[Congressional Record Volume 149, Number 17 (Thursday, January 30, 2003)]
[Senate]
[Pages S1829-S1832]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. McCAIN:
  S. 267. A bill to amend the Internal Revenue Code of 1986 to provide 
for a deferral of tax on gain from the sale of telecommunications 
businesses in specific circumstances or a tax credit and other 
incentives to promote diversity of ownership in telecommunications 
businesses; to the Committee on Finance.
  Mr. McCAIN. Mr. President, today I am introducing the 
Telecommunications Ownership Diversity Act of 2003. This legislation is 
designed to ensure that more Americans have an opportunity to provide 
their distinct voices in today's telecommunications marketplace. In 
addition to providing competition by certain small businesses, this 
bill would encourage ownership by individuals who are currently 
underrepresented in the ownership of telecommunications companies, 
including minorities and women, by making carefully crafted changes in 
the tax code.
  The bill would institute market-based, voluntary measures designed to 
achieve this goal. It would provide sellers of telecommunications 
assets a tax deferral when those assets are bought for cash by certain 
small businesses. It would also provide investors an incentive to 
consider certain small businesses by providing a reduction in the tax 
on gains from investment in these companies.
  Today, transactions in the telecommunications industry are routinely 
valued in the billions of dollars. Even radio, which has traditionally 
been a comparatively easier telecom segment to enter, has been priced 
out of the range of most would-be entrants. Given the significant cost 
of participating in this industry, the limited club of media and other 
telecommunications owners may not always include certain small 
businesses.
  This morning, I chaired a hearing in the Committee on Commerce, 
Science, and Transportation on media ownership. We heard of the 
difficulties small minority-owned businesses experience when trying to 
raise the capital necessary to enter this business. Minorities are 
woefully underrepresented in the ownership of commercial broadcast 
facilities. As of December 2000, minorities owned an estimated 3.8 
percent of these facilities in the United States, despite representing 
an estimated 29 percent of the total United States population. The bill 
does not mandate ownership levels by any specific group. But it does 
ensure that certain small businesses are on equal footing with large 
companies. We should ensure that the American media landscape includes 
opportunities for these voices to be heard.
  Too often today, new entrants and small businesses lose out on 
opportunities to purchase telecom assets because they don't offer 
sellers the same tax treatment as their larger competitors. A small 
purchaser's cash offer triggers tax liability, while a larger 
purchaser's stock offer may be accepted effectively tax-free. When an 
entity chooses to sell a telecom business, our tax laws should not make 
one bidder more attractive than another.
  The goal of viewpoint diversity has been at the center of recent 
debate over media ownership rules. While it is important to discuss the 
relative merits of ownership restrictions, we must also consider 
market-based, voluntary methods of facilitating entry and diversity of 
ownership. And that's what this legislation would do.
  I ask unanimous consent that the full 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. 267

       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 ``Telecommunications Ownership 
     Diversification Act of 2003''.

     SEC. 2. FINDINGS AND PURPOSES.

       (a) Findings.--Congress makes the following findings:
       (1) Current trends in the telecommunications industry show 
     that there is increasing convergence among various media, 
     including broadcasting, cable television, and Internet-based 
     businesses, that provide news, information, and 
     entertainment.
       (2) This convergence will continue, and therefore, 
     diversifying the ownership of telecommunications facilities 
     remains a preeminent public interest concern that should be 
     reflected in both telecommunications and tax policy.
       (3) A market-based, voluntary system of investment 
     incentives is an effective, lawful, and economically sound 
     means of facilitating entry and diversification of ownership 
     in the telecommunications industry.
       (4) Opportunities for new entrants to participate and grow 
     in the telecommunications industry have substantially 
     decreased since the end of the Federal Communications

[[Page S1830]]

     Commission's tax certificate policy in 1995, particularly in 
     light of the availability of tax-free like-kind exchanges, 
     despite the most robust period of transfers of radio and 
     television stations in history. During this time, businesses 
     owned or controlled by socially disadvantaged individuals, 
     including, but not limited to, members of minority groups and 
     women, have continued to be underrepresented as owners of 
     telecommunications facilities.
       (5) Businesses owned or controlled by socially 
     disadvantaged individuals are, and historically have been, 
     economically disadvantaged in the telecommunications 
     industry. For these businesses, access to and cost of capital 
     are and have been substantial obstacles to new entry and 
     growth. Consequently, diversification of ownership in the 
     telecommunications industry has been limited.
       (6) Telecommunications facilities owned by new entrants may 
     not be attractive to investors because their start-up costs 
     are often high, their revenue streams are uncertain, and 
     their profit margins are unknown.
       (7) It is consistent with the public interest and with the 
     pro-competition policies of the Telecommunications Act of 
     1996 to provide incentives that will facilitate investments 
     in, and acquisition of, telecommunications facilities by 
     economically and socially disadvantaged businesses, thereby 
     diversifying the ownership of telecommunications facilities.
       (8) Increased participation by economically and socially 
     disadvantaged businesses in the ownership of 
     telecommunications facilities will enhance competition in the 
     telecommunications industry. Permitting sellers of 
     telecommunications facilities to defer taxation of gains from 
     transactions involving economically and socially 
     disadvantaged businesses, or certain small businesses 
     supported by investments from the Telecommunications 
     Development Fund that provides capital for such businesses, 
     will further the development of a competitive and diverse 
     United States telecommunications industry without 
     governmental intrusion in private investment decisions.
       (9) The public interest would not be served by attempts to 
     diversify the ownership of telecommunications businesses 
     through any approach that would involve the use of mandated 
     set-asides or quotas.
       (10) Today, the telecommunications industry is struggling 
     to survive one of its most troubling times. Therefore, 
     facilitating voluntary, pro-competitive transactions that 
     will promote ownership of telecommunications facilities by 
     economically and socially disadvantaged businesses and 
     certain small businesses will aid in providing the investment 
     and capital that is crucial to this sector.
       (b) Purpose.--The purpose of this Act is to facilitate 
     voluntary, pro-competitive transactions that will promote 
     ownership of telecommunications facilities by economically 
     and socially disadvantaged businesses and certain small 
     businesses.

      SEC. 3. NONRECOGNITION OF GAIN ON CERTAIN QUALIFIED SALES OF 
                   TELECOMMUNICATIONS BUSINESSES.

       (a) In General.--Subchapter O of chapter 1 of the Internal 
     Revenue Code of 1986 (relating to gain or loss on disposition 
     of property) is amended by inserting after part IV the 
     following new part:

        ``PART V--CERTAIN SALES OF TELECOMMUNICATIONS BUSINESSES

``Sec. 1071. Nonrecognition of gain on certain sales of 
              telecommunications businesses.

     ``SEC. 1071. NONRECOGNITION OF GAIN ON CERTAIN SALES OF 
                   TELECOMMUNICATIONS BUSINESSES.

       ``(a) In General.--For purposes of this subtitle, if a 
     taxpayer elects the application of this section to a 
     qualified telecommunications sale, such sale shall be treated 
     as an involuntary conversion of property within the meaning 
     of section 1033.
       ``(b) Limitation on Amount of Gain on Which Tax May Be 
     Deferred.--
       ``(1) In general.--The amount of gain on any qualified 
     telecommunications sale which is not recognized by reason of 
     this section--
       ``(A) shall not exceed $250,000,000 per sale, and
       ``(B) shall not exceed \1/3\ of such dollar amount per 
     taxable year.
       ``(2) Carryforwards of unused amounts.--If the amount of 
     gain on any qualified telecommunications sale which is not 
     recognized by reason of this section exceeds the limitation 
     imposed by paragraph (1)(B) for the taxable year, such excess 
     shall be carried to the succeeding taxable year and added to 
     the amount allowable under this section for such taxable 
     year.
       ``(c) Qualified Telecommunications Sale.--For purposes of 
     this section, the term `qualified telecommunications sale' 
     means any sale to an eligible purchaser of--
       ``(1) the assets of a telecommunications business, or
       ``(2) stock in a corporation if, immediately after such 
     sale--
       ``(A) the eligible purchaser controls (within the meaning 
     of section 368(c)) such corporation, and
       ``(B) substantially all of the assets of such corporation 
     are assets of 1 or more telecommunications businesses, or
       ``(3) an interest in a partnership if, immediately after 
     such sale--
       ``(A) the eligible purchaser owns a partnership interest 
     possessing--
       ``(i) at least 80 percent of the total combined voting 
     power of all classes of partnership interests entitled to 
     vote,
       ``(ii) control over the management of the partnership,
       ``(iii) at least 80 percent of the capital interests of the 
     partnership, and
       ``(iv) a distributive share of at least 80 percent of each 
     item of the partnership's income, gain, loss, deduction or 
     credit, and
       ``(B) substantially all of the assets of such partnership 
     are assets of 1 or more telecommunications businesses.
       ``(d) Special Rules.--
       ``(1) In general.--In applying section 1033 for purposes of 
     subsection (a), stock of a corporation or an interest in a 
     partnership operating a telecommunications business, whether 
     or not representing control of such corporation or 
     partnership, shall be treated as property similar or related 
     in service or use to the property sold in the qualified 
     telecommunications sale.
       ``(2) Election to reduce basis rather than recognize 
     remainder of gain.--If--
       ``(A) a taxpayer elects the treatment under subsection (a) 
     with respect to any qualified telecommunications sale, and
       ``(B) an amount of gain would (but for this paragraph) be 
     recognized on such sale under section 1033(a)(2)(A) in excess 
     of the amount required to be recognized by reason of 
     subsection (b),

     then the amount of gain described in this subparagraph shall 
     not be recognized to the extent that the taxpayer elects to 
     reduce the basis of depreciable property (within the meaning 
     of section 1017(b)(3)) held by the taxpayer immediately after 
     the sale or acquired in the same taxable year. The manner and 
     amount of such reduction shall be determined under 
     regulations prescribed by the Secretary.
       ``(3) Basis.--For basis of property acquired on a sale or 
     exchange treated as an involuntary conversion under 
     subsection (a), see section 1033(b).
       ``(e) Recapture of Tax Benefit if Telecommunications 
     Business Resold Within 3 Years, etc.--
       ``(1) In general.--If, within 3 years after the date of any 
     qualified telecommunications sale, there is a recapture event 
     with respect to the property involved in such sale, then the 
     purchaser's tax imposed by this chapter for the taxable year 
     in which such event occurs shall be increased by an amount 
     equal to the product of--
       ``(A) the highest marginal rate of income tax imposed on 
     corporations under section 11, and
       ``(B) the lesser of--
       ``(i) the consideration furnished by the purchaser in such 
     sale, or
       ``(ii) the dollar amount specified in subsection (b)(1)(A).
       ``(2) Exception for reinvested amounts.--Paragraph (1) 
     shall not apply to any recapture event which is a sale if--
       ``(A) the sale is a qualified telecommunications sale, or
       ``(B) during the 60-day period beginning on the date of 
     such sale, the taxpayer is the purchaser in another qualified 
     telecommunications sale in which the consideration furnished 
     by the taxpayer is not less than the amount realized on the 
     recapture event sale.
       ``(3) Recapture event.--For purposes of this subsection, 
     the term `recapture event' means, with respect to any 
     qualified telecommunications sale--
       ``(A) any sale or other disposition of the assets, stock, 
     or partnership interest referred to in subsection (c) which 
     were acquired by the taxpayer in such sale, and
       ``(B) in the case of a qualified telecommunications sale 
     described in paragraph (2) or (3) of subsection (c)--
       ``(i) any sale or other disposition of a telecommunications 
     business by the corporation or partnership referred to in 
     such subsection, or
       ``(ii) any other transaction which results in the eligible 
     purchaser ceasing to be an eligible purchaser, or ceasing to 
     have control (as defined in subsection (c)(2)(A)) of such 
     corporation or ownership of an interest in such partnership 
     sufficient to satisfy the requirements of subsection 
     (c)(3)(A).
       ``(f) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Eligible purchaser.--The term `eligible purchaser' 
     means--
       ``(A) any economically and socially disadvantaged business, 
     or
       ``(B) any corporation or partnership if immediately 
     following the purchase--
       ``(i) substantially all the assets of such corporation or 
     partnership are assets of 1 or more telecommunications 
     businesses, and
       ``(ii) the Telecommunications Development Fund established 
     under section 714 of the Communications Act of 1934 (47 
     U.S.C. 614) or any wholly-owned affiliate of such Fund owns 
     at least 5 percent of--

       ``(I) the stock in such corporation,
       ``(II) the partnership interest in such partnership, or
       ``(III) the indebtedness convertible into such stock or 
     partnership interest.

       ``(2) Economically and socially disadvantaged business.--
     The term `economically and socially disadvantaged business' 
     means a person which is designated by the Secretary as an 
     economically and socially disadvantaged business based on a 
     determination that such person--
       ``(A) meets the control requirements of paragraph (6),

[[Page S1831]]

       ``(B) will be a telecommunications business after the 
     purchase for which the eligibility determination is sought, 
     and
       ``(C) before the purchase for which the eligibility 
     determination is sought does not have--
       ``(i) attributable ownership interest in television 
     broadcast stations having an aggregate national audience 
     reach of more than 5 percent as defined by the Federal 
     Communications Commission under section 73.3555(e)(2)(i) of 
     title 47 of the Code of Federal Regulations as in effect on 
     January 1, 2001,
       ``(ii) attributable ownership interest in--

       ``(I) more than 50 radio stations nationally, and
       ``(II) radio stations with a combined market share 
     exceeding 10 percent of radio advertising revenues in the 
     relevant market as defined by the Federal Communications 
     Commission, or

       ``(iii) attributable ownership interest in any other 
     telecommunications business having more than 5 percent of 
     national subscribers of their respective service.
       ``(3) Relevant market.--The term `relevant market' means 
     the local radio market served by the radio station or 
     stations being purchased.
       ``(4) Telecommunications business.--The term 
     `telecommunications business' means a business which, as its 
     primary purpose, engages in electronic communications and is 
     regulated by the Federal Communications Commission pursuant 
     to the Communications Act of 1934, including a cable system 
     (as defined in section 602(7) of such Act (47 U.S.C. 
     522(7))), a radio station (as defined in section 3(35) of 
     such Act (47 U.S.C. 153(35))), a broadcasting station 
     providing television service (as defined in section 3(49) of 
     such Act (47 U.S.C. 153(49))), a provider of direct broadcast 
     satellite service (as defined in section 335(b)(5)(A) of such 
     Act (47 U.S.C. 335(b)(5)(A))), a provider of video 
     programming (as defined in section 602(20) of such Act (47 
     U.S.C. 522(20))), a provider of commercial mobile services 
     (as defined in section 332(d)(1) of such Act (47 U.S.C. 
     332(d)(1))), a telecommunications carrier (as defined in 
     section 3(44) of such Act (47 U.S.C. 153(44))), a provider of 
     fixed satellite service, a reseller of the communications 
     service or commercial mobile service, or a provider of 
     multichannel multipoint distribution service.
       ``(5) Purchase.--A taxpayer shall be considered to have 
     purchased a property if, but for subsection (d)(2) and the 
     application of section 1033(b), the basis of the property 
     would be its cost within the meaning of section 1012.
       ``(6) Control.--
       ``(A) Individuals.--For purposes of paragraph (2)(A), an 
     individual who meets the requirements of paragraph (7) also 
     meets the requirements of this paragraph.
       ``(B) Entities.--For purposes of paragraph (2)(A), an 
     entity meets the requirement of this paragraph if the 
     requirements of subparagraphs (C), (D), or (E) are satisfied.
       ``(C) 30-percent test.--The requirements of this 
     subparagraph are satisfied if--
       ``(i) with respect to any entity which is a corporation, 
     individuals who meet the requirements of paragraph (7) 
     collectively own at least 30 percent in value of the 
     outstanding stock of the corporation, and more than 50 
     percent of the total combined voting power of all classes of 
     stock entitled to vote of the corporation, and
       ``(ii) with respect to any entity which is a partnership, 
     individuals who meet the requirements of paragraph (7) 
     collectively own at least 30 percent of the capital interests 
     in the partnership, a distributive share of at least 30 
     percent of each item of the partnership's income, gain, loss, 
     deduction, or credit, more than 50 percent of the total 
     combined voting power of all partnership interests entitled 
     to vote, and control over the management of the partnership.
       ``(D) 15-percent test.--The requirements of this 
     subparagraph are satisfied if--
       ``(i) with respect to any entity which is a corporation--

       ``(I) individuals who meet the requirements of paragraph 
     (7) collectively own at least 15 percent in value of the 
     outstanding stock of the corporation, and more than 50 
     percent of the total combined voting power of all classes of 
     stock entitled to vote of the corporation, and
       ``(II) no other person owns more than 25 percent in value 
     of the outstanding stock of the corporation, and

       ``(ii) with respect to any entity which is a partnership--

       ``(I) individuals who meet the requirements of paragraph 
     (7) collectively own at least 15 percent of the capital 
     interests in the partnership, a distributive share of at 
     least 15 percent of each item of the partnership's income, 
     gain, loss, deduction, or credit, more than 50 percent of the 
     total combined voting power of all classes of partnership 
     interests entitled to vote, and control over the management 
     of the partnership, and
       ``(II) no other person owns more than 25 percent of the 
     capital interests and profits interests in the partnership or 
     a distributive share of more than 25 percent of any item of 
     the partnership's income, gain, loss, deduction, or credit.

       ``(E) Publicly-traded corporation test.--The requirements 
     of this subparagraph are satisfied if, with respect to a 
     corporation the securities of which are traded on an 
     established securities market, individuals who meet the 
     requirements of paragraph (7) collectively own more than 50 
     percent of the total combined voting power of all classes of 
     stock entitled to vote of the corporation.
       ``(F) Restrictions on agreements concerning voting of stock 
     or partnership interests.--For purposes of satisfying the 
     requirements of subparagraph (C), (D), or (E), the stock or 
     partnership interest relied upon to establish compliance 
     shall not be subject to any agreement, arrangement, or 
     understanding which provides for, or relates to, the voting 
     of the stock or partnership interest in any manner by, or at 
     the direction of, any person other than an eligible 
     individual who meets the requirements of paragraph (7), or 
     the right of any person other than 1 of those individuals to 
     acquire the voting power through purchase of shares, 
     partnership interests, or otherwise.
       ``(G) Constructive ownership.--In applying subparagraphs 
     (C), (D), (E), and (F), the constructive ownership rules of 
     section 318 shall apply, but only if the interests for which 
     constructive ownership is claimed are not owned, directly or 
     indirectly, by individuals who do not meet the requirements 
     of paragraph (7).
       ``(7) Individuals.--An individual meets the requirements of 
     this paragraph if such individual is--
       ``(A) a United States citizen, and
       ``(B) a member of an economically or socially disadvantaged 
     class determined by the Secretary to be underrepresented in 
     the ownership of the relevant telecommunications business.''.
       (b) Conforming Amendments.--
       (1) Sections 1245(b)(5) and 1250(d)(5) of the Internal 
     Revenue Code of 1986 are each amended--
       (A) by inserting ``section 1071 (relating to certain sales 
     of telecommunications businesses) or'' before section 1081'', 
     and
       (B) by inserting ``and 1071'' before ``1081'' in the 
     heading thereof.
       (2) The table of parts for subchapter O of chapter 1 of 
     such Code is amended by inserting after the item relating to 
     part IV the following new item:

``Part V. Certain sales of telecommunications businesses.''.

       (c) Effective Date.--The amendments made by this section 
     shall apply to elections made with respect to any sale on or 
     after the date of the enactment of this Act.

      SEC. 4. TELECOMMUNICATIONS BUSINESS CREDIT.

       (a) In General.--Subpart E of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     rules for computing investment credit) is amended by 
     inserting after section 48 the following new section:

     ``SEC. 48A. TELECOMMUNICATIONS BUSINESS CREDIT.

       ``For purposes of section 46, there is allowed as a credit 
     against the tax imposed by this chapter for any taxable year 
     an amount equal to 10 percent of the taxable income of any 
     taxpayer which at all times during such taxable year--
       ``(1) is a local exchange carrier (as defined in section 
     3(26) of the Communications Act of 1934 (47 U.S.C. 153(26))),
       ``(2) is not a Bell operating company (as defined in 
     section 3(4) of such Act (47 U.S.C. 153(4))), and
       ``(3) is headquartered in an area designated as an 
     empowerment zone by the Secretary of Housing and Urban 
     Development.''.
       (b) Transitional Rule.--Section 39(d) of the Internal 
     Revenue Code of 1986 (relating to transitional rules) is 
     amended by adding at the end the following new paragraph:
       ``(11) No carryback of section 48a credit before effective 
     date.--No portion of the unused business credit for any 
     taxable year which is attributable to the telecommunications 
     business credit determined under section 48A may be carried 
     back to a taxable year ending on or before the date of the 
     enactment of section 48A.''.
       (c) Conforming Amendments.--
       (1) Section 46 of the Internal Revenue Code of 1986 
     (relating to amount of credit) is amended by striking ``and'' 
     at the end of paragraph (2), by striking the period at the 
     end of paragraph (3) and inserting ``, and'', and by adding 
     at the end the following new paragraph:
       ``(4) the telecommunications business credit.''.
       (2) The table of sections for subpart E of part IV of 
     subchapter A of chapter 1 of such Code is amended by 
     inserting after the item relating to section 48 the following 
     new item:

``48A. Telecommunications business credit.''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years ending after the date of the 
     enactment of this Act.

     SEC. 5. EXCLUSION OF 50 PERCENT OF GAIN.

       (a) In General.--Section 1202 of the Internal Revenue Code 
     of 1986 (relating to partial exclusion for gain from certain 
     small business stock) is amended--
       (1) by adding at the end of subsection (a) the following 
     new paragraph:
       ``(3) Certain telecommunications investments by 
     corporations and investment companies.--Gross income shall 
     not include 50 percent of any gain from the sale or exchange 
     of stock in an eligible purchaser (as defined in section 
     1071(f)(1)), engaged in a telecommunications business (as 
     defined in section 1071(f)(4)) held for more than 5 years.'',
       (2) by striking subparagraphs (A) and (B) of subsection 
     (b)(1) and inserting the following new subparagraphs:
       ``(A) in the case of gain from the sale or exchange of 
     qualified small business stock held for more than 5 years--

[[Page S1832]]

       ``(i) $10,000,000 reduced by the aggregate amount of 
     eligible gain taken into account by the taxpayer under 
     subsection (a) for prior taxable years attributable to 
     dispositions of stock issued by such corporation, or
       ``(ii) 10 times the aggregate adjusted bases of qualified 
     small business stock issued by such corporation and disposed 
     of by the taxpayer during the taxable year, and
       ``(B) in the case of gain from the sale or exchange of 
     stock in an eligible purchaser engaged in a 
     telecommunications business for more than 5 years--
       ``(i) $20,000,000 reduced by the aggregate amount of 
     eligible gain taken into account by the taxpayer under 
     subsection (a) for prior taxable years attributable to 
     dispositions of stock issued by an eligible purchaser engaged 
     in a telecommunications business, or
       ``(ii) 15 times the aggregate adjusted bases of stock of an 
     eligible purchaser engaged in a telecommunications business 
     issued by such eligible purchaser and disposed of by the 
     taxpayer during the taxable year.'',
       (3) by striking ``subparagraph (B)'' in the last sentence 
     of subsection (b)(1) and inserting ``subparagraphs (A)(ii) 
     and (B)(ii)'',
       (4) by striking ``years.'' in subsection (b)(2) and 
     inserting ``years or any gain from the sale or exchange of 
     stock in an eligible purchaser engaged in a 
     telecommunications business held for more than 5 years.'', 
     and
       (5) by striking the period at the end of subsection 
     (b)(3)(A) and inserting ``, and paragraph (1)(B) shall be 
     applied by substituting `$10,000,000' for `$20,000,000'.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to sales on or after the date of the enactment of 
     this Act.

      SEC. 6. TECHNICAL AND CONFORMING AMENDMENTS; REGULATIONS.

       (a) Technical and Conforming Amendments.--The Secretary of 
     the Treasury shall, not later than 150 days after the date of 
     the enactment of this Act, submit to the Committee on Ways 
     and Means of the House of Representatives and the Committee 
     on Finance of the Senate, a draft of any technical and 
     conforming amendments of the Internal Revenue Code of 1986 
     which are necessary to reflect throughout such Code the 
     amendments made by this Act.
       (b) Regulations.--The Secretary of the Treasury, in 
     consultation with the Federal Communications Commission, 
     shall promulgate regulations to implement the amendments made 
     by this Act not later than 90 days after the date of the 
     enactment of this Act. The regulations shall provide for the 
     determination by the Secretary of the Treasury as to whether 
     an applicant is an ``eligible purchaser'' as defined in 
     section 1071(f) of the Internal Revenue Code of 1986 (as 
     added by section 3(a)). The regulations shall further provide 
     that such determinations of eligibility shall be made not 
     later than 45 calendar days after an application is filed 
     with the Secretary of the Treasury. The regulations 
     implementing section 1071(f)(7) of such Code (as added by 
     section 3) shall be updated on an ongoing basis not less 
     frequently than every 5 years.

      SEC. 7. BIENNIAL PROGRAM AUDITS BY GAO.

       Not later than January 1, 2005, and not later than 2 years 
     thereafter, the Comptroller General of the United States 
     shall audit the administration of the sections of the 
     Internal Revenue Code of 1986 added or amended by this Act, 
     and issue a report on the results of that audit. The 
     Comptroller General shall include in the report, 
     notwithstanding any provision of section 6103 of the Internal 
     Revenue Code of 1986 to the contrary--
       (1) a list of eligible purchasers (as defined in section 
     1071(f)(1) of such Code) and any other taxpayer receiving a 
     benefit from the operation of section 48A or 1202 of such 
     Code as such section was added or amended by this Act, and
       (2) an assessment of the effect the amendments made by this 
     Act have on increasing new entry and growth in the 
     telecommunications industry by economically and socially 
     disadvantaged businesses, and the effect of this Act on 
     enhancing the competitiveness of the telecommunications 
     industry.
                                 ______