I
104TH CONGRESS
1ST SESSION
H. R. 2617
To amend the Internal Revenue Code of 1986 to exempt small issues from
the restrictions on the deduction by financial institutions for interest,
to disregard certain amounts of capital expenditures in applying
$10,000,000 limit on such issues, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
NOVEMBER 10, 1995
Mr. ENGLISH of Pennsylvania (for himself, Mr. FOX, and Mr. UNDERWOOD)
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 exempt
small issues from the restrictions on the deduction by
financial institutions for interest, to disregard certain
amounts of capital expenditures in applying $10,000,000
limit on such issues, 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. QUALIFIED SMALL ISSUE BONDS EXEMPT
FROM RESTRICTIONS ON DEDUCTION BY FI-
NANCIAL INSTITUTIONS FOR INTEREST.
(a) 
IN
GENERAL.—Clause 
(ii) 
of 
section
265(b)(3)(B) of the Internal Revenue Code of 1986 (de-
fining qualified tax-exempt obligation) is amended by
striking ‘‘or’’ at the end of subclause (I), by redesignating
subclause (II) as subclause (III), and by inserting after
subclause (I) the following new subclause:
‘‘(II) any qualified small issue
bond (as defined in section 144(a)),
or’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to taxable years beginning after
the date of the enactment of this Act.
SEC. 
2. 
$10,000,000 
OF 
CAPITAL 
EXPENDITURES 
DIS-
REGARDED IN APPLYING $10,000,000 LIMITA-
TION 
ON 
FACE 
AMOUNT 
OF 
QUALIFIED
SMALL ISSUE BONDS.
(a) IN GENERAL.—Subparagraph (A) of section
144(a)(4) of the Internal Revenue Code of 1986 (relating
to $10,000,000 limit in certain cases) is amended by add-
ing at the end the following new flush sentence:
‘‘Capital expenditures which would (but for this
sentence) be taken into account under clause
(ii) shall be taken into account only to the ex-
tent such expenditures exceed $10,000,000.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to—
(1) obligations issued after the date of the en-
actment of this Act, and
(2) capital expenditures made after such date
with respect to obligations issued on or before such
date.
SEC. 3. LIMITATION ON LAND ACQUISITION NOT TO APPLY
TO QUALIFIED SMALL ISSUE BONDS.
(a) IN GENERAL.—Subsection (c) of section 147 of
the Internal Revenue Code of 1986 (relating to limitation
on use for land acquisition) is amended by adding at the
end the following new paragraph:
‘‘(4) EXCEPTION FOR QUALIFIED SMALL ISSUE
BONDS.—Paragraph (1)(A) shall not apply to any
qualified small issue bond.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to obligations issued after the
date of the enactment of this Act.
SEC. 4. REPEAL OF PERCENTAGE LIMITATION ON DI-
RECTLY RELATED AND ANCILLARY FACILI-
TIES WHICH MAY BE FINANCED BY QUALI-
FIED SMALL ISSUE BONDS.
(a) IN GENERAL.—The last sentence of section
144(a)(12)(C) of the Internal Revenue Code of 1986 (de-
fining manufacturing property) is amended by striking
‘‘if—’’ and all that follows and inserting ‘‘if such facilities
are located on the same site as the manufacturing facil-
ity.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to obligations issued after the
date of the enactment of this Act.
SEC. 5. REPEAL OF DE MINIMIS LIMITATION APPLICABLE
TO FINANCING OF OFFICE SPACE BY QUALI-
FIED SMALL ISSUE BONDS.
(a) IN GENERAL.—Subparagraph (C) of section
144(a)(12) of the Internal Revenue Code of 1986 (defin-
ing manufacturing property) is amended by striking the
second sentence and by adding at the end the following
new sentence: ‘‘An office shall not be treated as described
in the 1st sentence of this subparagraph unless—
‘‘(i) the office is located on the prem-
ises of a facility described in such sen-
tence, and
‘‘(ii) not more than a de minimis
amount of the functions to be performed at
such office is not directly related to the
day-to-day operations at such facility.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to obligations issued after the
date of the enactment of this Act.
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