I
106TH CONGRESS
2D SESSION
H. R. 3700
To amend the Internal Revenue Code of 1986 to allow a credit to holders
of qualified bonds issued by an intercity passenger rail carrier, and
for other purposes.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 29, 2000
Mr. HOUGHTON (for himself, Mr. OBERSTAR, Mr. MATSUI, Mr. BOEHLERT,
Mr. ENGLISH, Mr. RAHALL, Mr. CONYERS, Mr. BACHUS, Mr. LEWIS of
Georgia, Mr. BORSKI, Mr. JEFFERSON, Mr. LATOURETTE, Mr. CLEM-
ENT, Mr. SMITH of New Jersey, Mr. FILNER, Ms. MILLENDER-MCDON-
ALD, and Mr. BLUMENAUER) introduced the following bill; which was re-
ferred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to allow a
credit to holders of qualified bonds issued by an intercity
passenger rail carrier, 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 ‘‘High-Speed Rail In-
vestment Act of 2000’’.
SEC. 2. CREDIT TO HOLDERS OF QUALIFIED INTERCITY
PASSENGER RAIL CARRIER BONDS.
(a) IN GENERAL.—Part IV of subchapter A of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
credits against tax) is amended by adding at the end the
following new subpart:
‘‘Subpart H—Nonrefundable Credit for Holders of
Qualified Intercity Passenger Rail Carrier Bonds
‘‘Sec. 54. Credit to holders of qualified intercity passenger rail
carrier bonds.
‘‘SEC. 54. CREDIT TO HOLDERS OF QUALIFIED INTERCITY
PASSENGER RAIL CARRIER BONDS.
‘‘(a) ALLOWANCE OF CREDIT.—In the case of a tax-
payer who holds a qualified intercity passenger rail carrier
bond on a credit allowance date of such bond which occurs
during the taxable year, there shall be allowed as a credit
against the tax imposed by this chapter for such taxable
year an amount equal to the sum of the credits determined
under subsection (b) with respect to credit allowance dates
during such year on which the taxpayer holds such bond.
‘‘(b) AMOUNT OF CREDIT.—
‘‘(1) IN GENERAL.—The amount of the credit
determined under this subsection with respect to any
credit allowance date for a qualified intercity pas-
senger rail carrier bond is 25 percent of the annual
credit determined with respect to such bond.
‘‘(2) ANNUAL CREDIT.—The annual credit de-
termined with respect to any qualified intercity pas-
senger rail carrier bond is the product of—
‘‘(A) the applicable credit rate, multiplied
by
‘‘(B) the outstanding face amount of the
bond.
‘‘(3) APPLICABLE CREDIT RATE.—For purposes
of paragraph (2), the applicable credit rate with re-
spect to an issue is the rate equal to an average
market yield (as of the day before the date of
issuance of the issue) on outstanding long-term cor-
porate debt obligations (determined under regula-
tions prescribed by the Secretary).
‘‘(4) SPECIAL RULE FOR ISSUANCE AND RE-
DEMPTION.—In the case of a bond which is issued
during the 3-month period ending on a credit allow-
ance date, the amount of the credit determined
under this subsection with respect to such credit al-
lowance date shall be a ratable portion of the credit
otherwise determined based on the portion of the 3-
month period during which the bond is outstanding.
A similar rule shall apply when the bond is re-
deemed.
‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.—
‘‘(1) IN GENERAL.—The credit allowed under
subsection (a) for any taxable year shall not exceed
the excess of—
‘‘(A) the sum of the regular tax liability
(as defined in section 26(b)) plus the tax im-
posed by section 55, over
‘‘(B) the sum of the credits allowable
under this part (other than this subpart and
subpart C).
‘‘(2) CARRYOVER OF UNUSED CREDIT.—If the
credit allowable under subsection (a) exceeds the
limitation imposed by paragraph (1) for such taxable
year, such excess shall be carried to the succeeding
taxable year and added to the credit allowable under
subsection (a) for such taxable year.
‘‘(d) QUALIFIED INTERCITY PASSENGER RAIL CAR-
RIER BOND.—For purposes of this part—
‘‘(1) IN GENERAL.—The term ‘qualified inter-
city passenger rail carrier bond’ means any bond
issued as part of an issue if—
‘‘(A) 95 percent or more of the proceeds of
such issue are—
‘‘(i) to be used for any qualified
project, or
‘‘(ii) to be pledged to secure payments
and other obligations incurred by the
issuer in connection with any qualified
project,
‘‘(B) the bond is issued by an intercity
passenger rail carrier,
‘‘(C) the issuer—
‘‘(i) designates such bond for purposes
of this section,
‘‘(ii) certifies that it meets the State
contribution requirement of paragraph (2)
with respect to such project, and
‘‘(iii) certifies that it has obtained the
written approval of the Secretary of Trans-
portation for such project, and
‘‘(D) the term of each bond which is part
of such issue does not exceed 20 years.
‘‘(2) STATE CONTRIBUTION REQUIREMENT.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (1)(C)(ii), the State contribution require-
ment of this paragraph is met with respect to
any qualified project if the issuer has a written
binding commitment from 1 or more States to
make matching contributions not later than the
date of issuance of the issue of not less than 20
percent of the cost of the qualified project.
‘‘(B) USE OF STATE MATCHING CONTRIBU-
TIONS.—The matching contributions described
in subparagraph (A) with respect to each quali-
fied project shall be used—
‘‘(i) in the case of an amount equal to
20 percent of the cost of such project, to
redeem bonds which are a part of the issue
with respect to such project, and
‘‘(ii) in the case of any remaining
amount, at the election of the issuer and
the contributing State—
‘‘(I) to fund the qualified project,
‘‘(II) to redeem such bonds, or
‘‘(III) for the purposes of sub-
clauses (I) and (II).
‘‘(3) QUALIFIED PROJECT.—The term ‘qualified
project’ means—
‘‘(A) the acquisition, financing, or refi-
nancing of equipment, rolling stock, and other
capital improvements for the northeast rail cor-
ridor between Washington, D.C. and Boston,
Massachusetts,
‘‘(B) the acquisition, financing, or refi-
nancing of equipment, rolling stock, and other
capital improvements for the improvement of
train speeds or safety (or both) on the high-
speed rail corridors designated under section
104(d)(2) of title 23, United States Code, and
‘‘(C) with respect to not more than 10 per-
cent of the net proceeds of an issue, the acquisi-
tion, financing, or refinancing of equipment,
rolling stock, and other capital improvements
for non-designated high-speed rail corridors, in-
cluding station rehabilitation, track or signal
improvements, or the elimination of grade
crossings.
‘‘(4) TEMPORARY PERIOD EXCEPTION.—A bond
shall not be treated as failing to meet the require-
ment of paragraph (1)(A) solely by reason of the
fact that the proceeds of the issue of which such
bond is a part are invested for a reasonable tem-
porary period (but not more than 36 months) until
such proceeds are needed for the purpose for which
such issue was issued.
‘‘(e) LIMITATIONS
ON AMOUNT
OF BONDS DES-
IGNATED.—
‘‘(1) IN GENERAL.—There is a qualified inter-
city passenger rail carrier bond limitation for each
fiscal year. Such limitation is—
‘‘(A) $1,000,000,000 for each of the fiscal
years 2001 through 2010, and
‘‘(B) zero after 2010.
‘‘(2) LIMITATION ON AMOUNT OF BONDS FOR
NORTHEAST
CORRIDOR.—Not 
more 
than
$3,000,000,000 of the limitation under paragraph
(1) may be designated for projects described in sub-
section (d)(3)(A).
‘‘(3) CARRYOVER OF UNUSED LIMITATION.—If
for any fiscal year—
‘‘(A) the limitation amount under para-
graph (1), exceeds
‘‘(B) the amount of bonds issued during
such year which are designated under sub-
section (d)(1)(C)(i),
the limitation amount under paragraph (1) for the
following fiscal year shall be increased by the
amount of such excess.
‘‘(f) OTHER DEFINITIONS.—For purposes of this
subpart—
‘‘(1) INTERCITY PASSENGER RAIL CARRIER.—
The term ‘intercity passenger rail carrier’ means any
rail carrier (as defined in paragraph (7) of section
24102 of title 49, United States Code) providing
intercity rail passenger transportation (as defined in
paragraph (5) of such section).
‘‘(2) CREDIT
ALLOWANCE
DATE.—The term
‘credit allowance date’ means—
‘‘(A) March 15,
‘‘(B) June 15,
‘‘(C) September 15, and
‘‘(D) December 15.
Such term includes the last day on which the bond
is outstanding.
‘‘(3) BOND.—The term ‘bond’ includes any ob-
ligation.
‘‘(4) STATE.—The term ‘State’ includes the
District of Columbia.
‘‘(g) BONDS HELD
BY REGULATED INVESTMENT
COMPANIES.—If any qualified intercity passenger rail car-
rier bond is held by a regulated investment company, the
credit determined under subsection (a) shall be allowed to
shareholders of such company under procedures pre-
scribed by the Secretary.
‘‘(h) USE OF TRUST ACCOUNT.—
‘‘(1) IN GENERAL.—The amount of any match-
ing contribution with respect to a qualified project
described 
in 
subsection 
(d)(2)(B)(i) 
or
(d)(2)(B)(ii)(II) and the temporary period invest-
ment earnings on proceeds of the issue with respect
to such project described in subsection (d)(4), and
any earnings thereon, shall be held in a trust ac-
count by a trustee independent of the issuer to be
used to redeem bonds which are part of such issue.
‘‘(2) USE OF REMAINING FUNDS IN TRUST AC-
COUNT.—Upon the repayment of the principal of all
qualified intercity passenger rail carrier bonds issued
under this section by an issuer, any remaining funds
in the trust account described in paragraph (1) for
such issuer shall be available to the trustee described
in paragraph (1) to meet any remaining obligations
under any guaranteed investment contract used to
secure earnings sufficient to repay the principal of
such bonds. Any remaining balance in such trust ac-
count shall be paid to the United States to be used
to redeem public debt obligations.
‘‘(i) CREDIT INCLUDED IN GROSS INCOME.—Gross
income includes the amount of the credit allowed to the
taxpayer under this section (determined without regard to
subsection (c)) and the amount so included shall be treat-
ed as interest income.
‘‘(j) CREDITS MAY BE STRIPPED.—Under regula-
tions prescribed by the Secretary—
‘‘(1) IN GENERAL.—There may be a separation
(including at issuance) of the ownership of a quali-
fied intercity passenger rail carrier bond and the en-
titlement to the credit under this section with re-
spect to such bond. In case of any such separation,
the credit under this section shall be allowed to the
person who on the credit allowance date holds the
instrument evidencing the entitlement to the credit
and not to the holder of the bond.
‘‘(2) CERTAIN RULES TO APPLY.—In the case
of a separation described in paragraph (1), the rules
of section 1286 shall apply to the qualified intercity
passenger rail carrier bond as if it were a stripped
bond and to the credit under this section as if it
were a stripped coupon.
‘‘(k) TREATMENT
FOR
ESTIMATED
TAX
PUR-
POSES.—Solely for purposes of sections 6654 and 6655,
the credit allowed by this section to a taxpayer by reason
of holding a qualified intercity passenger rail carrier bond
on a credit allowance date shall be treated as if it were
a payment of estimated tax made by the taxpayer on such
date.
‘‘(l) CREDIT MAY BE TRANSFERRED.—Nothing in
any law or rule of law shall be construed to limit the trans-
ferability of the credit allowed by this section through sale
and repurchase agreements.
‘‘(m) REPORTING.—Issuers of qualified intercity pas-
senger rail carrier bonds shall submit reports similar to
the reports required under section 149(e).’’
(b) REPORTING.—Subsection (d) of section 6049 of
such Code (relating to returns regarding payments of in-
terest) is amended by adding at the end the following:
‘‘(8) REPORTING
OF
CREDIT
ON
QUALIFIED
INTERCITY PASSENGER RAIL CARRIER BONDS.—
‘‘(A) IN GENERAL.—For purposes of sub-
section (a), the term ‘interest’ includes amounts
includible in gross income under section 54(i)
and such amounts shall be treated as paid on
the credit allowance date (as defined in section
54(f)(2)).
‘‘(B) 
REPORTING
TO
CORPORATIONS,
ETC.—Except as otherwise provided in regula-
tions, in the case of any interest described in
subparagraph (A) of this paragraph, subsection
(b)(4) of this section shall be applied without
regard to subparagraphs (A), (H), (I), (J), (K),
and (L)(i).
‘‘(C) REGULATORY AUTHORITY.—The Sec-
retary may prescribe such regulations as are
necessary or appropriate to carry out the pur-
poses of this paragraph, including regulations
which require more frequent or more detailed
reporting.’’
(c) CLERICAL AMENDMENTS.—
(1) The table of subparts for part IV of sub-
chapter A of chapter 1 of such Code is amended by
adding at the end the following:
‘‘Subpart H. Nonrefundable Credit for Holders of Qualified Inter-
city Passenger Rail Carrier Bonds.’’
(2) Section 6401(b)(1) of such Code is amend-
ed by striking ‘‘and G’’ and inserting ‘‘G, and H’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to obligations issued after Sep-
tember 30, 2000.
(e) NO INFERRED FEDERAL GUARANTEE.—Nothing
in this section shall be construed to infer a guarantee by
the United States of the payment of principal with respect
to any bond to which section 54 of the Internal Revenue
Code of 1986 (as added by this section) applies.
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