[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5012 Introduced in House (IH)]







106th CONGRESS
  2d Session
                                H. R. 5012

   To amend the Internal Revenue Code of 1986 to provide an enhanced 
     research credit for the development of smart gun technologies.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 27, 2000

 Mr. Barr of Georgia 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 provide an enhanced 
     research credit for the development of smart gun technologies.

    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 ``Firearms Safety Research and 
Development Act of 2000''.

SEC. 2. ENHANCED RESEARCH CREDIT FOR DEVELOPMENT OF SMART GUN 
              TECHNOLOGIES.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business related 
credits) is amended by inserting after section 45C the following new 
section:

``SEC. 45D. RESEARCH EXPENSES FOR SMART GUN TECHNOLOGIES.

    ``(a) General Rule.--For purposes of section 38, in the case of a 
taxpayer who is a Federal firearms licensee, the smart gun technology 
credit determined under this section for the taxable year is an amount 
equal to 30 percent of the excess of--
            ``(1) the smart gun technology expenses for the taxable 
        year, over
            ``(2) the base amount.
    ``(b) Smart Gun Technology Expenses; Base Amount.--For purposes of 
this section--
            ``(1) Smart gun technology expenses.--
                    ``(A) In general.--Except as otherwise provided in 
                this paragraph, the term `smart gun technology 
                expenses' means the amounts which are paid or incurred 
                by the taxpayer during the taxable year which would be 
                described in subsection (b) of section 41 if such 
                subsection were applied with the modifications set 
                forth in subparagraph (B).
                    ``(B) Modifications.--For purposes of subparagraph 
                (A), subsection (b) of section 41 shall be applied--
                            ``(i) by substituting `smart gun technology 
                        research' for `qualified research' each place 
                        it appears in paragraphs (2) and (3) of such 
                        subsection, and
                            ``(ii) by substituting `100 percent' for 
                        `65 percent' in paragraph (3)(A) of such 
                        subsection.
                    ``(C) Exclusion for amounts funded by grants, 
                etc.--The term `smart gun technology expenses' shall 
                not include any amount to the extent such amount is 
                funded by any grant, contract, or otherwise by another 
                person (or any governmental entity).
                    ``(D) Special rule.--For purposes of this 
                paragraph, section 41 shall be deemed to remain in 
                effect for periods after June 30, 2004.
            ``(2) Base amount.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term `base amount' means the 
                amount which would be the base amount in section 41(c) 
                if such section were applied by substituting `smart gun 
                technology research' for `qualified research' each 
                place it appears.
                    ``(B) Base amount is zero for 3 years.--The base 
                amount shall be zero for purposes of determining the 
                amount of credit for taxable years beginning in 2001, 
                2002, or 2003.
    ``(c) Smart Gun Technology Research.--For purposes of this 
section--
            ``(1) In general.--The term `smart gun technology research' 
        means qualified research (as defined in section 41(d)) for the 
        purpose of developing smart gun technologies for firearms.
            ``(2) Smart gun technology.--The term `smart gun 
        technology' means any technology (other than a simple 
        mechanical lock) which is designed--
                    ``(A) to prevent a firearm from being fired by any 
                individual other than an authorized user of the 
                firearm, and
                    ``(B) to convert the firearm from the inoperable 
                condition to the operable condition in less than 1 
                second after contact with either the firearm or the 
arming device of an authorized user.
        For purposes of the preceding sentence, the term `authorized 
        user' means, with respect to a firearm, the owner of the 
        firearm and any individual lawfully authorized by such owner to 
        operate the firearm.
    ``(d) Federal Firearms Licensee.--For purposes of this section, the 
term `Federal firearms licensee' means any person holding a license 
under chapter 44 of title 18, United States Code, other than a licensed 
collector.
    ``(e) Coordination With Credit For Increasing Research 
Expenditures.--
            ``(1) In general.--Except as provided in paragraph (2), any 
        smart gun technology expenses for a taxable year to which an 
        election under this section applies shall not be taken into 
        account for purposes of determining the credit allowable under 
        section 41 for such taxable year.
            ``(2) Expenses included in determining base period research 
        expenses.--Smart gun technology expenses for any taxable year 
        shall be taken into account in determining base period research 
        expenses for purposes of applying section 41 to subsequent 
        taxable years.
    ``(f) Special Rules.--
            ``(1) Certain rules made applicable.--Rules similar to the 
        rules of paragraphs (1) and (2) of section 41(f) shall apply 
        for purposes of this section.
            ``(2) Election.--This section shall apply to any taxpayer 
        for any taxable year only if such taxpayer elects (at such time 
        and in such manner as the Secretary may by regulations 
        prescribe) to have this section apply for such taxable year.''
    (b) Denial of Double Benefit.--Section 280C of such Code (relating 
to certain expenses for which credits are allowable) is amended by 
adding at the end the following new subsection:
    ``(d) Credit for Smart Gun Technology Expenses.--
            ``(1) In general.--No deduction shall be allowed for that 
        portion of the smart gun technology expenses (as defined in 
        section 45D(b)) otherwise allowable as a deduction for the 
        taxable year which is equal to the amount of the credit 
        allowable for the taxable year under section 45D (determined 
        without regard to section 38(c) thereof).
            ``(2) Similar rule where taxpayer capitalizes rather than 
        deducts expenses.--If--
                    ``(A) the amount of the credit allowable for the 
                taxable year under section 45D (determined without 
                regard to section 38(c)), exceeds
                    ``(B) the amount allowable as a deduction for the 
                taxable year for smart gun technology expenses 
                (determined without regard to paragraph (1)),
        the amount chargeable to capital account for the taxable year 
        for such expenses shall be reduced by the amount of such 
        excess.
            ``(3) Controlled groups.--In the case of a corporation 
        which is a member of a controlled group of corporations (within 
        the meaning of section 41(f)(5)) or a trade or business which 
        is treated as being under common control with other trades or 
        business (within the meaning of section 41(f)(1)(B)), this 
        subsection shall be applied under rules prescribed by the 
        Secretary similar to the rules applicable under subparagraphs 
        (A) and (B) of section 41(f)(1).''.
    (c) Credit Made Part of General Business Credit.--
            (1) In general.--Subsection (b) of section 38 of such Code 
        (relating to current year business credit) is amended by 
        striking ``plus'' at the end of paragraph (11), by striking the 
        period at the end of paragraph (12) and inserting ``, plus'', 
        and by adding at the end thereof the following new paragraph:
            ``(13) in the case of a taxpayer who is a Federal firearms 
        licensee (as defined in section 45D(d)), the smart gun 
        technology credit determined under section 45D(a).''.
            (2) Limitation on carryback.--Subsection (d) of section 39 
        of such Code is amended by adding at the end the following new 
        paragraph:
            ``(9) No carryback of smart gun technology credit before 
        effective date.--No portion of the unused business credit for 
        any taxable year which is attributable to the credit determined 
        under section 45D may be carried back to any taxable year 
        ending before the date of the enactment of section 45D.''.
            (3) Deduction for certain unused business credits.--
        Subsection (c) of section 196 of such Code is amended by 
        striking ``and'' at the end of paragraph (7), by striking the 
        period at the end of paragraph (8) and inserting ``, and'', and 
        by adding after paragraph (8) the following new paragraph:
            ``(9) the smart gun technology credit determined under 
        section 45D.''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of such Code is amended by 
inserting after the item relating to section 45C the following new 
item:

                              ``Sec. 45D. Research expenses for smart 
                                        gun technologies.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred after December 31, 2000, in taxable 
years ending after such date.

SEC. 3. FIREARMS TAX NOT TO APPLY TO COST OF SMART GUN TECHNOLOGY.

    (a) In General.--Section 4181 of the Internal Revenue Code of 1986 
(relating to imposition of tax on firearms) is amended by adding at the 
end the following new sentence:
``The price taken into account under the preceding sentence shall not 
include so much of the price of the firearm as is attributable to any 
smart gun technology (as defined in section 45D(c)(2)) of such 
firearm.''
    (b) Effective Date.--The amendment made by this section shall take 
effect on January 1, 2001.
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