To amend the Internal Revenue Code of 1986 to provide tax incentives to encourage the conversion of the defense industry to commercial endeavors, and for other purposes.

Summary: Allows the use of the targeted jobs credit for hiring a long-term unemployed defense or shipbuilding industry worker.  Describes such worker as an individual certified by the designated local agency as having been unemployed in such industry who:  (1) has been receiving unemployment compensation at all times during the six-month period prior to the hiring date; or (2) has been receiving unemployment compensation but has exhausted all rights to such compensation and has remained unemployed beginning on the date such rights were exhausted and ending on the date before the hiring date. 
Requires the individual to be employed by the employer for at least 120 days and the employer to certify that:  (1) the individual was hired after the employer took reasonable actions to specifically recruit such workers; and (2) the individual was not hired to replace an employee who was involuntarily separated from employment by the employer without cause. 
Makes such credit permanent law. 
Allows an investment tax credit for nondefense production and manufacturing equipment of ten percent of the aggregate bases of such properties placed in service during the taxable year.

SECTION 1. TAX CREDIT FOR HIRING LONG-TERM UNEMPLOYED DEFENSE AND 
              SHIPBUILDING INDUSTRY WORKERS.

    (a) Allowance of Credit.--Paragraph (1) of section 51(d) of the 
Internal Revenue Code of 1986 (defining members of targeted groups) is 
amended by striking ``or'' at the end of subparagraph (I), by striking 
the period at the end of subparagraph (J) and inserting ``, or'', and 
by adding at the end the following new subparagraph:
            ``(K) a long-term unemployed defense or shipbuilding 
        industry worker.''
    (b) Long-Term Unemployed Defense or Shipbuilding Industry Worker.--
Section 51(d) of such Code is amended by adding at the end thereof the 
following new paragraph:
            ``(17) Long-term unemployed defense or shipbuilding 
        industry worker.--
                    ``(A) In general.--The term `long-term unemployed 
                defense or shipbuilding industry worker' means an 
                individual certified by the designated local agency as 
                having been employed in the defense or shipbuilding 
                industry and--
                            ``(i) who has been receiving unemployment 
                        compensation at all times during the 6-month 
                        period ending with the last day of the month 
                        preceding the hiring date, or
                            ``(ii) who--
                                    ``(I) was receiving unemployment 
                                compensation but exhausted all rights 
                                to such compensation, and
                                    ``(II) has remained unemployed 
                                during the period beginning on the date 
                                such rights were exhausted and ending 
                                on the day before the hiring date.
                    ``(B) Employment in defense or shipbuilding 
                industry.--For purposes of subparagraph (A), an 
                individual shall be treated as employed--
                            ``(i) in the defense industry if such 
                        individual's services were performed pursuant 
                        to any defense contract (as defined in section 
                        48(c)(4)), and
                            ``(ii) in the shipbuilding industry if such 
                        individual's services were performed pursuant 
                        to any contract for the construction or 
                        reconstruction of any ship or any subcontract 
                        in connection with such construction or 
                        reconstruction.
                    ``(C) Unemployment compensation.--For purposes of 
                this paragraph, the term `unemployment compensation' 
                has the meaning given such term by section 85(b).''
    (c) Certain Individuals Not Eligible.--Section 51(i) of such Code 
(relating to certain individuals ineligible) is amended by adding at 
the end the following new paragraph:
            ``(4) Special rules for long-term unemployed defense and 
        shipbuilding industry workers.--No wages shall be taken into 
        account under subsection (a) with respect to any long-term 
        unemployed defense or shipbuilding industry worker (as defined 
        in subsection (d)(17)) unless--
                    ``(A) notwithstanding paragraph (3), the individual 
                is employed by the employer at least 120 days, and
                    ``(B) the employer certifies on the return of tax 
                for the taxable year for which credit is claimed that--
                            ``(i) the individual was hired after the 
                        employer took reasonable actions to 
                        specifically recruit long-term unemployed 
                        defense or shipbuilding industry workers, and
                            ``(ii) the individual was not hired to 
                        replace an employee who was involuntarily 
                        separated from employment by the employer 
                        without cause.''
    (d) Credit for Hiring Long-Term Unemployed Defense or Shipbuilding 
Industry Workers Made Permanent.--Paragraph (4) of section 51(c) of 
such Code is amended by adding at the end thereof the following new 
sentence: ``The preceding sentence shall not apply to wages paid or 
incurred to any long-term unemployed defense or shipbuilding industry 
worker (as defined in subsection (d)(17)).''
    (e) Effective Date.--The amendments made by this section shall 
apply to individuals hired on and after the date of the enactment of 
this Act.

SEC. 2. TECHNOLOGY TRANSFER TAX CREDIT.

    (a) Allowance of Credit.--Section 46 of the Internal Revenue Code 
of 1986 (relating to amount of investment credit) is amended by 
striking ``and'' at the end of paragraph (2), by striking the period at 
the end of paragraph (3) and inserting ``, and'', and by adding at the 
end thereof the following new paragraph:
            ``(4) in the case of an eligible taxpayer (as defined in 
        section 48(c)), the nondefense production and manufacturing 
        equipment credit.''
    (b) Amount of Credit.--Section 48 of such Code is amended by adding 
at the end thereof the following new subsection:
    ``(c) Nondefense Production and Manufacturing Equipment Credit.--
            ``(1) In general.--For purposes of section 46, in the case 
        of an eligible taxpayer, the nondefense production and 
        manufacturing equipment credit for any taxable year is an 
        amount equal to 10 percent of the qualified investment for such 
        taxable year.
            ``(2) Qualified investment.--
                    ``(A) In general.--For purposes of paragraph (1), 
                the qualified investment for any taxable year is the 
                aggregate of--
                            ``(i) the applicable percentage of the 
                        basis of each new qualified nondefense 
                        production and manufacturing equipment property 
                        placed in service by the taxpayer during such 
                        taxable year, plus
                            ``(ii) the applicable percentage of the 
                        cost of each used qualified nondefense 
                        production and manufacturing equipment property 
                        placed in service by the taxpayer during such 
                        taxable year.
                    ``(B) Applicable percentage.--For purposes of 
                subparagraph (A), the applicable percentage for any 
                property shall be determined under paragraphs (2) and 
                (7) of section 46(c) (as in effect on the day before 
                the date of the enactment of the Revenue Reconciliation 
                Act of 1990).
                    ``(C) Certain rules made applicable.--The 
                provisions of subsections (b) and (c) of section 48 (as 
                in effect on the day before the date of the enactment 
                of the Revenue Reconciliation Act of 1990) shall apply 
                for purposes of this paragraph.
            ``(3) Qualified nondefense production and manufacturing 
        equipment property.--For purposes of this subsection, the term 
        `qualified nondefense production and manufacturing equipment 
        property' means any property--
                    ``(A) which is used as an integral part of the 
                manufacture or production of nondefense tangible 
                personal property,
                    ``(B) which is tangible property to which section 
                168 applies, and
                    ``(C) which is section 1245 property (as defined in 
                section 1245(a)(3)).
            ``(4) Eligible taxpayer.--
                    ``(A) In general.--A taxpayer is an eligible 
                taxpayer for purposes of this subsection if more than 
                50 percent of the gross revenues of such taxpayer for 
                the taxable year are attributable to defense contracts.
                    ``(B) Defense contract.--For purposes of this 
                paragraph, the term `defense contract' means any 
                contract or subcontract entered into between the 
                taxpayer and a defense agency to provide material or 
                defense related operations.
                    ``(C) Defense agency.--For purposes of this 
                paragraph, the term `defense agency' means the 
                Department of Defense, the nuclear weapons division of 
                the Department of Energy, the National Aeronautics and 
                Space Administration, the Coast Guard, and any other 
                agency of the Government to the extent such agency 
                conducts military or other defense related operations.
            ``(5) Coordination with other credits.--This subsection 
        shall not apply to any property to which the energy credit or 
        rehabilitation credit would apply unless the taxpayer elects to 
        waive the application of such credit to such property.
            ``(6) Certain progress expenditure rules made applicable.--
        Rules similar to rules of subsection (c)(4) and (d) of section 
        46 (as in effect on the day before the date of the enactment of 
        the Revenue Reconciliation Act of 1990) shall apply for 
        purposes of this subsection.''
    (c) Technical Amendments.--
            (1) Clause (ii) of section 49(a)(1)(C) of such Code is 
        amended by inserting ``or qualified nondefense production and 
        manufacturing equipment property'' after ``energy property''.
            (2) Subparagraph (E) of section 50(a)(2) of such Code is 
        amended by inserting ``or 48(c)(4)'' before the period at the 
        end thereof.
            (3) Paragraph (5) of section 50(a) of such Code is amended 
        by adding at the end thereof the following new subparagraph.
                    ``(D) Special rules for certain property.--In the 
                case of any qualified nondefense production and 
                manufacturing equipment property which is 3-year 
                property (within the meaning of section 168(e))--
                            ``(i) the percentage set forth in clause 
                        (ii) of the table contained in paragraph (1)(B) 
                        shall be 66 percent,
                            ``(ii) the percentage set forth in clause 
                        (iii) of such table shall be 33 percent, and
                            ``(iii) clauses (iv) and (v) of such table 
                        shall not apply.''
            (4)(A) The section heading for section 48 of such Code is 
        amended to read as follows:

``SEC. 48. OTHER CREDITS.''

            (B) The table of sections for subpart E of part IV of 
        subchapter A of chapter 1 is amended by striking the item 
        relating to section 48 and inserting the following:

                              ``Sec. 48. Other credits.''
    (d) Effective Date.--The amendments made by this section shall 
apply to periods after December 31, 1992, under rules similar to the 
rules of section 48(m) of the Internal Revenue Code of 1986 (as in 
effect on the day before the date of the enactment of the Revenue 
Reconciliation Act of 1990).