[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5497 Introduced in House (IH)]







106th CONGRESS
  2d Session
                                H. R. 5497

 To amend the Internal Revenue Code of 1986 to allow a credit against 
    income tax for certain audio or video postproduction equipment.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 18, 2000

   Mr. Weller (for himself, Mr. Foley, Mr. Becerra, Mr. Matsui, Mr. 
 Ramstad, Mr. English, Mr. Rogan, Mr. Sessions, Mr. Sensenbrenner, Mr. 
 Lewis of Georgia, Mr. Coyne, Mrs. Maloney of New York, Mrs. Jones of 
Ohio, Mr. Waxman, Mr. Condit, and Mr. Berman) 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 allow a credit against 
    income tax for certain audio or video postproduction equipment.

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

SECTION 1. CREDIT FOR BUSINESS USE OF AUDIO AND VIDEO POSTPRODUCTION 
              EQUIPMENT.

    (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 adding at the end the following new section:

``SEC. 45D. AUDIO AND VIDEO POSTPRODUCTION EQUIPMENT.

    ``(a) In General.--For purposes of section 38, the postproduction 
equipment credit determined under this section for the taxable year is 
an amount equal to 20 percent of the excess (if any) of--
            ``(1) the aggregate basis of qualified postproduction 
        equipment placed in service by the taxpayer during the taxable 
        year, over
            ``(2) an amount equal to 5 percent of the taxpayer's 
        average annual gross receipts from digital postproduction 
        services for the 4 preceding taxable years.
    ``(b) Definitions.--For purposes of this section--
            ``(1) Qualified postproduction equipment.--The term 
        `qualified postproduction equipment' means any tangible 
        personal property (not including a building and its structural 
        components) but only if--
                    ``(A) it is reasonable to expect that at least 50 
                percent of the use of such property during each of the 
                first 3 years after being placed in service by the 
                taxpayer will be--
                            ``(i) to provide digital postproduction 
                        services, or
                            ``(ii) to maintain, operate, control, 
                        regulate, repair, measure, or test property 
                        used to provide digital postproduction 
                        services, and
                    ``(B) section 168 applies to such property.
            ``(2) Postproduction services.--The term `postproduction 
        services' means--
                    ``(A) services to transform, manipulate, assemble, 
                and duplicate visual moving images and synchronous 
                sound previously captured during principal photography,
                    ``(B) the creation of visual images and synchronous 
                sound to be used with visual moving images and sound 
                captured during principal photography,
                    ``(C) animation services, or
                    ``(D) the providing of equipment to perform 
                services referred to in any of the preceding 
                subparagraphs.
            ``(3) Digital postproduction services.--The term `digital 
        postproduction services' means postproduction services where--
                    ``(A) the customer delivery requirement to meet the 
                ATSC compression format restraints is one of the 23 
                specified image formats listed in the Advanced 
                Television Systems Committee Digital Television 
                Standard Table 3, or
                    ``(B) program audio has more than 2 channel sound 
                that will be downmixed through use of the AC3 
                compression standard specified by the Advanced 
                Television Systems Committee Digital Television 
                Standard.
    ``(c) Recapture.--Rules similar to the rules of section 50(a) shall 
apply to the credit determined under this section; except that--
            ``(1) the recapture percentage shall be 100 percent if the 
        property is used to provide services on any production subject 
        to the record keeping requirements of section 2257 of title 18, 
        United States Code (relating to record keeping requirements 
        with respect to films, etc., with sexually explicit content), 
        and
            ``(2) if, during any of the first 3 years after the 
        property is placed in service, less than 50 percent of the use 
        of the property is for purposes referred to in subsection 
        (b)(1)(A), such property shall cease to be qualified 
        postproduction equipment as of the beginning of the earliest 
        such year.
    ``(d) Special Rules.--
            ``(1) Property used outside united states.--No credit shall 
        be determined under this section with respect to property which 
        is used predominantly outside the United States.
            ``(2) Certain rules to apply.--Rules similar to the rules 
        of subsections (c)(6), (f), and (g) of section 41 shall apply 
        for purposes of this section.
            ``(3) Reduction in basis.--For purposes of this subtitle, 
        if a credit is determined under this section with respect to 
        any property, the basis of such property shall be reduced by 
        the amount of the credit so determined.''
    (b) Conforming Amendments.--
            (1) Section 38(b) of such Code is amended--
                    (A) by striking ``plus'' at the end of paragraph 
                (11),
                    (B) by striking the period at the end of paragraph 
                (12), and inserting ``, plus'', and
                    (C) by adding at the end the following new 
                paragraph:
            ``(13) the postproduction credit determined under section 
        45D.''
            (2) Subsection (d) of section 39 of such Code (relating to 
        carryback and carryforward of unused credits) is amended by 
        adding at the end the following new paragraph:
            ``(9) No carryback of section 45d credit before january 1, 
        2001.--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 a taxable year beginning 
        before January 1, 2001.''
            (3) The table of sections for subpart D of part IV of 
        subchapter A of chapter 1 of such Code is amended by adding at 
        the end the following new item:

                              ``Sec. 45D. Audio and video 
                                        postproduction equipment.''
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2000.
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