I
106TH CONGRESS
2D SESSION
H. R. 5497
To amend the Internal Revenue Code of 1986 to allow a credit against
income tax for certain audio or video postproduction equipment.
IN THE HOUSE OF REPRESENTATIVES
OCTOBER 18, 2000
Mr. WELLER (for himself, Mr. FOLEY, Mr. BECERRA, Mr. MATSUI, Mr.
RAMSTAD, Mr. ENGLISH, Mr. ROGAN, Mr. SESSIONS, Mr. SENSEN-
BRENNER, Mr. LEWIS of Georgia, Mr. COYNE, Mrs. MALONEY of New
York, Mrs. JONES of Ohio, Mr. WAXMAN, Mr. CONDIT, and Mr. BER-
MAN) 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 allow a
credit against income tax for certain audio or video
postproduction equipment.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. CREDIT FOR BUSINESS USE OF AUDIO AND
VIDEO POSTPRODUCTION EQUIPMENT.
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to business related credits) is amended by
adding at the end the following new section:
‘‘SEC. 45D. AUDIO AND VIDEO POSTPRODUCTION EQUIP-
MENT.
‘‘(a) IN GENERAL.—For purposes of section 38, the
postproduction equipment credit determined under this
section for the taxable year is an amount equal to 20 per-
cent of the excess (if any) of—
‘‘(1) 
the 
aggregate 
basis 
of 
qualified
postproduction equipment placed in service by the
taxpayer during the taxable year, over
‘‘(2) an amount equal to 5 percent of the tax-
payer’s average annual gross receipts from digital
postproduction services for the 4 preceding taxable
years.
‘‘(b) DEFINITIONS.—For purposes of this section—
‘‘(1) 
QUALIFIED
POSTPRODUCTION
EQUIP-
MENT.—The term ‘qualified postproduction equip-
ment’ means any tangible personal property (not in-
cluding a building and its structural components)
but only if—
‘‘(A) it is reasonable to expect that at least
50 percent of the use of such property during
each of the first 3 years after being placed in
service by the taxpayer will be—
‘‘(i) to provide digital postproduction
services, or
‘‘(ii) to maintain, operate, control,
regulate, repair, measure, or test property
used to provide digital postproduction serv-
ices, and
‘‘(B) section 168 applies to such property.
‘‘(2) POSTPRODUCTION
SERVICES.—The term
‘postproduction services’ means—
‘‘(A) services to transform, manipulate, as-
semble, and duplicate visual moving images and
synchronous sound previously captured during
principal photography,
‘‘(B) the creation of visual images and syn-
chronous sound to be used with visual moving
images and sound captured during principal
photography,
‘‘(C) animation services, or
‘‘(D) the providing of equipment to per-
form services referred to in any of the pre-
ceding subparagraphs.
‘‘(3) DIGITAL
POSTPRODUCTION
SERVICES.—
The term ‘digital postproduction services’ means
postproduction services where—
‘‘(A) the customer delivery requirement to
meet the ATSC compression format restraints
is one of the 23 specified image formats listed
in the Advanced Television Systems Committee
Digital Television Standard Table 3, or
‘‘(B) program audio has more than 2
channel sound that will be downmixed through
use of the AC3 compression standard specified
by the Advanced Television Systems Committee
Digital Television Standard.
‘‘(c) RECAPTURE.—Rules similar to the rules of sec-
tion 50(a) shall apply to the credit determined under this
section; except that—
‘‘(1) the recapture percentage shall be 100 per-
cent if the property is used to provide services on
any production subject to the record keeping re-
quirements of section 2257 of title 18, United States
Code (relating to record keeping requirements with
respect to films, etc., with sexually explicit content),
and
‘‘(2) if, during any of the first 3 years after the
property is placed in service, less than 50 percent of
the use of the property is for purposes referred to
in subsection (b)(1)(A), such property shall cease to
be qualified postproduction equipment as of the be-
ginning of the earliest such year.
‘‘(d) SPECIAL RULES.—