I 

108TH CONGRESS 

1ST SESSION H. R. 882

To amend the Internal Revenue Code of 1986 to modify the qualified small 

issue bond provisions. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 25, 2003

Mr. ENGLISH introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL

To amend the Internal Revenue Code of 1986 to modify 

the qualified small issue bond provisions.

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 ‘‘Bond Financing Re5 newal Act of 2003’’. 

6 SEC. 2. MODIFICATIONS TO SMALL ISSUE BOND PROVI7 SIONS. 

8 (a) INCREASE IN AMOUNT OF QUALIFIED SMALL

9 ISSUE BONDS PERMITTED FOR FACILITIES TO BE USED

10 BY RELATED PRINCIPAL USERS.—
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1 (1) IN GENERAL.—Clause (i) of section 

2 144(a)(4)(A) of the Internal Revenue Code of 1986 

3 (relating to $10,000,000 limit in certain cases) is 

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

5 ‘‘$20,000,000’’. 

6 (2) COST-OF-LIVING ADJUSTMENT.—Section 

7 144(a)(4) of such Code is amended by adding at the 

8 end the following: 

9 ‘‘(G) COST-OF-LIVING ADJUSTMENT.—In 

10 the case of a taxable year beginning in a cal11 endar year after 2003, the $20,000,000 amount 

12 under subparagraph (A) shall be increased by 

13 an amount equal to—

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

15 ‘‘(ii) the cost-of-living adjustment 

16 under section 1(f)(3) for the calendar year 

17 in which the taxable year begins, deter18 mined by substituting ‘calendar year 2002’ 

19 for ‘calendar year 1992’ in subparagraph 

20 (B) thereof.’’. 

21 (3) CLERICAL AMENDMENT.—The heading of 

22 paragraph (4) of section 144(a) of such Code is 

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

24 ‘‘$20,000,000’’. 
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1 (4) EFFECTIVE DATE.—The amendments made 

2 by this subsection shall apply to—

3 (A) obligations issued after the date of the 

4 enactment of this Act, and 

5 (B) capital expenditures made after such 

6 date with respect to obligations issued on or be7 fore such date. 

8 (b) DEFINITION OF MANUFACTURING FACILITY.—

9 (1) IN GENERAL.—Section 144(a)(12)(C) of 

10 such Code (defining manufacturing facility) is 

11 amended to read as follows: 

12 ‘‘(C) MANUFACTURING FACILITY.—For the 

13 purposes of this paragraph, the term ‘manufac14 turing facility’ means any facility—

15 ‘‘(i) which is used in the manufacture 

16 of tangible personal property (including the 

17 processing resulting in a change in the 

18 condition of such property), 

19 ‘‘(ii) which is used in the manufac20 ture, development, or production of specifi21 cally developed software products or proc22 esses if—

23 ‘‘(I) it takes more than 6 months 

24 to develop or produce such products, 
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1 ‘‘(II) the development or produc2 tion could not with due diligence be 

3 reasonably expected to occur in less 

4 than 6 months, and 

5 ‘‘(III) the software product or 

6 process comprises programs, routines, 

7 and attendant documentation devel8 oped and maintained for use in com9 puter and telecommunications tech10 nology, or 

11 ‘‘(iii) which is used in the manufac12 ture, development, or production of spe13 cially developed biobased or bioenergy 

14 products or processes if—

15 ‘‘(I) it takes more than 6 months 

16 to develop or produce, 

17 ‘‘(II) the development or produc18 tion could not with due diligence be 

19 reasonably expected to occur in less 

20 than 6 months, and 

21 ‘‘(III) the biobased or bioenergy 

22 product or process comprises prod23 ucts, processes, programs, routines, 

24 and attendant documentation devel25 oped and maintained or the utilization 
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1 of biological materials in commercial 

2 or industrial products, or renewable 

3 domestic agricultural or forestry ma4 terials in commercial or industrial 

5 products, or for the utilization of bio6 mass materials. 

7 ‘‘(D) RELATED FACILITY.—For purposes 

8 of subparagraph (C), the term ‘manufacturing 

9 facility’ includes facilities that are directly and 

10 functionally related to a manufacturing facility 

11 (determined without regard to this sentence) 

12 if— 

13 ‘‘(i) such facilities, including an office 

14 facility and a research and development fa15 cility, are located on the same site as the 

16 manufacturing facility, and 

17 ‘‘(ii) not more than 40 percent of the 

18 net proceeds of the issue are used to pro19 vide such facilities, but shall not include a 

20 facility solely for research and development 

21 activities.’’. 

22 (2) EFFECTIVE DATE.—The amendment made 

23 by this subsection shall apply to obligations issued 

24 after the date of the enactment of this Act. 
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1 SEC. 3. ACQUISITION INTEREST EXPENSES OF FINANCIAL 

2 INSTITUTIONS FOR SMALL ISSUE BONDS 

3 MADE DEDUCTIBLE. 

4 (a) IN GENERAL.—Clause (ii) of section 

5 265(b)(3)(B) of the Internal Revenue Code of 1986 (relat6 ing to certain bonds not treated as private activity bonds) 

7 is amended by striking ‘‘or’’ at the end of subclause (I), 

8 by striking the period at the end of subclause (II) and 

9 inserting ‘‘, or’’, and by inserting after subclause (II) the 

10 following new subclause: 

11 ‘‘(III) any obligation which is a 

12 qualified small issue bond described in 

13 section 144(a)(12)(B) if such obliga14 tion is part of an issue the aggregate 

15 authorized face amount of which is 

16 less than $2,000,000.’’. 

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

18 this section shall apply to obligations issued after the date 

19 of the enactment of this Act.

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