I
103D CONGRESS
1ST SESSION
H. R. 241
To amend the Internal Revenue Code of 1986 to encourage investments
in new manufacturing and other productive equipment by allowing an
investment tax credit to taxpayers who increase the amount of such
investments.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 5, 1993
Mr. LEVIN (for himself and Mr. MATSUI) 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 encourage
investments in new manufacturing and other productive
equipment by allowing an investment tax credit to tax-
payers who increase the amount of such investments.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. INVESTMENT CREDIT FOR NEW MANUFACTUR-
ING AND OTHER PRODUCTION EQUIPMENT.
(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) the manufacturing and other productive
equipment credit.’’
(b) AMOUNT OF CREDIT.—Section 48 of such Code
is amended by adding at the end thereof the following new
subsection:
‘‘(c) MANUFACTURING
AND OTHER PRODUCTIVE
EQUIPMENT CREDIT.—
‘‘(1) IN GENERAL.—For purposes of section 46,
the manufacturing and other productive equipment
credit for any taxable year is an amount equal to 10
percent of the excess (if any) of—
‘‘(A) the aggregate bases of qualified man-
ufacturing and other productive equipment
properties placed in service during such taxable
year, over
‘‘(B) the base amount.
‘‘(2) QUALIFIED
MANUFACTURING
AND
PRO-
DUCTIVE EQUIPMENT PROPERTY.—For purposes of
this subsection—
‘‘(A) IN
GENERAL.—The term ‘qualified
manufacturing and productive equipment prop-
erty’ means any property—
‘‘(i) which is used as an integral part
of manufacturing, production, or extraction
or of furnishing transportation, commu-
nications, electrical energy, gas, water, or
sewage disposal services,
‘‘(ii) which is tangible property to
which section 168 applies,
‘‘(iii) which is section 1245 property
(as defined in section 1245(a)(3)), and
‘‘(iv)(I) the construction, reconstruc-
tion, or erection of which is completed by
the taxpayer, or
‘‘(II) which is acquired by the tax-
payer if the original use of such property
commences with the taxpayer.
‘‘(B) SPECIAL RULE FOR COMPUTER SOFT-
WARE.—In the case of any computer software
which is used to control or monitor a manufac-
turing or production process and with respect
to which depreciation (or amortization in lieu of
depreciation) is allowable, such software shall
be treated as qualified manufacturing and pro-
ductive equipment property.
‘‘(3) BASE
AMOUNT.—For purposes of para-
graph (1)(B)—
‘‘(A) 
IN
GENERAL.—The 
term 
‘base
amount’ means the product of—
‘‘(i) the fixed-base percentage, and
‘‘(ii) the average annual gross receipts
of the taxpayer for the four taxable years
preceding the taxable year for which the
credit is being determined (hereafter in
this subsection referred to as the ‘credit
year’).
‘‘(B) MINIMUM
BASE
AMOUNT.—In no
event shall the base amount be less than 50
percent of the amount determined under para-
graph (1)(A).
‘‘(C) FIXED-BASE PERCENTAGE.—
‘‘(i) IN
GENERAL.—The fixed-base
percentage is the percentage which the ag-
gregate amounts described in paragraph
(1)(A) for taxable years beginning after
December 31, 1986, and before January 1,
1992, is of the aggregate gross receipts of
the taxpayer for such taxable years.
‘‘(ii) ROUNDING.—The percentages
determined under clause (i) shall be round-
ed to the nearest 1/100 of 1 percent.
‘‘(D) OTHER RULES.—Rules similar to the
rules of paragraphs (4) and (5) of section 41(c)
shall apply for purposes of this paragraph.
‘‘(4) 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 credits to such property.
‘‘(5) 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.’’
(b) MANUFACTURING
AND
OTHER
PRODUCTIVE
EQUIPMENT CREDIT ALLOWABLE AGAINST ENTIRE REG-
ULAR TAX AND ALTERNATIVE MINIMUM TAX.—
(1) Subsection (c) of section 38 of such Code
(relating to limitation based on amount of tax) is
amended by adding at the end thereof the following
new paragraph:
‘‘(3) SPECIAL
RULES
FOR
MANUFACTURING
AND OTHER PRODUCTIVE EQUIPMENT CREDIT.—
‘‘(A) IN GENERAL.—In the case of a C
corporation, this section and section 39 shall be
applied separately—
‘‘(i) first with respect to so much of
the credit allowed by subsection (a) as is
not attributable to the productive equip-
ment credit, and
‘‘(ii) then with respect to the produc-
tive equipment credit.
‘‘(B) RULES
FOR
APPLICATION
OF
PRO-
DUCTIVE EQUIPMENT CREDIT.—
‘‘(i) IN GENERAL.—In the case of the
productive equipment credit, in lieu of ap-
plying the preceding paragraphs of this
subsection, the amount of such credit al-
lowed under subsection (a) for any taxable
year shall not exceed the net chapter 1 tax
for such year.
‘‘(ii) NET CHAPTER 1 TAX.—For pur-
poses of clause (i), the term ‘net chapter 1
tax’ means the sum of the regular tax li-
ability for the taxable year and the tax im-
posed by section 55 for the taxable year,
reduced by the sum of the credits allowable
under this part for the taxable year (other
than under section 34 and other than the
productive equipment credit).
‘‘(C) PRODUCTIVE EQUIPMENT CREDIT.—
For purposes of this paragraph, the term ‘pro-
ductive equipment credit’ means the credit al-
lowable under subsection (a) by reason of sec-
tion 48(c).’’
(2) Paragraph (2) of section 55(c) of such Code
is amended to read as follows:
‘‘(2) CROSS REFERENCES.—
‘‘(A) For provisions providing that certain credits
are not allowable against the tax imposed by this
section, see sections 26(a), 28(d)(2), 29(b)(5), and
38(c).
‘‘(B) For provision allowing manufacturing and
other productive equipment credit against the tax
imposed by this section, see section 38(c)(3).’’
(d) TECHNICAL AMENDMENTS.—
(1) Clause (ii) of section 49(a)(1)(C) of such
Code is amended by inserting ‘‘or qualified manufac-
turing and productive equipment property’’ after
‘‘energy property’’.
(2) Subparagraph (E) of section 50(a)(2) of
such Code is amended by inserting ‘‘or 48(c)(5)’’ 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 manufac-
turing and productive equipment property
which is 3-year property (within the meaning 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 of such Code is
amended by striking the item relating to section 48
and inserting the following:
‘‘Sec. 48. Other credits.’’
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to—
(1) property acquired by the taxpayer after
March 31, 1993, and
(2) property the construction, reconstruction, or
erection of which is completed by the taxpayer after
March 31, 1993, but only to the extent of the basis
thereof attributable to construction, reconstruction,
or erection after such date.
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