The Act raises the limit on the amount of tangible personal property a taxpayer may elect to expense -- rather than depreciate -- each year under section 179 to $100,000 a year, for property placed in service in a tax year beginning in 2003 through 2005. This limit is indexed for inflation for property placed in service in tax years beginning in 2004 and 2005. The limit reverts to $25,000 for property placed in service in tax years beginning after 2005.

The Act also raises the threshold at which the $100,000 limitation begins to phase out, so that a taxpayer that places more than $400,000 of section 179 tangible personal property in service in a tax year beginning in 2003 will have a reduced limitation (phased out entirely when such investment reaches $500,000). The $400,000 threshold also is indexed for inflation in tax years beginning in 2004 and 2005, but reverts to the prior-law threshold of $200,000 for property placed in service in tax years beginning after 2005.

The Act makes off-the-shelf computer software eligible for the expensing election. Off-the-shelf software is computer software that:

• Is readily available for purchase by the general public

• Is subject to a non-exclusive license, and

• Has not been substantially modified

Such purchased software otherwise is amortized, generally, over a 36-month period, and would be eligible for bonus depreciation. Investment in such software is counted in determining the phaseout of the $100,000 expensing limitation.

The Act also permits taxpayers to make or revoke a section 179 election on an amended return for the year the asset was placed in service, without obtaining the consent of the IRS. However, any revocation of an earlier election is irrevocable.