Boat Building Investment Act of 1998

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Boat Building Investment Act of 
1998''.

SEC. 2. CREDIT FOR PURCHASE OF LUXURY YACHTS CONSTRUCTED IN THE UNITED 
              STATES.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 30A the following new section:

``SEC. 30B. PURCHASE OF LUXURY YACHTS CONSTRUCTED IN THE UNITED STATES.

    ``(a) Allowance of Credit.--There shall be allowed as a credit 
against the tax imposed by this chapter for the taxable year an amount 
equal to 20 percent of the cost of any new domestic luxury yacht 
purchased by the taxpayer during such year.
    ``(b) Maximum Credit.--The amount of the credit allowed by 
subsection (a) with respect to any yacht shall not exceed $10,000,000.
    ``(c) New Domestic Luxury Yacht.--For purposes of this section, the 
term `new domestic luxury yacht' means any yacht if--
            ``(1) the yacht is more than 50 feet in length,
            ``(2) substantially all of the value of which is 
        attributable to value added in the United States,
            ``(3) the original use of which commences with the 
        taxpayer, and
            ``(4) the yacht is designed, built, documented, and 
        registered in the United States.
    ``(d) Application With Other Credits; Carryover of Excess Credit.--
The credit allowed by subsection (a) for any taxable year shall not 
exceed the excess (if any) of--
            ``(1) the regular tax for the taxable year reduced by the 
        sum of the credits allowable under subpart A and the preceding 
        sections of this subpart, over
            ``(2) the tentative minimum tax for the taxable year.
If the credit under subsection (a) exceeds the limitation of the 
preceding sentence, such excess shall be added to the credit allowable 
under subsection (a) for the succeeding taxable year.
    ``(e) Recapture of Credit If Yacht Ceases To Be Documented, Etc., 
in the United States.--
            ``(1) In general.--If, during any taxable year, there is a 
        recapture event with respect to any new domestic luxury yacht 
        of the taxpayer, 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 this section for all prior taxable years which 
                would have resulted if no credit had been allowed under 
                this section for the purchase of such yacht.
            ``(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 occurs in:
                                                         percentage is:
                Year 1...............................          100     
                Year 2...............................           85     
                Year 3...............................           70     
                Year 4...............................           55     
                Year 5...............................           40     
                Year 6...............................           25     
                Year 7...............................           10     
                Years 8 and thereafter...............            0.    
                    ``(B) Years.--References to years in the table in 
                subparagraph (A) are references to the consecutive 12-
                month periods beginning with the date the yacht is 
                placed in service by the taxpayer.
            ``(3) Recapture event defined.--For purposes of this 
        subsection, the term `recapture event' means--
                    ``(A) any sale or other disposition of the yacht, 
                or
                    ``(B) the documentation, registration, maintenance, 
                or storage of the yacht outside the United States.
            ``(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 under this section 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--
                            ``(i) the amount of any credit under 
                        subpart A, B, or D of this part, or
                            ``(ii) the tax imposed by section 55.
    ``(f) Reduction in Basis.--For purposes of this subtitle, rules 
similar to the rules of section 50(c) (other than paragraph (3) 
thereof) shall apply to the credit allowed under this section.''.
    (b) Conforming Amendments.--
            (1) Subsection (a) of section 1016 of such Code is amended 
        by striking ``and'' at the end of paragraph (26), by striking 
        the period at the end of paragraph (27) and inserting ``, 
        and'', and by adding at the end thereof the following new 
        paragraph:
            ``(28) in the case of a yacht with respect to which credit 
        was allowed under section 30B, to the extent provided in 
        section 30B(f)(2).''.
            (2) The table of sections for subpart B of part IV of 
        subchapter A of chapter 1 of such Code is amended by inserting 
        after the item relating to section 30A the following new item:

                              ``Sec. 30B. Purchase of luxury yachts 
                                        constructed in the United 
                                        States.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to yachts purchased after the date of the enactment of this Act.

SEC. 3. GRANTS TO ENCOURAGE PERSONS OUTSIDE THE UNITED STATES TO 
              PURCHASE LUXURY YACHTS CONSTRUCTED IN THE UNITED STATES.

    (a) In General.--The Secretary of Commerce shall establish a 
program under which grants are provided to entities for the purpose 
of--
            (1) encouraging persons outside the United States to 
        purchase luxury yachts (as defined in section 30B of the 
        Internal Revenue Code of 1986, as added by section 2(a)) which 
        are constructed in the United States, and
            (2) providing specialized education and training for 
        workers who construct such yachts.
    (b) Authorization.--There are authorized to be appropriated 
$25,000,000 for the purpose of carrying out subsection (a). Amounts 
appropriated for any fiscal year shall remain available under expended.

Summary: Boat Building Investment Act of 1998 - Amends the Internal Revenue Code to allow a personal tax credit for the purchase of a new US-made luxury yacht. Sets forth credit recapture rules upon disposition or registration or maintenance outside the United States. Directs the Secretary of Commerce to establish a grant program to: (1) encourage persons outside the United to purchase such yachts, and (2) train yacht workers. Authorizes appropriations.