[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 1303 Introduced in Senate (IS)]







104th CONGRESS
  1st Session
                                S. 1303

 To amend the Internal Revenue Code of 1986 to provide tax credits for 
       Indian investment and employment, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            October 10, 1995

 Mr. McCain (for himself, Mr. Baucus, Mr. Bingaman, Mr. Campbell, Mr. 
Inouye, Mr. Kyl, Mr. Stevens, and Mr. Thomas) 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 tax credits for 
       Indian investment and employment, 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 ``Indian Reservation Jobs and 
Investment Act of 1995''.

SEC. 2. INVESTMENT TAX CREDIT FOR PROPERTY ON INDIAN RESERVATIONS.

    (a) Allowance of Indian Reservation Credit.--Section 46 of the 
Internal Revenue Code of 1986 (relating to investment credits) is 
amended by striking ``and'' at the end of paragraph (2), by striking 
the period at the end of paragraph (3) and inserting ``, and'', and by 
adding after paragraph (3) the following new paragraph:
            ``(4) the Indian reservation credit.''.
    (b) Amount of Indian Reservation Credit.--
            (1) In general.--Section 48 of such Code (relating to the 
        energy credit and the reforestation credit) is amended by 
        adding after subsection (b) the following new subsection:
    ``(c) Indian Reservation Credit.--
            ``(1) In general.--For purposes of section 46, the Indian 
        reservation credit for any taxable year is the Indian 
        reservation percentage of the qualified investment in qualified 
        Indian reservation property placed in service during such 
        taxable year, determined in accordance with the following 
        table:

``In the case of qualified Indian   The Indian reservation percentage 
        reservation property which          is--
        is--
    Reservation personal property.................                   10
    New reservation construction property.........                   15
    Reservation infrastructure investment.........                   15
            ``(2) Qualified investment in qualified Indian reservation 
        property defined.--For purposes of this subpart--
                    ``(A) In general.--The term `qualified Indian 
                reservation property' means property--
                            ``(i) which is--
                                    ``(I) reservation personal 
                                property;
                                    ``(II) new reservation construction 
                                property; or
                                    ``(III) reservation infrastructure 
                                investment; and
                            ``(ii) not acquired (directly or 
                        indirectly) by the taxpayer from a person who 
                        is related to the taxpayer (within the meaning 
                        of section 465(b)(3)(C)).
                The term `qualified Indian reservation property' does 
                not include any property (or any portion thereof) 
                placed in service for purposes of conducting or housing 
                class I, II, or III gaming (as defined in section 4 of 
                the Indian Gaming Regulatory Act (25 U.S.C. 2703)).
                    ``(B) Qualified investment.--The term `qualified 
                investment' means--
                            ``(i) in the case of reservation 
                        infrastructure investment, the amount expended 
                        by the taxpayer for the acquisition or 
                        construction of the reservation infrastructure 
                        investment; and
                            ``(ii) in the case of all other qualified 
                        Indian reservation property, the taxpayer's 
                        basis for such property.
                    ``(C) Reservation personal property.--The term 
                `reservation personal property' means qualified 
                personal property which is used by the taxpayer 
                predominantly in the active conduct of a trade or 
                business within an Indian reservation.
        Property shall not be treated as `reservation personal 
        property' if it is used or located outside the Indian 
        reservation on a regular basis.
                    ``(D) Qualified personal property.--The term 
                `qualified personal property' means property--
                            ``(i) for which depreciation is allowable 
                        under section 168;
                            ``(ii) which is not--
                                    ``(I) nonresidential real property;
                                    ``(II) residential rental property; 
                                or
                                    ``(III) real property which is not 
                                described in (I) or (II) and which has 
                                a class life of more than 12.5 years.
                        For purposes of this subparagraph, the terms 
                        `nonresidential real property', `residential 
                        rental property', and `class life' have the 
                        respective meanings given such terms by section 
                        168.
                    ``(E) New reservation construction property.--The 
                term `new reservation construction property' means 
                qualified real property--
                            ``(i) which is located in an Indian 
                        reservation;
                            ``(ii) which is used by the taxpayer 
                        predominantly in the active conduct of a trade 
                        or business within an Indian reservation; and
                            ``(iii) which is originally placed in 
                        service by the taxpayer.
                    ``(F) Qualified real property.--The term `qualified 
                real property' means property for which depreciation is 
                allowable under section 168 and which is described in 
                clause (I), (II), or (III) of subparagraph (D)(ii).
                    ``(G) Reservation infrastructure investment.--
                            ``(i) In general.--The term `reservation 
                        infrastructure investment' means qualified 
                        personal property or qualified real property 
                        which--
                                    ``(I) benefits the tribal 
                                infrastructure;
                                    ``(II) is available to the general 
                                public; and
                                    ``(III) is placed in service in 
                                connection with the taxpayer's active 
                                conduct of a trade or business within 
                                an Indian reservation.
                            ``(ii) Property may be located outside the 
                        reservation.--Qualified personal property and 
                        qualified real property used or located outside 
                        an Indian reservation shall be reservation 
                        infrastructure investment only if its purpose 
                        is to connect to existing tribal infrastructure 
                        in the reservation, and shall include, but not 
                        be limited to, roads, power lines, water 
                        systems, railroad spurs, and communications 
                        facilities.
                    ``(H) Coordination with other credits.--The term 
                `qualified Indian reservation property' shall not 
                include any property with respect to which the energy 
                credit or the rehabilitation credit is allowed.
            ``(3) Real estate rentals.--For purposes of this section, 
        the rental to others of real property located within an Indian 
        reservation shall be treated as the active conduct of a trade 
        or business in an Indian reservation.
            ``(4) Indian reservation defined.--For purposes of this 
        subpart, the term `Indian reservation' means a reservation, as 
        defined in--
                    ``(A) section 3(d) of the Indian Financing Act of 
                1974 (25 U.S.C. 1452(d)); or
                    ``(B) section 4(10) of the Indian Child Welfare Act 
                of 1978 (25 U.S.C. 1903(10)).
            ``(5) Limitation based on unemployment.--
                    ``(A) General rule.--The Indian reservation credit 
                allowed under section 46 for any taxable year shall 
                equal--
                            ``(i) if the Indian unemployment rate on 
                        the applicable Indian reservation for which the 
                        credit is sought exceeds 300 percent of the 
                        national average unemployment rate at any time 
                        during the calendar year in which the property 
                        is placed in service or during the immediately 
                        preceding 2 calendar years, 100 percent of such 
                        credit;
                            ``(ii) if such Indian unemployment rate 
                        exceeds 150 percent but not 300 percent, 50 
                        percent of such credit; and
                            ``(iii) if such Indian unemployment rate 
                        does not exceed 150 percent, 0 percent of such 
                        credit.
                    ``(B) Special rule for large projects.--In the case 
                of a qualified Indian reservation property which has 
                (or is a component of a project which has) a projected 
                construction period of more than 2 years or a cost of 
                more than $1,000,000, subparagraph (A) shall be applied 
                by substituting `during the earlier of the calendar 
                year in which the taxpayer enters into a binding 
                agreement to make a qualified investment or the first 
                calendar year in which the taxpayer has expended at 
                least 10 percent of the taxpayer's qualified 
                investment, or the preceding calendar year' for `during 
                the calendar year in which the property is placed in 
                service or during the immediately preceding 2 calendar 
                years'.
                    ``(C) Determination of Indian unemployment.--For 
                purposes of this paragraph, with respect to any Indian 
                reservation, the Indian unemployment rate shall be 
                based upon Indians unemployed and able to work, and 
                shall be certified by the Secretary of the Interior.
            ``(6) Coordination with nonrevenue laws.--Any reference in 
        this subsection to a provision not contained in this title 
        shall be treated for purposes of this subsection as a reference 
        to such provision as in effect on the date of the enactment of 
        this paragraph.''.
            (2) Lodging to qualify.--Paragraph (2) of section 50(b) of 
        such Code (relating to property used for lodging) is amended--
                    (A) by striking ``and'' at the end of subparagraph 
                (C);
                    (B) by striking the period at the end of 
                subparagraph (D) and inserting ``; and'' and
                    (C) by adding at the end the following 
                subparagraph:
                    ``(E) new reservation construction property.''.
    (c) Recapture.--Subsection (a) of section 50 of such Code (relating 
to recapture in case of dispositions, etc.), is amended by adding at 
the end the following new paragraph:
            ``(6) Special rules for indian reservation property.--
                    ``(A) In general.--If, during any taxable year, 
                property with respect to which the taxpayer claimed an 
                Indian reservation credit--
                            ``(i) is disposed of; or
                            ``(ii) in the case of reservation personal 
                        property--
                                    ``(I) otherwise ceases to be 
                                investment credit property with respect 
                                to the taxpayer; or
                                    ``(II) is removed from the Indian 
                                reservation, converted, or otherwise 
                                ceases to be Indian reservation 
                                property, the tax under this chapter 
                                for such taxable year shall be 
                                increased by the amount described in 
                                subparagraph (B).
                    ``(B) Amount of increase.--The increase in tax 
                under subparagraph (A) shall equal the aggregate 
                decrease in the credits allowed under section 38 by 
                reason of section 48(c) for all prior taxable years 
                which would have resulted had the qualified investment 
                taken into account with respect to the property been 
                limited to an amount which bears the same ratio to the 
                qualified investment with respect to such property as 
                the period such property was held by the taxpayer bears 
                to the applicable recovery period under section 168(g).
                    ``(C) Coordination with other recapture 
                provisions.--In the case of property to which this 
                paragraph applies, paragraph (1) shall not apply and 
                the rules of paragraphs (3), (4), and (5) shall 
                apply.''.
    (d) Basis Adjustment To Reflect Investment Credit.--Paragraph (3) 
of section 50(c) of such Code (relating to basis adjustment to 
investment credit property) is amended by striking ``energy credit or 
reforestation credit'' and inserting ``energy credit, reforestation 
credit, or Indian reservation credit other than with respect to any 
expenditure for new reservation construction property''.
    (e) Certain Governmental Use Property To Qualify.--Paragraph (4) of 
section 50(b) of such Code (relating to property used by governmental 
units or foreign persons or entities) is amended by redesignating 
subparagraphs (D) and (E) as subparagraphs (E) and (F), respectively, 
and inserting after subparagraph (C) the following new subparagraph:
                    ``(D) Exception for reservation infrastructure 
                investment.--This paragraph shall not apply for 
                purposes of determining the Indian reservation credit 
                with respect to reservation infrastructure 
                investment.''.
    (f) Application of At-Risk Rules.--Subparagraph (C) of section 
49(a)(1) of such Code is amended by striking ``and'' at the end of 
clause (ii), by striking the period at the end of clause (iii) and 
inserting ``, and'', and by adding at the end the following new clause:
                            ``(iv) the qualified investment in 
                        qualified Indian reservation property.''.
    (g) Clerical Amendments.--
            (1) Section 48 of such Code is amended by striking the 
        heading and inserting the following:

``SEC. 48. ENERGY CREDIT; REFORESTATION CREDIT; INDIAN RESERVATION 
              CREDIT.''.

            (2) 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. Energy credit; reforestation credit; Indian reservation 
                            credit.''.
    (h) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 1995.
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