II

104TH CONGRESS

1ST SESSION S. 409

To amend the Internal Revenue Code of 1986 to allow defense contractors

a credit against income tax for 20 percent of the defense conversion

employee retraining expenses paid or incurred by the contractors.

IN THE SENATE OF THE UNITED STATES

FEBRUARY 14 (legislative day, JANUARY 30), 1995

Ms. SNOWE introduced the following bill; which was read twice and referred

to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to allow defense contractors a credit against income tax for 20

percent of the defense conversion employee retraining

expenses paid or incurred by the contractors.

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

3 SECTION 1. DEFENSE CONVERSION EMPLOYEE RETRAIN4 ING CREDIT.

5 (a) IN GENERAL.—Subpart D of part IV of sub6 chapter A of chapter 1 of the Internal Revenue Code of

7 1986 (relating to business-related credits) is amended by

8 adding at the end the following new section:
2

•S 409 IS

1 ‘‘SEC. 45C. DEFENSE CONVERSION EMPLOYEE RETRAINING

2 EXPENSES.

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

4 in the case of a defense contractor, the defense conversion

5 employee retraining credit determined under this section

6 is an amount equal to 20 percent of the defense conversion

7 employee retraining expenses paid or incurred by the tax8 payer during the taxable year.

9 ‘‘(b) LIMITATION.—The amount of defense conver10 sion employee retraining expenses with respect to an em11 ployee which may be taken into account under subsection

12 (a) for the taxable year shall not exceed $ll.

13 ‘‘(c) DEFENSE CONVERSION EMPLOYEE RETRAINING

14 EXPENSES.—For purposes of this section—

15 ‘‘(1) IN GENERAL.—The term ‘defense conver16 sion employee retraining expenses’ includes all

17 amounts paid or incurred with respect to educational

18 or training programs in which a qualified conversion

19 employee participates to learn or improve skills nec20 essary or useful to such employee’s employment in

21 the defense contractor’s nondefense-related business.

22 ‘‘(2) DEFENSE CONTRACTOR.—The term ‘de23 fense contractor’ means any taxpayer if not less

24 than 80 percent of its gross receipts for the taxable

25 year is derived from defense-related business.
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•S 409 IS

1 ‘‘(3) QUALIFIED CONVERSION EMPLOYEE.—The

2 term ‘qualified conversion employee’ means an em3 ployee of a defense contractor who had been em4 ployed by the defense contractor or another defense

5 contractor in a defense-related business and who is

6 employed by the defense contractor in a nondefense7 related business during the taxable year.

8 ‘‘(4) DEFENSE-RELATED BUSINESS.—The term

9 ‘defense-related business’ means an activity to pro10 vide material or defense-related operations pursuant

11 to a contract or subcontract entered into (whether or

12 not by the taxpayer) with a defense agency of the

13 United States.

14 ‘‘(5) NONDEFENSE-RELATED BUSINESS.—The

15 term ‘nondefense-related business’ means any activ16 ity which is not a defense-related business.

17 ‘‘(d) DENIAL OF DOUBLE BENEFIT.—No deduction

18 shall be allowed under this chapter for any amount taken

19 into account in determining the credit under this section.’’

20 (b) CREDIT TO BE PART OF GENERAL BUSINESS

21 CREDIT.—Subsection (b) of section 38 of the Internal

22 Revenue Code of 1986 (relating to general business credit)

23 is amended by striking ‘‘plus’’ at the end of paragraph

24 (10), by striking the period at the end of paragraph (11)
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•S 409 IS

1 and inserting ‘‘, plus’’, and by adding at the end the fol2 lowing new paragraph:

3 ‘‘(12) in the case of a defense contractor, the

4 defense conversion employee retraining credit deter5 mined under section 45C.’’

6 (c) CLERICAL AMENDMENT.—The table of sections

7 for subpart D of part IV of subchapter A of chapter 1

8 of the Internal Revenue Code of 1986 is amended by add9 ing at the end the following new item:

‘‘Sec. 45C. Defense conversion employee retraining expenses.’’

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

11 this section shall apply to amounts paid or incurred after

12 the date of the enactment of this Act in taxable years end13 ing after such date.

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