I

103D CONGRESS

1ST SESSION H. R. 681

To amend the Internal Revenue Code of 1986 to provide tax relief for

small businesses.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 27, 1993

Mrs. JOHNSON of Connecticut 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

tax relief for small businesses.

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 ‘‘Small Business En5 hancement Act of 1993’’.
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1 TITLE I—INCREMENTAL INVEST2 MENT TAX CREDIT FOR PRO3 DUCTIVE PROPERTY

4 SEC. 101. INCREMENTAL INVESTMENT CREDIT.

5 (a) ALLOWANCE OF CREDIT.—Section 46 of the In6 ternal Revenue Code of 1986 (relating to amount of in7 vestment credit) is amended by striking ‘‘and’’ at the end

8 of paragraph (2), by striking the period at the end of para9 graph (3) and inserting ‘‘, and’’, and by adding at the

10 end thereof the following new paragraph:

11 ‘‘(4) in the case of a small business (as defined

12 in section 48(c)), the general investment credit.’’

13 (b) AMOUNT OF CREDIT.—Section 48 of such Code

14 is amended by adding at the end thereof the following new

15 subsection:

16 ‘‘(c) GENERAL INVESTMENT CREDIT.—

17 ‘‘(1) IN GENERAL.—For purposes of section 46,

18 in the case of a small business, the general invest19 ment credit for any taxable year is an amount equal

20 to 10 percent of the excess (if any) of—

21 ‘‘(A) the qualified investment for such tax22 able year, over

23 ‘‘(B) the qualified investment for the tax24 able year which begins in 1991 or 1992, which25 ever is selected by the taxpayer.
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1 The selection under subparagraph (B), once made,

2 shall be irrevocable.

3 ‘‘(2) SMALL BUSINESS.—For purposes of this

4 subsection, the term ‘small business’ means any tax5 payer actively engaged in a trade or business if the

6 average number of individuals employed by the tax7 payer during the taxable year is less than 500.

8 ‘‘(3) QUALIFIED INVESTMENT.—

9 ‘‘(A) IN GENERAL.—For purposes of para10 graph (1), the qualified investment for any tax11 able year is the aggregate of—

12 ‘‘(i) the applicable percentage of the

13 basis of each new productive property

14 placed in service by the taxpayer during

15 such taxable year, plus

16 ‘‘(ii) the applicable percentage of the

17 cost of each used productive property

18 placed in service by the taxpayer during

19 such taxable year.

20 ‘‘(B) APPLICABLE PERCENTAGE.—For

21 purposes of subparagraph (A), the applicable

22 percentage for any property shall be determined

23 under paragraphs (2) and (7) of section 46(c)

24 (as in effect on the day before the date of the
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1 enactment of the Revenue Reconciliation Act of

2 1990).

3 ‘‘(C) CERTAIN RULES MADE APPLICA4 BLE.—The provisions of subsections (b) and (c)

5 of section 48 (as in effect on the day before the

6 date of the enactment of the Revenue Reconcili7 ation Act of 1990) shall apply for purposes of

8 this paragraph.

9 ‘‘(4) PRODUCTIVE PROPERTY.—For purposes of

10 this subsection, the term ‘productive property’

11 means any tangible property to which section 168

12 applies (not including a building and its structural

13 components)—

14 ‘‘(A) which is used as an integral part of

15 manufacturing, production, or extraction, or

16 ‘‘(B) which is a motor vehicle.

17 ‘‘(5) COORDINATION WITH OTHER CREDITS.—

18 This subsection shall not apply to any property to

19 which the energy credit or rehabilitation credit

20 would apply unless the taxpayer elects to waive the

21 application of such credits to such property.

22 ‘‘(6) CERTAIN PROGRESS EXPENDITURE RULES

23 MADE APPLICABLE.—Rules similar to rules of sub24 section (c)(4) and (d) of section 46 (as in effect on

25 the day before the date of the enactment of the Rev-
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1 enue Reconciliation Act of 1990) shall apply for pur2 poses of this subsection.

3 ‘‘(7) SPECIAL RULES.—

4 ‘‘(A) CONTROLLED GROUPS.—For pur5 poses of this subsection—

6 ‘‘(i) all taxpayers treated as a single

7 employer under subsection (a) or (b) of

8 section 52 shall be treated as a single tax9 payer, and

10 ‘‘(ii) the credit (if any) determined

11 under this subsection with respect to each

12 such taxpayer shall be its proportionate

13 share of the basis of the productive prop14 erty giving rise to such credit.

15 ‘‘(B) ALLOCATION OF BASIS ADJUST16 MENT.—The reduction required by section

17 50(c) for any taxable year shall be allocated

18 among the productive property in proportion to

19 the respective bases of such property.

20 ‘‘(C) RECAPTURE.—In applying section

21 50(a) to any property which ceases to be pro22 ductive property, the credit determined under

23 this subsection with respect to such property

24 shall be treated as being equal to 10 percent of

25 the lesser of—
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1 ‘‘(i) the excess referred to in para2 graph (1) for the taxable year in which

3 such property was determined, or

4 ‘‘(ii) the qualified investment in such

5 property which was taken into account

6 under paragraph (1).’’

7 (c) TECHNICAL AMENDMENTS.—

8 (1) Subparagraph (C) of section 49(a)(1) of

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

10 of clause (ii), by striking the period at the end of

11 clause (iii) and inserting ‘‘, and’’, and by adding at

12 the end thereof the following new clause:

13 ‘‘(iv) the basis of any new productive

14 property and the cost of any used produc15 tive property.’’

16 (2) Subparagraph (E) of section 50(a)(2) of

17 such Code is amended by inserting ‘‘or 48(c)(5)’’ be18 fore the period at the end thereof.

19 (3) Paragraph (5) of section 50(a) of such Code

20 is amended by adding at the end thereof the follow21 ing new subparagraph:

22 ‘‘(D) SPECIAL RULES FOR CERTAIN PROP23 ERTY.—In the case of any productive property

24 which is 3-year property (within the meaning of

25 section 168(e))—
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1 ‘‘(i) the percentage set forth in clause

2 (ii) of the table contained in paragraph

3 (1)(B) shall be 66 percent,

4 ‘‘(ii) the percentage set forth in clause

5 (iii) of such table shall be 33 percent, and

6 ‘‘(iii) clauses (iv) and (v) of such table

7 shall not apply.’’

8 (4)(A) The section heading for section 48 of

9 such Code is amended to read as follows:

10 ‘‘SEC. 48. OTHER CREDITS.’’

11 (B) The table of sections for subpart E of part

12 IV of subchapter A of chapter 1 of such Code is

13 amended by striking the item relating to section 48

14 and inserting the following:

‘‘Sec. 48. Other credits.’’

15 (d) EFFECTIVE DATE.—The amendments made by

16 this section shall apply to periods after December 31,

17 1992, under rules similar to the rules of section 48(m)

18 of the Internal Revenue Code of 1986 (as in effect on the

19 day before the date of the enactment of the Revenue Rec20 onciliation Act of 1990).
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1 TITLE II—INCREASE IN

2 EXPENSING FOR PRODUC3 TIVE PROPERTY

4 SEC. 201. CHANGES IN ELECTION TO EXPENSE CERTAIN DE5 PRECIABLE BUSINESS ASSETS.

6 (a) INCREASE IN LIMIT FOR PRODUCTIVE EQUIP7 MENT.—Paragraph (1) of section 179(b) of the Internal

8 Revenue Code of 1986 (relating to election to expense cer9 tain depreciable property) is amended by striking

10 ‘‘$10,000.’’ and inserting ‘‘$10,000 ($50,000 in the case

11 of section 179 property for use as an integral part of man12 ufacturing, production, or extraction).’’

13 (b) MEDIUM-SIZED COMPANIES ELIGIBLE.—Para14 graph (2) of section 179(b) of such Code is amended by

15 striking ‘‘$200,000.’’ and inserting ‘‘$200,000

16 ($1,000,000 in the case of section 179 property for use

17 as an integral part of manufacturing, production, or ex18 traction).’’

19 (c) DEDUCTIONS UNDER SECTION 179 EXCLUDED

20 FROM MINIMUM TAX.—

21 (1) Paragraph (1) of section 56(a) of such Code

22 is amended by adding at the end thereof the follow23 ing new subparagraph:

24 ‘‘(E) SPECIAL RULE FOR SECTION 179

25 PROPERTY.—In the case of section 179 prop-
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1 erty (as defined in section 179(d)), the deduc2 tion allowable under section 179 shall be treat3 ed as allowable under the alternative system of

4 section 168(g).’’

5 (2) Subparagraph (A) of section 56(g)(4) of

6 such Code is amended by adding at the end thereof

7 the following new clause:

8 ‘‘(vi) SPECIAL RULE FOR SECTION 179

9 PROPERTY.—In the case of section 179

10 property (as defined in section 179(d)), the

11 deduction allowable under section 179 shall

12 be treated as allowable under the alter13 native system of section 168(g).’’

14 (d) EFFECTIVE DATE.—The amendments made by

15 this section shall apply to taxable years beginning after

16 December 31, 1992.

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