I 

116TH CONGRESS 

1ST SESSION H. R. 5422 

To amend the Internal Revenue Code of 1986 to modify certain rules applicable to qualified small issue manufacturing bonds, to expand certain 

exceptions to the private activity bond rules for first-time farmers, and 

for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 12, 2019 

Mrs. MURPHY of Florida (for herself and Mr. LAHOOD) 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 modify 

certain rules applicable to qualified small issue manufacturing bonds, to expand certain exceptions to the private 

activity bond rules for first-time farmers, and for other 

purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Modernizing Agricul5 tural and Manufacturing Bonds Act’’. 


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1 SEC. 2. MODIFICATIONS TO QUALIFIED SMALL ISSUE 

2 BONDS. 

3 (a) MANUFACTURING FACILITIES TO INCLUDE PRO4 DUCTION OF INTANGIBLE PROPERTY AND FUNCTIONALLY

5 RELATED FACILITIES.—Subparagraph (C) of section 

6 144(a)(12) of the Internal Revenue Code of 1986 is 

7 amended to read as follows: 

8 ‘‘(C) MANUFACTURING FACILITY.—For 

9 purposes of this paragraph— 

10 ‘‘(i) IN GENERAL.—The term ‘manu11 facturing facility’ means any facility 

12 which— 

13 ‘‘(I) is used in the manufacturing 

14 or production of tangible personal 

15 property (including the processing re16 sulting in a change in the condition of 

17 such property), 

18 ‘‘(II) is used in the creation or 

19 production of intangible property 

20 which is described in section 

21 197(d)(1)(C)(iii), or 

22 ‘‘(III) is functionally related and 

23 subordinate to a facility described in 

24 subclause (I) or (II) if such facility is 

25 located on the same site as the facility 

26 described in subclause (I) or (II). 


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1 ‘‘(ii) CERTAIN FACILITIES IN2 CLUDED.—The term ‘manufacturing facil3 ity’ includes facilities that are directly re4 lated and ancillary to a manufacturing fa5 cility (determined without regard to this 

6 clause) if— 

7 ‘‘(I) those facilities are located on 

8 the same site as the manufacturing 

9 facility, and 

10 ‘‘(II) not more than 25 percent 

11 of the net proceeds of the issue are 

12 used to provide those facilities. 

13 ‘‘(iii) LIMITATION ON OFFICE

14 SPACE.—A rule similar to the rule of sec15 tion 142(b)(2) shall apply for purposes of 

16 clause (i). 

17 ‘‘(iv) LIMITATION ON REFUNDINGS

18 FOR CERTAIN PROPERTY.—Subclauses (II) 

19 and (III) of clause (i) shall not apply to 

20 any bond issued on or before the date of 

21 the enactment of the Modernizing Agricul22 tural and Manufacturing Bonds Act, or to 

23 any bond issued to refund a bond issued 

24 on or before such date (other than a bond 

25 to which clause (iii) of this subparagraph 


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1 (as in effect before the date of the enact2 ment of the Modernizing Agricultural and 

3 Manufacturing Bonds Act applies)), either 

4 directly or in a series of refundings.’’. 

5 (b) INCREASE IN LIMITATIONS.—Section 144(a)(4) 

6 of such Code is amended— 

7 (1) in subparagraph (A)(i), by striking 

8 ‘‘$10,000,000’’ and inserting ‘‘$30,000,000’’, and 

9 (2) in the heading, by striking ‘‘$10,000,000’’ and 

10 inserting ‘‘$30,000,000’’. 

11 (c) ADJUSTMENT FOR INFLATION.—Section 

12 144(a)(4) of the Internal Revenue Code of 1986 is amend13 ed by adding at the end the following new subparagraph: 

14 ‘‘(H) ADJUSTMENT FOR INFLATION.—In 

15 the case of any calendar year after 2020, the 

16 $30,000,000 amount in subparagraph (A) shall 

17 be increased by an amount equal to— 

18 ‘‘(i) such dollar amount, multiplied by 

19 ‘‘(ii) the cost-of-living adjustment de20 termined under section 1(f)(3) for the cal21 endar year, determined by substituting 

22 ‘calendar year 2019’ for ‘calendar year 

23 2016’ in subparagraph (A)(ii) thereof. 

24 If any amount as increased under the preceding 

25 sentence is not a multiple of $100, such amount 


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1 shall be rounded to the nearest multiple of 

2 $100.’’. 

3 (d) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to obligations issued after the date 

5 of the enactment of this Act. 

6 SEC. 3. EXPANSION OF CERTAIN EXCEPTIONS TO THE PRI7 VATE ACTIVITY BOND RULES FOR FIRST8 TIME FARMERS. 

9 (a) INCREASE IN DOLLAR LIMITATION.— 

10 (1) IN GENERAL.—Section 147(c)(2)(A) of the 

11 Internal Revenue Code of 1986 is amended by strik12 ing ‘‘$450,000’’ and inserting ‘‘$552,500’’. 

13 (2) REPEAL OF SEPARATE LOWER DOLLAR LIM14 ITATION ON USED FARM EQUIPMENT.—Section 

15 147(c)(2) of such Code is amended by striking sub16 paragraph (F) and by redesignating subparagraphs 

17 (G) and (H) as subparagraphs (F) and (G), respec18 tively. 

19 (3) QUALIFIED SMALL ISSUE BOND LIMITATION

20 CONFORMED TO INCREASED DOLLAR LIMITATION.— 

21 Section 144(a)(11)(A) of such Code is amended by 

22 striking ‘‘$250,000’’ and inserting ‘‘$552,500’’. 

23 (4) INFLATION ADJUSTMENT.— 


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1 (A) IN GENERAL.—Section 147(c)(2)(G) of 

2 such Code, as redesignated by paragraph (2), is 

3 amended— 

4 (i) by striking ‘‘after 2008, the dollar 

5 amount in subparagraph (A) shall be in6 creased’’ and inserting ‘‘after 2020, the 

7 dollar amounts in subparagraph (A) and 

8 section 144(a)(11)(A) shall each be in9 creased’’, and 

10 (ii) in clause (ii), by striking ‘‘2007’’ 

11 and inserting ‘‘2019’’. 

12 (B) CROSS-REFERENCE.—Section 

13 144(a)(11) of such Code is amended by adding 

14 at the end the following new subparagraph: 

15 ‘‘(D) INFLATION ADJUSTMENT.—For infla16 tion adjustment of dollar amount contained in 

17 subparagraph (A), see section 147(c)(2)(G).’’. 

18 (b) SUBSTANTIAL FARMLAND DETERMINED ON

19 BASIS OF AVERAGE RATHER THAN MEDIAN FARM

20 SIZE.—Section 147(c)(2)(E) of such Code is amended by 

21 striking ‘‘median’’ and inserting ‘‘average’’. 

22 (c) EFFECTIVE DATE.—The amendments made by 

23 this section shall apply to bonds issued after the date of 

24 the enactment of this Act. 

Æ 


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