II 110th CONGRESS 1st Session S. 1910 IN THE SENATE OF THE UNITED STATES August 1, 2007 Mr. Reed (for himself, Ms. Snowe, Mr. Kerry, and Mr. Kennedy) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to provide that amounts derived from Federal grants and State matching funds in connection with revolving funds established in accordance with the Federal Water Pollution Control Act and the Safe Drinking Water Act will not be treated as proceeds or replacement proceeds for purposes of section 148 of such Code.

1.

Treatment of Federal grants and State matching funds in connection with revolving funds established in accordance with Federal Water Pollution Control Act and Safe Drinking Water Act

(a)

In general

Section 148(a) of the Internal Revenue Code of 1986 (defining arbitrage bond) is amended by adding at the end the following new sentence: For purposes of determining whether a bond is an arbitrage bond under this section, any amount derived from an investment of any Federal grant or related State match made in connection with any revolving fund established in accordance with title VI of the Federal Water Pollution Control Act or section 1452 of the Safe Drinking Water Act (or subsequent reauthorizations of such Acts) shall not be taken into account.. (b)

Effective date

The amendment made by this section shall apply to obligations issued or outstanding after the date of the enactment of this Act, but only with respect to amounts earned on outstanding obligations after such date of enactment.