[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 798 Introduced in Senate (IS)]
107th CONGRESS
1st Session
S. 798
To amend the Internal Revenue Code of 1986 to allow small business
employers certain credits against income tax, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 30, 2001
Mr. Lieberman 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 allow small business
employers certain credits against income tax, 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 ``Productivity, Opportunity, and
Prosperity Act of 2001''.
SEC. 2. CREDIT FOR EXPENSES FOR REMEDIAL EDUCATION FOR EMPLOYEES.
(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. 45E. REMEDIAL EDUCATION CREDIT.
``(a) General Rule.--For purposes of section 38, the amount of the
remedial education credit determined under this section with respect to
any employer for any taxable year is an amount equal to 30 percent of
the qualified remedial education expenditures of the taxpayer for such
taxable year.
``(b) Definitions.--For purposes of this section--
``(1) Qualified remedial education expenditure.--The term
`qualified remedial education expenditure' means any amount
paid or incurred by the taxpayer for remedial education
provided for any employee of the taxpayer.
``(2) Remedial education.--The term `remedial education'
means a written plan of study and training in literacy and
numeracy, including the study of English as a second language.
``(c) Coordination With Other Credits.--The amount of credit
otherwise allowable under sections 51(a) and 1396(a) with respect to
any employee shall be reduced by the credit allowed by this section
with respect to such employee.
``(d) Controlled Groups.--For purposes of this section, all persons
treated as a single employer under subsection (b), (c), (m), or (o) of
section 414 shall be treated as a single employer.''.
(b) Credit Made Part of General Business Credit.--Subsection (b) of
section 38 of the Internal Revenue Code of 1986 (relating to general
business credit) is amended by striking ``plus'' at the end of
paragraph (12), by striking the period at the end of paragraph (13) and
inserting ``, plus'', and by adding at the end the following new
paragraph:
``(14) in the case of an employer, the remedial education
credit determined under section 45E(a).''.
(c) Denial of Double Benefit.--Section 280C of the Internal Revenue
Code of 1986 (relating to certain expenses for which credits are
allowable) is amended by adding at the end the following new
subsection:
``(d) Remedial Education Credit.--No deduction shall be allowed for
that portion of the expenses otherwise allowable as a deduction for the
taxable year which is equal to the amount of the credit determined for
the taxable year under section 45E(a).''.
(d) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 of the Internal Revenue Code of
1986 is amended by adding at the end the following new item:
``Sec. 45E. Remedial education credit.''.
(e) Effective Date.--The amendments made by this section shall
apply to expenses paid or incurred in the taxable years beginning after
the date of the enactment of this Act.
SEC. 3. INVESTMENT TAX CREDIT FOR QUALIFIED INFORMATION TECHNOLOGY
PROPERTY.
(a) Allowance of Small Business Digital Divide 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 small business digital divide credit.''.
(b) Amount of Small Business Digital Divide Credit.--
(1) In general.--Section 48 of the Internal Revenue Code of
1986 (relating to the energy credit and the reforestation
credit) is amended by adding at the end the following new
subsection:
``(c) Small Business Digital Divide Credit.--
``(1) In general.--For purposes of section 46, in the case
of a small business employer, the small business digital divide
credit for any taxable year is 10 percent of the taxpayer's
basis in qualified information technology property placed in
service during such taxable year.
``(2) Definitions.--For purposes of this subpart--
``(A) Qualified information technology property.--
The term `qualified information technology property'
means computer technology and equipment (as defined in
section 170(e)(6)(F)(i)).
``(B) Small business employer.--
``(i) In general.--The term `small business
employer' means, with respect to any taxable
year, any employer who employed an average of
100 or fewer employees on business days during
such taxable year.
``(ii) Controlled groups.--For purposes of
clause (i), all persons treated as a single
employer under subsection (b), (c), (m), or (o)
of section 414 shall be treated as a single
employer.
``(3) Termination.--This subsection shall not apply to any
property placed in service after December 31, 2002.''.
(c) Basis Adjustment To Reflect Investment Credit.--Paragraph (3)
of section 50(c) of the Internal Revenue Code of 1986 (relating to
basis adjustment to investment credit property) is amended by striking
``energy credit or reforestation credit'' and inserting ``energy
credit, reforestation credit, or small business digital divide
credit''.
(d) Application of At-Risk Rules.--Subparagraph (C) of section
49(a)(1) of the Internal Revenue Code of 1986 (relating to certain
nonrecourse financing excluded from credit basis) 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 basis of qualified information
technology property.''.
(e) Clerical Amendments.--
(1) Section 48 of the Internal Revenue Code of 1986 is
amended by striking the heading and inserting the following:
``SEC. 48. ENERGY CREDIT; REFORESTATION CREDIT; SMALL BUSINESS DIGITAL
DIVIDE CREDIT.''.
(2) The table of sections for subpart E of part IV of
subchapter A of chapter 1 of such Code is amended by striking
the item relating to section 48 and inserting the following:
``Sec. 48. Energy credit; reforestation
credit; small business digital
divide credit.''.
(f) Effective Date.--The amendments made by this section shall
apply to property placed in service after the date of the enactment of
this Act.
SEC. 4. INCREASED EXCLUSION AND OTHER MODIFICATIONS APPLICABLE TO
QUALIFIED SMALL BUSINESS STOCK.
(a) Increased Exclusion.--
(1) In general.--Subsection (a) of section 1202 of the
Internal Revenue Code of 1986 (relating to 50-percent exclusion
for gain from certain small business stock) is amended by
striking ``50 percent'' and inserting ``100 percent''.
(2) Conforming amendments.--
(A) Subparagraph (A) of section 1(h)(5) of such
Code is amended to read as follows:
``(A) collectibles gain, over''.
(B) Section 1(h) of such Code is amended by
striking paragraph (8).
(C) Paragraph (9) of section 1(h) of such Code is
amended by striking ``, gain described in paragraph
(7)(A)(i), and section 1202 gain'' and inserting ``and
gain described in paragraph (7)(A)(i)''.
(D) Section 1(h) of such Code is amended by
redesignating paragraphs (9) (as amended by
subparagraph (C)), (10), (11), (12), and (13) as
paragraphs (8), (9), (10), (11), and (12),
respectively.
(E) The heading for section 1202 of such Code is
amended by striking ``partial'' and inserting ``100-
percent''.
(F) The table of sections for part I of subchapter
P of chapter 1 of such Code is amended by striking
``Partial'' in the item relating to section 1202 and
inserting ``100-percent''.
(b) Reduction in Holding Period.--
(1) In general.--Subsection (a) of section 1202 of the
Internal Revenue Code of 1986 (relating to partial exclusion
for gains from certain small business stock) is amended by
striking ``5 years'' and inserting ``3 years''.
(2) Conforming amendment.--Subsections (g)(2)(A) and
(j)(1)(A) of section 1202 of such Code are each amended by
striking ``5 years'' and inserting ``3 years''.
(c) Exclusion Available to Corporations.--
(1) In general.--Subsection (a) of section 1202 of the
Internal Revenue Code of 1986 (relating to partial exclusion
for gains from certain small business stock) is amended by
striking ``other than a corporation''.
(2) Technical amendment.--Subsection (c) of section 1202 of
such Code is amended by adding at the end the following new
paragraph:
``(4) Stock held among members of controlled group not
eligible.--Stock of a member of a parent-subsidiary controlled
group (as defined in subsection (d)(3)) shall not be treated as
qualified small business stock while held by another member of
such group.''.
(d) Repeal of Minimum Tax Preference.--
(1) In general.--Subsection (a) of section 57 of the
Internal Revenue Code of 1986 (relating to items of tax
preference) is amended by striking paragraph (7).
(2) Technical amendment.--Subclause (II) of section
53(d)(1)(B)(ii) of such Code is amended by striking ``, (5),
and (7)'' and inserting ``and (5)''.
(e) Stock of Larger Businesses Eligible for Exclusion.--
(1) In general.--Paragraph (1) of section 1202(d) of the
Internal Revenue Code of 1986 (defining qualified small
business) is amended by striking ``$50,000,000'' each place it
appears and inserting ``$300,000,000''.
(2) Inflation adjustment.--Section 1202(d) of such Code
(defining qualified small business) is amended by adding at the
end the following:
``(4) Inflation adjustment of asset limitation.--In the
case of stock issued in any calendar year after 2002, the
$300,000,000 amount contained in paragraph (1) shall be
increased by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year in which
the taxable year begins, determined by substituting
`calendar year 2001' for `calendar year 1992' in
subparagraph (B) thereof.
If any amount as adjusted under the preceding sentence is not a
multiple of $10,000, such amount shall be rounded to the
nearest multiple of $10,000.''.
(f) Repeal of Per-Issuer Limitation.--Section 1202(b) of the
Internal Revenue Code of 1986 (relating to per-issuer limitations on
taxpayer's eligible gain) is repealed.
(g) Other Modifications.--
(1) Repeal of working capital limitation.--Section
1202(e)(6) of the Internal Revenue Code of 1986 (relating to
working capital) is amended--
(A) in subparagraph (B), by striking ``2 years''
and inserting ``5 years''; and
(B) by striking the last sentence.
(2) Exception from redemption rules where business
purpose.--Section 1202(c)(3) of such Code (relating to certain
purchases by corporation of its own stock) is amended by adding
at the end the following new subparagraph:
``(D) Waiver where business purpose.--A purchase of
stock by the issuing corporation shall be disregarded
for purposes of subparagraph (B) if the issuing
corporation establishes that there was a business
purpose for such purchase and one of the principal
purposes of the purchase was not to avoid the
limitations of this section.''.
(h) Qualified Trade or Business.--Section 1202(e)(3) of the
Internal Revenue Code of 1986 (defining qualified trade or business) is
amended by inserting ``and'' at the end of subparagraph (C), by
striking ``, and'' at the end of subparagraph (D) and inserting a
period, and by striking subparagraph (E).
(i) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section apply to stock issued after the
date of the enactment of this Act.
(2) Special rule.--The amendments made by subsections (a),
(c), (e), (f), and (g)(1) apply to stock issued after August
10, 1993.
SEC. 5. REPEAL OF MINIMUM TAX PREFERENCE FOR EXCLUSION FOR INCENTIVE
STOCK OPTIONS.
(a) In General.--Subsection (b) of section 56 of the Internal
Revenue Code of 1986 (relating to adjustments in computing alternative
minimum taxable income) is amended by striking paragraph (3).
(b) Effective Date.--The amendment made by this section shall apply
to options exercised in calendar years beginning after the date of the
enactment of this Act.
SEC. 6. 3-YEAR DEPRECIABLE LIFE FOR SEMICONDUCTOR MANUFACTURING
EQUIPMENT.
(a) In General.--Subparagraph (A) of section 168(e)(3) of the
Internal Revenue Code of 1986 (relating to classification of property)
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) any semiconductor manufacturing equipment.''
(b) Conforming Amendments.--
(1) Subparagraph (B) of section 168(e)(3) of the Internal
Revenue Code of 1986 is amended--
(A) by striking clause (ii),
(B) by redesignating clauses (iii) through (vi) as
clauses (ii) through (v), respectively, and
(C) by striking ``clause (vi)(I)'' in the last
sentence and inserting ``clause (v)(I)''.
(2) Subparagraph (B) of section 168(g)(3) of such Code is
amended by striking the items relating to subparagraph (B)(ii)
and subparagraph (B)(iii) and inserting the following:
``(A)(iv).............................. 3
``(B)(ii).............................. 9.5''.
(c) Effective Date.--The amendments made by this section shall
apply to equipment placed in service after the date of the enactment of
this Act.
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