I

106TH CONGRESS

2D SESSION H. R. 5012

To amend the Internal Revenue Code of 1986 to provide an enhanced research

credit for the development of smart gun technologies.

IN THE HOUSE OF REPRESENTATIVES

JULY 27, 2000

Mr. BARR of Georgia introduced the following bill; which was referred to the

Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to provide

an enhanced research credit for the development of smart

gun technologies.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Firearms Safety Re5 search and Development Act of 2000’’.

6 SEC. 2. ENHANCED RESEARCH CREDIT FOR DEVELOPMENT

7 OF SMART GUN TECHNOLOGIES.

8 (a) IN GENERAL.—Subpart D of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of
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1 1986 (relating to business related credits) is amended by

2 inserting after section 45C the following new section:

3 ‘‘SEC. 45D. RESEARCH EXPENSES FOR SMART GUN TECH4 NOLOGIES.

5 ‘‘(a) GENERAL RULE.—For purposes of section 38,

6 in the case of a taxpayer who is a Federal firearms li7 censee, the smart gun technology credit determined under

8 this section for the taxable year is an amount equal to

9 30 percent of the excess of—

10 ‘‘(1) the smart gun technology expenses for the

11 taxable year, over

12 ‘‘(2) the base amount.

13 ‘‘(b) SMART GUN TECHNOLOGY EXPENSES; BASE

14 AMOUNT.—For purposes of this section—

15 ‘‘(1) SMART GUN TECHNOLOGY EXPENSES.—

16 ‘‘(A) IN GENERAL.—Except as otherwise

17 provided in this paragraph, the term ‘smart gun

18 technology expenses’ means the amounts which

19 are paid or incurred by the taxpayer during the

20 taxable year which would be described in sub21 section (b) of section 41 if such subsection were

22 applied with the modifications set forth in sub23 paragraph (B).
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1 ‘‘(B) MODIFICATIONS.—For purposes of

2 subparagraph (A), subsection (b) of section 41

3 shall be applied—

4 ‘‘(i) by substituting ‘smart gun tech5 nology research’ for ‘qualified research’

6 each place it appears in paragraphs (2)

7 and (3) of such subsection, and

8 ‘‘(ii) by substituting ‘100 percent’ for

9 ‘65 percent’ in paragraph (3)(A) of such

10 subsection.

11 ‘‘(C) EXCLUSION FOR AMOUNTS FUNDED

12 BY GRANTS, ETC.—The term ‘smart gun tech13 nology expenses’ shall not include any amount

14 to the extent such amount is funded by any

15 grant, contract, or otherwise by another person

16 (or any governmental entity).

17 ‘‘(D) SPECIAL RULE.—For purposes of

18 this paragraph, section 41 shall be deemed to

19 remain in effect for periods after June 30,

20 2004.

21 ‘‘(2) BASE AMOUNT.—

22 ‘‘(A) IN GENERAL.—Except as provided in

23 subparagraph (B), the term ‘base amount’

24 means the amount which would be the base

25 amount in section 41(c) if such section were ap-
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1 plied by substituting ‘smart gun technology re2 search’ for ‘qualified research’ each place it ap3 pears.

4 ‘‘(B) BASE AMOUNT IS ZERO FOR 3

5 YEARS.—The base amount shall be zero for

6 purposes of determining the amount of credit

7 for taxable years beginning in 2001, 2002, or

8 2003.

9 ‘‘(c) SMART GUN TECHNOLOGY RESEARCH.—For

10 purposes of this section—

11 ‘‘(1) IN GENERAL.—The term ‘smart gun tech12 nology research’ means qualified research (as de13 fined in section 41(d)) for the purpose of developing

14 smart gun technologies for firearms.

15 ‘‘(2) SMART GUN TECHNOLOGY.—The term

16 ‘smart gun technology’ means any technology (other

17 than a simple mechanical lock) which is designed—

18 ‘‘(A) to prevent a firearm from being fired

19 by any individual other than an authorized user

20 of the firearm, and

21 ‘‘(B) to convert the firearm from the inop22 erable condition to the operable condition in

23 less than 1 second after contact with either the

24 firearm or the arming device of an authorized

25 user.
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1 For purposes of the preceding sentence, the term

2 ‘authorized user’ means, with respect to a firearm,

3 the owner of the firearm and any individual lawfully

4 authorized by such owner to operate the firearm.

5 ‘‘(d) FEDERAL FIREARMS LICENSEE.—For purposes

6 of this section, the term ‘Federal firearms licensee’ means

7 any person holding a license under chapter 44 of title 18,

8 United States Code, other than a licensed collector.

9 ‘‘(e) COORDINATION WITH CREDIT FOR INCREASING

10 RESEARCH EXPENDITURES.—

11 ‘‘(1) IN GENERAL.—Except as provided in para12 graph (2), any smart gun technology expenses for a

13 taxable year to which an election under this section

14 applies shall not be taken into account for purposes

15 of determining the credit allowable under section 41

16 for such taxable year.

17 ‘‘(2) EXPENSES INCLUDED IN DETERMINING

18 BASE PERIOD RESEARCH EXPENSES.—Smart gun

19 technology expenses for any taxable year shall be

20 taken into account in determining base period re21 search expenses for purposes of applying section 41

22 to subsequent taxable years.

23 ‘‘(f) SPECIAL RULES.—

24 ‘‘(1) CERTAIN RULES MADE APPLICABLE.—

25 Rules similar to the rules of paragraphs (1) and (2)
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1 of section 41(f) shall apply for purposes of this sec2 tion.

3 ‘‘(2) ELECTION.—This section shall apply to

4 any taxpayer for any taxable year only if such tax5 payer elects (at such time and in such manner as

6 the Secretary may by regulations prescribe) to have

7 this section apply for such taxable year.’’

8 (b) DENIAL OF DOUBLE BENEFIT.—Section 280C of

9 such Code (relating to certain expenses for which credits

10 are allowable) is amended by adding at the end the fol11 lowing new subsection:

12 ‘‘(d) CREDIT FOR SMART GUN TECHNOLOGY EX13 PENSES.—

14 ‘‘(1) IN GENERAL.—No deduction shall be al15 lowed for that portion of the smart gun technology

16 expenses (as defined in section 45D(b)) otherwise al17 lowable as a deduction for the taxable year which is

18 equal to the amount of the credit allowable for the

19 taxable year under section 45D (determined without

20 regard to section 38(c) thereof).

21 ‘‘(2) SIMILAR RULE WHERE TAXPAYER CAP22 ITALIZES RATHER THAN DEDUCTS EXPENSES.—If—

23 ‘‘(A) the amount of the credit allowable for

24 the taxable year under section 45D (determined

25 without regard to section 38(c)), exceeds
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1 ‘‘(B) the amount allowable as a deduction

2 for the taxable year for smart gun technology

3 expenses (determined without regard to para4 graph (1)),

5 the amount chargeable to capital account for the

6 taxable year for such expenses shall be reduced by

7 the amount of such excess.

8 ‘‘(3) CONTROLLED GROUPS.—In the case of a

9 corporation which is a member of a controlled group

10 of corporations (within the meaning of section

11 41(f)(5)) or a trade or business which is treated as

12 being under common control with other trades or

13 business (within the meaning of section

14 41(f)(1)(B)), this subsection shall be applied under

15 rules prescribed by the Secretary similar to the rules

16 applicable under subparagraphs (A) and (B) of sec17 tion 41(f)(1).’’.

18 (c) CREDIT MADE PART OF GENERAL BUSINESS

19 CREDIT.—

20 (1) IN GENERAL.—Subsection (b) of section 38

21 of such Code (relating to current year business cred22 it) is amended by striking ‘‘plus’’ at the end of para23 graph (11), by striking the period at the end of

24 paragraph (12) and inserting ‘‘, plus’’, and by add25 ing at the end thereof the following new paragraph:
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1 ‘‘(13) in the case of a taxpayer who is a Fed2 eral firearms licensee (as defined in section 45D(d)),

3 the smart gun technology credit determined under

4 section 45D(a).’’.

5 (2) LIMITATION ON CARRYBACK.—Subsection

6 (d) of section 39 of such Code is amended by adding

7 at the end the following new paragraph:

8 ‘‘(9) NO CARRYBACK OF SMART GUN TECH9 NOLOGY CREDIT BEFORE EFFECTIVE DATE.—No

10 portion of the unused business credit for any taxable

11 year which is attributable to the credit determined

12 under section 45D may be carried back to any tax13 able year ending before the date of the enactment of

14 section 45D.’’.

15 (3) DEDUCTION FOR CERTAIN UNUSED BUSI16 NESS CREDITS.—Subsection (c) of section 196 of

17 such Code is amended by striking ‘‘and’’ at the end

18 of paragraph (7), by striking the period at the end

19 of paragraph (8) and inserting ‘‘, and’’, and by add20 ing after paragraph (8) the following new para21 graph:

22 ‘‘(9) the smart gun technology credit deter23 mined under section 45D.’’.

24 (d) CLERICAL AMENDMENT.—The table of sections

25 for subpart D of part IV of subchapter A of chapter 1
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1 of such Code is amended by inserting after the item relat2 ing to section 45C the following new item:

‘‘Sec. 45D. Research expenses for smart gun technologies.’’.

3 (e) EFFECTIVE DATE.—The amendments made by

4 this section shall apply to amounts paid or incurred after

5 December 31, 2000, in taxable years ending after such

6 date.

7 SEC. 3. FIREARMS TAX NOT TO APPLY TO COST OF SMART

8 GUN TECHNOLOGY.

9 (a) IN GENERAL.—Section 4181 of the Internal Rev10 enue Code of 1986 (relating to imposition of tax on fire11 arms) is amended by adding at the end the following new

12 sentence:

13 ‘‘The price taken into account under the preceding sen14 tence shall not include so much of the price of the firearm

15 as is attributable to any smart gun technology (as defined

16 in section 45D(c)(2)) of such firearm.’’

17 (b) EFFECTIVE DATE.—The amendment made by

18 this section shall take effect on January 1, 2001.

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