I
106TH CONGRESS
2D SESSION
H. R. 5012
To amend the Internal Revenue Code of 1986 to provide an enhanced research
credit for the development of smart gun technologies.
IN THE HOUSE OF REPRESENTATIVES
JULY 27, 2000
Mr. BARR of Georgia 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 enhanced research credit for the development of smart
gun technologies.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Firearms Safety Re-
search and Development Act of 2000’’.
SEC. 2. ENHANCED RESEARCH CREDIT FOR DEVELOPMENT
OF SMART GUN TECHNOLOGIES.
(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
inserting after section 45C the following new section:
‘‘SEC. 45D. RESEARCH EXPENSES FOR SMART GUN TECH-
NOLOGIES.
‘‘(a) GENERAL RULE.—For purposes of section 38,
in the case of a taxpayer who is a Federal firearms li-
censee, the smart gun technology credit determined under
this section for the taxable year is an amount equal to
30 percent of the excess of—
‘‘(1) the smart gun technology expenses for the
taxable year, over
‘‘(2) the base amount.
‘‘(b) SMART GUN TECHNOLOGY EXPENSES; BASE
AMOUNT.—For purposes of this section—
‘‘(1) SMART GUN TECHNOLOGY EXPENSES.—
‘‘(A) IN GENERAL.—Except as otherwise
provided in this paragraph, the term ‘smart gun
technology expenses’ means the amounts which
are paid or incurred by the taxpayer during the
taxable year which would be described in sub-
section (b) of section 41 if such subsection were
applied with the modifications set forth in sub-
paragraph (B).
‘‘(B) MODIFICATIONS.—For purposes of
subparagraph (A), subsection (b) of section 41
shall be applied—
‘‘(i) by substituting ‘smart gun tech-
nology research’ for ‘qualified research’
each place it appears in paragraphs (2)
and (3) of such subsection, and
‘‘(ii) by substituting ‘100 percent’ for
‘65 percent’ in paragraph (3)(A) of such
subsection.
‘‘(C) EXCLUSION FOR AMOUNTS FUNDED
BY GRANTS, ETC.—The term ‘smart gun tech-
nology expenses’ shall not include any amount
to the extent such amount is funded by any
grant, contract, or otherwise by another person
(or any governmental entity).
‘‘(D) SPECIAL
RULE.—For purposes of
this paragraph, section 41 shall be deemed to
remain in effect for periods after June 30,
2004.
‘‘(2) BASE AMOUNT.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), the term ‘base amount’
means the amount which would be the base
amount in section 41(c) if such section were ap-
plied by substituting ‘smart gun technology re-
search’ for ‘qualified research’ each place it ap-
pears.
‘‘(B) BASE
AMOUNT
IS
ZERO
FOR
YEARS.—The base amount shall be zero for
purposes of determining the amount of credit
for taxable years beginning in 2001, 2002, or
2003.
‘‘(c) SMART GUN TECHNOLOGY RESEARCH.—For
purposes of this section—
‘‘(1) IN GENERAL.—The term ‘smart gun tech-
nology research’ means qualified research (as de-
fined in section 41(d)) for the purpose of developing
smart gun technologies for firearms.
‘‘(2) SMART
GUN
TECHNOLOGY.—The term
‘smart gun technology’ means any technology (other
than a simple mechanical lock) which is designed—
‘‘(A) to prevent a firearm from being fired
by any individual other than an authorized user
of the firearm, and
‘‘(B) to convert the firearm from the inop-
erable condition to the operable condition in
less than 1 second after contact with either the
firearm or the arming device of an authorized
user.
For purposes of the preceding sentence, the term
‘authorized user’ means, with respect to a firearm,
the owner of the firearm and any individual lawfully
authorized by such owner to operate the firearm.
‘‘(d) FEDERAL FIREARMS LICENSEE.—For purposes
of this section, the term ‘Federal firearms licensee’ means
any person holding a license under chapter 44 of title 18,
United States Code, other than a licensed collector.
‘‘(e) COORDINATION WITH CREDIT FOR INCREASING
RESEARCH EXPENDITURES.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), any smart gun technology expenses for a
taxable year to which an election under this section
applies shall not be taken into account for purposes
of determining the credit allowable under section 41
for such taxable year.
‘‘(2) EXPENSES
INCLUDED
IN
DETERMINING
BASE
PERIOD
RESEARCH
EXPENSES.—Smart gun
technology expenses for any taxable year shall be
taken into account in determining base period re-
search expenses for purposes of applying section 41
to subsequent taxable years.
‘‘(f) SPECIAL RULES.—
‘‘(1) CERTAIN
RULES
MADE
APPLICABLE.—
Rules similar to the rules of paragraphs (1) and (2)
of section 41(f) shall apply for purposes of this sec-
tion.
‘‘(2) ELECTION.—This section shall apply to
any taxpayer for any taxable year only if such tax-
payer elects (at such time and in such manner as
the Secretary may by regulations prescribe) to have
this section apply for such taxable year.’’
(b) DENIAL OF DOUBLE BENEFIT.—Section 280C of
such Code (relating to certain expenses for which credits
are allowable) is amended by adding at the end the fol-
lowing new subsection:
‘‘(d) CREDIT FOR SMART GUN TECHNOLOGY EX-
PENSES.—
‘‘(1) IN GENERAL.—No deduction shall be al-
lowed for that portion of the smart gun technology
expenses (as defined in section 45D(b)) otherwise al-
lowable as a deduction for the taxable year which is
equal to the amount of the credit allowable for the
taxable year under section 45D (determined without
regard to section 38(c) thereof).
‘‘(2) SIMILAR
RULE
WHERE
TAXPAYER
CAP-
ITALIZES RATHER THAN DEDUCTS EXPENSES.—If—
‘‘(A) the amount of the credit allowable for
the taxable year under section 45D (determined
without regard to section 38(c)), exceeds
‘‘(B) the amount allowable as a deduction
for the taxable year for smart gun technology
expenses (determined without regard to para-
graph (1)),
the amount chargeable to capital account for the
taxable year for such expenses shall be reduced by
the amount of such excess.
‘‘(3) CONTROLLED GROUPS.—In the case of a
corporation which is a member of a controlled group
of corporations (within the meaning of section
41(f)(5)) or a trade or business which is treated as
being under common control with other trades or
business 
(within 
the 
meaning 
of 
section
41(f)(1)(B)), this subsection shall be applied under
rules prescribed by the Secretary similar to the rules
applicable under subparagraphs (A) and (B) of sec-
tion 41(f)(1).’’.
(c) CREDIT MADE PART OF GENERAL BUSINESS
CREDIT.—
(1) IN GENERAL.—Subsection (b) of section 38
of such Code (relating to current year business cred-
it) is amended by striking ‘‘plus’’ at the end of para-
graph (11), by striking the period at the end of
paragraph (12) and inserting ‘‘, plus’’, and by add-
ing at the end thereof the following new paragraph:
of such Code is amended by inserting after the item relat-
ing to section 45C the following new item:
‘‘Sec. 45D. Research expenses for smart gun technologies.’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to amounts paid or incurred after
December 31, 2000, in taxable years ending after such
date.
SEC. 3. FIREARMS TAX NOT TO APPLY TO COST OF SMART
GUN TECHNOLOGY.
(a) IN GENERAL.—Section 4181 of the Internal Rev-
enue Code of 1986 (relating to imposition of tax on fire-
arms) is amended by adding at the end the following new
sentence:
‘‘The price taken into account under the preceding sen-
tence shall not include so much of the price of the firearm
as is attributable to any smart gun technology (as defined
in section 45D(c)(2)) of such firearm.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall take effect on January 1, 2001.
Æ