[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 2056 Introduced in Senate (IS)]
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119th CONGRESS
1st Session
S. 2056
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 SENATE OF THE UNITED STATES
June 12, 2025
Mr. Cruz introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
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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