[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5278 Introduced in House (IH)]







107th CONGRESS
  2d Session
                                H. R. 5278

 To amend the Internal Revenue Code of 1986 to encourage investment in 
          high productivity property, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 26, 2002

Mr. English (for himself and Mr. Neal of Massachusetts) 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 encourage investment in 
          high productivity property, 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 ``High Productivity and Economic 
Growth Act of 2002''.

SEC. 2. ADOPTION OF THE HIGH PRODUCTIVITY INVESTMENT DEDUCTION.

    (a) In General.--Part VI of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to itemized deductions for 
individuals and corporations) is amended by inserting after section 168 
the following new section:

``SEC. 168A. HIGH PRODUCTIVITY INVESTMENT DEDUCTION.

    ``(a) Treatment as Expenses.--A taxpayer may elect to treat the 
cost of any high productivity property as an expense not chargeable to 
capital account. Any cost so treated shall be allowed as a deduction in 
the taxable year in which the high productivity property is placed in 
service.
    ``(b) Definition of High Productivity Property.--
            ``(1) In general.--Except as provided in paragraph (3), the 
        term `high productivity property' means any--
                    ``(A) computer,
                    ``(B) computer related peripheral equipment,
                    ``(C) computer based machinery,
                    ``(D) electronic diagnostic equipment,
                    ``(E) electronic control equipment,
                    ``(F) other electronic, electromechanical, laser or 
                computer based equipment,
                    ``(G) computer software,
                    ``(H) equipment used in the manufacture of 
                semiconductors,
                    ``(I) high technology medical equipment,
                    ``(J) advanced technology communications equipment,
                    ``(K) optical fiber and photonics equipment,
                    ``(L) advanced environmental products,
                    ``(M) advanced life science products, or
                    ``(N) new high productivity assets.
            ``(2) Definitions.--For purposes of this subsection:
                    ``(A) Computer.--The term `computer' means a 
                programmable electronically activated device which--
                            ``(i) is capable of accepting information, 
                        applying prescribed processes to the 
                        information, and supplying the results of those 
                        processes, and
                            ``(ii) consists of a central processing 
                        unit containing extensive storage, logic, 
                        arithmetic and control capabilities.
                    ``(B) Computer related peripheral equipment.--The 
                term `computer related peripheral equipment' means any 
                auxiliary machine or other equipment (whether on-line 
                or off-line) which is designed to be placed under the 
                control of the central processing unit of a computer 
                (as determined without regard to whether such machine 
                or equipment is an integral part of other property 
                which is not a computer).
                    ``(C) Computer based machinery.--The term `computer 
                based machinery' means any machine which--
                            ``(i) cuts, forms, shapes, drills, bores, 
                        mixes, paints, seals, welds, or otherwise 
                        transforms material, or
                            ``(ii) handles, conveys, assembles, or 
                        packages materials or products,
                by responding to electronically stored information and 
                programmed commands.
                    ``(D) Electronic diagnostic equipment.--The term 
                `electronic diagnostic equipment' means equipment that 
                uses electronic components to sense or monitor 
                location, size, volume, surface characteristics, 
                pressure, temperature, speed, chemical composition, or 
                other similar characteristics.
                    ``(E) Electronic control equipment.--The term 
                `electronic control equipment' means equipment that 
                electronically controls pressure, temperature, size, 
                volume, composition purity or other similar 
                characteristics.
                    ``(F) High technology medical equipment.--The term 
                `high technology medical equipment' means any 
                electronic, electromechanical, or computer-based high 
                technology equipment used in the screening, monitoring, 
                observation, diagnosis, or treatment of patients in a 
                laboratory, medical, or hospital environment.
                    ``(G) Advanced technology communications 
                equipment.--The term `advanced technology 
                communications equipment' means equipment used in the 
                transmission or reception of voice, data, video, 
                paging, messaging, or other communications services 
                that are delivered using packet technology. A packet is 
                a unit of data, or sequence of binary digits, that is 
                routed between an origin and a destination on a packet-
                switched network.
                    ``(H) Optical fiber and photonics equipment.--The 
                term `optical fiber and photonics equipment' means 
                optical fiber and the equipment and materials used to 
                generate, manipulate and direct light particles over 
                such fiber.
                    ``(I) Advanced environmental products.--The term 
                `advanced environmental product' means any high cell 
                density ceramic or other device used for the control of 
                nitrogen oxide and particulate emissions.
                    ``(J) Advanced life sciences products.--The term 
                `advanced life sciences product' means any polymer, 
                ceramic or high-purity glass product used in biological 
                research.
                    ``(K) New high productivity assets.--
                            ``(i) In general.--The term `new high 
                        productivity assets' means any asset utilizing 
                        1 or more technological or scientific processes 
                        which were not in common commercial use before 
                        January 1, 2001.
                            ``(ii) Determinations.--The Secretary shall 
                        establish procedures pursuant to which 
                        taxpayers can seek a public ruling that a 
                        particular class of assets qualifies as new 
                        high productivity assets. The procedures shall 
                        require the Secretary to provide a 
                        determination within 90 days of receipt of a 
                        properly completed request for a public ruling.
            ``(3) Excluded property.--The term `high productivity 
        property' shall not include--
                    ``(A) an entire car, locomotive, aircraft, ship or 
                other vehicle solely because the vehicle is controlled 
                in whole or part by a computer or other electronic 
                equipment,
                    ``(B) any equipment of a kind used primarily for 
                entertainment or amusement of the user, and
                    ``(C) typewriters, calculators, copiers, 
                duplication equipment, and other similar equipment.
    ``(c) Election.-- An election under this section for any taxable 
year shall--
            ``(1) be made on an asset by asset basis, and
            ``(2) be made on the taxpayer's return of the tax imposed 
        by this chapter for the taxable year.
    ``(d) Special Rules.--
            ``(1) Cost.--For purposes of this section, the cost of 
        property does not include so much of the basis of such property 
        as is determined by reference to the basis of other property 
        held at any time by the person acquiring such property.
            ``(2) Antichurning rules.--
                    ``(A) In general.--This section shall not apply to 
                any property acquired by the taxpayer after September 
                10, 2002, if--
                            ``(i) the property was owned or used at any 
                        time during the period beginning on January 1, 
                        2001, and ending on September 10, 2002, by the 
                        taxpayer or a related person,
                            ``(ii) the property was owned or used at 
                        any time during the period described in clause 
                        (i), and, as part of the transaction, the user 
                        of the property does not change,
                            ``(iii) the taxpayer leases such property 
                        to a person (or a person related to such 
                        person) who owned or used such property at any 
                        time during the period described in clause (i), 
                        or
                            ``(iv) the property is acquired in a 
                        transaction as part of which the user of such 
                        property does not change and the property was 
                        acquired from a person to which clause (ii) or 
                        clause (iii) applies.
                    ``(B) Applicable cost recovery rules.--Section 168 
                shall apply to any property to which this section does 
                not apply by reason of this paragraph.
                    ``(C) Special rules.--For purposes of this 
                paragraph--
                            ``(i) property shall not be treated as 
                        owned before it is placed in service, and
                            ``(ii) whether the user of a property 
                        changes will be determined in accordance with 
                        regulations prescribed by the Secretary.
            ``(3) Recapture in certain cases.--The Secretary shall, by 
        regulations, provide for the recapturing the benefit under any 
        deduction allowable under subsection (a) with respect to any 
        property which is not used predominantly in a trade or business 
        at any time.
            ``(4) Alternative depreciation system applies.--The 
        election under subsection (a) may not be made with respect to 
        property which at any time during the taxable year in which 
such property is placed in service is--
                    ``(A) described in paragraph (1) of section 
                168A(g), or
                    ``(B) `listed property' `not predominantly used in 
                a qualified business use' as such terms apply for 
                purposes of paragraph (1) of 280F(b).''.
    (b) Conforming Amendment.--The table of sections for part VI of 
subchapter B of chapter 1 of such Code is amended by adding after 
section 168 the following new item:

                              ``Sec. 168A. High productivity investment 
                                        deduction.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after September 10, 2002, with 
respect to taxable years beginning after such date.

SEC. 3. 30 PERCENT EXPENSING FOR CERTAIN PROPERTY ACQUIRED AFTER 
              SEPTEMBER 10, 2001, MADE PERMANENT.

    (a) Repeal of Limitations.--
            (1) Acquisition limitation.--Section 168(k)(2) of the 
        Internal Revenue Code of 1986 is amended by striking ``, and 
        before September 11, 2004'' each place it appears in 
        subparagraphs (A)(iii) and (D)(i).
             (2) Placed in service limitation.--Subparagraph (A) of 
        section 168(k)(2) of such Code is amended by inserting ``and'' 
        at the end of clause (ii), by striking ``, and'' at the end of 
        clause (iii) and inserting a period, and by striking clause 
        (iv).
            (3) Basis limitation for certain property.--Subparagraph 
        (B) of section 168(k)(2) of such Code is amended by striking 
        clause (ii) and redesignating clause (iii) as clause (ii).
    (b) Syndications.--Subparagraph (D) of section 168(k)(2) of such 
Code (relating to special rules) is amended by adding at the end the 
following:
                            ``(iii) Syndications.--For purposes of 
                        subparagraph (A)(ii), if property--
                                    ``(I) is treated as originally 
                                placed in service after September 10, 
                                2001, either directly or by a lessor of 
                                such property or pursuant to 
                                subparagraph (D)(ii), and
                                    ``(II) is sold within 6 months 
                                after such property is so placed in 
                                service,
                        such property shall be treated as originally 
                        placed in service not earlier than the date of 
                        such sale.''.
    (c) Conforming Amendment.--The heading of subsection (k) of section 
168 of such Code is amended by striking ``, and Before September 11, 
2004''.
    (d) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to property placed 
        in service after September 10, 2002, in taxable years beginning 
        after such date.
            (2) Subsection (b).--The amendment made by subsection (b) 
        shall take effect as if included in the amendments made by 
        section 101 of the Job Creation and Worker Assistance Act of 
        2002.

SEC. 4. DEPRECIATION RULES NOT MODIFIED FOR PURPOSES OF ALTERNATIVE 
              MINIMUM TAX.

    (a) Determination of Alternative Taxable Income.--Paragraph (1) of 
section 56(a) of the Internal Revenue Code of 1986 (relating to 
depreciation) is amended by adding at the end the following new 
subparagraph:
                    ``(E) Termination.--This paragraph shall not apply 
                to property placed in service after September 10, 2002, 
                in taxable years beginning after such date.''.
    (b) Determination of Adjusted Current Earnings.--Subparagraph (A) 
of section 56(g)(4) of such Code (relating to depreciation) is amended 
by adding at the end the following new clause:
                            ``(vi) Termination.--This subparagraph 
                        shall not apply to property placed in service 
                        after September 10, 2002, in taxable years 
                        beginning after such date.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after September 10, 2002, in 
taxable years beginning after such date.
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