SECTION 1. INVESTMENT CREDIT FOR NEW MANUFACTURING AND OTHER PRODUCTION 
              EQUIPMENT.

    (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) the manufacturing and other productive equipment 
        credit.''
    (b) Amount of Credit.--Section 48 of such Code is amended by adding 
at the end thereof the following new subsection:
    ``(c) Manufacturing and Other Productive Equipment Credit.--
            ``(1) In general.--For purposes of section 46, the 
        manufacturing and other productive equipment credit for any 
        taxable year is an amount equal to 10 percent of the excess (if 
        any) of--
                    ``(A) the aggregate bases of qualified 
                manufacturing and other productive equipment properties 
                placed in service during such taxable year, over
                    ``(B) the base amount.
            ``(2) Qualified manufacturing and productive equipment 
        property.--For purposes of this subsection--
                    ``(A) In general.--The term `qualified 
                manufacturing and productive equipment property' means 
                any property--
                            ``(i) which is used as an integral part of 
                        manufacturing, production, or extraction or of 
                        furnishing transportation, communications, 
                        electrical energy, gas, water, or sewage 
                        disposal services,
                            ``(ii) which is tangible property to which 
                        section 168 applies,
                            ``(iii) which is section 1245 property (as 
                        defined in section 1245(a)(3)), and
                            ``(iv)(I) the construction, reconstruction, 
                        or erection of which is completed by the 
                        taxpayer, or
                            ``(II) which is acquired by the taxpayer if 
                        the original use of such property commences 
                        with the taxpayer.
                    ``(B) Special rule for computer software.--In the 
                case of any computer software which is used to control 
                or monitor a manufacturing or production process and 
                with respect to which depreciation (or amortization in 
                lieu of depreciation) is allowable, such software shall 
                be treated as qualified manufacturing and productive 
                equipment property.
            ``(3) Base amount.--For purposes of paragraph (1)(B)--
                    ``(A) In general.--The term `base amount' means the 
                product of--
                            ``(i) the fixed-base percentage, and
                            ``(ii) the average annual gross receipts of 
                        the taxpayer for the four taxable years 
                        preceding the taxable year for which the credit 
                        is being determined (hereafter in this 
                        subsection referred to as the `credit year').
                    ``(B) Minimum base amount.--In no event shall the 
                base amount be less than 50 percent of the amount 
                determined under paragraph (1)(A).
                    ``(C) Fixed-base percentage.--
                            ``(i) In general.--The fixed-base 
                        percentage is the percentage which the 
                        aggregate amounts described in paragraph (1)(A) 
                        for taxable years beginning after December 31, 
                        1986, and before January 1, 1992, is of the 
                        aggregate gross receipts of the taxpayer for 
                        such taxable years.
                            ``(ii) Rounding.--The percentages 
                        determined under clause (i) shall be rounded to 
                        the nearest 1/100 of 1 percent.
                    ``(D) Other rules.--Rules similar to the rules of 
                paragraphs (4) and (5) of section 41(c) shall apply for 
                purposes of this paragraph.
            ``(4) 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.
            ``(5) 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.''
    (b) Manufacturing and Other Productive Equipment Credit Allowable 
Against Entire Regular Tax and Alternative Minimum Tax.--
            (1) Subsection (c) of section 38 of such Code (relating to 
        limitation based on amount of tax) is amended by adding at the 
        end thereof the following new paragraph:
            ``(3) Special rules for manufacturing and other productive 
        equipment credit.--
                    ``(A) In general.--In the case of a C corporation, 
                this section and section 39 shall be applied 
                separately--
                            ``(i) first with respect to so much of the 
                        credit allowed by subsection (a) as is not 
                        attributable to the productive equipment 
                        credit, and
                            ``(ii) then with respect to the productive 
                        equipment credit.
                    ``(B) Rules for application of productive equipment 
                credit.--
                            ``(i) In general.--In the case of the 
                        productive equipment credit, in lieu of 
                        applying the preceding paragraphs of this 
                        subsection, the amount of such credit allowed 
                        under subsection (a) for any taxable year shall 
                        not exceed the net chapter 1 tax for such year.
                            ``(ii) Net chapter 1 tax.--For purposes of 
                        clause (i), the term `net chapter 1 tax' means 
                        the sum of the regular tax liability for the 
                        taxable year and the tax imposed by section 55 
                        for the taxable year, reduced by the sum of the 
                        credits allowable under this part for the 
                        taxable year (other than under section 34 and 
                        other than the productive equipment credit).
                    ``(C) Productive equipment credit.--For purposes of 
                this paragraph, the term `productive equipment credit' 
                means the credit allowable under subsection (a) by 
                reason of section 48(c).''
            (2) Paragraph (2) of section 55(c) of such Code is amended 
        to read as follows:
            ``(2) Cross references.--

                                ``(A) For provisions providing that 
certain credits are not allowable against the tax imposed by this 
section, see sections 26(a), 28(d)(2), 29(b)(5), and 38(c).
                                ``(B) For provision allowing 
manufacturing and other productive equipment credit against the tax 
imposed by this section, see section 38(c)(3).''
    (d) Technical Amendments.--
            (1) Clause (ii) of section 49(a)(1)(C) of such Code is 
        amended by inserting ``or qualified manufacturing and 
        productive equipment property'' after ``energy 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 qualified manufacturing and productive 
                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 of such Code is amended by striking 
        the item relating to section 48 and inserting the following:

                              ``Sec. 48. Other credits.''
    (e) Effective Date.--The amendments made by this section shall 
apply to--
            (1) property acquired by the taxpayer after March 31, 1993, 
        and
            (2) property the construction, reconstruction, or erection 
        of which is completed by the taxpayer after March 31, 1993, but 
        only to the extent of the basis thereof attributable to 
        construction, reconstruction, or erection after such date.
Amends the Internal Revenue Code to allow an investment tax credit for manufacturing and other productive equiment for the period after December 31, 1986, and before January 1, 1992.  Provides for determining such credit. 
Allows such credit in determining the regular tax and the alternative minimum tax.
To amend the Internal Revenue Code of 1986 to encourage investments in new manufacturing and other productive equipment by allowing an investment tax credit to taxpayers who increase the amount of such investments.