I
105TH CONGRESS
2D SESSION
H. R. 3536
To amend the Internal Revenue Code of 1986 to encourage the construction
in the United States of luxury yachts, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 24, 1998
Mr. KENNEDY of Rhode Island introduced the following bill; which was re-
ferred to the Committee on Ways and Means, and in addition to the
Committee on Commerce, for a period to be subsequently determined by
the Speaker, in each case for consideration of such provisions as fall with-
in the jurisdiction of the committee concerned
A BILL
To amend the Internal Revenue Code of 1986 to encourage
the construction in the United States of luxury yachts,
and for other purposes.
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 ‘‘Boat Building Invest-
ment Act of 1998’’.
SEC. 2. CREDIT FOR PURCHASE OF LUXURY YACHTS CON-
STRUCTED IN THE UNITED STATES.
(a) IN GENERAL.—Subpart B of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 is amended by inserting after section 30A the follow-
ing new section:
‘‘SEC. 30B. PURCHASE OF LUXURY YACHTS CONSTRUCTED
IN THE UNITED STATES.
‘‘(a) ALLOWANCE OF CREDIT.—There shall be al-
lowed as a credit against the tax imposed by this chapter
for the taxable year an amount equal to 20 percent of the
cost of any new domestic luxury yacht purchased by the
taxpayer during such year.
‘‘(b) MAXIMUM CREDIT.—The amount of the credit
allowed by subsection (a) with respect to any yacht shall
not exceed $10,000,000.
‘‘(c) NEW DOMESTIC LUXURY YACHT.—For pur-
poses of this section, the term ‘new domestic luxury yacht’
means any yacht if—
‘‘(1) the yacht is more than 50 feet in length,
‘‘(2) substantially all of the value of which is
attributable to value added in the United States,
‘‘(3) the original use of which commences with
the taxpayer, and
‘‘(4) the yacht is designed, built, documented,
and registered in the United States.
‘‘(d) APPLICATION WITH OTHER CREDITS; CARRY-
OVER OF EXCESS CREDIT.—The credit allowed by sub-
section (a) for any taxable year shall not exceed the excess
(if any) of—
‘‘(1) the regular tax for the taxable year re-
duced by the sum of the credits allowable under sub-
part A and the preceding sections of this subpart,
over
‘‘(2) the tentative minimum tax for the taxable
year.
If the credit under subsection (a) exceeds the limitation
of the preceding sentence, such excess shall be added to
the credit allowable under subsection (a) for the succeed-
ing taxable year.
‘‘(e) RECAPTURE OF CREDIT IF YACHT CEASES TO
BE DOCUMENTED, ETC., IN THE UNITED STATES.—
‘‘(1) IN GENERAL.—If, during any taxable year,
there is a recapture event with respect to any new
domestic luxury yacht of the taxpayer, then the tax
of the taxpayer under this chapter for such taxable
year shall be increased by an amount equal to the
product of—
‘‘(A) the applicable recapture percentage,
and
‘‘(B) the aggregate decrease in the credits
allowed under this section for all prior taxable
years which would have resulted if no credit
had been allowed under this section for the pur-
chase of such yacht.
‘‘(2) APPLICABLE RECAPTURE PERCENTAGE.—
‘‘(A) IN GENERAL.—For purposes of this
subsection, the applicable recapture percentage
shall be determined from the following table:
The applicable
recapture
‘‘If the recapture event occurs in:
percentage is:
Year 1 ........................................................................
100
Year 2 ........................................................................
Year 3 ........................................................................
Year 4 ........................................................................
Year 5 ........................................................................
Year 6 ........................................................................
Year 7 ........................................................................
Years 8 and thereafter ..............................................
0.
‘‘(B) YEARS.—References to years in the
table in subparagraph (A) are references to the
consecutive 12-month periods beginning with
the date the yacht is placed in service by the
taxpayer.
‘‘(3) RECAPTURE EVENT DEFINED.—For pur-
poses of this subsection, the term ‘recapture event’
means—
‘‘(A) any sale or other disposition of the
yacht, or
‘‘(B) 
the 
documentation, 
registration,
maintenance, or storage of the yacht outside
the United States.
‘‘(4) SPECIAL RULES.—
‘‘(A) TAX
BENEFIT
RULE.—The tax for
the taxable year shall be increased under para-
graph (1) only with respect to credits allowed
by reason of this section which were used to re-
duce tax liability. In the case of credits not so
used to reduce tax liability, the carryforwards
under this section shall be appropriately ad-
justed.
‘‘(B) NO CREDITS AGAINST TAX.—Any in-
crease in tax under this subsection shall not be
treated as a tax imposed by this chapter for
purposes of determining—
‘‘(i) the amount of any credit under
subpart A, B, or D of this part, or
‘‘(ii) the tax imposed by section 55.
‘‘(f) REDUCTION IN BASIS.—For purposes of this
subtitle, rules similar to the rules of section 50(c) (other
than paragraph (3) thereof) shall apply to the credit al-
lowed under this section.’’.
(b) CONFORMING AMENDMENTS.—
(1) Subsection (a) of section 1016 of such Code
is amended by striking ‘‘and’’ at the end of para-
graph (26), by striking the period at the end of
paragraph (27) and inserting ‘‘, and’’, and by add-
ing at the end thereof the following new paragraph:
‘‘(28) in the case of a yacht with respect to
which credit was allowed under section 30B, to the
extent provided in section 30B(f)(2).’’.
(2) The table of sections for subpart B of part
IV of subchapter A of chapter 1 of such Code is
amended by inserting after the item relating to sec-
tion 30A the following new item:
‘‘Sec. 30B. Purchase of luxury yachts constructed in the United
States.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to yachts purchased after the date
of the enactment of this Act.
SEC. 3. GRANTS TO ENCOURAGE PERSONS OUTSIDE THE
UNITED 
STATES 
TO 
PURCHASE 
LUXURY
YACHTS 
CONSTRUCTED 
IN 
THE 
UNITED
STATES.
(a) IN GENERAL.—The Secretary of Commerce shall
establish a program under which grants are provided to
entities for the purpose of—
(1) encouraging persons outside the United
States to purchase luxury yachts (as defined in sec-
tion 30B of the Internal Revenue Code of 1986, as
added by section 2(a)) which are constructed in the
United States, and
(2) providing specialized education and training
for workers who construct such yachts.
(b) AUTHORIZATION.—There are authorized to be ap-
propriated $25,000,000 for the purpose of carrying out
subsection (a). Amounts appropriated for any fiscal year
shall remain available under expended.
Æ