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conducted after the close of such taxable year,
such amount shall be treated as paid or incurred
during the period during which the safety and
effectiveness testing is conducted.
‘‘(d) SAFETY
AND EFFECTIVENESS TESTING.—For
purposes of this section—
‘‘(1) IN GENERAL.—The term ‘safety and effec-
tiveness testing’ means any testing which—
‘‘(A) is related to the use of a new animal
drug for use on a minor animal species for
which it was designated under section 573 of the
Federal Food, Drug, and Cosmetic Act,
‘‘(B) is carried out under an exemption for
such new animal drug under section 512(j) of
such Act (or regulations issued under such sec-
tion),
‘‘(C) occurs—
‘‘(i) after the date on which the appli-
cation for designation of such new animal
drug under section 573 of such Act is filed,
and
‘‘(ii) before the date on which such ap-
plication is approved under section 512(c)
of such Act, and
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‘‘(D) which is conducted by or on behalf of
an eligible taxpayer.
‘‘(2) MINOR ANIMAL SPECIES.—
‘‘(A) IN GENERAL.—The term ‘minor ani-
mal species’ means animals, other than humans,
which are not major animal species.
‘‘(B) MAJOR ANIMAL SPECIES.—The term
‘major animal species’ means cattle, horses,
swine, chickens, turkeys, dogs, cats, and any
other species as determined by the Secretary,
after consultation with the Secretary of Agri-
culture.
‘‘(e) TREATMENT OF QUALIFIED SAFETY AND EFFEC-
TIVENESS TESTING EXPENSES.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), any qualified safety and effectiveness test-
ing expenses for a taxable year to which an election
under this section applies shall not be taken into ac-
count for purposes of determining the credit allowable
under section 41 for such taxable year.
‘‘(2) TREATED AS BASE PERIOD RESEARCH EX-
PENSES.—Any qualified safe and effectiveness testing
expenses for any taxable year which are qualified re-
search expenses (within the meaning of section 41(b))
shall be taken into account in determining base pe-
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riod research expenses for purposes of applying sec-
tion 41 to subsequent taxable years.
‘‘(f) SPECIAL RULES.—
‘‘(1) LIMITATION.—No credit shall be allowed
under this section with respect to any safety and ef-
fectiveness testing conducted by a corporation to
which an election under section 936 applies.
‘‘(2) AGGREGATION OF EXPENDITURES AND AL-
LOCATIONS OF CREDIT.—Rules similar to the rules of
paragraphs (1) and (2) of section 41(f) and section
41(g) shall apply for purposes of this section.’’.
(b) CREDIT ALLOWED AS PART OF GENERAL BUSI-
NESS CREDIT.—Section 38(b), as amended by this Act, is
amended by striking ‘‘plus’’ at the end of paragraph (31),
by striking the period at the end of paragraph (32) and
inserting ‘‘, plus’’, and by adding at the end the following
new paragraph:
‘‘(33) the drug safety and effectiveness testing for
minor animal species credit determined under section
45P(a).’’.
(c) DENIAL OF DOUBLE BENEFIT.—Section 280C, as
amended by this Act, is amended by adding at the end the
following new subsection:
‘‘(g) DRUG SAFETY AND EFFECTIVENESS TESTING FOR
MINOR ANIMAL SPECIES CREDIT.—
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‘‘(1) IN GENERAL.—No deduction shall be al-
lowed for that portion of the qualified safety and ef-
fectiveness testing expenses (as defined in section
45P(c)(1)) otherwise allowable as a deduction for the
taxable year which is equal to the amount of the cred-
it determined for such taxable year under section
45P(a).
‘‘(2) SIMILAR RULE WHERE TAXPAYER CAPITAL-
IZES RATHER THAN DEDUCTS EXPENSES.—If—
‘‘(A) the amount of the credit determined
for the taxable year under section 45P(a), exceeds
‘‘(B) the amount allowable as a deduction
for such taxable year for qualified safety and ef-
fectiveness testing expenses (determined without
regard to paragraph (1)),
the amount chargeable to capital account for the tax-
able year for such expenses shall be reduced by the
amount of such excess.
‘‘(3) CONTROLLED GROUPS.—Paragraph (3) of
subsection (b) shall apply for purposes of this sub-
section.’’.
(d) CLERICAL AMENDMENT.—The table of sections for
subpart D of part IV of subchapter A of chapter 1, as
amended by this Act, is amended by adding at the end the
following new item:
‘‘Sec. 45P. Drug safety and effectiveness testing for minor animal species.’’.
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(e) EFFECTIVE DATE.—The amendments made by this
section shall apply to amounts paid or incurred after the
date of the enactment of this Act.
SEC. 12407. CERTAIN FARMING BUSINESS MACHINERY AND
EQUIPMENT TREATED AS 5-YEAR PROPERTY.
(a) IN GENERAL.—Section 168(e)(3)(B) (defining 5-
year property) is amended by striking ‘‘and’’ at the end
of clause (v), by striking the period at the end of clause
(vi)(III) and inserting ‘‘, and’’, and by inserting after
clause (vi) the following new clause:
‘‘(vii) any machinery or equipment
(other than any grain bin, cotton ginning
asset, fence, or other land improvement)
which is used in a farming business (as de-
fined in section 263A(e)(4)), the original
use of which commences with the taxpayer
after the date of the enactment of this
clause, and which is placed in service before
January 1, 2010.’’.
(b) ALTERNATIVE SYSTEM.—The table contained in
section 168(g)(3)(B) (relating to special rule for certain
property assigned to classes) is amended by inserting after
the item relating to subparagraph (B)(iii) the following:
‘‘(B)(vii) ..........................................................................................
10’’.
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(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to property placed in service after the
date of the enactment of this Act.
SEC. 12408. EXPENSING OF BROADBAND INTERNET ACCESS
EXPENDITURES.
(a) IN GENERAL.—Part VI of subchapter B of chapter
1 (relating to itemized deductions for individuals and cor-
porations) is amended by inserting after section 190 the fol-
lowing new section:
‘‘SEC. 191. BROADBAND EXPENDITURES.
‘‘(a) TREATMENT OF EXPENDITURES.—
‘‘(1) IN
GENERAL.—A taxpayer may elect to
treat any qualified broadband expenditure which is
paid or incurred by the taxpayer as an expense which
is not chargeable to a capital account. Any expendi-
ture which is so treated shall be allowed as a deduc-
tion.
‘‘(2) ELECTION.—An election under paragraph
(1) shall be made at such time and in such manner
as the Secretary may prescribe by regulation.
‘‘(b) QUALIFIED BROADBAND EXPENDITURES.—For
purposes of this section—
‘‘(1) 
IN
GENERAL.—The 
term 
‘qualified
broadband expenditure’ means, with respect to any
taxable year, any direct or indirect costs incurred
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after the date of the enactment of this section, and on
or before the first December 31 which is 3 years after
such date, and properly taken into account with re-
spect to—
‘‘(A) the purchase or installation of quali-
fied equipment (including any upgrades thereto),
and
‘‘(B) the connection of such qualified equip-
ment to any qualified subscriber.
‘‘(2) CERTAIN
SATELLITE
EXPENDITURES
EX-
CLUDED.—Such term shall not include any costs in-
curred with respect to the launching of any satellite
equipment.
‘‘(3) LEASED EQUIPMENT.—Such term shall in-
clude so much of the purchase price paid by the lessor
of qualified equipment subject to a lease described in
subsection (c)(2)(B) as is attributable to expenditures
incurred by the lessee which would otherwise be de-
scribed in paragraph (1).
‘‘(4) LIMITATION
WITH
REGARD
TO
CURRENT
GENERATION BROADBAND SERVICES.—Only 50 per-
cent of the amounts taken into account under para-
graph (1) with respect to qualified equipment through
which current generation broadband services are pro-
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vided shall be treated as qualified broadband expendi-
tures.
‘‘(c) WHEN EXPENDITURES TAKEN INTO ACCOUNT.—
For purposes of this section—
‘‘(1) IN GENERAL.—Qualified broadband expend-
itures with respect to qualified equipment shall be
taken into account with respect to the first taxable
year in which—
‘‘(A) current generation broadband services
are provided through such equipment to qualified
subscribers, or
‘‘(B) next generation broadband services are
provided through such equipment to qualified
subscribers.
‘‘(2) LIMITATION.—
‘‘(A) IN GENERAL.—Qualified expenditures
shall be taken into account under paragraph (1)
only with respect to qualified equipment—
‘‘(i) the original use of which com-
mences with the taxpayer, and
‘‘(ii) which is placed in service after
the date of the enactment of this Act.
‘‘(B) SALE-LEASEBACKS.—For purposes of
subparagraph (A), if property—
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‘‘(i) is originally placed in service
after the date of the enactment of this Act
by any person, and
‘‘(ii) sold and leased back by such per-
son within 3 months after the date such
property was originally placed in service,
such property shall be treated as originally
placed in service not earlier than the date on
which such property is used under the leaseback
referred to in clause (ii).
‘‘(d) SPECIAL ALLOCATION RULES.—
‘‘(1) CURRENT GENERATION BROADBAND SERV-
ICES.—For purposes of determining the amount of
qualified broadband expenditures under subsection
(a)(1) with respect to qualified equipment through
which current generation broadband services are pro-
vided, if the qualified equipment is capable of serving
both qualified subscribers and other subscribers, the
qualified broadband expenditures shall be multiplied
by a fraction—
‘‘(A) the numerator of which is the sum of
the number of potential qualified subscribers
within the rural areas and the underserved areas
which the equipment is capable of serving with
current generation broadband services, and
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‘‘(B) the denominator of which is the total
potential subscriber population of the area which
the equipment is capable of serving with current
generation broadband services.
‘‘(2) NEXT
GENERATION
BROADBAND
SERV-
ICES.—For purposes of determining the amount of
qualified broadband expenditures under subsection
(a)(1) with respect to qualified equipment through
which next generation broadband services are pro-
vided, if the qualified equipment is capable of serving
both qualified subscribers and other subscribers, the
qualified broadband expenditures shall be multiplied
by a fraction—
‘‘(A) the numerator of which is the sum
of—
‘‘(i) the number of potential qualified
subscribers within the rural areas and un-
derserved areas, plus
‘‘(ii) the number of potential qualified
subscribers within the area consisting only
of residential subscribers not described in
clause (i),
which the equipment is capable of serving with
next generation broadband services, and
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‘‘(B) the denominator of which is the total
potential subscriber population of the area which
the equipment is capable of serving with next
generation broadband services.
‘‘(e) DEFINITIONS.—For purposes of this section—
‘‘(1) ANTENNA.—The term ‘antenna’ means any
device used to transmit or receive signals through the
electromagnetic spectrum, including satellite equip-
ment.
‘‘(2) CABLE OPERATOR.—The term ‘cable oper-
ator’ has the meaning given such term by section
602(5) of the Communications Act of 1934 (47 U.S.C.
522(5)).
‘‘(3) COMMERCIAL MOBILE SERVICE CARRIER.—
The term ‘commercial mobile service carrier’ means
any person authorized to provide commercial mobile
radio service as defined in section 20.3 of title 47,
Code of Federal Regulations.
‘‘(4) CURRENT GENERATION BROADBAND SERV-
ICE.—The term ‘current generation broadband serv-
ice’ means the transmission of signals at a rate of at
least 5,000,000 bits per second to the subscriber and
at least 1,000,000 bits per second from the subscriber.
‘‘(5) MULTIPLEXING OR DEMULTIPLEXING.—The
term ‘multiplexing’ means the transmission of 2 or
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more signals over a single channel, and the term
‘demultiplexing’ means the separation of 2 or more
signals previously combined by compatible multi-
plexing equipment.
‘‘(6) NEXT GENERATION BROADBAND SERVICE.—
The term ‘next generation broadband service’ means
the transmission of signals at a rate of at least
100,000,000 bits per second to the subscriber and at
least 20,000,000 bits per second from the subscriber.
‘‘(7) NONRESIDENTIAL SUBSCRIBER.—The term
‘nonresidential subscriber’ means any person who
purchases broadband services which are delivered to
the permanent place of business of such person.
‘‘(8) OPEN VIDEO SYSTEM OPERATOR.—The term
‘open video system operator’ means any person au-
thorized to provide service under section 653 of the
Communications Act of 1934 (47 U.S.C. 573).
‘‘(9) OTHER
WIRELESS
CARRIER.—The term
‘other wireless carrier’ means any person (other than
a telecommunications carrier, commercial mobile
service carrier, cable operator, open video system op-
erator, or satellite carrier) providing current genera-
tion broadband services or next generation broadband
service to subscribers through the radio transmission
of energy.
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‘‘(10) PACKET
SWITCHING.—The term ‘packet
switching’ means controlling or routing the path of
any digitized transmission signal which is assembled
into packets or cells.
‘‘(11) PROVIDER.—The term ‘provider’ means,
with respect to any qualified equipment—
‘‘(A) a cable operator,
‘‘(B) a commercial mobile service carrier,
‘‘(C) an open video system operator,
‘‘(D) a satellite carrier,
‘‘(E) a telecommunications carrier, or
‘‘(F) any other wireless carrier,
providing current generation broadband services or
next generation broadband services to subscribers
through such qualified equipment.
‘‘(12) PROVISION
OF
SERVICES.—A provider
shall be treated as providing services to 1 or more
subscribers if—
‘‘(A) such a subscriber has been passed by
the provider’s equipment and can be connected to
such equipment for a standard connection fee,
‘‘(B) the provider is physically able to de-
liver current generation broadband services or
next generation broadband services, as applica-
ble, to such a subscriber without making more
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than an insignificant investment with respect to
such subscriber,
‘‘(C) the provider has made reasonable ef-
forts to make such subscribers aware of the avail-
ability of such services,
‘‘(D) such services have been purchased by
1 or more such subscribers, and
‘‘(E) such services are made available to
such subscribers at average prices comparable to
those at which the provider makes available
similar services in any areas in which the pro-
vider makes available such services.
‘‘(13) QUALIFIED EQUIPMENT.—
‘‘(A) IN
GENERAL.—The term ‘qualified
equipment’ means equipment which provides
current generation broadband services or next
generation broadband services—
‘‘(i) at least a majority of the time
during periods of maximum demand to
each subscriber who is utilizing such serv-
ices, and
‘‘(ii) in a manner substantially the
same as such services are provided by the
provider to subscribers through equipment
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with respect to which no deduction is al-
lowed under subsection (a)(1).
‘‘(B) ONLY
CERTAIN
INVESTMENT
TAKEN
INTO ACCOUNT.—Except as provided in subpara-
graph (C) or (D), equipment shall be taken into
account under subparagraph (A) only to the ex-
tent it—
‘‘(i) extends from the last point of
switching to the outside of the unit, build-
ing, dwelling, or office owned or leased by
a subscriber in the case of a telecommuni-
cations carrier or broadband-over-powerline
operator,
‘‘(ii) extends from the customer side of
the mobile telephone switching office to a
transmission/receive 
antenna 
(including
such antenna) owned or leased by a sub-
scriber in the case of a commercial mobile
service carrier,
‘‘(iii) extends from the customer side of
the headend to the outside of the unit, build-
ing, dwelling, or office owned or leased by
a subscriber in the case of a cable operator
or open video system operator, or
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‘‘(iv) extends from a transmission/re-
ceive antenna (including such antenna)
which transmits and receives signals to or
from multiple subscribers, to a trans-
mission/receive antenna (including such an-
tenna) on the outside of the unit, building,
dwelling, or office owned or leased by a sub-
scriber in the case of a satellite carrier or
other wireless carrier, unless such other
wireless carrier is also a telecommuni-
cations carrier.
‘‘(C) PACKET
SWITCHING
EQUIPMENT.—
Packet switching equipment, regardless of loca-
tion, shall be taken into account under subpara-
graph (A) only if it is deployed in connection
with equipment described in subparagraph (B)
and is uniquely designed to perform the function
of packet switching for current generation
broadband services or next generation broadband
services, but only if such packet switching is the
last in a series of such functions performed in
the transmission of a signal to a subscriber or
the first in a series of such functions performed
in the transmission of a signal from a sub-
scriber.
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‘‘(D) MULTIPLEXING AND DEMULTIPLEXING
EQUIPMENT.—Multiplexing and demultiplexing
equipment shall be taken into account under sub-
paragraph (A) only to the extent it is deployed
in connection with equipment described in sub-
paragraph (B) and is uniquely designed to per-
form 
the 
function 
of 
multiplexing 
and
demultiplexing packets or cells of data and mak-
ing associated application adaptions, but only if
such multiplexing or demultiplexing equipment
is located between packet switching equipment
described in subparagraph (C) and the sub-
scriber’s premises.
‘‘(14) 
QUALIFIED
SUBSCRIBER.—The 
term
‘qualified subscriber’ means—
‘‘(A) with respect to the provision of current
generation broadband services—
‘‘(i) 
any 
nonresidential 
subscriber
maintaining a permanent place of business
in a rural area or underserved area, or
‘‘(ii) any residential subscriber resid-
ing in a dwelling located in a rural area or
underserved area which is not a saturated
market, and
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‘‘(B) with respect to the provision of next
generation broadband services—
‘‘(i) 
any 
nonresidential 
subscriber
maintaining a permanent place of business
in a rural area or underserved area, or
‘‘(ii) any residential subscriber.
‘‘(15) RESIDENTIAL
SUBSCRIBER.—The term
‘residential subscriber’ means any individual who
purchases broadband services which are delivered to
such individual’s dwelling.
‘‘(16) RURAL
AREA.—The term ‘rural area’
means any census tract which—
‘‘(A) is not within 10 miles of any incor-
porated or census designated place containing
more than 25,000 people, and
‘‘(B) is not within a county or county
equivalent which has an overall population den-
sity of more than 500 people per square mile of
land.
‘‘(17) RURAL
SUBSCRIBER.—The term ‘rural
subscriber’ means any residential subscriber residing
in a dwelling located in a rural area or nonresiden-
tial subscriber maintaining a permanent place of
business located in a rural area.
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‘‘(18) SATELLITE CARRIER.—The term ‘satellite
carrier’ means any person using the facilities of a
satellite or satellite service licensed by the Federal
Communications Commission and operating in the
Fixed-Satellite Service under part 25 of title 47 of the
Code of Federal Regulations or the Direct Broadcast
Satellite Service under part 100 of title 47 of such
Code to establish and operate a channel of commu-
nications for distribution of signals, and owning or
leasing a capacity or service on a satellite in order
to provide such point-to-multipoint distribution.
‘‘(19) SATURATED
MARKET.—The term ‘satu-
rated market’ means any census tract in which, as of
the date of the enactment of this section—
‘‘(A) current generation broadband services
have been provided by a single provider to 85
percent or more of the total number of potential
residential subscribers residing in dwellings lo-
cated within such census tract, and
‘‘(B) such services can be utilized—
‘‘(i) at least a majority of the time
during periods of maximum demand by
each such subscriber who is utilizing such
services, and
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‘‘(ii) in a manner substantially the
same as such services are provided by the
provider to subscribers through equipment
with respect to which no deduction is al-
lowed under subsection (a)(1).
‘‘(20) 
SUBSCRIBER.—The 
term 
‘subscriber’
means any person who purchases current generation
broadband services or next generation broadband serv-
ices.
‘‘(21) 
TELECOMMUNICATIONS
CARRIER.—The
term ‘telecommunications carrier’ has the meaning
given such term by section 3(44) of the Communica-
tions Act of 1934 (47 U.S.C. 153(44)), but—
‘‘(A) includes all members of an affiliated
group of which a telecommunications carrier is
a member, and
‘‘(B) does not include a commercial mobile
service carrier.
‘‘(22) TOTAL
POTENTIAL
SUBSCRIBER
POPU-
LATION.—The term ‘total potential subscriber popu-
lation’ means, with respect to any area and based on
the most recent census data, the total number of po-
tential residential subscribers residing in dwellings
located in such area and potential nonresidential sub-
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scribers maintaining permanent places of business lo-
cated in such area.
‘‘(23) UNDERSERVED AREA.—The term ‘under-
served area’ means—
‘‘(A) any census tract which is located in—
‘‘(i) an empowerment zone or enter-
prise community designated under section
1391, or
‘‘(ii) the District of Columbia Enter-
prise Zone established under section 1400,
or
‘‘(B) any census tract—
‘‘(i) the poverty level of which is at
least 30 percent (based on the most recent
census data), and
‘‘(ii) the median family income of
which does not exceed—
‘‘(I) in the case of a census tract
located in a metropolitan statistical
area, 70 percent of the greater of the
metropolitan area median family in-
come or the statewide median family
income, and
‘‘(II) in the case of a census tract
located in a nonmetropolitan statis-
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tical area, 70 percent of the nonmetro-
politan statewide median family in-
come.
‘‘(24) UNDERSERVED
SUBSCRIBER.—The term
‘underserved subscriber’ means any residential sub-
scriber residing in a dwelling located in an under-
served area or nonresidential subscriber maintaining
a permanent place of business located in an under-
served area.
‘‘(f) SPECIAL RULES.—
‘‘(1) PROPERTY
USED
OUTSIDE
THE
UNITED
STATES, 
ETC., 
NOT
QUALIFIED.—No expenditures
shall be taken into account under subsection (a)(1)
with respect to the portion of the cost of any property
referred to in section 50(b) or with respect to the por-
tion of the cost of any property specified in an elec-
tion under section 179.
‘‘(2) BASIS REDUCTION.—
‘‘(A) IN
GENERAL.—For purposes of this
title, the basis of any property shall be reduced
by the portion of the cost of such property taken
into account under subsection (a)(1).
‘‘(B) ORDINARY INCOME RECAPTURE.—For
purposes of section 1245, the amount of the de-
duction allowable under subsection (a)(1) with