I

108TH CONGRESS

1ST SESSION H. R. 2194

To reward the hard work and risk of individuals who choose to live in

and help preserve America’s small, rural towns, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MAY 21, 2003

Mr. POMEROY (for himself and Mr. OSBORNE) introduced the following bill;

which was referred to the Committee on Ways and Means, and in addition to the Committees on Education and the Workforce, and Agriculture,

for a period to be subsequently determined by the Speaker, in each case

for consideration of such provisions as fall within the jurisdiction of the

committee concerned

A BILL

To reward the hard work and risk of individuals who choose

to live in and help preserve America’s small, rural towns,

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; ETC.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘New Homestead Act of 2003’’.

6 (b) AMENDMENT OF 1986 CODE.—Except as other7 wise expressly provided, whenever in this Act an amend8 ment or repeal is expressed in terms of an amendment
2

•HR 2194 IH

1 to, or repeal of, a section or other provision, the reference

2 shall be considered to be made to a section or other provi3 sion of the Internal Revenue Code of 1986.

4 (c) TABLE OF CONTENTS.—The table of contents for

5 this Act is as follows:

Sec. 1. Short title; etc.

TITLE I—NEW HOMESTEAD OPPORTUNITIES

Sec. 101. Loans for leadership initiative.

Sec. 102. Credit for certain rural homebuyers.

Sec. 103. Capital loss deduction allowed with respect to sale or exchange of

principal residence in certain rural areas.

Sec. 104. Individual homestead accounts.

TITLE II—INCENTIVES FOR MAIN STREET BUSINESSES

Sec. 201. Rural investment tax credit.

Sec. 202. Qualified rural small business investment credit.

Sec. 203. Accelerated depreciation for rural investment property.

TITLE III—NEW HOMESTEAD VENTURE CAPITAL FUND

Sec. 301. New homestead venture capital fund.

6 TITLE I—NEW HOMESTEAD

7 OPPORTUNITIES

8 SEC. 101. LOANS FOR LEADERSHIP INITIATIVE.

9 (a) DEFINITIONS.—In this section:

10 (1) DEGREE.—The term ‘‘degree’’ means an as11 sociate’s or bachelor’s degree awarded by an institu12 tion of higher education.

13 (2) INSTITUTION OF HIGHER EDUCATION.—The

14 term ‘‘institution of higher education’’ has the

15 meaning given the term in section 101 of the Higher

16 Education Act of 1965 (20 U.S.C. 1001).
3

•HR 2194 IH

1 (3) QUALIFYING COUNTY.—The term ‘‘quali2 fying county’’ means any county which—

3 (A) is outside a metropolitan statistical

4 area (defined as such by the Office of Manage5 ment and Budget), and

6 (B) during the 20-year period ending with

7 the calendar year preceding the date of enact8 ment of this Act, has a net out-migration of in9 habitants from the county of at least 10 percent

10 of the population of the county at the beginning

11 of such period.

12 (4) SECRETARY.—The term ‘‘Secretary’’ means

13 the Secretary of Education.

14 (b) PROGRAM.—

15 (1) IN GENERAL.—The Secretary shall carry

16 out a program of assuming the obligation to repay,

17 pursuant to subsection (c), a loan made, insured, or

18 guaranteed under part B, D, or E of title IV of the

19 Higher Education Act of 1965 (20 U.S.C. 1071 et

20 seq., 20 U.S.C. 1087a et seq., and 20 U.S.C.

21 1087aa et seq.), excluding loans made under section

22 428B of such Act or comparable loans made under

23 part D of such Act, for any borrower who—

24 (A) completes a degree;

25 (B) resides in a qualifying county; and
4

•HR 2194 IH

1 (C) is employed in a qualifying county.

2 (2) REGULATIONS.—The Secretary is author3 ized to prescribe such regulations as may be nec4 essary to carry out the provisions of this section.

5 (c) LOAN REPAYMENT.—

6 (1) IN GENERAL.—The Secretary shall assume

7 the obligation to repay, after each of the first 5

8 years of the residency and employment described in

9 subparagraphs (B) and (C) of subsection (b)(1) that

10 occur after the date of enactment of this section, 10

11 percent of the total amount of all loans made to a

12 student under the provisions of the Higher Edu13 cation Act of 1965 as described in subsection (b)(1),

14 up to a maximum amount of $2,000 each year.

15 (2) CONSTRUCTION.—Nothing in this section

16 shall be construed to authorize the refunding of any

17 repayment of a loan made under part B, D, or E

18 of title IV of the Higher Education Act of 1965.

19 (3) INTEREST.—If a portion of a loan is repaid

20 by the Secretary under this section for any year, the

21 proportionate amount of interest on such loan which

22 accrues for such year shall be repaid by the Sec23 retary so long as the total amount repaid by the

24 Secretary in any 1 year does not exceed $2,000.
5

•HR 2194 IH

1 (d) REPAYMENT TO ELIGIBLE LENDERS.—The Sec2 retary shall pay to each eligible lender or holder for each

3 fiscal year an amount equal to the aggregate amount of

4 loans which are subject to repayment pursuant to this sec5 tion for such year.

6 (e) APPLICATION FOR REPAYMENT.—

7 (1) IN GENERAL.—An eligible borrower desiring

8 loan repayment under this section shall submit a

9 complete and accurate application to the Secretary

10 at such time, in such manner, and containing such

11 information as the Secretary may require.

12 (2) CONDITIONS.—An eligible borrower may

13 apply for loan repayment under this section after

14 completing each year of qualifying residency and em15 ployment. The eligible borrower shall receive forbear16 ance while engaged in qualifying residency and em17 ployment unless the borrower is in deferment while

18 so engaged.

19 (f) DEFINITION OF ELIGIBLE BORROWER.—In this

20 section the term ‘‘eligible borrower’’ means any borrower

21 who is not in default on any of the borrower’s student

22 loans under part B, D, or E of title IV of the Higher

23 Education Act of 1965.

24 (g) AUTHORIZATION OF APPROPRIATIONS.—
6

•HR 2194 IH

1 (1) LOAN REPAYMENT.—There are authorized

2 to be appropriated to carry out this section such

3 sums as may be necessary.

4 (2) PERKINS LOAN FUNDS.—There are author5 ized to be appropriated such sums as may be nec6 essary for Federal capital contributions to student

7 loan funds established under part E of title IV of

8 the Higher Education Act of 1965.

9 (h) REPAYMENT EXCLUDED FROM GROSS IN10 COME.—Section 108(f)(1) (relating to student loans) is

11 amended by inserting ‘‘or pursuant to section 101 of the

12 New Homestead Act of 2003’’ after ‘‘employers’’.

13 SEC. 102. CREDIT FOR CERTAIN RURAL HOMEBUYERS.

14 (a) IN GENERAL.—Subpart A of part IV of sub15 chapter A of chapter 1 (relating to nonrefundable personal

16 credits) is amended by inserting before section 26 the fol17 lowing:

18 ‘‘SEC. 25C. PURCHASE OF RESIDENCES BY CERTAIN RURAL

19 HOMEBUYERS.

20 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in21 dividual who purchases a qualified residence in a quali22 fying county during any taxable year, there shall be al23 lowed as a credit against the tax imposed by this chapter

24 for the taxable year an amount equal to the lesser of—
7

•HR 2194 IH

1 ‘‘(1) 10 percent of the purchase price of the

2 residence, or

3 ‘‘(2) $5,000.

4 ‘‘(b) LIMITATIONS.—

5 ‘‘(1) LIMITATION BASED ON AMOUNT OF

6 TAX.—The credit allowed under subsection (a) for

7 any taxable year shall not exceed the excess of—

8 ‘‘(A) the sum of the regular tax liability

9 (as defined in section 26(b)) plus the tax im10 posed by section 55, over

11 ‘‘(B) the sum of the credits allowable

12 under this subpart (other than this section and

13 section 23) and section 27 for the taxable year.

14 ‘‘(2) MARRIED INDIVIDUALS FILING JOINTLY.—

15 In the case of a husband and wife who file a joint

16 return, the credit under this section is allowable only

17 if the residence is a qualified residence with respect

18 to both the husband and wife, and the amount speci19 fied under subsection (a)(2) shall apply to the joint

20 return.

21 ‘‘(3) MARRIED INDIVIDUALS FILING SEPA22 RATELY.—In the case of a married individual filing

23 a separate return, subsection (a)(2) shall be applied

24 by substituting ‘$2,500’ for ‘$5,000’.
8

•HR 2194 IH

1 ‘‘(4) OTHER TAXPAYERS.—If 2 or more individ2 uals who are not married purchase a qualified resi3 dence, the amount of the credit allowed under sub4 section (a) shall be allocated among such individuals

5 in such manner as the Secretary may prescribe, ex6 cept that the total amount of the credits allowed to

7 all such individuals shall not exceed $5,000.

8 ‘‘(c) DEFINITIONS.—For purposes of this section—

9 ‘‘(1) QUALIFIED RESIDENCE.—The term ‘quali10 fied residence’ has the same meaning as when used

11 in section 163(h).

12 ‘‘(2) QUALIFYING COUNTY.—The term ‘quali13 fying county’ means any county which—

14 ‘‘(A) is outside a metropolitan statistical

15 area (defined as such by the Office of Manage16 ment and Budget), and

17 ‘‘(B) during the 20-year period ending

18 with the calendar year preceding the date of the

19 enactment of this section, has a net out-migra20 tion of inhabitants from the county of at least

21 10 percent of the population of the county at

22 the beginning of such period.

23 ‘‘(3) PURCHASE AND PURCHASE PRICE.—The

24 terms ‘purchase’ and ‘purchase price’ have the

25 meanings provided by section 1400C(e).
9

•HR 2194 IH

1 ‘‘(d) CARRYFORWARD OF UNUSED CREDIT.—If the

2 credit allowable under subsection (a) for any taxable year

3 exceeds the limitation imposed by subsection (b)(1) for

4 such taxable year reduced by the sum of the credits allow5 able under this subpart (other than this section and sec6 tion 23), such excess shall be carried to the succeeding

7 taxable year and added to the credit allowable under sub8 section (a) for such taxable year.

9 ‘‘(e) REPORTING.—If the Secretary requires informa10 tion reporting under section 6045 by a person described

11 in subsection (e)(2) thereof to verify the eligibility of tax12 payers for the credit allowable by this section, the excep13 tion provided by section 6045(e)(5) shall not apply.

14 ‘‘(f) RECAPTURE OF CREDIT IN CASE OF CERTAIN

15 SALES.—

16 ‘‘(1) IN GENERAL.—Except as provided in para17 graph (5), if the taxpayer disposes of a qualified res18 idence with respect to the purchase of which a credit

19 was allowed under subsection (a) at any time within

20 5 years after the date the taxpayer acquired the

21 property, then the tax imposed under this chapter

22 for the taxable year in which the disposition occurs

23 is increased by the credit recapture amount.
10

•HR 2194 IH

1 ‘‘(2) CREDIT RECAPTURE AMOUNT.—For pur2 poses of paragraph (1), the credit recapture amount

3 is an amount equal to the sum of—

4 ‘‘(A) the applicable recapture percentage of

5 the amount of the credit allowed to the tax6 payer under this section, plus

7 ‘‘(B) interest at the overpayment rate es8 tablished under section 6621 on the amount de9 termined under subparagraph (A) for each

10 prior taxable year for the period beginning on

11 the due date for filing the return for the prior

12 taxable year involved.

13 No deduction shall be allowed under this chapter for

14 interest described in subparagraph (B).

15 ‘‘(3) APPLICABLE RECAPTURE PERCENTAGE.—

16 ‘‘(A) IN GENERAL.—For purposes of this

17 subsection, the applicable recapture percentage

18 shall be determined from the following table:

The applicable

recapture

‘‘If the sale occurs in: percentage is:

Year 1 ........................................................................ 100

Year 2 ........................................................................ 80

Year 3 ........................................................................ 60

Year 4 ........................................................................ 40

Year 5 ........................................................................ 20

Years 6 and thereafter .............................................. 0.

19 ‘‘(B) YEARS.—For purposes of subpara20 graph (A), year 1 shall begin on the first day

21 of the taxable year in which the purchase of the
11

•HR 2194 IH

1 qualified residence described in subsection (a)

2 occurs.

3 ‘‘(4) NO CREDITS AGAINST TAX.—Any increase

4 in tax under this subsection shall not be treated as

5 a tax imposed by this chapter for purposes of deter6 mining the amount of any credit under this chapter

7 or for purposes of section 55.

8 ‘‘(5) DEATH OF OWNER; CASUALTY LOSS; IN9 VOLUNTARY CONVERSION; ETC.—The provisions of

10 paragraph (1) do not apply to—

11 ‘‘(A) a disposition of a qualified residence

12 made on account of the death of any individual

13 having a legal or equitable interest therein oc14 curring during the 5-year period to which ref15 erence is made under paragraph (1),

16 ‘‘(B) a disposition of the old qualified resi17 dence if it is substantially or completely de18 stroyed by a casualty described in section

19 165(c)(3) or compulsorily or involuntarily con20 verted (within the meaning of section 1033(a)),

21 or

22 ‘‘(C) a disposition pursuant to a settlement

23 in a divorce or legal separation proceeding

24 where the qualified residence is sold or the

25 other spouse retains such residence.
12

•HR 2194 IH

1 ‘‘(g) BASIS ADJUSTMENT.—For purposes of this sub2 title, if a credit is allowed under this section with respect

3 to the purchase of any residence, the basis of such resi4 dence shall be reduced by the amount of the credit so al5 lowed.’’.

6 (b) CONFORMING AMENDMENTS.—

7 (1) Subsection (a) of section 1016 (relating to

8 general rule for adjustments to basis) is amended by

9 striking ‘‘and’’ at the end of paragraph (27), by

10 striking the period at the end of paragraph (28) and

11 inserting ‘‘, and’’, and by adding at the end the fol12 lowing:

13 ‘‘(29) in the case of a residence with respect to

14 which a credit was allowed under section 25C, to the

15 extent provided in section 25C(g).’’.

16 (2) Section 24(b)(3)(B), as amended by the Job

17 Creation and Worker Assistance Act of 2002, is

18 amended by striking ‘‘23 and 25B’’ and inserting

19 ‘‘23, 25B, and 25C’’.

20 (3) Section 25(e)(1)(C) is amended by striking

21 ‘‘23 and 1400C’’ and by inserting ‘‘23, 25C, and

22 1400C’’.

23 (4) Section 25(e)(1)(C), as amended by the Job

24 Creation and Worker Assistance Act of 2002, is

25 amended by inserting ‘‘25C,’’ after ‘‘25B,’’.
13

•HR 2194 IH

1 (5) Section 25B(g), as amended by the Job

2 Creation and Worker Assistance Act of 2002, is

3 amended by striking ‘‘section 23’’ and inserting

4 ‘‘sections 23 and 25C’’.

5 (6) Section 26(a)(1), as amended by the Job

6 Creation and Worker Assistance Act of 2002, is

7 amended by striking ‘‘and 25B’’ and inserting ‘‘25B,

8 and 25C’’.

9 (7) Section 1400C(d) is amended by inserting

10 ‘‘and section 25C’’ after ‘‘this section’’.

11 (8) Section 1400C(d), as amended by the Job

12 Creation and Worker Assistance Act of 2002, is

13 amended by striking ‘‘and 25B’’ and inserting ‘‘25B,

14 and 25C’’.

15 (9) The table of sections for subpart A of part

16 IV of subchapter A of chapter 1 is amended by in17 serting before the item relating to section 26 the fol18 lowing:

‘‘Sec. 25C. Purchase of residences by certain rural homebuyers.’’.

19 (c) EFFECTIVE DATE.—

20 (1) IN GENERAL.—The amendments made by

21 subsections (a) and (b)(9) shall apply to purchases

22 after the date of the enactment of this Act, in tax23 able years ending after such date.

24 (2) TEMPORARY CONFORMING AMENDMENTS.—

25 The amendments made by paragraphs (3) and (7) of
14

•HR 2194 IH

1 subsection (b) shall apply to taxable years ending be2 fore January 1, 2004.

3 (3) PERMANENT CONFORMING AMENDMENTS.—

4 The amendments made by paragraphs (1), (2), (4),

5 (5), (6), and (8) of subsection (b) shall apply to tax6 able years beginning after December 31, 2003.

7 SEC. 103. CAPITAL LOSS DEDUCTION ALLOWED WITH RE8 SPECT TO SALE OR EXCHANGE OF PRINCIPAL

9 RESIDENCE IN CERTAIN RURAL AREAS.

10 (a) IN GENERAL.—Subsection (c) of section 165 (re11 lating to limitation on losses of individuals) is amended—

12 (1) by striking ‘‘and’’ at the end of paragraph

13 (2),

14 (2) by striking the period at the end of para15 graph (3) and inserting ‘‘; and’’, and

16 (3) by adding at the end the following:

17 ‘‘(4) losses arising from the sale or exchange of

18 the principal residence (within the meaning of sec19 tion 121) of the taxpayer located in a qualifying

20 county (as defined in section 223(b)(2)), but only if

21 the principal residence was acquired by the taxpayer

22 after the date of enactment of this paragraph.’’.

23 (b) CONFORMING AMENDMENT.—Section 67(b)(3) is

24 amended by striking ‘‘paragraph (2) or (3)’’ and inserting

25 ‘‘paragraph (2), (3), or (4)’’.
15

•HR 2194 IH

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

2 this section shall apply to sales and exchanges after the

3 date of the enactment of this Act, in taxable years ending

4 after such date.

5 SEC. 104. INDIVIDUAL HOMESTEAD ACCOUNTS.

6 (a) IN GENERAL.—Subchapter F of chapter 1 (relat7 ing to exempt organizations) is amended by adding at the

8 end the following:

9 ‘‘PART IX—INDIVIDUAL HOMESTEAD ACCOUNTS

‘‘Sec. 530A. Individual homestead accounts.

10 ‘‘SEC. 530A. INDIVIDUAL HOMESTEAD ACCOUNTS.

11 ‘‘(a) GENERAL RULE.—An individual homestead ac12 count shall be exempt from taxation under this subtitle.

13 Notwithstanding the preceding sentence, any individual

14 homestead account shall be subject to the taxes imposed

15 by section 511 (relating to imposition of tax on unrelated

16 business income of charitable, etc., organizations).

17 ‘‘(b) INDIVIDUAL HOMESTEAD ACCOUNT.—For pur18 poses of this title, the term ‘individual homestead account’

19 means a trust created or organized in the United States

20 for the exclusive benefit of a qualified individual or his

21 beneficiaries, but only if the written governing instrument

22 creating the trust meets the following requirements:

23 ‘‘(1) Except in the case of a qualified rollover

24 (as defined in subsection (f)(7))—
16

•HR 2194 IH

1 ‘‘(A) no contribution will be accepted un2 less it is in cash;

3 ‘‘(B) contributions will not be accepted for

4 the taxable year in excess of $2,500 (deter5 mined without regard to any contribution made

6 under subsection (d)); and

7 ‘‘(C) contributions will not be accepted for

8 any taxable year following the fifth taxable year

9 in which the qualified individual has contributed

10 to any individual homestead account.

11 ‘‘(2) The requirements of paragraphs (2)

12 through (6) of section 408(a) are met.

13 ‘‘(c) QUALIFIED INDIVIDUAL; QUALIFYING COUN14 TY.—For purposes of this section—

15 ‘‘(1) QUALIFIED INDIVIDUAL.—The term ‘quali16 fied individual’ means, for any taxable year, an indi17 vidual who is a bona fide resident of a qualifying

18 county.

19 ‘‘(2) QUALIFYING COUNTY.—The term ‘quali20 fying county’ means any county which—

21 ‘‘(A) is outside a metropolitan statistical

22 area (defined as such by the Office of Manage23 ment and Budget), and

24 ‘‘(B) during the 20-year period ending

25 with the calendar year preceding the date of the
17

•HR 2194 IH

1 enactment of this section, has a net out-migra2 tion of inhabitants from the county of at least

3 10 percent of the population of the county at

4 the beginning of such period.

5 ‘‘(d) MATCHING CONTRIBUTIONS TO INDIVIDUAL

6 HOMESTEAD ACCOUNTS.—

7 ‘‘(1) IN GENERAL.—Not less than once each

8 taxable year, the Secretary shall deposit (to the ex9 tent provided in appropriation Acts) into an indi10 vidual Homestead account of each qualified indi11 vidual an amount equal to the applicable percentage

12 of the sum of the amounts deposited into all of the

13 individual homestead accounts of such individual

14 during such taxable year (determined without regard

15 to any amount contributed under this subsection).

16 ‘‘(2) APPLICABLE PERCENTAGE.—For purposes

17 of this subsection, the applicable percentage with re18 spect to any qualified individual for any taxable year

19 shall be determined in accordance with the following

20 tables:

‘‘If modified adjusted gross

income is:

The applicable percentage is:

$30,000 or less ................................................................................... 100

Over $30,000 but not over $60,000 .................................................. 50

Over $60,000 but not over $100,000 ................................................ 25

Over $100,000 ................................................................................... zero.

21 ‘‘(A) In the case of a head of household (as

22 defined in section 2(b)):
18

•HR 2194 IH

‘‘If modified adjusted gross

income is:

The applicable percentage is:

$22,500 or less ................................................................................... 100

Over $22,500 but not over $45,000 .................................................. 50

Over $45,000 but not over $75,000 .................................................. 25

Over $75,000 ..................................................................................... zero.

1 ‘‘(B) In the case of any other individual:

‘‘If modified adjusted gross

income is:

The applicable percentage is:

$15,000 or less ................................................................................... 100

Over $15,000 but not over $30,000 .................................................. 50

Over $30,000 but not over $50,000 .................................................. 25

Over $50,000 ..................................................................................... zero.

2 For purposes of this paragraph, the term ‘modified

3 adjusted gross income’ has the meaning given such

4 term by section 86(b)(2).

5 ‘‘(3) EXCLUSION FROM INCOME.—Except as

6 otherwise provided in this section, gross income shall

7 not include any amount deposited into an individual

8 homestead account under paragraph (1).

9 ‘‘(4) FORFEITURE OF MATCHING CONTRIBU10 TIONS IN THE CASE OF CERTAIN DISTRIBUTIONS.—

11 In the event of a distribution from an individual

12 homestead account before the date described in sub13 section (f)(1)(A) (other than a distribution described

14 in subsection (e)(2)(A)), the account holder shall

15 forfeit the corresponding matching contributions and

16 interest earned on the matching contributions, un17 less such distribution is recontributed to such ac18 count within 6 months of such distribution.

19 ‘‘(e) TAX TREATMENT OF DISTRIBUTIONS.—
19

•HR 2194 IH

1 ‘‘(1) INCLUSION OF AMOUNTS IN GROSS IN2 COME.—Except as otherwise provided in this sub3 section, any amount paid or distributed out of an in4 dividual homestead account shall be includible in the

5 gross income of the payee or distributee, as the case

6 may be, in the manner as provided in section 72.

7 For purposes of the preceding sentence, distributions

8 which are includable in gross income shall be treated

9 as first attributable to amounts contributed under

10 subsection (d) to the extent thereof.

11 ‘‘(2) EXCLUSION OF CATASTROPHIC MEDICAL

12 EXPENSE DISTRIBUTIONS IN FIRST FIVE YEARS AND

13 QUALIFIED INDIVIDUAL HOMESTEAD DISTRIBUTIONS

14 THEREAFTER.—Paragraph (1) shall not apply to—

15 ‘‘(A) any distribution described in section

16 72(t)92)(B) before the date described in sub17 section (f)(1)(A), but only to the extent such

18 distribution does not exceed the balance in the

19 account as of the date of such distribution, re20 duced by any matching contribution under sub21 section (d), and

22 ‘‘(B) any qualified individual homestead

23 distribution.

24 ‘‘(f) QUALIFIED INDIVIDUAL HOMESTEAD DISTRIBU25 TION.—For purposes of this section—
20

•HR 2194 IH

1 ‘‘(1) IN GENERAL.—The term ‘qualified indi2 vidual homestead distribution’ means any amount

3 paid or distributed out of an individual homestead

4 account which would otherwise be includible in gross

5 income, to the extent that such payment or

6 distribution—

7 ‘‘(A) is paid or distributed after the 5-tax8 able year period beginning with the first taxable

9 year in which the qualified individual made a

10 contribution to the individual homestead ac11 count (including any predecessor account), and

12 ‘‘(B) is used exclusively to pay qualified in13 dividual homestead expenses for the qualified

14 individual or the spouse or dependent (as de15 fined in section 152) of such individual.

16 ‘‘(2) QUALIFIED INDIVIDUAL HOMESTEAD EX17 PENSES.—The term ‘qualified individual homestead

18 expenses’ means any of the following:

19 ‘‘(A) Qualified higher education expenses.

20 ‘‘(B) Qualified first-time homebuyer costs.

21 ‘‘(C) Qualified business capitalization

22 costs.

23 ‘‘(D) Qualified medical expenses.

24 ‘‘(E) Qualified rollovers.
21

•HR 2194 IH

1 ‘‘(3) QUALIFIED HIGHER EDUCATION EX2 PENSES.—

3 ‘‘(A) IN GENERAL.—The term ‘qualified

4 higher education expenses’ has the meaning

5 given such term by section 72(t)(7), determined

6 by treating postsecondary vocational edu7 cational schools as eligible educational institu8 tions.

9 ‘‘(B) POSTSECONDARY VOCATIONAL EDU10 CATION SCHOOL.—The term ‘postsecondary vo11 cational educational school’ means an area vo12 cational education school (as defined in sub13 paragraph (C) or (D) of section 521(4) of the

14 Carl D. Perkins Vocational and Applied Tech15 nology Education Act (20 U.S.C. 2471(4)))

16 which is in any State (as defined in section

17 521(33) of such Act), as such sections are in

18 effect on the date of the enactment of this sec19 tion.

20 ‘‘(C) COORDINATION WITH OTHER BENE21 FITS.—The amount of qualified higher edu22 cation expenses for any taxable year shall be re23 duced as provided in section 25A(g)(2).

24 ‘‘(4) QUALIFIED FIRST-TIME HOMEBUYER

25 COSTS.—The term ‘qualified first-time homebuyer
22

•HR 2194 IH

1 costs’ means qualified acquisition costs (as defined

2 in section 72(t)(8) without regard to subparagraph

3 (B) thereof) with respect to a principal residence

4 (within the meaning of section 121) located in a

5 qualifying county for a qualified first-time home6 buyer (as defined in section 72(t)(8)).

7 ‘‘(5) QUALIFIED BUSINESS CAPITALIZATION

8 COSTS.—

9 ‘‘(A) IN GENERAL.—The term ‘qualified

10 business capitalization costs’ means qualified

11 expenditures for the capitalization of a qualified

12 business pursuant to a qualified plan.

13 ‘‘(B) QUALIFIED EXPENDITURES.—The

14 term ‘qualified expenditures’ means expendi15 tures included in a qualified plan, including

16 capital, plant, equipment, working capital, and

17 inventory expenses.

18 ‘‘(C) QUALIFIED BUSINESS.—The term

19 ‘qualified business’ means any trade or business

20 located in a qualifying county other than any

21 trade or business—

22 ‘‘(i) which consists of the operation of

23 any facility described in section

24 144(c)(6)(B), or

25 ‘‘(ii) which contravenes any law.
23

•HR 2194 IH

1 Rules similar to the rules under subsection (b)

2 or (c) of section 1397C shall apply to any quali3 fied business under this section.

4 ‘‘(D) QUALIFIED PLAN.—The term ‘quali5 fied plan’ means a business plan which meets

6 such requirements as the Secretary may specify.

7 ‘‘(6) QUALIFIED MEDICAL EXPENSES.—The

8 term ‘qualified medical expenses’ means any amount

9 paid during the taxable year, not compensated for by

10 insurance or otherwise, for medical care (as defined

11 in section 213(d)) of the taxpayer, his spouse, or his

12 dependent (as defined in section 152).

13 ‘‘(7) QUALIFIED ROLLOVERS.—The term ‘quali14 fied rollover’ means any amount paid from an indi15 vidual homestead account of a taxpayer into another

16 such account established for the benefit of—

17 ‘‘(A) such taxpayer, or

18 ‘‘(B) any qualified individual who is—

19 ‘‘(i) the spouse of such taxpayer, or

20 ‘‘(ii) any dependent (as defined in sec21 tion 152) of the taxpayer.

22 Rules similar to the rules of section 408(d)(3) shall

23 apply for purposes of this paragraph.

24 ‘‘(g) TAX TREATMENT OF ACCOUNTS.—
24

•HR 2194 IH

1 ‘‘(1) LOSS OF EXEMPTION IN CASE OF PROHIB2 ITED TRANSACTIONS.—For purposes of this section,

3 rules similar to the rules of section 408(e) shall

4 apply.

5 ‘‘(2) OTHER RULES TO APPLY.—Rules similar

6 to the rules of paragraphs (4), (5), and (6) of sec7 tion 408(d) shall apply for purposes of this section.

8 ‘‘(h) OTHER DEFINITIONS AND SPECIAL RULES.—

9 For purposes of this section—

10 ‘‘(1) ALL ACCOUNTS TREATED AS ONE AC11 COUNT.—All individual homestead accounts of a

12 qualified individual shall be treated as 1 account.

13 ‘‘(2) TIME WHEN CONTRIBUTIONS DEEMED

14 MADE.—A taxpayer shall be deemed to have made a

15 contribution to an individual homestead account on

16 the last day of the preceding taxable year if the con17 tribution is made on account of such taxable year

18 and is made not later than the time prescribed by

19 law for filing the return for such taxable year (not

20 including extensions thereof).

21 ‘‘(3) CUSTODIAL ACCOUNTS.—Rules similar to

22 the rules of section 408(h) shall apply.

23 ‘‘(4) REPORTS.—The trustee of an individual

24 homestead account shall make such reports regard25 ing such account to the Secretary and to the indi-
25

•HR 2194 IH

1 vidual for whom the account is maintained with re2 spect to contributions (and the years to which they

3 relate), distributions, and such other matters as the

4 Secretary may require under regulations. The re5 ports required by this paragraph—

6 ‘‘(A) shall be filed at such time and in

7 such manner as the Secretary prescribes in

8 such regulations; and

9 ‘‘(B) shall be furnished to individuals—

10 ‘‘(i) not later than January 31 of the

11 calendar year following the calendar year

12 to which such reports relate; and

13 ‘‘(ii) in such manner as the Secretary

14 prescribes in such regulations.

15 ‘‘(5) INVESTMENT IN COLLECTIBLES TREATED

16 AS DISTRIBUTIONS.—Rules similar to the rules of

17 section 408(m) shall apply.

18 ‘‘(i) DESIGNATION OF EARNED INCOME TAX CREDIT

19 PAYMENTS FOR DEPOSIT TO INDIVIDUAL HOMESTEAD

20 ACCOUNT.—

21 ‘‘(1) IN GENERAL.—With respect to the return

22 of any qualified individual for the taxable year of the

23 tax imposed by this chapter, such individual may

24 designate that a specified portion (not less than $1)

25 of any overpayment of tax for such taxable year
26

•HR 2194 IH

1 which is attributable to the earned income tax credit

2 shall be deposited by the Secretary into an individual

3 homestead account of such individual. The Secretary

4 shall so deposit such portion designated under this

5 subsection.

6 ‘‘(2) MANNER AND TIME OF DESIGNATION.—A

7 designation under paragraph (1) may be made with

8 respect to any taxable year—

9 ‘‘(A) at the time of filing the return of the

10 tax imposed by this chapter for such taxable

11 year, or

12 ‘‘(B) at any other time (after the time of

13 filing the return of the tax imposed by this

14 chapter for such taxable year) specified in regu15 lations prescribed by the Secretary.

16 Such designation shall be made in such manner as

17 the Secretary prescribes by regulations.

18 ‘‘(3) PORTION ATTRIBUTABLE TO EARNED IN19 COME TAX CREDIT.—For purposes of this sub20 section, an overpayment for any taxable year shall

21 be treated as attributable to the earned income tax

22 credit to the extent that such overpayment does not

23 exceed the credit allowed to the taxpayer under sec24 tion 32 for such taxable year.
27

•HR 2194 IH

1 ‘‘(4) OVERPAYMENTS TREATED AS RE2 FUNDED.—For purposes of this title, any portion of

3 an overpayment of tax designated under paragraph

4 (1) shall be treated as being refunded to the tax5 payer as of the last date prescribed for filing the re6 turn of tax imposed by this chapter (determined

7 without regard to extensions) or, if later, the date

8 the return is filed.

9 ‘‘(j) PENALTY FOR DISTRIBUTIONS NOT USED FOR

10 QUALIFIED INDIVIDUAL HOMESTEAD EXPENSES.—

11 ‘‘(1) IN GENERAL.—If any amount is distrib12 uted from an individual homestead account and is

13 not used exclusively to pay qualified individual

14 homestead expenses for the holder of the account or

15 the spouse or dependent (as defined in section 152)

16 of such holder, the tax imposed by this chapter for

17 the taxable year of such distribution shall be in18 creased by 10 percent of such amount which is in19 cludible in gross income. For purposes of the pre20 ceding sentence, distributions which are includable

21 in gross income shall be treated as first attributable

22 to amounts contributed under subsection (d) to the

23 extent thereof.
28

•HR 2194 IH

1 ‘‘(2) EXCEPTION FOR CERTAIN DISTRIBU2 TIONS.—Paragraph (1) shall not apply to distribu3 tions which are—

4 ‘‘(A) made on or after the date on which

the account holder attains age 591 5 ⁄2,

6 ‘‘(B) made to a beneficiary (or the estate

7 of the account holder) on or after the death of

8 the account holder,

9 ‘‘(C) attributable to the account holder’s

10 being disabled within the meaning of section

11 72(m)(7), or

12 ‘‘(D) described in subsection (e)(2)(A).

13 ‘‘(k) APPLICATION OF SECTION.—This section shall

14 apply to amounts paid to an individual homestead account

15 for any taxable year beginning after the date of the enact16 ment of the New Homestead Act of 2003.’’.

17 (b) TAX ON EXCESS CONTRIBUTIONS.—

18 (1) TAX IMPOSED.—Subsection (a) of section

19 4973 is amended by striking ‘‘or’’ at the end of

20 paragraph (3), adding ‘‘or’’ at the end of paragraph

21 (4), and inserting after paragraph (4) the following:

22 ‘‘(5) an individual homestead account (within

23 the meaning of section 530A(b)),’’.

24 (2) EXCESS CONTRIBUTIONS.—Section 4973 is

25 amended by adding at the end the following:
29

•HR 2194 IH

1 ‘‘(g) INDIVIDUAL HOMESTEAD ACCOUNTS.—For pur2 poses of this section, in the case of individual homestead

3 accounts, the term ‘excess contributions’ means the sum

4 of—

5 ‘‘(1) the excess (if any) of—

6 ‘‘(A) the amount contributed for the tax7 able year to the accounts (other than a quali8 fied rollover, as defined in section 530A(f)(7),

9 or a contribution under section 530A(d)), over

10 ‘‘(B) the amount allowable under section

11 530A for such contributions; and

12 ‘‘(2) the amount determined under this sub13 section for the preceding taxable year reduced by the

14 sum of—

15 ‘‘(A) the distributions out of the accounts

16 for the taxable year which were included in the

17 gross income of the payee under section

18 530A(e)(1);

19 ‘‘(B) the distributions out of the accounts

20 for the taxable year to which rules similar to

21 the rules of section 408(d)(5) apply by reason

22 of section 530A(g)(2); and

23 ‘‘(C) the excess (if any) of the maximum

24 amount allowable as a contribution under sec25 tion 530A for the taxable year over the amount
30

•HR 2194 IH

1 contributed to the account for the taxable year

2 (other than a contribution under section

3 530A(d)).

4 For purposes of this subsection, any contribution which

5 is distributed from the individual homestead account in

6 a distribution to which rules similar to the rules of section

7 408(d)(4) apply by reason of section 530A(g)(2) shall be

8 treated as an amount not contributed.’’.

9 (c) TAX ON PROHIBITED TRANSACTIONS.—Section

10 4975 is amended—

11 (1) by adding at the end of subsection (c) the

12 following:

13 ‘‘(6) SPECIAL RULE FOR INDIVIDUAL HOME14 STEAD ACCOUNTS.—An individual for whose benefit

15 an individual homestead account is established and

16 any contributor to such account shall be exempt

17 from the tax imposed by this section with respect to

18 any transaction concerning such account (which

19 would otherwise be taxable under this section) if,

20 with respect to such transaction, the account ceases

21 to be an individual homestead account by reason of

22 the application of section 530A(g)(1) to such ac23 count.’’; and

24 (2) in subsection (e)(1), by striking ‘‘or’’ at the

25 end of subparagraph (E), by redesignating subpara-
31

•HR 2194 IH

1 graph (F) as subparagraph (G), and by inserting

2 after subparagraph (E) the following:

3 ‘‘(F) an individual homestead account de4 scribed in section 530A(b), or’’.

5 (d) INFORMATION RELATING TO CERTAIN TRUSTS

6 AND ANNUITY PLANS.—Subsection (c) of section 6047 is

7 amended—

8 (1) by inserting ‘‘or section 530A’’ after ‘‘sec9 tion 219’’; and

10 (2) by inserting ‘‘, of any individual homestead

11 account described in section 530A(b),’’, after ‘‘sec12 tion 408(a)’’.

13 (e) INSPECTION OF APPLICATIONS FOR TAX EXEMP14 TION.—Clause (i) of section 6104(a)(1)(B) is amended by

15 inserting ‘‘an individual homestead account described in

16 section 530A(b),’’ after ‘‘section 408(a),’’.

17 (f) FAILURE TO PROVIDE REPORTS ON INDIVIDUAL

18 HOMESTEAD ACCOUNTS.—Paragraph (2) of section

19 6693(a) is amended by striking ‘‘and’’ at the end of sub20 paragraph (C), by striking the period and inserting ‘‘,

21 and’’ at the end of subparagraph (D), and by adding at

22 the end the following:

23 ‘‘(E) section 530A(h)(4) (relating to indi24 vidual homestead accounts).’’.
32

•HR 2194 IH

1 (g) CLERICAL AMENDMENT.—The table of parts for

2 subchapter F of chapter 1 is amended by adding at the

3 end the following:

‘‘Part IX. Individual homestead accounts.’’.

4 TITLE II—INCENTIVES FOR MAIN

5 STREET BUSINESSES

6 SEC. 201. RURAL INVESTMENT TAX CREDIT.

7 (a) IN GENERAL.—Subpart D of part IV of sub8 chapter A of chapter 1 (relating to business related cred9 its) is amended by adding at the end the following:

10 ‘‘SEC. 42A. RURAL INVESTMENT CREDIT.

11 ‘‘(a) IN GENERAL.—For purposes of section 38, the

12 amount of the rural investment credit determined under

13 this section for any taxable year in the credit period shall

14 be an amount equal to the applicable percentage of the

15 eligible basis of each qualified rural investment building.

16 ‘‘(b) APPLICABLE PERCENTAGE: 70 PERCENT

17 PRESENT VALUE CREDIT FOR NEW BUILDINGS; 30 PER18 CENT PRESENT VALUE CREDIT FOR EXISTING BUILD19 INGS.—For purposes of this section—

20 ‘‘(1) IN GENERAL.—The term ‘applicable per21 centage’ means the appropriate percentage pre22 scribed by the Secretary for the earlier of—

23 ‘‘(A) the first month of the credit period

24 with respect to a rural investment building, or
33

•HR 2194 IH

1 ‘‘(B) at the election of the taxpayer, the

2 month in which the taxpayer and the rural in3 vestment credit agency enter into an agreement

4 with respect to such building (which is binding

5 on such agency, the taxpayer, and all successors

6 in interest) as to the rural investment credit

7 dollar amount to be allocated to such building.

8 A month may be elected under subparagraph (B)

9 only if the election is made not later than the 5th

10 day after the close of such month. Such an election,

11 once made, shall be irrevocable.

12 ‘‘(2) METHOD OF PRESCRIBING PERCENT13 AGES.—The percentages prescribed by the Secretary

14 for any month shall be percentages which will yield

15 over a 10-year period amounts of credit under sub16 section (a) which have a present value equal to—

17 ‘‘(A) 70 percent of the eligible basis of a

18 new building, and

19 ‘‘(B) 30 percent of the eligible basis of an

20 existing building.

21 ‘‘(3) METHOD OF DISCOUNTING.—The present

22 value under paragraph (2) shall be determined—

23 ‘‘(A) as of the last day of the 1st year of

24 the 10-year period referred to in paragraph (2),
34

•HR 2194 IH

1 ‘‘(B) by using a discount rate equal to 72

2 percent of the average of the annual Federal

3 mid-term rate and the annual Federal long4 term rate applicable under section 1274(d)(1)

5 to the month applicable under subparagraph

6 (A) or (B) of paragraph (1) and compounded

7 annually, and

8 ‘‘(C) by assuming that the credit allowable

9 under this section for any year is received on

10 the last day of such year.

11 ‘‘(c) ELIGIBLE BASIS; QUALIFIED RURAL INVEST12 MENT BUILDING.—For purposes of this section—

13 ‘‘(1) ELIGIBLE BASIS.—

14 ‘‘(A) IN GENERAL.—The eligible basis of

15 any qualified rural investment building for any

16 taxable year shall be determined under rules

17 similar to the rules under section 42(d), except

18 that—

19 ‘‘(i) the determination of the adjusted

20 basis of any building shall be made as of

21 the beginning of the credit period, and

22 ‘‘(ii) such basis shall include develop23 ment costs properly attributable to such

24 building.
35

•HR 2194 IH

1 ‘‘(B) DEVELOPMENT COSTS.—For pur2 poses of subparagraph (A)(ii), the term ‘devel3 opment costs’ includes—

4 ‘‘(i) site preparation costs,

5 ‘‘(ii) State and local impact fees,

6 ‘‘(iii) reasonable development costs,

7 ‘‘(iv) professional fees related to basis

8 items,

9 ‘‘(v) construction financing costs re10 lated to basis items other than land, and

11 ‘‘(vi) on-site and adjacent improve12 ments required by State and local govern13 ments.

14 ‘‘(2) QUALIFIED RURAL INVESTMENT BUILD15 ING.—The term ‘qualified rural investment building’

16 means any building which is part of a qualified rural

17 investment project at all times during the period—

18 ‘‘(A) beginning on the 1st day in the com19 pliance period on which such building is part of

20 such an investment project, and

21 ‘‘(B) ending on the last day of the compli22 ance period with respect to such building.

23 ‘‘(d) REHABILITATION EXPENDITURES TREATED AS

24 SEPARATE NEW BUILDING.—Rehabilitation expenditures

25 paid or incurred by the taxpayer with respect to any build-
36

•HR 2194 IH

1 ing shall be treated for purposes of this section as a sepa2 rate new building under the rules of section 42(e).

3 ‘‘(e) DEFINITION AND SPECIAL RULES RELATING TO

4 CREDIT PERIOD.—

5 ‘‘(1) CREDIT PERIOD DEFINED.—For purposes

6 of this section, the term ‘credit period’ means, with

7 respect to any building, the period of 10 taxable

8 years beginning with the taxable year in which the

9 building is first placed in service.

10 ‘‘(2) SPECIAL RULE FOR 1ST YEAR OF CREDIT

11 PERIOD.—

12 ‘‘(A) IN GENERAL.—The credit allowable

13 under subsection (a) with respect to any build14 ing for the 1st taxable year of the credit period

15 shall be determined by multiplying such credit

16 by the fraction—

17 ‘‘(i) the numerator of which is the

18 number of full months of such year during

19 which such building was in service, and

20 ‘‘(ii) the denominator of which is 12.

21 ‘‘(B) DISALLOWED 1ST YEAR CREDIT AL22 LOWED IN 11TH YEAR.—Any reduction by rea23 son of subparagraph (A) in the credit allowable

24 (without regard to subparagraph (A)) for the

25 1st taxable year of the credit period shall be al-
37

•HR 2194 IH

1 lowable under subsection (a) for the 1st taxable

2 year following the credit period.

3 ‘‘(3) CREDIT PERIOD FOR EXISTING BUILDINGS

4 NOT TO BEGIN BEFORE REHABILITATION CREDIT

5 ALLOWED.—The credit period for an existing build6 ing shall not begin before the 1st taxable year of the

7 credit period for rehabilitation expenditures with re8 spect to the building.

9 ‘‘(f) QUALIFIED RURAL INVESTMENT PROJECT;

10 QUALIFYING COUNTY.—For purposes of this section—

11 ‘‘(1) QUALIFIED RURAL INVESTMENT

12 PROJECT.—The term ‘qualified rural investment

13 project’ means any investment project of 1 or more

14 qualified rural investment buildings located in a

15 qualifying county (and, if necessary to the project,

16 any contiguous county) and selected by the State ac17 cording to its qualified rural investment plan.

18 ‘‘(2) QUALIFYING COUNTY.—The term ‘quali19 fying county’ means any county which—

20 ‘‘(A) is outside a metropolitan statistical

21 area (defined as such by the Office of Manage22 ment and Budget), and

23 ‘‘(B) during the 20-year period ending

24 with the calendar year preceding the date of the

25 enactment of this section, has a net out-migra-
38

•HR 2194 IH

1 tion of inhabitants from the county of at least

2 10 percent of the population of the county at

3 the beginning of such period.

4 ‘‘(g) LIMITATION ON AGGREGATE CREDIT ALLOW5 ABLE WITH RESPECT TO INVESTMENT PROJECTS LO6 CATED IN A STATE.—

7 ‘‘(1) CREDIT MAY NOT EXCEED CREDIT

8 AMOUNT ALLOCATED TO BUILDING.—The amount of

9 the credit determined under this section for any tax10 able year with respect to any building shall not ex11 ceed the rural investment credit dollar amount allo12 cated to such building under rules similar to the

13 rules of section 42(h)(1).

14 ‘‘(2) ALLOCATED CREDIT AMOUNT TO APPLY

15 TO ALL TAXABLE YEARS ENDING DURING OR AFTER

16 CREDIT ALLOCATION YEAR.—Any rural investment

17 credit dollar amount allocated to any building for

18 any calendar year—

19 ‘‘(A) shall apply to such building for all

20 taxable years in the credit period ending during

21 or after such calendar year, and

22 ‘‘(B) shall reduce the aggregate rural in23 vestment credit dollar amount of the allocating

24 agency only for such calendar year.
39

•HR 2194 IH

1 ‘‘(3) RURAL INVESTMENT CREDIT DOLLAR

2 AMOUNT FOR AGENCIES.—

3 ‘‘(A) IN GENERAL.—The aggregate rural

4 investment credit dollar amount which a rural

5 investment credit agency may allocate for any

6 calendar year is the portion of the State rural

7 investment credit ceiling allocated under this

8 paragraph for such calendar year to such agen9 cy.

10 ‘‘(B) STATE CEILING INITIALLY ALLO11 CATED TO STATE RURAL INVESTMENT CREDIT

12 AGENCIES.—Except as provided in subpara13 graphs (D) and (E), the State rural investment

14 credit ceiling for each calendar year shall be al15 located to the rural investment credit agency of

16 such State. If there is more than 1 rural invest17 ment credit agency of a State, all such agencies

18 shall be treated as a single agency.

19 ‘‘(C) STATE RURAL INVESTMENT CREDIT

20 CEILING.—The State rural investment credit

21 ceiling applicable to any State and any calendar

22 year shall be an amount equal to the sum of—

23 ‘‘(i) the unused State rural investment

24 credit ceiling (if any) of such State for the

25 preceding calendar year,
40

•HR 2194 IH

1 ‘‘(ii) $1,000,000 for each qualifying

2 county in the State,

3 ‘‘(iii) the amount of State rural in4 vestment credit ceiling returned in the cal5 endar year, plus

6 ‘‘(iv) the amount (if any) allocated

7 under subparagraph (D) to such State by

8 the Secretary.

9 For purposes of clause (i), the unused State

10 rural investment credit ceiling for any calendar

11 year is the excess (if any) of the sum of the

12 amounts described in clauses (ii) through (iv)

13 over the aggregate rural investment credit dol14 lar amount allocated for such year. For pur15 poses of clause (iii), the amount of State rural

16 investment credit ceiling returned in the cal17 endar year equals the rural investment credit

18 dollar amount previously allocated within the

19 State to any investment project which fails to

20 meet the 10 percent test under section

21 42(h)(1)(E)(ii) on a date after the close of the

22 calendar year in which the allocation was made

23 or which does not become a qualified rural in24 vestment project within the period required by

25 this section or the terms of the allocation or to
41

•HR 2194 IH

1 any investment project with respect to which an

2 allocation is canceled by mutual consent of the

3 rural investment credit agency and the alloca4 tion recipient.

5 ‘‘(D) UNUSED RURAL INVESTMENT CREDIT

6 CARRYOVERS ALLOCATED AMONG CERTAIN

7 STATES.—

8 ‘‘(i) IN GENERAL.—The unused rural

9 investment credit carryover of a State for

10 any calendar year shall be assigned to the

11 Secretary for allocation among qualified

12 States for the succeeding calendar year.

13 ‘‘(ii) UNUSED RURAL INVESTMENT

14 CREDIT CARRYOVER.—For purposes of this

15 subparagraph, the unused rural investment

16 credit carryover of a State for any calendar

17 year is the excess (if any) of the unused

18 State rural investment credit ceiling for

19 such year (as defined in subparagraph

20 (C)(i)) over the excess (if any) of—

21 ‘‘(I) the unused State rural in22 vestment credit ceiling for the year

23 preceding such year, over
42

•HR 2194 IH

1 ‘‘(II) the aggregate rural invest2 ment credit dollar amount allocated

3 for such year.

4 ‘‘(iii) FORMULA FOR ALLOCATION OF

5 UNUSED RURAL INVESTMENT CREDIT

6 CARRYOVERS AMONG QUALIFIED

7 STATES.—The amount allocated under this

8 subparagraph to a qualified State for any

9 calendar year shall be the amount deter10 mined by the Secretary to bear the same

11 ratio to the aggregate unused rural invest12 ment credit carryovers of all States for the

13 preceding calendar year as such State’s

14 population for the calendar year bears to

15 the population of all qualified States for

16 the calendar year. For purposes of the pre17 ceding sentence, population shall be deter18 mined in accordance with section 146(j).

19 ‘‘(iv) QUALIFIED STATE.—For pur20 poses of this subparagraph, the term

21 ‘qualified State’ means, with respect to a

22 calendar year, any State—

23 ‘‘(I) which allocated its entire

24 State rural investment credit ceiling

25 for the preceding calendar year, and
43

•HR 2194 IH

1 ‘‘(II) for which a request is made

2 (not later than May 1 of the calendar

3 year) to receive an allocation under

4 clause (iii).

5 ‘‘(E) STATE MAY PROVIDE FOR DIF6 FERENT ALLOCATION.—Rules similar to the

7 rules of section 146(e) (other than paragraph

8 (2)(B) thereof) shall apply for purposes of this

9 paragraph.

10 ‘‘(F) POPULATION.—For purposes of this

11 paragraph, population shall be determined in

12 accordance with section 146(j).

13 ‘‘(G) COST-OF-LIVING ADJUSTMENT.—

14 ‘‘(i) IN GENERAL.—In the case of a

15 calendar year after 2004, the $1,000,000

16 amount in subparagraph (C) shall be in17 creased by an amount equal to—

18 ‘‘(I) such dollar amount, multi19 plied by

20 ‘‘(II) the cost-of-living adjust21 ment determined under section

22 1(f )(3) for such calendar year by sub23 stituting ‘calendar year 2003’ for ‘cal24 endar year 1992’ in subparagraph (B)

25 thereof.
44

•HR 2194 IH

1 ‘‘(ii) ROUNDING.—Any increase under

2 clause (i) which is not a multiple of $5,000

3 shall be rounded to the next lowest mul4 tiple of $5,000.

5 ‘‘(4) PORTION OF STATE CEILING SET-ASIDE

6 FOR CERTAIN INVESTMENT PROJECTS INVOLVING

7 QUALIFIED NONPROFIT ORGANIZATIONS.—

8 ‘‘(A) IN GENERAL.—At least 10 percent of

9 the State rural investment credit ceiling for any

10 State for any calendar year shall be allocated to

11 qualified rural investment projects described in

12 subparagraph (B).

13 ‘‘(B) INVESTMENT PROJECTS INVOLVING

14 QUALIFIED NONPROFIT ORGANIZATIONS.—For

15 purposes of subparagraph (A), a qualified rural

16 investment project is described in this subpara17 graph if a qualified nonprofit organization is to

18 materially participate (within the meaning of

19 section 469(h)) in the development and oper20 ation of the investment project throughout the

21 compliance period.

22 ‘‘(C) QUALIFIED NONPROFIT ORGANIZA23 TION.—For purposes of this paragraph, the

24 term ‘qualified nonprofit organization’ means

25 any organization if—
45

•HR 2194 IH

1 ‘‘(i) such organization is described in

2 any paragraph of section 501(c) and is ex3 empt from tax under section 501(a),

4 ‘‘(ii) such organization is determined

5 by the State rural investment credit agency

6 not to be affiliated with or controlled by a

7 for-profit organization; and

8 ‘‘(iii) 1 of the exempt purposes of

9 such organization includes the fostering of

10 rural investment.

11 ‘‘(D) TREATMENT OF CERTAIN SUBSIDI12 ARIES.—

13 ‘‘(i) IN GENERAL.—For purposes of

14 this paragraph, a qualified nonprofit orga15 nization shall be treated as satisfying the

16 ownership and material participation test

17 of subparagraph (B) if any qualified cor18 poration in which such organization holds

19 stock satisfies such test.

20 ‘‘(ii) QUALIFIED CORPORATION.—For

21 purposes of clause (i), the term ‘qualified

22 corporation’ means any corporation if 100

23 percent of the stock of such corporation is

24 held by 1 or more qualified nonprofit orga-
46

•HR 2194 IH

1 nizations at all times during the period

2 such corporation is in existence.

3 ‘‘(E) STATE MAY NOT OVERRIDE SET4 ASIDE.—Nothing in subparagraph (F) of para5 graph (3) shall be construed to permit a State

6 not to comply with subparagraph (A) of this

7 paragraph.

8 ‘‘(F) CREDITS FOR QUALIFIED NONPROFIT

9 ORGANIZATIONS.—

10 ‘‘(i) ALLOWANCE OF CREDIT.—Any

11 credit which would be allowable under sub12 section (a) with respect to a qualified rural

13 investment building of a qualified nonprofit

14 organization if such organization were not

15 exempt from tax under this chapter shall

16 be treated as a credit allowable under sub17 part C to such organization.

18 ‘‘(ii) USE OF CREDIT.—A qualified

19 nonprofit organization may assign, trade,

20 sell, or otherwise transfer any credit allow21 able to such organization under subpara22 graph (A) to any taxpayer.

23 ‘‘(iii) CREDIT NOT INCOME.—A trans24 fer under subparagraph (B) of any credit

25 allowable under subparagraph (A) shall not
47

•HR 2194 IH

1 result in income for purposes of section

2 511.

3 ‘‘(5) SPECIAL RULES.—

4 ‘‘(A) BUILDING MUST BE LOCATED WITH5 IN JURISDICTION OF CREDIT AGENCY.—A rural

6 investment credit agency may allocate its aggre7 gate rural investment credit dollar amount only

8 to buildings located in the jurisdiction of the

9 governmental unit of which such agency is a

10 part.

11 ‘‘(B) AGENCY ALLOCATIONS IN EXCESS OF

12 LIMIT.—If the aggregate rural investment cred13 it dollar amounts allocated by a rural invest14 ment credit agency for any calendar year exceed

15 the portion of the State rural investment credit

16 ceiling allocated to such agency for such cal17 endar year, the rural investment credit dollar

18 amounts so allocated shall be reduced (to the

19 extent of such excess) for buildings in the re20 verse of the order in which the allocations of

21 such amounts were made.

22 ‘‘(C) CREDIT REDUCED IF ALLOCATED

23 CREDIT DOLLAR AMOUNT IS LESS THAN CREDIT

24 WHICH WOULD BE ALLOWABLE WITHOUT RE25 GARD TO SALES CONVENTION, ETC.—
48

•HR 2194 IH

1 ‘‘(i) IN GENERAL.—The amount of

2 the credit determined under this section

3 with respect to any building shall not ex4 ceed the clause (ii) percentage of the

5 amount of the credit which would (but for

6 this subparagraph) be determined under

7 this section with respect to such building.

8 ‘‘(ii) DETERMINATION OF PERCENT9 AGE.—For purposes of clause (i), the

10 clause (ii) percentage with respect to any

11 building is the percentage which—

12 ‘‘(I) the rural investment credit

13 dollar amount allocated to such build14 ing bears to

15 ‘‘(II) the credit amount deter16 mined in accordance with clause (iii).

17 ‘‘(iii) DETERMINATION OF CREDIT

18 AMOUNT.—The credit amount determined

19 in accordance with this clause is the

20 amount of the credit which would (but for

21 this subparagraph) be determined under

22 this section with respect to the building if

23 this section were applied without regard to

24 paragraph (2)(A) of subsection (e).
49

•HR 2194 IH

1 ‘‘(D) RURAL INVESTMENT CREDIT AGENCY

2 TO SPECIFY APPLICABLE PERCENTAGE AND

3 MAXIMUM ELIGIBLE BASIS.—In allocating a

4 rural investment credit dollar amount to any

5 building, the rural investment credit agency

6 shall specify the applicable percentage and the

7 maximum eligible basis which may be taken

8 into account under this section with respect to

9 such building. The applicable percentage and

10 maximum eligible basis so specified shall not ex11 ceed the applicable percentage and eligible basis

12 determined under this section without regard to

13 this subsection.

14 ‘‘(6) OTHER DEFINITIONS.—For purposes of

15 this subsection—

16 ‘‘(A) RURAL INVESTMENT CREDIT AGEN17 CY.—The term ‘rural investment credit agency’

18 means any agency authorized to carry out this

19 subsection.

20 ‘‘(B) POSSESSIONS TREATED AS

21 STATES.—The term ‘State’ includes a posses22 sion of the United States.

23 ‘‘(7) PORTION OF STATE CEILING SET-ASIDE

24 FOR QUALIFIED RURAL SMALL BUSINESS INVEST25 MENT CREDITS.—Not more than 20 percent of the
50

•HR 2194 IH

1 State rural investment credit ceiling for any State

2 for any calendar year may be allocated to qualified

3 rural small business investment credits under section

4 42B.

5 ‘‘(h) DEFINITIONS AND SPECIAL RULES.—For pur6 poses of this section—

7 ‘‘(1) COMPLIANCE PERIOD.—The term ‘compli8 ance period’ means, with respect to any building, the

9 period of 10 taxable years beginning with the 1st

10 taxable year of the credit period with respect there11 to.

12 ‘‘(2) NEW BUILDING.—The term ‘new building’

13 means a building the original use of which begins

14 with the taxpayer.

15 ‘‘(3) EXISTING BUILDING.—The term ‘existing

16 building’ means any building which is not a new

17 building.

18 ‘‘(4) APPLICATION TO ESTATES AND TRUSTS.—

19 In the case of an estate or trust, the amount of the

20 credit determined under subsection (a) and any in21 crease in tax under subsection (i) shall be appor22 tioned between the estate or trust and the bene23 ficiaries on the basis of the income of the estate or

24 trust allocable to each.

25 ‘‘(i) RECAPTURE OF CREDIT.—If—
51

•HR 2194 IH

1 ‘‘(1) as of the close of any taxable year in the

2 compliance period, the amount of the eligible basis

3 of any building with respect to the taxpayer is less

4 than

5 ‘‘(2) the amount of such basis as of the close

6 of the preceding taxable year,

7 then the taxpayer’s tax under this chapter for the

8 taxable year shall be increased by the credit recap9 ture amount determined under rules similar to the

10 rules of section 42(j).

11 ‘‘(j) CERTIFICATIONS AND OTHER REPORTS TO SEC12 RETARY.—

13 ‘‘(1) CERTIFICATION WITH RESPECT TO 1ST

14 YEAR OF CREDIT PERIOD.—Following the close of

15 the 1st taxable year in the credit period with respect

16 to any qualified rural investment building, the tax17 payer shall certify to the Secretary (at such time

18 and in such form and in such manner as the Sec19 retary prescribes)—

20 ‘‘(A) the taxable year, and calendar year,

21 in which such building was first placed in serv22 ice,

23 ‘‘(B) the eligible basis of such building as

24 of the beginning of the credit period,
52

•HR 2194 IH

1 ‘‘(C) the maximum applicable percentage

2 and eligible basis permitted to be taken into ac3 count by the appropriate rural investment cred4 it agency under subsection (g),

5 ‘‘(D) the election made under subsection

6 (f) with respect to the qualified rural invest7 ment project of which such building is a part,

8 and

9 ‘‘(E) such other information as the Sec10 retary may require.

11 In the case of a failure to make the certification re12 quired by the preceding sentence on the date pre13 scribed therefor, unless it is shown that such failure

14 is due to reasonable cause and not to willful neglect,

15 no credit shall be allowable by reason of subsection

16 (a) with respect to such building for any taxable

17 year ending before such certification is made.

18 ‘‘(2) ANNUAL REPORTS TO THE SECRETARY.—

19 The Secretary may require taxpayers to submit an

20 information return (at such time and in such form

21 and manner as the Secretary prescribes) for each

22 taxable year setting forth—

23 ‘‘(A) the eligible basis for the taxable year

24 of each qualified rural investment building of

25 the taxpayer,
53

•HR 2194 IH

1 ‘‘(B) the information described in para2 graph (1)(C) for the taxable year, and

3 ‘‘(C) such other information as the Sec4 retary may require.

5 The penalty under section 6652(j) shall apply to any

6 failure to submit the return required by the Sec7 retary under the preceding sentence on the date pre8 scribed therefor.

9 ‘‘(3) ANNUAL REPORTS FROM RURAL INVEST10 MENT CREDIT AGENCIES.—Each agency which allo11 cates any rural investment credit amount to any

12 building for any calendar year shall submit to the

13 Secretary (at such time and in such manner as the

14 Secretary shall prescribe) an annual report

15 specifying—

16 ‘‘(A) the amount of rural investment credit

17 amount allocated to each building for such year,

18 ‘‘(B) sufficient information to identify each

19 such building and the taxpayer with respect

20 thereto, and

21 ‘‘(C) such other information as the Sec22 retary may require.

23 The penalty under section 6652(j) shall apply to any

24 failure to submit the report required by the pre25 ceding sentence on the date prescribed therefor.
54

•HR 2194 IH

1 ‘‘(k) RESPONSIBILITIES OF RURAL INVESTMENT

2 CREDIT AGENCIES.—

3 ‘‘(1) PLANS FOR ALLOCATION OF CREDIT

4 AMONG INVESTMENT PROJECTS.—

5 ‘‘(A) IN GENERAL.—Notwithstanding any

6 other provision of this section, the rural invest7 ment credit dollar amount with respect to any

8 building shall be zero unless—

9 ‘‘(i) such amount was allocated pursu10 ant to a qualified rural investment plan of

11 the agency which is approved by the gov12 ernmental unit (in accordance with rules

13 similar to the rules of section 147(f)(2)

14 (other than subparagraph (B)(ii) thereof))

15 of which such agency is a part,

16 ‘‘(ii) such agency notifies the chief ex17 ecutive officer (or the equivalent) of the

18 local jurisdiction within which the building

19 is located of such investment project and

20 provides such individual a reasonable op21 portunity to comment on the investment

22 project,

23 ‘‘(iii) a comprehensive market study

24 of the development needs of individuals in

25 the qualifying county to be served by the
55

•HR 2194 IH

1 investment project is conducted before the

2 credit allocation is made and at the devel3 oper’s expense by a disinterested party who

4 is approved by such agency, and

5 ‘‘(iv) a written explanation is available

6 to the general public for any allocation of

7 a rural investment credit dollar amount

8 which is not made in accordance with es9 tablished priorities and selection criteria of

10 the rural investment credit agency.

11 ‘‘(B) QUALIFIED RURAL INVESTMENT

12 PLAN.—For purposes of this section, the term

13 ‘qualified rural investment plan’ means any

14 plan—

15 ‘‘(i) which sets forth selection criteria

16 to be used to determine priorities of the

17 rural investment credit agency which are

18 appropriate to qualifying counties,

19 ‘‘(ii) which also gives preference in al20 locating rural investment credit dollar

21 amounts among selected investment

22 projects to—

23 ‘‘(I) investment projects that tar24 get those small rural counties with
56

•HR 2194 IH

1 consistently high rates of net out-mi2 gration,

3 ‘‘(II) investment projects that

4 link the economic development and job

5 creation efforts of 2 or more small

6 rural counties with high rates of net

7 out-migration, and

8 ‘‘(III) investment projects that

9 link the economic development and job

10 creation efforts of 1 or more small

11 rural counties in the State with high

12 rates of net out-migration to related

13 efforts in regions of such State experi14 encing economic growth, and

15 ‘‘(iii) which provides a procedure that

16 the agency (or an agent or other private

17 contractor of such agency) will follow in

18 monitoring for noncompliance with the

19 provisions of this section and in notifying

20 the Internal Revenue Service of such non21 compliance which such agency becomes

22 aware of and in monitoring for noncompli23 ance through regular site visits.
57

•HR 2194 IH

1 ‘‘(C) CERTAIN SELECTION CRITERIA MUST

2 BE USED.—The selection criteria set forth in a

3 qualified rural investment plan must include—

4 ‘‘(i) investment project location,

5 ‘‘(ii) technology and transportation in6 frastructure needs, and

7 ‘‘(iii) private development trends.

8 ‘‘(2) CREDIT ALLOCATED TO BUILDING NOT TO

9 EXCEED AMOUNT NECESSARY TO ASSURE INVEST10 MENT PROJECT FEASIBILITY.—

11 ‘‘(A) IN GENERAL.—The rural investment

12 credit dollar amount allocated to an investment

13 project shall not exceed the amount the rural

14 investment credit agency determines is nec15 essary for the financial feasibility of the invest16 ment project and its viability as a qualified

17 rural investment project throughout the compli18 ance period.

19 ‘‘(B) AGENCY EVALUATION.—In making

20 the determination under subparagraph (A), the

21 rural investment credit agency shall consider—

22 ‘‘(i) the sources and uses of funds and

23 the total financing planned for the invest24 ment project,
58

•HR 2194 IH

1 ‘‘(ii) any proceeds or receipts expected

2 to be generated by reason of tax benefits,

3 ‘‘(iii) the percentage of the rural in4 vestment credit dollar amount used for in5 vestment project costs other than the cost

6 of intermediaries, and

7 ‘‘(iv) the reasonableness of the devel8 opmental and operational costs of the in9 vestment project.

10 Clause (iii) shall not be applied so as to impede

11 the development of investment projects in hard12 to-develop areas.

13 ‘‘(C) DETERMINATION MADE WHEN CRED14 IT AMOUNT APPLIED FOR AND WHEN BUILDING

15 PLACED IN SERVICE.—

16 ‘‘(i) IN GENERAL.—A determination

17 under subparagraph (A) shall be made as

18 of each of the following times:

19 ‘‘(I) The application for the rural

20 investment credit dollar amount.

21 ‘‘(II) The allocation of the rural

22 investment credit dollar amount.

23 ‘‘(III) The date the building is

24 first placed in service.
59

•HR 2194 IH

1 ‘‘(ii) CERTIFICATION AS TO AMOUNT

2 OF OTHER SUBSIDIES.—Prior to each de3 termination under clause (i), the taxpayer

4 shall certify to the rural investment credit

5 agency the full extent of all Federal, State,

6 and local subsidies which apply (or which

7 the taxpayer expects to apply) with respect

8 to the building.

9 ‘‘(l) REGULATIONS.—The Secretary shall prescribe

10 such regulations as may be necessary or appropriate to

11 carry out the purposes of this section, including

12 regulations—

13 ‘‘(1) dealing with—

14 ‘‘(A) investment projects which include

15 more than 1 building or only a portion of a

16 building,

17 ‘‘(B) buildings which are sold in portions,

18 ‘‘(2) providing for the application of this section

19 to short taxable years,

20 ‘‘(3) preventing the avoidance of the rules of

21 this section, and

22 ‘‘(4) providing the opportunity for rural invest23 ment credit agencies to correct administrative errors

24 and omissions with respect to allocations and record

25 keeping within a reasonable period after their dis-
60

•HR 2194 IH

1 covery, taking into account the availability of regula2 tions and other administrative guidance from the

3 Secretary.’’.

4 (b) CURRENT YEAR BUSINESS CREDIT CALCULA5 TION.—Section 38(b) (relating to current year business

6 credit) is amended by striking ‘‘plus’’ at the end of para7 graph (14), by striking the period at the end of paragraph

8 (15) and inserting ‘‘, plus’’, and by adding at the end the

9 following:

10 ‘‘(16) the rural investment credit determined

11 under section 42A(a).’’.

12 (c) LIMITATION ON CARRYBACK.—Subsection (d) of

13 section 39 (relating to carryback and carryforward of un14 used credits) is amended by adding at the end the fol15 lowing:

16 ‘‘(11) NO CARRYBACK OF RURAL INVESTMENT

17 CREDIT BEFORE EFFECTIVE DATE.—No portion of

18 the unused business credit for any taxable year

19 which is attributable to the rural investment credit

20 determined under section 42A may be carried back

21 to a taxable year beginning before the date of the

22 enactment of the New Homestead Act of 2003.’’.

23 (d) CONFORMING AMENDMENTS.—
61

•HR 2194 IH

1 (1) Section 55(c)(1) is amended by inserting

2 ‘‘or subsection (i) or (j) of section 42A’’ after ‘‘sec3 tion 42’’.

4 (2) Subsections (i)(c)(3), (i)(c)(6)(B)(i), and

5 (k)(1) of section 469 are each amended by inserting

6 ‘‘or 42A’’ after ‘‘section 42’’.

7 (3) Section 772(a) is amended by striking

8 ‘‘and’’ at the end of paragraph (10), by redesig9 nating paragraph (11) as paragraph (12), and by in10 serting after paragraph (10) the following:

11 ‘‘(11) the rural investment credit determined

12 under section 42A, and’’.

13 (4) Section 774(b)(4) is amended by inserting

14 ‘‘, 42A(i),’’ after ‘‘section 42(j)’’.

15 (e) CLERICAL AMENDMENT.—The table of sections

16 for subpart D of part IV of subchapter A of chapter 1

17 is amended by inserting after the item relating to section

18 42 the following:

‘‘Sec. 42A. Rural investment credit.’’.

19 (f) EFFECTIVE DATE.—The amendments made by

20 this section shall apply to expenditures made in taxable

21 years beginning after the date of the enactment of this

22 Act.
62

•HR 2194 IH

1 SEC. 202. QUALIFIED RURAL SMALL BUSINESS INVEST2 MENT CREDIT.

3 (a) IN GENERAL.—Subpart D of part IV of sub4 chapter A of chapter 1 (relating to business related cred5 its), as amended by this Act, is amended by adding at

6 the end the following:

7 ‘‘SEC. 42B. QUALIFIED RURAL SMALL BUSINESS INVEST8 MENT CREDIT.

9 ‘‘(a) IN GENERAL.—For purposes of section 38, in

10 the case of a qualified rural small business, the amount

11 of the qualified rural small business investment credit de12 termined under this section for any taxable year is equal

13 to 30 percent of the qualified expenditures for the taxable

14 year of such business.

15 ‘‘(b) DOLLAR LIMITATION.—

16 ‘‘(1) IN GENERAL.—The credit allowable under

17 subsection (a) for any taxable year shall not exceed

18 the lesser of—

19 ‘‘(A) $5,000, or

20 ‘‘(B) the amount when added to the aggre21 gate credits allowable to the taxpayer under

22 subsection (a) for all preceding taxable years

23 does not exceed $25,000.

24 ‘‘(2) NO DOUBLE CREDIT ALLOWED.—In the

25 case of any qualified rural small business which

26 places in service a qualified rural investment build-
63

•HR 2194 IH

1 ing with respect to which a rural investment credit

2 is allowed under section 42A for any taxable year,

3 paragraph (1)(A) shall be applied with respect to

4 such taxable year by substituting ‘zero’ for ‘$5,000’.

5 ‘‘(c) QUALIFIED RURAL SMALL BUSINESS.—For

6 purposes of this section, the term ‘qualified rural small

7 business’ means any person if such person—

8 ‘‘(1) employed not more than 5 full-time em9 ployees during the taxable year,

10 ‘‘(2) materially and substantially participates in

11 management,

12 ‘‘(3) is located is a qualifying county, and

13 ‘‘(4) submitted a qualified business plan with

14 respect to which the rural investment credit agency

15 with jurisdiction over such qualifying county has al16 located a portion of the State rural investment ceil17 ing for such taxable year under section 42A(g)(7).

18 For purposes of paragraph (1), an employee shall be con19 sidered full-time if such employee is employed at least 30

20 hours per week for 20 or more calendar weeks in the tax21 able year.

22 ‘‘(d) QUALIFIED EXPENDITURES.—For purposes of

23 this section—

24 ‘‘(1) IN GENERAL.—The term ‘qualified expend25 itures’ means expenditures normally associated with
64

•HR 2194 IH

1 starting or expanding a business and included in a

2 qualified business plan, including costs for capital,

3 plant and equipment, inventory expenses, and wages,

4 but not including interest costs.

5 ‘‘(2) ONLY CERTAIN EXPENDITURES INCLUDED

6 FOR EXISTING BUSINESSES.—In the case of a quali7 fied rural small business with respect to which a

8 credit under subsection (a) was allowed for a pre9 ceding taxable year, such term shall include only so

10 much of the expenditures described in paragraph (1)

11 for the taxable year as exceed the aggregate of such

12 expenditures for the preceding taxable year.

13 ‘‘(e) QUALIFIED BUSINESS PLAN.—For purposes of

14 this section, the term ‘qualified business plan’ means a

15 business plan which—

16 ‘‘(1) has been approved by the rural investment

17 credit agency with jurisdiction over the qualifying

18 county in which the qualified rural small business is

19 located pursuant to such agency’s rural investment

20 plan, and

21 ‘‘(2) meets such requirements as the agency

22 may specify.

23 ‘‘(f) DENIAL OF DOUBLE BENEFIT.—In the case of

24 the amount of the credit determined under this section—
65

•HR 2194 IH

1 ‘‘(1) no deduction or credit shall be allowed for

2 such amount under any other provision of this chap3 ter, and

4 ‘‘(2) no increase in the adjusted basis of any

5 property shall result from such amount.

6 ‘‘(g) DEFINITIONS AND SPECIAL RULES.—For pur7 poses of this section—

8 ‘‘(1) any term which is used in this section

9 which is used in section 42A shall have the meaning

10 given such term by section 42A, and

11 ‘‘(2) rules similar to the rules under subsections

12 (j)(2), (j)(3), and (k) of section 42A shall apply.’’.

13 (b) CURRENT YEAR BUSINESS CREDIT CALCULA14 TION.—Section 38(b) (relating to current year business

15 credit), as amended by this Act, is amended by striking

16 ‘‘plus’’ at the end of paragraph (15), by striking the period

17 at the end of paragraph (16) and inserting ‘‘, plus’’, and

18 by adding at the end the following:

19 ‘‘(17) the qualified rural small business invest20 ment credit determined under section 42B(a).’’.

21 (c) LIMITATION ON CARRYBACK.—Subsection (d) of

22 section 39 (relating to carryback and carryforward of un23 used credits), as amended by this Act, is amended by add24 ing at the end the following:
66

•HR 2194 IH

1 ‘‘(12) NO CARRYBACK OF QUALIFIED RURAL

2 SMALL BUSINESS INVESTMENT CREDIT BEFORE EF3 FECTIVE DATE.—No portion of the unused business

4 credit for any taxable year which is attributable to

5 the qualified rural small business investment credit

6 determined under section 42B may be carried back

7 to a taxable year beginning before the date of the

8 enactment of the New Homestead Act of 2003.’’.

9 (d) CLERICAL AMENDMENT.—The table of sections

10 for subpart D of part IV of subchapter A of chapter 1,

11 as amended by this Act, is amended by inserting after the

12 item relating to section 42A the following:

‘‘Sec. 42B. Qualified rural small business investment credit.’’.

13 (e) EFFECTIVE DATE.—The amendments made by

14 this section shall apply to expenditures made in taxable

15 years beginning after the date of the enactment of this

16 Act.

17 SEC. 203. ACCELERATED DEPRECIATION FOR RURAL IN18 VESTMENT PROPERTY.

19 (a) IN GENERAL.—Section 168 is amended by adding

20 at the end the following:

21 ‘‘(l) PROPERTY IN RURAL INVESTMENT PROJECTS.—

22 ‘‘(1) IN GENERAL.—For purposes of subsection

23 (a), the applicable recovery period for qualified rural

24 investment property shall be determined in accord-
67

•HR 2194 IH

1 ance with the table contained in paragraph (2) in

2 lieu of the table contained in subsection (c).

3 ‘‘(2) APPLICABLE RECOVERY PERIOD FOR

4 RURAL INVESTMENT PROPERTY.—For purposes of

5 paragraph (1)—

The applicable

‘‘In the case of: recovery period is:

3-year property ................................................................. 2 years

5-year property ................................................................. 3 years

7-year property ................................................................. 4 years

10-year property ............................................................... 6 years

15-year property ............................................................... 9 years

20-year property ............................................................... 12 years

Nonresidential real property ............................................ 22 years.

6 ‘‘(3) DEDUCTION ALLOWED IN COMPUTING

7 MINIMUM TAX.—For purposes of determining alter8 native minimum taxable income under section 55,

9 the deduction under subsection (a) for property to

10 which paragraph (1) applies shall be determined

11 under this section without regard to any adjustment

12 under section 56.

13 ‘‘(4) QUALIFIED RURAL INVESTMENT PROP14 ERTY DEFINED.—For purposes of this subsection—

15 ‘‘(A) IN GENERAL.—The term ‘qualified

16 rural investment property’ means property

17 which is property described in the table in para18 graph (2) and which is—

19 ‘‘(i) used by the taxpayer predomi20 nantly in the active conduct of a trade or
68

•HR 2194 IH

1 business within a qualified rural invest2 ment project,

3 ‘‘(ii) not used or located outside the

4 qualified rural investment project on a reg5 ular basis,

6 ‘‘(iii) not acquired (directly or indi7 rectly) by the taxpayer from a person who

8 is related to the taxpayer (within the

9 meaning of section 465(b)(3)(C)), and

10 ‘‘(iv) not property (or any portion

11 thereof) placed in service for purposes of

12 operating any facility described in section

13 144(c)(6)(B).

14 ‘‘(B) EXCEPTION FOR ALTERNATIVE DE15 PRECIATION PROPERTY.—The term ‘qualified

16 rural investment property’ does not include any

17 property to which the alternative depreciation

18 system under subsection (g) applies,

19 determined—

20 ‘‘(i) without regard to subsection

21 (g)(7) (relating to election to use alter22 native depreciation system), and

23 ‘‘(ii) after the application of section

24 280F(b) (relating to listed property with

25 limited business use).
69

•HR 2194 IH

1 ‘‘(C) SPECIAL RULE FOR INFRASTRUCTURE

2 INVESTMENT.—

3 ‘‘(i) IN GENERAL.—Subparagraph

4 (A)(ii) shall not apply to qualified infra5 structure property located outside of the

6 qualified rural investment project if the

7 purpose of such property is to connect with

8 qualified infrastructure property located

9 within such project.

10 ‘‘(ii) QUALIFIED INFRASTRUCTURE

11 PROPERTY.—For purposes of this subpara12 graph, the term ‘qualified infrastructure

13 property’ means qualified rural investment

14 property (determined without regard to

15 subparagraph (A)(ii)) which—

16 ‘‘(I) benefits the qualifying coun17 ty infrastructure,

18 ‘‘(II) is available to the general

19 public, and

20 ‘‘(III) is placed in service in con21 nection with the taxpayer’s active con22 duct of a trade or business within a

23 qualified rural investment project.
70

•HR 2194 IH

1 Such term includes, but is not limited to,

2 roads, power lines, water systems, railroad

3 spurs, and communications facilities.

4 ‘‘(5) DEFINITIONS.—For purposes of this sub5 section, any term used in this section which is used

6 in section 42A shall have the meaning given such

7 term by section 42A.’’.

8 (b) EFFECTIVE DATE.—The amendment made by

9 this section shall apply to property placed in service after

10 the date of the enactment of this Act, in taxable years

11 ending after such date.

12 TITLE III—NEW HOMESTEAD

13 VENTURE CAPITAL FUND

14 SEC. 301. NEW HOMESTEAD VENTURE CAPITAL FUND.

15 The Consolidated Farm and Rural Development Act

16 (7 U.S.C. 1921 et seq.) is amended by adding at the end

17 the following:

18 ‘‘Subtitle G—New Homestead

19 Venture Capital Fund

20 ‘‘SEC. 383A. SHORT TITLE.

21 ‘‘This subtitle may be cited as the ‘New Homestead

22 Venture Capital Fund Act’.

23 ‘‘SEC. 383B. DEFINITIONS.

24 ‘‘In this subtitle:
71

•HR 2194 IH

1 ‘‘(1) AUTHORIZED PRIVATE INVESTOR.—The

2 term ‘authorized private investor’ means an indi3 vidual, legal entity, or affiliate or subsidiary of an

4 individual or legal entity that—

5 ‘‘(A) is eligible to receive a loan guarantee

6 under this title;

7 ‘‘(B) is eligible to receive a loan guarantee

8 under the Rural Electrification Act of 1936 (7

9 U.S.C. 901 et seq.);

10 ‘‘(C) is created under the National Con11 sumer Cooperative Bank Act (12 U.S.C. 3011

12 et seq.);

13 ‘‘(D) is an insured depository institution

14 subject to section 383D(b)(2);

15 ‘‘(E) is a Farm Credit System institution

16 described in section 1.2(a) of the Farm Credit

17 Act of 1971 (12 U.S.C. 2002(a)); or

18 ‘‘(F) is determined by the Board to be an

19 appropriate investor in the Fund.

20 ‘‘(2) BOARD.—The term ‘Board’ means the

21 board of directors of the Fund established under

22 section 383F.

23 ‘‘(3) FUND.—The term ‘Fund’ means the New

24 Homestead Venture Capital Fund established under

25 section 383C.
72

•HR 2194 IH

1 ‘‘(4) GROUP OF SIMILAR AUTHORIZED PRIVATE

2 INVESTORS.—The term ‘group of similar authorized

3 private investors’ means any 1 of the following:

4 ‘‘(A) Insured depository institutions with

5 total assets of more than $250,000,000.

6 ‘‘(B) Insured depository institutions with

7 total assets equal to or less than $250,000,000.

8 ‘‘(C) Farm Credit System institutions de9 scribed in section 1.2(a) of the Farm Credit Act

10 of 1971 (12 U.S.C. 2002(a)).

11 ‘‘(D) Cooperative financial institutions

12 (other than Farm Credit System institutions).

13 ‘‘(E) Authorized private investors, other

14 than those described in subparagraphs (A)

15 through (D).

16 ‘‘(F) Other nonprofit organizations, includ17 ing credit unions.

18 ‘‘(5) INSURED DEPOSITORY INSTITUTION.—The

19 term ‘insured depository institution’ means any bank

20 or savings association the deposits of which are in21 sured under the Federal Deposit Insurance Act (12

22 U.S.C. 1811 et seq.).

23 ‘‘(6) QUALIFYING COUNTY.—The term ‘quali24 fying county’ means any county that—
73

•HR 2194 IH

1 ‘‘(A) is located outside a metropolitan sta2 tistical area (as defined by the Office of Man3 agement and Budget); and

4 ‘‘(B) during the 20-year period ending

5 with the fiscal year preceding the applicable fis6 cal year for which assistance is made available

7 under section 383E, has a net outmigration of

8 inhabitants from the county of at least 10 per9 cent of the population of the county at the be10 ginning of the period.

11 ‘‘(7) RURAL BUSINESS.—The term ‘rural busi12 ness’ means a rural cooperative, a value-added agri13 cultural enterprise, or any other enterprise that is or

14 will be located in a qualifying county.

15 ‘‘SEC. 383C. ESTABLISHMENT OF THE FUND.

16 ‘‘(a) IN GENERAL.—

17 ‘‘(1) AUTHORITY TO ESTABLISH.—Upon certifi18 cation by the Secretary that, to the maximum extent

19 practicable, the parties proposing to establish a fund

20 provide a broad representation of all of the groups

21 of similar authorized private investors described in

22 subparagraphs (A) through (F) of section 383B(4),

23 the parties so certified may establish, a non-Federal

24 entity under State law, to purchase shares of, and

25 manage a fund to be known as the ‘New Homestead
74

•HR 2194 IH

1 Venture Capital Fund’, to generate and provide eq2 uity capital to rural businesses.

3 ‘‘(2) OWNERSHIP.—

4 ‘‘(A) IN GENERAL.—To the maximum ex5 tent practicable, equity ownership of the Fund

6 shall be distributed among authorized private

7 investors representing all of the groups of simi8 lar authorized private investors described in

9 subparagraphs (A) through (F) of section

10 383B(4).

11 ‘‘(B) EXCLUSION OF GROUPS.—No group

12 of similar authorized private investors shall be

13 excluded from equity ownership of the Fund

14 during any period during which the Fund is in

15 existence if an authorized private investor rep16 resentative of the group is able and willing to

17 invest in the Fund.

18 ‘‘(b) PURPOSE.—The purpose of the Fund is to

19 strengthen the economies of qualifying counties by—

20 ‘‘(1) making needed investments in qualifying

21 counties to reverse the devastating impact of chronic

22 outmigration and to help the qualifying counties re23 build and grow;

24 ‘‘(2) providing equity funding for existing and

25 startup rural businesses with high potential for job
75

•HR 2194 IH

1 creation that are or will be located in qualifying

2 counties;

3 ‘‘(3) offering the funding described in para4 graph (2) to rural businesses, many of which have

5 difficulty obtaining equity capital;

6 ‘‘(4) authorizing use of the funding described in

7 paragraph (2) only after State and local govern8 ments match a significant portion of the funding;

9 ‘‘(5) requiring a portion of the funding de10 scribed in paragraph (2) to be used for technical and

11 other similar assistance to rural businesses; and

12 ‘‘(6) providing incentives to greater participa13 tion by authorized private investors through provi14 sion of guarantees of up to 60 percent of the invest15 ments of the authorized private investors in quali16 fying counties.

17 ‘‘(c) ARTICLES OF INCORPORATION AND BY-LAWS.—

18 The articles of incorporation and by-laws of the Fund shall

19 set forth purposes of the Fund that are consistent with

20 the purposes described in subsection (b).

21 ‘‘SEC. 383D. INVESTMENT IN THE FUND.

22 ‘‘(a) IN GENERAL.—The Secretary shall—

23 ‘‘(1) subject to subsection (b)(1), make avail24 able to the Fund $200,000,000 for each of fiscal

25 years 2004 through 2013;
76

•HR 2194 IH

1 ‘‘(2) subject to subsection (c), guarantee a por2 tion of each investment made by an authorized pri3 vate investor in the Fund; and

4 ‘‘(3) subject to subsection (d), guarantee the re5 payment of principal of, and accrued interest on, de6 bentures issued by the Fund to authorized private

7 investors.

8 ‘‘(b) NON-FEDERAL FUNDS.—

9 ‘‘(1) IN GENERAL.—Under subsection (a)(1),

10 the Secretary shall make an amount available to the

11 Fund for a fiscal year only after—

12 ‘‘(A) at least $50,000,000 has been in13 vested in the Fund for the fiscal year by au14 thorized private investors in accordance with

15 this subtitle and the terms and conditions set

16 forth in the by-laws of the Fund; and

17 ‘‘(B) at least $50,000,000 has been in18 vested in the Fund for the fiscal year by State

19 and local governments.

20 ‘‘(2) INSURED DEPOSITORY INSTITUTIONS.—

21 ‘‘(A) IN GENERAL.—Subject to subpara22 graphs (B) and (C)—

23 ‘‘(i) an insured depository institution

24 may be an authorized private investor in

25 the Fund; and
77

•HR 2194 IH

1 ‘‘(ii) an investment in the Fund may

2 be considered to be part of the record of

3 an institution in meeting the credit needs

4 of the community in which the institution

5 is located under any applicable Federal

6 law.

7 ‘‘(B) INVESTMENT LIMIT.—The total in8 vestment in the Fund of an insured depository

9 institution shall not exceed 5 percent of the in10 stitution’s capital and surplus.

11 ‘‘(C) REGULATORY AUTHORITY.—An ap12 propriate Federal banking agency may, by regu13 lation or order, impose on any insured deposi14 tory institution investing in the Fund, any safe15 guard, limitation, or condition (including an in16 vestment limit that is lower than the investment

17 limit under subparagraph (B)) that the Federal

18 banking agency considers to be appropriate to

19 ensure that the institution operates—

20 ‘‘(i) in a financially sound manner;

21 and

22 ‘‘(ii) in compliance with all applicable

23 law.

24 ‘‘(c) GUARANTEE OF PRIVATE INVESTMENTS.—
78

•HR 2194 IH

1 ‘‘(1) IN GENERAL.—The Secretary shall guar2 antee, under terms and conditions determined by the

3 Secretary—

4 ‘‘(A) except as provided in subparagraph

5 (B), 40 percent of any loss of the principal of

6 each investment made by an authorized private

7 investor in the Fund; and

8 ‘‘(B) 60 percent of any loss of the prin9 cipal of each investment made by an authorized

10 private investor in the Fund if the investment

11 is used for a manufacturing or high-technology

12 business.

13 ‘‘(2) MAXIMUM TOTAL GUARANTEE.—The ag14 gregate potential liability of the Secretary with re15 spect to all guarantees under paragraph (1) shall

16 not apply to more than $500,000,000 in private in17 vestments in the Fund.

18 ‘‘(3) REDEMPTION OF GUARANTEE.—

19 ‘‘(A) DATE.—An authorized private inves20 tor in the Fund may redeem a guarantee under

21 paragraph (1), with respect to the total invest22 ments in the Fund and the total losses of the

23 authorized private investor as of the date of

24 redemption—
79

•HR 2194 IH

1 ‘‘(i) on the date that is 5 years after

2 the date of the initial investment of the au3 thorized private investor; or

4 ‘‘(ii) annually thereafter.

5 ‘‘(B) EFFECT OF REDEMPTION.—On re6 demption of a guarantee under subparagraph

7 (A)—

8 ‘‘(i) the shares in the Fund of the au9 thorized private investor shall be redeemed;

10 and

11 ‘‘(ii) the authorized private investor

12 shall be prohibited from making any future

13 investment in the Fund.

14 ‘‘(d) DEBENTURES.—

15 ‘‘(1) IN GENERAL.—The Fund may, at the dis16 cretion of the Board, raise additional capital through

17 the issuance of debentures and through other means

18 determined to be appropriate by the Board.

19 ‘‘(2) GUARANTEE OF DEBT BY SECRETARY.—

20 ‘‘(A) IN GENERAL.—The Secretary shall

21 guarantee 100 percent of the principal of, and

22 accrued interest on, debentures issued by the

23 Fund that are approved by the Secretary.

24 ‘‘(B) MAXIMUM DEBT GUARANTEED BY

25 SECRETARY.—The outstanding value of deben-
80

•HR 2194 IH

1 tures issued by the Fund and guaranteed by

2 the Secretary shall not exceed the lesser of—

3 ‘‘(i) the amount equal to twice the

4 value of the assets held by the Fund; or

5 ‘‘(ii) $500,000,000.

6 ‘‘(C) RECAPTURE OF GUARANTEE PAY7 MENTS.—If the Secretary makes a payment on

8 a debenture issued by the Fund as a result of

9 a guarantee of the Secretary under this para10 graph, the Secretary shall have priority over

11 other creditors for repayment of the debenture.

12 ‘‘(3) AUTHORIZED PRIVATE INVESTORS.—An

13 authorized private investor may purchase debentures

14 issued by the Fund.

15 ‘‘SEC. 383E. INVESTMENTS AND OTHER ACTIVITIES OF THE

16 FUND.

17 ‘‘(a) INVESTMENTS.—

18 ‘‘(1) IN GENERAL.—

19 ‘‘(A) TYPES.—Subject to subparagraphs

20 (B) and (C), the Fund may—

21 ‘‘(i) make equity investments in a

22 rural business that meets the requirements

23 of paragraph (6) and such other require24 ments as the Board may establish; and
81

•HR 2194 IH

1 ‘‘(ii) extend credit to such rural busi2 ness in—

3 ‘‘(I) the form of mezzanine debt,

4 convertible debt, or subordinated debt;

5 or

6 ‘‘(II) any other form of near-eq7 uity debt.

8 ‘‘(B) LIMITATIONS ON EQUITY INVEST9 MENTS.—After the initial equity investment in

10 a rural business described in subparagraph

11 (A)(i), the Fund may not make additional eq12 uity investments in such rural business if the

13 additional equity investments would result in

14 the Fund owning more than 30 percent of the

15 equity of such rural business.

16 ‘‘(C) LIMITATION ON NONEQUITY INVEST17 MENTS.—Except in the case of a project to as18 sist a rural cooperative, the total amount of

19 nonequity investments described in subpara20 graph (A)(ii) that may be provided by the Fund

21 shall not exceed 20 percent of the total invest22 ments of the Fund in the project.

23 ‘‘(2) PROCEDURES.—The Fund shall implement

24 procedures to ensure that—
82

•HR 2194 IH

1 ‘‘(A) the financing arrangements of the

2 Fund meet the Fund’s primary focus of pro3 viding equity capital; and

4 ‘‘(B) the Fund does not compete with con5 ventional sources of credit.

6 ‘‘(3) DIVERSITY OF PROJECTS.—The Fund—

7 ‘‘(A) shall seek to make equity investments

8 in a variety of viable projects for rural busi9 nesses, with a significant share of

10 investments—

11 ‘‘(i) in manufacturing or high-tech12 nology businesses of diverse sizes;

13 ‘‘(ii) in smaller projects in rural com14 munities of diverse sizes; and

15 ‘‘(iii) in cooperative and noncoopera16 tive businesses; and

17 ‘‘(B) shall be managed in a manner that

18 diversifies the risks to the Fund among a vari19 ety of projects.

20 ‘‘(4) LIMITATION ON RURAL BUSINESSES AS21 SISTED.—The Fund shall not invest in any rural

22 business that—

23 ‘‘(A) is primarily retail in nature (as deter24 mined by the Board), other than a purchasing

25 cooperative, or
83

•HR 2194 IH

1 ‘‘(B) consists of the operation of any facil2 ity described in section 144(c)(6)(B).

3 ‘‘(5) INTEREST RATE LIMITATIONS.—Returns

4 on investments in and by the Fund, and returns on

5 the extension of credit by participants in projects as6 sisted by the Fund, shall not be subject to any State

7 or Federal law establishing a maximum allowable in8 terest rate.

9 ‘‘(6) REQUIREMENTS FOR RECIPIENTS.—

10 ‘‘(A) OTHER INVESTMENTS.—Any recipi11 ent of amounts from the Fund shall make or

12 obtain a significant investment from a source of

13 capital other than the Fund.

14 ‘‘(B) SPONSORSHIP.—To be considered for

15 an equity investment from the Fund, a rural

16 business investment project shall be sponsored

17 by a regional, State, or local sponsoring or en18 dorsing organization such as—

19 ‘‘(i) a financial institution;

20 ‘‘(ii) a development organization; or

21 ‘‘(iii) any other established entity en22 gaging or assisting in rural business devel23 opment, including a rural cooperative.

24 ‘‘(b) TECHNICAL ASSISTANCE.—The Board shall use

25 not less than 2 percent of capital provided by the Federal
84

•HR 2194 IH

1 Government to provide technical assistance to rural busi2 nesses seeking an equity investment from the Fund.

3 ‘‘(c) ANNUAL AUDIT.—

4 ‘‘(1) IN GENERAL.—The Board shall authorize

5 an annual audit of the financial statements of the

6 Fund by a nationally recognized auditing firm using

7 generally accepted accounting procedures.

8 ‘‘(2) AVAILABILITY OF AUDIT RESULTS.—The

9 results of the audit required by paragraph (1) shall

10 be made available to investors in the Fund.

11 ‘‘(d) ANNUAL REPORT.—The Board shall prepare

12 and make available to the public an annual report that—

13 ‘‘(1) describes the projects funded with amounts

14 from the Fund;

15 ‘‘(2) specifies the recipients of amounts from

16 the Fund;

17 ‘‘(3) specifies the co-investors in all projects

18 that receive amounts from the Fund; and

19 ‘‘(4) meets the reporting requirements, if any,

20 of the State under the law of which the Fund is es21 tablished.

22 ‘‘(e) OTHER AUTHORITIES.—

23 ‘‘(1) IN GENERAL.—The Board may exercise

24 such other authorities as are necessary to carry out

25 this subtitle.
85

•HR 2194 IH

1 ‘‘(2) OVERSIGHT.—The Secretary shall enter

2 into a contract with the Administrator of the Small

3 Business Administration under which the Adminis4 trator of the Small Business Administration shall be

5 responsible for the routine duties of the Secretary in

6 regard to the Fund.

7 ‘‘SEC. 383F. GOVERNANCE OF THE FUND.

8 ‘‘(a) IN GENERAL.—The Fund shall be governed by

9 a board of directors that represents all of the authorized

10 private investors in the Fund and the Federal Government

11 and that consists of—

12 ‘‘(1) a designee of the Secretary;

13 ‘‘(2) 2 members who are appointed by the Sec14 retary and are not Federal employees, including—

15 ‘‘(A) 1 member with expertise in venture

16 capital investment; and

17 ‘‘(B) 1 member with expertise in coopera18 tive development;

19 ‘‘(3) 1 member who is appointed by the Sec20 retary and is a State government representative

21 from among States with the highest rates of out22 migration from qualifying counties; and

23 ‘‘(4) 7 members who are elected by the author24 ized private investors with investments in the Fund,

25 of whom not less than 1 member shall be a rural
86

•HR 2194 IH

1 community banker from an insured depository insti2 tution with total assets equal to or less than

3 $250,000,000 with an investment in the Fund.

4 ‘‘(b) LIMITATION ON VOTING CONTROL.—No indi5 vidual investor or group of similar authorized private in6 vestors may control more than 25 percent of the votes on

7 the Board.

8 ‘‘SEC. 383G. AUTHORIZATION OF APPROPRIATIONS.

9 ‘‘There are authorized to be appropriated such sums

10 as are necessary to carry out this subtitle.’’.

Æ