[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2603 Introduced in House (IH)]

103d CONGRESS
  1st Session
                                H. R. 2603

To amend the Internal Revenue Code of 1986 to provide transition relief 
            for nonprofit student loan funding corporations.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              July 1, 1993

Mr. Neal of Massachusetts (for himself and Mr. Moakley) introduced the 
 following bill; which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to provide transition relief 
            for nonprofit student loan funding corporations.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. ELECTION TO CEASE STATUS AS QUALIFIED SCHOLARSHIP FUNDING 
              CORPORATION.

    ``(a) In General.--Subsection (d) of section 150 of the Internal 
Revenue Code of 1986 (relating to definitions and special rules) is 
amended by adding at the end thereof the following new paragraph:
            ``(3) Election to cease status as qualified scholarship 
        funding corporation.--
                    ``(A) In general.--Any bond outstanding on the date 
                of the issuer's election under this paragraph (and any 
                bond issued to refund such a bond) shall not fail--
                            ``(i) to be qualified scholarship funding 
                        bond; or
                            ``(ii) to be a qualified student loan 
                        bond--
                (or similar provisions of prior law) merely because the 
                issuer ceases to be described in paragraph (2) if the 
                issuer meets the requirements of subparagraphs (B) and 
                (C), or engages in a transaction described in 
                subparagraph (B), of this paragraph.
                    ``(B) Assets and liabilities of issuer transferred 
                to taxable subsidiary.--The requirements of this 
                subparagraph are met by an issuer if--
                            ``(i) all of the student loan notes of the 
                        issuer are transferred to another corporation 
                        within a reasonable period after the election 
                        is made under this paragraph;
                            ``(ii) such other corporation assumes or 
                        otherwise provides for the payment of all of 
                        the qualified scholarship funding bond 
                        indebtedness of the issuer within a reasonable 
                        period after the election is made under this 
                        paragraph;
                            ``(iii) to the extent permitted by law, 
                        such other corporation assumes all of the 
                        responsibilities, and succeeds to all of the 
                        rights, of the issuer under the issuer's 
                        agreements with the Secretary of Education in 
                        respect of student loans;
                            ``(iv) immediately after such transfer, the 
                        issuer holds all of the stock in such other 
                        corporation; and
                            ``(v) such other corporation is not exempt 
                        from tax under this chapter.
                    ``(C) Issuer to operate as organization described 
                in section 501(c)(3)--The requirements of this 
                subparagraph are met by an issuer if, after the 
                transfer referred to in subparagraph (B), the issuer is 
                described in section 501(c)(3) and exempt from tax 
                under section 501(a).
                    ``(D) Coordination with tax on excess business 
                holdings.--For purposes of section 4943, the 
                corporation to which the issuer makes the transfer 
                referred to in subparagraph (B) shall be treated as a 
                functionally related business (as defined in section 
                4942(j)(4)) with respect to the issuer so long as more 
                than 50 percent of the gross income of such corporation 
                is derived from, or more than 50 percent of the assets 
                (by value) of such corporation consists of, student 
                loan notes incurred under the Higher Education Act of 
                1965.
                    ``(E) Election.--An election under this paragraph 
                may be revoked only with the consent of the 
                Secretary.''
    (b) Effective Date.--the amendment made by this section shall take 
effect on the date of the enactment of this Act.

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