S. 2056

119 S2056 IS: Cost Recovery and Expensing Acceleration to Transform the Economy and Jumpstart Opportunities for Businesses and Startups Act
 U.S. Senate
 2025-06-12
 text/xml
 EN
 Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
  II
  119th CONGRESS
  1st Session
  S. 2056
  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.
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  .
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 .
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.
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:
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.