SECTION 6. INTERACTION OF THE

STIMULUS ACT WITH CERTAIN TAX INCENTIVES FOR GO ZONE AND KANSAS DISASTER AREA

.01 Stimulus Act and GO Zone . (1) Section 179 . (a) In general . Section 1400N(e)(1) provides that, for purposes of § 179, the dollar amount in effect under § 179(b)(1) for the taxable year is increased by the lesser of $100,000, or the cost of § 179 GO Zone property placed in service during the taxable year, and the dollar amount in effect under § 179(b)(2) for the taxable year is increased by the lesser of $600,000, or the cost of § 179 GO Zone property placed in service during the taxable year.

(b) Section 179 GO Zone property sub- stantially used in specified portions of the GO Zone . For any taxable year beginning in 2008, the only § 179 GO Zone property eligible for the increased § 179 amounts under § 1400N(e)(1) is § 179 GO Zone property substantially all of the use of which is in one or more specified portions of the GO Zone (as defined in § 1400N(d)(6) and section 3 of Notice 2007–36, 2007–17 I.R.B. 1000) and placed in service by the taxpayer on or before December 31, 2008. For all such § 179 GO Zone property, the § 179(b)(1) dollar amount for any taxable year beginning in 2008 is $250,000, increased by the lesser of $100,000, or the cost of that property placed in service during that taxable year, and the § 179(b)(2) dollar amount for any taxable year beginning in 2008 is $800,000, increased by the lesser of $600,000, or the cost of that property placed in service during that taxable year. Accordingly, for all § 179 GO Zone property described in this section 6.01(1)(b), the maximum § 179(b)(1) and § 179(b)(2) amounts available for any taxable year beginning in 2008 are $350,000 and $1,400,000, respectively.

(c) Other § 179 GO Zone property . For all § 179 GO Zone property (other than the property described in section 6.01(1)(b) of this revenue procedure) placed in service by the taxpayer during any taxable year beginning in 2008, the maximum § 179(b)(1) and § 179(b)(2) amounts available for that taxable year are $250,000

and $800,000, respectively. For all § 179 GO Zone property placed in service by the taxpayer during any taxable year beginning in 2007 and ending in 2008, the § 179(b)(1) dollar amount is $125,000, increased by the lesser of $100,000, or the cost of that property placed in service during that taxable year, and the § 179(b)(2) dollar amount is $500,000, increased by the lesser of $600,000, or the cost of that property placed in service during that taxable year. Accordingly, for all § 179 GO Zone property placed in service by the taxpayer during any taxable year beginning in 2007 and ending in 2008, the maximum § 179(b)(1) and § 179(b)(2) amounts available for that taxable year are $225,000 and $1,100,000, respectively.

(2) Additional first year depreciation deduction .

(a) Nonresidential real property or residential rental property . Except for qualified leasehold improvement property (as defined in § 168(k)(3) and § 1.168(k)–1(c)), the Stimulus additional first year depreciation deduction does not apply to nonresidential real property or residential rental property. Accordingly, in the case of nonresidential real property or residential rental property (other than qualified leasehold improvement property) that is GO Zone property or GO Zone extension property, the rules under § 1400N(d) apply (including the self-constructed property rules under § 1400N(d)(3), as amended by the Stimulus Act).

(b) Other property . (i) GO Zone extension property . For the taxable year beginning after 2007, the only property to which both §§ 168(k) and 1400N(d) apply is GO Zone extension property that is described in § 1400N(d)(6)(B)(ii)(II), is new property, is acquired by the taxpayer after 2007, and is placed in service by the taxpayer before 2009. For such property, the rules under § 168(k) apply. For all other GO Zone extension property described in § 1400N(d)(6)(B)(ii)(II) (including used property), the rules under § 1400N(d) apply.

(ii) GO Zone property other than GO Zone extension property . Because the GO Zone additional first year depreciation deduction has expired for GO Zone property described in § 1400N(d)(2)(A)(i)(I) (other than

September 22, 2008 724 2008–38 I.R.B.

the last year provided in § 179(c)(2) is 2011. The Internal Revenue Service and the Treasury Department intend to amend § 1.179–5(c) to incorporate the guidance set forth under this section 7. Until § 1.179–5(c) is amended, taxpayers may rely on the guidance set forth in this section 7.