OTHER MODIFICATIONS TO MINIMUM TAX.

SEC. 7612. OTHER MODIFICATIONS TO MINIMUM TAX. (a) Modification to Corporate Minimum Tax Credit.— (1) In general.— Subparagraph (B) of section 53(d)(1) (relating to credit not allowed for exclusion preferences) is amended by adding at the end thereof the following new clause: “(iv) Credit allowable for exclusion preferences of corporations.—In the case of a corporation— “(I) the preceding provisions of this subparagraph shall not apply, and “(II) the adjusted net minimum tax for any taxable year is the amount of the net minimum tax for such year increased by the amount of any credit not allowed under section 29 solely by reason of the application of section 29(b)(5)(B).” (2) Conforming amendment.— Clause (ii) of section 53(d)(1)(B) is amended— (A) by striking “subsections (b)(1) and (c)(3)” and inserting “subsection (b)(1)”, and (B) by striking the last sentence. (3) Effective date.—The amendments made by this subsection shall apply for purposes of determining the adjusted net 103 STAT. 2374minimum tax for taxable years beginning after December 31, 1989. (b) Adjustment for Disallowed Portion of Orphan Drug Credit.— (1) In general.—Clauses (iii) and (iv) of section 53(d)(1) (B) (as amended by subsection (a)) are each amended by inserting after “section 29(d)(5)(B)” the following: “or not allowed under section 28 solely by reason of the application of section 28(d)(2)(B)”. (2) Effective date.—The amendment made by paragraph (1) shall apply for purposes of determining the amount of the minimum tax credit for taxable years beginning after December 31, 1989; except that, for such purposes, section 53(b)(1) of the Internal Revenue Code of 1986 shall be applied as if such amendment had been in effect for all prior taxable years. (c) Exemption for Certain Home Construction Contracts.— (1) In general.—Paragraph (3) of section 56(a) (relating to treatment of certain long-term contracts) is amended by striking “with respect to which the requirements of clauses (i) and (ii) of section 460(e)(1)(B) are met”. (2) Effective date.—The amendment made by paragraph (1) shall apply to contracts entered into in taxable years beginning after September 30, 1990, (d) Treatment of Certain Research and Experimental Expenditures.— (1) In general.— Paragraph (2) of section 56(b) (relating to circulation and research and experimental expenditures) is amended by adding at the end thereof the following new subparagraph: “(D) Exception for certain research and experimental expenditures.—If the taxpayer materially participates (within the meaning of section 469(h)) in an activity, this paragraph shall not apply to any amount allowable as a deduction under section 174(a) for expenditures paid or incurred in connection with such activity.” (2) Effective date.—The amendment made by paragraph (1) shall apply to taxable years beginning after December 31, 1990. (e) 90-Percent Limitation on Foreign Tax Credit Not To Apply to Certain Corporations.— (1) In general.— Paragraph (2) of section 59(a) (relating to limitation of foreign tax credit to 90-percent of tax) is amended by adding at the end thereof the following new subparagraph: “(C) Exception.— Subparagraph (A) shall not apply to any domestic corporation if— “(i) more than 50 percent of the stock of such domestic corporation (by vote and value) is owned by United States persons who are not members of an affiliated group (as defined in section 1504 of such Code) which includes such corporation, “(ii) all of the activities of such corporation are conducted in 1 foreign country with which the United States has an income tax treaty in effect and such treaty provides for the exchange of information between such foreign country and the United States, “(iii) all of the current earnings and profits of such corporation are distributed at least annually (other than current earnings and profits retained for normal 103 STAT. 2375maintenance or capital replacements or improvements of an existing business), and “(iv) all of such distributions by such corporation to United States persons are used by such persons in a trade or business conducted in the United States.” (2) Effective date.— (A) In general.—The amendment made by paragraph (1) shall apply to taxable years beginning after March 31, 1990. (B) Special rule for year which includes march 31, 1990.—In the case of any taxable year (of a corporation described in subparagraph (C) of section 59(a)(2) of the Internal Revenue Code of 1986 (as added by paragraph (1))) which begins after December 31, 1989, and includes March 31, 1990, the amount determined under clause (ii) of section 59(a)(2)(A) of such Code shall be an amount which bears the same ratio to the amount which would have been determined under such clause without regard to this subparagraph as the number of days in such taxable year on or before March 31, 1990, bears to the total number of days in such taxable year. (f) Study of Depreciation Treatment of Certain Vehicles.— (1) In general.—The Secretary of the Treasury or his delegate shall conduct a study on the proper class life for cars and light trucks. (2) Report.—Not later than the day 1 year after the date of the enactment of this Act, the Secretary shall submit a report to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate on the report conducted under paragraph (1), together with such recommendations as he may deem advisable.