H.R. 7229 - Renewing Investment in American Workers and Supply Chains Act

117TH CONGRESS
2D SESSION

H.R. 7229

To amend the Internal Revenue Code of 1986 to modify
the depreciation of nonresidential real property
and residential rental property.

IN THE HOUSE OF REPRESENTATIVES

MARCH 24, 2022

Mrs. WALORSKI (for herself, Mr. BANKS, Mr. SMITH of Nebraska,
Mrs. MILLER of West Virginia, Mr. CRAWFORD, Mr. CAWTHORN,
Mr. BAIRD, Ms. MACE, Ms. VAN DUYNE, Mr. RESCHENTHALER,
and Mr. PERRY) 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 modify the depreciation of nonresidential real property and residential rental property.

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 "Renewing Investment in American Workers and Supply Chains Act".

SECTION 2. MODIFICATION OF DEPRECIATION OF NONRESIDENTIAL REAL PROPERTY AND RESIDENTIAL RENTAL PROPERTY.

(a) 20-YEAR RECOVERY PERIOD. —

(1) IN GENERAL. — Section 168(e)(3)(F) of the Internal Revenue Code of 1986 is amended to read as follows:

"(F) 20-YEAR PROPERTY. — The term '20-year property' means —

"(i) initial clearing and grading land improvements with respect to any electric utility transmission and distribution plant,

"(ii) any nonresidential real property, and

"(iii) any residential rental property.".

(2) BONUS DEPRECIATION NOT APPLICABLE. — Section 168(k)(2)(A)(i)(I) of such Code is amended by inserting "(other than nonresidential real property and residential rental property)" before the comma at the end.

(3) CONFORMING AMENDMENT. — The table contained in section 168(c) of such Code is amended —

(A) by striking the row relating to residential rental property, and

(B) by striking the row relating to nonresidential real property.

(b) ADJUSTMENT OF DEDUCTION TO PROVIDE NEUTRAL COST RECOVERY. — Section 168 of such Code is amended by adding at the end the following new subsection:

"(n) NEUTRAL COST RECOVERY FOR NONRESIDENTIAL REAL PROPERTY AND RESIDENTIAL RENTAL PROPERTY. —

"(1) IN GENERAL. — The deduction otherwise provided under section 167(a) with respect to nonresidential real property and residential rental property for any taxable year shall be equal to the product of such amount (determined without regard to this subsection) multiplied by the applicable neutral cost recovery ratio with respect to such property for such taxable year.

"(2) NEUTRAL COST RECOVERY RATIO. — For purposes of paragraph (1), the term 'applicable neutral cost recovery ratio' means, with respect to any property for any taxable year, the product (not less than 1 and rounded to the nearest 0.001) of —

"(A) the quotient of —

"(i) the gross domestic product deflator (as determined by the Bureau of Economic Analysis) for the calendar quarter ending in such taxable year which corresponds to the calendar quarter during which such property was placed in service by the taxpayer, divided by

"(ii) the gross domestic product deflator (as determined by the Bureau of Economic Analysis) for the calendar quarter during which such property was placed in service by the taxpayer, multiplied by

"(B) 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 such 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.

"(3) APPLICATION TO PROPERTY PLACED IN SERVICE BEFORE DATE OF ENACTMENT. — In the case of nonresidential real property or residential rental property which is placed in service before the date of enactment of this subsection, subparagraphs (A)(i), (A)(ii), and (B) of paragraph (2) shall each be applied by substituting 'calendar quarter which includes the date of enactment of this subsection' for 'calendar quarter during which such property was placed in service by the taxpayer'.

"(4) 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.".

(c) EFFECTIVE DATES. —

(1) 20-YEAR RECOVERY PERIOD. — The amendments made by subsection (a) shall apply to property placed in service after the date of the enactment of this Act, in taxable years ending after such date.

(2) NEUTRAL COST RECOVERY. — The amendments made by subsection (b) shall apply to taxable years ending after the date of the enactment of this Act.