‘‘(1) MAXIMUM DOLLAR AMOUNT.—
‘‘(A) 
IN
GENERAL.—The 
maximum
amount excluded under subsection (a) to a tax-
payer for the taxable year shall not exceed
$100,000 ($50,000 in the case of a married in-
dividual filing a separate return).
‘‘(B) CONTROLLED
GROUPS.—For pur-
poses of subparagraph (A), all corporations
which are members of the same parent-subsidi-
ary controlled group (as defined in section
198(b)(2)) with respect to the taxpayer shall be
treated as 1 person, and the dollar amount ap-
plicable under subparagraph (A) shall be allo-
cated among the taxpayer and such persons in
proportion to their respective sales and ex-
changes of stock during the calendar year in
which the taxable year of the taxpayer begins.
‘‘(2) EXCLUDED
GAIN
MUST
BE
LONG-TERM
CAPITAL GAIN.—Subsection (a) shall not apply to
any gain other than long-term capital gain.
‘‘(c) QUALIFIED SPACE CORPORATION STOCK.—
‘‘(1) IN GENERAL.—The term ‘qualified space
corporation stock’ means common stock in a C cor-
poration if—
‘‘(A) as of the date of issuance, such cor-
poration is a qualified space corporation (or, in
the case of a new corporation, is being orga-
nized for purposes of being a qualified space
corporation),
‘‘(B) such stock is acquired by the tax-
payer at its original issue (directly or through
an underwriter)—
‘‘(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), and
‘‘(C) during substantially all of the tax-
payer’s holding period for such stock, such cor-
poration qualified as a space corporation.
‘‘(2) SPACE
CORPORATION.—The term ‘space
corporation’ means, with respect to any taxable year,
any domestic corporation which is a C corporation if
at least 75 percent of its gross receipts for such tax-
able year are derived from the active conduct of a
trade or business involving the providing of space-re-
lated products or services. For purposes of the pre-
ceding sentence, gross receipts attributable to oper-
ations within a Commercial Space Center, or to the
establishment or operation of a Commercial Space
Center, shall not be taken into account.
‘‘(3) CERTAIN PURCHASES BY CORPORATION OF
ITS OWN STOCK.—A rule similar to the rule of sec-
tion 1202(c)(3) shall apply for purposes of this sub-
section.
‘‘(d) SPECIAL RULES.—
‘‘(1) 10-YEAR
SAFE
HARBOR.—If any stock
ceases to be qualified space corporation stock by rea-
son of subsection (c)(1)(C) after the 10-year period
beginning on the date the taxpayer acquired such
stock, such stock shall continue to be treated as
meeting the requirements of such subsection; except
that the amount of gain to which subsection (a) ap-
plies on any sale or exchange of such stock shall not
exceed the amount which would be qualified capital
gain had such stock been sold on the date of such
cessation.
‘‘(2) OTHER RULES TO APPLY.—Rules similar
to the rules of subsections (f), (g), (h), (i), and (j)
of section 1202 shall apply for purposes of this sec-
tion.
‘‘(e) APPLICATION OF SECTION.—This section shall
apply only to stock acquired after December 31, 1995, and
before January 1, 2011.’’
(b) CLERICAL AMENDMENT.—The table of sections
for such part I is amended by adding at the end the follow-
ing new item:
‘‘Sec. 1203. Gain on space corporation stock.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after De-
cember 31, 1995.
SEC. 4. TREATMENT OF BONDS TO FINANCE SPACE
LAUNCH AND LAUNCH SUPPORT FACILITIES.
(a) IN GENERAL.—Subsection (a) of section 142 of
the Internal Revenue Code of 1986 (defining exempt facil-
ity bond) is amended by striking ‘‘or’’ at the end of para-
graph (11), by striking the period at the end of paragraph
(12) and inserting ‘‘, or’’, and by adding at the end the
following:
‘‘(13) 
space 
launch 
and 
launch 
support
facilities.
Paragraph (13) shall not apply to any bond issued after
December 31, 2010.’’
(b) SPACE LAUNCH AND LAUNCH SUPPORT FACILI-
TIES.—Section 142 of such Code is amended by adding
at the end the following new subsection:
‘‘(k) SPACE LAUNCH AND LAUNCH SUPPORT FACILI-
TIES.—
‘‘(1) IN GENERAL.—For purposes of subsection
(a)(13), the term ‘space launch and launch support
facilities’ means—
‘‘(A) all facilities, equipment, and real
property used to prepare space transportation
vehicles and their payloads for transportation
to, from, or within outer space, or in suborbital
trajectory or to launch such vehicles, and
‘‘(B) all facilities, equipment, and real
property used to conduct research and develop-
ment, manufacture, process, and service space
transportation vehicles and their payloads.
‘‘(2) PAYLOAD.—For purposes of this sub-
section, the term ‘payload’ means anything that a
person undertakes to transport to, from, or within
outer space, or in suborbital trajectory, by means of
a space transportation vehicle, but does not include
the space transportation vehicle itself except for its
components which are specifically designed or adapt-
ed for that payload.
‘‘(3) SPACE TRANSPORTATION VEHICLE.—For
purposes of this subsection, the term ‘space trans-
portation vehicle’ means any vehicle constructed for
the purpose of operating in, or transporting a pay-
load to, from, or within, outer space, or in suborbital
trajectory, and includes any component of such vehi-
cle not specifically designed or adapted for a pay-
load.’’
(c) EXCEPTION FROM VOLUME CAP.—Paragraph (3)
of section 146(g) of such Code is amended—
(1) by striking ‘‘or (12)’’ and inserting ‘‘, (12),
or (13)’’, and
(2) by striking ‘‘and environmental enhance-
ments of hydroelectric generating facilities’’ and in-
serting ‘‘, environmental enhancements of hydro-
electric generating facilities, and space launch and
launch support facilities’’.
(d) CERTAIN ADDITIONAL REQUIREMENTS NOT TO
APPLY TO SPACE LAUNCH AND LAUNCH SUPPORT FA-
CILITIES BONDS.—
(1) Subsection (h) of section 147 of such Code
is amended by adding at the end the following new
paragraph:
‘‘(3) SPACE
LAUNCH
AND
LAUNCH
SUPPORT
FACILITIES BONDS.—Subsections (a), (b), (c), and
(d) shall not apply to any exempt facility bond de-
scribed in section 142(a)(13).’’
(2) The heading for subsection (h) of section
147 of such Code is amended by striking ‘‘AND
QUALIFIED
501(c)(3) 
BONDS’’ 
and 
inserting
‘‘QUALIFIED 501(c)(3) BONDS, AND SPACE LAUNCH
AND LAUNCH SUPPORT FACILITIES BONDS’’.
(e) FEDERAL GUARANTEED SPACE LAUNCH
AND
LAUNCH SUPPORT FACILITIES BONDS PERMITTED.—
Paragraph (3) of section 149(b) of such Code is amended
by adding at the end the following new subparagraph:
‘‘(E) EXCEPTION FOR SPACE LAUNCH AND
LAUNCH
SUPPORT
FACILITIES
BONDS.—Para-
graph (1) shall not apply to any exempt facility
bond described in section 142(a)(13) in situa-
tions where the guarantee of the United States
(or any agency or instrumentality thereof) is
the result of payment of rent, user fees, or
other charges by the United States (or any
agency or instrumentality thereof) for the use
of a facility financed with such a bond.’’
(f) EFFECTIVE DATE.—The amendments made by
this section shall apply to obligations issued after the date
of the enactment of this Act.
SEC. 5. SPACE MANUFACTURING INCENTIVE.
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
items specifically excluded from gross income) is amended
by redesignating section 137 as section 138 and inserting
after section 136 the following new section:
‘‘SEC. 137. SPACE MANUFACTURING INCOME.
‘‘(a) GENERAL RULE.—Gross income shall not in-
clude space manufacturing income.
‘‘(b) SPACE MANUFACTURING INCOME.—For pur-
poses of this section, the term ‘space manufacturing in-
come’ means—
‘‘(1) income derived from the sale by the tax-
payer to an unrelated person of any product which
is manufactured by the taxpayer in outer space and
returned to Earth, and
‘‘(2) income of an individual attributable to
services performed in outer space by such individual
in a trade or business.
‘‘(c) EXCLUSION FROM TARIFFS, ETC.—Any prod-
uct—
‘‘(1) which is manufactured in outer space, and
‘‘(2) which was—
‘‘(A) launched from, and returned to Earth
at, within the United States, or
‘‘(B) manufactured at a facility in outer
space which is owned by 1 or more United
States persons,
shall be exempt from all Federal excises, imposts, and du-
ties and any other Federal tariffs.
‘‘(d) PHASEOUT OF BENEFITS.—In the case of a tax-
able year beginning after December 31, 2025, the amount
excluded under subsection (a) shall be reduced (but not
below zero) by x/20th’s of the amount excludable without
regard to this subsection, where ‘x’ is the number of years
such taxable year is after the last taxable year beginning
before January 1, 2026. A similar rule shall apply to the
benefits under subsection (c).’’
(b) CLERICAL AMENDMENT.—The table of sections
for such part III is amended by striking the last item and
inserting the following new items:
‘‘Sec. 137. Space manufacturing income.
‘‘Sec. 138. Cross references to other Acts.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1995.
SEC. 6. STATE TAX BENEFITS FOR COMMERCIAL SPACE AC-
TIVITIES TO BE ENCOURAGED.
The President shall encourage State and local govern-
ments to offer tax and other incentives to encourage com-
mercial space activities.
Æ
HR 1953 IH——2