article: SECTION 1. INVESTMENT CREDIT FOR STAGE 3 AIRCRAFT MODIFICATIONS. (a) Allowance of Credit.--Section 46 of the Internal Revenue Code of 1986 (relating to amount of investment credit) is amended by striking ``and'' at the end of paragraph (2), by striking the period at the end of paragraph (3) and inserting ``, and'', and by adding at the end the following new paragraph: ``(4) the stage 3 aircraft modification credit.'' (b) Amount of Credit.--Section 48 of such Code is amended by adding at the end the following new subsection: ``(c) Stage 3 Aircraft Modification Credit.-- ``(1) In general.--For purposes of section 46, the stage 3 aircraft modification credit is the stage 3 aircraft modification percentage of the basis of each stage 3 aircraft modification property placed in service during the taxable year. ``(2) Stage 3 aircraft modification percentage.--The stage 3 aircraft modification percentage is 10 percent. ``(3) Qualified stage 3 aircraft modification property.-- For purposes of this subpart-- ``(A) In general.--The term `qualified stage 3 aircraft modification property' means tangible property-- ``(i) which is an integral part of and modification of a nonstage 3 aircraft (including the installation of different engines or the retrofit of the existing engines with sound attenuation devices), ``(ii) which is certificated by the Federal Aviation Administration and is made to qualify the aircraft for the stage 3 noise level requirements, and ``(iii) the original use of which begins with the taxpayer. ``(B) Stage 3 noise level.--The term `stage 3 noise level' has the meaning given such term by section 36.1(f)(5) of title 14, Code of Regulations (as in effect on February 15, 1993). ``(C) Nonstage 3 aircraft.--The term `nonstage 3 aircraft' means an aircraft with a maximum gross takeoff weight in excess of 75,000 pounds which did not meet the stage 3 noise level requirements before the stage 3 aircraft modification property was installed. ``(4) Special rule for certain purchases and leases.--For purposes of paragraph (3)(A)(iii), a qualified stage 3 aircraft modification property shall be treated as originally placed in service by a person if it is sold to such person or is leased by such person within 3 months of the date such modifications are made.'' (c) Stage 3 Aircraft Modification Credit Allowable Against Regular Tax and Alternative Minimum Tax.--Subsection (c) of section 38 of such Code (relating to limitation based on amount of tax) is amended by adding at the end the following new paragraph: ``(3) Special rules for stage 3 aircraft modification credit.-- ``(A) Liability for tax.--In the case of the stage 3 aircraft modification credit, the credit allowable under subsection (a) for any taxable year shall not exceed the excess (if any) of-- ``(i) the sum of-- ``(I) the taxpayer's tentative minimum tax liability under section 55(b) for such taxable year determined without regard to the stage 3 aircraft modification credit, plus ``(II) the taxpayer's regular tax liability for such taxable year (as defined in section 26(b)), over ``(ii) the sum of the credits allowable against the taxpayer's regular tax liability under part IV (other than section 34 and the stage 3 aircraft modification credit). ``(B) Application of the credit.--Each of the following amounts shall be reduced by the full amount of the credit determined under subparagraph (A): ``(i) the taxpayer's tentative minimum tax under section 55(b) for the taxable year, and ``(ii) the taxpayer's regular tax liability (as defined in section 26(b)) reduced by the sum of the credits allowable under part IV (other than section 34 and the stage 3 aircraft modification credit). If the amount of the credit determined under subparagraph (A) exceeds the amount described in clause (ii) of subparagraph (B), then the excess shall be deemed to be the adjusted net minimum tax for such taxable year for purposes of section 53.'' (d) Technical and Conforming Amendments.-- (1) Paragraph (1) of section 38(c) of such Code is amended by striking ``The credit'' and inserting ``Except as provided in paragraph (3), the credit''. (2) Paragraph (2) of section 55(c) of such Code is amended-- (A) by striking ``For provisions'' and inserting ``(A) For provisions'', and (B) by adding at the end the following new subparagraph: ``(B) For provisions allowing the stage 3 aircraft modification credit against the tax imposed by this section, see section 38(c)(3).'' (3) Section 49(a)(1)(C) of such Code is amended by striking ``and'' at the end of clause (ii), by striking the period at the end of clause (iii) and inserting ``, and'', and by adding at the end the following new clause: ``(iv) the basis of any qualified stage 3 aircraft modification property.'' (4)(A) The section heading for section 48 of such Code is amended to read as follows: ``SEC. 48. OTHER CREDITS.'' (B) The table of sections for subpart E of part IV of subchapter A of chapter 1 of such Code is amended by striking the item relating to section 48 and inserting the following: ``Sec. 48. Other credits.'' (e) Effective Date.--The amendments made by this section apply to stage 3 aircraft modification property completed after December 31, 1991, and placed in service after December 31, 1991, and before January 1, 1997.
summary: Amends the Internal Revenue Code to allow businesses an investment tax credit for costs incurred for noise modification of aircraft from stage 2 levels to stage 3 levels. Allows such credit against the regular tax and alternative minimum tax.