I
106TH CONGRESS
2D SESSION
H. R. 3898
To amend the Internal Revenue Code of 1986 to exclude from Federal
taxation certain income derived from the manufacture of products and
provision of services in outer space.
IN THE HOUSE OF REPRESENTATIVES
MARCH 9, 2000
Mr. ROHRABACHER (for himself, Mr. SENSENBRENNER, Mr. HALL of Texas,
Mr. GORDON, Mr. WELDON of Florida, Mr. CALVERT, Mr. BARTLETT of
Maryland, Mr. LUCAS of Oklahoma, Mr. COOK, and Ms. JACKSON-LEE
of Texas) introduced the following bill; which was referred to the Com-
mittee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to exclude
from Federal taxation certain income derived from the
manufacture of products and provision of services in
outer space.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Zero Gravity, Zero
Tax Act of 2000’’.
SEC. 2. SPACE-RELATED INCOME.
(a) EXCLUSION FROM GROSS INCOME.—
(1) IN GENERAL.—Part III of subchapter B of
chapter 1 of the Internal Revenue Code of 1986 (re-
lating to items specifically excluded from gross in-
come) is amended by redesignating section 139 as
section 140 and inserting after section 138 the fol-
lowing new section:
‘‘SEC. 139. SPACE-RELATED INCOME.
‘‘(a) GENERAL RULE.—Gross income shall not in-
clude space-related income.
‘‘(b) SPACE-RELATED INCOME.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘space-related income’ means—
‘‘(A) income derived from the sale by the
taxpayer to an unrelated person of—
‘‘(i) any product which is manufac-
tured by the taxpayer in outer space, and
‘‘(ii) any service provided by the tax-
payer in or from outer space, and
‘‘(B) income of an individual attributable
to services performed in or from outer space by
such individual in a trade or business.
‘‘(2) EXCEPTION
FOR
TELECOMMUNICATIONS
SERVICES, ETC.—Paragraph (1)(A)(ii) shall not
apply to any telecommunications service, any service
provided by a weather or other earth observation
satellite, and any service of transporting property to
or from outer space.
‘‘(c) 
EXCLUSION
FROM
TARIFFS, 
ETC.—Any
product—
‘‘(1) which is manufactured in outer space, and
‘‘(2) which was—
‘‘(A) launched from, and returned to
Earth, within the United States, or
‘‘(B) manufactured at a facility in outer
space which is owned by 1 or more United
States persons,
shall be exempt from all Federal excises, imposts, and du-
ties and any other Federal tariffs.
‘‘(d) PHASEOUT OF BENEFITS.—In the case of a tax-
able year beginning after December 31, 2025, the amount
excluded under subsection (a) shall be reduced (but not
below zero) by x/20th’s of the amount excludable without
regard to this subsection, where ‘x’ is the number of years
such taxable year is after the last taxable year beginning
before January 1, 2026. A similar rule shall apply to the
benefits under subsection (c).’’
(2) CLERICAL AMENDMENT.—The table of sec-
tions for part III of such Code is amended by strik-
ing the last item and inserting the following new
items:
‘‘Sec. 139. Space-related income.
‘‘Sec. 140. Cross references to other Acts.’’
(b) CAPITAL GAINS EXCLUSION.—
(1) IN GENERAL.—Part I of subchapter P of
such Code (relating to treatment of capital gains) is
amended by adding at the end the following new sec-
tion:
‘‘SEC. 1203. EXCLUSION FOR GAINS OF QUALIFIED SPACE
CORPORATIONS.
‘‘(a) IN GENERAL.—Gross income shall not include
gain on the sale or exchange of any stock of a qualified
space corporation.
‘‘(b) QUALIFIED SPACE CORPORATION.—For pur-
poses of subsection (a), the term ‘qualified space corpora-
tion’ means, with respect to any taxable year, a domestic
corporation which is a C corporation if—
‘‘(1) such corporation is organized exclusively
for providing to unrelated persons—
‘‘(A) any product which is manufactured
by the corporation in outer space, or
‘‘(B) any service provided by the corpora-
tion in or from outer space, and
‘‘(2) such corporation derives at least 90 per-
cent of its gross receipts from the active conduct of
a trade or business of providing a product or service
described in paragraph (1).
Such term shall not include a corporation providing a serv-
ice or product described in section 139(b)(2).’’.
(2) CLERICAL AMENDMENT.—The table of sec-
tions for part I of subchapter P of such Code is
amended by adding at the end the following new
item:
‘‘Sec. 1203. Exclusion for gains of qualified space corporations.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
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