I
103D CONGRESS
1ST SESSION
H. R. 1325
To amend the Internal Revenue Code of 1986 to provide tax credits for
Indian investment and employment, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 11, 1993
Mr. RICHARDSON 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
tax credits for Indian investment and employment, 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. SHORT TITLE.
This Act may be cited as the ‘‘Indian Employment
and Investment Act of 1993’’.
SEC. 2. INVESTMENT TAX CREDIT FOR PROPERTY ON IN-
DIAN RESERVATIONS.
(a) ALLOWANCE OF INDIAN RESERVATION CRED-
IT.—Section 46 of the Internal Revenue Code of 1986 (re-
lating to investment credits) is amended by striking ‘‘and’’
at the end of paragraph (2), by striking the period at the
end of paragraph (3) and inserting ‘‘, and’’, and by adding
after paragraph (3) the following new paragraph:
‘‘(4) the Indian reservation credit.’’.
(b) AMOUNT OF INDIAN RESERVATION CREDIT.—
(1) IN GENERAL.—Section 48 of such Code (re-
lating to the energy credit and the reforestation
credit) is amended by adding after subsection (b)
the following new subsection:
‘‘(c) INDIAN RESERVATION CREDIT.—
‘‘(1) IN GENERAL.—For purposes of section 46,
the Indian reservation credit for any taxable year is
the Indian reservation percentage of the qualified in-
vestment in qualified Indian reservation property
placed in service during such taxable year, deter-
mined in accordance with the following table:
‘‘In the case of qualified
Indian reservation property
The Indian reservation
which is:
percentage is:
Reservation personal property ...............................
New reservation construction property .................
Reservation infrastructure investment ..................
15.
‘‘(2) QUALIFIED
INVESTMENT
IN
QUALIFIED
INDIAN
RESERVATION
PROPERTY
DEFINED.—For
purposes of this subpart—
‘‘(A) IN
GENERAL.—The term ‘qualified
Indian reservation property’ means property—
‘‘(i) which is—
‘‘(I) reservation personal prop-
erty,
‘‘(II) new reservation construc-
tion property, or
‘‘(III) reservation infrastructure
investment, and
‘‘(ii) not acquired (directly or indi-
rectly) by the taxpayer from a person who
is related to the taxpayer (within the
meaning of section 465(b)(3)(C)).
The term ‘qualified Indian reservation property’
does not include any property (or any portion
thereof) placed in service for purposes of con-
ducting or housing class I, II, or III gaming (as
defined in section 4 of the Indian Gaming Reg-
ulatory Act (25 U.S.C. 2703)).
‘‘(B) QUALIFIED INVESTMENT.—The term
‘qualified investment’ means—
‘‘(i) in the case of reservation infra-
structure investment, the amount expended
by the taxpayer for the acquisition or con-
struction of the reservation infrastructure
investment; and
‘‘(ii) in the case of all other qualified
Indian reservation property, the taxpayer’s
basis for such property.
‘‘(C) 
RESERVATION
PERSONAL
PROP-
ERTY.—The term ‘reservation personal prop-
erty’ means qualified personal property which is
used by the taxpayer predominantly in the ac-
tive conduct of a trade or business within an
Indian reservation. Property shall not be treat-
ed as ‘reservation personal property’ if it is
used or located outside the Indian reservation
on a regular basis.
‘‘(D) QUALIFIED PERSONAL PROPERTY.—
The term ‘qualified personal property’ means
property—
‘‘(i) for which depreciation is allow-
able under section 168,
‘‘(ii) which is not—
‘‘(I) nonresidential real property,
‘‘(II) residential rental property,
or
‘‘(III) real property which is not
described in (I) or (II) and which has
a class life of more than 12.5 years.
For purposes of this subparagraph, the terms
‘nonresidential real property’, ‘residential rental
property’, and ‘class life’ have the respective
meanings given such terms by section 168.
‘‘(E) NEW
RESERVATION
CONSTRUCTION
PROPERTY.—The term ‘new reservation con-
struction property’ means qualified real prop-
erty—
‘‘(i) which is located in an Indian res-
ervation,
‘‘(ii) which is used by the taxpayer
predominantly in the active conduct of a
trade or business within an Indian reserva-
tion, and
‘‘(iii) which is originally placed in
service by the taxpayer.
‘‘(F) QUALIFIED
REAL
PROPERTY.—The
term ‘qualified real property’ means property
for which depreciation is allowable under sec-
tion 168 and which is described in clause (I),
(II), or (III) of subparagraph (D)(ii).
‘‘(G) RESERVATION INFRASTRUCTURE IN-
VESTMENT.—
‘‘(i) IN GENERAL.—The term ‘reserva-
tion 
infrastructure 
investment’ 
means
qualified personal property or qualified real
property which—
‘‘(I) benefits the tribal infrastruc-
ture,
‘‘(II) is available to the general
public, and
‘‘(III) is placed in service in con-
nection with the taxpayer’s active con-
duct of a trade or business within an
Indian reservation.
‘‘(ii) PROPERTY
MAY
BE
LOCATED
OUTSIDE
THE
RESERVATION.—Qualified
personal property and qualified real prop-
erty used or located outside an Indian res-
ervation shall be reservation infrastructure
investment only if its purpose is to connect
to existing tribal infrastructure in the res-
ervation, and shall include, but not be lim-
ited to, roads, power lines, water systems,
railroad spurs, and communications facili-
ties.
‘‘(H) COORDINATION WITH OTHER CRED-
ITS.—The term ‘qualified Indian reservation
property’ shall not include any property with re-
spect to which the energy credit or the rehabili-
tation credit is allowed.
‘‘(3) REAL ESTATE RENTALS.—For purposes of
this section, the rental to others of real property lo-
cated within an Indian reservation shall be treated
as the active conduct of a trade or business in an
Indian reservation.
‘‘(4) INDIAN
RESERVATION
DEFINED.—For
purposes of this subpart, the term ‘Indian reserva-
tion’ means a reservation, as defined in—
‘‘(A) section 3(d) of the Indian Financing
Act of 1974 (25 U.S.C. 1452(d)), or
‘‘(B) section 4(10) of the Indian Child
Welfare Act of 1978 (25 U.S.C. 1903(10)).
‘‘(5) 
LIMITATION
BASED
ON
UNEMPLOY-
MENT.—
‘‘(A) GENERAL
RULE.—The Indian res-
ervation credit allowed under section 46 for any
taxable year shall equal—
‘‘(i) if the Indian unemployment rate
on the applicable Indian reservation for
which the credit is sought exceeds 300 per-
cent of the national average unemployment
rate at any time during the calendar year
in which the property is placed in service
or during the immediately preceding 2 cal-
endar years, 100 percent of such credit,
‘‘(ii) if such Indian unemployment
rate exceeds 150 percent but not 300 per-
cent, 50 percent of such credit, and
‘‘(iii) if such Indian unemployment
rate does not exceed 150 percent, 0 per-
cent of such credit.
‘‘(B) 
SPECIAL
RULE
FOR
LARGE
PROJECTS.—In the case of a qualified Indian
reservation property which has (or is a compo-
nent of a project which has) a projected con-
struction period of more than 2 years or a cost
of more than $1,000,000, subparagraph (A)
shall apply by substituting ‘during the earlier of
the calendar year in which the taxpayer enters
into a binding agreement to make a qualified
investment or the first calendar year in which
the taxpayer has expended at least 10 percent
of the taxpayer’s qualified investment, or the
preceding calendar year’ for ‘during the cal-
endar year in which the property is placed in
service or during the immediately preceding 2
calendar years’.
‘‘(C) DETERMINATION OF INDIAN UNEM-
PLOYMENT.—For purposes of this paragraph,
with respect to any Indian reservation, the In-
dian unemployment rate shall be based upon
Indians unemployed and able to work, and shall
be certified by the Secretary of the Interior.
‘‘(6) 
COORDINATION
WITH
NONREVENUE
LAWS.—Any reference in this subsection to a provi-
sion not contained in this title shall be treated for
purposes of this subsection as a reference to such
provision as in effect on the date of the enactment
of this paragraph.’’.
(2) LODGING TO QUALIFY.—Paragraph (2) of
section 50(b) of such Code (relating to property used
for lodging) is amended—
(A) by striking ‘‘and’’ at the end of sub-
paragraph (C),
(B) by striking the period at the end of
subparagraph (D) and inserting ‘‘; and’’ and
(C) by adding at the end thereof the fol-
lowing subparagraph:
‘‘(E) new reservation construction prop-
erty.’’.
(c) RECAPTURE.—Subsection (a) of section 50 of
such Code (relating to recapture in case of dispositions,
etc.), is amended by adding at the end thereof the follow-
ing new paragraph:
‘‘(6) SPECIAL RULES FOR INDIAN RESERVATION
PROPERTY.—
‘‘(A) IN GENERAL.—If, during any taxable
year, property with respect to which the tax-
payer claimed an Indian reservation credit—
‘‘(i) is disposed of, or
‘‘(ii) in the case of reservation per-
sonal property—
‘‘(I) otherwise ceases to be in-
vestment credit property with respect
to the taxpayer, or
‘‘(II) is removed from the Indian
reservation, converted or otherwise
ceases to be Indian reservation prop-
erty,
the tax under this chapter for such taxable year
shall be increased by the amount described in
subparagraph (B).
‘‘(B) AMOUNT
OF
INCREASE.—The in-
crease in tax under subparagraph (A) shall
equal the aggregate decrease in the credits al-
lowed under section 38 by reason of section
48(c) for all prior taxable years which would
have resulted had the qualified investment
taken into account with respect to the property
been limited to an amount which bears the
same ratio to the qualified investment with re-
spect to such property as the period such prop-
erty was held by the taxpayer bears to the ap-
plicable recovery period under section 168(g).
‘‘(C) COORDINATION WITH OTHER RECAP-
TURE PROVISIONS.—In the case of property to
which this paragraph applies, paragraph (1)
shall not apply and the rules of paragraphs (3),
(4), and (5) shall apply.’’.
(d) BASIS ADJUSTMENT TO REFLECT INVESTMENT
CREDIT.—Paragraph (3) of section 50(c) of such Code
(relating to basis adjustment to investment credit prop-
erty) is amended by striking ‘‘energy credit or reforest-
ation credit’’ and inserting ‘‘energy credit, reforestation
credit or Indian reservation credit other than with respect
to any expenditure for new reservation construction prop-
erty’’.
(e) CERTAIN GOVERNMENTAL USE PROPERTY TO
QUALIFY.—Paragraph (4) of section 50(b) of such Code
(relating to property used by governmental units or for-
eign persons or entities) is amended by redesignating sub-
paragraphs (D) and (E) as subparagraphs (E) and (F),
respectively, and inserting after subparagraph (C) the fol-
lowing new subparagraph:
‘‘(D) EXCEPTION
FOR
RESERVATION
IN-
FRASTRUCTURE INVESTMENT.—This paragraph
shall not apply for purposes of determining the
Indian reservation credit with respect to res-
ervation infrastructure investment.’’.
(f) APPLICATION
OF AT-RISK RULES.—Subpara-
graph (C) of section 49(a)(1) of such Code is amended
by striking ‘‘and’’ at the end of clause (ii), by striking
the period at the end of clause (iii) and inserting ‘‘, and’’,
and by adding at the end the following new clause:
‘‘(iv) the qualified investment in quali-
fied Indian reservation property.’’.
(g) CLERICAL AMENDMENTS.—
(1) Section 48 of such Code is amended by
striking the heading and inserting the following:
‘‘SEC. 48. ENERGY CREDIT; REFORESTATION CREDIT; IN-
DIAN RESERVATION CREDIT.’’.
(2) The table of sections for subpart E of part
IV of subchapter A of chapter 1 is amended by
striking out the item relating to section 48 and in-
serting the following:
‘‘Sec. 48. Energy credit; reforestation credit; Indian reservation
credit.’’.
(h) EFFECTIVE DATE.—The amendments made by
this section shall apply to property placed in service after
December 31, 1993.
SEC. 3. INDIAN EMPLOYMENT CREDIT.
(a) ALLOWANCE OF INDIAN EMPLOYMENT CRED-
IT.—Section 38(b) of the Internal Revenue Code of 1986
(relating to general business credits) is amended by strik-
ing ‘‘plus’’ at the end of paragraph (7), by striking the
period at the end of paragraph (8) and inserting ‘‘, plus’’,
and by adding after paragraph (8) the following new para-
graph:
‘‘(9) the Indian employment credit as deter-
mined under section 45A(a).’’.
(b) AMOUNT OF INDIAN EMPLOYMENT CREDIT.—
Subpart D of Part IV of subchapter A of chapter 1 of
such Code (relating to business related credits) is amended
by adding at the end thereof the following new section:
‘‘SEC. 45A . INDIAN EMPLOYMENT CREDIT.
‘‘(a) AMOUNT OF CREDIT.—
‘‘(1) IN GENERAL.—For purposes of section 38,
the amount of the Indian employment credit deter-
mined under this section with respect to any em-
ployer for any taxable year is 10 percent (30 percent
in the case of an employer with at least 85 percent
Indian employees throughout the taxable year) of
the sum of—
‘‘(A) the qualified wages paid or incurred
during such taxable year, plus
‘‘(B) qualified employee health insurance
costs paid or incurred during such taxable year.
In no event shall the amount of the Indian employ-
ment credit for any taxable year exceed the credit
limitation amount determined under subsection (e)
for such taxable year.
‘‘(2) INDIAN
EMPLOYEE.—For purposes of
paragraph (1), the term ‘Indian employee’ means an
employee who is an enrolled member of an Indian
tribe or the spouse of such a member.
‘‘(b) QUALIFIED WAGES; QUALIFIED EMPLOYEE
HEALTH INSURANCE COSTS.—For purposes of this sec-
tion—
‘‘(1) QUALIFIED WAGES.—
‘‘(A) IN
GENERAL.—The term ‘qualified
wages’ means any wages paid or incurred by an
employer for services performed by an employee
while such employee is a qualified employee.
‘‘(B) COORDINATION
WITH
TARGETED
JOBS CREDIT.—The term ‘qualified wages’ shall
not include wages attributable to service ren-