I 
117TH CONGRESS 
1ST SESSION H. R. 2737 
To amend the Internal Revenue Code of 1986 to modify certain rules applica-
ble to qualified small issue manufacturing bonds, to expand certain 
exceptions to the private activity bond rules for first-time farmers, and 
for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 21, 2021 
Mrs. MURPHY of Florida (for herself and Mr. LAHOOD) 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 
certain rules applicable to qualified small issue manufac-
turing bonds, to expand certain exceptions to the private 
activity bond rules for first-time farmers, 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 ‘‘Modernizing Agricul-
tural and Manufacturing Bonds Act’’. 
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SEC. 2. MODIFICATIONS TO QUALIFIED SMALL ISSUE 
BONDS. 
(a) MANUFACTURING FACILITIES TO INCLUDE PRO-
DUCTION OF INTANGIBLE PROPERTY AND FUNCTIONALLY 
RELATED
FACILITIES.—Subparagraph (C) of section 
144(a)(12) of the Internal Revenue Code of 1986 is 
amended to read as follows: 
‘‘(C) 
MANUFACTURING
FACILITY.—For 
purposes of this paragraph— 
‘‘(i) IN GENERAL.—The term ‘manu-
facturing 
facility’ 
means 
any 
facility 
which— 
‘‘(I) is used in the manufacturing 
or production of tangible personal 
property (including the processing re-
sulting in a change in the condition of 
such property), 
‘‘(II) is used in the creation or 
production 
of 
intangible 
property 
which 
is 
described 
in 
section 
197(d)(1)(C)(iii), or 
‘‘(III) is functionally related and 
subordinate to a facility described in 
subclause (I) or (II) if such facility is 
located on the same site as the facility 
described in subclause (I) or (II). 
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‘‘(ii) 
CERTAIN
FACILITIES
IN-
CLUDED.—The term ‘manufacturing facil-
ity’ includes facilities that are directly re-
lated and ancillary to a manufacturing fa-
cility (determined without regard to this 
clause) if— 
‘‘(I) those facilities are located on 
the same site as the manufacturing 
facility, and 
‘‘(II) not more than 25 percent 
of the net proceeds of the issue are 
used to provide those facilities. 
‘‘(iii) 
LIMITATION
ON
OFFICE 
SPACE.—A rule similar to the rule of sec-
tion 142(b)(2) shall apply for purposes of 
clause (i). 
‘‘(iv) LIMITATION
ON
REFUNDINGS 
FOR CERTAIN PROPERTY.—Subclauses (II) 
and (III) of clause (i) shall not apply to 
any bond issued on or before the date of 
the enactment of the Modernizing Agricul-
tural and Manufacturing Bonds Act, or to 
any bond issued to refund a bond issued 
on or before such date (other than a bond 
to which clause (iii) of this subparagraph 
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(as in effect before the date of the enact-
ment of the Modernizing Agricultural and 
Manufacturing Bonds Act applies)), either 
directly or in a series of refundings.’’. 
(b) INCREASE IN LIMITATIONS.—Section 144(a)(4) 
of such Code is amended— 
(1) 
in 
subparagraph 
(A)(i), 
by 
striking 
‘‘$10,000,000’’ and inserting ‘‘$50,000,000’’; and 
(2) in the heading, by striking ‘‘$10,000,000’’ and 
inserting ‘‘$50,000,000’’. 
(c) 
ADJUSTMENT
FOR
INFLATION.—Section 
144(a)(4) of the Internal Revenue Code of 1986 is amend-
ed by adding at the end the following new subparagraph: 
‘‘(H) ADJUSTMENT
FOR
INFLATION.—In 
the case of any calendar year after 2021, the 
$50,000,000 amount in subparagraph (A) shall 
be increased by an amount equal to— 
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for the cal-
endar year, determined by substituting 
‘calendar year 2020’ for ‘calendar year 
2016’ in subparagraph (A)(ii) thereof. 
If any amount as increased under the preceding 
sentence is not a multiple of $100, such amount 
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shall be rounded to the nearest multiple of 
$100.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to obligations issued after the date 
of the enactment of this Act. 
SEC. 3. EXPANSION OF CERTAIN EXCEPTIONS TO THE PRI-
VATE ACTIVITY BOND RULES FOR FIRST- 
TIME FARMERS. 
(a) INCREASE IN DOLLAR LIMITATION.— 
(1) IN GENERAL.—Section 147(c)(2)(A) of the 
Internal Revenue Code of 1986 is amended by strik-
ing ‘‘$450,000’’ and inserting ‘‘$552,500’’. 
(2) REPEAL OF SEPARATE LOWER DOLLAR LIM-
ITATION
ON
USED
FARM
EQUIPMENT.—Section 
147(c)(2) of such Code is amended by striking sub-
paragraph (F) and by redesignating subparagraphs 
(G) and (H) as subparagraphs (F) and (G), respec-
tively. 
(3) QUALIFIED SMALL ISSUE BOND LIMITATION 
CONFORMED TO INCREASED DOLLAR LIMITATION.— 
Section 144(a)(11)(A) of such Code is amended by 
striking ‘‘$250,000’’ and inserting ‘‘$552,500’’. 
(4) INFLATION ADJUSTMENT.— 
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(A) IN GENERAL.—Section 147(c)(2)(G) of 
such Code, as redesignated by paragraph (2), is 
amended— 
(i) by striking ‘‘after 2008, the dollar 
amount in subparagraph (A) shall be in-
creased’’ and inserting ‘‘after 2021, the 
dollar amounts in subparagraph (A) and 
section 144(a)(11)(A) shall each be in-
creased’’; and 
(ii) in clause (ii), by striking ‘‘2007’’ 
and inserting ‘‘2020’’. 
(B) 
CROSS-REFERENCE.—Section 
144(a)(11) of such Code is amended by adding 
at the end the following new subparagraph: 
‘‘(D) INFLATION ADJUSTMENT.—For infla-
tion adjustment of dollar amount contained in 
subparagraph (A), see section 147(c)(2)(G).’’. 
(b) SUBSTANTIAL
FARMLAND
DETERMINED
ON 
BASIS
OF AVERAGE RATHER THAN MEDIAN FARM 
SIZE.—Section 147(c)(2)(E) of such Code is amended by 
striking ‘‘median’’ and inserting ‘‘average’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to bonds issued after the date of 
the enactment of this Act. 
Æ 
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