I

103D CONGRESS

1ST SESSION H. R. 1559

To amend the Internal Revenue Code of 1986 to provide an investment

tax credit for stage 3 aircraft.

IN THE HOUSE OF REPRESENTATIVES

MARCH 31, 1993

Mr. OBERSTAR (for himself and Mr. INHOFE) 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 investment tax credit for stage 3 aircraft.

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

3 SECTION 1. INVESTMENT CREDIT FOR STAGE 3 AIRCRAFT

4 MODIFICATIONS.

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 the following new paragraph:
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1 ‘‘(4) the stage 3 aircraft modification credit.’’

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

3 is amended by adding at the end the following new sub4 section:

5 ‘‘(c) STAGE 3 AIRCRAFT MODIFICATION CREDIT.—

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

7 the stage 3 aircraft modification credit is the stage

8 3 aircraft modification percentage of the basis of

9 each stage 3 aircraft modification property placed in

10 service during the taxable year.

11 ‘‘(2) STAGE 3 AIRCRAFT MODIFICATION PER12 CENTAGE.—The stage 3 aircraft modification per13 centage is 10 percent.

14 ‘‘(3) QUALIFIED STAGE 3 AIRCRAFT MODIFICA15 TION PROPERTY.—For purposes of this subpart—

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

17 stage 3 aircraft modification property’ means

18 tangible property—

19 ‘‘(i) which is an integral part of and

20 modification of a nonstage 3 aircraft (in21 cluding the installation of different engines

22 or the retrofit of the existing engines with

23 sound attenuation devices),

24 ‘‘(ii) which is certificated by the Fed25 eral Aviation Administration and is made
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1 to qualify the aircraft for the stage 3 noise

2 level requirements, and

3 ‘‘(iii) the original use of which begins

4 with the taxpayer.

5 ‘‘(B) STAGE 3 NOISE LEVEL.—The term

6 ‘stage 3 noise level’ has the meaning given such

7 term by section 36.1(f)(5) of title 14, Code of

8 Regulations (as in effect on February 15,

9 1993).

10 ‘‘(C) NONSTAGE 3 AIRCRAFT.—The term

11 ‘nonstage 3 aircraft’ means an aircraft with a

12 maximum gross takeoff weight in excess of

13 75,000 pounds which did not meet the stage 3

14 noise level requirements before the stage 3 air15 craft modification property was installed.

16 ‘‘(4) SPECIAL RULE FOR CERTAIN PURCHASES

17 AND LEASES.—For purposes of paragraph

18 (3)(A)(iii), a qualified stage 3 aircraft modification

19 property shall be treated as originally placed in serv20 ice by a person if it is sold to such person or is

21 leased by such person within 3 months of the date

22 such modifications are made.’’

23 (c) STAGE 3 AIRCRAFT MODIFICATION CREDIT AL24 LOWABLE AGAINST REGULAR TAX AND ALTERNATIVE

25 MINIMUM TAX.—Subsection (c) of section 38 of such Code
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1 (relating to limitation based on amount of tax) is amended

2 by adding at the end the following new paragraph:

3 ‘‘(3) SPECIAL RULES FOR STAGE 3 AIRCRAFT

4 MODIFICATION CREDIT.—

5 ‘‘(A) LIABILITY FOR TAX.—In the case of

6 the stage 3 aircraft modification credit, the

7 credit allowable under subsection (a) for any

8 taxable year shall not exceed the excess (if any)

9 of—

10 ‘‘(i) the sum of—

11 ‘‘(I) the taxpayer’s tentative min12 imum tax liability under section 55(b)

13 for such taxable year determined with14 out regard to the stage 3 aircraft

15 modification credit, plus

16 ‘‘(II) the taxpayer’s regular tax

17 liability for such taxable year (as de18 fined in section 26(b)), over

19 ‘‘(ii) the sum of the credits allowable

20 against the taxpayer’s regular tax liability

21 under part IV (other than section 34 and

22 the stage 3 aircraft modification credit).

23 ‘‘(B) APPLICATION OF THE CREDIT.—

24 Each of the following amounts shall be reduced
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1 by the full amount of the credit determined

2 under subparagraph (A):

3 ‘‘(i) the taxpayer’s tentative minimum

4 tax under section 55(b) for the taxable

5 year, and

6 ‘‘(ii) the taxpayer’s regular tax liabil7 ity (as defined in section 26(b)) reduced by

8 the sum of the credits allowable under part

9 IV (other than section 34 and the stage 3

10 aircraft modification credit).

11 If the amount of the credit determined under sub12 paragraph (A) exceeds the amount described in

13 clause (ii) of subparagraph (B), then the excess shall

14 be deemed to be the adjusted net minimum tax for

15 such taxable year for purposes of section 53.’’

16 (d) TECHNICAL AND CONFORMING AMENDMENTS.—

17 (1) Paragraph (1) of section 38(c) of such Code

18 is amended by striking ‘‘The credit’’ and inserting

19 ‘‘Except as provided in paragraph (3), the credit’’.

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

21 is amended—

22 (A) by striking ‘‘For provisions’’ and in23 serting ‘‘(A) For provisions’’, and

24 (B) by adding at the end the following new

25 subparagraph:
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1 ‘‘(B) For provisions allowing the stage 3

2 aircraft modification credit against the tax im3 posed by this section, see section 38(c)(3).’’

4 (3) Section 49(a)(1)(C) of such Code is amend5 ed by striking ‘‘and’’ at the end of clause (ii), by

6 striking the period at the end of clause (iii) and in7 serting ‘‘, and’’, and by adding at the end the follow8 ing new clause:

9 ‘‘(iv) the basis of any qualified stage

10 3 aircraft modification property.’’

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 (e) EFFECTIVE DATE.—The amendments made by

19 this section apply to stage 3 aircraft modification property

20 completed after December 31, 1991, and placed in service

21 after December 31, 1991, and before January 1, 1997.

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