text: 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.
target: 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.
feat_title: To amend the Internal Revenue Code of 1986 to provide an investment tax credit for Stage 3 aircraft.