Credit for property used to furnish broadband services in underserved and rural areas

(a)

In general

Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to business related credits) is amended by inserting after section 45Q the following new section:

45R.

Property used to furnish broadband services in underserved and rural areas

(a)

In general

For purposes of section 38, the broadband services credit determined under this section is an amount equal to the applicable percentage of the cost of each qualified broadband property placed in service during the taxable year. (b)

Applicable percentage

(1)

In general

For purposes of subsection (a), the applicable percentage is— (A)50 percent for qualified broadband property for underserved and rural areas in which, on the date of the enactment of this section, not more than the greater of— (i)5 percent of the households, or (ii)20 households,

have broadband access, and

(B)30 percent for qualified broadband property for underserved and rural areas which, on such date, are not described in paragraph (1). (2)

Increased percentage where high speed service provided

The applicable percentage determined under paragraph (1) shall be increased by 10 percentage points for qualified broadband property providing transmission service at a speed which is not less than— (A)except in the case of commercial mobile radio services, 50 megabits per second downstream and 20 megabits per second upstream, and (B)in the case of commercial mobile radio services, 10 megabits per second downstream and 2 megabits per second upstream. (c)

Definitions

For purposes of this section— (1)

Qualified broadband property

The term qualified broadband property means section 1245 property (as defined in section 1245(a)(3))— (A)which is used to provide broadband services in underserved or rural areas to purchasers of such services, (B)which is— (i)tangible property (to which section 168 applies), or (ii)computer software (as defined in section 197(e)(3)(B)) which is described in section 197(e)(3)(A) and to which section 167 applies, and (C)the original use of which commences with the taxpayer.

Such term shall not include any property described in section 50(b).

(2)

Broadband

The term broadband means an Internet Protocol-based transmission service (at a speed which is not less than 5 megabits per second downstream and 1 megabit per second upstream) that enables users to send and receive voice, video, data, graphics, or a combination, without regard to any transmission media or technology. (3)

Underserved area

The term underserved area means— (A)any census tract that is located in— (i)an empowerment zone or enterprise community designated under section 1391, or (ii)the District of Columbia Enterprise Zone established under section 1400, or (B)any census tract— (i)the poverty level of which is at least 30 percent (based on the most recent census data), and (ii)the median family income of which does not exceed— (I)in the case of a census tract located in a metropolitan statistical area, 70 percent of the greater of the metropolitan area median family income or the statewide median family income, and (II)in the case of a census tract located in a nonmetropolitan statistical area, 70 percent of the nonmetropolitan statewide median family income. (4)

Rural area

The term rural area means any census tract outside a metropolitan statistical area (as defined by the Office of Management and Budget). (5)

Regulated entities

The credit determined under subsection (a) may not be used to reduce a taxpayer's cost of service, but may be used to reduce rate base, provided that such reduction is restored not less rapidly than ratably. For purposes of determining ratable restorations to rate base, the period of time used in computing depreciation expense for purposes of reflecting operating results in the taxpayer's regulated books of account shall be used. (d)

Recapture in case of dispositions, etc

Under regulations prescribed by the Secretary— (1)

Early disposition

If, before the close of the period to which section 50(a)(1) applies, qualified broadband property is disposed of or ceases to be used to provide broadband services to any underserved area, then the tax under this chapter for the taxable year in which such disposition or cessation occurs shall be increased by the recapture percentage (determined under the table contained in section 50(a)(1)(B)) of the aggregate credits allowed under subsection (a) for all prior taxable years. (2)

Subsection not to apply in certain cases

Rules similar to the rules of section 50(a)(4) shall apply for purposes of paragraph (1). (e)

Other rules To apply

Rules similar to the rules of paragraphs (3), (4), and (5) of section 179(d) shall apply for purposes of this section. (f)

Basis reduction

Rules similar to the rules of sections 50(c) (other than paragraph (3)) and 1016(a)(19) shall apply for purposes of this section.

(b)

Credit To be part of general business credit

Subsection (b) of section 38 of such Code is amended by striking plus at the end of paragraph (34), by striking the period at the end of paragraph (35) and inserting , plus, and by adding at the end the following new paragraph:

(36) the broadband services credit determined under section 45R(a).

(c)

Clerical amendment

The table of sections subpart D of part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item:

Sec. 45R. Property used to furnish broadband services in underserved and rural areas.

(d)

Effective date

The amendments made by this section shall apply to property placed in service after the date of enactment of this Act in taxable years ending after such date.