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103D CONGRESS

1ST SESSION H. R. 947

To amend the Internal Revenue Code of 1986 to allow a permanent

incremental investment credit.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 17, 1993

Mr. LIPINSKI 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 allow a

permanent incremental investment credit.

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 ‘‘Buy-American Invest5 ment Incentive Act’’.

6 SEC. 2. INCREMENTAL INVESTMENT CREDIT.

7 (a) ALLOWANCE OF CREDIT.—Section 46 of the In8 ternal Revenue Code of 1986 (relating to amount of in9 vestment credit) is amended by striking ‘‘and’’ at the end

10 of paragraph (2), by striking the period at the end of para-
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1 graph (3) and inserting ‘‘, and’’, and by adding at the

2 end thereof the following new paragraph:

3 ‘‘(4) the incremental investment credit.’’

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

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

6 subsection:

7 ‘‘(c) INCREMENTAL INVESTMENT CREDIT.—

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

9 the incremental investment credit for any taxable

10 year is an amount equal to 10 percent of the excess

11 (if any) of—

12 ‘‘(A) the aggregate bases of qualified in13 vestment credit properties placed in service dur14 ing such taxable year, over

15 ‘‘(B) 80 percent of the base amount.

16 ‘‘(2) QUALIFIED INVESTMENT CREDIT PROP17 ERTY.—For purposes of this subsection—

18 ‘‘(A) IN GENERAL.—The term ‘qualified

19 investment credit property’ means any eligible

20 property—

21 ‘‘(i) which is tangible property to

22 which section 168 applies,

23 ‘‘(ii) which is section 1245 property

24 (as defined in section 1245(a)(3)), and
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1 ‘‘(iii)(I) the construction, reconstruc2 tion, or erection of which is completed by

3 the taxpayer, or

4 ‘‘(II) which is acquired by the tax5 payer if the original use of such property

6 commences with the taxpayer.

7 ‘‘(B) ELIGIBLE PROPERTY.—

8 ‘‘(i) IN GENERAL.—Except as other9 wise provided in this subparagraph, the

10 term ‘eligible property’ means tangible

11 property (other than a building, its struc12 tural components, or an air conditioning or

13 heating unit), but only if such property—

14 ‘‘(I) is used as an integral part of

15 manufacturing, production (including

16 agriculture), or extraction or of fur17 nishing transportation, communica18 tions, electrical energy, gas, water,

19 waste disposal, or pollution control

20 services,

21 ‘‘(II) constitutes a research facil22 ity or research equipment used in con23 nection with any of the activities re24 ferred to in subclause (I), or
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1 ‘‘(III) constitutes a facility used

2 in connection with any of the activities

3 referred to in subclause (I) for the

4 bulk storage of fungible commodities

5 (including commodities in a liquid or

6 gaseous state).

7 ‘‘(ii) IMPORTED PROPERTY NOT ELIGI8 BLE.—Property shall not be treated as eli9 gible property if—

10 ‘‘(I) such property was completed

11 outside the United States, or

12 ‘‘(II) less than 75 percent of the

13 basis of such property is attributable

14 to value added within the United

15 States.

16 For purposes of this clause, the term

17 ‘United States’ includes the Common18 wealth of Puerto Rico and the possessions

19 of the United States.

20 ‘‘(iii) CERTAIN PROPERTY NOT ELIGI21 BLE.—Any passenger automobile and any

22 office furnishings shall not be treated as

23 eligible property.

24 ‘‘(3) BASE AMOUNT.—For purposes of para25 graph (1)(B)—
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1 ‘‘(A) IN GENERAL.—The term ‘base

2 amount’ means the product of—

3 ‘‘(i) the fixed-base percentage, and

4 ‘‘(ii) the average annual gross receipts

5 of the taxpayer for the 4 taxable years pre6 ceding the taxable year for which the cred7 it is being determined (hereafter in this

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

9 ‘‘(B) MINIMUM BASE AMOUNT.—In no

10 event shall the base amount be less than 50

11 percent of the amount determined under para12 graph (1)(A).

13 ‘‘(C) FIXED-BASE PERCENTAGE.—

14 ‘‘(i) IN GENERAL.—The fixed-base

15 percentage is the percentage which the ag16 gregate amounts described in paragraph

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

18 December 31, 1987, and before January 1,

19 1993, is of the aggregate gross receipts of

20 the taxpayer for such taxable years.

21 ‘‘(ii) ROUNDING.—The percentages

22 determined under clause (i) shall be rounded to the nearest 1 23 ⁄100 of 1 percent.
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1 ‘‘(D) OTHER RULES.—Rules similar to the

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

3 shall apply for purposes of this paragraph.

4 ‘‘(4) COORDINATION WITH OTHER CREDITS.—

5 This subsection shall not apply to any property to

6 which the energy credit or rehabilitation credit

7 would apply unless the taxpayer elects to waive the

8 application of such credits to such property.

9 ‘‘(5) CERTAIN PROGRESS EXPENDITURE RULES

10 MADE APPLICABLE.—Rules similar to rules of sub11 section (c)(4) and (d) of section 46 (as in effect on

12 the day before the date of the enactment of the Rev13 enue Reconciliation Act of 1990) shall apply for pur14 poses of this subsection.’’

15 (c) INCREMENTAL INVESTMENT CREDIT ALLOWABLE

16 AGAINST ENTIRE REGULAR TAX AND ALTERNATIVE MIN17 IMUM TAX.—

18 (1) Subsection (c) of section 38 of such Code

19 (relating to limitation based on amount of tax) is

20 amended by adding at the end thereof the following

21 new paragraph:

22 ‘‘(3) SPECIAL RULES FOR INCREMENTAL IN23 VESTMENT CREDIT.—
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1 ‘‘(A) IN GENERAL.—In the case of a C

2 corporation, this section and section 39 shall be

3 applied separately—

4 ‘‘(i) first with respect to so much of

5 the credit allowed by subsection (a) as is

6 not attributable to the incremental invest7 ment credit, and

8 ‘‘(ii) then with respect to the incre9 mental investment credit.

10 ‘‘(B) RULES FOR APPLICATION OF INCRE11 MENTAL INVESTMENT CREDIT.—

12 ‘‘(i) IN GENERAL.—In the case of the

13 incremental investment credit, in lieu of

14 applying the preceding paragraphs of this

15 subsection, the amount of such credit al16 lowed under subsection (a) for any taxable

17 year shall not exceed the net chapter 1 tax

18 for such year.

19 ‘‘(ii) NET CHAPTER 1 TAX.—For pur20 poses of clause (i), the term ‘net chapter 1

21 tax’ means the sum of the regular tax li22 ability for the taxable year and the tax im23 posed by section 55 for the taxable year,

24 reduced by the sum of the credits allowable

25 under this part for the taxable year (other
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1 than under section 34 and other than the

2 incremental investment credit).

3 ‘‘(C) INCREMENTAL INVESTMENT CRED4 IT.—For purposes of this paragraph, the term

5 ‘incremental investment credit’ means the credit

6 allowable under subsection (a) by reason of sec7 tion 48(c).’’

8 (2) Paragraph (2) of section 55(c) of such Code

9 is amended to read as follows:

10 ‘‘(2) CROSS REFERENCES.—

‘‘(A) For provisions providing that certain credits

are not allowable against the tax imposed by this

section, see sections 26(a), 28(d)(2), 29(b)(5), and

38(c).

‘‘(B) For provision allowing incremental investment credit against the tax imposed by this section,

see section 38(c)(3).’’

11 (d) TECHNICAL AMENDMENTS.—

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

13 Code is amended by inserting ‘‘or qualified invest14 ment credit property’’ after ‘‘energy property’’.

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

16 such Code is amended by inserting ‘‘or 48(c)(5)’’ be17 fore the period at the end thereof.

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

19 is amended by adding at the end thereof the follow20 ing new subparagraph:

21 ‘‘(D) SPECIAL RULES FOR CERTAIN PROP22 ERTY.—In the case of any qualified investment
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1 credit property which is 3-year property (within

2 the meaning of section 168(e))—

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

4 (ii) of the table contained in paragraph

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

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

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

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

9 shall not apply.’’

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

11 such Code is amended to read as follows:

12 ‘‘SEC. 48. OTHER CREDITS.’’

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

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

15 amended by striking the item relating to section 48

16 and inserting the following:

‘‘Sec. 48. Other credits.’’

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

18 this section shall apply to—

19 (1) property acquired by the taxpayer after De20 cember 3, 1992, and

21 (2) property the construction, reconstruction, or

22 erection of which is completed by the taxpayer after

23 December 3, 1992, but only to the extent of the

24 basis thereof attributable to construction, recon25 struction, or erection after such date.
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