To amend the Internal Revenue Code of 1986 to provide an incremental investment tax credit to assist defense contractors in converting to non-defense operations.

Amends the Internal Revenue Code to establish a defense contractor conversion investment tax credit to be equal to 15 percent of: (1) the incremental nondefense qualified investment for a taxable year; plus (2) the qualified nondefense product expenses incurred during such year.

Defines a "defense contractor" as any taxpayer if more than ten percent of its gross receipts are derived from defense contracts.

Bars a deduction for that portion of the qualified nondefense product expenses otherwise allowable as a deduction that is equal to the amount of credit with respect to such expenses.