Senators Aim To Modernize US Depreciation Rules

by Mike Godfrey, Tax-News.com, Washington

25 July 2005

The United States Senate Finance Committee is drafting new legislation with the aim of modernizing and simplifying the depreciation rules for the purchase of equipment and machinery by business.

Sen. Gordon Smith (R-Ore), who is drafting the bill with committee ranking Democrat Max Baucus and Sen. John Kerry (D-Mass), says that the legislation addresses the needs of emerging technologies and new industries and will promote investment. The proposals will also allow the Treasury Department to create or shorten the depreciation lives for assets in the high technology sector.

Smith added that the depreciation recovery periods have remained unchanged since 1986, despite the rapid changes in technology that have taken place in the meantime.

"My bill will help bring our system into line with the reality of today's marketplace," he stated.

Baucus observed in a statement that: "Businesses are often unsure of how to depreciate assets which did not exist in 1988 or have been substantially improved since then. It is time for American business to have a 21st century cost recovery system."

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