I
103D CONGRESS
1ST SESSION
H. R. 691
To amend the Internal Revenue Code of 1986 to encourage immediate invest-
ments in new manufacturing and other productive equipment by tempo-
rarily allowing an investment tax credit to taxpayers who increase the
amount of such investments.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 27, 1993
Mr. RIDGE 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
immediate investments in new manufacturing and other
productive equipment by temporarily allowing an invest-
ment tax credit to taxpayers who increase the amount
of such investments.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Competitiveness Tax
Credit Act’’.
SEC. 2. TEMPORARY INVESTMENT CREDIT FOR NEW MANU-
FACTURING AND OTHER PRODUCTIVE EQUIP-
MENT.
(a) ALLOWANCE OF CREDIT.—Section 46 of the In-
ternal Revenue Code of 1986 (relating to amount of in-
vestment credit) is amended by striking ‘‘and’’ at the end
of paragraph (2), by striking the period at the end of para-
graph (3) and inserting ‘‘, and’’, and by adding at the
end the following new paragraph:
‘‘(4) the manufacturing and other productive
equipment credit.’’
(b) AMOUNT OF CREDIT.—Section 48 of such Code
is amended by adding at the end the following new sub-
section:
‘‘(c) MANUFACTURING
AND OTHER PRODUCTIVE
EQUIPMENT CREDIT.—
‘‘(1) IN GENERAL.—For purposes of section 46,
the manufacturing and other productive equipment
credit for any taxable year is an amount equal to the
sum of—
‘‘(A) the domestic equipment credit, and
‘‘(B) the nondomestic equipment credit.
‘‘(2) AMOUNT OF DOMESTIC AND NONDOMESTIC
EQUIPMENT
CREDITS.—For purposes of this sub-
section—
‘‘(A) DOMESTIC EQUIPMENT CREDIT.—
‘‘(i) 
IN
GENERAL.—The 
domestic
equipment credit for any taxable year is 10
percent of the amount equal to the product
of—
‘‘(I) 
the 
domestic 
equipment
ratio, and
‘‘(II) 
the 
qualified 
increase
amount.
‘‘(ii) DOMESTIC EQUIPMENT RATIO.—
The domestic equipment ratio for any tax-
able year is a fraction in which—
‘‘(I) the numerator is the aggre-
gate bases of the qualified manufac-
turing and other productive equip-
ment properties placed in service dur-
ing such taxable year which are of do-
mestic origin, and
‘‘(II) the denominator is the ag-
gregate bases of all qualified manufac-
turing and other productive equip-
ment properties placed in service dur-
ing such taxable year.
‘‘(B) NONDOMESTIC
EQUIPMENT
CRED-
IT.—
‘‘(i) IN GENERAL.—The nondomestic
equipment credit for any taxable year is 7
percent of the amount equal to the product
of—
‘‘(I) the nondomestic equipment
ratio, and
‘‘(II) 
the 
qualified 
increase
amount.
‘‘(ii) 
NONDOMESTIC
EQUIPMENT
RATIO.—The nondomestic equipment ratio
for any taxable year is a fraction in
which—
‘‘(I) the numerator is the aggre-
gate bases of the qualified manufac-
turing and other productive equip-
ment properties placed in service dur-
ing such taxable year which are not of
domestic origin, and
‘‘(II) the denominator is the ag-
gregate bases of all qualified manufac-
turing and other productuve equip-
ment properties placed in service dur-
ing such taxable year.
‘‘(C) DETERMINATION OF DOMESTIC ORI-
GIN.—
‘‘(i) IN GENERAL.—Property shall be
treated as being of domestic origin only
if—
‘‘(I) the property was completed
in the United States, and
‘‘(II) at least 50 percent of the
basis of the property is attributable to
value added within the United States.
‘‘(ii) UNITED
STATES.—The term
‘United States’ includes the Common-
wealth of Puerto Rico and the possessions
of the United States.
‘‘(3) QUALIFIED MANUFACTURING AND OTHER
PRODUCTIVE EQUIPMENT PROPERTY.—For purposes
of this subsection—
‘‘(A) IN
GENERAL.—The term ‘qualified
manufacturing and other productive equipment
property’ means any property—
‘‘(i) which is used as an integral part
of the manufacture or production of tan-
gible personal property and increases the
efficiency of the manufacturing or produc-
tion process;
‘‘(ii) which is tangible property to
which section 168 applies, other than 3-
year property (within the meaning of sec-
tion 168(e)),
‘‘(iii) which is section 1245 property
(as defined in section 1245(a)(3)), and
‘‘(iv)(I) the construction, reconstruc-
tion, or erection of which is completed by
the taxpayer, or
‘‘(II) which is acquired by the tax-
payer, if the original use of such property
commences with the taxpayer.
‘‘(B) SPECIAL RULE FOR COMPUTER SOFT-
WARE.—In the case of any computer software—
‘‘(i) which is used to control or mon-
itor a manufacturing or production proc-
ess,
‘‘(ii) which increases the efficiency of
the manufacturing or production process,
and
‘‘(iii) with respect to which deprecia-
tion (or amortization in lieu of deprecia-
tion) is allowable,
such software shall be treated as qualified man-
ufacturing and other productive equipment
property.
‘‘(4) QUALIFIED INCREASE AMOUNT.—For pur-
poses of this subsection—
‘‘(A) IN
GENERAL.—The term ‘qualified
increase amount’ means the excess (if any) of—
‘‘(i) the aggregate bases of qualified
manufacturing and other productive equip-
ment properties placed in service during
the taxable year, over
‘‘(ii) the base amount.
‘‘(B) BASE
AMOUNT.—The term ‘base
amount’ means the product of—
‘‘(i) the fixed-base percentage, and
‘‘(ii) the average annual gross receipts
of the taxpayer for the 4 taxable years pre-
ceding the taxable year for which the cred-
it is being determined (in this subsection
referred to as the ‘credit year’).
‘‘(C) MINIMUM
BASE
AMOUNT.—In no
event shall the base amount be less than 50
percent of the amount determined under sub-
paragraph (A)(i).
‘‘(D) FIXED-BASE PERCENTAGE.—
‘‘(i) IN
GENERAL.—The fixed-base
percentage is the percentage which the ag-
gregate amounts described in subpara-
graph (A)(i) for taxable years beginning
after December 31, 1987, and before Jan-
uary 1, 1993, is of the aggregate gross re-
ceipts of the taxpayer for such taxable
years.
‘‘(ii) ROUNDING.—The percentages
determined under clause (i) shall be round-
ed to the nearest 1⁄100 of 1 percent.
‘‘(E) OTHER RULES.—Rules similar to the
rules of paragraphs (4) and (5) of section 41(c)
shall apply for purposes of this paragraph.
‘‘(5) COORDINATION WITH OTHER CREDITS.—
This subsection shall not apply to any property to
which the energy credit or rehabilitation credit
would apply unless the taxpayer elects to waive the
application of such credits to such property.
‘‘(6) CERTAIN PROGRESS EXPENDITURE RULES
MADE APPLICABLE.—Rules similar to rules of sub-
sections (c)(4) and (d) of section 46 (as in effect on
the day before the date of the enactment of the Rev-
enue Reconciliation Act of 1990) shall apply for pur-
poses of this subsection.
‘‘(7) TERMINATION
DATE.—This subsection
shall not apply to any property placed in service
after the expiration of the 2-year period beginning
on the date of the enactment of this Act.’’
(c) TECHNICAL AMENDMENTS.—
(1) Clause (ii) of section 49(a)(1)(C) of such
Code is amended by inserting ‘‘or qualified manufac-
turing and other productive equipment property’’
after ‘‘energy property’’.
(2) Subparagraph (E) of section 50(a)(2) of
such Code is amended by inserting ‘‘or 48(c)(6)’’ be-
fore the period at the end.
(3)(A) The section heading for section 48 of
such Code is amended to read as follows:
‘‘SEC. 48. OTHER CREDITS.’’
(B) The table of sections for subpart E of part
IV of subchapter A of chapter 1 of such Code is
amended by striking the item relating to section 48
and inserting the following:
‘‘Sec. 48. Other credits.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to—
(1) property acquired by the taxpayer after the
date of the enactment of this Act, and
(2) property the construction, reconstruction, or
erection of which is completed by the taxpayer after
the date of the enactment of this Act, but only to
the extent of the basis thereof attributable to con-
struction, reconstruction, or erection after such date.
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