SECTION 2. BACKGROUND

.01 Rev. Proc. 2002–33 provided additional time for certain taxpayers that filed their 2000 or 2001 federal tax return before June 1, 2002, to (1) claim the 30-percent additional first year depreciation provided by §§ 168(k)(1) and 1400L(b) of the Internal Revenue Code for a class of property that is qualified property or qualified New York Liberty Zone (Liberty Zone) property placed in service after September 10, 2001, during the 2000 or 2001 taxable

year, (2) elect the increased § 179 amount provided by § 1400L(f) for § 179 property that is Liberty Zone property placed in service by the taxpayer after September 10, 2001, during the 2000 or 2001 taxable year, and (3) depreciate under § 168 Liberty Zone leasehold improvement property (as defined in § 1400L(c)(2)) placed in service by the taxpayer after September 10, 2001, during the 2000 or 2001 taxable year, as 5-year property using the straight-line method of depreciation. See sections 4.01, 4.03, and 4.04 of Rev. Proc. 2002–33. .02 Rev. Proc. 2002–33 also explained how taxpayers may make the election provided by § 168(k)(2)(C)(iii) and § 1400L(b)(2)(C)(iv) not to deduct the 30-percent additional first year depreciation for any class of property that is qualified property or Liberty Zone property placed in service after September 10, 2001. Special provisions, including a deemed election, were provided for taxpayers that filed their 2000 or 2001 federal tax return before June 1, 2002. See sections 3 and 4.02 of Rev. Proc. 2002–33.

.03 The Treasury Department and the Internal Revenue Service have learned that some taxpayers were unaware of the relief

2003-29 I.R.B. 119 July 21, 2003

appropriate line on any Form 3115 filed under this revenue procedure.

.02 Election Not to Deduct 30-Percent Additional First Year Depreciation .

(1) In general . A taxpayer that timely filed its federal tax return for the taxable year that included September 11, 2001, has made the election not to deduct the 30-percent additional first year depreciation for a class of property that is qualified property or Liberty Zone property during the taxable year that included September 11, 2001, if: (a) the taxpayer made the election within the time prescribed in section 3.03(1) or 3.03(2)(a) of Rev. Proc. 2002–33, and in the manner prescribed in the instructions for the 2001 Form 4562, Depreciation and Amortization (Rev. March 2002); or

(b) the taxpayer made the election within the time prescribed in section 3.03(1) or 3.03(2)(a) of Rev. Proc. 2002–33 and included with the taxpayer’s federal tax return for the taxable year that included September 11, 2001, an affirmative statement to the effect that the taxpayer is not deducting the 30-percent additional first year depreciation for the class of property. The affirmative statement may be a statement attached to, or written on, the return (for example, writing on the Form 4562 “not deducting 30 percent”).

(2) Deemed election . If section 3.02(1) of this revenue procedure does not apply, a taxpayer that timely filed its federal tax return for the taxable year that included September 11, 2001, also will be treated as making the election not to deduct the 30-percent additional first year depreciation for a class of property that is qualified property or Liberty Zone property placed in service by the taxpayer after September 10, 2001, during the taxable year that included September 11, 2001, if the taxpayer:

(a) on that return, did not claim the 30-percent additional first year depreciation for that class of property but did claim depreciation; and

(b) does not file an amended federal tax return (or a qualified amended return) or a Form 3115 within the time and in the manner prescribed in section 3.01 of this revenue procedure to claim the 30-percent additional first year depreciation for the

provided by Rev. Proc. 2002–33 or were precluded from the relief because their federal tax returns for the taxable year that included September 11, 2001, were filed on or after June 1, 2002. As a result, Treasury and the Service have determined that it is appropriate to extend the relief provided in section 4 of Rev. Proc. 2002–33 to any taxpayer that timely filed its federal tax return for the taxable year that included September 11, 2001. Treasury and the Service also have determined that it is appropriate to allow certain taxpayers additional time to change their selection of § 179 property. Accordingly, section 3 of this revenue procedure amplifies and modifies section 4 of Rev. Proc. 2002–33.