II 

115TH CONGRESS 

1ST SESSION S. 1925 

To amend the Internal Revenue Code of 1986 to permanently modify the 

limitations on the deduction of interest by financial institutions which 

hold tax-exempt bonds, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

OCTOBER 5, 2017 

Mr. MENENDEZ (for himself and Mr. CARDIN) 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 permanently 

modify the limitations on the deduction of interest by 

financial institutions which hold tax-exempt bonds, 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 ‘‘Municipal Bond Mar5 ket Support Act of 2017’’. 


lotter on DSKBCFDHB2PROD with BILLS
2 

•S 1925 IS

1 SEC. 2. PERMANENT MODIFICATION OF SMALL ISSUER EX2 CEPTION TO TAX-EXEMPT INTEREST EX3 PENSE ALLOCATION RULES FOR FINANCIAL 

4 INSTITUTIONS. 

5 (a) PERMANENT INCREASE IN LIMITATION.—Sub6 paragraphs (C)(i), (D)(i), and (D)(iii)(II) of section 

7 265(b)(3) of the Internal Revenue Code of 1986 are each 

8 amended by striking ‘‘$10,000,000’’ and inserting 

9 ‘‘$30,000,000’’. 

10 (b) PERMANENT MODIFICATION OF OTHER SPECIAL

11 RULES.—Section 265(b)(3) of such Code is amended— 

12 (1) by redesignating clauses (iv), (v), and (vi) 

13 of subparagraph (G) as clauses (ii), (iii), and (iv) of 

14 such subparagraph, respectively; and 

15 (2) by striking so much of subparagraph (G) as 

16 precedes such clauses and inserting the following: 

17 ‘‘(G) QUALIFIED 501(c)(3) BONDS TREAT18 ED AS ISSUED BY EXEMPT ORGANIZATION.—In 

19 the case of a qualified 501(c)(3) bond (as de20 fined in section 145), this paragraph shall be 

21 applied by treating the 501(c)(3) organization 

22 for whose benefit such bond was issued as the 

23 issuer. 

24 ‘‘(H) SPECIAL RULE FOR QUALIFIED

25 FINANCINGS.— 


lotter on DSKBCFDHB2PROD with BILLS
3 

•S 1925 IS

1 ‘‘(i) IN GENERAL.—In the case of a 

2 qualified financing issue— 

3 ‘‘(I) subparagraph (F) shall not 

4 apply, and 

5 ‘‘(II) any obligation issued as a 

6 part of such issue shall be treated as 

7 a qualified tax-exempt obligation if 

8 the requirements of this paragraph 

9 are met with respect to each qualified 

10 portion of the issue (determined by 

11 treating each qualified portion as a 

12 separate issue which is issued by the 

13 qualified borrower with respect to 

14 which such portion relates).’’. 

15 (c) INFLATION ADJUSTMENT.—Section 265(b)(3) of 

16 such Code, as amended by subsection (b), is amended by 

17 adding at the end the following new subparagraph: 

18 ‘‘(I) INFLATION ADJUSTMENT.—In the 

19 case of any calendar year after 2017, the 

20 $30,000,000 amounts contained in subpara21 graphs (C)(i), (D)(i), and (D)(iii)(II) shall each 

22 be increased by an amount equal to— 

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

24 ‘‘(ii) the cost-of-living adjustment de25 termined under section 1(f)(3) for such 


lotter on DSKBCFDHB2PROD with BILLS
4 

•S 1925 IS

1 calendar year, determined by substituting 

2 ‘calendar year 2016’ for ‘calendar year 

3 1992’ in subparagraph (B) thereof. 

4 Any increase determined under the preceding 

5 sentence shall be rounded to the nearest mul6 tiple of $100,000.’’. 

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

8 this section shall apply to obligations issued after the date 

9 of the enactment of this Act. 

Æ 


lotter on DSKBCFDHB2PROD with BILLS