To amend the Internal Revenue Code of 1986 to provide tax benefits for small businesses, to repeal the Federal communications excise tax, and for other purposes.

August 2, 2001

Ms. HOOLEY of Oregon introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to provide tax benefits for small businesses, to repeal the Federal communications excise 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; REFERENCES; TABLE OF CONTENTS.

(a) SHORT TITLE- This Act may be cited as the `Small Business Tax Fairness Act of 2001'.

(b) AMENDMENT OF 1986 CODE- Except as otherwise expressly provided, whenever in this Act 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.

(c) TABLE OF CONTENTS- The table of contents of this Act is as follows:

Sec. 1. Short title; references; table of contents.

TITLE I--SMALL BUSINESS PROVISIONS

Sec. 101. Deduction for 100 percent of health insurance costs of self-employed individuals.

Sec. 102. Increase in expense treatment for small businesses.

Sec. 103. Increased deduction for meal expenses.

Sec. 104. Increased deductibility of business meal expenses for individuals subject to Federal limitations on hours of service.

Sec. 105. Income averaging for farmers and fishermen not to increase alternative minimum tax liability.

Sec. 106. Clarification of cash accounting rules for small business.

Sec. 107. Extension of research credit made permanent.

TITLE II--TIMBER INCENTIVES

Sec. 201. Partial inflation adjustment for timber.

Sec. 202. Amortization of reforestation expenditures and reforestation tax credit.

TITLE III--ENERGY EFFICIENT HOMES

Sec. 301. Credit for energy efficiency improvements to existing homes.

Sec. 302. Business credit for construction of new energy efficient home.

TITLE IV--REPEAL OF FEDERAL COMMUNICATIONS EXCISE TAX

Sec. 401. Repeal of Federal communications excise tax.

TITLE V--DONATION OF COMPUTER TECHNOLOGY AND EQUIPMENT TO ELEMENTARY AND SECONDARY SCHOOLS

Sec. 501. Credit for donation of computer technology and equipment to elementary and secondary schools.

TITLE I--SMALL BUSINESS PROVISIONS

SEC. 101. DEDUCTION FOR 100 PERCENT OF HEALTH INSURANCE COSTS OF SELF-EMPLOYED INDIVIDUALS.

(a) IN GENERAL- Paragraph (1) of section 162(l) is amended to read as follows:

`(1) ALLOWANCE OF DEDUCTION- In the case of an individual who is an employee within the meaning of section 401(c)(1), there shall be allowed as a deduction under this section an amount equal to 100 percent of the amount paid during the taxable year for insurance which constitutes medical care for the taxpayer and the taxpayer's spouse and dependents.'.

(b) CLARIFICATION OF LIMITATIONS ON OTHER COVERAGE- The first sentence of section 162(l)(2)(B) is amended to read as follows: `Paragraph (1) shall not apply to any taxpayer for any calendar month for which the taxpayer participates in any subsidized health plan maintained by any employer (other than an employer described in section 401(c)(4)) of the taxpayer or the spouse of the taxpayer.'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 2000.

SEC. 102. INCREASE IN EXPENSE TREATMENT FOR SMALL BUSINESSES.

(a) IN GENERAL- Paragraph (1) of section 179(b) (relating to dollar limitation) is amended to read as follows:

`(1) DOLLAR LIMITATION- The aggregate cost which may be taken into account under subsection (a) for any taxable year shall not exceed $30,000.'.

(b) EFFECTIVE DATE- The amendment made by this section shall apply to taxable years beginning after December 31, 2000.

SEC. 103. INCREASED DEDUCTION FOR MEAL EXPENSES.

(a) IN GENERAL- Paragraph (1) of section 274(n) (relating to only 50 percent of meal and entertainment expenses allowed as deduction) is amended by striking `50 percent' in the text and inserting `the allowable percentage'.

(b) ALLOWABLE PERCENTAGES- Subsection (n) of section 274 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, 60 percent (55 percent for taxable years beginning during 2001).'.

(c) CONFORMING AMENDMENT- The heading for subsection (n) of section 274 is amended by striking `50 PERCENT' and inserting `LIMITED PERCENTAGES'.

(d) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 2000.

SEC. 104. INCREASED DEDUCTIBILITY OF BUSINESS MEAL EXPENSES FOR INDIVIDUALS SUBJECT TO FEDERAL LIMITATIONS ON HOURS OF SERVICE.

(a) IN GENERAL- Paragraph (4) of section 274(n) (relating to limited percentages of meal and entertainment expenses allowed as deduction), as redesignated by section 103, 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 be applied by substituting `80 percent' for the percentage otherwise applicable under paragraph (2)(B).'.

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 2000.

SEC. 105. INCOME AVERAGING FOR FARMERS AND FISHERMEN NOT TO INCREASE ALTERNATIVE MINIMUM TAX LIABILITY.

(a) IN GENERAL- Section 55(c) (defining regular tax) is amended by redesignating paragraph (2) as paragraph (3) and by inserting after paragraph (1) the following:

`(2) COORDINATION WITH INCOME AVERAGING FOR FARMERS AND FISHERMEN- Solely for purposes of this section, section 1301 (relating to averaging of farm and fishing income) shall not apply in computing the regular tax.'.

(b) ALLOWING INCOME AVERAGING FOR FISHERMEN-

(1) IN GENERAL- Section 1301(a) is amended by striking `farming business' and inserting `farming business or fishing business,'.

(2) DEFINITION OF ELECTED FARM INCOME-

(A) IN GENERAL- Clause (i) of section 1301(b)(1)(A) is amended by inserting `or fishing business' before the semicolon.

(B) CONFORMING AMENDMENT- Subparagraph (B) of section 1301(b)(1) is amended by inserting `or fishing business' after `farming business' both places it occurs.

(3) DEFINITION OF FISHING BUSINESS- Section 1301(b) is amended by adding at the end the following new paragraph:

`(4) FISHING BUSINESS- The term `fishing business' means the conduct of commercial fishing as defined in section 3 of the Magnuson-Stevens Fishery Conservation and Management Act (16 U.S.C. 1802).'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 2000.

SEC. 106. CLARIFICATION OF CASH ACCOUNTING RULES FOR SMALL BUSINESS.

(a) Section 446 (relating to general rule for methods of accounting) is amended by adding at the end the following new subsection:

`(g) SMALL TAXPAYERS PERMITTED TO USE CASH ACCOUNTING METHOD WITHOUT LIMITATION- A taxpayer shall not be required to use an accrual method of accounting for any taxable year by reason of using merchandise or inventory, if the average annual gross receipts of such taxpayer (or any predecessor) for the 3-year-period ending with such prior taxable year does not exceed $5,000,000. The rules of paragraphs (2) and (3) of section 448(c) shall apply for purposes of the preceding sentence. In the case of a C corporation or a partnership which has a C corporation as a partner, the first sentence of this subsection shall apply only if such C corporation or partnership meets the requirements of section 448(b)(3).'

(b) EFFECTIVE DATE- The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

SEC. 107. EXTENSION OF RESEARCH CREDIT MADE PERMANENT.

(a) IN GENERAL- Section 41 (relating to credit for increasing research activities) is amended by striking subsection (h).

(b) CONFORMING AMENDMENT- Paragraph (1) of section 45C(b) of such Code is amended by striking subparagraph (D).

TITLE II--TIMBER INCENTIVES

SEC. 201. PARTIAL INFLATION ADJUSTMENT FOR TIMBER.

(a) IN GENERAL- Part I of subchapter P of chapter 1 (relating to treatment of capital gains) is amended by adding at the end the following new section:

`SEC. 1203. PARTIAL INFLATION ADJUSTMENT FOR TIMBER.

`(a) IN GENERAL- At the election of any taxpayer who has qualified timber gain for any taxable year, there shall be allowed as a deduction from gross income an amount equal to the qualified percentage of such gain.

`(b) QUALIFIED TIMBER GAIN- For purposes of this section, the term `qualified timber gain' means long-term capital gain from the sale or exchange of timber.

`(c) QUALIFIED PERCENTAGE- For purposes of this section, the term `qualified percentage' means the percentage (not exceeding 50 percent) determined by multiplying--

`(1) 3 percent, by

`(2) the number of years in the holding period of the taxpayer with respect to the timber.

`(d) ESTATES AND TRUSTS- In the case of an estate or trust, the deduction under subsection (a) shall be computed by excluding the portion of (if any) the gains for the taxable year from sales or exchanges of capital assets which, under sections 652 and 662 (relating to inclusions of amounts in gross income of beneficiaries of trusts), is includible by the income beneficiaries as gain derived from the sale or exchange of capital assets.'

(b) COORDINATION WITH MAXIMUM RATES OF TAX ON NET CAPITAL GAINS-

(1) Subsection (h)(4) of section 1 (relating to maximum capital gains rate) is amended by striking `and' at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting `, and', and by adding at the end the following new subparagraph:

`(C) qualified timber gain with respect to which an election is in effect under section 1203.'

(2) Subsection (a) of section 1201 (relating to the alternative tax for corporations) is amended by inserting at the end thereof the following new sentence:

`For purposes of this section, net capital gain shall be determined without regard to qualified timber gain (as defined in section 1203) with respect to which an election is in effect under section 1203.'

(c) ALLOWANCE OF DEDUCTION IN COMPUTING ADJUSTED GROSS INCOME- Subsection (a) of section 62 (relating to definition of adjusted gross income) is amended by inserting after paragraph (18) the following new paragraph:

`(19) PARTIAL INFLATION ADJUSTMENT FOR TIMBER- The deduction allowed by section 1203.'

(d) TECHNICAL AMENDMENTS-

(1) Subparagraph (B) of section 172(d)(2) is amended to read as follows:

`(B) the exclusion under section 1202 and the deduction under section 1203 shall not be allowed.'

(2) The last sentence of section 453A(c)(3) is amended by striking `(whichever is appropriate)' and inserting `or the deduction under section 1203 (whichever is appropriate)'.

(3) Section 641(c)(2)(C) is amended by inserting after clause (iii) the following new clause:

`(iv) The deduction under section 1203.'

(4) The first sentence of section 642(c)(4) is amended to read as follows: `To the extent that the amount otherwise allowable as a deduction under this subsection consists of gain described in section 1202(a) or qualified timber gain (as defined in section 1203(b)), proper adjustment shall be made for any exclusion allowable under section 1202, and any deduction allowable under section 1203, to the estate or trust.'

(5) The last sentence of section 643(a)(3) is amended to read as follows: `The exclusion under section 1202 and the deduction under section 1203 shall not be taken into account.'

(6) Subparagraph (C) of section 643(a)(6) is amended by inserting `(i)' before `there shall' and by inserting before the period `, and (ii) the deduction under section 1203 (relating to partial inflation adjustment for timber) shall not be taken into account'.

(7) Paragraph (4) of section 691(c) is amended by inserting `1203,' after `1202,'.

(8) The second sentence of paragraph (2) of section 871(a) is amended by striking `section 1202' and inserting `sections 1202 and 1203'.

(e) CLERICAL AMENDMENT- The table of sections for part I of subchapter P of chapter 1 is amended by adding at the end the following new item:

`Sec. 1203. Partial inflation adjustment for timber.'

(f) EFFECTIVE DATE- The amendments made by this section shall apply to sales or exchanges after December 31, 2000.

SEC. 202. AMORTIZATION OF REFORESTATION EXPENDITURES AND REFORESTATION TAX CREDIT.

(a) DECREASE IN AMORTIZATION PERIOD-

(1) IN GENERAL- Section 194(a) is amended by striking `84 months' and inserting `60 months'.

(2) CONFORMING AMENDMENT- Section 194(a) is amended by striking `84-month period' and inserting `60-month period'.

(b) REMOVAL OF CAP ON AMORTIZABLE BASIS-

(1) Section 194 is amended by striking subsection (b) and by redesignating subsections (c) and (d) as subsections (b) and (c), respectively.

(2) Subsection (b) of section 194 (as redesignated by paragraph (1)) is amended by striking paragraph (4).

(3) Paragraph (1) of section 48(b) is amended by striking `(after the application of section 194(b)(1))'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to additions to capital account made after December 31, 2000.

TITLE III--ENERGY EFFICIENT HOMES

SEC. 301. CREDIT FOR ENERGY EFFICIENCY IMPROVEMENTS TO EXISTING HOMES.

(a) IN GENERAL- Subpart A of part IV of subchapter A of chapter 1 (relating to nonrefundable personal credits) is amended by inserting after section 25B the following new section:

`SEC. 25C. ENERGY EFFICIENCY IMPROVEMENTS TO EXISTING HOMES.

`(a) ALLOWANCE OF CREDIT- In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 20 percent of the amount paid or incurred by the taxpayer for qualified energy efficiency improvements installed during such taxable year.

`(b) LIMITATIONS-

`(1) MAXIMUM CREDIT- The credit allowed by this section with respect to a dwelling shall not exceed $2,000.

`(2) PRIOR CREDIT AMOUNTS FOR TAXPAYER ON SAME DWELLING TAKEN INTO ACCOUNT- If a credit was allowed to the taxpayer under subsection (a) with respect to a dwelling in 1 or more prior taxable years, the amount of the credit otherwise allowable for the taxable year with respect to that dwelling shall not exceed the amount of $2,000 reduced by the sum of the credits allowed under subsection (a) to the taxpayer with respect to the dwelling for all prior taxable years.

`(c) CARRYFORWARD OF UNUSED CREDIT- If the credit allowable under subsection (a) exceeds the limitation imposed by section 26(a) for such taxable year reduced by the sum of the credits allowable under subpart A of part IV of subchapter A (other than this section), such excess shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such taxable year.

`(d) QUALIFIED ENERGY EFFICIENCY IMPROVEMENTS- For purposes of this section, the term `qualified energy efficiency improvements' means any energy efficient building envelope component, and any energy efficient heating, cooling, or water heating appliance, the installation of which, by itself or in combination with other such components or appliances, is certified to improve the annual energy performance of the existing home by at least 30 percent, if--

`(1) such component or appliance is installed in or on a dwelling--

`(A) located in the United States, and

`(B) owned and used by the taxpayer as the taxpayer's principal residence (within the meaning of section 121),

`(2) the original use of such component or appliance commences with the taxpayer, and

`(3) such component or appliance reasonably can be expected to remain in use for at least 5 years.

Such certification shall be made by the contractor who installed such improvements, a local building regulatory authority, or a qualified energy consultant (such as a utility or an accredited home energy rating system provider).

`(e) SPECIAL RULES-

`(1) TENANT-STOCKHOLDER IN COOPERATIVE HOUSING CORPORATION- In the case of an individual who is a tenant-stockholder (as defined in section 216) in a cooperative housing corporation (as defined in such section), such individual shall be treated as having paid his tenant-stockholder's proportionate share (as defined in section 216(b)(3)) of the cost of qualified energy efficiency improvements made by such corporation.

`(2) CONDOMINIUMS-

`(A) IN GENERAL- In the case of an individual who is a member of a condominium management association with respect to a condominium which he owns, such individual shall be treated as having paid his proportionate share of the cost of qualified energy efficiency improvements made by such association.

`(B) CONDOMINIUM MANAGEMENT ASSOCIATION- For purposes of this paragraph, the term `condominium management association' means an organization which meets the requirements of paragraph (1) of section 528(c) (other than subparagraph (E) thereof) with respect to a condominium project substantially all of the units of which are used as residences.

`(f) BASIS ADJUSTMENT- For purposes of this subtitle, if a credit is allowed under this section for any expenditure with respect to any property, the increase in the basis of such property which would (but for this subsection) result from such expenditure shall be reduced by the amount of the credit so allowed.

`(g) TERMINATION- Subsection (a) shall apply to qualified energy efficiency improvements installed during the period beginning on January 1, 2000, and ending on December 31, 2004.'.

(b) CONFORMING AMENDMENTS-

(1) Subsection (c) of section 23 is amended by inserting `, section 25C, and section 1400C' after `other than this section'.

(2) Subparagraph (C) of section 25(e)(1) is amended by inserting `25C,' after `25B'.

(3) Subsection (d) of section 1400C is amended by striking `and 25B' and inserting `, 25B, and 25C'.

(4) Subsection (a) of section 1016 is amended by striking `and' at the end of paragraph (27), by striking the period at the end of paragraph (28) and inserting `; and', and by adding at the end the following new paragraph:

`(29) to the extent provided in section 25C(f), in the case of amounts with respect to which a credit has been allowed under section 25C.'.

(5) The table of sections for subpart A of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 25B the following new item:

`Sec. 25C. Energy efficiency improvements to existing homes.'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years ending after December 31, 2000.

SEC. 302. BUSINESS CREDIT FOR CONSTRUCTION OF NEW ENERGY EFFICIENT HOME.

(a) IN GENERAL- Subpart D of part IV of subchapter A of chapter 1 (relating to business related credits) is amended by inserting after section 45F the following new section:

`SEC. 45G. NEW ENERGY EFFICIENT HOME CREDIT.

`(a) IN GENERAL- For purposes of section 38, in the case of an eligible contractor, the credit determined under this section for the taxable year is an amount equal to the aggregate adjusted bases of all energy efficient property installed in a qualified new energy efficient home during construction of such home.

`(b) LIMITATIONS-

`(1) MAXIMUM CREDIT-

`(A) IN GENERAL- The credit allowed by this section with respect to a dwelling shall not exceed $2,000.

`(B) PRIOR CREDIT AMOUNTS ON SAME DWELLING TAKEN INTO ACCOUNT- If a credit was allowed under subsection (a) with respect to a dwelling in 1 or more prior taxable years, the amount of the credit otherwise allowable for the taxable year with respect to that dwelling shall not exceed the amount of $2,000 reduced by the sum of the credits allowed under subsection (a) with respect to the dwelling for all prior taxable years.

`(2) COORDINATION WITH REHABILITATION AND ENERGY CREDITS- For purposes of this section--

`(A) the basis of any property referred to in subsection (a) shall be reduced by that portion of the basis of any property which is attributable to qualified rehabilitation expenditures (as defined in section 47(c)(2)) or to the energy percentage of energy property (as determined under section 48(a)), and

`(B) expenditures taken into account under either section 47 or 48(a) shall not be taken into account under this section.

`(c) DEFINITIONS- For purposes of this section--

`(1) ELIGIBLE CONTRACTOR- The term `eligible contractor' means the person who constructed the new energy efficient home.

`(2) ENERGY EFFICIENT PROPERTY- The term `energy efficient property' means any energy efficient building envelope component, and any energy efficient heating, cooling, or water heating appliance.

`(3) QUALIFIED NEW ENERGY EFFICIENT HOME- The term `qualified new energy efficient home' means a dwelling--

`(A) located in the United States,

`(B) the construction of which is substantially completed after December 31, 2000,

`(C) the original use of which is as a principal residence (within the meaning of section 121) which commences with the person who acquires such dwelling from the eligible contractor, and

`(D) the energy efficiency of which is certified to exceed by 30 percent or more the applicable standards for energy efficiency, based upon energy use or building component performance established for comparable dwellings under the 1998 International Energy Conservation Code.

`(4) CONSTRUCTION- The term `construction' includes reconstruction and rehabilitation.

`(5) ACQUIRE- The term `acquire' includes purchase and, in the case of reconstruction and rehabilitation, such term includes a binding written contract for such reconstruction or rehabilitation.

`(d) CERTIFICATION- A certification described in subsection (c)(3)(D) with respect to a dwelling shall be made by the eligible contractor, a local building regulatory authority, or a qualified energy consultant (such as a utility or an accredited home energy rating system provider).

`(e) BASIS ADJUSTMENT- For purposes of this subtitle, if a credit is allowed under this section for any expenditure with respect to any property, the increase in the basis of such property which would (but for this subsection) result from such expenditure shall be reduced by the amount of the credit so allowed.

`(f) TERMINATION- Subsection (a) shall apply to dwellings purchased during the period beginning on January 1, 2000, and ending on December 31, 2004.'.

(b) CREDIT MADE PART OF GENERAL BUSINESS CREDIT- Subsection (b) of section 38 (relating to current year business credit) is amended by striking `plus' at the end of paragraph (14), by striking the period at the end of paragraph (15) and inserting `, plus', and by adding at the end thereof the following new paragraph:

`(16) the new energy efficient home credit determined under section 45G.'.

(c) DENIAL OF DOUBLE BENEFIT- Section 280C (relating to certain expenses for which credits are allowable) is amended by adding at the end thereof the following new subsection:

`(d) NEW ENERGY EFFICIENT HOME EXPENSES- No deduction shall be allowed for that portion of expenses for a new energy efficient home otherwise allowable as a deduction for the taxable year which is equal to the amount of the credit determined for such taxable year under section 45G.'.

(d) CREDIT ALLOWED AGAINST REGULAR AND MINIMUM TAX-

(1) IN GENERAL- Subsection (c) of section 38 (relating to limitation based on amount of tax) is amended by redesignating paragraph (4) as paragraph (5) and by inserting after paragraph (3) the following new paragraph:

`(4) SPECIAL RULES FOR NEW ENERGY EFFICIENT HOME CREDIT-

`(A) IN GENERAL- In the case of the new energy efficient home credit--

`(i) this section and section 39 shall be applied separately with respect to the credit, and

`(ii) in applying paragraph (1) to the credit--

`(I) subparagraph (A) thereof shall not apply, and

`(II) the limitation under paragraph (1) (as modified by subclause (I)) shall be reduced by the credit allowed under subsection (a) for the taxable year (other than the new energy efficient home credit).

`(B) NEW ENERGY EFFICIENT HOME CREDIT- For purposes of this subsection, the term `new energy efficient home credit' means the credit allowable under subsection (a) by reason of section 45G.'.

(2) CONFORMING AMENDMENT- Subclause (II) of section 38(c)(2)(A)(ii) is amended by inserting `, the new energy efficient home credit,' after `employment credit'.

(e) LIMITATION ON CARRYBACK- Subsection (d) of section 39 is amended by adding at the end the following new paragraph:

`(11) NO CARRYBACK OF NEW ENERGY EFFICIENT HOME CREDIT BEFORE EFFECTIVE DATE- No portion of the unused business credit for any taxable year which is attributable to the credit determined under section 45G may be carried back to any taxable year ending before the date of the enactment of section 45G.'.

(f) DEDUCTION FOR CERTAIN UNUSED BUSINESS CREDITS- Subsection (c) of section 196 is amended by striking `and' at the end of paragraph (8), by striking the period at the end of paragraph (9) and inserting `, and', and by adding after paragraph (9) the following new paragraph:

`(10) the new energy efficient home credit determined under section 45G.'.

(g) CLERICAL AMENDMENT- The table of sections for subpart D of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 45F the following new item:

`Sec. 45G. New energy efficient home credit.'.

(h) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years ending after December 31, 2000.

TITLE IV--REPEAL OF FEDERAL COMMUNICATIONS EXCISE TAX

SEC. 401. REPEAL OF FEDERAL COMMUNICATIONS EXCISE TAX.

(a) IN GENERAL- Chapter 33 (relating to facilities and services) is amended by striking subchapter B.

(b) PHASE-OUT OF TAX- Paragraph (2) of section 4251(b) (defining applicable percentage) is amended to read as follows:

`(2) APPLICABLE PERCENTAGE- The term `applicable percentage' means--

`(A) 2 percent with respect to amounts paid pursuant to bills first rendered on or after the 30th day after the date of the enactment of this subparagraph and before October 1, 2001, and

`(B) 1 percent with respect to amounts paid pursuant to bills first rendered after September 30, 2001, and before October 1, 2002.'.

(c) CONFORMING AMENDMENTS-

(1) Section 4293 is amended by striking `chapter 32 (other than the taxes imposed by sections 4064 and 4121) and subchapter B of chapter 33,' and inserting `and chapter 32 (other than the taxes imposed by sections 4064 and 4121),'.

(2)(A) Paragraph (1) of section 6302(e) is amended by striking `section 4251 or'.

(B) Paragraph (2) of section 6302(e) is amended--

(i) by striking `imposed by--' and all that follows through `with respect to' and inserting `imposed by section 4261 or 4271 with respect to', and

(ii) by striking `bills rendered or'.

(C) The subsection heading for section 6302(e) is amended by striking `COMMUNICATIONS SERVICES AND'.

(3) Section 6415 is amended by striking `4251, 4261, or 4271' each place it appears and inserting `4261 or 4271'.

(4) Paragraph (2) of section 7871(a) is amended by inserting `or' at the end of subparagraph (B), by striking subparagraph (C), and by redesignating subparagraph (D) as subparagraph (C).

(5) The table of subchapters for chapter 33 is amended by striking the item relating to subchapter B.

(d) EFFECTIVE DATES-

(1) REPEAL- The amendments made by subsections (a) and (c) shall apply to amounts paid pursuant to bills first rendered after September 30, 2002.

(2) PHASE-OUT- The amendment made by subsection (b) shall apply to amounts paid pursuant to bills first rendered on or after the 30th day after the date of the enactment of this Act.

TITLE V--DONATION OF COMPUTER TECHNOLOGY AND EQUIPMENT TO ELEMENTARY AND SECONDARY SCHOOLS

SEC. 501. CREDIT FOR DONATION OF COMPUTER TECHNOLOGY AND EQUIPMENT TO ELEMENTARY AND SECONDARY SCHOOLS.

(a) GENERAL RULE- Subpart D of part IV of subchapter A of chapter 1 (relating to business related credits) is amended by adding at the end the following new section:

`SEC. 45H. DONATION OF COMPUTER TECHNOLOGY AND EQUIPMENT TO ELEMENTARY AND SECONDARY SCHOOLS.

`(a) GENERAL RULE- For purposes of section 38, the computer donation credit determined under this section for the taxable year is an amount equal to 50 percent of the qualified computer technology donations made in the taxable year by a corporation.

`(b) LIMITATION- The credit allowed under subsection (a) shall not exceed 10 percent of the corporation's taxable income computed without regard to--

`(1) this section,

`(2) part VIII (except section 248),

`(3) any net operating loss carryback to the taxable year under section 172, and

`(4) any capital loss carryback to the taxable year under section 1212(a)(1).

`(c) DEFINITIONS- For purposes of subsection (a)--

`(1) QUALIFIED COMPUTER TECHNOLOGY DONATIONS- The term `qualified computer technology donations' means a qualified elementary or secondary educational contribution (as defined in section 170(e)(6).

`(2) CORPORATION- The term `corporation' shall have the meaning given to such term by section 170(e)(4)(D).'

(b) CREDIT MADE PART OF GENERAL BUSINESS CREDIT- Subsection (b) of section 38 is amended by striking `plus' at the end of paragraph (15), by striking the period at the end of paragraph (16) and inserting `, plus', and by adding at the end thereof the following new paragraph:

`(17) the computer donation credit determined under section 45H(a).'.

(c) CREDIT ALLOWED AGAINST REGULAR AND MINIMUM TAX-

(1) IN GENERAL- Subsection (c) of section 38 (relating to limitation based on amount of tax) is amended by redesignating paragraph (5) as paragraph (6) and by inserting after paragraph (4) the following new paragraph:

`(5) SPECIAL RULES FOR COMPUTER DONATION CREDIT-

`(A) IN GENERAL- In the case of the computer donation credit--

`(i) this section and section 39 shall be applied separately with respect to the credit, and

`(ii) in applying paragraph (1) to the credit--

`(I) subparagraph (A) thereof shall not apply, and

`(II) the limitation under paragraph (1) (as modified by subclause (I)) shall be reduced by the credit allowed under subsection (a) for the taxable year (other than the computer donation credit).

`(B) COMPUTER DONATION CREDIT- For purposes of this subsection, the term `computer donation credit' means the credit allowable under subsection (a) by reason of section 45H(a).'.

(2) CONFORMING AMENDMENT- Subclause (II) of section 38(c)(2)(A)(ii) is amended by inserting `or the computer donation credit' after `the new energy efficient home credit'.

(d) LIMITATION ON CARRYBACK- Subsection (d) of section 39 is amended by adding at the end thereof the following new paragraph:

`(12) NO CARRYBACK OF COMPUTER DONATION CREDIT BEFORE EFFECTIVE DATE- No portion of the unused business credit for any taxable year which is attributable to the credit determined under section 45H may be carried back to any taxable year ending before the date of the enactment of section 45H.'.

(e) DEDUCTION FOR CERTAIN UNUSED BUSINESS CREDITS- Subsection (c) of section 196 is amended by striking `and' at the end of paragraph (9), by striking the period at the end of paragraph (10) and inserting `, and', and by adding after paragraph (10) the following new paragraph:

`(11) the computer donation credit determined under section 45H.'.

(f) DENIAL OF DOUBLE BENEFIT- Section 280C is amended by adding at the end thereof the following new subsection:

`(e) CREDIT FOR QUALIFIED COMPUTER TECHNOLOGY DONATIONS- No deduction shall be allowed for that portion of the donations referred to in section 45H(c)(1) otherwise allowable as a deduction for the taxable year which is equal to the amount of the credit determined for such taxable year under section 45H(a).'.

(g) CLERICAL AMENDMENT- The table of sections for subpart D of part IV of subchapter (A) of chapter 1 is amended by adding at the end the following new item:

`Sec. 45H. Donation of computer technology and equipment to elementary and secondary schools.'.

(h) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

END