II 

118TH CONGRESS 

1ST SESSION S. 2723 

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

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

for other purposes. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 5, 2023 

Mr. BROWN (for himself and Ms. ERNST) introduced the following bill; which 

was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to modify 

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

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

purposes. 

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

3 SECTION 1. SHORT TITLE. 

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


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1 SEC. 2. MODIFICATIONS TO QUALIFIED SMALL ISSUE 

2 BONDS. 

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

5 RELATED FACILITIES.—Subparagraph (C) of section 

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

7 amended to read as follows: 

8 ‘‘(C) MANUFACTURING FACILITY.—For 

9 purposes of this paragraph— 

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

12 which— 

13 ‘‘(I) is used in the manufacturing 

14 or production of tangible personal 

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

17 such property), 

18 ‘‘(II) is used in the creation or 

19 production of intangible property 

20 which is described in section 

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

22 ‘‘(III) is functionally related and 

23 subordinate to a facility described in 

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

25 located on the same site as the facility 

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


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

6 clause) if— 

7 ‘‘(I) those facilities are located on 

8 the same site as the manufacturing 

9 facility, and 

10 ‘‘(II) not more than 25 percent 

11 of the net proceeds of the issue are 

12 used to provide those facilities. 

13 ‘‘(iii) LIMITATION ON OFFICE

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

16 clause (i). 

17 ‘‘(iv) LIMITATION ON REFUNDINGS

18 FOR CERTAIN PROPERTY.—Subclauses (II) 

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

20 any bond issued on or before the date of 

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

23 any bond issued to refund a bond issued 

24 on or before such date (other than a bond 

25 to which clause (iii) of this subparagraph 


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

3 Manufacturing Bonds Act applies)), either 

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

5 (b) INCREASE IN LIMITATIONS.— 

6 (1) IN GENERAL.—Section 144(a)(4) of such 

7 Code is amended— 

8 (A) in subparagraph (A)(i), by striking 

9 ‘‘$10,000,000’’ and inserting ‘‘$30,000,000’’, 

10 and 

11 (B) in the heading, by striking 

12 ‘‘$10,000,000’’ and inserting ‘‘$30,000,000’’. 

13 (2) INCREASE IN ADDITIONAL CAPITAL EX14 PENDITURES NOT TAKEN INTO ACCOUNT.—Section 

15 144(a)(4)(G) of such Code is amended by inserting 

16 ‘‘$30,000,000, in the case of bonds issued after the 

17 date of the enactment of the Modernizing Agricul18 tural and Manufacturing Bonds Act’’. 

19 (3) INCREASE IN AGGREGATE LIMIT PER TAX20 PAYER.—Section 144(a)(10)(A) of such Code is 

21 amended by striking ‘‘$40,000,000’’ and inserting 

22 ‘‘$120,000,000’’. 

23 (4) ADJUSTMENT FOR INFLATION.—Section 

24 144(a) of the Internal Revenue Code of 1986 is 


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1 amended by adding at the end the following new 

2 paragraph: 

3 ‘‘(13) ADJUSTMENT FOR INFLATION.—In the 

4 case of any calendar year after 2023, the 

5 $30,000,000 amounts in paragraph (4)(A), the 

6 $30,000,000 amount in paragraph (4)(G), and the 

7 $120,000,000 amount in paragraph (10)(A) shall 

8 each be increased by an amount equal to— 

9 ‘‘(A) such dollar amount, multiplied by 

10 ‘‘(B) the cost-of-living adjustment deter11 mined under section 1(f)(3) for the calendar 

12 year, determined by substituting ‘calendar year 

13 2022’ for ‘calendar year 2016’ in subparagraph 

14 (A)(ii) thereof. 

15 If any amount as increased under the preceding sen16 tence is not a multiple of $100,000, such amount 

17 shall be rounded to the nearest multiple of 

18 $100,000.’’. 

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

20 this section shall apply to obligations issued after the date 

21 of the enactment of this Act. 

22 SEC. 3. EXPANSION OF CERTAIN EXCEPTIONS TO THE PRI23 VATE ACTIVITY BOND RULES FOR FIRST24 TIME FARMERS. 

25 (a) INCREASE IN DOLLAR LIMITATION.— 


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

2 Internal Revenue Code of 1986 is amended by strik3 ing ‘‘$450,000’’ and inserting ‘‘$1,000,000’’. 

4 (2) REPEAL OF SEPARATE LOWER DOLLAR LIM5 ITATION ON USED FARM EQUIPMENT.—Section 

6 147(c)(2) of such Code is amended by striking sub7 paragraph (F) and by redesignating subparagraphs 

8 (G) and (H) as subparagraphs (F) and (G), respec9 tively. 

10 (3) QUALIFIED SMALL ISSUE BOND LIMITATION

11 CONFORMED TO INCREASED DOLLAR LIMITATION.— 

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

13 striking ‘‘$250,000’’ and inserting ‘‘$1,000,000’’. 

14 (4) INFLATION ADJUSTMENT.— 

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

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

17 amended— 

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

19 amount in subparagraph (A) shall be in20 creased’’ and inserting ‘‘after 2024, the 

21 dollar amounts in subparagraph (A) and 

22 section 144(a)(11)(A) shall each be in23 creased’’, 

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

25 and inserting ‘‘2023’’, and 


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1 (iii) in the last sentence, by striking 

2 ‘‘$100’’ each place it appears and inserting 

3 ‘‘$10,000’’. 

4 (B) CROSS-REFERENCE.—Section 

5 144(a)(11) of such Code is amended by adding 

6 at the end the following new subparagraph: 

7 ‘‘(D) INFLATION ADJUSTMENT.—For infla8 tion adjustment of dollar amount contained in 

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

10 (b) SUBSTANTIAL FARMLAND DETERMINED ON

11 BASIS OF AVERAGE RATHER THAN MEDIAN FARM

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

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

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

15 this section shall apply to bonds issued after December 

16 31, 2023. 

Æ 


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