[Congressional Record Volume 147, Number 131 (Wednesday, October 3, 2001)]
[Senate]
[Pages S10159-S10165]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BOND:
  S. 1493. A bill to forgive interest payments for a 2-year period on 
certain disaster loans to small business concerns in the aftermath of 
the terrorist attacks perpetrated against the United States on 
September 11, 2001, to amend the Internal Revenue Code of 1986 to 
provide tax relief for small business concerns, and for other purposes; 
to the Committee on Finance.
  Mr. BOND. Madam President, I rise today to introduce the ``Small 
Business Leads to Economic Recovery Act of 2001.'' The senseless 
terrorist attacks of September 11th have dealt a severe blow to the 
Nation and to our already struggling economy. The Small Business 
Administration estimates that 14,000 small businesses are within the 
disaster area in New York alone. These businesses clearly have been 
directly affected by this national disaster. But the economic impact 
does not stop there. For months small enterprises and self-employed 
individuals across the country have been struggling with the slowing 
economy. The recent terrorist attacks makes their situation even more 
dire.
  In light of these events, the increasing calls from the small 
business community for economic stimulus legislation have 
understandably increased. As the Ranking Member of the Committee on 
Small Business and Entrepreneurship, I receive on a daily basis pleas 
for help from small business in Missouri and across the Nation: small 
restaurants who have lost much of their business due to the fall off in 
business travel; local flight schools that have been grounded as a 
result of the recent terrorist attacks; and Main Street retailers who 
are struggling to survive in the slowing economy. Clearly, we must act 
and act soon.
  In response to these urgent calls for help, I have prepared the Small 
Business Leads to Economic Recovery Act of 2001, which is designed to 
provide effective economic stimulus in three distinct but complementary 
ways: increasing access to capital for the Nation's small enterprises; 
providing tax relief and investment incentives for our small firms and 
the self-employed; and directing one of the Nation's largest 
consumers--the Federal Government--to shop with small business in 
America.
  When the Disaster Relief Program at the Small Business 
Administration, SBA, was first established, the terrorist attack on New 
York City and the Pentagon was hardly contemplated. Now that we as a 
Nation are confronted with this nightmare, it is easy to see that are 
traditional approach to disaster relief will not be helpful to the 
thousands of small businesses located at or around the World Trade 
Center and the Pentagon.
  In New York City, it may be a year or more before many of the small 
businesses destroyed or shut down by the terrorist attacks can reopen 
their doors for business. Small firms near the Pentagon, such as those 
at the Reagan National Airport or Crystal City, Virginia, are also shut 
down or barely operating. And there are small businesses throughout the 
United States that have been shut down for national security concerns. 
For example, General Aviation aircraft remain grounded, closing all 
flight schools and other small businesses dependent on single engine 
aircraft.
  Regular small business disaster loans fall short of providing 
effective disaster relief to help these small businesses. Therefore, my 
bill will allow small businesses to defer for up to two years repayment 
of principal and interest on their SBA disaster relief loans. Interest 
that would otherwise accrue during the deferment period would be 
forgiven. It is my intention that this essential new ingredient will 
allow the small businesses to get back on their feet without 
jeopardizing their credit or diving them into bankruptcy.
  Small enterprises located in the presidentially declared disaster 
areas surrounding the World Trade Center and the Pentagon are not the 
only business experiencing extreme hardship as the direct result of the 
terrorist attacks of September 11th. Nationwide, thousands of small 
businesses are unable to conduct business or are operating at a bare-
minimum level. Tens of thousands of jobs are at risk of being lost as 
our nation's small businesses weather the fall out from the September 
11th attacks.
  My bill provides a special financial tool to assist small businesses 
as they deal with these significant business disruptions. Small 
businesses in need of working capital would be able to obtain SBA-
guaranteed ``Emergency Relief Loans'' from their banks to help them 
during this period. Fees normally paid by the borrower to the SBA would 
be eliminated, and the SBA would guarantee 95 percent of the loan. A 
key feature of my bill is the authorization for the bank to defer 
repayment of principal for up to one year.
  My colleagues and I have been hearing time and time again during the 
last three weeks since the terrorist attacks that small businesses are 
experiencing significant hardship. Many small businesses were already 
experiencing a downturn in business activity prior to September 11th. 
As the White House Chief of Staff recently commented, our economy was 
in a downturn before September 11, and this downturn was further 
exacerbated by the terrorist attacks.
  Historically, when our economy slows or turns into a recession, the 
strength of the small business sector helps to right our economic ship, 
leading the nation to economic recovery. Today, small businesses employ 
58 percent of the U.S. workforce and create 75 percent of the net new 
jobs. Clearly, we cannot afford to ignore America's small businesses as 
we consider measures to stimulate our economy.
  The Small Business Leads to Economic Recovery Act of 2001 also 
provides for changes in the SBA 7(a) Guaranteed Business Loan Program 
and the 504 Certified Development Company Loan Program to stimulate 
lending to small businesses that are most likely to grow and add new 
employees. These enhancements to the SBA's 7(a) and 504 loan programs 
are to extend for one year. They are designed to make the program more 
affordable during the period when the economy is weak and banks have 
tightened their underwriting requirements for small business loans.
  Specifically, when the economy is slowing, it is normal for banks to 
raise the bar for obtaining commercial loans. However, making it harder 
for small businesses to survive is the wrong reaction to a slowing 
economy. By tweaking the 7(a) and 504 loans to make them more 
affordable to borrowers and lenders, we will be working against 
history's rules governing a slowing economy, thereby adding a stimulus 
for small businesses. Essentially, we will be providing a counter-
cyclical action in the face a slow economy with the express purpose of 
accelerating the recovery.

  I have agreed to cosponsor a bill that Senator John Kerry, Chairman 
of the Committee on Small Business and Entrepreneurship, intends to 
introduce in the near future to improve and strengthen the credit and 
management assistance programs at the SBA in response to the September 
11th terrorist attack. I am pleased to report that his bill will 
incorporate key ingredients of Title I of the Small Business Leads to 
Economic Recovery Act of 2001 by adopting the three tier approach to 
enhance the SBA's credit programs so they can respond more effectively 
and efficiently to the September 11th disaster.
  With the contraction of the private-equity market over the past year, 
the Small Business Investment Company, SBIC, program has taken on a 
significant role in providing venture capital to small businesses 
seeking investments in the range of $500,000 to $3 million. In the 
current economic environment, the SBIC program represents an 
increasingly important source of capital for small enterprises.
  While Debenture SBICs qualify for SBA-guaranteed borrowed capital, 
the government guarantee forces a number of potential investors, namely 
pension funds, to avoid investing in SBICs because they would be 
subject to tax liability for unrelated business taxable income, UBTI. 
When free to choose, tax-exempt investors generally opt to invest in 
venture capital funds that do not create UBTI.

[[Page S10160]]

  As a result, 60 percent of the private-capital potentially available 
to these SBICs is effectively ``off limits.'' The Small Business Leads 
to Economic Recovery Act of 2001 corrects this problem by excluding 
government-guaranteed capital borrowed by Debenture SBICs from debt for 
purposes of the UBTI rules. This change would permit tax-exempt 
organizations to invest in SBICs without the burdens of UBTI 
recordkeeping or tax liability. More importantly, this change in the 
law could double the amount of private capital being invested in small 
businesses through the Debenture SBIC program.
  The access-to-capital provisions of the bill will go a long way 
toward easing the cash-flow burdens that small firms are now facing, 
but we can also tackle this problem from another perspective, reducing 
the tax burden of small businesses. Accordingly, the second component 
of my Small Business Leads to Economic Recovery Act provides 
substantial tax relief for small businesses. These provisions hold the 
greatest potential, in my opinion, for fast and effective tax stimulus 
for small enterprises.
  First and foremost, this bill would permit small businesses to 
expense substantially more of their new equipment purchases by raising 
the expensing limit to $100,000 per year and by increasing the 
expensing phase-out threshold to $500,000. In addition, for small 
businesses that cannot qualify for expensing, the bill reduces the 
depreciation-recovery period for computers, peripheral equipment and 
software to two years.
  Together, these provisions have several important advantages for 
America's small businesses, especially in light of the current economic 
conditions. By allowing more equipment purchases to be deducted 
currently and reducing the recovery period for technology purchases 
that must be depreciated, we can provide much needed capital for small 
businesses. With that freed-up capital, a business can invest in new 
computer equipment, which will benefit the small enterprise and, in 
turn, stimulate the sagging technology industry. Finally, new computer 
equipment will contribute to continued productivity growth in the 
business community, which Federal Reserve Chairman Alan Greenspan has 
stressed is essential to the long-term vitality of our economy.
  Finally, these modifications will simplify the tax law for countless 
small businesses. Greater expensing means less equipment subject to the 
onerous depreciation rules. And for businesses that do not qualify for 
expensing, shortening the recovery period for computer equipment from 
the current five-year period will add some common sense to the tax law. 
Since most computers have outlived their usefulness after two to three 
years, let alone five years, too many businesses are left to depreciate 
this property long after it has become obsolete.
  In short, the equipment-expensing and depreciation changes I propose 
are a win-win for small businesses, the technology industry, and our 
national economy as a whole. But we do not stop there. The bill also 
addresses the limitation on depreciation that many small firms face 
with regard to the automobiles, light trucks and vans that are so 
essential to their operations.
  Specifically, the Small Business Leads to Economic Recovery Act 
amends the limitations under section 280F of the tax code, which 
currently prohibit a small business from claiming a full depreciation 
deduction if the vehicle costs more than $14,460, for vehicles placed 
in service in 2000. Although these limitations have been subject to 
inflation adjustments since they were adjusted in 1986, they have not 
kept pace with the actual cost of new vehicles in most cases. For many 
small businesses, the use of a car, light truck or van is an essential 
asset for transporting personnel to sales and service appointments and 
for delivering their products. Accordingly, the bill adjusts the 
thresholds so that a business will not lose any of its depreciation 
deduction for vehicles costing less than $25,000, which will continue 
to be indexed for inflation.
  This provision of the bill will help ease the cash flow strains for 
many small businesses, freeing critical capital that can be used for 
investments in new business vehicles. In turn, purchases of new cars, 
light trucks or vans will offer much-needed stimulus for the nation's 
automotive industry. Again, multiple benefits for a small change in our 
tax code.
  My bill also responds to the difficult times facing the nation's 
restaurant industry, which the National Restaurant Association 
estimates lost 60,000 jobs in September due to slower sales caused by 
the current economic conditions and the recent terrorist attacks. While 
by no means a complete solution, we can lend a hand to the restaurant 
industry, which is dominated by small businesses, by increasing the 
business-meals deduction to 100 percent. This will provide an 
incentive for businesses to return to their local restaurants, and at 
the same time assist non-restaurant businesses and the self-employed 
for whom business meals are an unavoidable fact of life.

  At the National Women's Small Business Summit, which I hosted last 
June, a number of participants noted that unlike their large 
competitors, small enterprises often sell their products and services 
by word of mouth and close many business transactions on the road or in 
a local diner. In many ways the business breakfast with a potential 
customer is akin to formal advertising that larger businesses purchase 
in newspapers or on radio or television. While the newspaper ad is 
fully deductible, however, the business meal is only 50 percent 
deductible for the small business owner.
  In addition, many self-employed individuals like sales 
representatives spend enormous amounts of time on the road with no 
choice but to eat in restaurants while away from home. For these 
individuals the current 50 percent limitation on the deductibility of 
business meals is a severe strain on cash flow, especially with the 
soft market conditions they face for selling their products and 
services. A 100 percent deduction will ease those strains and help 
small firms in these situations to weather the current economic storm.
  The final tax provisions of my bill relate to a growing problem for 
small businesses--the alternative minimum tax, AMT. For the sole 
proprietors, partners, and S corporation shareholders, the individual 
AMT increases their tax liability by, among other things, reducing 
depreciation and depletion deductions, limiting net operating loss 
treatment, eliminating the deductibility of state and local taxes, and 
curtailing the expensing of research and experimentation costs. In 
addition, because of its complexity, this tax forces small business 
owners to waste precious funds on tax professionals to determine 
whether the AMT even applies. For these reasons, the bill includes the 
recommendation of the Taxpayer Advocate to repeal the individual AMT. 
In light of the current economic situation facing our nation's small 
enterprises, my bill will repeal the individual AMT beginning this 
year.
  For small corporations, the AMT story is much the same, high 
compliance costs and additional taxes draining away scarce capital from 
the business. Accordingly, for small corporate taxpayers, the bill 
increases the current exemption from the corporate AMT. As a result, a 
small corporation will initially qualify for the exemption if its 
average gross receipts are $7.5 million or less, up from the current $5 
million, during its first three taxable years. Thereafter, a small 
corporation will continue to qualify for the AMT exemption for as long 
as its average gross receipts for the prior three-year period do not 
exceed $10 million, up from the current $7.5 million.
  The tax component of the Small Business Leads to Economic Recovery 
Act will provide significant cash-flow relief for small enterprises and 
many incentives for them to continue investing in our economy for their 
long-term well being. Together with the access-to-capital component, 
the tax relief will give a significant boost to small businesses and 
our economy. But we can do more, we can call on the Nation's largest 
consumer, the Federal Government, to shop with small business in 
America.
  Toward that end, my bill would make some subtle changes in the laws 
governing Federal procurement that will have a dramatic impact on 
expanding contracting opportunities for small businesses. For example, 
when the Brooks Act was enacted in 1982, it prohibited small business 
set asides for

[[Page S10161]]

contracts to provide architectural and engineering services valued at 
$85,000 or more. It has been almost twenty years, and the ceiling has 
not been adjusted, not even once, to reflect inflation or other changes 
in the economy. My bill would increase this ceiling to $300,000 and 
would create immediate opportunities for contracting officers in 
Federal agencies to increase the number of contracts set aside for 
small businesses.
  It is also the Federal Government's policy that contracts valued at 
less than $100,000 be reserved for small businesses. This policy, 
however, is not followed by the General Services Administration, GSA, 
with respect to the Federal Supply Schedule, FSS. Too often contracts 
for less than $100,000 are filed by large businesses. Therefore, my 
bill would require that all Federal agency contracts, requirements or 
procurements valued at less than $100,000 be reserved for small 
businesses. Again, this change in our law would have an immediate 
positive effect by making more contracting opportunities available to 
small businesses.
  For contracts for property or services not on the GSA's FSS, my bill 
would require that contracts valued at less than $100,000 be reserved 
for competition among small businesses registered on the SBA's PRO-Net 
and the Central Contractor Register, CCR, at the Department of Defense, 
DoD. By using the two registries, small businesses would know where to 
go to begin the process of competing for government contracts, and 
contracting officers would have at their fingertips a list of hundreds 
of thousands of small businesses listed by industry category.
  My bill would provide for a six-month announcement period, which 
would be followed by a one year phase-in period during which 25 percent 
of the dollar value of all contracts valued less than $100,000 would be 
set aside for small businesses. After the first year, the set aside 
would increase to 50 percent in the second and subsequent years.
  Minority-owned small businesses and small businesses located in 
economically distressed urban and rural areas are at a particular 
disadvantage when competing for Federal government contracts. My bill 
would offer improved opportunities for these small businesses as part 
of the disaster-recovery effort. It would provide that when a 
contracting officer directs a contract to a HUBZone or 8(a) small 
businesses, the current ceiling on sole-source contracting would be 
removed. This change would apply only to the money that is appropriated 
by the Congress specifically targeted to the September 11 disaster-
recovery effort.
  The Small Business Leads to Economic Recovery Act is a comprehensive 
bill to help the Nation as well as the owners and employees of small 
businesses. Its relief is targeted and is designed to work tomorrow and 
in the immediate future. Now is not the time to focus on ten year plans 
and lengthy phase-in periods. Small businesses need help, today, and my 
bill will put cash in the business' bank account and in employees' 
pockets. Small businesses have been the champions of past economic 
recoveries. My bill gives small businesses the tools to accelerate a 
recovery, so that our Nation's economic fortunes are reversed sooner 
rather than later.
  Madam President, I ask unanimous consent that the text of the bill 
and a summary of its provisions be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1493

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Small 
     Business Leads to Economic Recovery Act of 2001''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.

           TITLE I--SMALL BUSINESS EMERGENCY LOAN ASSISTANCE

Sec. 101. Short title.
Sec. 102. Definitions.
Sec. 103. Deferment of disaster loan payments.
Sec. 104. Refinancing existing disaster loans.
Sec. 105. Emergency relief loan program.
Sec. 106. Economic recovery loan and financing programs.

     TITLE II--SMALL BUSINESS TAX PROVISIONS FOR ECONOMIC STIMULUS

Sec. 201. Amendment of 1986 Code.
Sec. 202. Increase in expense treatment of certain depreciable business 
              assets for small businesses.
Sec. 203. Expensing of computer software.
Sec. 204. Modification of depreciation rules for computers and 
              software.
Sec. 205. Adjustments to depreciation limits for business vehicles.
Sec. 206. Increased deduction for business meal expenses.
Sec. 207. Modification of unrelated business income limitation on 
              investment in certain debt-financed properties.
Sec. 208. Repeal of alternative minimum tax on individuals.
Sec. 209. Exemption from alternative minimum tax for small 
              corporations.

                 TITLE III--SMALL BUSINESS PROCUREMENTS

Sec. 301. Expansion of opportunity for small businesses to be awarded 
              department of defense contracts for architectural and 
              engineering services and construction design.
Sec. 302. Procurements of property and services in amounts not in 
              excess of $100,000 from small businesses.
Sec. 303. Sole Source Procurements of Property and Services under the 
              2001 Emergency Supplemental Appropriations Act for 
              Recovery From and Response to Terrorist Attacks on the 
              United States.

           TITLE I--SMALL BUSINESS EMERGENCY LOAN ASSISTANCE

     SEC. 101. SHORT TITLE.

       This title may be cited as the ``Small Business Emergency 
     Loan Assistance Act of 2001''.

     SEC. 102. DEFINITIONS.

       In this title--
       (1) the term ``Administration'' means the Small Business 
     Administration;
       (2) the term ``covered loan'' means a loan made by the 
     Administration to a small business concern--
       (A) under section 7(b) of the Small Business Act (15 U.S.C. 
     636(b)); and
       (B) located in an area which the President has designated 
     as a disaster area as a result of the terrorist attacks 
     perpetrated against the United States on September 11, 2001; 
     and
       (3) the term ``small business concern'' has the same 
     meaning as in section 3 of the Small Business Act (15 U.S.C. 
     632).

     SEC. 103. DEFERMENT OF DISASTER LOAN PAYMENTS.

       (a) In General.--Notwithstanding any other provision of 
     law, payments of principal or interest on a covered loan 
     shall be deferred, and no interest shall accrue with respect 
     to a covered loan, during the 2-year period following the 
     date of issuance of the covered loan.
       (b) Resumption of Payments.--At the end of the 2-year 
     period described in subsection (a), the payment of periodic 
     installments of principal and interest shall be required with 
     respect to a covered loan, in the same manner and subject to 
     the same terms and conditions as would otherwise be 
     applicable to a loan made under section 7(b) of the Small 
     Business Act (15 U.S.C. 636(b)).

     SEC. 104. REFINANCING EXISTING DISASTER LOANS.

       (a) In General.--Any loan made under section 7(b) of the 
     Small Business Act (15 U.S.C. 636(b)) that was outstanding as 
     to principal or interest on September 11, 2001, may be 
     refinanced by a small business concern that is also eligible 
     to receive a covered loan under this Act, and the refinanced 
     amount shall be considered to be part of the covered loan for 
     purposes of this title.
       (b) No Affect on Eligibility.--A refinancing under 
     subsection (a) by a small business concern shall be in 
     addition to any covered loan eligibility for that small 
     business concern under this title.

     SEC. 105. EMERGENCY RELIEF LOAN PROGRAM.

       (a) Business Loan Authority.--Section 7(a) of the Small 
     Business Act (15 U.S.C. 636(a)) is amended by adding at the 
     end the following:
       ``(31) Temporary loan authority following terrorist 
     attacks.--
       ``(A) In general.--During the 1-year period beginning on 
     the date of enactment of this paragraph, the Administration 
     may make loans under this subsection to a small business 
     concern that has suffered, or that is likely to suffer, 
     significant economic injury as a result of the terrorist 
     attacks perpetrated against the United States on September 
     11, 2001.
       ``(B) Loan terms.--With respect to a loan under this 
     paragraph--
       ``(i) for purposes of paragraph (2)(A), participation by 
     the Administration shall be equal to 95 percent of the 
     balance of the financing outstanding at the time of 
     disbursement of the loan;
       ``(ii) no fee may be required or charged under paragraph 
     (18);
       ``(iii) the applicable rate of interest shall not exceed a 
     rate that is one percentage point above the prime rate as 
     published in a national financial newspaper published each 
     business day;
       ``(iv) no such loan shall be made if the total amount 
     outstanding and committed (by participation or otherwise) to 
     the borrower under this paragraph would exceed $1,000,000;
       ``(v) upon request of the borrower, repayment of principal 
     due on a loan made under

[[Page S10162]]

     this paragraph shall be deferred during the 1-year period 
     beginning on the date of issuance of the loan; and
       ``(vi) the repayment period shall not exceed 7 years, 
     including any period of deferment under clause (v).
       ``(C) Applicability.--The loan terms described in 
     subparagraph (B) shall apply to a loan under this paragraph 
     notwithstanding any other provision of this subsection, and 
     except as specifically provided in this paragraph, a loan 
     under this paragraph shall otherwise be subject to the same 
     terms and conditions as any other loan under this subsection.
       ``(D) Significant economic injury.--In this paragraph, the 
     term`substantial economic injury' means an economic harm to a 
     small business concern that results in the inability of the 
     small business concern--
       ``(i) to meet its obligations as they mature;
       ``(ii) to pay its ordinary and necessary operating 
     expenses; or
       ``(iii) to market, produce, or provide a product or service 
     ordinarily marketed, produced, or provided by the business 
     concern.''.

     SEC. 106. ECONOMIC RECOVERY LOAN AND FINANCING PROGRAMS.

       (a) One-Year Suspension of Section 7(a) Fees.--Section 
     7(a)(18) of the Small Business Act (15 U.S.C. 636(a)(18)) is 
     amended by adding at the end the following:
       ``(C) One-year waiver of fees following terrorist 
     attacks.--No fee may be collected or charged, and no fee 
     shall accrue under this paragraph during the 1-year period 
     beginning on the date of enactment of the Small Business 
     Terrorism Relief and Economic Stimulus Act of 2001.''.
       (b) One-Year Increase in Participation Levels.--Section 
     7(a)(2) of the Small Business Act (15 U.S.C. 636(a)(2)) is 
     amended--
       (1) in subparagraph (A), by striking ``subparagraph (B)'' 
     and inserting ``subparagraphs (B) and (E)''; and
       (2) by adding at the end the following:
       ``(E) Temporary participation levels following terrorist 
     attacks.--During the 1-year period beginning on the date of 
     enactment of the Small Business Terrorism Relief and Economic 
     Stimulus Act of 2001, clauses (i) and (ii) of subparagraph 
     (A) shall be construed to read as follows:
       `` `(i) 85 percent of the balance of the financing 
     outstanding at the time of disbursement of the loan, if such 
     balance exceeds $150,000; or
       `` `(ii) 90 percent of the balance of the financing 
     outstanding at the time of disbursement of the loan, if such 
     balance is less than or equal to $150,000.'.''.
       (c) One-Year Suspension of Other Fees.--Section 503 of the 
     Small Business Investment Act of 1958 (15 U.S.C. 697) is 
     amended--
       (1) in subsection (b)(7)(A), by striking ``which amount 
     shall'' and inserting ``which amount shall not be assessed or 
     collected, and no amount shall accrue, during the 1-year 
     period beginning on the date of enactment of the Small 
     Business Terrorism Relief and Economic Stimulus Act of 2001, 
     and which amount shall otherwise''; and
       (2) in subsection (d)(2), by adding at the end the 
     following: ``No fee may be assessed or collected under this 
     paragraph, and no fee shall accrue, during the 1-year period 
     beginning on the date of enactment of the Small Business 
     Terrorism Relief and Economic Stimulus Act of 2001.''.

     TITLE II--SMALL BUSINESS TAX PROVISIONS FOR ECONOMIC STIMULUS

     SEC. 201. AMENDMENT OF 1986 CODE.

       Except as otherwise expressly provided, whenever in this 
     title an amendment or repeal is expressed in terms of an 
     amendment to, or repeal of, a section or other provision, the 
     reference shall be considered to be made to a section or 
     other provision of the Internal Revenue Code of 1986.

     SEC. 202. INCREASE IN EXPENSE TREATMENT OF CERTAIN 
                   DEPRECIABLE BUSINESS ASSETS FOR SMALL 
                   BUSINESSES.

       (a) In General.--Section 179(b)(1) (relating to dollar 
     limitation) is amended to read as follows:
       ``(1) Dollar limitation.--
       ``(A) In general.--The aggregate cost which may be taken 
     into account under subsection (a) for any taxable year shall 
     not exceed $100,000.
       ``(B) Inflation adjustment.--In the case of any taxable 
     year beginning in a calendar year after 2001, the dollar 
     amount contained in subparagraph (A) shall be increased by an 
     amount equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, by substituting ``calendar year 2000'' for 
     ``calendar year 1992'' in subparagraph (B) thereof.

     If any amount as adjusted under this subparagraph is not a 
     multiple of $1,000, such amount shall be rounded to the 
     nearest multiple of $1,000.''.
       (b) Expansion of Phase-Out of Limitation.--Section 
     179(b)(2) is amended to read as follows:
       ``(2) Reduction in limitation.--
       ``(A) In general.--The limitation under paragraph (1) for 
     any taxable year shall be reduced (but not below zero) by the 
     amount by which the cost of section 179 property for which a 
     deduction is allowable (without regard to this subsection) 
     under subsection (a) for such taxable year exceeds 
     $500,000.''
       ``(B) Inflation adjustment.--In the case of any taxable 
     year beginning in a calendar year after 2001, the dollar 
     amount contained in subparagraph (A) shall be increased by an 
     amount equal to--
       ``(i) such dollar amount, multiplied by
       ``(ii) the cost-of-living adjustment determined under 
     section 1(f)(3) for the calendar year in which the taxable 
     year begins, by substituting ``calendar year 2000'' for 
     ``calendar year 1992'' in subparagraph (B) thereof.

     If any amount as adjusted under this subparagraph is not a 
     multiple of $10,000, such amount shall be rounded to the 
     nearest multiple of $10,000.''.
       (c) Time of Deduction.--The second sentence of section 
     179(a) (relating to election to expense certain depreciable 
     business assets) is amended by inserting ``(or, if the 
     taxpayer elects, the preceding taxable year if the property 
     was purchased in such preceding year)'' after ``service''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 203. EXPENSING OF COMPUTER SOFTWARE.

       (a) Computer Software Eligible for Expensing.--The heading 
     and first sentence of section 179(d)(1) (relating to section 
     179 property) are amended to read as follows:
       ``(1) Section 179 property.--For purposes of this section, 
     the term `section 179 property' means property--
       ``(A) which is--
       ``(i) tangible property to which section 168 applies, or
       ``(ii) computer software (as defined in section 
     197(e)(3)(B)) to which section 167 applies,
       ``(B) which is section 1245 property (as defined in section 
     1245(a)(3)), and
       ``(C) which is acquired by purchase for use in the active 
     conduct of a trade or business.''.
       (b) No Computer Software Included as Section 197 
     Intangible.--
       (1) In general.--Section 197(e)(3)(A) is amended to read as 
     follows:
       ``(A) In general.--Any computer software.''.
       (2) Conforming amendment.--Section 167(f)(1)(B) is amended 
     by striking ``; except that such term shall not include any 
     such software which is an amortizable section 197 
     intangible''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after December 31, 
     2000.

     SEC. 204. MODIFICATION OF DEPRECIATION RULES FOR COMPUTERS 
                   AND SOFTWARE.

       (a) 2-Year Applicable Recovery Period for Depreciation of 
     Computers and Peripheral Equipment.--
       (1) In general.--Section 168(c) (relating to applicable 
     recovery period) is amended by adding at the end the 
     following flush sentence:

     ``In the case of 5-year property which is a computer or 
     peripheral equipment, the applicable recovery period shall be 
     2 years.''.
       (2) Conforming amendments.--
       (A) Section 168(g)(3)(C) (relating to alternative 
     depreciation system for certain property) is amended to read 
     as follows:
       ``(C) Qualified technological equipment.--
       ``(i) In general.--Except as provided in clause (ii), in 
     the case of any qualified technological equipment, the 
     recovery period used for purposes of paragraph (2) shall be 5 
     years.
       ``(ii) Computers or peripheral equipment.--In the case of 
     any computer or peripheral equipment, the recovery period 
     used for purposes of paragraph (2) shall be 2 years.''.
       (B) Section 168(j)(2) (relating to depreciation of property 
     on Indian reservations) is amended by adding at the end the 
     following flush sentence:

     ``In the case of 5-year property which is a computer or 
     peripheral equipment, the applicable recovery period shall be 
     1 year.''.
       (C) Section 467(e)(3)(A) (relating to certain payments for 
     the use of property or services) is amended by adding at the 
     end the following flush sentence:

     ``In the case of 5-year property which is a computer or 
     peripheral equipment, the applicable recovery period shall be 
     2 years.''.
       (b) 2-Year Depreciation Period for Computer Software.--
     Section 167(f)(1)(A) of the Internal Revenue Code of 1986 is 
     amended by striking ``36 months'' and inserting ``24 
     months''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after December 31, 
     2000.

     SEC. 205. ADJUSTMENTS TO DEPRECIATION LIMITS FOR BUSINESS 
                   VEHICLES.

       (a) In General.--
       (1) Increase in limitation.--Section 280F(a)(1)(A) 
     (relating to limitation on amount of depreciation for luxury 
     automobiles) is amended--
       (A) by striking ``$2,560'' in clause (i) and inserting 
     ``$5,400'';
       (B) by striking ``$4,100'' in clause (ii) and inserting 
     ``$8,500'';
       (C) by striking ``$2,450'' in clause (iii) and inserting 
     ``$5,100''; and
       (D) by striking ``$1,475'' in clause (iv) and inserting 
     ``$3,000''.
       (2) Conforming amendment.--Section 280F(a)(1)(B)(ii) 
     (relating to disallowed deductions allowed for years after 
     recovery period) is amended by striking ``$1,475'' each place 
     that it appears and inserting ``$3,000''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to property placed in service after December 31, 
     2000.

     SEC. 206. INCREASED DEDUCTION FOR BUSINESS MEAL EXPENSES.

       (a) In General.--Section 274(n)(1) (relating to only 50 
     percent of meal and entertainment expenses allowed as 
     deduction) is amended

[[Page S10163]]

     by striking ``50 percent'' in the text and inserting ``the 
     allowable percentage''.
       (b) Allowable Percentage.--Section 274(n) is amended by 
     redesignating paragraphs (2) and (3) as paragraphs (3) and 
     (4), respectively, and by inserting after paragraph (1) the 
     following new paragraph:
       ``(2) Allowable percentage.--For purposes of paragraph (1), 
     the allowable percentage is--
       ``(A) in the case of amounts for items described in 
     paragraph (1)(B), 50 percent, and
       ``(B) in the case of expenses for food or beverages, 100 
     percent.''.
       (c) Clarification of Special Rule for Individuals Subject 
     to Federal Hours of Service.--Section 274(n)(4) (relating to 
     limited percentages of meal and entertainment expenses 
     allowed as deduction), as redesignated by subsection (b), is 
     amended to read as follows:
       ``(4) Special rule for individuals subject to federal hours 
     of service.--In the case of any expenses for food or 
     beverages consumed while away from home (within the meaning 
     of section 162(a)(2)) by an individual during, or incident 
     to, the period of duty subject to the hours of service 
     limitations of the Department of Transportation, paragraph 
     (2)(B) shall apply to such expenses.''.
       (d) Conforming Amendment.--The heading for subsection (n) 
     of section 274 is amended by striking ``50 Percent'' and 
     inserting ``Limited Percentages''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 207. MODIFICATION OF UNRELATED BUSINESS INCOME 
                   LIMITATION ON INVESTMENT IN CERTAIN DEBT-
                   FINANCED PROPERTIES.

       (a) In General.--Section 514(c)(6) (relating to acquisition 
     indebtedness) is amended--
       (1) by striking ``include an obligation'' and inserting 
     ``include--
       ``(A) an obligation'',
       (2) by striking the period at the end and inserting ``, 
     or'', and
       (3) by adding at the end the following:
       ``(B) indebtedness incurred by a small business investment 
     company licensed under the Small Business Investment Act of 
     1958 which is evidenced by a debenture--
       ``(i) issued by such company under section 303(a) such Act, 
     or
       ``(ii) held or guaranteed by the Small Business 
     Administration.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to acquisitions made on or after the date of the 
     enactment of this Act.

     SEC. 208. REPEAL OF ALTERNATIVE MINIMUM TAX ON INDIVIDUALS.

       (a) In General.--
       (1) Repeal.--Section 55(a) (relating to alternative minimum 
     tax) is amended by adding at the end the following new flush 
     sentence:

     ``For purposes of this title, the tentative minimum tax on 
     any taxpayer other than a corporation for any taxable year 
     beginning after December 31, 2000, shall be zero.''.
       (2) Nonrefundable personal credits fully allowed against 
     regular tax liability.--
       (A) In general.--Section 26(a) (relating to limitation 
     based on amount of tax) is amended to read as follows:
       ``(a) Limitation Based on Amount of Tax.--The aggregate 
     amount of credits allowed by this subpart for the taxable 
     year shall not exceed the taxpayer's regular tax liability 
     for the taxable year.''.
       (B) Child credit.--Section 24(d) is amended by striking 
     paragraph (2) and by redesignating paragraph (3) as paragraph 
     (2).
       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 209. EXEMPTION FROM ALTERNATIVE MINIMUM TAX FOR SMALL 
                   CORPORATIONS.

       (a) In General.--Section 55(e)(1)(A) (relating to exemption 
     for small corporations) is amended to read as follows:
       ``(A) $10,000,000 gross receipts test.--The tentative 
     minimum tax of a corporation shall be zero for any taxable 
     year if the corporation's average annual gross receipts for 
     all 3-taxable-year periods ending before such taxable year 
     does not exceed $10,000,000. For purposes of the preceding 
     sentence, only taxable years beginning after December 31, 
     1997, shall be taken into account.''.
       (b) Gross Receipts Test For First 3-year Period.--Section 
     55(e)(1)(B) is amended to read as follows:
       ``(B) $7,500,000 gross receipts test for first 3-year 
     period.--Subparagraph (A) shall be applied by substituting 
     `$7,500,000' for `$10,000,000' for the first 3-taxable-year 
     period (or portion thereof) of the corporation which is taken 
     into account under subparagraph (A).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

                 TITLE III--SMALL BUSINESS PROCUREMENTS

     SEC. 301. EXPANSION OF OPPORTUNITY FOR SMALL BUSINESSES TO BE 
                   AWARDED DEPARTMENT OF DEFENSE CONTRACTS FOR 
                   ARCHITECTURAL AND ENGINEERING SERVICES AND 
                   CONSTRUCTION DESIGN.

       Section 2855(b)(2) of title 10, United States Code, is 
     amended by striking ``$85,000'' and inserting ``$300,000''.

     SEC. 302. PROCUREMENTS OF PROPERTY AND SERVICES IN AMOUNTS 
                   NOT IN EXCESS OF $100,000 FROM SMALL 
                   BUSINESSES.

       (a) Small Business Set-Asides.--Section 15 of the Small 
     Business Act (15 U.S.C. 644) is amended by adding at the end 
     the following:
       ``(q) Procurements of Property and Services not in Excess 
     of $100,000.--
       ``(1) Federal supply schedule items.--The head of an agency 
     procuring items listed on a Federal Supply Schedule in a 
     total amount not in excess of $100,000 shall procure the 
     items from a small business.
       ``(2) Other property and services.--The head of an agency 
     procuring property or services not listed on a Federal Supply 
     Schedule in a total amount not in excess of $100,000 shall 
     procure the property or services from a small business 
     registered on PRO-Net or the Centralized Contractor 
     Registration System. Competitive procedures shall be used in 
     the selection of sources for procurements from small 
     businesses under this subsection.''.
       (b) Phased Implementation.--
       (1) First 2 years.--During the 2-year period beginning on 
     the effective date determined under subsection (c), the 
     requirement of subsection (q)(1) of section 15 of the Small 
     Business Act (as added by subsection (a) of this section) 
     shall apply with respect to 25 percent of the procurements 
     described in that subsection (determined on the basis of 
     amount), and the requirement in subsection (q)(2) of that 
     section shall apply with respect to 25 percent of the 
     procurements described in subsection (q)(2) (determined on 
     the basis of amount).
       (2) Ensuing 2 years.--During the 2-year period beginning on 
     the day after the expiration of the period described in 
     paragraph (1), the requirement of subsection (q)(1) of 
     section 15 of the Small Business Act (as added by subsection 
     (a) of this section) shall apply with respect to 50 percent 
     of the procurements described in that subsection (determined 
     on the basis of amount), and the requirement in subsection 
     (q)(2) of that section shall apply with respect to 50 percent 
     of the procurements described in subsection (q)(2) 
     (determined on the basis of amount).
       (c) Effective Date.--Section 15(q) of the Small Business 
     Act (as added by subsection (a) of this section) shall take 
     effect on the first day of the first month that begins not 
     less than 180 days after the date of enactment of this Act.

     SEC. 303. SOLE SOURCE PROCUREMENTS OF PROPERTY AND SERVICES 
                   UNDER THE 2001 EMERGENCY SUPPLEMENTAL 
                   APPROPRIATIONS ACT FOR RECOVERY FROM AND 
                   RESPONSE TO TERRORIST ATTACKS ON THE UNITED 
                   STATES.

       Notwithstanding the provisions of sections 
     8(a)(1)(D)(i)(II) and subclauses (I) and (II) of section 
     31(b)(2)(A)(ii) of the Small Business Act (15 U.S.C. 
     637(a)(1)(D)(i)(II), 658(b)(2)(A)(ii)(I), and 
     658(b)(2)(A)(ii)(II), respectively), a contracting officer 
     may award non-competitive contracts with the budget authority 
     provided by the 2001 Emergency Supplemental Appropriations 
     Act for Recovery from and Response to Terrorist Attacks on 
     the United States (Public Law 107-38) or by subsequent 
     emergency appropriations bill adopted pursuant thereto, if--
       (a) such contracts are to be awarded to an eligible Program 
     Participant under section 8(a) or to a qualified HUBZone 
     small business concern under section 3(p)(5) of the Small 
     Business Act (15 U.S.C. 637(a) and 632(p)(5)), and
       (b) the head of the procuring agency certifies that the 
     property or services needed by the agency are of such an 
     unusual and compelling urgency that the United States would 
     be seriously harmed by use of competitive procedures, 
     pursuant to--
       (1) section 2304(c)(2) of Title 10, United States Code, or
       (2) section 303(c)(2) of the Federal Property and 
     Administrative Services Act of 1949 (41 U.S.C. 253(c)(2)).
                                  ____


     S. 1493: Small Business Leads to Economic Recovery Act of 2001


                       description of provisions

           TITLE I--SMALL BUSINESS EMERGENCY LOAN ASSISTANCE

                        Section 101. Short Title

       This section sets forth the title, ``Small Business Leads 
     to Economic Recovery Act of 2001.''

                        Section 102. Definitions

       This section provides the definitions of key words used in 
     Title I.

            Section 103. Deferment of Disaster Loan Payments

       In recognition that the small businesses eligible for 
     Disaster Assistance Loans will not be able to begin repayment 
     of the loans for up to two years, the bill provides that both 
     principal and interest payment will be deferred for two years 
     from the date of loan origination. Interest that accrues 
     during the deferment period would be forgiven.

            Section 104. Refinancing Existing Disaster Loans

       As the result of the World Trade Center bombing in 1993, 
     there are small businesses in the Presidentially-declared 
     disaster area that have outstanding SBA disaster loans. This 
     section will permit small businesses to refinance outstanding 
     disaster loans in the new disaster loans with the two-year 
     deferment provision.

               Section 105. Emergency Relief Loan Program

       This section creates a special one-year program at the SBA 
     using key components of the 7(a) guaranteed business loan 
     program to create a working capital loan program for small 
     businesses suffering significant economic injury as the 
     result of the September

[[Page S10164]]

     11, 2001, terrorist attacks on the World Trade Center and the 
     Pentagon. The loans would have a 95 percent guarantee, and 
     there would be no up-front borrower fee. The interest rate 
     would be the Prime Rate plus 1 percent. Banks would have the 
     option to defer principal payments for up to one year.
       This special working capital loan program recognizes there 
     are small businesses nationwide that are experiencing serious 
     cash flow difficulties as the result of the terrorist 
     attacks, e.g., travel agencies, flight training and other 
     commercial users of single-engine VFR aircraft.

       Section 106. Economic Recovery Loan and Financing Programs

       As the result of the deteriorating economy, which was 
     experiencing a downturn prior to September 11, 2001, banks 
     had initiated steps to tighten the availability of credit to 
     small businesses. For Fiscal Year 2001, it is projected that 
     new loan originations may drop as much as 25 percent from the 
     projections on October 1, 2000.
       This section will make significant changes for one year to 
     the 7(a) guaranteed business loan program. Loans would be 
     available for all qualified borrowers. The up-front loan 
     origination fee paid by the borrower, which ranges from 2.0 
     percent to 3.5 percent depending on loan size, would be 
     eliminated. The guarantee percentage for the general loan 
     program would be increased from 75 percent to 85 percent. For 
     the LowDoc program, the guarantee percentage would increase 
     from 80 percent to 90 percent.
       This section would also make similar changes to the 504 
     Certified Development Company Loan Program. For one year, the 
     up-front fee paid by the bank making the loan in the first 
     loss position would be eliminated. Further, the annual fee 
     paid by the borrower would also be dropped.

   Section 107. Small Business Investment Company Enhancement Program

       The Administration and the SBIC industry has recommended 
     that the SBIC/Participating Securities Program become a fee-
     based program, which would eliminate the need for an annual 
     appropriation. This change would entail enacting legislation 
     to increase the SBIC fee from 1 percent to at least l.38 
     percent. This section would allow the SBA to increase the 
     annual fee to no more than 1.50 percent, which would support 
     a program level fo $3.5 billion in Fiscal Year 2002.

     TITLE II--SMALL BUSINESS TAX PROVISIONS FOR ECONOMIC STIMULUS

                  Section 201. Amendment of 1986 Code

       This section clarifies that all changes in the bill are to 
     the Internal Revenue Code of 1986, as previously amended.

   Section 202. Increase in Expense Treatment of Certain Depreciable 
                 Business Assets for Small Businesses.

       The bill amends section 179 of the Internal Revenue Code to 
     increase the amount of equipment purchases that small 
     businesses may expense each year from the current $24,000 to 
     $100,000. This change will eliminate the burdensome 
     recordkeeping involved in depreciating such equipment and 
     free up capital for small businesses to grow and create jobs.
       The bill also increases the phase-out limitation for 
     equipment expensing from the current $200,000 to $500,000, 
     thereby expanding the type of equipment that can qualify for 
     expensing treatment. This limitation along with the annual 
     expensing amount will be indexed for inflation under the 
     bill.
       Following the recommendation of the National Taxpayer 
     Advocate, the bill also amends section 179 to permit 
     expensing in the year that the property is purchased or the 
     year that the property is placed in service, whichever is 
     earlier. This will eliminate the difficulty that many small 
     enterprises have encountered when investing in new equipment 
     in one tax year, e.g., 2001 that cannot be placed in service 
     until the following year, e.g., 2002. The equipment-
     expensing provisions will be effective for taxable years 
     beginning after December 31, 2000.

              Section 203. Expensing of Computer Software

       In connection with the expanded equipment-expensing limits, 
     the bill also permits taxpayers to expense computer software 
     up to the new $100,000 limit on annual equipment expensing. 
     This provision will eliminate the compliance costs and 
     burdens of depreciation software over a three-year period, 
     which is often inconsistent with the product's actual useful 
     life. This provision will be effective for taxable years 
     beginning after December 31, 2000.

   Section 204. Modification of Depreciation Rules for Computers and 
                                Software

       For small business taxpayers who do not qualify for 
     expensing treatment, the bill modifies the outdated 
     depreciation rules to permit taxpayers to depreciate computer 
     equipment and software over a two-year period. Under present 
     law, computer equipment is generally depreciated over a five-
     year period and software is usually depreciated over three 
     years. With the rapid advancements in technology, these 
     depreciation periods are sorely out of date and can result in 
     small businesses having to exhaust their depreciation 
     deductions well after the equipment or software is obsolete. 
     The bill makes the tax code in this area more consistent with 
     the technological reality of the business world. This 
     provision will be effective for computers and software placed 
     in service in taxable years beginning after December 31, 
     2000.

 Section 205. Adjustments to Depreciation Limits for Business Vehicles

       The bill amends section 280F of the Internal Revenue Code, 
     which limits the amount of depreciation that a business may 
     claim with respect to a vehicle used for business purposes. 
     Under the current thresholds, a business loses a portion of 
     its depreciation deduction if the vehicle costs more than 
     $14,460, for vehicles placed in service in 2000. Although 
     these limitations have been subject to inflation adjustments, 
     they have not kept pace with the actual cost of new cars, 
     light trucks and vans in most cases. For many small 
     businesses, the use of a car, light truck or van is an 
     essential asset for transporting personnel to sales and 
     service appointments and for delivering their products. 
     Accordingly, the bill adjusts the thresholds so that a 
     business will not lose any of its depreciation deduction for 
     vehicles costing less than $25,000, which will continue to be 
     indexed for inflation. This provision will be effective for 
     vehicles placed in service in taxable years beginning after 
     December 31, 2000.

      Section 206. Increased Deduction for Business Meal Expenses

       The bill increases the limitation on the deductibility of 
     business meals from the current 50 percent to 100 percent 
     beginning in 2001 to provide an incentive for businesses to 
     return to their local restaurants. At the same time, this 
     provision will assist non-restaurant businesses and self-
     employed individuals level the playing field. Unlike their 
     large competitors, small enterprises often sell their 
     products and services by word of mouth and close many 
     business transactions on the road or in a local diner. In 
     many ways the business breakfast with a potential customer is 
     akin to formal advertising that larger businesses purchase in 
     newspapers or on radio or television. While the newspaper 
     ad is fully deductible, however, the business meal is only 
     50 percent deductible for the small business owner.
       In addition, many self-employed individuals like sales 
     representatives spend enormous amounts of time on the road 
     with no choice but to eat in restaurants while away from 
     home, further straining their cash flow. By increasing the 
     deduction to 100 percent, the bill addresses these problems, 
     as well as the lack of parity that small business owners face 
     with respect to individuals subject to the Federal hours-of-
     service limitations of the Department of Transportation, such 
     as truck drivers, who are currently able to deduct a larger 
     portion of their business meals.

 Section 207. Modification of Unrelated Business Income Limitation on 
            Investments in Certain Debt-Financed Properties

       With the recent contraction of the private-equity market, 
     the Small Business Investment Company, SBIC program, which is 
     overseen by the SBA, has taken on a significant role in 
     providing venture capital to small businesses seeking 
     investments in the range of $500,000 to $3 million. Debenture 
     SBICs qualify for SBA-guaranteed borrowed capital, which 
     subjects tax-exempt investors that would otherwise be 
     inclined to invest in Debenture SBICs to tax liability for 
     unrelated business taxable income, UBTI. When free to choose, 
     tax-exempt investors generally opt to invest in venture 
     capital funds that do not create UBTI. As a result, 60 
     percent of the private-capital potentially available to 
     Debenture SBICs is effectively ``off limits.''
       The bill would exclude government-guaranteed capital 
     borrowed by Debenture SBICs from debt for purposes of the 
     UBTI rules. This change would permit tax-exempt organizations 
     to invest in Debenture SBICs without the burdens of UBTI 
     recordkeeping or tax liability, thereby providing additional 
     capital for investment in small businesses across the nation. 
     This provision would be effective for acquisitions made on or 
     after the date of enactment of this bill.

     Section 208. Repeal of Alternative Minimum Tax on Individuals

       The bill repeals the individual Alternative Minimum Tax, 
     AMT effective for taxable years beginning after December 31, 
     2000. For individual taxpayers, the individual AMT has become 
     an increasingly burdensome tax. For the sole proprietors, 
     partners, and S corporation shareholders, the individual AMT 
     increases their tax liability by, among other things, 
     limiting depreciation and depletion deductions, net operating 
     loss treatment, the deductibility of state and local taxes, 
     and expensing of research and experimentation costs. In 
     addition, because of its complexity, this tax forces small 
     business owners to waste precious funds on tax professionals 
     to determine whether the AMT even applies.

 Section 209. Expansion of the Exemption From the Alternative Minimum 
                       Tax for Small Corporations

       For small corporate taxpayers, the bill increases the 
     current exemption from the corporate AMT, under section 55(e) 
     of the Internal Revenue Code. Under the bill, a small 
     corporation will initially qualify for the exemption if its 
     average gross receipts are $7.5 million or less, up from the 
     current $5 million, during its first three taxable years. 
     Thereafter, a small corporation will continue to qualify for 
     the AMT exemption for so long as its average gross 
     receipts for the prior three-year period do not exceed $10 
     million, up from the current $7.5 million. The increased 
     limits for the small-corporation exemption from the 
     corporate AMT will be effective for taxable years 
     beginning after December 31, 2000.

[[Page S10165]]

                 TITLE III--SMALL BUSINESS PROCUREMENTS

   Section 301. Expansion of Opportunity for Small Businesses To Be 
     Awarded Department of Defense Contracts for Architectural and 
              Engineering Services and Construction Design

       The Brooks Act was enacted in 1982 and prohibits any small 
     businesses set asides for architectural and engineering 
     contracts valued at $85,000 or more. No change in this 
     ceiling has been made since enactment of the Brooks Act. This 
     section would increase the ceiling to $300,000, which would 
     create, almost immediately, new Federal contracting 
     opportunities for small businesses.

 Section 302. Procurements of Property and Services in Amounts Not in 
                Excess of $100,000 From Small Businesses

       This section would make more contracts valued at less than 
     $100,000 available to small businesses. Under the Federal 
     Supply Schedule, FSS, at GSA, all agency contracts, 
     requirements, or procurements valued at less than $100,000 
     would be made from small businesses.
       For contracts for property or services not on the GSA's 
     FSS, the procuring agency would set aside such contracts, 
     valued at less than $100,000, for competition among small 
     businesses registered on the SBA's PRO-Net and the DoD's 
     Centralized Contractor Registration, CCR, System. There would 
     be a two-year phase-in period. After an initial six-month 
     period, during the first year, 25 percent of the dollar value 
     of all contracts less than $100,000 would be awarded to small 
     businesses. This would increase to 50 percent in the second 
     and subsequent years.

          Section 303. HUBZone and 8(a) Sole-Source Contracts

       Contracts for property and services made with funds from 
     the ``2001 Emergency Supplemental Appropriations Act for 
     Recovery From and Response to Terrorist Attacks on the United 
     States'' will be exempt from the ceiling on sole-source 
     contracts under the HUBZone and 8(a) programs. Currently, the 
     ceilings are $3 million for service contracts and $5 million 
     for manufacturing contracts.
                                 ______