< Back to S. 1109 (103rd Congress, 1993–1994)

Text of the Investment Tax Incentive Act of 1993

This bill was introduced on June 15, 1993, in a previous session of Congress, but was not enacted. The text of the bill below is as of Jun 15, 1993 (Introduced).

Source: GPO

S 1109 IS

103d CONGRESS

1st Session

S. 1109

To amend the Internal Revenue Code of 1986 to provide that the deduction for depreciation shall be computed on a neutral cost recovery basis, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JUNE 15, 1993

Mr. PRESSLER introduced the following bill; which was read twice and referred to the Committee on Finance


A BILL

To amend the Internal Revenue Code of 1986 to provide that the deduction for depreciation shall be computed on a neutral cost recovery basis, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ‘Investment Tax Incentive Act of 1993’.

SEC. 2. DEPRECIATION ADJUSTMENT FOR CERTAIN PROPERTY PLACED IN SERVICE IN TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 1992.

    (a) IN GENERAL- Section 168 of the Internal Revenue Code of 1986 (relating to accelerated cost recovery system) is amended by adding at the end thereof the following new subsection:

    ‘(j) DEDUCTION ADJUSTMENT TO ALLOW EQUIVALENT OF EXPENSING FOR CERTAIN PROPERTY PLACED IN SERVICE IN TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 1992-

      ‘(1) IN GENERAL- In the case of tangible property placed in service in a taxable year beginning after December 31, 1992, the deduction allowable under this section with respect to such property for any taxable year (after the taxable year during which the property is placed in service) shall be--

        ‘(A) the amount so allowable for such taxable year without regard to this subsection, multiplied by

        ‘(B) the applicable neutral cost recovery ratio for such taxable year.

      For purposes of subparagraph (A), paragraphs (1) and (2) of section 168(b) shall be applied by substituting ‘150 percent’ for ‘200 percent’.

      ‘(2) APPLICABLE NEUTRAL COST RECOVERY RATIO- For purposes of paragraph (1), the applicable neutral cost recovery ratio for any taxable year is the number determined by--

        ‘(A) dividing--

          ‘(i) the gross national product deflator for the calendar quarter ending in such taxable year which corresponds to the calendar quarter during which the property was placed in service by the taxpayer, by

          ‘(ii) the gross national product deflator for the calendar quarter during which the property was placed in service by the taxpayer, and

        ‘(B) then multiplying the number determined under subparagraph (A) by the number equal to 1.035 to the nth power where ‘n’ is the number of full years in the period beginning on the 1st day of the calendar quarter during which the property was placed in service by the taxpayer and ending on the day before the beginning of the corresponding calendar quarter ending during such taxable year.

      The applicable neutral cost recovery ratio shall not be taken into account unless it is greater than 1. The applicable neutral cost recovery ratio shall be rounded to the nearest one-tenth of 1 percent.

      ‘(3) GROSS NATIONAL PRODUCT DEFLATOR- For purposes of paragraph (2), the gross national product deflator for any calendar quarter is the implicit price deflator for the gross national product for such quarter (as shown in the first revision thereof).

      ‘(4) ELECTION NOT TO HAVE SUBSECTION APPLY- This subsection shall not apply to any property if the taxpayer elects not to have this subsection apply to such property. Such an election, once made, shall be irrevocable.’

    (b) MINIMUM TAX TREATMENT- Paragraph (1) of section 56(a) of such Code is amended by adding at the end thereof the following new subparagraph:

        ‘(E) USE OF NEUTRAL COST RECOVERY RATIO- In the case of tangible property placed in service in a taxable year beginning after December 31, 1992, the deduction allowable under this paragraph with respect to such property for any taxable year (after the taxable year during which the property is placed in service) shall be--

          ‘(i) the amount so allowable for such taxable year without regard to this subparagraph, multiplied by

          ‘(ii) the applicable neutral cost recovery ratio for such taxable year (as determined under section 168(j)).

        This subparagraph shall not apply to any property with respect to which there is an election in effect not to have section 168(j) apply.’

    (c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 1992.

SEC. 3. REPEAL OF SPECIAL DEPRECIATION RULES APPLICABLE UNDER THE ADJUSTED CURRENT EARNINGS PROVISIONS OF THE MINIMUM TAX.

    (a) IN GENERAL- Subparagraph (A) of section 56(g)(4) of the Internal Revenue Code of 1986 (relating to adjustments) is amended to read as follows:

        ‘(A) DEPRECIATION-

          ‘(i) IN GENERAL- The depreciation deduction with respect to any property for any taxable year beginning after December 31, 1992, shall be the same as the depreciation deduction allowable in computing alternative minimum taxable income for such taxable year.

          ‘(ii) BASIS RULES- Notwithstanding clause (i), the adjusted basis of any depreciable property held by the taxpayer as of the beginning of the taxpayer’s first taxable year beginning after December 31, 1992, shall be determined as if the provisions of clause (i) had also applied to taxable years beginning in 1990, 1991, and 1992.

          ‘(iii) LOST BASIS RECOVERED OVER 5 YEARS- The amount determined under clause (iv) shall be allowed as a deduction ratably over the 60-month period beginning with the first month of the taxpayer’s first taxable year beginning after December 31, 1992.

          ‘(iv) AMOUNT OF LOST BASIS- The amount determined under this clause is the excess of--

            ‘(I) the aggregate adjusted bases of depreciable property held by the taxpayer as of the beginning of the taxpayer’s first taxable year beginning after December 31, 1992, which would have been determined (as of such time) under clause (i) without regard to clause (ii), over

            ‘(II) the aggregate adjusted bases of such property (as of such time) as determined under the rules of clause (ii).’

    (b) EFFECTIVE DATE- The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 1992.