II

106TH CONGRESS

2D SESSION S. 2321

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

development costs of telecommunications facilities in rural areas.

IN THE SENATE OF THE UNITED STATES

MARCH 29, 2000

Mr. ROCKEFELLER (for himself and Ms. SNOWE) 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

tax credit for development costs of telecommunications

facilities in rural areas.

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 ‘‘Rural Telecommuni5 cations Modernization Act of 2000’’.

6 SEC. 2. CREDIT FOR TELECOMMUNICATIONS FACILITIES

7 DEVELOPMENT IN RURAL AREAS.

8 (a) IN GENERAL.—Section 46(a) of the Internal Rev9 enue Code of 1986 (relating to amount of investment cred10 it) is amended by striking ‘‘and’’ at the end of paragraph
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1 (2), by striking the period at the end of paragraph (3)

2 and inserting ‘‘, and’’, and by adding at the end the fol3 lowing:

4 ‘‘(4) the rural telecommunications facilities

5 credit.’’

6 (b) AMOUNT OF CREDIT.—Subpart E of part IV of

7 subchapter A of chapter 1 of the Internal Revenue Code

8 of 1986 (relating to rules for computing investment credit)

9 is amended by inserting after section 47 the following:

10 ‘‘SEC. 47A. RURAL TELECOMMUNICATIONS FACILITIES

11 CREDIT.

12 ‘‘(a) IN GENERAL.—For purposes of section 46, the

13 rural telecommunications facilities credit for any taxable

14 year is an amount equal to the applicable percentage of

15 the qualified broadband local access facilities expenditures

16 for such taxable year.

17 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of

18 subsection (a), the applicable percentage in the case of

19 qualified broadband local access facilities expenditures in

20 connection with—

21 ‘‘(1) broadband telecommunications facilities, is

22 10 percent, and

23 ‘‘(2) enhanced broadband telecommunications

24 facilities, is 15 percent.
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1 ‘‘(c) QUALIFIED BROADBAND LOCAL ACCESS FACILI2 TIES EXPENDITURE.—For purposes of this section, the

3 term ‘qualified broadband local access facilities expendi4 ture’ means any expenditure—

5 ‘‘(1) chargeable to capital account—

6 ‘‘(A) for property for which depreciation is

7 allowable under section 168, and

8 ‘‘(B) incurred in connection with

9 broadband telecommunications facilities or en10 hanced broadband telecommunications facilities

11 serving rural subscribers, and

12 ‘‘(2) incurred during the period—

13 ‘‘(A) beginning with the taxpayer’s (or any

14 predecessor’s) first taxable year beginning after

15 the date of the enactment of this section, and

16 ‘‘(B) ending with the taxpayer’s (or any

17 predecessor’s) third taxable year beginning

18 after such date.

19 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur20 poses of this section—

21 ‘‘(1) BROADBAND TELECOMMUNICATIONS FA22 CILITIES.—The term ‘broadband telecommunications

23 facilities’ means broadband local access facilities ca24 pable of—

25 ‘‘(A) transmitting voice, and
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1 ‘‘(B) downloading data at a rate of 1.5

2 MBPS and uploading data at a rate of .5

3 MBPS.

4 ‘‘(2) ENHANCED BROADBAND TELECOMMUNI5 CATIONS FACILITIES.—The term ‘enhanced

6 broadband telecommunications facilities’ means the

7 broadband local access facilities capable of—

8 ‘‘(A) transmitting voice, and

9 ‘‘(B) downloading and uploading data at a

10 rate of 10 MBPS.

11 ‘‘(3) DETERMINATION OF BROADBAND LOCAL

12 ACCESS FACILITIES.—Broadband local access

13 facilities—

14 ‘‘(A) begin at the switching point closest to

15 the rural subscriber, which is—

16 ‘‘(i) the subscriber side of the nearest

17 switching facility in the case of local ex18 change carriers,

19 ‘‘(ii) the subscriber side of the

20 headend or the node in the case of cable

21 television operators, and

22 ‘‘(iii) the subscriber side of the trans23 mission and reception facilities in the case

24 of a wireless or satellite carrier,
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1 ‘‘(B) end at the interface between the net2 work and the rural subscriber’s location, and

3 ‘‘(C) do not include any switching facility.

4 ‘‘(4) RURAL SUBSCRIBER.—The term ‘rural

5 subscriber’ means a subscriber who lives in area

6 which—

7 ‘‘(A) is not within 10 miles of any incor8 porated or census designated places containing

9 more than 25,000 people, and

10 ‘‘(B) is not within a county or county

11 equivalent which has an overall population den12 sity of more than 500 people per square mile of

13 land.’’

14 (c) SPECIAL RULE FOR MUTUAL OR COOPERATIVE

15 TELEPHONE COMPANIES.—Section 501(c)(12)(B) of the

16 Internal Revenue Code of 1986 (relating to list of exempt

17 organizations) is amended by striking ‘‘or’’ at the end of

18 clause (iii), by striking the period at the end of clause (iv)

19 and inserting ‘‘, or’’, and by adding at the end the fol20 lowing new clause:

21 ‘‘(v) which is not described in sub22 paragraph (A), in an amount which does

23 not exceed in any year an amount equal to

24 the applicable percentage of the qualified

25 broadband local access facilities expendi-
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1 tures (as determined in section 47A) of the

2 mutual or cooperative telephone company

3 for such year.’’

4 (d) CONFORMING AMENDMENT.—The table of sec5 tions for subpart E of part IV of subchapter A of chapter

6 1 of the Internal Revenue Code of 1986 is amended by

7 inserting after the item relating to section 47 the fol8 lowing:

‘‘Sec. 47A. Rural telecommunications facilities credit.’’

9 (e) EFFECTIVE DATES.—

10 (1) IN GENERAL.—Except as provided in para11 graph (2), the amendments made by this section

12 shall apply to expenditures incurred after the date of

13 the enactment of this Act.

14 (2) SPECIAL RULE.—The amendments made by

15 subsection (c) shall apply to amounts received after

16 the date of the enactment of this Act.

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