SECTION 1. ALLOWANCE OF CREDIT FOR EMPLOYER EXPENSES FOR CERTAIN ON-
              SITE DAY-CARE FACILITIES.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business related 
credits) is amended by adding at the end thereof the following new 
section:

``SEC. 45A. EMPLOYER ON-SITE DAY-CARE FACILITY CREDIT.

    ``(a) In General.--For purposes of section 38, the employer on-site 
day-care facility credit determined under this section for the taxable 
year is an amount equal to 50 percent of the qualified investment in 
property placed in service during such taxable year as part of a 
qualified day-care facility.
    ``(b) Limitation.--The credit allowable under subsection (a) with 
respect to any qualified day-care facility shall not exceed $150,000.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Qualified investment.--The term `qualified 
        investment' means the amount paid or incurred to acquire, 
        construct, rehabilitate, or expand property--
                    ``(A) which is to be used as part of a qualified 
                day-care facility, and
                    ``(B) with respect to which a deduction for 
                depreciation (or amortization in lieu of depreciation) 
                is allowable.
        Such term includes only amounts properly chargeable to capital 
        account.
            ``(2) Qualified day-care facility.--
                    ``(A) In general.--The term `qualified day-care 
                facility' means a facility--
                            ``(i) operated by an employer to provide 
                        dependent care assistance for enrollees, at 
                        least 30 percent of whom are dependents of 
                        employees of employers to which a credit under 
                        subsection (a) with respect to the facility is 
                        allowable,
                            ``(ii) the principal use of which is to 
                        provide dependent care assistance described in 
                        clause (i),
                            ``(iii) located on the premises of such 
                        employer,
                            ``(iv) which meets the requirements of all 
                        applicable laws and regulations of the State or 
                        local government in which it is located, 
                        including, but not limited to, the licensing of 
                        the facility as a day-care facility, and
                            ``(v) the use of which (or the eligibility 
                        to use) does not discriminate in favor of 
                        employees who are highly compensated employees 
                        (within the meaning of section 414(q)).
                    ``(B) Multiple employers.--With respect to a 
                facility jointly operated by more than 1 employer, the 
                term `qualified day-care facility' shall include any 
                facility located on the premises of 1 employer and 
                within a reasonable distance from the premises of the 
                other employers.
    ``(d) Recapture of Credit.--
            ``(1) In general.--If, as of the close of any taxable year, 
        there is a recapture event with respect to any qualified day-
        care facility, then the tax of the taxpayer under this chapter 
        for such taxable year shall be increased by an amount equal to 
        the product of--
                    ``(A) the applicable recapture percentage, and
                    ``(B) the aggregate decrease in the credits allowed 
                under section 38 for all prior taxable years which 
                would have resulted if the qualified on-site day-care 
                expenses of the taxpayer with respect to such facility 
                had been zero.
            ``(2) Applicable recapture percentage.--
                    ``(A) In general.--For purposes of this subsection, 
                the applicable recapture percentage shall be determined 
                from the following table:

                                                         The applicable
                                                              recapture
        ``If the recapture event                         percentage is:
        occurs in:
                Years 1-3......................................     100
                Year 4.........................................      85
                Year 5.........................................      70
                Year 6.........................................      55
                Year 7.........................................      40
                Year 8.........................................      25
                Years 9 and 10.................................      10
                Years 11 and thereafter........................      0.
                    ``(B) Years.--For purposes of subparagraph (A), 
                year 1 shall begin on the first day of the taxable year 
                in which the qualified day-care facility is placed in 
                service by the taxpayer.
            ``(3) Recapture event defined.--For purposes of this 
        subsection, the term `recapture event' means--
                    ``(A) Cessation of operation.--The cessation of the 
                operation of the facility as a qualified day-care 
                facility.
                    ``(B) Change in ownership.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), the disposition of a taxpayer's 
                        interest in a qualified day-care facility with 
                        respect to which the credit described in 
                        subsection (a) was allowable.
                            ``(ii) Agreement to assume recapture 
                        liability.--Clause (i) shall not apply if the 
                        person acquiring such interest in the facility 
                        agrees in writing to assume the recapture 
                        liability of the person disposing of such 
                        interest in effect immediately before such 
                        disposition. In the event of such an 
                        assumption, the person acquiring the interest 
                        in the facility shall be treated as the 
                        taxpayer for purposes of assessing any 
                        recapture liability (computed as if there had 
                        been no change in ownership).
            ``(4) Special rules.--
                    ``(A) Tax benefit rule.--The tax for the taxable 
                year shall be increased under paragraph (1) only with 
                respect to credits allowed by reason of this section 
                which were used to reduce tax liability. In the case of 
                credits not so used to reduce tax liability, the 
                carryforwards and carrybacks under section 39 shall be 
                appropriately adjusted.
                    ``(B) No credits against tax.--Any increase in tax 
                under this subsection shall not be treated as a tax 
                imposed by this chapter for purposes of determining the 
                amount of any credit under subpart A, B, or D of this 
                part.
                    ``(C) No recapture by reason of casualty loss.--The 
                increase in tax under this subsection shall not apply 
                to a cessation of operation of the facility as a 
                qualified day-care facility by reason of a casualty 
                loss to the extent such loss is restored by 
                reconstruction or replacement within a reasonable 
                period established by the Secretary.
    ``(e) Special Allocation Rules.--For purposes of this section--
            ``(1) Allocation in case of multiple employers.--In the 
        case of multiple employers jointly operating a qualified day-
        care facility, the credit allowable by this section to each 
        such employer shall be its proportionate share of the qualified 
        on-site day-care expenses giving rise to the credit.
            ``(2) Pass-thru in the case of estates and trusts.--Under 
        regulations prescribed by the Secretary, rules similar to the 
        rules of subsection (d) of section 52 shall apply.
            ``(3) Allocation in the case of partnerships.--In the case 
        of partnerships, the credit shall be allocated among partners 
        under regulations prescribed by the Secretary.
    ``(f) No Double Benefit.--
            ``(1) Reduction in basis.--For purposes of this subtitle--
                    ``(A) In general.--If a credit is determined under 
                this section with respect to any property, the basis of 
                such property shall be reduced by the amount of the 
                credit so determined.
                    ``(B) Certain dispositions.--If during any taxable 
                year there is a recapture amount determined with 
                respect to any property the basis of which was reduced 
                under paragraph (1), the basis of such property 
                (immediately before the event resulting in such 
                recapture) shall be increased by an amount equal to 
                such recapture amount. For purposes of the preceding 
                sentence, the term `recapture amount' means any 
                increase in tax (or adjustment in carrybacks or 
                carryovers) determined under subsection (d).
            ``(2) Other deductions and credits.--No deduction or credit 
        shall be allowed under any other provision of this chapter with 
        respect to the amount of the credit determined under this 
        section.
    ``(g) Termination.--This section shall not apply to taxable years 
beginning after December 31, 1996.''.
    (b) Conforming Amendments.--
            (1) Section 38(b) of the Internal Revenue Code of 1986 is 
        amended--
                    (A) by striking out ``plus'' at the end of 
                paragraph (7),
                    (B) by striking out the period at the end of 
                paragraph (8), and inserting in lieu thereof a comma 
                and ``plus'', and
                    (C) by adding at the end thereof the following new 
                paragraph:
            ``(9) the employer on-site day-care facility credit 
        determined under section 45A.''.
            (2) The table of sections for subpart D of part IV of 
        subchapter A of chapter 1 is amended by adding at the end 
        thereof the following new item:

                              ``Sec. 45A. Employer on-site day-care 
                                        facility credit.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1993.
Amends the Internal Revenue Code to make available to an employer an income tax credit for expenses paid or incurred to acquire, construct, rehabilitate, or expand a qualified on-site day care facility operated by the employer for the care of enrollees, at least 30 percent of whom must be dependents of the employer's employees. 
Terminates the credit after December 31, 1996.
To amend the Internal Revenue Code of 1986 to provide a credit against tax for employers who provide on-site day-care facilities for dependents of their employees, and for other purposes.