[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2617 Introduced in House (IH)]







104th CONGRESS
  1st Session
                                H. R. 2617

To amend the Internal Revenue Code of 1986 to exempt small issues from 
    the restrictions on the deduction by financial institutions for 
   interest, to disregard certain amounts of capital expenditures in 
   applying $10,000,000 limit on such issues, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           November 10, 1995

 Mr. English of Pennsylvania (for himself, Mr. Fox, and Mr. Underwood) 
 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 exempt small issues from 
    the restrictions on the deduction by financial institutions for 
   interest, to disregard certain amounts of capital expenditures in 
   applying $10,000,000 limit on such issues, and for other purposes.

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

SECTION 1. QUALIFIED SMALL ISSUE BONDS EXEMPT FROM RESTRICTIONS ON 
              DEDUCTION BY FINANCIAL INSTITUTIONS FOR INTEREST.

    (a) In General.--Clause (ii) of section 265(b)(3)(B) of the 
Internal Revenue Code of 1986 (defining qualified tax-exempt 
obligation) is amended by striking ``or'' at the end of subclause (I), 
by redesignating subclause (II) as subclause (III), and by inserting 
after subclause (I) the following new subclause:
                                    ``(II) any qualified small issue 
                                bond (as defined in section 144(a)), 
                                or''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

SEC. 2. $10,000,000 OF CAPITAL EXPENDITURES DISREGARDED IN APPLYING 
              $10,000,000 LIMITATION ON FACE AMOUNT OF QUALIFIED SMALL 
              ISSUE BONDS.

    (a) In General.--Subparagraph (A) of section 144(a)(4) of the 
Internal Revenue Code of 1986 (relating to $10,000,000 limit in certain 
cases) is amended by adding at the end the following new flush 
sentence:
                ``Capital expenditures which would (but for this 
                sentence) be taken into account under clause (ii) shall 
                be taken into account only to the extent such 
                expenditures exceed $10,000,000.''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to--
            (1) obligations issued after the date of the enactment of 
        this Act, and
            (2) capital expenditures made after such date with respect 
        to obligations issued on or before such date.

SEC. 3. LIMITATION ON LAND ACQUISITION NOT TO APPLY TO QUALIFIED SMALL 
              ISSUE BONDS.

    (a) In General.--Subsection (c) of section 147 of the Internal 
Revenue Code of 1986 (relating to limitation on use for land 
acquisition) is amended by adding at the end the following new 
paragraph:
            ``(4) Exception for qualified small issue bonds.--Paragraph 
        (1)(A) shall not apply to any qualified small issue bond.''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to obligations issued after the date of the enactment of this 
Act.

SEC. 4. REPEAL OF PERCENTAGE LIMITATION ON DIRECTLY RELATED AND 
              ANCILLARY FACILITIES WHICH MAY BE FINANCED BY QUALIFIED 
              SMALL ISSUE BONDS.

    (a) In General.--The last sentence of section 144(a)(12)(C) of the 
Internal Revenue Code of 1986 (defining manufacturing property) is 
amended by striking ``if--'' and all that follows and inserting ``if 
such facilities are located on the same site as the manufacturing 
facility.''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to obligations issued after the date of the enactment of this 
Act.

SEC. 5. REPEAL OF DE MINIMIS LIMITATION APPLICABLE TO FINANCING OF 
              OFFICE SPACE BY QUALIFIED SMALL ISSUE BONDS.

    (a) In General.--Subparagraph (C) of section 144(a)(12) of the 
Internal Revenue Code of 1986 (defining manufacturing property) is 
amended by striking the second sentence and by adding at the end the 
following new sentence: ``An office shall not be treated as described 
in the 1st sentence of this subparagraph unless--
                            ``(i) the office is located on the premises 
                        of a facility described in such sentence, and
                            ``(ii) not more than a de minimis amount of 
                        the functions to be performed at such office is 
                        not directly related to the day-to-day 
                        operations at such facility.''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to obligations issued after the date of the enactment of this 
Act.
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