‘‘(A) IN
GENERAL.—The term ‘qualified 
tribal school modernization bond’ means, sub-
ject to subparagraph (B), any bond issued as 
part of an issue under section 2(b) of the In-
dian School Construction Act of 2003, as in ef-
fect on the date of the enactment of this sec-
tion, if—
‘‘(i) 95 percent or more of the pro-
ceeds of such issue are to be used for the 
construction, rehabilitation, or repair of a 
school facility funded by the Bureau of In-
dian Affairs of the Department of the Inte-
rior or for the acquisition of land on which 
such a facility is to be constructed with 
part of the proceeds of such issue, 
‘‘(ii) the bond is issued by a tribe, 
‘‘(iii) the issuer designates such bond 
for purposes of this section, and 
‘‘(iv) the term of each bond which is 
part of such issue does not exceed 15 
years. 
‘‘(B) NATIONAL LIMITATION ON AMOUNT 
OF BONDS DESIGNATED.—
‘‘(i) NATIONAL LIMITATION.—There is 
a national qualified tribal school mod-
ernization bond limitation for each cal-
endar year. Such limitation is—
‘‘(I) $200,000,000 for 2004, 
‘‘(II) $200,000,000 for 2005, 
and 
‘‘(III) zero after 2006. 
‘‘(ii) ALLOCATION OF LIMITATION.—
The national qualified tribal school mod-
ernization bond limitation shall be allo-
cated to tribes by the Secretary of the In-
terior subject to the provisions of section 2 
of the Indian School Construction Act of 
2003, as in effect on the date of the enact-
ment of this section. 
‘‘(iii) DESIGNATION SUBJECT TO LIMI-
TATION
AMOUNT.—The maximum aggre-
gate face amount of bonds issued during 
any calendar year which may be designated 
under subsection (d)(1) with respect to any 
tribe shall not exceed the limitation 
amount allocated to such government 
under clause (ii) for such calendar year. 
‘‘(iv) CARRYOVER OF UNUSED LIMITA-
TION.—If for any calendar year—
‘‘(I) the limitation amount under 
this subparagraph, exceeds 
‘‘(II) the amount of qualified 
tribal school modernization bonds 
issued during such year,
the limitation amount under this subpara-
graph for the following calendar year shall 
be increased by the amount of such excess. 
The preceding sentence shall not apply if 
such following calendar year is after 2010. 
‘‘(2) CREDIT
ALLOWANCE
DATE.—The term 
‘credit allowance date’ means—
‘‘(A) March 15, 
‘‘(B) June 15, 
‘‘(C) September 15, and 
‘‘(D) December 15. 
Such term includes the last day on which the bond 
is outstanding. 
‘‘(3) BOND.—The term ‘bond’ includes any ob-
ligation. 
‘‘(4) TRIBE.—The term ‘tribe’ has the meaning 
given the term ‘Indian tribal government’ by section 
7701(a)(40), including the application of section 
7871(d). Such term includes any consortium of 
tribes approved by the Secretary of the Interior.
‘‘(e) CREDIT INCLUDED IN GROSS INCOME.—Gross 
income includes the amount of the credit allowed to the 
taxpayer under this section (determined without regard to 
subsection (c)) and the amount so included shall be treat-
ed as interest income. 
‘‘(f) BONDS HELD
BY REGULATED INVESTMENT 
COMPANIES.—If any qualified tribal school modernization 
bond is held by a regulated investment company, the credit 
determined under subsection (a) shall be allowed to share-
holders of such company under procedures prescribed by 
the Secretary. 
‘‘(g) CREDITS MAY BE STRIPPED.—Under regula-
tions prescribed by the Secretary— 
‘‘(1) IN GENERAL.—There may be a separation 
(including at issuance) of the ownership of a quali-
fied tribal school modernization bond and the entitle-
ment to the credit under this section with respect to 
such bond. In case of any such separation, the credit 
under this section shall be allowed to the person who 
on the credit allowance date holds the instrument ev-
idencing the entitlement to the credit and not to the 
holder of the bond. 
‘‘(2) CERTAIN RULES TO APPLY.—In the case 
of a separation described in paragraph (1), the rules 
of section 1286 shall apply to the qualified tribal
school modernization bond as if it were a stripped 
bond and to the credit under this section as if it 
were a stripped coupon. 
‘‘(h) TREATMENT
FOR
ESTIMATED
TAX
PUR-
POSES.—Solely for purposes of sections 6654 and 6655, 
the credit allowed by this section to a taxpayer by reason 
of holding a qualified tribal school modernization bonds 
on a credit allowance date shall be treated as if it were 
a payment of estimated tax made by the taxpayer on such 
date. 
‘‘(i) CREDIT MAY BE TRANSFERRED.—Nothing in 
any law or rule of law shall be construed to limit the trans-
ferability of the credit allowed by this section through sale 
and repurchase agreements. 
‘‘(j) CREDIT TREATED AS ALLOWED UNDER PART 
IV OF SUBCHAPTER A.—For purposes of subtitle F, the 
credit allowed by this section shall be treated as a credit 
allowable under part IV of subchapter A of this chapter. 
‘‘(k) REPORTING.—Issuers of qualified tribal school 
modernization bonds shall submit reports similar to the 
reports required under section 149(e).’’. 
(2) CLERICAL AMENDMENT.—The table of sub-
chapters for chapter 1 of the Internal Revenue Code 
of 1986 is amended by adding at the end the fol-
lowing new item:
‘‘Subchapter Z. Tribal school modernization provisions.’’
(d) SOVEREIGN IMMUNITY.—This section and the 
amendments made by this section shall not be construed 
to impact, limit, or affect the sovereign immunity of the 
Federal Government or any State or tribal government. 
(e) EFFECTIVE DATE.—This section and the amend-
ments made by this section shall take effect on the date 
of the enactment of this Act with respect to bonds issued 
after December 31, 2003.
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