I
103D CONGRESS
1ST SESSION
H. R. 1993
To amend the Internal Revenue Code of 1986 to provide a credit against
tax for employers who provide on-site day-care facilities for dependents
of their employees, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MAY 5, 1993
Mr. TALENT 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
a credit against tax for employers who provide on-site
day-care facilities for dependents of their employees, 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. ALLOWANCE OF CREDIT FOR EMPLOYER EX-
PENSES FOR CERTAIN ON-SITE DAY-CARE FA-
CILITIES.
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
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1986 (relating to business related credits) is amended by
adding at the end thereof the following new section:
‘‘SEC. 45A. EMPLOYER ON-SITE DAY-CARE FACILITY CRED-
IT.
‘‘(a) IN GENERAL.—For purposes of section 38, the
employer on-site day-care facility credit determined under
this section for the taxable year is an amount equal to
50 percent of the qualified investment in property placed
in service during such taxable year as part of a qualified
day-care facility.
‘‘(b) LIMITATION.—The credit allowable under sub-
section (a) with respect to any qualified day-care facility
shall not exceed $150,000.
‘‘(c) DEFINITIONS.—For purposes of this section—
‘‘(1) 
QUALIFIED
INVESTMENT.—The 
term
‘qualified investment’ means the amount paid or in-
curred to acquire, construct, rehabilitate, or expand
property—
‘‘(A) which is to be used as part of a quali-
fied day-care facility, and
‘‘(B) with respect to which a deduction for
depreciation (or amortization in lieu of depre-
ciation) is allowable.
Such term includes only amounts properly charge-
able to capital account.
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‘‘(2) QUALIFIED DAY-CARE FACILITY.—
‘‘(A) IN
GENERAL.—The term ‘qualified
day-care facility’ means a facility—
‘‘(i) operated by an employer to pro-
vide dependent care assistance for enroll-
ees, at least 30 percent of whom are de-
pendents of employees of employers to
which a credit under subsection (a) with
respect to the facility is allowable,
‘‘(ii) the principal use of which is to
provide dependent care assistance de-
scribed in clause (i),
‘‘(iii) located on the premises of such
employer,
‘‘(iv) which meets the requirements of
all applicable laws and regulations of the
State or local government in which it is lo-
cated, including, but not limited to, the li-
censing of the facility as a day-care facil-
ity, and
‘‘(v) the use of which (or the eligibility
to use) does not discriminate in favor of
employees who are highly compensated em-
ployees (within the meaning of section
414(q)).
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‘‘(B) MULTIPLE
EMPLOYERS.—With re-
spect to a facility jointly operated by more than
1 employer, the term ‘qualified day-care facility’
shall include any facility located on the prem-
ises of 1 employer and within a reasonable dis-
tance from the premises of the other employers.
‘‘(d) RECAPTURE OF CREDIT.—
‘‘(1) IN GENERAL.—If, as of the close of any
taxable year, there is a recapture event with respect
to any qualified day-care facility, then the tax of the
taxpayer under this chapter for such taxable year
shall be increased by an amount equal to the prod-
uct of—
‘‘(A) the applicable recapture percentage,
and
‘‘(B) the aggregate decrease in the credits
allowed under section 38 for all prior taxable
years which would have resulted if the qualified
on-site day-care expenses of the taxpayer with
respect to such facility had been zero.
‘‘(2) APPLICABLE RECAPTURE PERCENTAGE.—
‘‘(A) IN GENERAL.—For purposes of this
subsection, the applicable recapture percentage
shall be determined from the following table:
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the recapture liability of the person dispos-
ing of such interest in effect immediately
before such disposition. In the event of
such an assumption, the person acquiring
the interest in the facility shall be treated
as the taxpayer for purposes of assessing
any recapture liability (computed as if
there had been no change in ownership).
‘‘(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
and carrybacks under section 39 shall be appro-
priately adjusted.
‘‘(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 the amount of any
credit under subpart A, B, or D of this part.
‘‘(C) NO RECAPTURE BY REASON OF CAS-
UALTY LOSS.—The increase in tax under this
subsection shall not apply to a cessation of op-
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eration of the facility as a qualified day-care fa-
cility by reason of a casualty loss to the extent
such loss is restored by reconstruction or re-
placement within a reasonable period estab-
lished by the Secretary.
‘‘(e) SPECIAL ALLOCATION RULES.—For purposes of
this section—
‘‘(1) ALLOCATION IN CASE OF MULTIPLE EM-
PLOYERS.—In the case of multiple employers jointly
operating a qualified day-care facility, the credit al-
lowable by this section to each such employer shall
be its proportionate share of the qualified on-site
day-care expenses giving rise to the credit.
‘‘(2) PASS-THRU IN THE CASE OF ESTATES AND
TRUSTS.—Under regulations prescribed by the Sec-
retary, rules similar to the rules of subsection (d) of
section 52 shall apply.
‘‘(3) ALLOCATION IN THE CASE OF PARTNER-
SHIPS.—In the case of partnerships, the credit shall
be allocated among partners under regulations pre-
scribed by the Secretary.
‘‘(f) NO DOUBLE BENEFIT.—
‘‘(1) REDUCTION IN BASIS.—For purposes of
this subtitle—
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‘‘(A) IN GENERAL.—If a credit is deter-
mined under this section with respect to any
property, the basis of such property shall be re-
duced by the amount of the credit so deter-
mined.
‘‘(B) CERTAIN
DISPOSITIONS.—If during
any taxable year there is a recapture amount
determined with respect to any property the
basis of which was reduced under paragraph
(1), the basis of such property (immediately be-
fore the event resulting in such recapture) shall
be increased by an amount equal to such recap-
ture amount. For purposes of the preceding
sentence, the term ‘recapture amount’ means
any 
increase 
in 
tax 
(or 
adjustment 
in
carrybacks or carryovers) determined under
subsection (d).
‘‘(2) OTHER DEDUCTIONS AND CREDITS.—No
deduction or credit shall be allowed under any other
provision of this chapter with respect to the amount
of the credit determined under this section.
‘‘(g) TERMINATION.—This section shall not apply to
taxable years beginning after December 31, 1996.’’.
(b) CONFORMING AMENDMENTS.—
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(1) Section 38(b) of the Internal Revenue Code
of 1986 is amended—
(A) by striking out ‘‘plus’’ at the end of
paragraph (7),
(B) by striking out the period at the end
of paragraph (8), and inserting in lieu thereof
a comma and ‘‘plus’’, and
(C) by adding at the end thereof the fol-
lowing new paragraph:
‘‘(9) the employer on-site day-care facility credit
determined under section 45A.’’.
(2) The table of sections for subpart D of part
IV of subchapter A of chapter 1 is amended by add-
ing at the end thereof the following new item:
‘‘Sec. 45A. Employer on-site day-care facility credit.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1993.
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