I

103D CONGRESS

1ST SESSION H. R. 674

To amend the Internal Revenue Code of 1986 to encourage investments

in new manufacturing and other productive equipment by providing a

temporary investment tax credit to taxpayers who increase the amount

of such investments.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 27, 1993

Mr. GALLEGLY (for himself, Mr. BAKER of Louisiana, Mr. HUNTER, Mr. SOLOMON, Mr. LIGHTFOOT, Mr. LEVY, Mr. SAXTON, Mr. DOOLITTLE, Mr.

FAWELL, Mr. ROHRABACHER, Mr. EMERSON, Mr. STUMP, and Mr.

PACKARD) 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 encourage

investments in new manufacturing and other productive

equipment by providing a temporary investment tax credit to taxpayers who increase the amount of such investments.

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 ‘‘Temporary Investment

5 Tax Credit Restoration Act of 1993’’.
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1 SEC. 2. INVESTMENT CREDIT FOR MANUFACTURING AND

2 OTHER PRODUCTIVE EQUIPMENT.

3 (a) ALLOWANCE OF CREDIT.—Section 46 of the In4 ternal Revenue Code of 1986 (relating to amount of in5 vestment credit) is amended by striking ‘‘and’’ at the end

6 of paragraph (2), by striking the period at the end of para7 graph (3) and inserting ‘‘, and’’, and by adding at the

8 end thereof the following new paragraph:

9 ‘‘(4) the manufacturing and other productive

10 equipment credit.’’

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

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

13 subsection:

14 ‘‘(c) MANUFACTURING AND OTHER PRODUCTIVE

15 EQUIPMENT CREDIT.—

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

17 the manufacturing and other productive equipment

18 credit for any taxable year is an amount equal to 10

19 percent of the excess (if any) of—

20 ‘‘(A) the aggregate bases of qualified man21 ufacturing and productive equipment properties

22 placed in service during such taxable year, over

23 ‘‘(B) the base amount.

24 ‘‘(2) QUALIFIED MANUFACTURING AND PRO25 DUCTIVE EQUIPMENT PROPERTY.—For purposes of

26 this subsection—
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1 ‘‘(A) IN GENERAL.—The term ‘qualified

2 manufacturing and productive equipment prop3 erty’ means any property—

4 ‘‘(i) which is used—

5 ‘‘(I) as an integral part of the

6 manufacture or production of tangible

7 personal property, or

8 ‘‘(II) in farming,

9 ‘‘(ii) which is tangible property to

10 which section 168 applies, and

11 ‘‘(iii) which is section 1245 property

12 (as defined in section 1245(a)(3)).

13 ‘‘(B) SPECIAL RULE FOR COMPUTER SOFT14 WARE.—In the case of any computer software

15 which is used to control or monitor a manufac16 turing or production process and with respect

17 to which depreciation (or amortization in lieu of

18 depreciation) is allowable, such software shall

19 be treated as qualified manufacturing and pro20 ductive equipment property.

21 ‘‘(3) BASE AMOUNT.—For purposes of para22 graph (1)(B)—

23 ‘‘(A) IN GENERAL.—The term ‘base

24 amount’ means the product of—

25 ‘‘(i) the fixed-base percentage, and
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1 ‘‘(ii) the average annual gross receipts

2 of the taxpayer for the 4 taxable years pre3 ceding the taxable year for which the cred4 it is being determined (hereafter in this

5 subsection referred to as the ‘credit year’).

6 ‘‘(B) MINIMUM BASE AMOUNT.—In no

7 event shall the base amount be less than 50

8 percent of the amount determined under para9 graph (1)(A).

10 ‘‘(C) FIXED-BASE PERCENTAGE.—

11 ‘‘(i) IN GENERAL.—The fixed-base

12 percentage is the percentage which the ag13 gregate amounts described in paragraph

14 (1)(A) for taxable years beginning after

15 December 31, 1987, and before January 1,

16 1993, is of the aggregate gross receipts of

17 the taxpayer for such taxable years.

18 ‘‘(ii) ROUNDING.—The percentages

19 determined under clause (i) shall be rounded to the nearest 1 20 ⁄100 of 1 percent.

21 ‘‘(D) OTHER RULES.—Rules similar to the

22 rules of paragraphs (4) and (5) of section 41(c)

23 shall apply for purposes of this paragraph.

24 ‘‘(4) ALLOCATION OF BASIS ADJUSTMENT.—

25 The reduction required by section 50(c) for any tax-
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1 able year shall be allocated among the qualified

2 manufacturing and productive equipment property

3 placed in service by the taxpayer during such year

4 in proportion to the respective bases of such prop5 erty.

6 ‘‘(5) RECAPTURE.—In applying section 50(a) to

7 any property which ceases to be qualified manufac8 turing and productive equipment property, the credit

9 determined under this subsection with respect to

10 such property shall be treated as being equal to 10

11 percent of the lesser of—

12 ‘‘(A) the excess referred to in paragraph

13 (1) for the taxable year in which such property

14 was placed in service, or

15 ‘‘(B) the basis of such property which was

16 taken into account under paragraph (1).

17 ‘‘(6) CONTROLLED GROUPS.—Rules similar to

18 the rules of paragraph (1) of section 41(f) shall

19 apply for purposes of this subsection.

20 ‘‘(7) COORDINATION WITH OTHER CREDITS.—

21 This subsection shall not apply to any property to

22 which the energy credit or rehabilitation credit

23 would apply unless the taxpayer elects to waive the

24 application of such credits to such property.
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1 ‘‘(8) CERTAIN PROGRESS EXPENDITURE RULES

2 MADE APPLICABLE.—Rules similar to rules of sub3 section (c)(4) and (d) of section 46 (as in effect on

4 the day before the date of the enactment of the Rev5 enue Reconciliation Act of 1990) shall apply for pur6 poses of this subsection.

7 ‘‘(9) APPLICATION OF SUBSECTION.—This sub8 section shall apply to periods after December 31,

9 1992, and before January 1, 1995, under rules simi10 lar to the rules of section 48(m) (as in effect on the

11 day before the date of the enactment of the Revenue

12 Reconciliation Act of 1990).’’

13 (c) TECHNICAL AMENDMENTS.—

14 (1) Clause (ii) of section 49(a)(1)(C) of such

15 Code is amended by inserting ‘‘or qualified manufac16 turing and productive equipment property’’ after

17 ‘‘energy property’’.

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

19 such Code is amended by inserting ‘‘or 48(c)(5)’’ be20 fore the period at the end thereof.

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

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

24 ‘‘(D) SPECIAL RULES FOR CERTAIN PROP25 ERTY.—In the case of any qualified manufac-
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1 turing and productive equipment property

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

3 section 168(e))—

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

5 (ii) of the table contained in paragraph

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

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

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

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

10 shall not apply.’’

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

12 such Code is amended to read as follows:

13 ‘‘SEC. 48. OTHER CREDITS.’’

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

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

16 amended by striking the item relating to section 48

17 and inserting the following:

‘‘Sec. 48. Other credits.’’

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

19 this section shall apply to taxable years ending after De20 cember 31, 1992.

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