[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 1109 Introduced in Senate (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.

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