SECTION 4. ELECTION

PROCEDURES FOR RETURNS FILED ON OR BEFORE JUNE 29, 2005

.01 In general . If a taxpayer filed its 2000, 2001, 2002, 2003, or 2004 federal tax return on or before June 29, 2005, and used a 5-year recovery period or a 9-year recovery period, as applicable, to depreciate qualified Liberty Zone leasehold improvement property placed in service by the taxpayer after September 10, 2001, during the 2000, 2001, 2002, 2003, or 2004 taxable year, but wants to depreciate this property using a 39-year recovery period or 40-year recovery period, as applicable (or using a 15-year recovery period or 39-year recovery period, as applicable, if the qualified Liberty Zone leasehold improvement property is qualified leasehold improvement property under § 168(e)(6)), the taxpayer may elect not to use the 5-year recovery period or 9-year recovery period, as applicable, for the qualified Liberty Zone leasehold improvement property either by:

(1) filing an amended federal tax return(s) (or a qualified amended return(s) under Rev. Proc. 94–69, 1994–2 C.B. 804, if applicable) on or before June 29, 2007, for the placed-in-service year and all subsequent affected taxable year(s), provided that the placed-in-service year and all subsequent affected taxable year(s) are open under the period of limitations for assessment under § 6501(a). The amended return(s) (or qualified amended return(s)) should include the statement “Filed Pursuant to Rev. Proc. 2005–43” at the top of the amended return(s) (or qualified amended return(s)); or

(2) filing a Form 3115, Application for Change in Accounting Method, with the taxpayer’s federal tax return for the taxable year that includes June 29, 2005, or with the taxpayer’s federal tax return for the first taxable year succeeding the taxable year that included June 29, 2005. This Form 3115 must be filed in accordance with the automatic change in method of accounting provisions in Rev. Proc. 2002–9 or any successor, with the following modifications:

(a) The scope limitations in section 4.02 of Rev. Proc. 2002–9 do not apply; and

(b) For purposes of section 6.02(4)(a) of Rev. Proc. 2002–9, the taxpayer should include on line 1a of the Form 3115 (revised December 2003) the designated automatic accounting method change number for the change in method of accounting for depreciation made under this section 4. This number for this method change is “93.”

.02 Deemed election . A taxpayer also will be treated as making the election not to use the 5-year recovery period or 9-year recovery period, as applicable, to depreciate qualified Liberty Zone leasehold improvement property placed in service by the taxpayer after September 10, 2001, during the 2000, 2001, 2002, 2003, or 2004 taxable year, if the taxpayer on the return filed for that taxable year, depreciated all qualified Liberty Zone leasehold improvement property placed-in-service by the taxpayer after September 10, 2001, during the 2000, 2001, 2002, 2003, or 2004 taxable year, as applicable, under § 168 by using the straight-line method of depreciation and, as applicable, a 39-year recovery period for purposes of the general depreciation system of § 168(a) or a 40-year recovery period for purposes of the alternative depreciation system of § 168(g) (or, as applicable, a 15-year recovery period for purposes of § 168(a) or a 39-year recovery period for purposes of § 168(g) if the qualified Liberty Zone leasehold improvement property is qualified leasehold improvement property under § 168(e)(6)).