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.
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 ‘‘Bond Financing Re-
newal Act of 2003’’. 
SEC. 2. MODIFICATIONS TO SMALL ISSUE BOND PROVI-
SIONS. 
(a) INCREASE IN AMOUNT OF QUALIFIED SMALL 
ISSUE BONDS PERMITTED FOR FACILITIES TO BE USED 
BY RELATED PRINCIPAL USERS.—
(1) 
IN
GENERAL.—Clause 
(i) 
of 
section 
144(a)(4)(A) of the Internal Revenue Code of 1986 
(relating to $10,000,000 limit in certain cases) is 
amended by striking ‘‘$10,000,000’’ and inserting 
‘‘$20,000,000’’. 
(2) 
COST-OF-LIVING
ADJUSTMENT.—Section 
144(a)(4) of such Code is amended by adding at the 
end the following: 
‘‘(G) COST-OF-LIVING
ADJUSTMENT.—In 
the case of a taxable year beginning in a cal-
endar year after 2003, the $20,000,000 amount 
under subparagraph (A) shall be increased by 
an amount equal to—
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment 
under section 1(f)(3) for the calendar year 
in which the taxable year begins, deter-
mined by substituting ‘calendar year 2002’ 
for ‘calendar year 1992’ in subparagraph 
(B) thereof.’’. 
(3) CLERICAL
AMENDMENT.—The heading of 
paragraph (4) of section 144(a) of such Code is 
amended by striking ‘‘$10,000,000’’ and inserting 
‘‘$20,000,000’’.
(4) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to—
(A) obligations issued after the date of the 
enactment of this Act, and 
(B) capital expenditures made after such 
date with respect to obligations issued on or be-
fore such date. 
(b) DEFINITION OF MANUFACTURING FACILITY.—
(1) IN
GENERAL.—Section 144(a)(12)(C) of 
such Code (defining manufacturing facility) is 
amended to read as follows: 
‘‘(C) MANUFACTURING FACILITY.—For the 
purposes of this paragraph, the term ‘manufac-
turing facility’ means any facility—
‘‘(i) which is used in the manufacture 
of tangible personal property (including the 
processing resulting in a change in the 
condition of such property), 
‘‘(ii) which is used in the manufac-
ture, development, or production of specifi-
cally developed software products or proc-
esses if—
‘‘(I) it takes more than 6 months 
to develop or produce such products,
‘‘(II) the development or produc-
tion could not with due diligence be 
reasonably expected to occur in less 
than 6 months, and 
‘‘(III) the software product or 
process comprises programs, routines, 
and attendant documentation devel-
oped and maintained for use in com-
puter and telecommunications tech-
nology, or 
‘‘(iii) which is used in the manufac-
ture, development, or production of spe-
cially developed biobased or bioenergy 
products or processes if—
‘‘(I) it takes more than 6 months 
to develop or produce, 
‘‘(II) the development or produc-
tion could not with due diligence be 
reasonably expected to occur in less 
than 6 months, and 
‘‘(III) the biobased or bioenergy 
product or process comprises prod-
ucts, processes, programs, routines, 
and attendant documentation devel-
oped and maintained or the utilization
of biological materials in commercial 
or industrial products, or renewable 
domestic agricultural or forestry ma-
terials in commercial or industrial 
products, or for the utilization of bio-
mass materials. 
‘‘(D) RELATED
FACILITY.—For purposes 
of subparagraph (C), the term ‘manufacturing 
facility’ includes facilities that are directly and 
functionally related to a manufacturing facility 
(determined without regard to this sentence) 
if— 
‘‘(i) such facilities, including an office 
facility and a research and development fa-
cility, are located on the same site as the 
manufacturing facility, and 
‘‘(ii) not more than 40 percent of the 
net proceeds of the issue are used to pro-
vide such facilities, but shall not include a 
facility solely for research and development 
activities.’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply to obligations issued 
after the date of the enactment of this Act.
SEC. 3. ACQUISITION INTEREST EXPENSES OF FINANCIAL 
INSTITUTIONS FOR SMALL ISSUE BONDS 
MADE DEDUCTIBLE. 
(a) 
IN
GENERAL.—Clause 
(ii) 
of 
section 
265(b)(3)(B) of the Internal Revenue Code of 1986 (relat-
ing to certain bonds not treated as private activity bonds) 
is amended by striking ‘‘or’’ at the end of subclause (I), 
by striking the period at the end of subclause (II) and 
inserting ‘‘, or’’, and by inserting after subclause (II) the 
following new subclause: 
‘‘(III) any obligation which is a 
qualified small issue bond described in 
section 144(a)(12)(B) if such obliga-
tion is part of an issue the aggregate 
authorized face amount of which is 
less than $2,000,000.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to obligations issued after the date 
of the enactment of this Act.
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