[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 858 Introduced in Senate (IS)]

103d CONGRESS
  1st Session
                                 S. 858

 To amend the Internal Revenue Code of 1986 to modify the alternative 
              minimum tax system, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

               April 30 (legislative day, April 19), 1993

Mr. Boren (for himself and Mr. Danforth) 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 modify the alternative 
              minimum tax system, 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; AMENDMENT OF 1986 CODE.

    (a) Short Title.--This Act may be cited as the ``Minimum Tax Reform 
Act of 1993''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.

SEC. 2. DEPRECIATION ADJUSTMENT USED IN COMPUTING ALTERNATIVE MINIMUM 
              TAXABLE INCOME.

    (a) 150-Percent Declining Balance Method.--
            (1) In general.--Paragraph (1) of section 56(a) (relating 
        to depreciation) is amended to read as follows:
            ``(1) Depreciation.--
                    ``(A) 150-percent declining balance method.--
                            ``(i) In general.--In the case of property 
                        not described in clause (ii), the depreciation 
                        deduction allowable under section 167 shall be 
                        determined as provided in section 168(a), 
                        except that the applicable depreciation method 
                        under section 168(a)(1) shall be--
                                    ``(I) the 150-percent declining 
                                balance method,
                                    ``(II) switching to the straight 
                                line method for the 1st taxable year 
                                for which using the straight line 
                                method with respect to the adjusted 
                                basis as of the beginning of the year 
                                will yield a higher allowance.
                            ``(ii) Property not using 150-percent 
                        method.--Property described in this clause is 
                        section 1250 property (as defined in section 
                        1250(c)) or any other property if the 
                        depreciation deduction determined under section 
                        168 with respect to such other property for 
                        purposes of the regular tax is determined by 
                        using the straight line method.
                    ``(B) Normalization rules.--With respect to public 
                utility property described in section 168(i)(10), the 
                Secretary shall prescribe the requirements of a 
                normalization method of accounting for this section.''.
            (2) No adjustment for adjusted current earnings system.--
        Clause (i) of section 56(g)(4)(A) (relating to depreciation 
        adjustments for computing adjusted current earnings) is amended 
        by adding at the end the following new sentence: ``The 
        preceding sentence shall not apply to property placed in 
        service in taxable years beginning after December 31, 1992, and 
        the depreciation deduction with respect to such property shall 
        be determined under the rules of subsection (a)(1)(A).''.
    (b) Exception for Environmental Property.--
            (1) In general.--Section 56(a)(1) (relating to depreciation 
        adjustments), as amended by subsection (a)(1), is amended by 
        adding at the end the following new subparagraph:
                    ``(C) Environmental improvement assets.--This 
                paragraph shall not apply to environmental improvement 
                assets (as defined in section 59(k)).''.
            (2) Environmental improvement assets.--Section 59 (relating 
        to definition and special rules) is amended by adding at the 
        end the following new subsection:
    ``(k) Environmental Improvement Assets.--
            ``(1) In general.--For purposes of section 56(a)(1)(B), the 
        term `environmental improvement asset' means tangible property 
        which is--
                    ``(A) of a character subject to the allowance for 
                depreciation provided in section 167;
                    ``(B) used for, or is functionally related to 
                property used for, one or more of the following 
                purposes--
                            ``(i) source reduction,
                            ``(ii) solid waste minimization,
                            ``(iii) waste conversion or recycling,
                            ``(iv) reduction of environmental hazards,
                            ``(v) compliance with environmental 
                        permits, rules, and similar requirements, 
                        including requirements with respect to noise 
                        pollution such as the reduction of aircraft 
                        noise level to stage 3 noise level (as defined 
                        in 14 CFR Sec. 36.1(f)(5)),
                            ``(vi) prevention, containment or control 
                        of unplanned releases, or
                            ``(vii) the manufacture, distribution and 
                        sale of alternate fuels and blending stocks or 
                        fuel additives for reformulated fuels, and
                    ``(C) except in the case of property used for the 
                reduction of aircraft noise levels described in 
                subparagraph (B)(v), located and used exclusively in 
                the United States during the taxable year.
        If only a portion of property described in subparagraphs (A) 
        and (C) is described in subparagraph (B), such portion shall be 
        treated as an environmental improvement asset.
            ``(2) Other definitions.--For purposes of this subsection--
                    ``(A) Source reduction.--The term `source 
                reduction' means reduction of the amount of regulated 
                substances or other pollutants from fixed or mobile 
                sources released into the environment if such reduction 
                reduces hazards to public health or environment.
                    ``(B) Solid waste minimization.--The term `solid 
                waste minimization' means the reduction in the 
                generation of, or the recovery of commercially usable 
                products from, residual materials which are classified 
                as, or which if disposed would be classified as, solid 
                wastes (within the meaning of the Resource Conservation 
                and Recovery Act).
                    ``(C) Waste conversion or recycling.--The term 
                `waste conversion or recycling' means the processing or 
                conversion of liquid, solid, or gaseous wastes into 
                fuel, energy, or other commercially usable products, 
                and the production of such products if production 
                occurs at the same facility as the conversion.
                    ``(D) Abatement of environmental hazards.--The term 
                `abatement of environmental hazards' includes the 
                abatement, reduction, monitoring, or stabilization of 
                potential human exposure to toxic chemicals, hazardous 
                or extremely hazardous substances, or harmful 
                radiation.
                    ``(E) Unplanned releases.--The term `unplanned 
                releases' means any release of regulated substances 
                (except federally permitted releases), including indoor 
                releases.
                    ``(F) Regulated substance.--The term `regulated 
                substance' includes any substance the release or 
                emission of which is prohibited, limited, or regulated 
                by Federal or State law or by Federal regulations (as 
                determined without regard to whether a particular 
                release would have been prohibited or limited).
                    ``(G) Release.--The term `release' means any 
                spilling, leaking, pouring, discharging, escaping, 
                dumping, or disposing into the environment, including 
                the abandonment or discarding of barrels or other 
                closed receptacles.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service in taxable years beginning after 
December 31, 1992.

SEC. 3. PRE-1993 MINIMUM TAX ALLOWED AS CREDIT AGAINST MINIMUM TAX FOR 
              CERTAIN TAXPAYERS.

    (a) In General.--Section 53(c) (relating to limitation) is amended 
by adding at the end the following new paragraph:
            ``(2) Special rule for certain taxpayers with pre-1993 
        unused minimum tax credits.--
                    ``(A) In general.--If a taxpayer had an unused 
                minimum tax credit for at least 3 of the taxable years 
                in the testing period, then, subject to the limitation 
                of subparagraph (B), the limitation under paragraph (1) 
                for any taxable year following the testing period shall 
                in no event be less than 50 percent of the excess (if 
                any) of--
                                    ``(I) the tentative minimum tax for 
                                such taxable year, over
                                    ``(II) the sum of the credits 
                                allowable under subparts A, B, D, E, 
                                and F of this part.
                    ``(B) Limitation.--
                            ``(i) In general.--The aggregate increases 
                        in the limitation under paragraph (1) by reason 
                        of subparagraph (A) shall not exceed the pre-
                        1993 unused minimum tax credits.
                            ``(ii) Ordering rule.--For purposes of 
                        clause (i), any credit under subsection (a) for 
                        taxable years following the testing period 
                        shall be treated as allocated to pre-1993 
                        unused minimum tax credits until such credits 
                        are used up.
                    ``(C) Definitions.--For purposes of this 
                paragraph--
                            ``(i) Testing period.--The term `testing 
                        period' means the 5-taxable year period ending 
                        with the taxpayer's last taxable year beginning 
                        in 1992.
                            ``(ii) Pre-1993 unused minimum tax 
                        credits.--The term `pre-1993 unused minimum tax 
                        credits' means the credits allowable under 
                        subsection (a) remaining unused as of the close 
                        of the testing period.''.
    (b) Conforming Amendments.--Section 53(c) (as in effect before the 
amendment made by subsection (a)) is amended--
            (1) by striking ``The'' and inserting:
            ``(1) In general.--Except as provided in paragraph (2), 
        the'', and
            (2) by redesignating paragraphs (1) and (2) as 
        subparagraphs (A) and (B).
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1992.

SEC. 4. ALLOWANCE OF GENERAL BUSINESS CREDIT AGAINST PORTION OF MINIMUM 
              TAX.

    (a) In General.--Subparagraph (A) of section 38(c)(1) (relating to 
limitation based on amount of tax) is amended by inserting ``75 percent 
of'' before ``the tentative minimum tax''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 1992.

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