I
103D CONGRESS
1ST SESSION
H. R. 2453
To amend the Internal Revenue Code of 1986 to provide tax incentives
to encourage the conversion of the defense industry to commercial en-
deavors, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JUNE 17, 1993
Mr. MACHTLEY 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 incentives to encourage the conversion of the defense
industry to commercial endeavors, 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. TAX CREDIT FOR HIRING LONG-TERM UNEM-
PLOYED DEFENSE AND SHIPBUILDING IN-
DUSTRY WORKERS.
(a) ALLOWANCE OF CREDIT.—Paragraph (1) of sec-
tion 51(d) of the Internal Revenue Code of 1986 (defining
members of targeted groups) is amended by striking ‘‘or’’
at the end of subparagraph (I), by striking the period at
the end of subparagraph (J) and inserting ‘‘, or’’, and by
adding at the end the following new subparagraph:
‘‘(K) a long-term unemployed defense or ship-
building industry worker.’’
(b) LONG-TERM UNEMPLOYED DEFENSE OR SHIP-
BUILDING INDUSTRY WORKER.—Section 51(d) of such
Code is amended by adding at the end thereof the follow-
ing new paragraph:
‘‘(17) LONG-TERM UNEMPLOYED DEFENSE OR
SHIPBUILDING INDUSTRY WORKER.—
‘‘(A) IN GENERAL.—The term ‘long-term
unemployed defense or shipbuilding industry
worker’ means an individual certified by the
designated local agency as having been em-
ployed in the defense or shipbuilding industry
and—
‘‘(i) who has been receiving unemploy-
ment compensation at all times during the
6-month period ending with the last day of
the month preceding the hiring date, or
‘‘(ii) who—
‘‘(I) was receiving unemployment
compensation but exhausted all rights
to such compensation, and
‘‘(II) has remained unemployed
during the period beginning on the
date such rights were exhausted and
ending on the day before the hiring
date.
‘‘(B) EMPLOYMENT IN DEFENSE OR SHIP-
BUILDING
INDUSTRY.—For purposes of sub-
paragraph (A), an individual shall be treated as
employed—
‘‘(i) in the defense industry if such in-
dividual’s services were performed pursu-
ant to any defense contract (as defined in
section 48(c)(4)), and
‘‘(ii) in the shipbuilding industry if
such individual’s services were performed
pursuant to any contract for the construc-
tion or reconstruction of any ship or any
subcontract in connection with such con-
struction or reconstruction.
‘‘(C) UNEMPLOYMENT
COMPENSATION.—
For purposes of this paragraph, the term ‘un-
employment compensation’ has the meaning
given such term by section 85(b).’’
(c) CERTAIN INDIVIDUALS NOT ELIGIBLE.—Section
51(i) of such Code (relating to certain individuals ineli-
gible) is amended by adding at the end the following new
paragraph:
‘‘(4) SPECIAL RULES FOR LONG-TERM UNEM-
PLOYED
DEFENSE
AND
SHIPBUILDING
INDUSTRY
WORKERS.—No wages shall be taken into account
under subsection (a) with respect to any long-term
unemployed defense or shipbuilding industry worker
(as defined in subsection (d)(17)) unless—
‘‘(A) notwithstanding paragraph (3), the
individual is employed by the employer at least
120 days, and
‘‘(B) the employer certifies on the return
of tax for the taxable year for which credit is
claimed that—
‘‘(i) the individual was hired after the
employer took reasonable actions to specifi-
cally recruit long-term unemployed defense
or shipbuilding industry workers, and
‘‘(ii) the individual was not hired to
replace an employee who was involuntarily
separated from employment by the em-
ployer without cause.’’
(d) CREDIT FOR HIRING LONG-TERM UNEMPLOYED
DEFENSE OR SHIPBUILDING INDUSTRY WORKERS MADE
PERMANENT.—Paragraph (4) of section 51(c) of such
Code is amended by adding at the end thereof the follow-
ing new sentence: ‘‘The preceding sentence shall not apply
to wages paid or incurred to any long-term unemployed
defense or shipbuilding industry worker (as defined in sub-
section (d)(17)).’’
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to individuals hired on and after
the date of the enactment of this Act.
SEC. 2. TECHNOLOGY TRANSFER TAX CREDIT.
(a) ALLOWANCE OF CREDIT.—Section 46 of the In-
ternal Revenue Code of 1986 (relating to amount of in-
vestment credit) is amended by striking ‘‘and’’ at the end
of paragraph (2), by striking the period at the end of para-
graph (3) and inserting ‘‘, and’’, and by adding at the
end thereof the following new paragraph:
‘‘(4) in the case of an eligible taxpayer (as de-
fined in section 48(c)), the nondefense production
and manufacturing equipment credit.’’
(b) AMOUNT OF CREDIT.—Section 48 of such Code
is amended by adding at the end thereof the following new
subsection:
‘‘(c) NONDEFENSE PRODUCTION AND MANUFACTUR-
ING EQUIPMENT CREDIT.—
‘‘(1) IN GENERAL.—For purposes of section 46,
in the case of an eligible taxpayer, the nondefense
production and manufacturing equipment credit for
any taxable year is an amount equal to 10 percent
of the qualified investment for such taxable year.
‘‘(2) QUALIFIED INVESTMENT.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the qualified investment for any tax-
able year is the aggregate of—
‘‘(i) the applicable percentage of the
basis of each new qualified nondefense pro-
duction and manufacturing equipment
property placed in service by the taxpayer
during such taxable year, plus
‘‘(ii) the applicable percentage of the
cost of each used qualified nondefense pro-
duction and manufacturing equipment
property placed in service by the taxpayer
during such taxable year.
‘‘(B) 
APPLICABLE
PERCENTAGE.—For
purposes of subparagraph (A), the applicable
percentage for any property shall be determined
under paragraphs (2) and (7) of section 46(c)
(as in effect on the day before the date of the
enactment of the Revenue Reconciliation Act of
1990).
‘‘(C) CERTAIN
RULES
MADE
APPLICA-
BLE.—The provisions of subsections (b) and (c)
of section 48 (as in effect on the day before the
date of the enactment of the Revenue Reconcili-
ation Act of 1990) shall apply for purposes of
this paragraph.
‘‘(3) QUALIFIED
NONDEFENSE
PRODUCTION
AND MANUFACTURING EQUIPMENT PROPERTY.—For
purposes of this subsection, the term ‘qualified
nondefense production and manufacturing equip-
ment property’ means any property—
‘‘(A) which is used as an integral part of
the manufacture or production of nondefense
tangible personal property,
‘‘(B) which is tangible property to which
section 168 applies, and
‘‘(C) which is section 1245 property (as
defined in section 1245(a)(3)).
‘‘(4) ELIGIBLE TAXPAYER.—
‘‘(A) IN GENERAL.—A taxpayer is an eligi-
ble taxpayer for purposes of this subsection if
more than 50 percent of the gross revenues of
such taxpayer for the taxable year are attrib-
utable to defense contracts.
‘‘(B) DEFENSE CONTRACT.—For purposes
of this paragraph, the term ‘defense contract’
means any contract or subcontract entered into
between the taxpayer and a defense agency to
provide material or defense related operations.
‘‘(C) DEFENSE AGENCY.—For purposes of
this paragraph, the term ‘defense agency’
means the Department of Defense, the nuclear
weapons division of the Department of Energy,
the National Aeronautics and Space Adminis-
tration, the Coast Guard, and any other agency
of the Government to the extent such agency
conducts military or other defense related
operations.
‘‘(5) COORDINATION WITH OTHER CREDITS.—
This subsection shall not apply to any property to
which the energy credit or rehabilitation credit
would apply unless the taxpayer elects to waive the
application of such credit to such property.
‘‘(6) CERTAIN PROGRESS EXPENDITURE RULES
MADE APPLICABLE.—Rules similar to rules of sub-
section (c)(4) and (d) of section 46 (as in effect on
the day before the date of the enactment of the Rev-
enue Reconciliation Act of 1990) shall apply for pur-
poses of this subsection.’’
(c) TECHNICAL AMENDMENTS.—
(1) Clause (ii) of section 49(a)(1)(C) of such
Code is amended by inserting ‘‘or qualified
nondefense production and manufacturing equip-
ment property’’ after ‘‘energy property’’.
(2) Subparagraph (E) of section 50(a)(2) of
such Code is amended by inserting ‘‘or 48(c)(4)’’ be-
fore the period at the end thereof.
(3) Paragraph (5) of section 50(a) of such Code
is amended by adding at the end thereof the follow-
ing new subparagraph.
‘‘(D) SPECIAL RULES FOR CERTAIN PROP-
ERTY.—In the case of any qualified nondefense
production and manufacturing equipment prop-
erty which is 3-year property (within the mean-
ing of section 168(e))—
‘‘(i) the percentage set forth in clause
(ii) of the table contained in paragraph
(1)(B) shall be 66 percent,
‘‘(ii) the percentage set forth in clause
(iii) of such table shall be 33 percent, and
‘‘(iii) clauses (iv) and (v) of such table
shall not apply.’’
(4)(A) The section heading for section 48 of
such Code is amended to read as follows:
‘‘SEC. 48. OTHER CREDITS.’’
(B) The table of sections for subpart E of part
IV of subchapter A of chapter 1 is amended by
striking the item relating to section 48 and inserting
the following:
‘‘Sec. 48. Other credits.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to periods after December 31,
1992, under rules similar to the rules of section 48(m)
of the Internal Revenue Code of 1986 (as in effect on the
day before the date of the enactment of the Revenue Rec-
onciliation Act of 1990).
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