quarter (as shown in the first 
 revision thereof).
 ``

    (5) Election not to have subsection apply.--This 
 subsection shall not apply to any applicable property if the 
 taxpayer elects not to have this subsection apply to such 
 property. Such an election, once made, shall be irrevocable.
 ``

    (6) Additional deduction not to affect basis or 
 recapture.--
 ``
        (A) In general.--The additional amount determined 
 under this section by reason of this subsection shall 
 not be taken into account in determining the adjusted 
 basis of any applicable property or of any interest in 
 a pass-thru entity which holds such property and shall 
 not be treated as a deduction for depreciation for 
 purposes of sections 1245 and 1250.
 ``
        (B) Pass-thru entity defined.--For purposes of 
 subparagraph
        (A) , the term `pass-thru entity' means--
 ``
            (i) a regulated investment company,
 ``
            (ii) a real estate investment trust,
 ``
            (iii) an S corporation,
 ``
            (iv) a partnership,
 ``
            (v) an estate or trust, and
 ``
            (vi) a common trust fund.
 ``

    (7) Applicable property.--For purposes of this 
 subsection, the term `applicable property' means residential 
 rental property or nonresidential real property (as such terms 
 are defined in subsection

    (e)

    (2) ).''.

    (b) Minimum Tax Treatment.--Paragraph

    (1) of 

section 56

    (a) of the 
Internal Revenue Code of 1986 is amended by adding at the end thereof 
the following new subparagraph:
 ``
        (E) Use of neutral cost recovery ratio.--In the 
 case of property to which 

section 168

    (n) applies, the 
 deduction allowable under this paragraph with respect 
 to such property for any taxable year (after the 
 taxable year during which the property is placed in 
 service) shall be--
 ``
            (i) the amount so allowable for such 
 taxable year without regard to this 
 subparagraph, multiplied by
 ``
            (ii) the applicable neutral cost recovery 
 ratio for such taxable year (as determined 
 under 

section 168

    (n) ).
 This subparagraph shall not apply to any property with 
 respect to which there is an election in effect not to 
 have 

section 168

    (n) apply.''.
            (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service before, on, or after the date of 
the enactment of this Act, with respect to taxable years ending on or 
after such date.

SEC. 4. ELIMINATION OF AMORTIZATION OF RESEARCH AND EXPERIMENTAL 
 EXPENDITURES.

    (a) In General.--

Section 174 of the Internal Revenue Code of 1986 
is amended to read as follows:

``

SEC. 174. RESEARCH AND EXPERIMENTAL EXPENDITURES.

 ``

    (a) Treatment as Expenses.--
 ``

    (1) In general.--A taxpayer may treat research or 
 experimental expenditures which are paid or incurred by him 
 during the taxable year in connection with his trade or 
 business as expenses which are not chargeable to capital 
 account. The expenditures so treated shall be allowed as a 
 deduction.
 ``

    (2) When method may be adopted.--
 ``
        (A) Without consent.--A taxpayer may, without the 
 consent of the Secretary, adopt the method provided in 
 this subsection for his first taxable year for which 
 expenditures described in paragraph

    (1) are paid or 
 incurred.
 ``
        (B) With consent.--A taxpayer may, with the 
 consent of the Secretary, adopt at any time the method 
 provided in this subsection.
 ``

    (3) Scope.--The method adopted under this subsection 
 shall apply to all expenditures described in paragraph

    (1) . The 
 method adopted shall be adhered to in computing taxable income 
 for the taxable year and for all subsequent taxable years 
 unless, with the approval of the Secretary, a change to a 
 different method is authorized with respect to part or all of 
 such expenditures.
 ``

    (b) Amortization of Certain Research and Experimental 
Expenditures.--
 ``

    (1) In general.--At the election of the taxpayer, made in 
 accordance with regulations prescribed by the Secretary, 
 research or experimental expenditures which are--
 ``
        (A) paid or incurred by the taxpayer in 
 connection with his trade or business,
 ``
        (B) not treated as expenses under subsection

    (a) , 
 and
 ``
            (C) chargeable to capital account but not 
 chargeable to property of a character which is subject 
 to the allowance under 

section 167 (relating to 
 allowance for depreciation, etc.) or 

section 611 
 (relating to allowance for depletion),
 may be treated as deferred expenses. In computing taxable 
 income, such deferred expenses shall be allowed as a deduction 
 ratably over such period of not less than 60 months as may be 
 selected by the taxpayer (beginning with the month in which the 
 taxpayer first realizes benefits from such expenditures). Such 
 deferred expenses are expenditures properly chargeable to 
 capital account for purposes of 

section 1016

    (a)

    (1) (relating to 
 adjustments to basis of property).
 ``

    (2) Time for and scope of election.--The election 
 provided by paragraph

    (1) may be made for any taxable year, but 
 only if made not later than the time prescribed by law for 
 filing the return for such taxable year (including extensions 
 thereof). The method so elected, and the period selected by the 
 taxpayer, shall be adhered to in computing taxable income for 
 the taxable year for which the election is made and for all 
 subsequent taxable years unless, with the approval of the 
 Secretary, a change to a different method (or to a different 
 period) is authorized with respect to part or all of such 
 expenditures. The election shall not apply to any expenditure 
 paid or incurred during any taxable year before the taxable 
 year for which the taxpayer makes the election.
 ``
            (c) Land and Other Property.--This section shall not apply to any 
expenditure for the acquisition or improvement of land, or for the 
acquisition or improvement of property to be used in connection with 
the research or experimentation and of a character which is subject to 
the allowance under 

section 167 (relating to allowance for 
depreciation, etc.) or 

section 611 (relating to allowance for 
depletion); but for purposes of this section allowances under 

section 167, and allowances under 

section 611, shall be considered as 
expenditures.
 ``
            (d) Exploration Expenditures.--This section shall not apply to 
any expenditure paid or incurred for the purpose of ascertaining the 
existence, location, extent, or quality of any deposit of ore or other 
mineral (including oil and gas).
 ``

    (e) Only Reasonable Research Expenditures Eligible.--This section 
shall apply to a research or experimental expenditure only to the 
extent that the amount thereof is reasonable under the circumstances.
 ``

    (f) Cross References.--
 ``

    (1) For adjustments to basis of property for amounts 
 allowed as deductions as deferred expenses under subsection

    (b) , see 

section 1016

    (a)

    (14) .
 ``

    (2) For election of 10-year amortization of expenditures 
 allowable as a deduction under subsection

    (a) , see 

section 59

    (e) .''.

    (b) Clerical Amendment.--The table of sections for part VI of 
subchapter B of chapter 1 of such Code is amended by striking the item 
relating to 

section 174 and inserting the following new item:

``

Sec. 174. Research and experimental expenditures''.
            (c) Conforming Amendments.--

    (1) Section 41
            (d) (1)
        (A) of such Code is amended by striking 
 ``specified research or experimental expenditures under 

section 174'' and inserting ``expenses under 

section 174''.

    (2) Section 280C
            (c) of such Code is amended to read as 
 follows:
 ``
            (c) Credit for Increasing Research Activities.--
 ``

    (1) In general.--No deduction shall be allowed for that 
 portion of the qualified research expenses (as defined in 
 

section 41

    (b) ) or basic research expenses (as defined in 
 

section 41

    (e)

    (2) ) otherwise allowable as a deduction for the 
 taxable year which is equal to the amount of the credit 
 determined for such taxable year under 

section 41

    (a) .
 ``

    (2) Similar rule where taxpayer capitalizes rather than 
 deducts expenses.--If--
 ``
        (A) the amount of the credit determined for the 
 taxable year under 

section 41

    (a)

    (1) , exceeds
 ``
        (B) the amount allowable as a deduction for such 
 taxable year for qualified research expenses or basic 
 research expenses (determined without regard to 
 paragraph

    (1) ),
 the amount chargeable to capital account for the taxable year 
 for such expenses shall be reduced by the amount of such 
 excess.
 ``

    (3) Election of reduced credit.--
 ``
        (A) In general.--In the case of any taxable year 
 for which an election is made under this paragraph--
 ``
            (i) paragraphs

    (1) and

    (2) shall not 
 apply, and
 ``
            (ii) the amount of the credit under 
 

section 41

    (a) shall be the amount determined 
 under subparagraph
        (B) .
 ``
        (B) Amount of reduced credit.--The amount of 
 credit determined under this subparagraph for any 
 taxable year shall be the amount equal to the excess 
 of--
 ``
            (i) the amount of credit determined under 
 

section 41

    (a) without regard to this paragraph, 
 over
 ``
            (ii) the product of--
 ``
            (I) the amount described in 
 clause
            (i) , and
 ``
            (II) the rate of tax under 
 

section 11

    (b) .
 ``
            (C) Election.--An election under this paragraph 
 for any taxable year shall be made not later than the 
 time for filing the return of tax for such year 
 (including extensions), shall be made on such return, 
 and shall be made in such manner as the Secretary may 
 prescribe. Such an election, once made, shall be 
 irrevocable.
 ``

    (4) Controlled groups.--Paragraph

    (3) of subsection

    (b) shall apply for purposes of this subsection.''.
            (d) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred in taxable years beginning after 
December 31, 2021.
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