I 
117TH CONGRESS 
1ST SESSION H. R. 2977 
To amend the Internal Revenue Code of 1986 to exclude gain from the 
sale or exchange of the entire interest in a wholly-owned rural incumbent 
local exchange carrier, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 4, 2021 
Mr. FERGUSON 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 exclude 
gain from the sale or exchange of the entire interest 
in a wholly-owned rural incumbent local exchange carrier, 
and for other purposes. 
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 ‘‘Connect America Now 
Act’’ or as the ‘‘CAN Act’’. 
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‘‘(b) RURAL INCUMBENT LOCAL EXCHANGE CAR-
RIER.—For purposes of this section, the term ‘rural in-
cumbent local exchange carrier’ means, with respect to a 
qualified 1-year period, a rural incumbent local exchange 
carrier (as defined in section 48D) that offers broadband 
internet access service at upload and download speeds of 
at least 1,000 megabits per second— 
‘‘(1) in the case of the 4th qualified 1-year pe-
riod, to not less than 30 percent of locations in an 
area described in section 139I(c)(2), 
‘‘(2) in the case of the 5th qualified 1-year pe-
riod, to not less than 40 percent of such locations, 
and 
‘‘(3) in the case of the 6th qualified 1-year pe-
riod, to not less than 50 percent of such locations. 
‘‘(c) QUALIFIED 1-YEAR PERIOD.—For purposes of 
this section, the term ‘qualified 1-year period’ means, with 
respect to a rural incumbent local exchange carrier with 
respect to a sale or exchange described in subsection 139I, 
the 1-year period starting on the date of such sale or ex-
change, and each of the 5 subsequent 1-year periods. 
‘‘(d) DEFINITIONS.—For purposes of this section, 
terms defined in the Communications Act of 1934 have 
the meaning given such terms in such Act.’’. 
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(b) CLERICAL AMENDMENT.—The table of parts of 
subchapter B of chapter 1 of such Code is amended by 
adding at the end the following new item: 
‘‘PART XII—RECAPTURE OF EXCLUSION OF GAIN FROM SALE OF RURAL 
INCUMBENT LOCAL EXCHANGE CARRIER STOCK’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply after the date of the enactment 
of this Act. 
SEC. 4. RURAL COMMUNICATIONS INVESTMENT TAX CRED-
IT. 
(a) IN GENERAL.—Subpart E of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after subsection 48C the 
following new section: 
‘‘SEC. 48D. RURAL COMMUNICATIONS INVESTMENT CRED-
IT. 
‘‘(a) IN GENERAL.— 
‘‘(1) CREDIT
AMOUNT.—For the purposes of 
section 46, in the case of a rural incumbent local ex-
change carrier, the rural communications investment 
credit for any taxable year is an amount equal to 30 
percent of the amounts that are paid or incurred by 
such carrier during any qualified 1-year period end-
ing in such taxable year to purchase, maintain, or 
improve property for the purpose of providing voice 
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telephone service or broadband internet access serv-
ice in an area described in section 139I(c)(2). 
‘‘(2) 
EXCLUSION
OF
CERTAIN
FEDERAL 
FUNDS.—Amounts paid or incurred which are other-
wise taken into account under paragraph (1) with 
respect to any qualified 1-year period shall be re-
duced (including for purposes of subsection (b)) by 
the amount of any Federal universal service support 
under section 254 of the Communications Act of 
1934 for the deployment of communications infra-
structure, or any Federal grant for the deployment 
of communications infrastructure received by such 
carrier and properly attributable to such period. 
‘‘(b) RURAL INCUMBENT LOCAL EXCHANGE CAR-
RIER.—For purposes of this section, the term ‘rural in-
cumbent local exchange carrier’ means, for a 1-year pe-
riod, an incumbent local exchange carrier— 
‘‘(1) whose stock has been acquired in a sale or 
exchange described in section 139I, 
‘‘(2) for which— 
‘‘(A) the ratio of— 
‘‘(i) the amount described in sub-
section (a)(1), divided by 
‘‘(ii) the average active voice telephone 
service or broadband internet access serv-
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ice connections during the qualified 1-year 
period referred to in subsection (a)(1), is 
not less than 
‘‘(B) the ratio of— 
‘‘(i) the product of 1.25 and the 
annualized average of the amounts de-
scribed in subsection (a)(1) for the 3-year 
period preceding the sale or exchange, di-
vided by 
‘‘(ii) the average active voice telephone 
service or broadband internet access serv-
ice connections during such 3-year period, 
and 
‘‘(3) in the case of the 3rd qualified 1-year pe-
riod, that offers broadband internet access service 
described in section 292(b) to not less than 20 per-
cent of locations in an area described in section 
139I(c)(2). 
‘‘(c) QUALIFIED 1-YEAR PERIOD.—For purposes of 
this section, the term ‘qualified 1-year period’ means, with 
respect to a rural incumbent local exchange carrier with 
respect to a sale or exchange described in subsection 139I, 
the 1-year period starting on the date of such sale or ex-
change, and each of the 2 subsequent 1-year periods. 
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‘‘(d) DEFINITIONS.—For purposes of this section, 
terms defined in the Communications Act of 1934 have 
the meaning given such terms in such Act. 
‘‘(e) TRANSFER OF CREDIT.—If, with respect to a 
credit under subsection (a) for any taxable year, the tax-
payer elects the application of this paragraph for such tax-
able year with respect to all (or any portion specified in 
such election) of such credit, the person specified in such 
election, and not the taxpayer, shall be treated as the tax-
payer for purposes of this title with respect to such credit 
(or such portion thereof).’’. 
(b) CONFORMING AMENDMENT.—Paragraph (6) of 
section 46 of such Code is amended to read as follows: 
‘‘(6) the rural communications investment cred-
it.’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
for subpart E of part IV of subchapter A of chapter 1 
of such Code is amended by inserting after the item relat-
ing to section 48C the following new item: 
‘‘Sec. 48D. Rural communications investment credit.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred after 
the date of the enactment of this Act. 
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SEC. 5. INCREASE AND EXPANSION OF PRIVATE ACTIVITY 
BONDS. 
(a) INCREASE IN VOLUME CAP.—Section 146(d)(1) 
of the Internal Revenue Code of 1986 is amended by in-
serting ‘‘120 percent of’’ before ‘‘the greater of’’. 
(b) EXEMPT FACILITY BONDS FOR BROADBAND IN-
FRASTRUCTURE.—Section 142(a) of such Code is amend-
ed by striking ‘‘or’’ at the end of paragraph (14), by strik-
ing the period at the end of paragraph (15) and inserting 
‘‘, or’’, and by adding at the end the following new para-
graph: 
‘‘(16) infrastructure for the provision of 
broadband internet access service.’’. 
(c) EFFECTIVE DATES.— 
(1) INCREASE IN VOLUME CAP.—The amend-
ment made by subsection (a) shall apply to calendar 
years after 2020. 
(2) EXEMPT FACILITY BONDS FOR BROADBAND 
INFRASTRUCTURE.—The amendments made by sub-
section (b) shall apply to bonds issued after the date 
of the enactment of this Act. 
Æ 
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