text: SECTION 1. SMALL MANUFACTURERS' COMPUTER HARDWARE AND SOFTWARE TAX 
                CREDIT IN LIEU OF EXPENSING.
  
      (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
  of the Internal Revenue Code of 1986 is amended by adding at the end 
  the following new section:
  
  ``SEC. 45R. SMALL MANUFACTURERS COMPUTER HARDWARE AND SOFTWARE TAX 
                CREDIT.
  
      ``(a) In General.--For purposes of section 38, the small 
  manufacturers' computer hardware and software credit determined under 
  this section for the taxable year is the lesser of--
              ``(1) 50 percent of the amount paid or incurred by the 
          taxpayer during the taxable year for qualified computer 
          hardware and software property; or
              ``(2) $35,000.00.
      ``(b) Qualified Computer Hardware and Software Property.--For 
  purposes of this section, the term `qualified computer hardware and 
  software property' means any computer hardware and software property 
  for use in any small manufacturer located in the United States--
              ``(1) the original use of which commences with the 
          taxpayer;
              ``(2) which is property of a character subject to the 
          allowance for depreciation; and
              ``(3) which is placed in service by the taxpayer after the 
          date of the enactment of this section.
      ``(c) Computer Hardware.--For purposes of this section, the term 
  `computer hardware' includes disk drives, integrated circuits, display 
  screens, cables, modems, speakers, and printers.
      ``(d) Computer Software.--For purposes of this section, the term 
  `computer software' means programs, programming languages, data that 
  direct the operations of a computer system or network, enterprise 
  resource planning software, manufacturing resource planning software, 
  materials requirements planning software and software designed to 
  enhance Internet capabilities.
      ``(e) Small Manufacturer.--For purposes of this section:
              ``(1) In general.--The term `small manufacturer' means--
                      ``(A) any unincorporated business, any partnership, 
                  or for-profit corporation;
                      ``(B) with respect to a taxable year, any which 
                  employed an average of 50 or fewer employees on 
                  business days during the preceding calendar year. For 
                  purposes of the preceding sentence, a preceding 
                  calendar year may be taken into account only if the 
                  small business was in existence throughout such year.
              ``(2) Small manufacturers not in existence in preceding 
          taxable year.--In the case of a small manufacturer which was 
          not in existence throughout the preceding calendar year, the 
          determination under paragraph (1) shall be based on the average 
          number of employees that it is reasonably expected such 
          employer or sole proprietor will employ on business days in the 
          current calendar year.
      ``(f) Calculation of Number of Employees.--For purposes of 
  subsection (e), the number of employees of a subsidiary of a wholly 
  owned corporation includes the employees of--
              ``(1) a parent corporation; and
              ``(2) any other subsidiary corporation of that parent 
          corporation.
      ``(g) Basis Adjustment.--For purposes of this subtitle, if a credit 
  is determined under this section in connection with any expenditure for 
  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 determined.
      ``(h) Termination.--This section shall not apply with respect to 
  any property placed in service after December 31, 2011.''.
      (b) Credit To Be Part of General Business Credit.--Section 38(b) of 
  such Code is amended by striking ``plus'' at the end of paragraph (34), 
  by striking the period at the end of paragraph (35) and inserting ``, 
  plus'', and by adding at the end the following new paragraph:
              ``(36) the small manufacturers' computer hardware and 
          software credit determined under section 45R(a).''.
      (c) Denial of Double Benefit.--Section 280C of such Code is amended 
  by adding at the end the following new subsection:
      ``(f) Small Manufacturers Computer Hardware and Software Credit.--
  No deduction shall be allowed for that portion of the expenses 
  otherwise allowable as a deduction for the taxable year which is equal 
  to the amount of the credit determined for the taxable year under 
  section 45R.''.
      (d) Allowance of Credit Against Alternative Minimum Tax.--
  Subparagraph (B) of section 38(c)(4) of such Code is amended by 
  striking ``and'' at the end of clause (vii), by striking the period at 
  the end of clause (viii) and insert ``, and'', and by inserting after 
  clause (viii) the following new clause:
                              ``(ix) the credit determined under section 
                          45R.''.
      (e) Transferability of Credit.--Nothing in any law or rule shall be 
  construed to limit the transferability, through sale and repurchase 
  agreements, of the credit allowed by reason of section 45R.
      (f) Effective Date.--The amendments made by this section shall 
  apply to taxable years ending after December 31, 2008.
target: Amends the Internal Revenue Code to allow certain small manufacturers a tax credit for their computer hardware and software expenses. Limits such credit to the lesser of 50% of such expenses or $35,000. Terminates such credit after 2011.
feat_title: To amend the Internal Revenue Code of 1986 to provide incentives for improving small manufacturers' computer technology.