I

103D CONGRESS

1ST SESSION H. R. 1956

To amend the Internal Revenue Code of 1986 to modify the alternative

minimum tax system, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MAY 4, 1993

Mr. ANDREWS of Texas 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 modify

the alternative minimum tax system, and for other purposes.

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; AMENDMENT OF 1986 CODE.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Minimum Tax Reform Act of 1993’’.

6 (b) AMENDMENT OF 1986 CODE.—Except as other7 wise expressly provided, whenever in this Act an amend8 ment or repeal is expressed in terms of an amendment

9 to, or repeal of, a section or other provision, the reference
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1 shall be considered to be made to a section or other provi2 sion of the Internal Revenue Code of 1986.

3 SEC. 2. DEPRECIATION ADJUSTMENT USED IN COMPUTING

4 ALTERNATIVE MINIMUM TAXABLE INCOME.

5 (a) 150-PERCENT DECLINING BALANCE METHOD.—

6 (1) IN GENERAL.—Paragraph (1) of section

7 56(a) (relating to depreciation) is amended to read

8 as follows:

9 ‘‘(1) DEPRECIATION.—

10 ‘‘(A) 150-PERCENT DECLINING BALANCE

11 METHOD.—

12 ‘‘(i) IN GENERAL.—In the case of

13 property not described in clause (ii), the

14 depreciation deduction allowable under sec15 tion 167 shall be determined as provided in

16 section 168(a), except that the applicable

17 depreciation method under section

18 168(a)(1) shall be—

19 ‘‘(I) the 150-percent declining

20 balance method (200-percent declining

21 balance method in the case of com22 puter or peripheral equipment (as de23 fined in section 168(i)(2)(B)),

24 ‘‘(II) switching to the straight

25 line method for the 1st taxable year
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1 for which using the straight line

2 method with respect to the adjusted

3 basis as of the beginning of the year

4 will yield a higher allowance.

5 ‘‘(ii) PROPERTY NOT USING 150-PER6 CENT METHOD.—Property described in

7 this clause is section 1250 property (as de8 fined in section 1250(c)) or any other

9 property if the depreciation deduction de10 termined under section 168 with respect to

11 such other property for purposes of the

12 regular tax is determined by using the

13 straight line method.

14 ‘‘(B) NORMALIZATION RULES.—With re15 spect to public utility property described in sec16 tion 168(i)(10), the Secretary shall prescribe

17 the requirements of a normalization method of

18 accounting for this section.’’.

19 (2) NO ADJUSTMENT FOR ADJUSTED CURRENT

20 EARNINGS SYSTEM.—Clause (i) of section

21 56(g)(4)(A) (relating to depreciation adjustments for

22 computing adjusted current earnings) is amended by

23 adding at the end the following new sentence: ‘‘The

24 preceding sentence shall not apply to property placed

25 in service in taxable years beginning after December
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1 31, 1992, and the depreciation deduction with re2 spect to such property shall be determined under the

3 rules of subsection (a)(1)(A).’’.

4 (b) EXCEPTION FOR ENVIRONMENTAL PROPERTY.—

5 (1) IN GENERAL.—Section 56(a)(1) (relating to

6 depreciation adjustments), as amended by subsection

7 (a)(1), is amended by adding at the end the follow8 ing new subparagraph:

9 ‘‘(C) ENVIRONMENTAL IMPROVEMENT AS10 SETS.—This paragraph shall not apply to envi11 ronmental improvement assets (as defined in

12 section 59(k)).’’.

13 (2) ENVIRONMENTAL IMPROVEMENT ASSETS.—

14 Section 59 (relating to definition and special rules)

15 is amended by adding at the end the following new

16 subsection:

17 ‘‘(k) ENVIRONMENTAL IMPROVEMENT ASSETS.—

18 ‘‘(1) IN GENERAL.—For purposes of section

19 56(a)(1)(B), the term ‘environmental improvement

20 asset’ means tangible property which is—

21 ‘‘(A) of a character subject to the allow22 ance for depreciation provided in section 167;

23 ‘‘(B) used for, or is functionally related to

24 property used for, one or more of the following

25 purposes—
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1 ‘‘(i) source reduction,

2 ‘‘(ii) solid waste minimization,

3 ‘‘(iii) waste conversion or recycling,

4 ‘‘(iv) reduction of environmental haz5 ards,

6 ‘‘(v) compliance with environmental

7 permits, rules, and similar requirements,

8 including requirements with respect to

9 noise pollution such as the reduction of

10 aircraft noise level to stage 3 noise level

11 (as defined in 14 CFR § 36.1(f)(5)),

12 ‘‘(vi) prevention, containment or con13 trol of unplanned releases, or

14 ‘‘(vii) the manufacture, distribution

15 and sale of alternate fuels and blending

16 stocks or fuel additives for reformulated

17 fuels, and

18 ‘‘(C) except in the case of property used

19 for the reduction of aircraft noise levels de20 scribed in subparagraph (B)(v), located and

21 used exclusively in the United States during the

22 taxable year.

23 If only a portion of property described in subpara24 graphs (A) and (C) is described in subparagraph
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1 (B), such portion shall be treated as an environ2 mental improvement asset.

3 ‘‘(2) OTHER DEFINITIONS.—For purposes of

4 this subsection—

5 ‘‘(A) SOURCE REDUCTION.—The term

6 ‘source reduction’ means reduction of the

7 amount of regulated substances or other pollut8 ants from fixed or mobile sources released into

9 the environment if such reduction reduces haz10 ards to public health or environment.

11 ‘‘(B) SOLID WASTE MINIMIZATION.—The

12 term ‘solid waste minimization’ means the re13 duction in the generation of, or the recovery of

14 commercially usable products from, residual

15 materials which are classified as, or which if

16 disposed would be classified as, solid wastes

17 (within the meaning of the Resource Conserva18 tion and Recovery Act).

19 ‘‘(C) WASTE CONVERSION OR RECY20 CLING.—The term ‘waste conversion or recy21 cling’ means the processing or conversion of liq22 uid, solid, or gaseous wastes into fuel, energy,

23 or other commercially usable products, and the

24 production of such products if production oc25 curs at the same facility as the conversion.
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1 ‘‘(D) ABATEMENT OF ENVIRONMENTAL

2 HAZARDS.—The term ‘abatement of environ3 mental hazards’ includes the abatement, reduc4 tion, monitoring, or stabilization of potential

5 human exposure to toxic chemicals, hazardous

6 or extremely hazardous substances, or harmful

7 radiation.

8 ‘‘(E) UNPLANNED RELEASES.—The term

9 ‘unplanned releases’ means any release of regu10 lated substances (except federally permitted re11 leases), including indoor releases.

12 ‘‘(F) REGULATED SUBSTANCE.—The term

13 ‘regulated substance’ includes any substance

14 the release or emission of which is prohibited,

15 limited, or regulated by Federal or State law or

16 by Federal regulations (as determined without

17 regard to whether a particular release would

18 have been prohibited or limited).

19 ‘‘(G) RELEASE.—The term ‘release’ means

20 any spilling, leaking, pouring, discharging, es21 caping, dumping, or disposing into the environ22 ment, including the abandonment or discarding

23 of barrels or other closed receptacles.’’.
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to property placed in service in

3 taxable years beginning after December 31, 1992.

4 SEC. 3. PRE-1993 MINIMUM TAX ALLOWED AS CREDIT

5 AGAINST MINIMUM TAX FOR CERTAIN TAX6 PAYERS.

7 (a) IN GENERAL.—Section 53(c) (relating to limita8 tion) is amended by adding at the end the following new

9 paragraph:

10 ‘‘(2) SPECIAL RULE FOR CERTAIN TAXPAYERS

11 WITH PRE-1993 UNUSED MINIMUM TAX CREDITS.—

12 ‘‘(A) IN GENERAL.—If a taxpayer had an

13 unused minimum tax credit for at least 3 of the

14 taxable years in the testing period, then, subject

15 to the limitation of subparagraph (B), the limi16 tation under paragraph (1) for any taxable year

17 following the testing period shall in no event be

18 less than 50 percent of the excess (if any) of—

19 ‘‘(I) the tentative minimum tax

20 for such taxable year, over

21 ‘‘(II) the sum of the credits al22 lowable under subparts A, B, D, E,

23 and F of this part.

24 ‘‘(B) LIMITATION.—
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1 ‘‘(i) IN GENERAL.—The aggregate in2 creases in the limitation under paragraph

3 (1) by reason of subparagraph (A) shall

4 not exceed the pre-1993 unused minimum

5 tax credits.

6 ‘‘(ii) ORDERING RULE.—For purposes

7 of clause (i), any credit under subsection

8 (a) for taxable years following the testing

9 period shall be treated as allocated to pre10 1993 unused minimum tax credits until

11 such credits are used up.

12 ‘‘(C) DEFINITIONS.—For purposes of this

13 paragraph—

14 ‘‘(i) TESTING PERIOD.—The term

15 ‘testing period’ means the 5-taxable year

16 period ending with the taxpayer’s last tax17 able year beginning in 1992.

18 ‘‘(ii) PRE-1993 UNUSED MINIMUM TAX

19 CREDITS.—The term ‘pre-1993 unused

20 minimum tax credits’ means the credits al21 lowable under subsection (a) remaining un22 used as of the close of the testing period.’’.

23 (b) CONFORMING AMENDMENTS.—Section 53(c) (as

24 in effect before the amendment made by subsection (a))

25 is amended—
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1 (1) by striking ‘‘The’’ and inserting:

2 ‘‘(1) IN GENERAL.—Except as provided in para3 graph (2), the’’, and

4 (2) by redesignating paragraphs (1) and (2) as

5 subparagraphs (A) and (B).

6 (c) EFFECTIVE DATE.—The amendments made by

7 this section shall apply to taxable years beginning after

8 December 31, 1992.

9 SEC. 4. ALLOWANCE OF GENERAL BUSINESS CREDIT

10 AGAINST PORTION OF MINIMUM TAX.

11 (a) IN GENERAL.—Subparagraph (A) of section

12 38(c)(1) (relating to limitation based on amount of tax)

13 is amended by inserting ‘‘75 percent of’’ before ‘‘the ten14 tative minimum tax’’.

15 (b) EFFECTIVE DATE.—The amendment made by

16 this section shall apply to taxable years beginning after

17 December 31, 1992.

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