Small Business Enhancement Act of 1993

Summary: TABLE OF CONTENTS: 
     Title I:  Incremental Investment Tax Credit for Productive 
Property 
     Title II:  Increase in Expensing for Productive Property 
Small Business Enhancement Act of 1993 - 
Title I:  Incremental Investment Tax Credit for Productive Property
 - Amends the Internal Revenue Code to allow small businesses a general investment credit for new productive property which is used as an integral part of manufacturing, production, or extraction, or which is a motor vehicle. 
Title II:  Increase in Expensing for Productive Property
 - Increases the deduction limit for expensing such productive property. Makes medium-sized companies eligible for such deduction.  Excludes such deduction from the minimum tax.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Small Business Enhancement Act of 
1993''.

   TITLE I--INCREMENTAL INVESTMENT TAX CREDIT FOR PRODUCTIVE PROPERTY

SEC. 101. INCREMENTAL INVESTMENT 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 a small business (as defined in 
        section 48(c)), the general investment credit.''
    (b) Amount of Credit.--Section 48 of such Code is amended by adding 
at the end thereof the following new subsection:
    ``(c) General Investment Credit.--
            ``(1) In general.--For purposes of section 46, in the case 
        of a small business, the general investment credit for any 
        taxable year is an amount equal to 10 percent of the excess (if 
        any) of--
                    ``(A) the qualified investment for such taxable 
                year, over
                    ``(B) the qualified investment for the taxable year 
                which begins in 1991 or 1992, whichever is selected by 
                the taxpayer.
        The selection under subparagraph (B), once made, shall be 
        irrevocable.
            ``(2) Small business.--For purposes of this subsection, the 
        term `small business' means any taxpayer actively engaged in a 
        trade or business if the average number of individuals employed 
        by the taxpayer during the taxable year is less than 500.
            ``(3) 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 productive property placed in 
                        service by the taxpayer during such taxable 
                        year, plus
                            ``(ii) the applicable percentage of the 
                        cost of each used productive 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.
            ``(4) Productive property.--For purposes of this 
        subsection, the term `productive property' means any tangible 
        property to which section 168 applies (not including a building 
        and its structural components)--
                    ``(A) which is used as an integral part of 
                manufacturing, production, or extraction, or
                    ``(B) which is a motor vehicle.
            ``(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 credits 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.
            ``(7) Special rules.--
                    ``(A) Controlled groups.--For purposes of this 
                subsection--
                            ``(i) all taxpayers treated as a single 
                        employer under subsection (a) or (b) of section 
                        52 shall be treated as a single taxpayer, and
                            ``(ii) the credit (if any) determined under 
                        this subsection with respect to each such 
                        taxpayer shall be its proportionate share of 
                        the basis of the productive property giving 
                        rise to such credit.
                    ``(B) Allocation of basis adjustment.--The 
                reduction required by section 50(c) for any taxable 
                year shall be allocated among the productive property 
                in proportion to the respective bases of such property.
                    ``(C) Recapture.--In applying section 50(a) to any 
                property which ceases to be productive property, the 
                credit determined under this subsection with respect to 
                such property shall be treated as being equal to 10 
                percent of the lesser of--
                            ``(i) the excess referred to in paragraph 
                        (1) for the taxable year in which such property 
                        was determined, or
                            ``(ii) the qualified investment in such 
                        property which was taken into account under 
                        paragraph (1).''
    (c) Technical Amendments.--
            (1) Subparagraph (C) of section 49(a)(1) of such Code is 
        amended by striking ``and'' at the end of clause (ii), by 
        striking the period at the end of clause (iii) and inserting 
        ``, and'', and by adding at the end thereof the following new 
        clause:
                            ``(iv) the basis of any new productive 
                        property and the cost of any used productive 
                        property.''
            (2) Subparagraph (E) of section 50(a)(2) of such Code is 
        amended by inserting ``or 48(c)(5)'' 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 productive 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 of such Code 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).

        TITLE II--INCREASE IN EXPENSING FOR PRODUCTIVE PROPERTY

SEC. 201. CHANGES IN ELECTION TO EXPENSE CERTAIN DEPRECIABLE BUSINESS 
              ASSETS.

    (a) Increase in Limit for Productive Equipment.--Paragraph (1) of 
section 179(b) of the Internal Revenue Code of 1986 (relating to 
election to expense certain depreciable property) is amended by 
striking ``$10,000.'' and inserting ``$10,000 ($50,000 in the case of 
section 179 property for use as an integral part of manufacturing, 
production, or extraction).''
    (b) Medium-Sized Companies Eligible.--Paragraph (2) of section 
179(b) of such Code is amended by striking ``$200,000.'' and inserting 
``$200,000 ($1,000,000 in the case of section 179 property for use as 
an integral part of manufacturing, production, or extraction).''
    (c) Deductions Under Section 179 Excluded From Minimum Tax.--
            (1) Paragraph (1) of section 56(a) of such Code is amended 
        by adding at the end thereof the following new subparagraph:
                    ``(E) Special rule for section 179 property.--In 
                the case of section 179 property (as defined in section 
                179(d)), the deduction allowable under section 179 
                shall be treated as allowable under the alternative 
                system of section 168(g).''
            (2) Subparagraph (A) of section 56(g)(4) of such Code is 
        amended by adding at the end thereof the following new clause:
                            ``(vi) Special rule for section 179 
                        property.--In the case of section 179 property 
                        (as defined in section 179(d)), the deduction 
                        allowable under section 179 shall be treated as 
                        allowable under the alternative system of 
                        section 168(g).''
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1992.