‘‘Sec. 139. Space-related income.
‘‘Sec. 140. Cross references to other Acts.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
SEC. 3. CREDIT FOR PURCHASE OF QUALIFIED SPACE COM-
PANY STOCK.
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to business related credits) is amended by
adding at the end the following new section:
‘‘SEC. 45G. SPACE COMPANY INVESTMENT CREDIT.
‘‘(a) GENERAL RULE.—For purposes of section 38,
the space company investment credit determined under
this section for any taxable year is the amount paid in
the taxable year for the purchase of qualified stock in a
qualified space company.
‘‘(b) QUALIFIED SPACE COMPANY.—For purposes of
this section—
‘‘(1) IN GENERAL.—The term ‘qualified space
company’ means a domestic C corporation if for the
3-taxable-year period ending with the taxable year
immediately preceding the taxable year in which
qualified stock is purchased—
‘‘(A) the average annual gross receipts of
such entity does not exceed $100,000,000, and
‘‘(B) more than 70 percent of such gross
receipts are derived from space-based business.
‘‘(2) 
SPACE-BASED
BUSINESS.—The 
term
‘space-based business’ means a business whose gross
receipts are substantially space-related income, as
defined in section 139(b).
‘‘(3) AGGREGATION RULES.—Rules similar to
the rules of section 1202(d)(3) shall apply.
‘‘(c) QUALIFIED
STOCK.—For purposes of this
section—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this section, the term ‘qualified stock’
means any stock in a domestic C corporation if—
‘‘(A) as of the date of issuance of such
stock, such corporation is a qualified space
company, and
‘‘(B) except as provided in subsections (f)
and (h), such stock is acquired by the taxpayer
at its original issue (directly or through an un-
derwriter)—
‘‘(i) in exchange for money or other
property (not including stock), or
‘‘(ii) as compensation for services pro-
vided to such corporation (other than serv-
ices performed as an underwriter of such
stock).
‘‘(2) ACTIVE BUSINESS REQUIREMENT.—Stock
in a corporation shall not be treated as qualified
stock unless, during substantially all of the tax-
payer’s holding period for such stock—
‘‘(A) such corporation meets active busi-
ness requirements substantially similar to the
requirements of section 1202(e), determined on
the basis that the qualified trade or business is
a space-based business, and
‘‘(B) such corporation is a C corporation.
‘‘(3) CERTAIN PURCHASE BY CORPORATION OF
ITS OWN STOCK.—Rules similar to the rules of sec-
tion 1202(c)(3) shall apply.
‘‘(e) RECAPTURE.—If, during any taxable year end-
ing with or within the 10-year period beginning on the
date qualified stock was purchased by the taxpayer, the
issuer of such stock ceases to a qualified space company,
the tax under this chapter for such taxable year shall be
increased by the aggregate decrease in the credits allowed
under section 38 for all prior taxable years which would
have resulted solely from reducing to zero any credit deter-
mined under subsection (a) with respect to such stock.
‘‘(f) TERMINATION.—This section shall not apply to
stock acquired after December 31, 2009.’’.
(b) CREDIT ALLOWED AS PART OF GENERAL BUSI-
NESS CREDIT.—Section 38(b) of such Code (defining cur-
rent year business credit) is amended by striking ‘‘plus’’
at the end of paragraph (14), by striking the period at
the end of paragraph (15) and inserting ‘‘, plus’’, and by
adding at the end the following new paragraph:
‘‘(16) space company investment credit deter-
mined under section 45G(a).’’.
(c) CONFORMING AMENDMENTS.—
(1) Section 39(d) of such Code is amended by
adding at the end the following new paragraph:
‘‘(11) NO CARRYBACK OF SPACE COMPANY IN-
VESTMENT CREDIT BEFORE JANUARY 1, 2002.—No
portion of the unused business credit for any taxable
year which is attributable to the space company in-
vestment credit determined under section 45G may
be carried back to a taxable year beginning before
January 1, 2002.’’.
(2) Subsection (c) of section 196 of such Code
is amended by striking ‘‘and’’ at the end of para-
graph (9), by striking the period at the end of para-
graph (10) and inserting ‘‘, and’’, and by adding at
the end the following new paragraph:
‘‘(11) the space company investment credit de-
termined under section 45G(a).’’.
(3) The table of sections for subpart D of part
IV of subchapter A of chapter 1 of such Code is
amended by adding at the end the following new
item:
‘‘Sec. 45G. Space Company Investment Credit.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to costs paid or incurred in taxable
years beginning after December 31, 2001.
SEC. 4. CAPITAL GAINS EXCLUSION.
(a) IN GENERAL.—Part I of subchapter P of the In-
ternal Revenue Code of 1986 (relating to treatment of
capital gains) is amended by adding at the end the fol-
lowing new section:
‘‘SEC. 1203. EXCLUSION FOR GAINS FROM SALE OR EX-
CHANGE OF STOCK 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 or article which is pro-
duced (within the meaning of section 139(b)(5))
by the corporation in outer space, or
‘‘(B) any service provided by the corpora-
tion in or from outer space, and
‘‘(2) at least 90 percent of the expenses of such
corporation are attributable to the active conduct of
a trade or business of providing a product, article,
or service described in paragraph (1).
Such term shall not include a corporation providing a serv-
ice, product, or article 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 from sale or exchange of stock
of qualified space corporations.’’.
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
Æ