Sec. 10. 36 MRSA §5200-A, sub-§2, ¶M, as repealed and replaced by PL 2003, c. 479, §6, is amended to read:

M. A fraction of any amount previously added back by the taxpayer to federal taxable income pursuant to subsection 1, paragraph N.

(1) With respect to property first placed in service during taxable years beginning in 2002, the adjustment under this paragraph is available for each year during the recovery period, beginning 2 years after the beginning of the taxable year during which the property was first placed in service. The fraction is equal to the amount added back under subsection 1, paragraph N with respect to the property, divided by the number of years in the recovery period minus 2.

(2) With respect to all other property, for the taxable year immediately following the taxable year during which the property was first placed in service, the fraction allowed by this paragraph is equal to 5% of the amount added back under subsection 1, paragraph N with respect to the property. For each subsequent taxable year during the recovery period, the fraction is equal to 95% of the amount added back under subsection 1, paragraph N with respect to the property, divided by the number of years in the recovery period minus 2.

In the case of property expensed pursuant to Section 179 of the Code, the term "recovery period" means the recovery period that would have been applicable to the property had Section 179 not been applied.; and

Sec. 11. 36 MRSA §5200-A, sub-§2, ¶P is enacted to read:

P.__For income tax years beginning on or after January 1, 2006, an amount equal to the total capital gains or depreciation recapture realized from the sale of multifamily affordable housing property.__The amount subtracted pursuant to this paragraph must be reduced by any amount claimed as a deduction for federal income tax purposes.