I 111th CONGRESS 1st Session H. R. 425 IN THE HOUSE OF REPRESENTATIVES January 9, 2009 Mr. Neal of Massachusetts (for himself and Mr. Ryan of Wisconsin) 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 prevent the alternative minimum tax from effectively repealing the Federal tax exemption for interest on State and local private activity bonds.

1.

Repeal of alternative minimum tax on private activity bonds

(a)

In General

Subsection (a) of section 57 of the Internal Revenue Code of 1986 (relating to items of tax preference) is amended by striking paragraph (5). (b)

Conforming Amendments

(1)Subparagraph (B) of section 1(g)(7) of such Code is amended by adding and at the end of clause (i), by striking , and at the end of clause (ii) and inserting a period, and by striking clause (iii). (2)Subclause (II) of section 53(d)(1)(B)(ii) of such Code is amended by striking , (5),. (3)Subparagraph (C) of section 56(b)(1) of such Code is amended by striking clause (iii) and redesignating clauses (iv) and (v) as clauses (iii) and (iv), respectively. (4)Paragraph (3) of section 148(b) of such Code is amended to read as follows: (3)

Exception for tax-exempt bonds

The term investment property does not include any tax-exempt bond.. (5)Subparagraph (B) of section 149(g)(3) of such Code is amended to read as follows: (B)

Exception for investment in tax-exempt bonds

Such term shall not include any bond issued as part of an issue 95 percent of the net proceeds of which are invested in bonds the interest on which is not includible in gross income under section 103.. (6)Paragraph (5) of section 1400L(d) of such Code is amended by striking subparagraph (E). (7)Paragraph (5) of section 1400N(a) of such Code is amended by striking subparagraph (G). (c)

Effective Date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.