SEC. 2. INVESTMENT CREDIT FOR MANUFACTURING AND
OTHER PRODUCTIVE EQUIPMENT.
(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 thereof 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 thereof the following new
subsection:
‘‘(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 10
percent of the excess (if any) of—
‘‘(A) the aggregate bases of qualified man-
ufacturing and productive equipment properties
placed in service during such taxable year, over
‘‘(B) the base amount.
‘‘(2) QUALIFIED
MANUFACTURING
AND
PRO-
DUCTIVE EQUIPMENT PROPERTY.—For purposes of
this subsection—
‘‘(A) IN
GENERAL.—The term ‘qualified
manufacturing and productive equipment prop-
erty’ means any property—
‘‘(i) which is used—
‘‘(I) as an integral part of the
manufacture or production of tangible
personal property, or
‘‘(II) in farming,
‘‘(ii) which is tangible property to
which section 168 applies, and
‘‘(iii) which is section 1245 property
(as defined in section 1245(a)(3)).
‘‘(B) SPECIAL RULE FOR COMPUTER SOFT-
WARE.—In the case of any computer software
which is used to control or monitor a manufac-
turing or production process and with respect
to which depreciation (or amortization in lieu of
depreciation) is allowable, such software shall
be treated as qualified manufacturing and pro-
ductive equipment property.
‘‘(3) BASE
AMOUNT.—For purposes of para-
graph (1)(B)—
‘‘(A) 
IN
GENERAL.—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 (hereafter in this
subsection referred to as the ‘credit year’).
‘‘(B) MINIMUM
BASE
AMOUNT.—In no
event shall the base amount be less than 50
percent of the amount determined under para-
graph (1)(A).
‘‘(C) FIXED-BASE PERCENTAGE.—
‘‘(i) IN
GENERAL.—The fixed-base
percentage is the percentage which the ag-
gregate amounts described in paragraph
(1)(A) for taxable years beginning after
December 31, 1987, and before January 1,
1993, is of the aggregate gross receipts 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.
‘‘(D) OTHER RULES.—Rules similar to the
rules of paragraphs (4) and (5) of section 41(c)
shall apply for purposes of this paragraph.
‘‘(4) ALLOCATION
OF
BASIS
ADJUSTMENT.—
The reduction required by section 50(c) for any tax-
able year shall be allocated among the qualified
manufacturing and productive equipment property
placed in service by the taxpayer during such year
in proportion to the respective bases of such prop-
erty.
‘‘(5) RECAPTURE.—In applying section 50(a) to
any property which ceases to be qualified manufac-
turing and productive equipment property, the credit
determined under this subsection with respect to
such property shall be treated as being equal to 10
percent of the lesser of—
‘‘(A) the excess referred to in paragraph
(1) for the taxable year in which such property
was placed in service, or
‘‘(B) the basis of such property which was
taken into account under paragraph (1).
‘‘(6) CONTROLLED GROUPS.—Rules similar to
the rules of paragraph (1) of section 41(f) shall
apply for purposes of this subsection.
‘‘(7) 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.
‘‘(8) CERTAIN PROGRESS EXPENDITURE RULES
MADE APPLICABLE.—Rules similar to rules of sub-
section (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.
‘‘(9) APPLICATION OF SUBSECTION.—This sub-
section shall apply to periods after December 31,
1992, and before January 1, 1995, under rules simi-
lar to the rules of section 48(m) (as in effect on the
day before the date of the enactment of the Revenue
Reconciliation Act of 1990).’’
(c) TECHNICAL AMENDMENTS.—
(1) Clause (ii) of section 49(a)(1)(C) of such
Code is amended by inserting ‘‘or qualified manufac-
turing and productive equipment property’’ after
‘‘energy property’’.
(2) Subparagraph (E) of section 50(a)(2) of
such Code is amended by inserting ‘‘or 48(c)(5)’’ be-
fore the period at the end thereof.
(3) Paragraph (5) of section 50(a) of such Code
is amended by adding at the end thereof the follow-
ing new subparagraph:
‘‘(D) SPECIAL RULES FOR CERTAIN PROP-
ERTY.—In the case of any qualified manufac-
turing and productive equipment property
which is 3-year property (within the meaning of
section 168(e))—
‘‘(i) the percentage set forth in clause
(ii) of the table contained in paragraph
(1)(B) shall be 66 percent,
‘‘(ii) the percentage set forth in clause
(iii) of such table shall be 33 percent, and
‘‘(iii) clauses (iv) and (v) of such table
shall not apply.’’
(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.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after De-
cember 31, 1992.
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