II 

111TH CONGRESS 

2D SESSION S. 3350 

To amend the Internal Revenue Code of 1986 to permanently modify the 

limitations on the deduction of interest by financial institutions which 

hold tax-exempt bonds, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MAY 12, 2010 

Mr. BINGAMAN (for himself and Mr. CRAPO) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to permanently 

modify the limitations on the deduction of interest by 

financial institutions which hold tax-exempt bonds, and 

for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Municipal Bond Mar5 ket Support Act of 2010’’. 


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•S 3350 IS

1 SEC. 2. PERMANENT MODIFICATION OF SMALL ISSUER EX2 CEPTION TO TAX-EXEMPT INTEREST EX3 PENSE ALLOCATION RULES FOR FINANCIAL 

4 INSTITUTIONS. 

5 (a) PERMANENT INCREASE IN LIMITATION.—Sub6 paragraphs (C)(i), (D)(i), and (D)(iii)(II) of section 

7 265(b)(3) of the Internal Revenue Code of 1986 are each 

8 amended by striking ‘‘$10,000,000’’ and inserting 

9 ‘‘$30,000,000’’. 

10 (b) PERMANENT MODIFICATION OF OTHER SPECIAL

11 RULES.—Paragraph (3) of section 265(b) of the Internal 

12 Revenue Code of 1986 is amended— 

13 (1) by redesignating clauses (iv), (v), and (vi) 

14 of subparagraph (G) as clauses (ii), (iii), and (iv) of 

15 such subparagraph, respectively, and 

16 (2) by striking so much of subparagraph (G) as 

17 precedes such clauses and inserting the following: 

18 ‘‘(G) QUALIFIED 501(c)(3) BONDS TREATED

19 AS ISSUED BY EXEMPT ORGANIZATION.—In the 

20 case of a qualified 501(c)(3) bond (as defined 

21 in section 145), this paragraph shall be applied 

22 by treating the 501(c)(3) organization for 

23 whose benefit such bond was issued as the 

24 issuer. 

25 ‘‘(H) SPECIAL RULE FOR QUALIFIED

26 FINANCINGS.— 


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•S 3350 IS

1 ‘‘(i) IN GENERAL.—In the case of a 

2 qualified financing issue— 

3 ‘‘(I) subparagraph (F) shall not 

4 apply, and 

5 ‘‘(II) any obligation issued as a 

6 part of such issue shall be treated as 

7 a qualified tax-exempt obligation if 

8 the requirements of this paragraph 

9 are met with respect to each qualified 

10 portion of the issue (determined by 

11 treating each qualified portion as a 

12 separate issue which is issued by the 

13 qualified borrower with respect to 

14 which such portion relates).’’. 

15 (c) INFLATION ADJUSTMENT.—Paragraph (3) of sec16 tion 265(b) of the Internal Revenue Code of 1986, as 

17 amended by subsection (b), is amended by adding at the 

18 end the following new subparagraph: 

19 ‘‘(I) INFLATION ADJUSTMENT.—In the 

20 case of any calendar year after 2011, the 

21 $30,000,000 amounts contained in subpara22 graphs (C)(i), (D)(i), and (D)(iii)(II) shall each 

23 be increased by an amount equal to— 

24 ‘‘(i) such dollar amount, multiplied by 


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•S 3350 IS

1 ‘‘(ii) the cost-of-living adjustment de2 termined under section 1(f)(3) for such 

3 calendar year, determined by substituting 

4 ‘calendar year 2010’ for ‘calendar year 

5 1992’ in subparagraph (B) thereof. 

6 Any increase determined under the preceding 

7 sentence shall be rounded to the nearest mul8 tiple of $100,000.’’. 

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

10 this section shall apply to obligations issued after Decem11 ber 31, 2010. 

Æ 


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