The area of New York City south of Canal Street was substantially
damaged in the September 11, 2001 terrorist attacks.  After the
attacks on New York, Congress created a new "Liberty Zone" in
New York City with an accompanying series of tax breaks for
businesses operating in the area.  One of these tax benefits was an
increased section 179 deduction of 30% for new property
investments in the Liberty Zone. 

New York Liberty Zone Area
The New York Liberty Zone is the area located on or south of
Canal Street, East Broadway (east of its intersection with Canal
Street), or Grand Street (east of its intersection with East Broadway)
in the Borough of Manhattan in the City of New York, New York.

Liberty Zone Requirements
To be qualified Liberty Zone property the property must have been
acquired by purchase after September 10, 2001, and there must not
have been a binding written contract for the acquisition in effect
before September 11, 2001.  The property also must be placed in
service for use in your trade or business or for the production of
income by January 1, 2007 (January  1, 2010, in the case of
qualifying nonresidential real property and residential rental
property).

Example: On October 1, 2001, you bought and placed in service in your
business, which is in the Liberty Zone, qualified Liberty Zone
property that cost $150,000.  You did not elect to claim a section
179 deduction.  You can deduct 30% of the cost $45,000 as a
special Liberty Zone depreciation allowance for 2001.  You use the
remaining $105,000 of cost to figure your regular depreciation
deduction for 2001 and later years.

Qualifying Property
The following types of property can qualify for the New York Liberty
Zone property :
 

Recapture the Liberty Zone Allowance
If you used the Liberty Zone Depreciation Allowance and
subsequently sold your property, you are required to recapture the
depreciation amount you used (unless you elected not to claim it).

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