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.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. INVESTMENT CREDIT FOR STAGE 3 AIRCRAFT
MODIFICATIONS.
(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:
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‘‘(4) the stage 3 aircraft modification credit.’’
(b) AMOUNT OF CREDIT.—Section 48 of such Code
is amended by adding at the end the following new sub-
section:
‘‘(c) STAGE 3 AIRCRAFT MODIFICATION CREDIT.—
‘‘(1) IN GENERAL.—For purposes of section 46,
the stage 3 aircraft modification credit is the stage
3 aircraft modification percentage of the basis of
each stage 3 aircraft modification property placed in
service during the taxable year.
‘‘(2) STAGE
AIRCRAFT
MODIFICATION
PER-
CENTAGE.—The stage 3 aircraft modification per-
centage is 10 percent.
‘‘(3) QUALIFIED STAGE 3 AIRCRAFT MODIFICA-
TION PROPERTY.—For purposes of this subpart—
‘‘(A) IN
GENERAL.—The term ‘qualified
stage 3 aircraft modification property’ means
tangible property—
‘‘(i) which is an integral part of and
modification of a nonstage 3 aircraft (in-
cluding the installation of different engines
or the retrofit of the existing engines with
sound attenuation devices),
‘‘(ii) which is certificated by the Fed-
eral Aviation Administration and is made
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to qualify the aircraft for the stage 3 noise
level requirements, and
‘‘(iii) the original use of which begins
with the taxpayer.
‘‘(B) STAGE 3 NOISE LEVEL.—The term
‘stage 3 noise level’ has the meaning given such
term by section 36.1(f)(5) of title 14, Code of
Regulations (as in effect on February 15,
1993).
‘‘(C) NONSTAGE 3 AIRCRAFT.—The term
‘nonstage 3 aircraft’ means an aircraft with a
maximum gross takeoff weight in excess of
75,000 pounds which did not meet the stage 3
noise level requirements before the stage 3 air-
craft modification property was installed.
‘‘(4) SPECIAL RULE FOR CERTAIN PURCHASES
AND
LEASES.—For 
purposes 
of 
paragraph
(3)(A)(iii), a qualified stage 3 aircraft modification
property shall be treated as originally placed in serv-
ice by a person if it is sold to such person or is
leased by such person within 3 months of the date
such modifications are made.’’
(c) STAGE 3 AIRCRAFT MODIFICATION CREDIT AL-
LOWABLE AGAINST REGULAR TAX AND ALTERNATIVE
MINIMUM TAX.—Subsection (c) of section 38 of such Code
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(relating to limitation based on amount of tax) is amended
by adding at the end the following new paragraph:
‘‘(3) SPECIAL RULES FOR STAGE 3 AIRCRAFT
MODIFICATION CREDIT.—
‘‘(A) LIABILITY FOR TAX.—In the case of
the stage 3 aircraft modification credit, the
credit allowable under subsection (a) for any
taxable year shall not exceed the excess (if any)
of—
‘‘(i) the sum of—
‘‘(I) the taxpayer’s tentative min-
imum tax liability under section 55(b)
for such taxable year determined with-
out regard to the stage 3 aircraft
modification credit, plus
‘‘(II) the taxpayer’s regular tax
liability for such taxable year (as de-
fined in section 26(b)), over
‘‘(ii) the sum of the credits allowable
against the taxpayer’s regular tax liability
under part IV (other than section 34 and
the stage 3 aircraft modification credit).
‘‘(B) APPLICATION
OF
THE
CREDIT.—
Each of the following amounts shall be reduced
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by the full amount of the credit determined
under subparagraph (A):
‘‘(i) the taxpayer’s tentative minimum
tax under section 55(b) for the taxable
year, and
‘‘(ii) the taxpayer’s regular tax liabil-
ity (as defined in section 26(b)) reduced by
the sum of the credits allowable under part
IV (other than section 34 and the stage 3
aircraft modification credit).
If the amount of the credit determined under sub-
paragraph (A) exceeds the amount described in
clause (ii) of subparagraph (B), then the excess shall
be deemed to be the adjusted net minimum tax for
such taxable year for purposes of section 53.’’
(d) TECHNICAL AND CONFORMING AMENDMENTS.—
(1) Paragraph (1) of section 38(c) of such Code
is amended by striking ‘‘The credit’’ and inserting
‘‘Except as provided in paragraph (3), the credit’’.
(2) Paragraph (2) of section 55(c) of such Code
is amended—
(A) by striking ‘‘For provisions’’ and in-
serting ‘‘(A) For provisions’’, and
(B) by adding at the end the following new
subparagraph:
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‘‘(B) For provisions allowing the stage 3
aircraft modification credit against the tax im-
posed by this section, see section 38(c)(3).’’
(3) Section 49(a)(1)(C) of such Code is amend-
ed by striking ‘‘and’’ at the end of clause (ii), by
striking the period at the end of clause (iii) and in-
serting ‘‘, and’’, and by adding at the end the follow-
ing new clause:
‘‘(iv) the basis of any qualified stage
3 aircraft modification property.’’
(4)(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.’’
(e) EFFECTIVE DATE.—The amendments made by
this section apply to stage 3 aircraft modification property
completed after December 31, 1991, and placed in service
after December 31, 1991, and before January 1, 1997.
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