SEC. 2. FINDINGS AND PURPOSES. 
(a) FINDINGS.—Congress makes the following find-
ings: 
(1) Current trends in the telecommunications 
industry show that there is increasing convergence 
among various media, including broadcasting, cable 
television, and Internet-based businesses, that pro-
vide news, information, and entertainment. 
(2) This convergence will continue, and there-
fore, diversifying the ownership of telecommuni-
cations facilities remains a preeminent public inter-
est concern that should be reflected in both tele-
communications and tax policy. 
(3) A market-based, voluntary system of invest-
ment incentives is an effective, lawful, and economi-
cally sound means of facilitating entry and diver-
sification of ownership in the telecommunications in-
dustry. 
(4) Opportunities for new entrants to partici-
pate and grow in the telecommunications industry 
have substantially decreased since the end of the 
Federal Communications Commission’s tax certifi-
cate policy in 1995, particularly in light of the avail-
ability of tax-free like-kind exchanges, despite the 
most robust period of transfers of radio and tele-
vision stations in history. During this time, busi-
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nesses owned or controlled by socially disadvantaged 
individuals, including, but not limited to, members of 
minority groups and women, have continued to be 
underrepresented as owners of telecommunications 
facilities. 
(5) Businesses owned or controlled by socially 
disadvantaged individuals are, and historically have 
been, economically disadvantaged in the tele-
communications industry. For these businesses, ac-
cess to and cost of capital are and have been sub-
stantial obstacles to new entry and growth. Con-
sequently, diversification of ownership in the tele-
communications industry has been limited. 
(6) Telecommunications facilities owned by new 
entrants may not be attractive to investors because 
their start-up costs are often high, their revenue 
streams are uncertain, and their profit margins are 
unknown. 
(7) It is consistent with the public interest and 
with the pro-competition policies of the Tele-
communications Act of 1996 to provide incentives 
that will facilitate investments in, and acquisition of, 
telecommunications facilities by economically and so-
cially disadvantaged businesses, thereby diversifying 
the ownership of telecommunications facilities. 
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(8) Increased participation by economically and 
socially disadvantaged businesses in the ownership of 
telecommunications facilities will enhance competi-
tion in the telecommunications industry. Permitting 
sellers of telecommunications facilities to defer tax-
ation of gains from transactions involving economi-
cally and socially disadvantaged businesses, or cer-
tain small businesses supported by investments from 
the Telecommunications Development Fund that 
provides capital for such businesses, will further the 
development of a competitive and diverse United 
States telecommunications industry without govern-
mental intrusion in private investment decisions. 
(9) The public interest would not be served by 
attempts to diversify the ownership of telecommuni-
cations businesses through any approach that would 
involve the use of mandated set-asides or quotas. 
(10) Today, the telecommunications industry is 
struggling to survive one of its most troubling times. 
Therefore, facilitating voluntary, pro-competitive 
transactions that will promote ownership of tele-
communications facilities by economically and so-
cially disadvantaged businesses and certain small 
businesses will aid in providing the investment and 
capital that is crucial to this sector. 
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(b) PURPOSE.—The purpose of this Act is to facili-
tate voluntary, pro-competitive transactions that will pro-
mote ownership of telecommunications facilities by eco-
nomically and socially disadvantaged businesses and cer-
tain small businesses. 
SEC. 3. NONRECOGNITION OF GAIN ON CERTAIN QUALI-
FIED SALES OF TELECOMMUNICATIONS BUSI-
NESSES. 
(a) IN GENERAL.—Subchapter O of chapter 1 of the 
Internal Revenue Code of 1986 (relating to gain or loss 
on disposition of property) is amended by inserting after 
part IV the following new part: 
‘‘PART V—CERTAIN SALES OF 
TELECOMMUNICATIONS BUSINESSES 
‘‘Sec. 1071. Nonrecognition of gain on certain sales of telecommunications busi-
nesses. 
‘‘SEC. 1071. NONRECOGNITION OF GAIN ON CERTAIN SALES 
OF TELECOMMUNICATIONS BUSINESSES. 
‘‘(a) IN GENERAL.—For purposes of this subtitle, if 
a taxpayer elects the application of this section to a quali-
fied telecommunications sale, such sale shall be treated as 
an involuntary conversion of property within the meaning 
of section 1033. 
‘‘(b) LIMITATION ON AMOUNT OF GAIN ON WHICH 
TAX MAY BE DEFERRED.— 
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‘‘(1) IN GENERAL.—The amount of gain on any 
qualified telecommunications sale which is not recog-
nized by reason of this section— 
‘‘(A) shall not exceed $250,000,000 per 
sale, and 
‘‘(B) shall not exceed 1⁄3 of such dollar 
amount per taxable year. 
‘‘(2) 
CARRYFORWARDS
OF
UNUSED 
AMOUNTS.—If the amount of gain on any qualified 
telecommunications sale which is not recognized by 
reason of this section exceeds the limitation imposed 
by paragraph (1)(B) for the taxable year, such ex-
cess shall be carried to the succeeding taxable year 
and added to the amount allowable under this sec-
tion for such taxable year. 
‘‘(c) QUALIFIED TELECOMMUNICATIONS SALE.—For 
purposes of this section, the term ‘qualified telecommuni-
cations sale’ means any sale to an eligible purchaser of— 
‘‘(1) the assets of a telecommunications busi-
ness, or 
‘‘(2) stock in a corporation if, immediately after 
such sale— 
‘‘(A) the eligible purchaser controls (within 
the meaning of section 368(c)) such corpora-
tion, and 
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‘‘(B) substantially all of the assets of such 
corporation are assets of 1 or more tele-
communications businesses, or 
‘‘(3) an interest in a partnership if, immediately 
after such sale— 
‘‘(A) the eligible purchaser owns a partner-
ship interest possessing— 
‘‘(i) at least 80 percent of the total 
combined voting power of all classes of 
partnership interests entitled to vote, 
‘‘(ii) control over the management of 
the partnership, 
‘‘(iii) at least 80 percent of the capital 
interests of the partnership, and 
‘‘(iv) a distributive share of at least 
80 percent of each item of the partner-
ship’s income, gain, loss, deduction or 
credit, and 
‘‘(B) substantially all of the assets of such 
partnership are assets of 1 or more tele-
communications businesses. 
‘‘(d) SPECIAL RULES.— 
‘‘(1) IN GENERAL.—In applying section 1033 
for purposes of subsection (a), stock of a corporation 
or an interest in a partnership operating a tele-
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