I 

110TH CONGRESS 

2D SESSION H. R. 5310 

To amend the Internal Revenue Code of 1986 to provide tax incentives 

for investing in companies involved in space-related activities. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 7, 2008 

Mr. ROHRABACHER (for himself and Mr. WELDON of Florida) introduced the 

following bill; which was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

tax incentives for investing in companies involved in 

space-related activities. 

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 ‘‘Zero Gravity, Zero 

5 Tax Act of 2008’’. 

6 SEC. 2. EXCLUSION OF SPACE-RELATED INCOME FROM 

7 GROSS INCOME. 

8 (a) IN GENERAL.—Part III of subchapter B of chap9 ter 1 of the Internal Revenue Code of 1986 (relating to 


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1 items specifically excluded from gross income) is amended 

2 by inserting after section 139B the following new section: 

3 ‘‘SEC. 139C. SPACE-RELATED INCOME. 

4 ‘‘(a) GENERAL RULE.—Gross income shall not in5 clude space-related income. 

6 ‘‘(b) SPACE-RELATED INCOME.— 

7 ‘‘(1) IN GENERAL.—For purposes of this sec8 tion, the term ‘space-related income’ means— 

9 ‘‘(A) income derived from the sale by the 

10 taxpayer to an unrelated person of— 

11 ‘‘(i) any product or article which is 

12 produced by the taxpayer in outer space, 

13 and 

14 ‘‘(ii) any service provided by the tax15 payer in or from outer space, 

16 ‘‘(B) income of an individual attributable 

17 to services performed in or from outer space by 

18 such individual in a trade or business, and 

19 ‘‘(C) any amount not described in subpara20 graph (A) or (B) which is interest, rent, roy21 alty, or similar amount received with respect to 

22 production or service described in subparagraph 

23 (A) or (B). 


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1 ‘‘(2) EXCEPTION FOR TELECOMMUNICATIONS

2 SERVICES, ETC.—Paragraph (1)(A)(ii) shall not 

3 apply to— 

4 ‘‘(A) any telecommunications service pro5 vided from earth orbit, 

6 ‘‘(B) any service provided by a weather or 

7 other earth observation satellite, and 

8 ‘‘(C) any other service provided on or be9 fore the date of the enactment of this section of 

10 transporting property to or from outer space. 

11 ‘‘(3) EXCEPTION FOR WAGES.—Paragraph (1) 

12 shall not apply to wages (as defined in section 3401) 

13 received by any employee of an employer. 

14 ‘‘(4) PROPORTIONAL ALLOCATION BETWEEN

15 SPACE-BASED AND EARTH-BASED ACTIVITIES.—In 

16 the case of any product or article which is produced 

17 partly in space, space-related income shall be an 

18 amount which bears the same ratio to the amount 

19 of gross income attributable to the sale of such prod20 uct or article as the expenses attributable to pro21 ducing such product or article in space bears to the 

22 total expenses incurred in producing such product or 

23 article. 

24 ‘‘(5) PRODUCED.—For purposes of this section, 

25 the term ‘produced’ includes created, fabricated, deVerDate Aug 31 2005 23:20 Feb 12, 2008 Jkt 069200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H5310.IH H5310

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1 veloped, grown, manufactured, extracted, processed, 

2 cured, and aged. 

3 ‘‘(c) EXCLUSION FROM TARIFFS, ETC.—Any prod4 uct— 

5 ‘‘(1) which is manufactured in outer space, and 

6 ‘‘(2) which was— 

7 ‘‘(A) launched from, and returned to 

8 Earth, within the United States, or 

9 ‘‘(B) Manufactured at a facility in outer 

10 space which is owned by 1 or more United 

11 States persons, shall be exempt from all Fed12 eral excises, imposts, and duties and any other 

13 Federal tariffs. 

14 ‘‘(d) PHASEOUT OF BENEFITS.—In the case of a tax15 able year beginning after December 31, 2017, the amount 

16 excluded under subsection (a) shall be reduced (but not 

17 below zero) by x/10th’s of the amount excludable without 

18 regard to this subsection, where ‘x’ is the number of years 

19 such taxable year is after the last taxable year beginning 

20 before January 1, 2018. A similar rule shall apply to the 

21 benefits under subsection (c).’’. 

22 (b) CLERICAL AMENDMENT.—The table of sections 

23 for part III of subchapter B of chapter 1 of such Code 

24 is amended by inserting after the item relating to section 

25 139B the following new item: 

‘‘Sec. 139C. Space-related income.’’. 


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

2 this section shall apply to taxable years beginning after 

3 December 31, 2008. 

4 SEC. 3. CREDIT FOR PURCHASE OF QUALIFIED SPACE COM5 PANY STOCK. 

6 (a) IN GENERAL.—Subpart D of part IV of sub7 chapter A of chapter 1 of the Internal Revenue Code of 

8 1986 (relating to business related credits) is amended by 

9 adding at the end the following new section: 

10 ‘‘SEC. 45O. SPACE COMPANY INVESTMENT CREDIT. 

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

12 the space company investment credit determined under 

13 this section for any taxable year is the amount paid in 

14 the taxable year for the purchase of qualified stock in a 

15 qualified space company. 

16 ‘‘(b) QUALIFIED SPACE COMPANY.—For purposes of 

17 this section— 

18 ‘‘(1) IN GENERAL.—The term ‘qualified space 

19 company’ means a domestic C corporation if for the 

20 3-taxable-year period ending with the taxable year 

21 immediately preceding the taxable year in which 

22 qualified stock is purchased— 

23 ‘‘(A) the average annual gross receipts of 

24 such entity does not exceed $100,000,000, and 


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1 ‘‘(B) more than 70 percent of such gross 

2 receipts are derived from space-based business. 

3 ‘‘(2) SPACE-BASED BUSINESS.—The term 

4 ‘space-based business’ means a business whose gross 

5 receipts are substantially space-related income, as 

6 defined in section 139C(b). 

7 ‘‘(3) AGGREGATION RULES.—Rules similar to 

8 the rules of section 1202(d)(3) shall apply. 

9 ‘‘(c) QUALIFIED STOCK.—For purposes of this sec10 tion— 

11 ‘‘(1) IN GENERAL.—Except as otherwise pro12 vided in this section, the term ‘qualified stock’ 

13 means any stock in a domestic C corporation if— 

14 ‘‘(A) as of the date of issuance of such 

15 stock, such corporation is a qualified space 

16 company, and 

17 ‘‘(B) except as provided in subsections (f) 

18 and (h), such stock is acquired by the taxpayer 

19 at its original issue (directly or through an un20 derwriter)— 

21 ‘‘(i) in exchange for money or other 

22 property (not including stock), or 

23 ‘‘(ii) as compensation for services pro24 vided to such corporation (other than servVerDate Aug 31 2005 23:20 Feb 12, 2008 Jkt 069200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H5310.IH H5310

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1 ices performed as an underwriter of such 

2 stock). 

3 ‘‘(2) ACTIVE BUSINESS REQUIREMENT.—Stock 

4 in a corporation shall not be treated as qualified 

5 stock unless, during substantially all of the tax6 payer’s holding period for such stock— 

7 ‘‘(A) such corporation meets active busi8 ness requirements substantially similar to the 

9 requirements of section 1202(e), determined on 

10 the basis that the qualified trade or business is 

11 a space-based business, and 

12 ‘‘(B) such corporation is a C corporation. 

13 ‘‘(3) CERTAIN PURCHASE BY CORPORATION OF

14 ITS OWN STOCK.—Rules similar to the rules of sec15 tion 1202(c)(3) shall apply. 

16 ‘‘(d) RECAPTURE.—If, during any taxable year end17 ing with or within the 10-year period beginning on the 

18 date qualified stock was purchased by the taxpayer, the 

19 issuer of such stock ceases to a qualified space company, 

20 the tax under this chapter for such taxable year shall be 

21 increased by the aggregate decrease in the credits allowed 

22 under section 38 for all prior taxable years which would 

23 have resulted solely from reducing to zero any credit deter24 mined under subsection (a) with respect to such stock. 


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1 ‘‘(e) TERMINATION.—This section shall not apply to 

2 stock acquired after December 31, 2016.’’. 

3 (b) CREDIT ALLOWED AS PART OF GENERAL BUSI4 NESS CREDIT.—Section 38(b) of such Code (defining cur5 rent year business credit) is amended by striking ‘‘plus’’ 

6 at the end of paragraph (30), by striking the period at 

7 the end of paragraph (31 and inserting ‘‘, plus’’, and by 

8 adding at the end the following new paragraph: 

9 ‘‘(32) space company investment credit deter10 mined under section 45O(a).’’. 

11 (c) CONFORMING AMENDMENTS.— 

12 (1) Subsection (c) of section 196 of such Code 

13 is amended by striking ‘‘and’’ at the end of para14 graph (12), by striking the period at the end of 

15 paragraph (13) and inserting ‘‘, and’’, and by add16 ing at the end the following new paragraph: 

17 ‘‘(14) the space company investment credit de18 termined under section 45O(a).’’. 

19 (2) The table of sections for subpart D of part 

20 IV of subchapter A of chapter 1 of such Code is 

21 amended by adding at the end the following new 

22 item: 

‘‘Sec. 45O. Space Company Investment Credit.’’. 

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

24 this section shall apply to costs paid or incurred in taxable 

25 years beginning after December 31, 2008. 


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1 SEC. 4. CAPITAL GAINS EXCLUSION. 

2 (a) IN GENERAL.—Part I of subchapter P of chapter 

3 1 of the Internal Revenue Code of 1986 (relating to treat4 ment of capital gains) is amended by adding at the end 

5 the following new section: 

6 ‘‘SEC. 1203. EXCLUSION FOR GAINS FROM SALE OR EX7 CHANGE OF STOCK OF QUALIFIED SPACE 

8 CORPORATIONS. 

9 ‘‘(a) IN GENERAL.—Gross income shall not include 

10 gain on the sale or exchange of any stock of a qualified 

11 space corporation. 

12 ‘‘(b) QUALIFIED SPACE CORPORATION.—For pur13 poses of subsection (a), the term ‘qualified space corpora14 tion’ means, with respect to any taxable year, a domestic 

15 corporation which is a C corporation if— 

16 ‘‘(1) such corporation is organized exclusively 

17 for providing to unrelated persons— 

18 ‘‘(A) any product or article which is pro19 duced (within the meaning of section 

20 139C(b)(5)) by the corporation in outer space, 

21 or 

22 ‘‘(B) any service provided by the corpora23 tion in or from outer space, and 

24 ‘‘(2) At least 90 percent of the expenses of such 

25 corporation are attributable to the active conduct of 


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1 a trade or business of providing a product, article, 

2 or service described in paragraph (1). 

3 Such term shall not include a corporation providing a serv4 ice, product, or article described in section 139C(b)(2).’’. 

5 (b) CLERICAL AMENDMENT.—The table of sections 

6 for part I of subchapter P of chapter 1 of such Code is 

7 amended by adding at the end the following new item: 

‘‘Sec. 1203. Exclusion for gains from sale or exchange of stock of qualified 

space corporations.’’. 

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

9 this section shall apply to taxable years beginning after 

10 December 31, 2008. 

Æ 


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