II 

110TH CONGRESS 

1ST SESSION S. 1093 

To reward the hard work and risk of individuals who choose to live in 

and help preserve America’s small, rural towns, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

APRIL 12, 2007 

Mr. DORGAN (for himself, Mr. HAGEL, Mr. JOHNSON, Mr. BROWNBACK, Mr. 

DURBIN, Mr. CONRAD, Mr. SALAZAR, Mr. ROCKEFELLER, Mr. COLEMAN, 

Ms. LANDRIEU, Mrs. LINCOLN, Mr. HARKIN, and Mr. PRYOR) introduced 

the following bill; which was read twice and referred to the Committee 

on Finance 

A BILL 

To reward the hard work and risk of individuals who choose 

to live in and help preserve America’s small, rural towns, 

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; ETC. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘New Homestead Act of 2007’’. 

6 (b) AMENDMENT OF 1986 CODE.—Except as other7 wise expressly provided, whenever in this Act an amend8 ment or repeal is expressed in terms of an amendment 


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1 to, or repeal of, a section or other provision, the reference 

2 shall be considered to be made to a section or other provi3 sion of the Internal Revenue Code of 1986. 

4 (c) TABLE OF CONTENTS.—The table of contents for 

5 this Act is as follows: 

Sec. 1. Short title; etc. 

TITLE I—NEW HOMESTEAD OPPORTUNITIES 

Sec. 101. Loans for leadership initiative. 

Sec. 102. Credit for certain rural homebuyers. 

Sec. 103. Capital loss deduction allowed with respect to sale or exchange of 

principal residence in certain rural areas. 

Sec. 104. Individual homestead accounts. 

TITLE II—INCENTIVES FOR MAIN STREET BUSINESSES 

Sec. 201. Rural investment tax credit. 

Sec. 202. Qualified rural small business investment credit. 

Sec. 203. Accelerated depreciation for rural investment property. 

TITLE III—NEW HOMESTEAD VENTURE CAPITAL FUND 

Sec. 301. New homestead venture capital fund. 

6 TITLE I—NEW HOMESTEAD 

7 OPPORTUNITIES 

8 SEC. 101. LOANS FOR LEADERSHIP INITIATIVE. 

9 (a) DEFINITIONS.—In this section: 

10 (1) DEGREE.—The term ‘‘degree’’ means an as11 sociate’s or bachelor’s degree awarded by an institu12 tion of higher education. 

13 (2) INSTITUTION OF HIGHER EDUCATION.—The 

14 term ‘‘institution of higher education’’ has the 

15 meaning given the term in section 101 of the Higher 

16 Education Act of 1965 (20 U.S.C. 1001). 


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1 (3) QUALIFYING COUNTY.—The term ‘‘quali2 fying county’’ means any county which— 

3 (A) is outside a metropolitan statistical 

4 area (defined as such by the Office of Manage5 ment and Budget), and 

6 (B) during the 20-year period ending with 

7 the calendar year preceding the date of enact8 ment of this Act, has a net out-migration of in9 habitants from the county of at least 10 percent 

10 of the population of the county at the beginning 

11 of such period. 

12 (4) SECRETARY.—The term ‘‘Secretary’’ means 

13 the Secretary of Education. 

14 (b) PROGRAM.— 

15 (1) IN GENERAL.—The Secretary shall carry 

16 out a program of assuming the obligation to repay, 

17 pursuant to subsection (c), a loan made, insured, or 

18 guaranteed under part B, D, or E of title IV of the 

19 Higher Education Act of 1965 (20 U.S.C. 1071 et 

20 seq., 20 U.S.C. 1087a et seq., and 20 U.S.C. 

21 1087aa et seq.), excluding loans made under section 

22 428B of such Act or comparable loans made under 

23 part D of such Act, for any borrower who— 

24 (A) completes a degree; 

25 (B) resides in a qualifying county; and 


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1 (C) is employed in a qualifying county. 

2 (2) REGULATIONS.—The Secretary is author3 ized to prescribe such regulations as may be nec4 essary to carry out the provisions of this section. 

5 (c) LOAN REPAYMENT.— 

6 (1) IN GENERAL.—The Secretary shall assume 

7 the obligation to repay, after each of the first 5 

8 years of the residency and employment described in 

9 subparagraphs (B) and (C) of subsection (b)(1) that 

10 occur after the date of enactment of this section, 10 

11 percent of the total amount of all loans made to a 

12 student under the provisions of the Higher Edu13 cation Act of 1965 as described in subsection (b)(1), 

14 up to a maximum amount of $2,000 each year. 

15 (2) CONSTRUCTION.—Nothing in this section 

16 shall be construed to authorize the refunding of any 

17 repayment of a loan made under part B, D, or E 

18 of title IV of the Higher Education Act of 1965. 

19 (3) INTEREST.—If a portion of a loan is repaid 

20 by the Secretary under this section for any year, the 

21 proportionate amount of interest on such loan which 

22 accrues for such year shall be repaid by the Sec23 retary so long as the total amount repaid by the 

24 Secretary in any 1 year does not exceed $2,000. 


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1 (d) REPAYMENT TO ELIGIBLE LENDERS.—The Sec2 retary shall pay to each eligible lender or holder for each 

3 fiscal year an amount equal to the aggregate amount of 

4 loans which are subject to repayment pursuant to this sec5 tion for such year. 

6 (e) APPLICATION FOR REPAYMENT.— 

7 (1) IN GENERAL.—An eligible borrower desiring 

8 loan repayment under this section shall submit a 

9 complete and accurate application to the Secretary 

10 at such time, in such manner, and containing such 

11 information as the Secretary may require. 

12 (2) CONDITIONS.—An eligible borrower may 

13 apply for loan repayment under this section after 

14 completing each year of qualifying residency and em15 ployment. The eligible borrower shall receive forbear16 ance while engaged in qualifying residency and em17 ployment unless the borrower is in deferment while 

18 so engaged. 

19 (f) DEFINITION OF ELIGIBLE BORROWER.—In this 

20 section the term ‘‘eligible borrower’’ means any borrower 

21 who is not in default on any of the borrower’s student 

22 loans under part B, D, or E of title IV of the Higher 

23 Education Act of 1965. 

24 (g) AUTHORIZATION OF APPROPRIATIONS.— 


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1 (1) LOAN REPAYMENT.—There are authorized 

2 to be appropriated to carry out this section such 

3 sums as may be necessary. 

4 (2) PERKINS LOAN FUNDS.—There are author5 ized to be appropriated such sums as may be nec6 essary for Federal capital contributions to student 

7 loan funds established under part E of title IV of 

8 the Higher Education Act of 1965. 

9 (h) REPAYMENT EXCLUDED FROM GROSS IN10 COME.—Section 108(f)(1) (relating to student loans) is 

11 amended by inserting ‘‘or pursuant to section 101 of the 

12 New Homestead Act of 2007’’ after ‘‘employers’’. 

13 SEC. 102. CREDIT FOR CERTAIN RURAL HOMEBUYERS. 

14 (a) IN GENERAL.—Subpart A of part IV of sub15 chapter A of chapter 1 (relating to nonrefundable personal 

16 credits) is amended by inserting before section 26 the fol17 lowing new section: 

18 ‘‘SEC. 25E. PURCHASE OF RESIDENCES BY CERTAIN RURAL 

19 HOMEBUYERS. 

20 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in21 dividual who purchases a qualified residence in a quali22 fying county during any taxable year, there shall be al23 lowed as a credit against the tax imposed by this chapter 

24 for the taxable year an amount equal to the lesser of— 


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1 ‘‘(1) 10 percent of the purchase price of the 

2 residence, or 

3 ‘‘(2) $5,000. 

4 ‘‘(b) LIMITATIONS.— 

5 ‘‘(1) LIMITATION BASED ON AMOUNT OF

6 TAX.—The credit allowed under subsection (a) for 

7 any taxable year shall not exceed the excess of— 

8 ‘‘(A) the sum of the regular tax liability 

9 (as defined in section 26(b)) plus the tax im10 posed by section 55, over 

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

12 under this subpart (other than this section and 

13 section 23) and section 27 for the taxable year. 

14 ‘‘(2) MARRIED INDIVIDUALS FILING JOINTLY.— 

15 In the case of a husband and wife who file a joint 

16 return, the credit under this section is allowable only 

17 if the residence is a qualified residence with respect 

18 to both the husband and wife, and the amount speci19 fied under subsection (a)(2) shall apply to the joint 

20 return. 

21 ‘‘(3) MARRIED INDIVIDUALS FILING SEPA22 RATELY.—In the case of a married individual filing 

23 a separate return, subsection (a)(2) shall be applied 

24 by substituting ‘$2,500’ for ‘$5,000’. 


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1 ‘‘(4) OTHER TAXPAYERS.—If 2 or more individ2 uals who are not married purchase a qualified resi3 dence, the amount of the credit allowed under sub4 section (a) shall be allocated among such individuals 

5 in such manner as the Secretary may prescribe, ex6 cept that the total amount of the credits allowed to 

7 all such individuals shall not exceed $5,000. 

8 ‘‘(c) DEFINITIONS.—For purposes of this section— 

9 ‘‘(1) QUALIFIED RESIDENCE.—The term ‘quali10 fied residence’ has the same meaning as when used 

11 in section 163(h). 

12 ‘‘(2) QUALIFYING COUNTY.—The term ‘quali13 fying county’ means any county which— 

14 ‘‘(A) is outside a metropolitan statistical 

15 area (defined as such by the Office of Manage16 ment and Budget), and 

17 ‘‘(B) during the 20-year period ending 

18 with the calendar year preceding the date of the 

19 enactment of this section, has a net out-migra20 tion of inhabitants from the county of at least 

21 10 percent of the population of the county at 

22 the beginning of such period. 

23 ‘‘(3) PURCHASE AND PURCHASE PRICE.—The 

24 terms ‘purchase’ and ‘purchase price’ have the 

25 meanings provided by section 1400C(e). 


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1 ‘‘(d) CARRYFORWARD OF UNUSED CREDIT.—If the 

2 credit allowable under subsection (a) for any taxable year 

3 exceeds the limitation imposed by subsection (b)(1) for 

4 such taxable year reduced by the sum of the credits allow5 able under this subpart (other than this section and sec6 tion 23), such excess shall be carried to the succeeding 

7 taxable year and added to the credit allowable under sub8 section (a) for such taxable year. 

9 ‘‘(e) REPORTING.—If the Secretary requires informa10 tion reporting under section 6045 by a person described 

11 in subsection (e)(2) thereof to verify the eligibility of tax12 payers for the credit allowable by this section, the excep13 tion provided by section 6045(e)(5) shall not apply. 

14 ‘‘(f) RECAPTURE OF CREDIT IN CASE OF CERTAIN

15 SALES.— 

16 ‘‘(1) IN GENERAL.—Except as provided in para17 graph (5), if the taxpayer disposes of a qualified res18 idence with respect to the purchase of which a credit 

19 was allowed under subsection (a) at any time within 

20 5 years after the date the taxpayer acquired the 

21 property, then the tax imposed under this chapter 

22 for the taxable year in which the disposition occurs 

23 is increased by the credit recapture amount. 


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1 ‘‘(2) CREDIT RECAPTURE AMOUNT.—For pur2 poses of paragraph (1), the credit recapture amount 

3 is an amount equal to the sum of— 

4 ‘‘(A) the applicable recapture percentage of 

5 the amount of the credit allowed to the tax6 payer under this section, plus 

7 ‘‘(B) interest at the overpayment rate es8 tablished under section 6621 on the amount de9 termined under subparagraph (A) for each 

10 prior taxable year for the period beginning on 

11 the due date for filing the return for the prior 

12 taxable year involved. 

13 No deduction shall be allowed under this chapter for 

14 interest described in subparagraph (B). 

15 ‘‘(3) APPLICABLE RECAPTURE PERCENTAGE.— 

16 ‘‘(A) IN GENERAL.—For purposes of this 

17 subsection, the applicable recapture percentage 

18 shall be determined from the following table: 

The applicable 

recapture 

‘‘If the sale occurs in: percentage is: 

Year 1 ...................................................................................... 100

Year 2 ...................................................................................... 80

Year 3 ...................................................................................... 60

Year 4 ...................................................................................... 40

Year 5 ...................................................................................... 20

Years 6 and thereafter ............................................................. 0. 

19 ‘‘(B) YEARS.—For purposes of subpara20 graph (A), year 1 shall begin on the first day 

21 of the taxable year in which the purchase of the 


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1 qualified residence described in subsection (a) 

2 occurs. 

3 ‘‘(4) NO CREDITS AGAINST TAX.—Any increase 

4 in tax under this subsection shall not be treated as 

5 a tax imposed by this chapter for purposes of deter6 mining the amount of any credit under this chapter 

7 or for purposes of section 55. 

8 ‘‘(5) DEATH OF OWNER; CASUALTY LOSS; IN9 VOLUNTARY CONVERSION; ETC.—The provisions of 

10 paragraph (1) do not apply to— 

11 ‘‘(A) a disposition of a qualified residence 

12 made on account of the death of any individual 

13 having a legal or equitable interest therein oc14 curring during the 5-year period to which ref15 erence is made under paragraph (1), 

16 ‘‘(B) a disposition of the old qualified resi17 dence if it is substantially or completely de18 stroyed by a casualty described in section 

19 165(c)(3) or compulsorily or involuntarily con20 verted (within the meaning of section 1033(a)), 

21 or 

22 ‘‘(C) a disposition pursuant to a settlement 

23 in a divorce or legal separation proceeding 

24 where the qualified residence is sold or the 

25 other spouse retains such residence. 


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1 ‘‘(g) BASIS ADJUSTMENT.—For purposes of this sub2 title, if a credit is allowed under this section with respect 

3 to the purchase of any residence, the basis of such resi4 dence shall be reduced by the amount of the credit so al5 lowed.’’. 

6 (b) CONFORMING AMENDMENTS.— 

7 (1) Subsection (a) of section 1016 (relating to 

8 general rule for adjustments to basis) is amended by 

9 striking ‘‘and’’ at the end of paragraph (36), by 

10 striking the period at the end of paragraph (37) and 

11 inserting ‘‘, and’’, and by adding at the end the fol12 lowing new paragraph: 

13 ‘‘(38) in the case of a residence with respect to 

14 which a credit was allowed under section 25E, to the 

15 extent provided in section 25E(g).’’. 

16 (2) Section 23(c)(1) is amended by inserting ‘‘, 

17 25E,’’ after ‘‘25D’’. 

18 (3) Section 25(e)(1)(C) is amended by inserting 

19 ‘‘25E,’’ after ‘‘25D,’’ both places it appears. 

20 (4) Section 1400C(d)(1) is amended by striking 

21 ‘‘and section 25D’’ and inserting ‘‘and sections 25D 

22 and 25E’’. 

23 (5) Section 1400C(d)(2) is amended by striking 

24 ‘‘and 25D’’ and inserting ‘‘25D, and 25E’’. 


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1 (6) The table of sections for subpart A of part 

2 IV of subchapter A of chapter 1 is amended by in3 serting before the item relating to section 26 the fol4 lowing new item: 

‘‘Sec. 25E. Purchase of residences by certain rural homebuyers.’’. 

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

6 this section shall apply to purchases after the date of the 

7 enactment of this Act, in taxable years ending after such 

8 date. 

9 SEC. 103. CAPITAL LOSS DEDUCTION ALLOWED WITH RE10 SPECT TO SALE OR EXCHANGE OF PRINCIPAL 

11 RESIDENCE IN CERTAIN RURAL AREAS. 

12 (a) IN GENERAL.—Subsection (c) of section 165 (re13 lating to limitation on losses of individuals) is amended— 

14 (1) by striking ‘‘and’’ at the end of paragraph 

15 (2), 

16 (2) by striking the period at the end of para17 graph (3) and inserting ‘‘; and’’, and 

18 (3) by adding at the end the following new 

19 paragraph: 

20 ‘‘(4) losses arising from the sale or exchange of 

21 the principal residence (within the meaning of sec22 tion 121) of the taxpayer located in a qualifying 

23 county (as defined in section 223(b)(2)), but only if 

24 the principal residence was acquired by the taxpayer 

25 after the date of enactment of this paragraph.’’. 


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1 (b) CONFORMING AMENDMENT.—Section 67(b)(3) is 

2 amended by striking ‘‘paragraph (2) or (3)’’ and inserting 

3 ‘‘paragraph (2), (3), or (4)’’. 

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

5 this section shall apply to sales and exchanges after the 

6 date of the enactment of this Act, in taxable years ending 

7 after such date. 

8 SEC. 104. INDIVIDUAL HOMESTEAD ACCOUNTS. 

9 (a) IN GENERAL.—Subchapter F of chapter 1 (relat10 ing to exempt organizations) is amended by adding at the 

11 end the following new part: 

12 ‘‘PART IX—INDIVIDUAL HOMESTEAD ACCOUNTS 

‘‘Sec. 530A. Individual homestead accounts. 

13 ‘‘SEC. 530A. INDIVIDUAL HOMESTEAD ACCOUNTS. 

14 ‘‘(a) GENERAL RULE.—An individual homestead ac15 count shall be exempt from taxation under this subtitle. 

16 Notwithstanding the preceding sentence, any individual 

17 homestead account shall be subject to the taxes imposed 

18 by section 511 (relating to imposition of tax on unrelated 

19 business income of charitable, etc., organizations). 

20 ‘‘(b) INDIVIDUAL HOMESTEAD ACCOUNT.—For pur21 poses of this title, the term ‘individual homestead account’ 

22 means a trust created or organized in the United States 

23 for the exclusive benefit of a qualified individual or his 


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1 beneficiaries, but only if the written governing instrument 

2 creating the trust meets the following requirements: 

3 ‘‘(1) Except in the case of a qualified rollover 

4 (as defined in subsection (f)(7))— 

5 ‘‘(A) no contribution will be accepted un6 less it is in cash, 

7 ‘‘(B) contributions will not be accepted for 

8 the taxable year in excess of $2,500 (deter9 mined without regard to any contribution made 

10 under subsection (d)), and 

11 ‘‘(C) contributions will not be accepted for 

12 any taxable year following the fifth taxable year 

13 in which the qualified individual has contributed 

14 to any individual homestead account. 

15 ‘‘(2) The requirements of paragraphs (2) 

16 through (6) of section 408(a) are met. 

17 ‘‘(c) QUALIFIED INDIVIDUAL; QUALIFYING COUN18 TY.—For purposes of this section— 

19 ‘‘(1) QUALIFIED INDIVIDUAL.—The term ‘quali20 fied individual’ means, for any taxable year, an indi21 vidual who is a bona fide resident of a qualifying 

22 county. 

23 ‘‘(2) QUALIFYING COUNTY.—The term ‘quali24 fying county’ means any county which— 


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1 ‘‘(A) is outside a metropolitan statistical 

2 area (defined as such by the Office of Manage3 ment and Budget), and 

4 ‘‘(B) during the 20-year period ending 

5 with the calendar year preceding the date of the 

6 enactment of this section, has a net out-migra7 tion of inhabitants from the county of at least 

8 10 percent of the population of the county at 

9 the beginning of such period. 

10 ‘‘(d) MATCHING CONTRIBUTIONS TO INDIVIDUAL

11 HOMESTEAD ACCOUNTS.— 

12 ‘‘(1) IN GENERAL.—Not less than once each 

13 taxable year, the Secretary shall deposit (to the ex14 tent provided in appropriation Acts) into an indi15 vidual Homestead account of each qualified indi16 vidual an amount equal to the applicable percentage 

17 of the sum of the amounts deposited into all of the 

18 individual homestead accounts of such individual 

19 during such taxable year (determined without regard 

20 to any amount contributed under this subsection). 

21 ‘‘(2) APPLICABLE PERCENTAGE.—For purposes 

22 of this subsection, the applicable percentage with re23 spect to any qualified individual for any taxable year 

24 shall be determined in accordance with the following 

25 tables: 


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1 ‘‘(A) In the case of a married individual 

2 (as defined in section 7703) filing a joint re3 turn: 

‘‘If modified adjusted gross 

income is: The applicable percentage is: 

$30,000 or less ................................................................................... 50

Over $30,000 but not over $60,000 .................................................. 25

Over $60,000 but not over $100,000 ................................................ 12.5

Over $100,000 ................................................................................... zero. 

4 ‘‘(B) In the case of a head of household 

5 (as defined in section 2(b)): 

‘‘If modified adjusted gross 

income is: The applicable percentage is: 

$22,500 or less ................................................................................... 50

Over $22,500 but not over $45,000 .................................................. 25

Over $45,000 but not over $75,000 .................................................. 12.5

Over $75,000 ..................................................................................... zero. 

6 ‘‘(C) In the case of any other individual: 

‘‘If modified adjusted gross 

income is: The applicable percentage is: 

$15,000 or less ................................................................................... 50

Over $15,000 but not over $30,000 .................................................. 25

Over $30,000 but not over $50,000 .................................................. 12.5

Over $50,000 ..................................................................................... zero. 

7 For purposes of this paragraph, the term ‘modified 

8 adjusted gross income’ has the meaning given such 

9 term by section 86(b)(2). 

10 ‘‘(3) EXCLUSION FROM INCOME.—Except as 

11 otherwise provided in this section, gross income shall 

12 not include any amount deposited into an individual 

13 homestead account under paragraph (1). 

14 ‘‘(4) FORFEITURE OF MATCHING CONTRIBU15 TIONS IN THE CASE OF CERTAIN DISTRIBUTIONS.— 

16 In the event of a distribution from an individual 


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1 homestead account before the date described in sub2 section (f)(1)(A) (other than a distribution described 

3 in subsection (e)(2)(A)), the account holder shall 

4 forfeit the corresponding matching contributions and 

5 interest earned on the matching contributions, un6 less such distribution is recontributed to such ac7 count within 6 months of such distribution. 

8 ‘‘(e) TAX TREATMENT OF DISTRIBUTIONS.— 

9 ‘‘(1) INCLUSION OF AMOUNTS IN GROSS IN10 COME.—Except as otherwise provided in this sub11 section, any amount paid or distributed out of an in12 dividual homestead account shall be includible in the 

13 gross income of the payee or distributee, as the case 

14 may be, in the manner as provided in section 72. 

15 For purposes of the preceding sentence, distributions 

16 which are includible in gross income shall be treated 

17 as first attributable to amounts contributed under 

18 subsection (d) to the extent thereof. 

19 ‘‘(2) EXCLUSION OF CATASTROPHIC MEDICAL

20 EXPENSE DISTRIBUTIONS IN FIRST FIVE YEARS AND

21 QUALIFIED INDIVIDUAL HOMESTEAD DISTRIBUTIONS

22 THEREAFTER.—Paragraph (1) shall not apply to— 

23 ‘‘(A) any distribution described in section 

24 72(t)92)(B) before the date described in sub25 section (f)(1)(A), but only to the extent such 


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1 distribution does not exceed the balance in the 

2 account as of the date of such distribution, re3 duced by any matching contribution under sub4 section (d), and 

5 ‘‘(B) any qualified individual homestead 

6 distribution. 

7 ‘‘(f) QUALIFIED INDIVIDUAL HOMESTEAD DISTRIBU8 TION.—For purposes of this section— 

9 ‘‘(1) IN GENERAL.—The term ‘qualified indi10 vidual homestead distribution’ means any amount 

11 paid or distributed out of an individual homestead 

12 account which would otherwise be includible in gross 

13 income, to the extent that such payment or distribu14 tion— 

15 ‘‘(A) is paid or distributed after the 5-tax16 able year period beginning with the first taxable 

17 year in which the qualified individual made a 

18 contribution to the individual homestead ac19 count (including any predecessor account), and 

20 ‘‘(B) is used exclusively to pay qualified in21 dividual homestead expenses for the qualified 

22 individual or the spouse or dependent (as de23 fined in section 152) of such individual. 


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1 ‘‘(2) QUALIFIED INDIVIDUAL HOMESTEAD EX2 PENSES.—The term ‘qualified individual homestead 

3 expenses’ means any of the following: 

4 ‘‘(A) Qualified higher education expenses. 

5 ‘‘(B) Qualified first-time homebuyer costs. 

6 ‘‘(C) Qualified business capitalization 

7 costs. 

8 ‘‘(D) Qualified medical expenses. 

9 ‘‘(E) Qualified rollovers. 

10 ‘‘(3) QUALIFIED HIGHER EDUCATION EX11 PENSES.— 

12 ‘‘(A) IN GENERAL.—The term ‘qualified 

13 higher education expenses’ has the meaning 

14 given such term by section 72(t)(7), determined 

15 by treating postsecondary vocational edu16 cational schools as eligible educational institu17 tions. 

18 ‘‘(B) POSTSECONDARY VOCATIONAL EDU19 CATION SCHOOL.—The term ‘postsecondary vo20 cational educational school’ means an area vo21 cational education school (as defined in sub22 paragraph (C) or (D) of section 521(4) of the 

23 Carl D. Perkins Vocational and Applied Tech24 nology Education Act (20 U.S.C. 2471(4))) 

25 which is in any State (as defined in section 


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1 521(33) of such Act), as such sections are in 

2 effect on the date of the enactment of this sec3 tion. 

4 ‘‘(C) COORDINATION WITH OTHER BENE5 FITS.—The amount of qualified higher edu6 cation expenses for any taxable year shall be re7 duced as provided in section 25A(g)(2). 

8 ‘‘(4) QUALIFIED FIRST-TIME HOMEBUYER

9 COSTS.—The term ‘qualified first-time homebuyer 

10 costs’ means qualified acquisition costs (as defined 

11 in section 72(t)(8) without regard to subparagraph 

12 (B) thereof) with respect to a principal residence 

13 (within the meaning of section 121) located in a 

14 qualifying county for a qualified first-time home15 buyer (as defined in section 72(t)(8)). 

16 ‘‘(5) QUALIFIED BUSINESS CAPITALIZATION

17 COSTS.— 

18 ‘‘(A) IN GENERAL.—The term ‘qualified 

19 business capitalization costs’ means qualified 

20 expenditures for the capitalization of a qualified 

21 business pursuant to a qualified plan. 

22 ‘‘(B) QUALIFIED EXPENDITURES.—The 

23 term ‘qualified expenditures’ means expendi24 tures included in a qualified plan, including 


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1 capital, plant, equipment, working capital, and 

2 inventory expenses. 

3 ‘‘(C) QUALIFIED BUSINESS.—The term 

4 ‘qualified business’ means any trade or business 

5 located in a qualifying county other than any 

6 trade or business— 

7 ‘‘(i) which consists of the operation of 

8 any facility described in section 

9 144(c)(6)(B), or 

10 ‘‘(ii) which contravenes any law. 

11 Rules similar to the rules under subsection (b) 

12 or (c) of section 1397C shall apply to any quali13 fied business under this section. 

14 ‘‘(D) QUALIFIED PLAN.—The term ‘quali15 fied plan’ means a business plan which meets 

16 such requirements as the Secretary may specify. 

17 ‘‘(6) QUALIFIED MEDICAL EXPENSES.—The 

18 term ‘qualified medical expenses’ means any amount 

19 paid during the taxable year, not compensated for by 

20 insurance or otherwise, for medical care (as defined 

21 in section 213(d)) of the taxpayer, his spouse, or his 

22 dependent (as defined in section 152). 

23 ‘‘(7) QUALIFIED ROLLOVERS.—The term ‘quali24 fied rollover’ means any amount paid from an indiVerDate Aug 31 2005 23:51 Apr 19, 2007 Jkt 030505 PO 00000 Frm 00022 Fmt 6652 Sfmt 6201 E:\BILLS\S1093.IS S1093

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1 vidual homestead account of a taxpayer into another 

2 such account established for the benefit of— 

3 ‘‘(A) such taxpayer, or 

4 ‘‘(B) any qualified individual who is— 

5 ‘‘(i) the spouse of such taxpayer, or 

6 ‘‘(ii) any dependent (as defined in sec7 tion 152) of the taxpayer. 

8 Rules similar to the rules of section 408(d)(3) shall 

9 apply for purposes of this paragraph. 

10 ‘‘(g) TAX TREATMENT OF ACCOUNTS.— 

11 ‘‘(1) LOSS OF EXEMPTION IN CASE OF PROHIB12 ITED TRANSACTIONS.—For purposes of this section, 

13 rules similar to the rules of section 408(e) shall 

14 apply. 

15 ‘‘(2) OTHER RULES TO APPLY.—Rules similar 

16 to the rules of paragraphs (4), (5), and (6) of sec17 tion 408(d) shall apply for purposes of this section. 

18 ‘‘(h) OTHER DEFINITIONS AND SPECIAL RULES.— 

19 For purposes of this section— 

20 ‘‘(1) ALL ACCOUNTS TREATED AS ONE AC21 COUNT.—All individual homestead accounts of a 

22 qualified individual shall be treated as 1 account. 

23 ‘‘(2) TIME WHEN CONTRIBUTIONS DEEMED

24 MADE.—A taxpayer shall be deemed to have made a 

25 contribution to an individual homestead account on 


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•S 1093 IS

1 the last day of the preceding taxable year if the con2 tribution is made on account of such taxable year 

3 and is made not later than the time prescribed by 

4 law for filing the return for such taxable year (not 

5 including extensions thereof). 

6 ‘‘(3) CUSTODIAL ACCOUNTS.—Rules similar to 

7 the rules of section 408(h) shall apply. 

8 ‘‘(4) REPORTS.—The trustee of an individual 

9 homestead account shall make such reports regard10 ing such account to the Secretary and to the indi11 vidual for whom the account is maintained with re12 spect to contributions (and the years to which they 

13 relate), distributions, and such other matters as the 

14 Secretary may require under regulations. The re15 ports required by this paragraph— 

16 ‘‘(A) shall be filed at such time and in 

17 such manner as the Secretary prescribes in 

18 such regulations, and 

19 ‘‘(B) shall be furnished to individuals— 

20 ‘‘(i) not later than January 31 of the 

21 calendar year following the calendar year 

22 to which such reports relate, and 

23 ‘‘(ii) in such manner as the Secretary 

24 prescribes in such regulations. 


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•S 1093 IS

1 ‘‘(5) INVESTMENT IN COLLECTIBLES TREATED

2 AS DISTRIBUTIONS.—Rules similar to the rules of 

3 section 408(m) shall apply. 

4 ‘‘(i) DESIGNATION OF EARNED INCOME TAX CREDIT

5 PAYMENTS FOR DEPOSIT TO INDIVIDUAL HOMESTEAD

6 ACCOUNT.— 

7 ‘‘(1) IN GENERAL.—With respect to the return 

8 of any qualified individual for the taxable year of the 

9 tax imposed by this chapter, such individual may 

10 designate that a specified portion (not less than $1) 

11 of any overpayment of tax for such taxable year 

12 which is attributable to the earned income tax credit 

13 shall be deposited by the Secretary into an individual 

14 homestead account of such individual. The Secretary 

15 shall so deposit such portion designated under this 

16 subsection. 

17 ‘‘(2) MANNER AND TIME OF DESIGNATION.—A 

18 designation under paragraph (1) may be made with 

19 respect to any taxable year— 

20 ‘‘(A) at the time of filing the return of the 

21 tax imposed by this chapter for such taxable 

22 year, or 

23 ‘‘(B) at any other time (after the time of 

24 filing the return of the tax imposed by this 


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•S 1093 IS

1 chapter for such taxable year) specified in regu2 lations prescribed by the Secretary. 

3 Such designation shall be made in such manner as 

4 the Secretary prescribes by regulations. 

5 ‘‘(3) PORTION ATTRIBUTABLE TO EARNED IN6 COME TAX CREDIT.—For purposes of this sub7 section, an overpayment for any taxable year shall 

8 be treated as attributable to the earned income tax 

9 credit to the extent that such overpayment does not 

10 exceed the credit allowed to the taxpayer under sec11 tion 32 for such taxable year. 

12 ‘‘(4) OVERPAYMENTS TREATED AS RE13 FUNDED.—For purposes of this title, any portion of 

14 an overpayment of tax designated under paragraph 

15 (1) shall be treated as being refunded to the tax16 payer as of the last date prescribed for filing the re17 turn of tax imposed by this chapter (determined 

18 without regard to extensions) or, if later, the date 

19 the return is filed. 

20 ‘‘(j) PENALTY FOR DISTRIBUTIONS NOT USED FOR

21 QUALIFIED INDIVIDUAL HOMESTEAD EXPENSES.— 

22 ‘‘(1) IN GENERAL.—If any amount is distrib23 uted from an individual homestead account and is 

24 not used exclusively to pay qualified individual 

25 homestead expenses for the holder of the account or 


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•S 1093 IS

1 the spouse or dependent (as defined in section 152) 

2 of such holder, the tax imposed by this chapter for 

3 the taxable year of such distribution shall be in4 creased by 10 percent of such amount which is in5 cludible in gross income. For purposes of the pre6 ceding sentence, distributions which are includible in 

7 gross income shall be treated as first attributable to 

8 amounts contributed under subsection (d) to the ex9 tent thereof. 

10 ‘‘(2) EXCEPTION FOR CERTAIN DISTRIBU11 TIONS.—Paragraph (1) shall not apply to distribu12 tions which are— 

13 ‘‘(A) made on or after the date on which 

the account holder attains age 591 14 ⁄2, 

15 ‘‘(B) made to a beneficiary (or the estate 

16 of the account holder) on or after the death of 

17 the account holder, 

18 ‘‘(C) attributable to the account holder’s 

19 being disabled within the meaning of section 

20 72(m)(7), or 

21 ‘‘(D) described in subsection (e)(2)(A). 

22 ‘‘(k) APPLICATION OF SECTION.—This section shall 

23 apply to amounts paid to an individual homestead account 

24 for any taxable year beginning after the date of the enact25 ment of the New Homestead Act of 2007.’’. 


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•S 1093 IS

1 (b) TAX ON EXCESS CONTRIBUTIONS.— 

2 (1) TAX IMPOSED.—Subsection (a) of section 

3 4973 is amended by striking ‘‘or’’ at the end of 

4 paragraph (4), by redesignating paragraph (5) as 

5 paragraph (6), and by inserting after paragraph (4) 

6 the following new paragraph: 

7 ‘‘(5) an individual homestead account (within 

8 the meaning of section 530A(b)), or’’. 

9 (2) EXCESS CONTRIBUTIONS.—Section 4973 is 

10 amended by adding at the end the following sub11 section: 

12 ‘‘(h) INDIVIDUAL HOMESTEAD ACCOUNTS.—For pur13 poses of this section, in the case of individual homestead 

14 accounts, the term ‘excess contributions’ means the sum 

15 of— 

16 ‘‘(1) the excess (if any) of— 

17 ‘‘(A) the amount contributed for the tax18 able year to the accounts (other than a quali19 fied rollover, as defined in section 530A(f)(7), 

20 or a contribution under section 530A(d)), over 

21 ‘‘(B) the amount allowable under section 

22 530A for such contributions, and 

23 ‘‘(2) the amount determined under this sub24 section for the preceding taxable year reduced by the 

25 sum of— 


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•S 1093 IS

1 ‘‘(A) the distributions out of the accounts 

2 for the taxable year which were included in the 

3 gross income of the payee under section 

4 530A(e)(1), 

5 ‘‘(B) the distributions out of the accounts 

6 for the taxable year to which rules similar to 

7 the rules of section 408(d)(5) apply by reason 

8 of section 530A(g)(2), and 

9 ‘‘(C) the excess (if any) of the maximum 

10 amount allowable as a contribution under sec11 tion 530A for the taxable year over the amount 

12 contributed to the account for the taxable year 

13 (other than a contribution under section 

14 530A(d)). 

15 For purposes of this subsection, any contribution which 

16 is distributed from the individual homestead account in 

17 a distribution to which rules similar to the rules of section 

18 408(d)(4) apply by reason of section 530A(g)(2) shall be 

19 treated as an amount not contributed.’’. 

20 (c) TAX ON PROHIBITED TRANSACTIONS.—Section 

21 4975 is amended— 

22 (1) by adding at the end of subsection (c) the 

23 following paragraph: 

24 ‘‘(7) SPECIAL RULE FOR INDIVIDUAL HOME25 STEAD ACCOUNTS.—An individual for whose benefit 


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•S 1093 IS

1 an individual homestead account is established and 

2 any contributor to such account shall be exempt 

3 from the tax imposed by this section with respect to 

4 any transaction concerning such account (which 

5 would otherwise be taxable under this section) if, 

6 with respect to such transaction, the account ceases 

7 to be an individual homestead account by reason of 

8 the application of section 530A(g)(1) to such ac9 count.’’, and 

10 (2) in subsection (e)(1), by striking ‘‘or’’ at the 

11 end of subparagraph (F), by redesignating subpara12 graph (G) as subparagraph (H), and by inserting 

13 after subparagraph (F) the following new subpara14 graph: 

15 ‘‘(G) an individual homestead account de16 scribed in section 530A(b), or’’. 

17 (d) INFORMATION RELATING TO CERTAIN TRUSTS

18 AND ANNUITY PLANS.—Subsection (c) of section 6047 is 

19 amended— 

20 (1) by inserting ‘‘or section 530A’’ after ‘‘sec21 tion 219’’, and 

22 (2) by inserting ‘‘, of any individual homestead 

23 account described in section 530A(b),’’, after ‘‘sec24 tion 408(a)’’. 


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•S 1093 IS

1 (e) INSPECTION OF APPLICATIONS FOR TAX EXEMP2 TION.—Clause (i) of section 6104(a)(1)(B) is amended by 

3 inserting ‘‘an individual homestead account described in 

4 section 530A(b),’’ after ‘‘section 408(a),’’. 

5 (f) FAILURE TO PROVIDE REPORTS ON INDIVIDUAL

6 HOMESTEAD ACCOUNTS.—Paragraph (2) of section 

7 6693(a) is amended by striking ‘‘and’’ at the end of sub8 paragraph (D), by striking the period and inserting ‘‘, 

9 and’’ at the end of subparagraph (E), and by inserting 

10 after subparagraph (E) the following new subparagraph: 

11 ‘‘(F) section 530A(h)(4) (relating to indi12 vidual homestead accounts).’’. 

13 (g) CLERICAL AMENDMENT.—The table of parts for 

14 subchapter F of chapter 1 is amended by adding at the 

15 end the following new item: 

‘‘PART IX. INDIVIDUAL HOMESTEAD ACCOUNTS’’. 

16 TITLE II—INCENTIVES FOR MAIN 

17 STREET BUSINESSES 

18 SEC. 201. RURAL INVESTMENT TAX CREDIT. 

19 (a) IN GENERAL.—Subpart D of part IV of sub20 chapter A of chapter 1 (relating to business related cred21 its) is amended by adding at the end the following new 

22 section: 

23 ‘‘SEC. 42A. RURAL INVESTMENT CREDIT. 

24 ‘‘(a) IN GENERAL.—For purposes of section 38, the 

25 amount of the rural investment credit determined under 


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•S 1093 IS

1 this section for any taxable year in the credit period shall 

2 be an amount equal to the applicable percentage of the 

3 eligible basis of each qualified rural investment building. 

4 ‘‘(b) APPLICABLE PERCENTAGE: 70 PERCENT

5 PRESENT VALUE CREDIT FOR NEW BUILDINGS; 30 PER6 CENT PRESENT VALUE CREDIT FOR EXISTING BUILD7 INGS.—For purposes of this section— 

8 ‘‘(1) IN GENERAL.—The term ‘applicable per9 centage’ means the appropriate percentage pre10 scribed by the Secretary for the earlier of— 

11 ‘‘(A) the first month of the credit period 

12 with respect to a rural investment building, or 

13 ‘‘(B) at the election of the taxpayer, the 

14 month in which the taxpayer and the rural in15 vestment credit agency enter into an agreement 

16 with respect to such building (which is binding 

17 on such agency, the taxpayer, and all successors 

18 in interest) as to the rural investment credit 

19 dollar amount to be allocated to such building. 

20 A month may be elected under subparagraph (B) 

21 only if the election is made not later than the 5th 

22 day after the close of such month. Such an election, 

23 once made, shall be irrevocable. 

24 ‘‘(2) METHOD OF PRESCRIBING PERCENT25 AGES.—The percentages prescribed by the Secretary 


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•S 1093 IS

1 for any month shall be percentages which will yield 

2 over a 10-year period amounts of credit under sub3 section (a) which have a present value equal to— 

4 ‘‘(A) 70 percent of the eligible basis of a 

5 new building, and 

6 ‘‘(B) 30 percent of the eligible basis of an 

7 existing building. 

8 ‘‘(3) METHOD OF DISCOUNTING.—The present 

9 value under paragraph (2) shall be determined— 

10 ‘‘(A) as of the last day of the 1st year of 

11 the 10-year period referred to in paragraph (2), 

12 ‘‘(B) by using a discount rate equal to 72 

13 percent of the average of the annual Federal 

14 mid-term rate and the annual Federal long15 term rate applicable under section 1274(d)(1) 

16 to the month applicable under subparagraph 

17 (A) or (B) of paragraph (1) and compounded 

18 annually, and 

19 ‘‘(C) by assuming that the credit allowable 

20 under this section for any year is received on 

21 the last day of such year. 

22 ‘‘(c) ELIGIBLE BASIS; QUALIFIED RURAL INVEST23 MENT BUILDING.—For purposes of this section— 

24 ‘‘(1) ELIGIBLE BASIS.— 


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•S 1093 IS

1 ‘‘(A) IN GENERAL.—The eligible basis of 

2 any qualified rural investment building for any 

3 taxable year shall be determined under rules 

4 similar to the rules under section 42(d), except 

5 that— 

6 ‘‘(i) the determination of the adjusted 

7 basis of any building shall be made as of 

8 the beginning of the credit period, and 

9 ‘‘(ii) such basis shall include develop10 ment costs properly attributable to such 

11 building. 

12 ‘‘(B) DEVELOPMENT COSTS.—For pur13 poses of subparagraph (A)(ii), the term ‘devel14 opment costs’ includes— 

15 ‘‘(i) site preparation costs, 

16 ‘‘(ii) State and local impact fees, 

17 ‘‘(iii) reasonable development costs, 

18 ‘‘(iv) professional fees related to basis 

19 items, 

20 ‘‘(v) construction financing costs re21 lated to basis items other than land, and 

22 ‘‘(vi) on-site and adjacent improve23 ments required by State and local govern24 ments. 


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•S 1093 IS

1 ‘‘(2) QUALIFIED RURAL INVESTMENT BUILD2 ING.—The term ‘qualified rural investment building’ 

3 means any building which is part of a qualified rural 

4 investment project at all times during the period— 

5 ‘‘(A) beginning on the 1st day in the com6 pliance period on which such building is part of 

7 such an investment project, and 

8 ‘‘(B) ending on the last day of the compli9 ance period with respect to such building. 

10 ‘‘(d) REHABILITATION EXPENDITURES TREATED AS

11 SEPARATE NEW BUILDING.—Rehabilitation expenditures 

12 paid or incurred by the taxpayer with respect to any build13 ing shall be treated for purposes of this section as a sepa14 rate new building under the rules of section 42(e). 

15 ‘‘(e) DEFINITION AND SPECIAL RULES RELATING TO

16 CREDIT PERIOD.— 

17 ‘‘(1) CREDIT PERIOD DEFINED.—For purposes 

18 of this section, the term ‘credit period’ means, with 

19 respect to any building, the period of 10 taxable 

20 years beginning with the taxable year in which the 

21 building is first placed in service. 

22 ‘‘(2) SPECIAL RULE FOR 1ST YEAR OF CREDIT

23 PERIOD.— 

24 ‘‘(A) IN GENERAL.—The credit allowable 

25 under subsection (a) with respect to any buildVerDate Aug 31 2005 23:51 Apr 19, 2007 Jkt 030505 PO 00000 Frm 00035 Fmt 6652 Sfmt 6201 E:\BILLS\S1093.IS S1093

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•S 1093 IS

1 ing for the 1st taxable year of the credit period 

2 shall be determined by multiplying such credit 

3 by the fraction— 

4 ‘‘(i) the numerator of which is the 

5 number of full months of such year during 

6 which such building was in service, and 

7 ‘‘(ii) the denominator of which is 12. 

8 ‘‘(B) DISALLOWED 1ST YEAR CREDIT AL9 LOWED IN 11TH YEAR.—Any reduction by rea10 son of subparagraph (A) in the credit allowable 

11 (without regard to subparagraph (A)) for the 

12 1st taxable year of the credit period shall be al13 lowable under subsection (a) for the 1st taxable 

14 year following the credit period. 

15 ‘‘(3) CREDIT PERIOD FOR EXISTING BUILDINGS

16 NOT TO BEGIN BEFORE REHABILITATION CREDIT

17 ALLOWED.—The credit period for an existing build18 ing shall not begin before the 1st taxable year of the 

19 credit period for rehabilitation expenditures with re20 spect to the building. 

21 ‘‘(f) QUALIFIED RURAL INVESTMENT PROJECT; 

22 QUALIFYING COUNTY.—For purposes of this section— 

23 ‘‘(1) QUALIFIED RURAL INVESTMENT

24 PROJECT.—The term ‘qualified rural investment 

25 project’ means any investment project of 1 or more 


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•S 1093 IS

1 qualified rural investment buildings located in a 

2 qualifying county (and, if necessary to the project, 

3 any contiguous county) and selected by the State ac4 cording to its qualified rural investment plan. 

5 ‘‘(2) QUALIFYING COUNTY.—The term ‘quali6 fying county’ means any county which— 

7 ‘‘(A) is outside a metropolitan statistical 

8 area (defined as such by the Office of Manage9 ment and Budget), and 

10 ‘‘(B) during the 20-year period ending 

11 with the calendar year preceding the date of the 

12 enactment of this section, has a net out-migra13 tion of inhabitants from the county of at least 

14 10 percent of the population of the county at 

15 the beginning of such period. 

16 ‘‘(g) LIMITATION ON AGGREGATE CREDIT ALLOW17 ABLE WITH RESPECT TO INVESTMENT PROJECTS LO18 CATED IN A STATE.— 

19 ‘‘(1) CREDIT MAY NOT EXCEED CREDIT

20 AMOUNT ALLOCATED TO BUILDING.—The amount of 

21 the credit determined under this section for any tax22 able year with respect to any building shall not ex23 ceed the rural investment credit dollar amount allo24 cated to such building under rules similar to the 

25 rules of section 42(h)(1). 


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•S 1093 IS

1 ‘‘(2) ALLOCATED CREDIT AMOUNT TO APPLY

2 TO ALL TAXABLE YEARS ENDING DURING OR AFTER

3 CREDIT ALLOCATION YEAR.—Any rural investment 

4 credit dollar amount allocated to any building for 

5 any calendar year— 

6 ‘‘(A) shall apply to such building for all 

7 taxable years in the credit period ending during 

8 or after such calendar year, and 

9 ‘‘(B) shall reduce the aggregate rural in10 vestment credit dollar amount of the allocating 

11 agency only for such calendar year. 

12 ‘‘(3) RURAL INVESTMENT CREDIT DOLLAR

13 AMOUNT FOR AGENCIES.— 

14 ‘‘(A) IN GENERAL.—The aggregate rural 

15 investment credit dollar amount which a rural 

16 investment credit agency may allocate for any 

17 calendar year is the portion of the State rural 

18 investment credit ceiling allocated under this 

19 paragraph for such calendar year to such agen20 cy. 

21 ‘‘(B) STATE CEILING INITIALLY ALLO22 CATED TO STATE RURAL INVESTMENT CREDIT

23 AGENCIES.—Except as provided in subpara24 graphs (D) and (E), the State rural investment 

25 credit ceiling for each calendar year shall be alVerDate Aug 31 2005 23:51 Apr 19, 2007 Jkt 030505 PO 00000 Frm 00038 Fmt 6652 Sfmt 6201 E:\BILLS\S1093.IS S1093

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•S 1093 IS

1 located to the rural investment credit agency of 

2 such State. If there is more than 1 rural invest3 ment credit agency of a State, all such agencies 

4 shall be treated as a single agency. 

5 ‘‘(C) STATE RURAL INVESTMENT CREDIT

6 CEILING.—The State rural investment credit 

7 ceiling applicable to any State and any calendar 

8 year shall be an amount equal to the sum of— 

9 ‘‘(i) the unused State rural investment 

10 credit ceiling (if any) of such State for the 

11 preceding calendar year, 

12 ‘‘(ii) $1,000,000 for each qualifying 

13 county in the State, 

14 ‘‘(iii) the amount of State rural in15 vestment credit ceiling returned in the cal16 endar year, plus 

17 ‘‘(iv) the amount (if any) allocated 

18 under subparagraph (D) to such State by 

19 the Secretary. 

20 For purposes of clause (i), the unused State 

21 rural investment credit ceiling for any calendar 

22 year is the excess (if any) of the sum of the 

23 amounts described in clauses (ii) through (iv) 

24 over the aggregate rural investment credit dol25 lar amount allocated for such year. For purVerDate Aug 31 2005 23:51 Apr 19, 2007 Jkt 030505 PO 00000 Frm 00039 Fmt 6652 Sfmt 6201 E:\BILLS\S1093.IS S1093

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•S 1093 IS

1 poses of clause (iii), the amount of State rural 

2 investment credit ceiling returned in the cal3 endar year equals the rural investment credit 

4 dollar amount previously allocated within the 

5 State to any investment project which fails to 

6 meet the 10 percent test under section 

7 42(h)(1)(E)(ii) on a date after the close of the 

8 calendar year in which the allocation was made 

9 or which does not become a qualified rural in10 vestment project within the period required by 

11 this section or the terms of the allocation or to 

12 any investment project with respect to which an 

13 allocation is canceled by mutual consent of the 

14 rural investment credit agency and the alloca15 tion recipient. 

16 ‘‘(D) UNUSED RURAL INVESTMENT CREDIT

17 CARRYOVERS ALLOCATED AMONG CERTAIN

18 STATES.— 

19 ‘‘(i) IN GENERAL.—The unused rural 

20 investment credit carryover of a State for 

21 any calendar year shall be assigned to the 

22 Secretary for allocation among qualified 

23 States for the succeeding calendar year. 

24 ‘‘(ii) UNUSED RURAL INVESTMENT

25 CREDIT CARRYOVER.—For purposes of this 


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•S 1093 IS

1 subparagraph, the unused rural investment 

2 credit carryover of a State for any calendar 

3 year is the excess (if any) of the unused 

4 State rural investment credit ceiling for 

5 such year (as defined in subparagraph 

6 (C)(i)) over the excess (if any) of— 

7 ‘‘(I) the unused State rural in8 vestment credit ceiling for the year 

9 preceding such year, over 

10 ‘‘(II) the aggregate rural invest11 ment credit dollar amount allocated 

12 for such year. 

13 ‘‘(iii) FORMULA FOR ALLOCATION OF

14 UNUSED RURAL INVESTMENT CREDIT

15 CARRYOVERS AMONG QUALIFIED

16 STATES.—The amount allocated under this 

17 subparagraph to a qualified State for any 

18 calendar year shall be the amount deter19 mined by the Secretary to bear the same 

20 ratio to the aggregate unused rural invest21 ment credit carryovers of all States for the 

22 preceding calendar year as such State’s 

23 population for the calendar year bears to 

24 the population of all qualified States for 

25 the calendar year. For purposes of the preVerDate Aug 31 2005 23:51 Apr 19, 2007 Jkt 030505 PO 00000 Frm 00041 Fmt 6652 Sfmt 6201 E:\BILLS\S1093.IS S1093

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•S 1093 IS

1 ceding sentence, population shall be deter2 mined in accordance with section 146(j). 

3 ‘‘(iv) QUALIFIED STATE.—For pur4 poses of this subparagraph, the term 

5 ‘qualified State’ means, with respect to a 

6 calendar year, any State— 

7 ‘‘(I) which allocated its entire 

8 State rural investment credit ceiling 

9 for the preceding calendar year, and 

10 ‘‘(II) for which a request is made 

11 (not later than May 1 of the calendar 

12 year) to receive an allocation under 

13 clause (iii). 

14 ‘‘(E) STATE MAY PROVIDE FOR DIF15 FERENT ALLOCATION.—Rules similar to the 

16 rules of section 146(e) (other than paragraph 

17 (2)(B) thereof) shall apply for purposes of this 

18 paragraph. 

19 ‘‘(F) POPULATION.—For purposes of this 

20 paragraph, population shall be determined in 

21 accordance with section 146(j). 

22 ‘‘(G) COST-OF-LIVING ADJUSTMENT.— 

23 ‘‘(i) IN GENERAL.—In the case of a 

24 calendar year after 2007, the $1,000,000 


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•S 1093 IS

1 amount in subparagraph (C) shall be in2 creased by an amount equal to— 

3 ‘‘(I) such dollar amount, multi4 plied by 

5 ‘‘(II) the cost-of-living adjust6 ment determined under section 1(f)(3) 

7 for such calendar year by substituting 

8 ‘calendar year 2006’ for ‘calendar 

9 year 1992’ in subparagraph (B) there10 of. 

11 ‘‘(ii) ROUNDING.—Any increase under 

12 clause (i) which is not a multiple of $5,000 

13 shall be rounded to the next lowest mul14 tiple of $5,000. 

15 ‘‘(4) PORTION OF STATE CEILING SET-ASIDE

16 FOR CERTAIN INVESTMENT PROJECTS INVOLVING

17 QUALIFIED NONPROFIT ORGANIZATIONS.— 

18 ‘‘(A) IN GENERAL.—At least 10 percent of 

19 the State rural investment credit ceiling for any 

20 State for any calendar year shall be allocated to 

21 qualified rural investment projects described in 

22 subparagraph (B). 

23 ‘‘(B) INVESTMENT PROJECTS INVOLVING

24 QUALIFIED NONPROFIT ORGANIZATIONS.—For 

25 purposes of subparagraph (A), a qualified rural 


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•S 1093 IS

1 investment project is described in this subpara2 graph if a qualified nonprofit organization is to 

3 materially participate (within the meaning of 

4 section 469(h)) in the development and oper5 ation of the investment project throughout the 

6 compliance period. 

7 ‘‘(C) QUALIFIED NONPROFIT ORGANIZA8 TION.—For purposes of this paragraph, the 

9 term ‘qualified nonprofit organization’ means 

10 any organization if— 

11 ‘‘(i) such organization is described in 

12 any paragraph of section 501(c) and is ex13 empt from tax under section 501(a), 

14 ‘‘(ii) such organization is determined 

15 by the State rural investment credit agency 

16 not to be affiliated with or controlled by a 

17 for-profit organization, and 

18 ‘‘(iii) 1 of the exempt purposes of 

19 such organization includes the fostering of 

20 rural investment. 

21 ‘‘(D) TREATMENT OF CERTAIN SUBSIDI22 ARIES.— 

23 ‘‘(i) IN GENERAL.—For purposes of 

24 this paragraph, a qualified nonprofit orga25 nization shall be treated as satisfying the 


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•S 1093 IS

1 ownership and material participation test 

2 of subparagraph (B) if any qualified cor3 poration in which such organization holds 

4 stock satisfies such test. 

5 ‘‘(ii) QUALIFIED CORPORATION.—For 

6 purposes of clause (i), the term ‘qualified 

7 corporation’ means any corporation if 100 

8 percent of the stock of such corporation is 

9 held by 1 or more qualified nonprofit orga10 nizations at all times during the period 

11 such corporation is in existence. 

12 ‘‘(E) STATE MAY NOT OVERRIDE SET13 ASIDE.—Nothing in subparagraph (F) of para14 graph (3) shall be construed to permit a State 

15 not to comply with subparagraph (A) of this 

16 paragraph. 

17 ‘‘(F) CREDITS FOR QUALIFIED NONPROFIT

18 ORGANIZATIONS.— 

19 ‘‘(i) ALLOWANCE OF CREDIT.—Any 

20 credit which would be allowable under sub21 section (a) with respect to a qualified rural 

22 investment building of a qualified nonprofit 

23 organization if such organization were not 

24 exempt from tax under this chapter shall 


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•S 1093 IS

1 be treated as a credit allowable under sub2 part C to such organization. 

3 ‘‘(ii) USE OF CREDIT.—A qualified 

4 nonprofit organization may assign, trade, 

5 sell, or otherwise transfer any credit allow6 able to such organization under subpara7 graph (A) to any taxpayer. 

8 ‘‘(iii) CREDIT NOT INCOME.—A trans9 fer under subparagraph (B) of any credit 

10 allowable under subparagraph (A) shall not 

11 result in income for purposes of section 

12 511. 

13 ‘‘(5) SPECIAL RULES.— 

14 ‘‘(A) BUILDING MUST BE LOCATED WITH15 IN JURISDICTION OF CREDIT AGENCY.—A rural 

16 investment credit agency may allocate its aggre17 gate rural investment credit dollar amount only 

18 to buildings located in the jurisdiction of the 

19 governmental unit of which such agency is a 

20 part. 

21 ‘‘(B) AGENCY ALLOCATIONS IN EXCESS OF

22 LIMIT.—If the aggregate rural investment cred23 it dollar amounts allocated by a rural invest24 ment credit agency for any calendar year exceed 

25 the portion of the State rural investment credit 


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1 ceiling allocated to such agency for such cal2 endar year, the rural investment credit dollar 

3 amounts so allocated shall be reduced (to the 

4 extent of such excess) for buildings in the re5 verse of the order in which the allocations of 

6 such amounts were made. 

7 ‘‘(C) CREDIT REDUCED IF ALLOCATED

8 CREDIT DOLLAR AMOUNT IS LESS THAN CREDIT

9 WHICH WOULD BE ALLOWABLE WITHOUT RE10 GARD TO SALES CONVENTION, ETC.— 

11 ‘‘(i) IN GENERAL.—The amount of 

12 the credit determined under this section 

13 with respect to any building shall not ex14 ceed the clause (ii) percentage of the 

15 amount of the credit which would (but for 

16 this subparagraph) be determined under 

17 this section with respect to such building. 

18 ‘‘(ii) DETERMINATION OF PERCENT19 AGE.—For purposes of clause (i), the 

20 clause (ii) percentage with respect to any 

21 building is the percentage which— 

22 ‘‘(I) the rural investment credit 

23 dollar amount allocated to such build24 ing bears to 


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1 ‘‘(II) the credit amount deter2 mined in accordance with clause (iii). 

3 ‘‘(iii) DETERMINATION OF CREDIT

4 AMOUNT.—The credit amount determined 

5 in accordance with this clause is the 

6 amount of the credit which would (but for 

7 this subparagraph) be determined under 

8 this section with respect to the building if 

9 this section were applied without regard to 

10 paragraph (2)(A) of subsection (e). 

11 ‘‘(D) RURAL INVESTMENT CREDIT AGENCY

12 TO SPECIFY APPLICABLE PERCENTAGE AND

13 MAXIMUM ELIGIBLE BASIS.—In allocating a 

14 rural investment credit dollar amount to any 

15 building, the rural investment credit agency 

16 shall specify the applicable percentage and the 

17 maximum eligible basis which may be taken 

18 into account under this section with respect to 

19 such building. The applicable percentage and 

20 maximum eligible basis so specified shall not ex21 ceed the applicable percentage and eligible basis 

22 determined under this section without regard to 

23 this subsection. 

24 ‘‘(6) OTHER DEFINITIONS.—For purposes of 

25 this subsection— 


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1 ‘‘(A) RURAL INVESTMENT CREDIT AGEN2 CY.—The term ‘rural investment credit agency’ 

3 means any agency authorized to carry out this 

4 subsection. 

5 ‘‘(B) POSSESSIONS TREATED AS STATES.— 

6 The term ‘State’ includes a possession of the 

7 United States. 

8 ‘‘(7) PORTION OF STATE CEILING SET-ASIDE

9 FOR QUALIFIED RURAL SMALL BUSINESS INVEST10 MENT CREDITS.—Not more than 20 percent of the 

11 State rural investment credit ceiling for any State 

12 for any calendar year may be allocated to qualified 

13 rural small business investment credits under section 

14 42B. 

15 ‘‘(h) DEFINITIONS AND SPECIAL RULES.—For pur16 poses of this section— 

17 ‘‘(1) COMPLIANCE PERIOD.—The term ‘compli18 ance period’ means, with respect to any building, the 

19 period of 10 taxable years beginning with the 1st 

20 taxable year of the credit period with respect there21 to. 

22 ‘‘(2) NEW BUILDING.—The term ‘new building’ 

23 means a building the original use of which begins 

24 with the taxpayer. 


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1 ‘‘(3) EXISTING BUILDING.—The term ‘existing 

2 building’ means any building which is not a new 

3 building. 

4 ‘‘(4) APPLICATION TO ESTATES AND TRUSTS.— 

5 In the case of an estate or trust, the amount of the 

6 credit determined under subsection (a) and any in7 crease in tax under subsection (i) shall be appor8 tioned between the estate or trust and the bene9 ficiaries on the basis of the income of the estate or 

10 trust allocable to each. 

11 ‘‘(i) RECAPTURE OF CREDIT.—If— 

12 ‘‘(1) as of the close of any taxable year in the 

13 compliance period, the amount of the eligible basis 

14 of any building with respect to the taxpayer is less 

15 than 

16 ‘‘(2) the amount of such basis as of the close 

17 of the preceding taxable year, then the taxpayer’s 

18 tax under this chapter for the taxable year shall be 

19 increased by the credit recapture amount determined 

20 under rules similar to the rules of section 42(j). 

21 ‘‘(j) CERTIFICATIONS AND OTHER REPORTS TO SEC22 RETARY.— 

23 ‘‘(1) CERTIFICATION WITH RESPECT TO 1ST

24 YEAR OF CREDIT PERIOD.—Following the close of 

25 the 1st taxable year in the credit period with respect 


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1 to any qualified rural investment building, the tax2 payer shall certify to the Secretary (at such time 

3 and in such form and in such manner as the Sec4 retary prescribes)— 

5 ‘‘(A) the taxable year, and calendar year, 

6 in which such building was first placed in serv7 ice, 

8 ‘‘(B) the eligible basis of such building as 

9 of the beginning of the credit period, 

10 ‘‘(C) the maximum applicable percentage 

11 and eligible basis permitted to be taken into ac12 count by the appropriate rural investment cred13 it agency under subsection (g), 

14 ‘‘(D) the election made under subsection 

15 (f) with respect to the qualified rural invest16 ment project of which such building is a part, 

17 and 

18 ‘‘(E) such other information as the Sec19 retary may require. 

20 In the case of a failure to make the certification re21 quired by the preceding sentence on the date pre22 scribed therefor, unless it is shown that such failure 

23 is due to reasonable cause and not to willful neglect, 

24 no credit shall be allowable by reason of subsection 


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1 (a) with respect to such building for any taxable 

2 year ending before such certification is made. 

3 ‘‘(2) ANNUAL REPORTS TO THE SECRETARY.— 

4 The Secretary may require taxpayers to submit an 

5 information return (at such time and in such form 

6 and manner as the Secretary prescribes) for each 

7 taxable year setting forth— 

8 ‘‘(A) the eligible basis for the taxable year 

9 of each qualified rural investment building of 

10 the taxpayer, 

11 ‘‘(B) the information described in para12 graph (1)(C) for the taxable year, and 

13 ‘‘(C) such other information as the Sec14 retary may require. 

15 The penalty under section 6652(j) shall apply to any 

16 failure to submit the return required by the Sec17 retary under the preceding sentence on the date pre18 scribed therefor. 

19 ‘‘(3) ANNUAL REPORTS FROM RURAL INVEST20 MENT CREDIT AGENCIES.—Each agency which allo21 cates any rural investment credit amount to any 

22 building for any calendar year shall submit to the 

23 Secretary (at such time and in such manner as the 

24 Secretary shall prescribe) an annual report speci25 fying— 


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1 ‘‘(A) the amount of rural investment credit 

2 amount allocated to each building for such year, 

3 ‘‘(B) sufficient information to identify each 

4 such building and the taxpayer with respect 

5 thereto, and 

6 ‘‘(C) such other information as the Sec7 retary may require. 

8 The penalty under section 6652(j) shall apply to any 

9 failure to submit the report required by the pre10 ceding sentence on the date prescribed therefor. 

11 ‘‘(k) RESPONSIBILITIES OF RURAL INVESTMENT

12 CREDIT AGENCIES.— 

13 ‘‘(1) PLANS FOR ALLOCATION OF CREDIT

14 AMONG INVESTMENT PROJECTS.— 

15 ‘‘(A) IN GENERAL.—Notwithstanding any 

16 other provision of this section, the rural invest17 ment credit dollar amount with respect to any 

18 building shall be zero unless— 

19 ‘‘(i) such amount was allocated pursu20 ant to a qualified rural investment plan of 

21 the agency which is approved by the gov22 ernmental unit (in accordance with rules 

23 similar to the rules of section 147(f)(2) 

24 (other than subparagraph (B)(ii) thereof)) 

25 of which such agency is a part, 


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1 ‘‘(ii) such agency notifies the chief ex2 ecutive officer (or the equivalent) of the 

3 local jurisdiction within which the building 

4 is located of such investment project and 

5 provides such individual a reasonable op6 portunity to comment on the investment 

7 project, 

8 ‘‘(iii) a comprehensive market study 

9 of the development needs of individuals in 

10 the qualifying county to be served by the 

11 investment project is conducted before the 

12 credit allocation is made and at the devel13 oper’s expense by a disinterested party who 

14 is approved by such agency, and 

15 ‘‘(iv) a written explanation is available 

16 to the general public for any allocation of 

17 a rural investment credit dollar amount 

18 which is not made in accordance with es19 tablished priorities and selection criteria of 

20 the rural investment credit agency. 

21 ‘‘(B) QUALIFIED RURAL INVESTMENT

22 PLAN.—For purposes of this section, the term 

23 ‘qualified rural investment plan’ means any 

24 plan— 


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1 ‘‘(i) which sets forth selection criteria 

2 to be used to determine priorities of the 

3 rural investment credit agency which are 

4 appropriate to qualifying counties, 

5 ‘‘(ii) which also gives preference in al6 locating rural investment credit dollar 

7 amounts among selected investment 

8 projects to— 

9 ‘‘(I) investment projects that tar10 get those small rural counties with 

11 consistently high rates of net out-mi12 gration, 

13 ‘‘(II) investment projects that 

14 link the economic development and job 

15 creation efforts of 2 or more small 

16 rural counties with high rates of net 

17 out-migration, and 

18 ‘‘(III) investment projects that 

19 link the economic development and job 

20 creation efforts of 1 or more small 

21 rural counties in the State with high 

22 rates of net out-migration to related 

23 efforts in regions of such State experi24 encing economic growth, and 


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1 ‘‘(iii) which provides a procedure that 

2 the agency (or an agent or other private 

3 contractor of such agency) will follow in 

4 monitoring for noncompliance with the 

5 provisions of this section and in notifying 

6 the Internal Revenue Service of such non7 compliance which such agency becomes 

8 aware of and in monitoring for noncompli9 ance through regular site visits. 

10 ‘‘(C) CERTAIN SELECTION CRITERIA MUST

11 BE USED.—The selection criteria set forth in a 

12 qualified rural investment plan must include— 

13 ‘‘(i) investment project location, 

14 ‘‘(ii) technology and transportation in15 frastructure needs, and 

16 ‘‘(iii) private development trends. 

17 ‘‘(2) CREDIT ALLOCATED TO BUILDING NOT TO

18 EXCEED AMOUNT NECESSARY TO ASSURE INVEST19 MENT PROJECT FEASIBILITY.— 

20 ‘‘(A) IN GENERAL.—The rural investment 

21 credit dollar amount allocated to an investment 

22 project shall not exceed the amount the rural 

23 investment credit agency determines is nec24 essary for the financial feasibility of the invest25 ment project and its viability as a qualified 


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•S 1093 IS

1 rural investment project throughout the compli2 ance period. 

3 ‘‘(B) AGENCY EVALUATION.—In making 

4 the determination under subparagraph (A), the 

5 rural investment credit agency shall consider— 

6 ‘‘(i) the sources and uses of funds and 

7 the total financing planned for the invest8 ment project, 

9 ‘‘(ii) any proceeds or receipts expected 

10 to be generated by reason of tax benefits, 

11 ‘‘(iii) the percentage of the rural in12 vestment credit dollar amount used for in13 vestment project costs other than the cost 

14 of intermediaries, and 

15 ‘‘(iv) the reasonableness of the devel16 opmental and operational costs of the in17 vestment project. 

18 Clause (iii) shall not be applied so as to impede 

19 the development of investment projects in hard20 to-develop areas. 

21 ‘‘(C) DETERMINATION MADE WHEN CRED22 IT AMOUNT APPLIED FOR AND WHEN BUILDING

23 PLACED IN SERVICE.— 


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1 ‘‘(i) IN GENERAL.—A determination 

2 under subparagraph (A) shall be made as 

3 of each of the following times: 

4 ‘‘(I) The application for the rural 

5 investment credit dollar amount. 

6 ‘‘(II) The allocation of the rural 

7 investment credit dollar amount. 

8 ‘‘(III) The date the building is 

9 first placed in service. 

10 ‘‘(ii) CERTIFICATION AS TO AMOUNT

11 OF OTHER SUBSIDIES.—Prior to each de12 termination under clause (i), the taxpayer 

13 shall certify to the rural investment credit 

14 agency the full extent of all Federal, State, 

15 and local subsidies which apply (or which 

16 the taxpayer expects to apply) with respect 

17 to the building. 

18 ‘‘(l) REGULATIONS.—The Secretary shall prescribe 

19 such regulations as may be necessary or appropriate to 

20 carry out the purposes of this section, including regula21 tions— 

22 ‘‘(1) dealing with— 

23 ‘‘(A) investment projects which include 

24 more than 1 building or only a portion of a 

25 building, 


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1 ‘‘(B) buildings which are sold in portions, 

2 ‘‘(2) providing for the application of this section 

3 to short taxable years, 

4 ‘‘(3) preventing the avoidance of the rules of 

5 this section, and 

6 ‘‘(4) providing the opportunity for rural invest7 ment credit agencies to correct administrative errors 

8 and omissions with respect to allocations and record 

9 keeping within a reasonable period after their dis10 covery, taking into account the availability of regula11 tions and other administrative guidance from the 

12 Secretary.’’. 

13 (b) CURRENT YEAR BUSINESS CREDIT CALCULA14 TION.—Section 38(b) (relating to current year business 

15 credit) is amended by striking ‘‘plus’’ at the end of para16 graph (30), by striking the period at the end of paragraph 

17 (31) and inserting ‘‘, plus’’, and by adding at the end the 

18 following new paragraph: 

19 ‘‘(32) the rural investment credit determined 

20 under section 42A(a).’’. 

21 (c) CONFORMING AMENDMENTS.— 

22 (1) Section 55(c)(1) is amended by inserting 

23 ‘‘or subsection (i) or (j) of section 42A’’ after ‘‘sec24 tion 42’’. 


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1 (2) Subsections (i)(c)(3), (i)(c)(6)(B)(i), and 

2 (k)(1) of section 469 are each amended by inserting 

3 ‘‘or 42A’’ after ‘‘section 42’’. 

4 (3) Section 772(a) is amended by striking 

5 ‘‘and’’ at the end of paragraph (10), by redesig6 nating paragraph (11) as paragraph (12), and by in7 serting after paragraph (10) the following new para8 graph: 

9 ‘‘(11) the rural investment credit determined 

10 under section 42A, and’’. 

11 (4) Section 774(b)(4) is amended by inserting 

12 ‘‘, 42A(i),’’ after ‘‘section 42(j)’’. 

13 (d) CLERICAL AMENDMENT.—The table of sections 

14 for subpart D of part IV of subchapter A of chapter 1 

15 is amended by inserting after the item relating to section 

16 42 the following new item: 

‘‘Sec. 42A. Rural investment credit.’’. 

17 (e) EFFECTIVE DATE.—The amendments made by 

18 this section shall apply to expenditures made in taxable 

19 years beginning after the date of the enactment of this 

20 Act. 

21 SEC. 202. QUALIFIED RURAL SMALL BUSINESS INVEST22 MENT CREDIT. 

23 (a) IN GENERAL.—Subpart D of part IV of sub24 chapter A of chapter 1 (relating to business related credVerDate Aug 31 2005 23:51 Apr 19, 2007 Jkt 030505 PO 00000 Frm 00060 Fmt 6652 Sfmt 6201 E:\BILLS\S1093.IS S1093

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1 its), as amended by this Act, is amended by adding at 

2 the end the following new section: 

3 ‘‘SEC. 42B. QUALIFIED RURAL SMALL BUSINESS INVEST4 MENT CREDIT. 

5 ‘‘(a) IN GENERAL.—For purposes of section 38, in 

6 the case of a qualified rural small business, the amount 

7 of the qualified rural small business investment credit de8 termined under this section for any taxable year is equal 

9 to 30 percent of the qualified expenditures for the taxable 

10 year of such business. 

11 ‘‘(b) DOLLAR LIMITATION.— 

12 ‘‘(1) IN GENERAL.—The credit allowable under 

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

14 the lesser of— 

15 ‘‘(A) $5,000, or 

16 ‘‘(B) the amount when added to the aggre17 gate credits allowable to the taxpayer under 

18 subsection (a) for all preceding taxable years 

19 does not exceed $25,000. 

20 ‘‘(2) NO DOUBLE CREDIT ALLOWED.—In the 

21 case of any qualified rural small business which 

22 places in service a qualified rural investment build23 ing with respect to which a rural investment credit 

24 is allowed under section 42A for any taxable year, 


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1 paragraph (1)(A) shall be applied with respect to 

2 such taxable year by substituting ‘zero’ for ‘$5,000’. 

3 ‘‘(c) QUALIFIED RURAL SMALL BUSINESS.—For 

4 purposes of this section, the term ‘qualified rural small 

5 business’ means any person if such person— 

6 ‘‘(1) employed not more than 5 full-time em7 ployees during the taxable year, 

8 ‘‘(2) materially and substantially participates in 

9 management, 

10 ‘‘(3) is located is a qualifying county, and 

11 ‘‘(4) submitted a qualified business plan with 

12 respect to which the rural investment credit agency 

13 with jurisdiction over such qualifying county has al14 located a portion of the State rural investment ceil15 ing for such taxable year under section 42A(g)(7). 

16 For purposes of paragraph (1), an employee shall be con17 sidered full-time if such employee is employed at least 30 

18 hours per week for 20 or more calendar weeks in the tax19 able year. 

20 ‘‘(d) QUALIFIED EXPENDITURES.—For purposes of 

21 this section— 

22 ‘‘(1) IN GENERAL.—The term ‘qualified expend23 itures’ means expenditures normally associated with 

24 starting or expanding a business and included in a 

25 qualified business plan, including costs for capital, 


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1 plant and equipment, inventory expenses, and wages, 

2 but not including interest costs. 

3 ‘‘(2) ONLY CERTAIN EXPENDITURES INCLUDED

4 FOR EXISTING BUSINESSES.—In the case of a quali5 fied rural small business with respect to which a 

6 credit under subsection (a) was allowed for a pre7 ceding taxable year, such term shall include only so 

8 much of the expenditures described in paragraph (1) 

9 for the taxable year as exceed the aggregate of such 

10 expenditures for the preceding taxable year. 

11 ‘‘(e) QUALIFIED BUSINESS PLAN.—For purposes of 

12 this section, the term ‘qualified business plan’ means a 

13 business plan which— 

14 ‘‘(1) has been approved by the rural investment 

15 credit agency with jurisdiction over the qualifying 

16 county in which the qualified rural small business is 

17 located pursuant to such agency’s rural investment 

18 plan, and 

19 ‘‘(2) meets such requirements as the agency 

20 may specify. 

21 ‘‘(f) DENIAL OF DOUBLE BENEFIT.—In the case of 

22 the amount of the credit determined under this section— 

23 ‘‘(1) no deduction or credit shall be allowed for 

24 such amount under any other provision of this chap25 ter, and 


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•S 1093 IS

1 ‘‘(2) no increase in the adjusted basis of any 

2 property shall result from such amount. 

3 ‘‘(g) DEFINITIONS AND SPECIAL RULES.—For pur4 poses of this section— 

5 ‘‘(1) any term which is used in this section 

6 which is used in section 42A shall have the meaning 

7 given such term by section 42A, and 

8 ‘‘(2) rules similar to the rules under subsections 

9 (j)(2), (j)(3), and (k) of section 42A shall apply.’’. 

10 (b) CURRENT YEAR BUSINESS CREDIT CALCULA11 TION.—Section 38(b) (relating to current year business 

12 credit), as amended by this Act, is amended by striking 

13 ‘‘plus’’ at the end of paragraph (31), by striking the period 

14 at the end of paragraph (32) and inserting ‘‘, plus’’, and 

15 by adding at the end the following new paragraph: 

16 ‘‘(33) the qualified rural small business invest17 ment credit determined under section 42B(a).’’. 

18 (c) CLERICAL AMENDMENT.—The table of sections 

19 for subpart D of part IV of subchapter A of chapter 1, 

20 as amended by this Act, is amended by inserting after the 

21 item relating to section 42A the following new item: 

‘‘Sec. 42B. Qualified rural small business investment credit.’’. 

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

23 this section shall apply to expenditures made in taxable 

24 years beginning after the date of the enactment of this 

25 Act. 


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1 SEC. 203. ACCELERATED DEPRECIATION FOR RURAL IN2 VESTMENT PROPERTY. 

3 (a) IN GENERAL.—Section 168 is amended by adding 

4 at the end the following new subsection: 

5 ‘‘(m) PROPERTY IN RURAL INVESTMENT

6 PROJECTS.— 

7 ‘‘(1) IN GENERAL.—For purposes of subsection 

8 (a), the applicable recovery period for qualified rural 

9 investment property shall be determined in accord10 ance with the table contained in paragraph (2) in 

11 lieu of the table contained in subsection (c). 

12 ‘‘(2) APPLICABLE RECOVERY PERIOD FOR

13 RURAL INVESTMENT PROPERTY.—For purposes of 

14 paragraph (1)— 

The applicable 

‘‘In the case of: recovery period is: 

3-year property ........................................................................ 2 years

5-year property ........................................................................ 3 years

7-year property ........................................................................ 4 years

10-year property ...................................................................... 6 years

15-year property ...................................................................... 9 years

20-year property ...................................................................... 12 years

Nonresidential real property .................................................... 22 years. 

15 ‘‘(3) DEDUCTION ALLOWED IN COMPUTING

16 MINIMUM TAX.—For purposes of determining alter17 native minimum taxable income under section 55, 

18 the deduction under subsection (a) for property to 

19 which paragraph (1) applies shall be determined 

20 under this section without regard to any adjustment 

21 under section 56. 


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1 ‘‘(4) QUALIFIED RURAL INVESTMENT PROP2 ERTY DEFINED.—For purposes of this subsection— 

3 ‘‘(A) IN GENERAL.—The term ‘qualified 

4 rural investment property’ means property 

5 which is property described in the table in para6 graph (2) and which is— 

7 ‘‘(i) used by the taxpayer predomi8 nantly in the active conduct of a trade or 

9 business within a qualified rural invest10 ment project, 

11 ‘‘(ii) not used or located outside the 

12 qualified rural investment project on a reg13 ular basis, 

14 ‘‘(iii) not acquired (directly or indi15 rectly) by the taxpayer from a person who 

16 is related to the taxpayer (within the 

17 meaning of section 465(b)(3)(C)), and 

18 ‘‘(iv) not property (or any portion 

19 thereof) placed in service for purposes of 

20 operating any facility described in section 

21 144(c)(6)(B). 

22 ‘‘(B) EXCEPTION FOR ALTERNATIVE DE23 PRECIATION PROPERTY.—The term ‘qualified 

24 rural investment property’ does not include any 

25 property to which the alternative depreciation 


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1 system under subsection (g) applies, deter2 mined— 

3 ‘‘(i) without regard to subsection 

4 (g)(7) (relating to election to use alter5 native depreciation system), and 

6 ‘‘(ii) after the application of section 

7 280F(b) (relating to listed property with 

8 limited business use). 

9 ‘‘(C) SPECIAL RULE FOR INFRASTRUCTURE

10 INVESTMENT.— 

11 ‘‘(i) IN GENERAL.—Subparagraph 

12 (A)(ii) shall not apply to qualified infra13 structure property located outside of the 

14 qualified rural investment project if the 

15 purpose of such property is to connect with 

16 qualified infrastructure property located 

17 within such project. 

18 ‘‘(ii) QUALIFIED INFRASTRUCTURE

19 PROPERTY.—For purposes of this subpara20 graph, the term ‘qualified infrastructure 

21 property’ means qualified rural investment 

22 property (determined without regard to 

23 subparagraph (A)(ii)) which— 

24 ‘‘(I) benefits the qualifying coun25 ty infrastructure, 


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1 ‘‘(II) is available to the general 

2 public, and 

3 ‘‘(III) is placed in service in con4 nection with the taxpayer’s active con5 duct of a trade or business within a 

6 qualified rural investment project. 

7 Such term includes, but is not limited to, 

8 roads, power lines, water systems, railroad 

9 spurs, and communications facilities. 

10 ‘‘(5) DEFINITIONS.—For purposes of this sub11 section, any term used in this section which is used 

12 in section 42A shall have the meaning given such 

13 term by section 42A.’’. 

14 (b) EFFECTIVE DATE.—The amendment made by 

15 this section shall apply to property placed in service after 

16 the date of the enactment of this Act, in taxable years 

17 ending after such date. 

18 TITLE III—NEW HOMESTEAD 

19 VENTURE CAPITAL FUND 

20 SEC. 301. NEW HOMESTEAD VENTURE CAPITAL FUND. 

21 The Consolidated Farm and Rural Development Act 

22 (7 U.S.C. 1921 et seq.) is amended by adding at the end 

23 the following new subtitle: 


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1 ‘‘Subtitle J—New Homestead 

2 Venture Capital Fund 

3 ‘‘SEC. 386A. SHORT TITLE. 

4 ‘‘This subtitle may be cited as the ‘New Homestead 

5 Venture Capital Fund Act’. 

6 ‘‘SEC. 386B. DEFINITIONS. 

7 ‘‘In this subtitle: 

8 ‘‘(1) AUTHORIZED PRIVATE INVESTOR.—The 

9 term ‘authorized private investor’ means an indi10 vidual, legal entity, or affiliate or subsidiary of an 

11 individual or legal entity that— 

12 ‘‘(A) is eligible to receive a loan guarantee 

13 under this title; 

14 ‘‘(B) is eligible to receive a loan guarantee 

15 under the Rural Electrification Act of 1936 (7 

16 U.S.C. 901 et seq.); 

17 ‘‘(C) is created under the National Con18 sumer Cooperative Bank Act (12 U.S.C. 3011 

19 et seq.); 

20 ‘‘(D) is an insured depository institution 

21 subject to section 386D(b)(2); 

22 ‘‘(E) is a Farm Credit System institution 

23 described in section 1.2(a) of the Farm Credit 

24 Act of 1971 (12 U.S.C. 2002(a)); or 


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1 ‘‘(F) is determined by the Board to be an 

2 appropriate investor in the Fund. 

3 ‘‘(2) BOARD.—The term ‘Board’ means the 

4 board of directors of the Fund established under 

5 section 386F. 

6 ‘‘(3) FUND.—The term ‘Fund’ means the New 

7 Homestead Venture Capital Fund established under 

8 section 386C. 

9 ‘‘(4) GROUP OF SIMILAR AUTHORIZED PRIVATE

10 INVESTORS.—The term ‘group of similar authorized 

11 private investors’ means any 1 of the following: 

12 ‘‘(A) Insured depository institutions with 

13 total assets of more than $250,000,000. 

14 ‘‘(B) Insured depository institutions with 

15 total assets equal to or less than $250,000,000. 

16 ‘‘(C) Farm Credit System institutions de17 scribed in section 1.2(a) of the Farm Credit Act 

18 of 1971 (12 U.S.C. 2002(a)). 

19 ‘‘(D) Cooperative financial institutions 

20 (other than Farm Credit System institutions). 

21 ‘‘(E) Authorized private investors, other 

22 than those described in subparagraphs (A) 

23 through (D). 

24 ‘‘(F) Other nonprofit organizations, includ25 ing credit unions. 


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1 ‘‘(5) INSURED DEPOSITORY INSTITUTION.—The 

2 term ‘insured depository institution’ means any bank 

3 or savings association the deposits of which are in4 sured under the Federal Deposit Insurance Act (12 

5 U.S.C. 1811 et seq.). 

6 ‘‘(6) QUALIFYING COUNTY.—The term ‘quali7 fying county’ means any county that— 

8 ‘‘(A) is located outside a metropolitan sta9 tistical area (as defined by the Office of Man10 agement and Budget); and 

11 ‘‘(B) during the 20-year period ending 

12 with the fiscal year preceding the applicable fis13 cal year for which assistance is made available 

14 under section 386E, has a net outmigration of 

15 inhabitants from the county of at least 10 per16 cent of the population of the county at the be17 ginning of the period. 

18 ‘‘(7) RURAL BUSINESS.—The term ‘rural busi19 ness’ means a rural cooperative, a value-added agri20 cultural enterprise, or any other enterprise that is or 

21 will be located in a qualifying county. 

22 ‘‘SEC. 386C. ESTABLISHMENT OF THE FUND. 

23 ‘‘(a) IN GENERAL.— 

24 ‘‘(1) AUTHORITY TO ESTABLISH.—Upon certifi25 cation by the Secretary that, to the maximum extent 


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1 practicable, the parties proposing to establish a fund 

2 provide a broad representation of all of the groups 

3 of similar authorized private investors described in 

4 subparagraphs (A) through (F) of section 386B(4), 

5 the parties so certified may establish, a non-Federal 

6 entity under State law, to purchase shares of, and 

7 manage a fund to be known as the ‘New Homestead 

8 Venture Capital Fund’, to generate and provide eq9 uity capital to rural businesses. 

10 ‘‘(2) OWNERSHIP.— 

11 ‘‘(A) IN GENERAL.—To the maximum ex12 tent practicable, equity ownership of the Fund 

13 shall be distributed among authorized private 

14 investors representing all of the groups of simi15 lar authorized private investors described in 

16 subparagraphs (A) through (F) of section 

17 386B(4). 

18 ‘‘(B) EXCLUSION OF GROUPS.—No group 

19 of similar authorized private investors shall be 

20 excluded from equity ownership of the Fund 

21 during any period during which the Fund is in 

22 existence if an authorized private investor rep23 resentative of the group is able and willing to 

24 invest in the Fund. 


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1 ‘‘(b) PURPOSE.—The purpose of the Fund is to 

2 strengthen the economies of qualifying counties by— 

3 ‘‘(1) making needed investments in qualifying 

4 counties to reverse the devastating impact of chronic 

5 outmigration and to help the qualifying counties re6 build and grow; 

7 ‘‘(2) providing equity funding for existing and 

8 startup rural businesses with high potential for job 

9 creation that are or will be located in qualifying 

10 counties; 

11 ‘‘(3) offering the funding described in para12 graph (2) to rural businesses, many of which have 

13 difficulty obtaining equity capital; 

14 ‘‘(4) authorizing use of the funding described in 

15 paragraph (2) only after State and local govern16 ments match a significant portion of the funding; 

17 ‘‘(5) requiring a portion of the funding de18 scribed in paragraph (2) to be used for technical and 

19 other similar assistance to rural businesses; and 

20 ‘‘(6) providing incentives to greater participa21 tion by authorized private investors through provi22 sion of guarantees of up to 60 percent of the invest23 ments of the authorized private investors in quali24 fying counties. 


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1 ‘‘(c) ARTICLES OF INCORPORATION AND BY-LAWS.— 

2 The articles of incorporation and by-laws of the Fund shall 

3 set forth purposes of the Fund that are consistent with 

4 the purposes described in subsection (b). 

5 ‘‘SEC. 386D. INVESTMENT IN THE FUND. 

6 ‘‘(a) IN GENERAL.—The Secretary shall— 

7 ‘‘(1) subject to subsection (b)(1), make avail8 able to the Fund $200,000,000 for each of fiscal 

9 years 2008 through 2017; 

10 ‘‘(2) subject to subsection (c), guarantee a por11 tion of each investment made by an authorized pri12 vate investor in the Fund; and 

13 ‘‘(3) subject to subsection (d), guarantee the re14 payment of principal of, and accrued interest on, de15 bentures issued by the Fund to authorized private 

16 investors. 

17 ‘‘(b) NON-FEDERAL FUNDS.— 

18 ‘‘(1) IN GENERAL.—Under subsection (a)(1), 

19 the Secretary shall make an amount available to the 

20 Fund for a fiscal year only after— 

21 ‘‘(A) at least $50,000,000 has been in22 vested in the Fund for the fiscal year by au23 thorized private investors in accordance with 

24 this subtitle and the terms and conditions set 

25 forth in the by-laws of the Fund; and 


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1 ‘‘(B) at least $50,000,000 has been in2 vested in the Fund for the fiscal year by State 

3 and local governments. 

4 ‘‘(2) INSURED DEPOSITORY INSTITUTIONS.— 

5 ‘‘(A) IN GENERAL.—Subject to subpara6 graphs (B) and (C)— 

7 ‘‘(i) an insured depository institution 

8 may be an authorized private investor in 

9 the Fund; and 

10 ‘‘(ii) an investment in the Fund may 

11 be considered to be part of the record of 

12 an institution in meeting the credit needs 

13 of the community in which the institution 

14 is located under any applicable Federal 

15 law. 

16 ‘‘(B) INVESTMENT LIMIT.—The total in17 vestment in the Fund of an insured depository 

18 institution shall not exceed 5 percent of the in19 stitution’s capital and surplus. 

20 ‘‘(C) REGULATORY AUTHORITY.—An ap21 propriate Federal banking agency may, by regu22 lation or order, impose on any insured deposi23 tory institution investing in the Fund, any safe24 guard, limitation, or condition (including an in25 vestment limit that is lower than the investment 


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1 limit under subparagraph (B)) that the Federal 

2 banking agency considers to be appropriate to 

3 ensure that the institution operates— 

4 ‘‘(i) in a financially sound manner; 

5 and 

6 ‘‘(ii) in compliance with all applicable 

7 law. 

8 ‘‘(c) GUARANTEE OF PRIVATE INVESTMENTS.— 

9 ‘‘(1) IN GENERAL.—The Secretary shall guar10 antee, under terms and conditions determined by the 

11 Secretary— 

12 ‘‘(A) except as provided in subparagraph 

13 (B), 40 percent of any loss of the principal of 

14 each investment made by an authorized private 

15 investor in the Fund; and 

16 ‘‘(B) 60 percent of any loss of the prin17 cipal of each investment made by an authorized 

18 private investor in the Fund if the investment 

19 is used for a manufacturing or high-technology 

20 business. 

21 ‘‘(2) MAXIMUM TOTAL GUARANTEE.—The ag22 gregate potential liability of the Secretary with re23 spect to all guarantees under paragraph (1) shall 

24 not apply to more than $500,000,000 in private in25 vestments in the Fund. 


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1 ‘‘(3) REDEMPTION OF GUARANTEE.— 

2 ‘‘(A) DATE.—An authorized private inves3 tor in the Fund may redeem a guarantee under 

4 paragraph (1), with respect to the total invest5 ments in the Fund and the total losses of the 

6 authorized private investor as of the date of re7 demption— 

8 ‘‘(i) on the date that is 5 years after 

9 the date of the initial investment of the au10 thorized private investor; or 

11 ‘‘(ii) annually thereafter. 

12 ‘‘(B) EFFECT OF REDEMPTION.—On re13 demption of a guarantee under subparagraph 

14 (A)— 

15 ‘‘(i) the shares in the Fund of the au16 thorized private investor shall be redeemed; 

17 and 

18 ‘‘(ii) the authorized private investor 

19 shall be prohibited from making any future 

20 investment in the Fund. 

21 ‘‘(d) DEBENTURES.— 

22 ‘‘(1) IN GENERAL.—The Fund may, at the dis23 cretion of the Board, raise additional capital through 

24 the issuance of debentures and through other means 

25 determined to be appropriate by the Board. 


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1 ‘‘(2) GUARANTEE OF DEBT BY SECRETARY.— 

2 ‘‘(A) IN GENERAL.—The Secretary shall 

3 guarantee 100 percent of the principal of, and 

4 accrued interest on, debentures issued by the 

5 Fund that are approved by the Secretary. 

6 ‘‘(B) MAXIMUM DEBT GUARANTEED BY

7 SECRETARY.—The outstanding value of deben8 tures issued by the Fund and guaranteed by 

9 the Secretary shall not exceed the lesser of— 

10 ‘‘(i) the amount equal to twice the 

11 value of the assets held by the Fund; or 

12 ‘‘(ii) $500,000,000. 

13 ‘‘(C) RECAPTURE OF GUARANTEE PAY14 MENTS.—If the Secretary makes a payment on 

15 a debenture issued by the Fund as a result of 

16 a guarantee of the Secretary under this para17 graph, the Secretary shall have priority over 

18 other creditors for repayment of the debenture. 

19 ‘‘(3) AUTHORIZED PRIVATE INVESTORS.—An 

20 authorized private investor may purchase debentures 

21 issued by the Fund. 

22 ‘‘SEC. 386E. INVESTMENTS AND OTHER ACTIVITIES OF THE 

23 FUND. 

24 ‘‘(a) INVESTMENTS.— 

25 ‘‘(1) IN GENERAL.— 


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1 ‘‘(A) TYPES.—Subject to subparagraphs 

2 (B) and (C), the Fund may— 

3 ‘‘(i) make equity investments in a 

4 rural business that meets the requirements 

5 of paragraph (6) and such other require6 ments as the Board may establish; and 

7 ‘‘(ii) extend credit to such rural busi8 ness in— 

9 ‘‘(I) the form of mezzanine debt, 

10 convertible debt, or subordinated debt; 

11 or 

12 ‘‘(II) any other form of near-eq13 uity debt. 

14 ‘‘(B) LIMITATIONS ON EQUITY INVEST15 MENTS.—After the initial equity investment in 

16 a rural business described in subparagraph 

17 (A)(i), the Fund may not make additional eq18 uity investments in such rural business if the 

19 additional equity investments would result in 

20 the Fund owning more than 30 percent of the 

21 equity of such rural business. 

22 ‘‘(C) LIMITATION ON NONEQUITY INVEST23 MENTS.—Except in the case of a project to as24 sist a rural cooperative, the total amount of 

25 nonequity investments described in subparaVerDate Aug 31 2005 23:51 Apr 19, 2007 Jkt 030505 PO 00000 Frm 00079 Fmt 6652 Sfmt 6201 E:\BILLS\S1093.IS S1093

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1 graph (A)(ii) that may be provided by the Fund 

2 shall not exceed 20 percent of the total invest3 ments of the Fund in the project. 

4 ‘‘(2) PROCEDURES.—The Fund shall implement 

5 procedures to ensure that— 

6 ‘‘(A) the financing arrangements of the 

7 Fund meet the Fund’s primary focus of pro8 viding equity capital; and 

9 ‘‘(B) the Fund does not compete with con10 ventional sources of credit. 

11 ‘‘(3) DIVERSITY OF PROJECTS.—The Fund— 

12 ‘‘(A) shall seek to make equity investments 

13 in a variety of viable projects for rural busi14 nesses, with a significant share of invest15 ments— 

16 ‘‘(i) in manufacturing or high-tech17 nology businesses of diverse sizes; 

18 ‘‘(ii) in smaller projects in rural com19 munities of diverse sizes; and 

20 ‘‘(iii) in cooperative and noncoopera21 tive businesses; and 

22 ‘‘(B) shall be managed in a manner that 

23 diversifies the risks to the Fund among a vari24 ety of projects. 


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1 ‘‘(4) LIMITATION ON RURAL BUSINESSES AS2 SISTED.—The Fund shall not invest in any rural 

3 business that— 

4 ‘‘(A) is primarily retail in nature (as deter5 mined by the Board), other than a purchasing 

6 cooperative, or 

7 ‘‘(B) consists of the operation of any facil8 ity described in section 144(c)(6)(B). 

9 ‘‘(5) INTEREST RATE LIMITATIONS.—Returns 

10 on investments in and by the Fund, and returns on 

11 the extension of credit by participants in projects as12 sisted by the Fund, shall not be subject to any State 

13 or Federal law establishing a maximum allowable in14 terest rate. 

15 ‘‘(6) REQUIREMENTS FOR RECIPIENTS.— 

16 ‘‘(A) OTHER INVESTMENTS.—Any recipi17 ent of amounts from the Fund shall make or 

18 obtain a significant investment from a source of 

19 capital other than the Fund. 

20 ‘‘(B) SPONSORSHIP.—To be considered for 

21 an equity investment from the Fund, a rural 

22 business investment project shall be sponsored 

23 by a regional, State, or local sponsoring or en24 dorsing organization such as— 

25 ‘‘(i) a financial institution; 


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1 ‘‘(ii) a development organization; or 

2 ‘‘(iii) any other established entity en3 gaging or assisting in rural business devel4 opment, including a rural cooperative. 

5 ‘‘(b) TECHNICAL ASSISTANCE.—The Board shall use 

6 not less than 2 percent of capital provided by the Federal 

7 Government to provide technical assistance to rural busi8 nesses seeking an equity investment from the Fund. 

9 ‘‘(c) ANNUAL AUDIT.— 

10 ‘‘(1) IN GENERAL.—The Board shall authorize 

11 an annual audit of the financial statements of the 

12 Fund by a nationally recognized auditing firm using 

13 generally accepted accounting procedures. 

14 ‘‘(2) AVAILABILITY OF AUDIT RESULTS.—The 

15 results of the audit required by paragraph (1) shall 

16 be made available to investors in the Fund. 

17 ‘‘(d) ANNUAL REPORT.—The Board shall prepare 

18 and make available to the public an annual report that— 

19 ‘‘(1) describes the projects funded with amounts 

20 from the Fund; 

21 ‘‘(2) specifies the recipients of amounts from 

22 the Fund; 

23 ‘‘(3) specifies the co-investors in all projects 

24 that receive amounts from the Fund; and 


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1 ‘‘(4) meets the reporting requirements, if any, 

2 of the State under the law of which the Fund is es3 tablished. 

4 ‘‘(e) OTHER AUTHORITIES.— 

5 ‘‘(1) IN GENERAL.—The Board may exercise 

6 such other authorities as are necessary to carry out 

7 this subtitle. 

8 ‘‘(2) OVERSIGHT.—The Secretary shall enter 

9 into a contract with the Administrator of the Small 

10 Business Administration under which the Adminis11 trator of the Small Business Administration shall be 

12 responsible for the routine duties of the Secretary in 

13 regard to the Fund. 

14 ‘‘SEC. 386F. GOVERNANCE OF THE FUND. 

15 ‘‘(a) IN GENERAL.—The Fund shall be governed by 

16 a board of directors that represents all of the authorized 

17 private investors in the Fund and the Federal Government 

18 and that consists of— 

19 ‘‘(1) a designee of the Secretary; 

20 ‘‘(2) 2 members who are appointed by the Sec21 retary and are not Federal employees, including— 

22 ‘‘(A) 1 member with expertise in venture 

23 capital investment; and 

24 ‘‘(B) 1 member with expertise in coopera25 tive development; 


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1 ‘‘(3) 1 member who is appointed by the Sec2 retary and is a State government representative 

3 from among States with the highest rates of out4 migration from qualifying counties; and 

5 ‘‘(4) 7 members who are elected by the author6 ized private investors with investments in the Fund, 

7 of whom not less than 1 member shall be a rural 

8 community banker from an insured depository insti9 tution with total assets equal to or less than 

10 $250,000,000 with an investment in the Fund. 

11 ‘‘(b) LIMITATION ON VOTING CONTROL.—No indi12 vidual investor or group of similar authorized private in13 vestors may control more than 25 percent of the votes on 

14 the Board. 

15 ‘‘SEC. 386G. AUTHORIZATION OF APPROPRIATIONS. 

16 ‘‘There are authorized to be appropriated such sums 

17 as are necessary to carry out this subtitle.’’. 

Æ 


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