[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1303 Introduced in House (IH)]
107th CONGRESS
1st Session
H. R. 1303
To amend the Internal Revenue Code of 1986 to clarify the rules
relating to lessee construction allowances and to contributions to the
capital of retailers.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 29, 2001
Ms. Dunn 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 clarify the rules
relating to lessee construction allowances and to contributions to the
capital of retailers.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. EXCLUSION FROM GROSS INCOME OF QUALIFIED LESSEE CONSTRUCTION
ALLOWANCES NOT LIMITED TO SHORT-TERM LEASES.
(a) In General.--Subsection (a) of section 110 of the Internal
Revenue Code of 1986 (relating to qualified lessee construction
allowances for short term leases) is amended by striking the period at
the end and inserting ``, and the amount expended meets the
requirements of the expenditure rule. Paragraph (1) shall not apply if
the lessee is a qualified retail business (as defined by section
118(d)(3) without regard to the proximity requirement in subparagraph
(A) thereof).''.
(b) Expenditure Rule.--Section 110 of such Code is amended by
redesignating subsections (b),(c), and (d) as subsections (c), (d), and
(e), respectively, and by inserting after subsection (a) the following
new subsection:
``(b) Expenditure Rule.--An expenditure meets the requirements of
this subsection if the expenditure occurs before the end of the second
taxable year after such amount was received.''.
(c) Conforming Amendments.--
(1) The section heading for section 110 of such Code is
amended by striking ``for short-term leases''.
(2) The item relating to section 110 in the table of
sections for part III of subchapter B of chapter 1 of such Code
is amended by striking ``for short-term leases''.
(d) Effective Date.--The amendments made by this section shall
apply to leases entered into after the date of the enactment of this
Act.
SEC. 2. EXCLUSION FROM GROSS INCOME FOR CERTAIN CONTRIBUTIONS TO THE
CAPITAL OF CERTAIN RETAILERS.
(a) In General.--Section 118 of the Internal Revenue Code of 1986
(relating to contributions to the capital of a corporation) is amended
by redesignating subsections (d) and (e) as subsections (e) and (f),
respectively, and by inserting after subsection (c) the following new
subsection:
``(d) Safe Harbor for Contributions to Certain Retailers.--
``(1) General rule.--For purposes of this section, the term
`contribution to the capital of the taxpayer' includes any
amount of money or other property received by the taxpayer if--
``(A) the taxpayer has entered into an agreement to
operate (or cause to be operated) a qualified retail
business at a particular location for a period of at
least 15 years,
``(B)(i) immediately after the receipt of such
money or other property, the taxpayer owns the land and
the structure to be used by the taxpayer in carrying on
a qualified retail business at such location, or
``(ii) the taxpayer uses such amount to acquire
ownership of at least such land and structure,
``(C) such amount meets the requirements of the
expenditure rule of paragraph (2), and
``(D) the contributor of such amount does not hold
a beneficial interest in any property located on the
premises of such qualified retail business other than
de minimis amounts of property associated with the
operation of property adjacent to such premises.
``(2) Expenditure rule.--An amount meets the requirements
of this paragraph if--
``(A) an amount equal to such amount is expended
for the acquisition of land or for acquisition or
construction of other property described in section
1231(b)--
``(i) which was the purpose motivating the
contribution, and
``(ii) which is used predominantly in a
qualified retail business at the location
referred to in paragraph (1)(A),
``(B) the expenditure referred to in subparagraph
(A) occurs before the end of the second taxable year
after the year in which such amount was received, and
``(C) accurate records are kept of the amounts
contributed and expenditures made on the basis of the
project for which the contribution was made and on the
basis of the year of the contribution expenditure.
``(3) Definition of qualified retail business.--
``(A) In general.--Except as provided in
subparagraph (B), the term `qualified retail business'
means a trade or business of selling tangible personal
property to the general public if the premises on which
such trade or business is conducted is in close
proximity to property that the contributor of the
amount referred to in paragraph (1) is developing or
operating for profit (or, in the case of a contributor
which is a governmental entity, is attempting to
revitalize).
``(B) Services.--A trade or business shall not fail
to be treated as a qualified retail business by reason
of sales of services if such sales are incident to the
sale of tangible personal property or if the services
are de minimis in amount.
``(4) Special rules.--
``(A) Leases.--For purposes of paragraph (1),
property shall be treated as owned by the taxpayer if
the taxpayer is the lessee of such property under a
lease having a term of at least 30 years and on which
only nominal rent is required.
``(B) Controlled groups.--For purposes of this
subsection, all persons treated as a single employer
under subsection (a) or (b) of section 52 shall be
treated as one person.
``(5) Disallowance of deductions and credits; adjusted
basis.--Notwithstanding any other provision of this subtitle,
no deduction or credit shall be allowed for, or by reason of,
any amount received by the taxpayer which constitutes a
contribution to capital to which this subsection applies. The
adjusted basis of any property acquired with the contributions
to which this subsection applies shall be reduced by the amount
of the contributions to which this subsection applies.
``(6) Regulations.--The Secretary shall prescribe such
regulations are appropriate to prevent the abuse of the
purposes of the subsection, including regulations which
allocate income and deductions (or adjust the amount excludable
under this subsection) in cases in which--
``(A) payments in excess of fair market value are
paid to the contributor by the taxpayer, or
``(B) the contributor and the taxpayer are related
parties.''.
(b) Conforming Amendment.--Subsection (e) of section 118 of such
Code (as redesignated by subsection (a)) is amended by adding at the
end the following flush sentence:
``Rules similar to the rules of the preceding sentence shall apply to
any amount treated as a contribution to the capital of the taxpayer
under subsection (d).''.
(c) Effective Date.--The amendments made by this section shall
apply to amounts received after the date of the enactment of this Act.
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