[Congressional Record Volume 148, Number 94 (Friday, July 12, 2002)]
[Senate]
[Page S6708]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BINGAMAN (for himself, Mr. Breaux, Mr. Conrad, and Mrs. 
        Lincoln):
  S. 2726. A bill to treat certain motor dealer transitional assistance 
as an involuntary conversion, and for other purposes; to the Committee 
on Finance.
  Mr. BINGAMAN. Mr. President, I rise today to introduce legislation 
important to thousands of independent small businesses across the 
country. The legislation I am introducing is a modest tax proposal 
designed to aid the Nation's 2,801 Oldsmobile franchised automobile 
dealers who are currently in the process of ending that relationship 
with General Motors, GM, due to GM's decision to eliminate the 
Oldsmobile product line. This legislation is similar to legislation 
that has been introduced in the House with bipartisan majority of the 
House Ways and Means Committee.
  As many of my colleagues know, GM notified their 2,801 Oldsmobile 
dealers in the United States on December 12, 2000 that they were 
phasing out the 100 year-old Oldsmobile brand and its complete line-up 
of vehicles. The announcement came with little warning to Oldsmobile 
dealers. In fact, many of the dealers had recently signed a new 
agreement with GM on November 1, 2000, with most dealers receiving a 
five-year term.
  As a consequence of its actions, GM is in the process of compensating 
Oldsmobile dealers to assist in the phase-out of their Oldsmobile 
dealerships. These dealers will be required, out of financial 
necessity, to reinvest the payment from GM into other dealership 
opportunities. In many cases, these dealers may face a significant 
financial burden in connection with their efforts to continue in the 
automobile retail business.
  The legislation I am introducing today seeks to lessen that burden by 
treating GM's financial assistance payments, made in connection with 
GM's unilateral decision to phase-out the Oldsmobile product line, as 
an involuntary conversion under an existing section of the Internal 
Revenue Code. Thus, the effect of the legislation is to allow the 
Oldsmobile dealer to defer tax consequences on GM's payments, provided 
that the proceeds are reinvested in other dealership properties in the 
time period specified in the Code.
  Small and family-owned businesses, such as automobile dealerships, 
form the economic backbone of local communities across our country, 
particularly in rural states like my home state of New Mexico. Allowing 
Oldsmobile dealers to reinvest the entire payment received from GM into 
replacement dealership property gives these dealers an opportunity to 
continue family-owned businesses and greatly benefits local economies 
throughout New Mexico and the Nation. I look forward to working with my 
colleagues on advancing this legislation.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2726

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. MOTOR VEHICLE DEALER TRANSITIONAL ASSISTANCE 
                   TREATED AS AN INVOLUNTARY CONVERSION.

       (a) In General.--For purposes of subtitle A of the Internal 
     Revenue Code of 1986, in the case of a taxpayer who was a 
     party to a motor vehicle sales and service agreement with a 
     motor vehicle manufacturer who announced in December 2000 
     that it would phase-out the motor vehicle brand to which such 
     agreement relates--
       (1) amounts received by such taxpayer from such 
     manufacturer on account of the termination of such agreement 
     shall be treated as received in an involuntary conversion to 
     which section 1033 of such Code applies, and
       (2) the period described in section 1033(a)(2)(B) of such 
     Code shall begin on December 12, 2000.
       (b) Character of Converted Property.--In applying section 
     1033 of such Code for purposes of this section, the property 
     involuntarily converted shall be treated as being property 
     used in the trade or business of a motor vehicle retail sales 
     and service dealership.
       (c) Effective Date.--This section shall apply to amounts 
     received after December 12, 2000, in taxable years ending 
     after such date.
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