II

106TH CONGRESS

1ST SESSION S. 1900

To amend the Internal Revenue Code of 1986 to allow a credit to holders

of qualified bonds issued by Amtrak, and for other purposes.

IN THE SENATE OF THE UNITED STATES

NOVEMBER 10, 1999

Mr. LAUTENBERG (for himself, Mr. JEFFORDS, Mr. MOYNIHAN, Mr.

CLELAND, Mr. KERRY, Mr. BIDEN, Mrs. BOXER, Mr. KOHL, Mr. SPECTER, Mr. ROBB, Mr. LEAHY, Mr. DEWINE, Mr. SARBANES, Mr.

TORRICELLI, Mr. L. CHAFEE, Mr. GRAHAM, Mr. KENNEDY, Ms. MIKULSKI, Ms. SNOWE, Mr. SCHUMER, Mr. LEVIN, and Mrs. HUTCHISON) 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 allow a

credit to holders of qualified bonds issued by Amtrak,

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 ‘‘High-Speed Rail In5 vestment Act’’.
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1 SEC. 2. CREDIT TO HOLDERS OF QUALIFIED AMTRAK

2 BONDS.

3 (a) IN GENERAL.—Part IV of subchapter A of chap4 ter 1 of the Internal Revenue Code of 1986 (relating to

5 credits against tax) is amended by adding at the end the

6 following new subpart:

7 ‘‘Subpart H—Nonrefundable Credit for Holders of

8 Qualified Amtrak Bonds

‘‘Sec. 54. Credit to holders of qualified Amtrak bonds.

9 ‘‘SEC. 54. CREDIT TO HOLDERS OF QUALIFIED AMTRAK

10 BONDS.

11 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of a tax12 payer who holds a qualified Amtrak bond on a credit al13 lowance date of such bond which occurs during the taxable

14 year, there shall be allowed as a credit against the tax

15 imposed by this chapter for such taxable year the amount

16 determined under subsection (b).

17 ‘‘(b) AMOUNT OF CREDIT.—

18 ‘‘(1) IN GENERAL.—The amount of the credit

19 determined under this subsection with respect to any

20 credit allowance date for a qualified Amtrak bond is

21 25 percent of the annual credit determined with re22 spect to such bond.

23 ‘‘(2) ANNUAL CREDIT.—The annual credit de24 termined with respect to any qualified Amtrak bond

25 is the product of—
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1 ‘‘(A) the applicable credit rate, multiplied

2 by

3 ‘‘(B) the outstanding face amount of the

4 bond.

5 ‘‘(3) APPLICABLE CREDIT RATE.—For purposes

6 of paragraph (2), the applicable credit rate with re7 spect to an issue is the rate equal to an average

8 market yield (as of the day before the date of

9 issuance of the issue) on outstanding long-term cor10 porate debt obligations (determined under regula11 tions prescribed by the Secretary).

12 ‘‘(4) SPECIAL RULE FOR ISSUANCE AND RE13 DEMPTION.—In the case of a bond which is issued

14 during the 3-month period ending on a credit allow15 ance date, the amount of the credit determined

16 under this subsection with respect to such credit al17 lowance date shall be a ratable portion of the credit

18 otherwise determined based on the portion of the 3-

19 month period during which the bond is outstanding.

20 A similar rule shall apply when the bond is re21 deemed.

22 ‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.—

23 ‘‘(1) IN GENERAL.—The credit allowed under

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

25 the excess of—
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1 ‘‘(A) the sum of the regular tax liability

2 (as defined in section 26(b)) plus the tax im3 posed by section 55, over

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

5 under this part (other than this subpart and

6 subpart C).

7 ‘‘(2) CARRYOVER OF UNUSED CREDIT.—If the

8 credit allowable under subsection (a) exceeds the

9 limitation imposed by paragraph (1) for such taxable

10 year, such excess shall be carried to the succeeding

11 taxable year and added to the credit allowable under

12 subsection (a) for such taxable year.

13 ‘‘(d) QUALIFIED AMTRAK BOND.—For purposes of

14 this part—

15 ‘‘(1) IN GENERAL.—The term ‘qualified Amtrak

16 bond’ means any bond issued as part of an issue

17 if—

18 ‘‘(A) 95 percent or more of the proceeds of

19 such issue are—

20 ‘‘(i) to be used for any qualified

21 project, or

22 ‘‘(ii) to be pledged to secure payments

23 and other obligations incurred by the Na24 tional Railroad Passenger Corporation in

25 connection with any qualified project,
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1 ‘‘(B) the bond is issued by the National

2 Railroad Passenger Corporation,

3 ‘‘(C) the issuer—

4 ‘‘(i) designates such bond for purposes

5 of this section,

6 ‘‘(ii) certifies that it meets the State

7 contribution requirement of paragraph (2)

8 with respect to such project, and

9 ‘‘(iii) certifies that it has obtained the

10 written approval of the Secretary of Trans11 portation for such project,

12 ‘‘(D) the term of each bond which is part

13 of such issue does not exceed 20 years, and

14 ‘‘(E) the payment of principal with respect

15 to such bond is guaranteed by the National

16 Railroad Passenger Corporation.

17 ‘‘(2) STATE CONTRIBUTION REQUIREMENT.—

18 ‘‘(A) IN GENERAL.—For purposes of para19 graph (1)(C)(ii), the State contribution require20 ment of this paragraph is met with respect to

21 any qualified project if the National Railroad

22 Passenger Corporation has a written binding

23 commitment from 1 or more States to make

24 matching contributions not later than the date
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1 of issuance of the issue of not less than 20 per2 cent of the cost of the qualified project.

3 ‘‘(B) USE OF STATE MATCHING CONTRIBU4 TIONS.—The matching contributions described

5 in subparagraph (A) with respect to each quali6 fied project shall be used—

7 ‘‘(i) in the case of an amount equal to

8 20 percent of the cost of such project, to

9 redeem bonds which are a part of the issue

10 with respect to such project, and

11 ‘‘(ii) in the case of any remaining

12 amount, at the election of the National

13 Railroad Passenger Corporation and the

14 contributing State—

15 ‘‘(I) to fund the qualified project,

16 or

17 ‘‘(II) to redeem such bonds, or

18 ‘‘(III) for the purposes of sub19 clauses (I) and (II).

20 ‘‘(3) QUALIFIED PROJECT.—The term ‘qualified

21 project’ means—

22 ‘‘(A) the acquisition, financing, or refi23 nancing of equipment, rolling stock, and other

24 capital improvements for the northeast rail cor-
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1 ridor between Washington, D.C. and Boston,

2 Massachusetts,

3 ‘‘(B) the acquisition, financing, or refi4 nancing of equipment, rolling stock, and other

5 capital improvements for the improvement of

6 train speeds or safety (or both) on the high7 speed rail corridors designated under section

8 104(d)(2) of title 23, United States Code, and

9 ‘‘(C) with respect to not more than 10 per10 cent of the net proceeds of an issue, the acquisi11 tion, financing, or refinancing of equipment,

12 rolling stock, and other capital improvements

13 for non-designated high-speed rail corridors, in14 cluding station rehabilitation, track or signal

15 improvements, or the elimination of grade

16 crossings.

17 ‘‘(4) TEMPORARY PERIOD EXCEPTION.—A bond

18 shall not be treated as failing to meet the require19 ment of paragraph (1)(A) solely by reason of the

20 fact that the proceeds of the issue of which such

21 bond is a part are invested for a reasonable tem22 porary period (but not more than 36 months) until

23 such proceeds are needed for the purpose for which

24 such issue was issued.
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1 ‘‘(e) LIMITATIONS ON AMOUNT OF BONDS DES2 IGNATED.—

3 ‘‘(1) IN GENERAL.—There is a qualified Am4 trak bond limitation for each fiscal year. Such limi5 tation is—

6 ‘‘(A) $1,000,000,000 for each of the fiscal

7 years 2001 through 2010, and

8 ‘‘(B) zero after 2010.

9 ‘‘(2) CARRYOVER OF UNUSED LIMITATION.—If

10 for any fiscal year—

11 ‘‘(A) the limitation amount under para12 graph (1), exceeds

13 ‘‘(B) the amount of bonds issued during

14 such year which are designated under sub15 section (d)(1)(C)(i),

16 the limitation amount under paragraph (1) for the

17 following fiscal year shall be increased by the

18 amount of such excess.

19 ‘‘(f) OTHER DEFINITIONS.—For purposes of this

20 subpart—

21 ‘‘(1) BOND.—The term ‘bond’ includes any ob22 ligation.

23 ‘‘(2) CREDIT ALLOWANCE DATE.—The term

24 ‘credit allowance date’ means—

25 ‘‘(A) March 15,
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1 ‘‘(B) June 15,

2 ‘‘(C) September 15, and

3 ‘‘(D) December 15.

4 Such term includes the last day on which the bond

5 is outstanding.

6 ‘‘(3) STATE.—The term ‘State’ includes the

7 District of Columbia.

8 ‘‘(g) PARTNERSHIP; S CORPORATION; AND OTHER

9 PASS-THRU ENTITIES.—Under regulations prescribed by

10 the Secretary, in the case of a partnership, trust, S cor11 poration, or other pass-thru entity, rules similar to the

12 rules of section 41(g) shall apply with respect to the credit

13 allowable under subsection (a).

14 ‘‘(h) BONDS HELD BY REGULATED INVESTMENT

15 COMPANIES.—If any qualified Amtrak bond is held by a

16 regulated investment company, the credit determined

17 under subsection (a) shall be allowed to shareholders of

18 such company under procedures prescribed by the Sec19 retary.

20 ‘‘(i) USE OF TRUST ACCOUNT.—

21 ‘‘(1) IN GENERAL.—The amount of any match22 ing contribution with respect to a qualified project

23 described in subsection (d)(2)(B)(i) or

24 (d)(2)(B)(ii)(II) and the temporary period invest25 ment earnings on proceeds of the issue with respect
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1 to such project described in subsection (d)(4), and

2 any earnings thereon, shall be held in a trust ac3 count by a trustee independent of the National Rail4 road Passenger Corporation to be used to redeem

5 bonds which are part of such issue.

6 ‘‘(2) USE OF REMAINING FUNDS IN TRUST AC7 COUNT.—Upon the repayment of the principal of all

8 qualified Amtrak bonds issued under this section,

9 any remaining funds in the trust account described

10 in paragraph (1) shall be available to the trustee de11 scribed in paragraph (1) to meet any remaining obli12 gations under any guaranteed investment contract

13 used to secure earnings sufficient to repay the prin14 cipal of such bonds. Any remaining balance in such

15 trust account shall be paid to the United States to

16 be used to redeem public-debt obligations.

17 ‘‘(j) CREDIT INCLUDED IN GROSS INCOME.—Gross

18 income includes the amount of the credit allowed to the

19 taxpayer under this section (determined without regard to

20 subsection (c)) and the amount so included shall be treat21 ed as interest income.

22 ‘‘(k) CREDITS MAY BE STRIPPED.—Under regula23 tions prescribed by the Secretary—

24 ‘‘(1) IN GENERAL.—There may be a separation

25 (including at issuance) of the ownership of a quali-
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1 fied Amtrak bond and the entitlement to the credit

2 under this section with respect to such bond. In case

3 of any such separation, the credit under this section

4 shall be allowed to the person who on the credit al5 lowance date holds the instrument evidencing the en6 titlement to the credit and not to the holder of the

7 bond.

8 ‘‘(2) CERTAIN RULES TO APPLY.—In the case

9 of a separation described in paragraph (1), the rules

10 of section 1286 shall apply to the qualified Amtrak

11 bond as if it were a stripped bond and to the credit

12 under this section as if it were a stripped coupon.

13 ‘‘(l) TREATMENT FOR ESTIMATED TAX PURPOSES.—

14 Solely for purposes of sections 6654 and 6655, the credit

15 allowed by this section to a taxpayer by reason of holding

16 a qualified Amtrak bond on a credit allowance date shall

17 be treated as if it were a payment of estimated tax made

18 by the taxpayer on such date.

19 ‘‘(m) CREDIT MAY BE TRANSFERRED.—Nothing in

20 any law or rule of law shall be construed to limit the trans21 ferability of the credit allowed by this section through sale

22 and repurchase agreements.

23 ‘‘(n) REPORTING.—Issuers of qualified Amtrak bonds

24 shall submit reports similar to the reports required under

25 section 149(e).’’
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1 (b) REPORTING.—Subsection (d) of section 6049 of

2 the Internal Revenue Code of 1986 (relating to returns

3 regarding payments of interest) is amended by adding at

4 the end the following:

5 ‘‘(8) REPORTING OF CREDIT ON QUALIFIED AM6 TRAK BONDS.—

7 ‘‘(A) IN GENERAL.—For purposes of sub8 section (a), the term ‘interest’ includes amounts

9 includible in gross income under section 54(j)

10 and such amounts shall be treated as paid on

11 the credit allowance date (as defined in section

12 54(f)(2)).

13 ‘‘(B) REPORTING TO CORPORATIONS,

14 ETC.—Except as otherwise provided in regula15 tions, in the case of any interest described in

16 subparagraph (A) of this paragraph, subsection

17 (b)(4) of this section shall be applied without

18 regard to subparagraphs (A), (H), (I), (J), (K),

19 and (L)(i).

20 ‘‘(C) REGULATORY AUTHORITY.—The Sec21 retary may prescribe such regulations as are

22 necessary or appropriate to carry out the pur23 poses of this paragraph, including regulations

24 which require more frequent or more detailed

25 reporting.’’
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1 (c) CLERICAL AMENDMENTS.—

2 (1) The table of subparts for part IV of sub3 chapter A of chapter 1 of the Internal Revenue Code

4 of 1986 is amended by adding at the end the fol5 lowing:

‘‘Subpart H. Nonrefundable Credit for Holders of Qualified Amtrak Bonds.’’

6 (2) Section 6401(b)(1) of such Code is amend7 ed by striking ‘‘and G’’ and inserting ‘‘G, and H’’.

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

9 this section shall apply to obligations issued after Sep10 tember 30, 2000.

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