[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[S. 3257 Introduced in Senate (IS)]

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114th CONGRESS
  2d Session
                                S. 3257

 To amend the Internal Revenue Code of 1986 to permanently modify the 
  limitations on the deduction of interest by financial institutions 
          which hold tax-exempt bonds, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 14, 2016

  Mr. Menendez (for himself and Mr. Cardin) 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 permanently modify the 
  limitations on the deduction of interest by financial institutions 
          which hold tax-exempt bonds, 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. SHORT TITLE.

    This Act may be cited as the ``Municipal Bond Market Support Act of 
2016''.

SEC. 2. PERMANENT MODIFICATION OF SMALL ISSUER EXCEPTION TO TAX-EXEMPT 
              INTEREST EXPENSE ALLOCATION RULES FOR FINANCIAL 
              INSTITUTIONS.

    (a) Permanent Increase in Limitation.--Subparagraphs (C)(i), 
(D)(i), and (D)(iii)(II) of section 265(b)(3) of the Internal Revenue 
Code of 1986 are each amended by striking ``$10,000,000'' and inserting 
``$30,000,000''.
    (b) Permanent Modification of Other Special Rules.--Section 
265(b)(3) of such Code is amended--
            (1) by redesignating clauses (iv), (v), and (vi) of 
        subparagraph (G) as clauses (ii), (iii), and (iv) of such 
        subparagraph, respectively, and
            (2) by striking so much of subparagraph (G) as precedes 
        such clauses and inserting the following:
                    ``(G) Qualified 501(c)(3) bonds treated as issued 
                by exempt organization.--In the case of a qualified 
                501(c)(3) bond (as defined in section 145), this 
                paragraph shall be applied by treating the 501(c)(3) 
                organization for whose benefit such bond was issued as 
                the issuer.
                    ``(H) Special rule for qualified financings.--
                            ``(i) In general.--In the case of a 
                        qualified financing issue--
                                    ``(I) subparagraph (F) shall not 
                                apply, and
                                    ``(II) any obligation issued as a 
                                part of such issue shall be treated as 
                                a qualified tax-exempt obligation if 
                                the requirements of this paragraph are 
                                met with respect to each qualified 
                                portion of the issue (determined by 
                                treating each qualified portion as a 
                                separate issue which is issued by the 
                                qualified borrower with respect to 
                                which such portion relates).''.
    (c) Inflation Adjustment.--Section 265(b)(3) of such Code, as 
amended by subsection (b), is amended by adding at the end the 
following new subparagraph:
                    ``(I) Inflation adjustment.--In the case of any 
                calendar year after 2016, the $30,000,000 amounts 
                contained in subparagraphs (C)(i), (D)(i), and 
                (D)(iii)(II) shall each be increased by an amount equal 
                to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for such 
                        calendar year, determined by substituting 
                        `calendar year 2015' for `calendar year 1992' 
                        in subparagraph (B) thereof.
                Any increase determined under the preceding sentence 
                shall be rounded to the nearest multiple of 
                $100,000.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to obligations issued after the date of the enactment of this 
Act.
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