itemized deductions for individuals and corporations) is 
amended by adding at the end the following new section: 
‘‘SEC. 200. INCOME ATTRIBUTABLE TO DOMESTIC MANU-
FACTURING ACTIVITIES. 
‘‘(a) ALLOWANCE OF DEDUCTION.—There shall be 
allowed as a deduction an amount equal to 100 percent 
of the lesser of— 
‘‘(1) the qualified manufacturing activities in-
come of the taxpayer for the taxable year, or 
‘‘(2) taxable income (determined without regard 
to this section) for the taxable year. 
‘‘(b) QUALIFIED MANUFACTURING ACTIVITIES IN-
COME.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘qualified manu-
facturing activities income’ for any taxable year 
means an amount equal to the excess (if any) of— 
‘‘(A) the taxpayer’s domestic manufac-
turing gross receipts for such taxable year, over 
‘‘(B) the sum of— 
‘‘(i) the cost of goods sold that are al-
locable to such receipts, and 
‘‘(ii) other expenses, losses, or deduc-
tions (other than the deduction allowed 
under this section), which are properly al-
locable to such receipts. 
VerDate Aug 31 2005 
02:30 Oct 20, 2007
Jkt 069200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H3900.IH
H3900
bajohnson on PROD1PC71 with BILLS
‘‘(2) ALLOCATION
METHOD.—The Secretary 
shall prescribe rules for the proper allocation of 
items described in paragraph (1) for purposes of de-
termining qualified manufacturing activities income. 
Such rules shall provide for the proper allocation of 
items whether or not such items are directly allo-
cable to domestic manufacturing gross receipts. 
‘‘(3) 
SPECIAL
RULES
FOR
DETERMINING 
COSTS.—Rules similar to the rules of section 
199(c)(3) shall apply for purposes of this subsection. 
‘‘(4) DOMESTIC
MANUFACTURING
GROSS
RE-
CEIPTS.— 
‘‘(A) IN
GENERAL.—The term ‘domestic 
manufacturing gross receipts’ means the gross 
receipts of the taxpayer which are derived from 
any lease, rental, license, sale, exchange, or 
other disposition of qualifying manufacturing 
property which was manufactured or produced 
by the taxpayer in whole or in significant part 
within the United States. 
‘‘(B) EXCEPTION
FOR
INHERENTLY
DO-
MESTIC ACTIVITIES.—Such term shall not in-
clude gross receipts of the taxpayer which are 
derived from inherently domestic activities, in-
cluding— 
VerDate Aug 31 2005 
02:30 Oct 20, 2007
Jkt 069200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H3900.IH
H3900
bajohnson on PROD1PC71 with BILLS
‘‘(i) the raising or harvesting of any 
agricultural or horticultural commodity, 
‘‘(ii) the cutting of trees, 
‘‘(iii) the extraction of ores or min-
erals, 
‘‘(iv) the production of electricity, nat-
ural gas, or potable water, and 
‘‘(v) the construction of real property. 
‘‘(5) 
QUALIFIED
MANUFACTURING
PROP-
ERTY.—The term ‘qualified manufacturing property’ 
means— 
‘‘(A) tangible personal property, 
‘‘(B) any computer software, 
‘‘(C) any qualified film (as defined in sec-
tion 199(c)(6)), and 
‘‘(D) any property described in section 
168(f)(4). 
‘‘(c) SPECIAL RULES.— 
‘‘(1) APPLICATION
TO
INDIVIDUALS.—In the 
case of an individual, subsection (a)(2) shall be ap-
plied by substituting ‘adjusted gross income’ for 
‘taxable income’. For purposes of the preceding sen-
tence, adjusted gross income shall be determined— 
‘‘(A) after application of sections 86, 135, 
137, 199, 219, 221, 222, and 469, and 
VerDate Aug 31 2005 
02:30 Oct 20, 2007
Jkt 069200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H3900.IH
H3900
bajohnson on PROD1PC71 with BILLS
‘‘(B) without regard to this section. 
‘‘(2) CERTAIN RULES TO APPLY.—Rules similar 
to the following rules shall apply for purposes of this 
section: 
‘‘(A) Subparagraphs (C) and (D) of sec-
tion 199(c)(4) (relating to government con-
tracts and certain partnerships). 
‘‘(B) Section 199(c)(7) (relating to related 
persons). 
‘‘(C) Section 199(d) (relating to definitions 
and special rules) other than paragraph (2).’’. 
(b) COORDINATION WITH SECTION 199.— 
(1) Paragraph (4) of section 199(c) of such 
Code is amended by redesignating subparagraphs 
(B), (C), and (D) as subparagraphs (C), (D), and 
(E), respectively, and by inserting after subpara-
graph (A) the following new subparagraph: 
‘‘(B) EXCEPTION
FOR
DOMESTIC
MANU-
FACTURING GROSS RECEIPTS.—Such term shall 
not include domestic manufacturing gross re-
ceipts (as defined in section 200(b)(4)).’’. 
(2) The heading for subparagraph (C) of sec-
tion 199(c)(4) of such Code, as redesignated by 
paragraph (1), is amended by striking ‘‘EXCEP-
TIONS’’ and inserting ‘‘OTHER EXCEPTIONS’’. 
VerDate Aug 31 2005 
02:30 Oct 20, 2007
Jkt 069200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H3900.IH
H3900
bajohnson on PROD1PC71 with BILLS
(c) MINIMUM TAX.—Section 56(g)(4)(C) of such 
Code (relating to disallowance of items not deductible in 
computing earnings and profits) is amended by adding at 
the end the following new clause: 
‘‘(vi) 
DEDUCTION
FOR
DOMESTIC 
MANUFACTURING.—Clause (i) shall not 
apply to any amount allowable as a deduc-
tion under section 200.’’. 
(d) TECHNICAL AMENDMENTS.— 
(1) 
Sections 
86(b)(2)(A), 
135(c)(4)(A), 
137(b)(3)(A), and 219(g)(3)(A)(ii) of such Code are 
each amended by inserting ‘‘200,’’ before ‘‘221’’. 
(2) Clause (i) of section 221(b)(2)(C) of such 
Code is amended by inserting by inserting ‘‘200,’’ 
before ‘‘222’’. 
(3) Clause (i) of section 222(b)(2)(C) of such 
Code is amended by inserting ‘‘199,’’ before ‘‘911’’. 
(4) Paragraph (1) of section 246(b) of such 
Code is amended by inserting ‘‘200,’’ after ‘‘199,’’. 
(5) Clause (iii) of section 469(i)(3)(F) of such 
Code is amended by inserting ‘‘200,’’ before ‘‘219,’’. 
(6) Subsection (a) of section 613 of such Code 
is amended by striking ‘‘the deduction under section 
199’’ and inserting ‘‘the deductions under section 
199 and 200’’. 
VerDate Aug 31 2005 
02:30 Oct 20, 2007
Jkt 069200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H3900.IH
H3900
bajohnson on PROD1PC71 with BILLS
(7) Paragraph (16) of section 1402(a) of such 
Code is amended by striking ‘‘the deduction provided 
by section 199’’ and inserting ‘‘the deductions pro-
vided by sections 199 and 200’’. 
(8) The table of sections for part VI of sub-
chapter B of chapter 1 of such Code is amended by 
adding at the end the following new item: 
‘‘Sec. 200. Income attributable to domestic manufacturing activities.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
Æ 
VerDate Aug 31 2005 
02:30 Oct 20, 2007
Jkt 069200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6301
E:\BILLS\H3900.IH
H3900
bajohnson on PROD1PC71 with BILLS