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[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 3446 Introduced in Senate (IS)]

110th CONGRESS
  2d Session
                                S. 3446

To amend the Internal Revenue Code of 1986 to defer the tax on the gain 
on the sale of certain telecommunications and media businesses, and for 
                            other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             August 1, 2008

Mr. Menendez (for himself, Mr. Salazar, Mr. Smith, Mr. Lautenberg, Mr. 
  Stevens, and Ms. Stabenow) 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 defer the tax on the gain 
on the sale of certain telecommunications and media businesses, and for 
                            other purposes.

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

SECTION 1. FINDINGS AND PURPOSE.

    (a) Findings.--Congress finds that:
            (1) Localism, competition, and diversity of voices have 
        long been the stated goals of United States telecommunications 
        and media policy.
            (2) In support of these goals, it has been long-standing 
        United States telecommunications and media policy to facilitate 
        diversity of ownership in the telecommunications and media 
        industry, to foster ownership of telecommunications and media 
        by socially disadvantaged businesses, and to disseminate 
        spectrum licenses among a wide variety of applicants, including 
        small businesses and businesses owned by members of minority 
        groups and women.
            (3) Diversification of ownership of telecommunications and 
        media properties remains a preeminent public interest concern 
        that should be reflected in United States telecommunications, 
        media, and tax policy.
            (4) In the years between 1995 and 2008, as broadcast media 
        ownership rules have been relaxed, ownership opportunities of 
        broadcast properties for socially disadvantaged individuals 
        have decreased significantly. Businesses owned or controlled by 
        socially disadvantaged individuals, including, but not limited 
        to, members of minority groups and women, have continued to be 
        underrepresented as owners of telecommunications and media 
        properties. As a result of the convergence and consolidation 
        taking place in telecommunications and media markets, as of 
        2008 a smaller number of firms provide the gateway to news, 
        information, and entertainment programming.
            (5) Fostered by the relaxation of the broadcast media 
        ownership rules, local broadcast markets are increasingly 
        characterized by consolidated ownership, with individual 
        entities owning multiple broadcast stations within a single 
        market that allow them to exploit economies of scale in the 
        advertising market not available to smaller or individual 
        operators. This results in individual operators frequently 
        being shut out of large amounts of advertising revenues.
            (6) The cable television industry is increasingly 
        characterized by firms that cluster their ownership of cable 
        systems in a small number of markets, with the result that many 
        local markets are dominated by a single cable company that 
        serves most or all of the jurisdictions in that market and 
        enjoys a favorable competitive and negotiating position in that 
        market.
            (7) Tax policy has fostered telecommunications and media 
        convergence and consolidation by providing a favorable tax 
        consequence to telecommunications and media firms selling their 
        properties to large entities that can purchase the properties 
        using tax-free like-kind exchanges. This puts socially 
        disadvantaged businesses at a greater disadvantage because 
        often they are not able to purchase the properties through an 
        exchange of stock.
            (8) Socially disadvantaged businesses and other small 
        businesses are less likely to be able to purchase 
        telecommunications and media properties through a tax-free 
        like-kind exchange than are established businesses.
            (9) Prior to 1995, the tax treatment of the sale of 
        appreciated telecommunications and media properties for 
        transactions not involving like-kind exchanges was partially 
        offset by the Federal Communications Commission tax certificate 
        policy, a program that allowed firms that sold 
        telecommunications and media properties to minority or women-
        owned firms to defer some of the taxes imposed on their sale of 
        appreciated properties. This program was eliminated in 1995.
            (10) As a result of the elimination of the tax certificate 
        program, the changes in telecommunications and media ownership 
        rules, and the market forces toward convergence and 
        consolidation, opportunities for socially disadvantaged 
        businesses to participate and grow in telecommunications and 
        media markets have decreased substantially despite the fact 
        that this has been an active period for the sale of 
        telecommunications and media properties.
            (11) These recent trends exacerbate the pattern of 
        businesses owned or controlled by socially disadvantaged 
        individuals, who have historically been economically 
        disadvantaged within the telecommunications industry, having 
        greater difficulty obtaining access to capital and facing 
        higher costs of capital than do other businesses. It is 
        consistent with the public interest to provide incentives that 
        will increase diversity in telecommunications and media 
        ownership by facilitating socially disadvantaged business 
        investment in, and acquisition of, telecommunications and media 
        properties, and to eliminate obstacles to such ownership.
            (12) Facilitating voluntary, pro-competitive transactions 
        that will promote ownership of telecommunications and media 
        properties by socially disadvantaged businesses by reducing 
        distortions in tax policy will aid in providing the investment 
        and capital that are crucial to the development of diversity of 
        ownership in this sector.
    (b) Purpose.--The purpose of this Act is to facilitate voluntary, 
pro-competitive transactions that will promote socially disadvantaged 
business ownership of telecommunications and media properties in order 
to diversify telecommunications and media ownership.

SEC. 2. TREATMENT OF GAIN ON QUALIFIED SALES OF TELECOMMUNICATIONS 
              BUSINESSES.

    (a) In General.--Subchapter O of chapter 1 of the Internal Revenue 
Code of 1986 (relating to gain or loss on disposition of property) is 
amended by inserting after part IV the following new part:

        ``PART V--CERTAIN SALES OF TELECOMMUNICATIONS BUSINESSES

``Sec. 1071. Treatment of gain on certain sales of telecommunications 
                            businesses.

``SEC. 1071. TREATMENT OF GAIN ON CERTAIN SALES OF TELECOMMUNICATIONS 
              BUSINESSES.

    ``(a) In General.--In the case of an eligible taxpayer, at the 
election of the taxpayer--
            ``(1) the tax imposed by this subtitle on the qualifying 
        gain from a qualified telecommunications sale may be paid on or 
        before the date that is 3 years after the date prescribed by 
        section 6151(a) for payment of such tax, or
            ``(2) the recognition of such qualifying gain shall be 
        deferred by reducing the basis of depreciable property (as 
        defined in section 1017(b)(3)) held by the taxpayer immediately 
        after such sale or acquired within 1 year after such sale by 
        the amount of such qualifying gain.
    ``(b) Eligible Taxpayer.--For purposes of this section, the term 
`eligible taxpayer' means the seller in a qualified telecommunications 
sale if such seller has received a qualifying gain certificate from the 
purchaser in such sale.
    ``(c) Qualifying Gain.--For purposes of this section, the term 
`qualifying gain' means the amount that is so much of the gain on any 
qualified telecommunications sale as does not exceed the amount of the 
qualifying gain certificate received by the seller in such sale from 
the purchaser.
    ``(d) Qualified Telecommunications Sale.--
            ``(1) In general.--For purposes of this section, the term 
        `qualified telecommunications sale' means any sale to a 
        qualified business of--
                    ``(A) the assets of a telecommunications business,
                    ``(B) stock in a corporation if, immediately after 
                such sale--
                            ``(i) the qualified business owns stock 
                        possessing at least the applicable percentage 
                        of the total combined voting power of all 
                        classes of stock entitled to vote and at least 
                        the applicable percentage of the total number 
                        of shares of all other classes of stock of such 
                        corporation, and
                            ``(ii) substantially all of the assets of 
                        such corporation are assets of one or more 
                        telecommunications businesses, or
                    ``(C) an interest in a partnership if, immediately 
                after such sale--
                            ``(i) the qualified business owns a 
                        partnership interest possessing--
                                    ``(I) a percentage that is at least 
                                equal to the applicable percentage of 
                                the total combined voting power of all 
                                classes of partnership interests 
                                entitled to vote,
                                    ``(II) control over the management 
                                of the partnership,
                                    ``(III) a percentage that is at 
                                least equal to the applicable 
                                percentage of the capital interests of 
                                the partnership, and
                                    ``(IV) a distributive share that is 
                                at least equal to the applicable 
                                percentage of each item of the 
                                partnership's income, gain, loss, 
                                deduction or credit, and
                            ``(ii) substantially all of the assets of 
                        such partnership are assets of one or more 
                        telecommunications businesses.
            ``(2) Qualified business.--For purposes of this section--
                    ``(A) In general.--The term `qualified business' 
                means any entity in which a socially disadvantaged 
                individual or a member of a socially disadvantaged 
                group has a qualified interest.
                    ``(B) Certification.--
                            ``(i) In general.--A business shall not be 
                        a qualified business under this section unless 
                        such business has been certified by the Federal 
                        Communications Commission as meeting the 
                        requirements of subparagraph (A).
                            ``(ii)  Reporting requirement.--
                                    ``(I) In general.--Any business 
                                certified by the Federal Communications 
                                Commission under this subparagraph 
                                shall report to such Commission any 
                                event that would lead to a change in 
                                the eligibility of the business for 
                                such certification.
                                    ``(II) Revision of structure or 
                                revocation of certification.--If the 
                                Federal Communications Commission 
                                determines that such business no longer 
                                meets the requirements of subparagraph 
                                (A) as a result of a reportable event 
                                under subclause (I), such business may 
                                revise its ownership structure in order 
                                to meet such requirements. If such 
                                business fails to revise its ownership 
                                structure in a manner sufficient to 
                                meet such requirements, the 
                                certification of such business under 
                                this subparagraph shall be revoked.
                            ``(iii) Qualifying gain certificates.--
                                    ``(I) In general.--Upon 
                                certification of any business under 
                                this subparagraph, the Federal 
                                Communications Commission shall issue 
                                qualifying gain certificates to such 
                                business for use in the purchase of 
                                telecommunications businesses through 
                                qualified telecommunications sales.
                                    ``(II) Limitation.--The aggregate 
                                amount of the qualifying gain 
                                certificates issued to a business under 
                                this clause for any calendar year shall 
                                not exceed $350,000,000 reduced by the 
                                aggregate amount of qualifying gain 
                                certificates issued to such business 
                                during the preceding 5 calendar years.
                            ``(iv) Regulations.--The Federal 
                        Communications Commission shall issue 
                        regulations to establish a process for granting 
                        certification to qualified businesses and for 
                        requiring reporting and review under this 
                        subparagraph.
                            ``(v) FCC reporting.--The Federal 
                        Communications Commission shall submit to the 
                        Secretary on or before January 31 of each year 
                        a list of all businesses certified as qualified 
                        businesses in the previous calendar year.
                    ``(C) Qualified interest.--An interest in an entity 
                shall be treated as qualified if such interest 
                represents a percentage that is at least equal to the 
                applicable percentage of--
                            ``(i) the total assets of the entity, and
                            ``(ii) the total combined voting power in 
                        such entity of all classes of interests 
                        entitled to vote.
                    ``(D) Socially disadvantaged individual.--The term 
                `socially disadvantaged individual' means an individual 
                that is--
                            ``(i) a United States citizen, and
                            ``(ii) socially and economically 
                        disadvantaged, as determined by the Federal 
                        Communications Commission using the following 
                        criteria:
                                    ``(I) Socially disadvantaged.--An 
                                individual may be considered socially 
                                disadvantaged if such individual has 
                                been subjected to racial or ethnic 
                                prejudice or cultural bias within 
                                United States society because of the 
                                individual's identity as a member of a 
                                group and without regard to individual 
                                qualities. The social disadvantage must 
                                stem from circumstances beyond the 
                                individual's control.
                                    ``(II) Members of designated 
                                groups.--
                                            ``(aa) There shall be a 
                                        rebuttable presumption that--

                                                    ``(AA) those 
                                                individuals asserting 
                                                membership in a group 
                                                previously designated 
                                                as socially 
                                                disadvantaged by the 
                                                Small Business 
                                                Administration 
                                                according to procedures 
                                                set forth under section 
                                                124.103 of title 13, 
                                                Code of Federal 
                                                Regulations (or a 
                                                successor regulation), 
                                                including Black 
                                                Americans, Hispanic 
                                                Americans, Native 
                                                Americans, Asian 
                                                Pacific Americans, and 
                                                members of other groups 
                                                that have been so 
                                                designated, and

                                                    ``(BB) those 
                                                entities that are 
                                                deemed socially 
                                                disadvantaged under 
                                                section 124.109 of 
                                                title 13, Code of 
                                                Federal Regulations (or 
                                                a successor 
                                                regulation),

                                        shall be considered socially 
                                        disadvantaged for purposes of 
                                        this section.
                                            ``(bb) In order to be 
                                        considered a member of a 
                                        socially disadvantaged group, 
                                        the Federal Communications 
                                        Commission may require that an 
                                        individual has held himself or 
                                        herself out, and has been 
                                        identified by others, as a 
                                        member of such group.
                                            ``(cc) The presumption of 
                                        membership in a socially 
                                        disadvantaged group may be 
                                        overcome with the presentation 
                                        of credible evidence to the 
                                        contrary. Individuals in 
                                        possession or knowledge of such 
                                        evidence shall submit such 
                                        information in writing to the 
                                        Federal Communications 
                                        Commission at such time and in 
                                        such manner as such Commission 
                                        shall require.
                                    ``(III) Individuals not members of 
                                a designated group.--An individual who 
                                is not a member of a group described in 
                                subclause (II)(aa) must establish 
                                individual social disadvantage by a 
                                preponderance of the evidence, which 
                                must include the following elements:
                                            ``(aa) At least one 
                                        objective distinguishing 
                                        feature that has contributed to 
                                        the social disadvantage of the 
                                        individual, such as race, 
                                        ethnic origin, gender, physical 
                                        handicap, long-term residence 
                                        in an environment isolated from 
                                        the mainstream of United States 
                                        society, or other similar 
                                        features not common to 
                                        individuals who are not 
                                        socially disadvantaged.
                                            ``(bb) Personal experiences 
                                        of substantial and chronic 
                                        social disadvantage in United 
                                        States society.
                                            ``(cc) Negative impact of 
                                        social disadvantage on entry 
                                        into or advancement in the 
                                        business world. This impact may 
                                        be proven by any relevant 
                                        evidence showing that the 
                                        totality of circumstances 
                                        reflects disadvantage in 
                                        entering into or advancing in 
                                        the business world, but such 
                                        evidence must include 
                                        information concerning the 
                                        education, employment, and 
                                        business history of the 
                                        individual as follows:

                                                    ``(AA) Evidence 
                                                relating to education 
                                                may include such 
                                                factors as denial of 
                                                equal access to 
                                                institutions of higher 
                                                education, exclusion 
                                                from social and 
                                                professional 
                                                association with 
                                                students or teachers, 
                                                denial of educational 
                                                honors rightfully 
                                                earned, and social 
                                                patterns or pressures 
                                                which discouraged the 
                                                individual from 
                                                pursuing a professional 
                                                or business education.

                                                    ``(BB) Evidence 
                                                relating to employment 
                                                may include such 
                                                factors as unequal 
                                                treatment in hiring, 
                                                promotions, or other 
                                                aspects of professional 
                                                advancement, pay and 
                                                fringe benefits, and 
                                                other terms and 
                                                conditions of 
                                                employment, retaliatory 
                                                or discriminatory 
                                                behavior by an 
                                                employer, and social 
                                                patterns or pressures 
                                                which have channeled 
                                                the individual into 
                                                nonprofessional or 
                                                nonbusiness fields.

                                                    ``(CC) Evidence 
                                                relating to business 
                                                history may include 
                                                such factors as unequal 
                                                access to credit or 
                                                capital, acquisition of 
                                                credit or capital under 
                                                commercially 
                                                unfavorable 
                                                circumstances, unequal 
                                                treatment in 
                                                opportunities for 
                                                government contracts or 
                                                other work, unequal 
                                                treatment by potential 
                                                customers and business 
                                                associates, and 
                                                exclusion from business 
                                                or professional 
                                                organizations.

                                    ``(IV) Economically 
                                disadvantaged.--
                                            ``(aa) In general.--An 
                                        individual may be considered 
                                        economically disadvantaged if 
                                        such individual is socially 
                                        disadvantaged, as determined 
                                        under subclauses (I) through 
                                        (III), and if the individual's 
                                        ability to compete in the free 
                                        enterprise system has been 
                                        impaired due to diminished 
                                        capital and credit 
                                        opportunities as compared to 
                                        others in the same or similar 
                                        line of business who are not 
                                        socially disadvantaged.
                                            ``(bb) Diminished 
                                        opportunities.--In considering 
                                        whether an individual has been 
                                        impaired by diminished capital 
                                        and credit opportunities, the 
                                        Federal Communications 
                                        Commission shall examine 
                                        factors relating to the 
                                        financial conditions of any 
                                        persons claiming disadvantaged 
                                        status, including the personal 
                                        financial condition of the 
                                        individual and the fair market 
                                        value of the stock and assets, 
                                        whether encumbered or not, of 
                                        any business under the control 
                                        of the individual, and the 
                                        financial condition of the 
                                        individual compared to the 
                                        financial profiles of other 
                                        businesses in the same or 
                                        similar line of business which 
                                        are not owned and controlled by 
                                        socially and economically 
                                        disadvantaged individuals. The 
                                        financial profiles so compared 
                                        shall include total assets, net 
                                        sales, pre-tax profit, and 
                                        sales to working capital ratio.
                                            ``(cc) Inclusion.--There 
                                        shall be a rebuttable 
                                        presumption that entities that 
                                        are deemed economically 
                                        disadvantaged under section 
                                        124.109 of title 13, Code of 
                                        Federal Regulations (or a 
                                        successor regulation) shall be 
                                        considered economically 
                                        disadvantaged for purposes of 
                                        this section.
                    ``(E) Socially disadvantaged group.--
                            ``(i) In general.--The term `socially 
                        disadvantaged group' means a group that--
                                    ``(I) is described in subparagraph 
                                (D)(ii)(II)(aa), or has been subjected 
                                to racial or ethnic prejudice or 
                                cultural bias within United States 
                                society because of circumstances or 
                                qualities beyond the individual control 
                                of the members of such group, and
                                    ``(II) is economically 
                                disadvantaged, as determined under 
                                subparagraph (D)(ii)(IV) by applying 
                                the rules of such subparagraph to the 
                                group as a whole.
                            ``(ii) Rebuttable presumption of 
                        disadvantage; evidence; etc.--For purposes of 
                        this subparagraph, rules similar to the rules 
                        of subclauses (II) and (III) of subparagraph 
                        (D)(ii) shall apply by applying such rules to 
                        the group as a whole.
                    ``(F) Aggregation rules.--For purposes of this 
                subsection, all persons treated as a single employer 
                under subsection (a) or (b) of section 52 or subsection 
                (m) or (o) of section 414 shall be treated as one 
                person.
            ``(3) Applicable percentage.--For purposes of this 
        subsection--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term `applicable percentage' 
                means the percentage prescribed by the Federal 
                Communications Commission in regulations implementing 
                this section. Such percentage shall not be less than--
                            ``(i) in the case of interest in the total 
                        assets of an entity, 20 percent, and
                            ``(ii) in the case of interest in the total 
                        combined voting power in an entity of all 
                        classes of interests entitled to vote, 51 
                        percent.
                    ``(B) Publicly traded corporations.--In the case of 
                a corporation the shares of which are regularly traded 
                on an established securities market, the applicable 
                percentage is 51 percent.
                    ``(C) Restriction on agreements concerning voting 
                of stock or partnership interests.--Any interest relied 
                upon to meet the applicable percentage shall not be 
                subject to any agreement, arrangement, or understanding 
                which provides for, or relates to--
                            ``(i) the voting of such interest in any 
                        manner by, or at the direction of, any person 
                        other than a socially disadvantaged individual 
                        or a member of a socially disadvantaged group, 
                        or
                            ``(ii) the right of any person other than a 
                        socially disadvantaged individual or a member 
                        of a socially disadvantaged group to acquire 
                        such interest through purchase of shares, 
                        partnership interests, or otherwise.
    ``(e) Qualifying Gain Certificate.--For purposes of this section, 
the term `qualifying gain certificate' means a certificate that is 
issued to a qualified business by the Federal Communications Commission 
under subsection (d)(2)(B)(iii).
    ``(f) Telecommunications Business.--The term `telecommunications 
business' means any business providing communication services by wire, 
cable, radio, satellite, or other technology if the providing of such 
services is governed by the Communications Act of 1934 or the 
Telecommunications Act of 1996.
    ``(g) Recapture of Tax Benefit if Telecommunications Business 
Resold Within 3 Years, etc.--
            ``(1) In general.--If, within 3 years after the date of any 
        qualified telecommunications sale, there is a recapture event 
        with respect to the property involved in such sale, then the 
        qualified business's tax imposed by this chapter for the 
        taxable year in which such event occurs shall be increased by 
        20 percent of the consideration furnished by such business in 
        such sale.
            ``(2) Exception for reinvested amounts.--Paragraph (1) 
        shall not apply to any recapture event which is a sale if--
                    ``(A) the sale is a qualified telecommunications 
                sale, or
                    ``(B) during the 60-day period beginning on the 
                date of such sale, the qualified business is the 
                purchaser in another qualified telecommunications sale 
                in which the consideration furnished by such business 
                is not less than the amount realized on the recapture 
                event sale.
            ``(3) Recapture event.--For purposes of this subsection, 
        the term `recapture event' means, with respect to any qualified 
        telecommunications sale--
                    ``(A) any sale or other disposition of the assets, 
                stock, or interest referred to in subsection (d)(1) 
                which were acquired by the qualified business in such 
                sale,
                    ``(B) in the case of a qualified telecommunications 
                sale described in subsection (d)(1)(B)--
                            ``(i) any sale or other disposition of a 
                        telecommunications business by the corporation 
                        referred to in such subsection, or
                            ``(ii) any other transaction which results 
                        in the qualified business not having control 
                        (as defined in subsection (d)(1)(B)(i)) of such 
                        corporation, and
                    ``(C) in the case of a qualified telecommunications 
                sale described in subsection (d)(1)(C)--
                            ``(i) any sale or other disposition of a 
                        telecommunications business by the partnership 
                        referred to in such subsection, or
                            ``(ii) any other transaction which results 
                        in the qualified business not having control 
                        (as defined in subsection (d)(1)(C)(i)) of such 
                        partnership.
        Such term shall not include any sale or other disposition 
        resulting from the default, or imminent default, of any 
        indebtedness of the taxpayer.
    ``(h) Cross-References.--
            ``(1) Security.--For authority of the Secretary to require 
        security in the case of an extension under subsection (a)(1), 
        see section 6165.
            ``(2) Period of limitation.--For extension of the period of 
        limitation in the case of an extension under subsection (a)(1), 
        see section 6503(k).''.
    (b) Clerical Amendment.--The table of parts for subchapter O of 
chapter 1 of the Internal Revenue Code of 1986 is amended by inserting 
after the item relating to part IV the following new item:

      ``Part V. Certain Sales of Telecommunications Businesses.''.

    (c) Conforming Amendments.--
            (1) Extension of period of limitation.--Section 6503 of the 
        Internal Revenue Code of 1986 (relating to suspension of 
        running of period of limitation) is amended--
                    (A) by redesignating subsection (k) as subsection 
                (l), and
                    (B) by inserting after subsection (j) the following 
                new subsection:
    ``(k) Extension of Time for Payment of Certain Telecommunications 
Gain Tax Liability.--The running of any period of limitations for 
collection of any amount of tax liability on gain from qualified 
telecommunications sales (as defined in section 1071(d)(1)) shall be 
suspended for the period of any extension of time under section 
1071(a)(1) for payment of such amount.''.
            (2) Reduction in basis.--Subsection (a) of section 1016 of 
        such Code (relating to general rule) is amended--
                    (A) by striking ``and'' at the end of paragraph 
                (36),
                    (B) by striking the period at the end of paragraph 
                (37) and inserting ``, and'', and
                    (C) by adding at the end the following new 
                paragraph:
            ``(38) to the extent provided in section 1071(a)(2).''.
    (d) Effective Date.--The amendments made by this section shall 
apply to sales in taxable years beginning after the date of the 
enactment of this Act.

SEC. 3. LOAN GUARANTEE PROGRAM TO ENCOURAGE DIVERSITY OF OWNERSHIP OF 
              TELECOMMUNICATIONS BUSINESSES.

    (a) In General.--The Administrator of the Small Business 
Administration may guarantee any loan made to a qualified business for 
the purchase of assets, stock, or interests described in section 
1071(d)(1) of the Internal Revenue Code of 1986 (relating to qualified 
telecommunications sale), as added by this Act.
    (b) Limitations.--
            (1) Security.--The Administrator shall not guarantee any 
        loan under subsection (a) unless the guaranteed portion of such 
        loan is secured by a first lien position or first mortgage on 
        the stock, assets, or interests financed by the loan.
            (2) Guarantee percentage; cap.--The amount of any loan 
        guaranteed by the Administrator under subsection (a)--
                    (A) shall not exceed 95 percent of the balance of 
                the financing outstanding at the time of disbursement 
                of the loan, and
                    (B) shall not exceed $8,000,000.
            (3) Fees.--With respect to each loan guaranteed under 
        subsection (a) (other than a loan that is repayable in 1 year 
        or less), the Administrator may collect a guarantee fee, which 
        shall be payable by the participating lender, and may be 
        charged to the borrower.
    (c) General Authority.--For purposes of carrying out this section, 
the Administrator may--
            (1) enter into contracts with private and Federal entities 
        for professional and other services;
            (2) enter into memorandums of understanding with other 
        Federal agencies; and
            (3) issue regulations, including regulations regarding--
                    (A) notice of and opportunity to cure a default;
                    (B) procedures related to foreclosure; and
                    (C) such other matters as the Administrator 
                considers appropriate.
    (d) Definitions.--For purposes of this section:
            (1) Administrator.--The term ``Administrator'' means the 
        Administrator of the Small Business Administration.
            (2) Qualified business.--The term ``qualified business'' 
        has the meaning given such term in section 1071(d)(2) of the 
        Internal Revenue Code of 1986, as added by this Act.
    (e) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as may be necessary to carry out the purposes of 
this section.

SEC. 4. PROGRAM AUDITS BY GAO.

    (a) Treatment of Gain on Qualifying Telecommunications Sales.--Not 
later than 5 years after the date of the enactment of this Act, and 
every 5 years thereafter, the Comptroller General of the United States 
shall audit the administration of section 1071 of the Internal Revenue 
Code of 1986, as added by this Act, and issue a report on the results 
of that audit. The Comptroller General shall include in the report, 
notwithstanding any provision of section 6103 of the Internal Revenue 
Code of 1986 to the contrary--
            (1) a list of qualified businesses (as defined in section 
        1071(d)(2) of such Code) and any other taxpayer receiving a 
        benefit from the operation of section 1071 as such section was 
        added by this Act,
            (2) an assessment of the effect the amendments made by this 
        Act have on increasing new entry and growth in the 
        telecommunications industry by qualified businesses, and
            (3) an assessment of whether the $350,000,000 limitation 
        amount under section 1071(d)(2)(B)(iii)(II) of such Code should 
        be adjusted for inflation in order to respond to the 
        telecommunications market, and in what year such adjustment 
        should begin.
    (b) Assessment of Loan Guarantee Program.--The report required 
under subsection (a) shall include an assessment of the loan guarantee 
program under section 3 of this Act, including an assessment of whether 
the $8,000,000 limitation amount under section 3(b)(2)(B) of this Act 
should be adjusted for inflation in order to respond to the 
telecommunications market, and in what year such adjustment should 
begin.

SEC. 5. SEVERABILITY.

    If any provision of this Act or any amendment made by this Act, or 
the application of a provision or amendment to any person or 
circumstance, is held to be unconstitutional, the remainder of this Act 
and the amendments made by this Act, and the application of the 
provisions and amendments of this Act to any person or circumstance, 
shall not be affected thereby.
                                 <all>
```