Effective: October 3, 2008
Subtitle A. Income Taxes
Chapter 1. Normal Taxes and Surtaxes
Subchapter Y. Short-Term Regional Benefits
Part II. Tax Benefits for Go Zones

1400N(6). Tax benefits for Gulf Opportunity Zone

(d) Special allowance for certain property acquired on or after August 28, 2005.--

(1) Additional allowance.--In the case of any qualified Gulf Opportunity Zone property--

(A) the depreciation deduction provided by section 167(a) for the taxable year in whichsuch property is placed in service shall include an allowance equal to 50 percent of the adjusted basis of such property, and

(B) the adjusted basis of the qualified Gulf Opportunity Zone property shall be reduced bythe amount of such deduction before computing the amount otherwise allowable as adepreciation deduction under this chapter for such taxable year and any subsequent taxable year.

(2) Qualified Gulf Opportunity Zone property.--For purposes of this subsection--

(A) In general.--The term "qualified Gulf Opportunity Zone property" means property--

(i) (I) which is described in section 168(k)(2)(A)(i), or

(II) which is nonresidential real property or residential rental property,

(ii) substantially all of the use of which is in the Gulf Opportunity Zone and is in the active conduct of a trade or business by the taxpayer in such Zone,

(iii) the original use of which in the Gulf Opportunity Zone commences with the taxpayer on or after August 28, 2005,

(iv) which is acquired by the taxpayer by purchase (as defined in section 179(d)) on or after August 28, 2005, but only if no written binding contract for the acquisition was in effect before August 28, 2005, and

(v) which is placed in service by the taxpayer on or before December 31, 2007 (December 31, 2008, in the case of nonresidential real property and residential rental property).

(B) Exceptions.--

(i) Alternative depreciation property.--Such term shall not include any property described in section 168(k)(2)(D)(i).

(ii) Tax-exempt bond-financed property.--Such term shall not include any property any portion of which is financed with the proceeds of any obligation the interest on which is exempt from tax under section 103.

(iii) Qualified revitalization buildings.--Such term shall not include any qualified revitalization building with respect to which the taxpayer has elected the application of paragraph (1) or (2) of section 1400I(a).

(iv) Election out.--If a taxpayer makes an election under this clause with respect to any class of property for any taxable year, this subsection shall not apply to all property in such class placed in service during such taxable year.

(3) Special rules.--For purposes of this subsection, rules similar to the rules of subparagraph(E) of Section 168(k)(2) shall apply, except that such subparagraph shall be applied--

(A) by substituting "August 27, 2005" for "December 31, 2007" each place it appearstherein,

(B) without regard to "and before January 1, 2009" in clause (i) thereof, and

(C) by substituting "qualified Gulf Opportunity Zone property" for "qualified property" in clause (iv) thereof.

(4) Allowance against alternative minimum tax.--For purposes of this subsection, rulessimilar to the rules of section 168(k)(2)(G) shall apply.

(5) Recapture.--For purposes of this subsection, rules similar to the rules under section179(d)(10) shall apply with respect to any qualified Gulf Opportunity Zone property whichceases to be qualified Gulf Opportunity Zone property.

(6) Extension for certain property.--

(A) in general.--In the case of any specified Gulf Opportunity Zone extension property, paragraph (2)(A) shall be applied without regard to clause (v) thereof.

(B) Specified Gulf Opportunity Zone extension property.--For purposes of this paragraph,the term "specified Gulf Opportunity Zone extension property" means property--

(i) substantially all of the use of which is in one or more specified portions of the GO Zone, and

(ii) which is--

(I) nonresidential real property or residential rental property which is placed in service by the taxpayer on or before December 31, 2010, or

(II) in the case of a taxpayer who places a building described in subclause (I) in service on or before December 31, 2010, property described in section 168(k)(2)(A)(i) if substantially all of the use of such property is in such building and such property is placed in service by the taxpayer not later than 90 days after such building is placed in service.

(C) Specified portions of the GO Zone.--For purposes of this paragraph, the term "specifiedportions of the GO Zone" means those portions of the GO Zone which are in any county or parishwhich is identified by the Secretary as being a county or parish in which hurricanes occurringduring 2005 damaged (in the aggregate) more than 60 percent of the housing units in such countyor parish which were occupied (determined according to the 2000 Census).

(D) Only pre-January 1, 2010, basis of real property eligible for additional allowance.--In thecase of property which is qualified Gulf Opportunity Zone property solely by reason ofsubparagraph (B)(ii)(I), paragraph (1) shall apply only to the extent of the adjusted basis thereofattributable to manufacture, construction, or production before January 1, 2010.

(E) Exception for bonus depreciation property under section 168(k).--The term "specifiedGulf Opportunity Zone extension property" shall not include any property to which section168(k) applies.