I
107TH CONGRESS
1ST SESSION
H. R. 2504
To amend the Internal Revenue Code of 1986 to provide tax incentives
for investing in companies involved in space-related activities.
IN THE HOUSE OF REPRESENTATIVES
JULY 16, 2001
Mr. ROHRABACHER (for himself, Ms. HARMAN, and Mr. CALVERT) 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 provide
tax incentives for investing in companies involved in
space-related activities.
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 ‘‘Zero Gravity, Zero
Tax Act of 2001’’.
SEC. 2. EXCLUSION OF SPACE-RELATED INCOME FROM
GROSS INCOME.
(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 139 as section 140 and inserting
after section 138 the following new section:
‘‘SEC. 139. SPACE-RELATED INCOME.
‘‘(a) GENERAL RULE.—Gross income shall not in-
clude space-related income.
‘‘(b) SPACE-RELATED INCOME.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘space-related income’ means—
‘‘(A) income derived from the sale by the
taxpayer to an unrelated person of—
‘‘(i) any product or article which is
produced by the taxpayer in outer space,
and
‘‘(ii) any service provided by the tax-
payer in or from outer space,
‘‘(B) income of an individual attributable
to services performed in or from outer space by
such individual in a trade or business, and
‘‘(C) any amount not described in subpara-
graph (A) or (B) which is interest, rent, roy-
alty, or similar amount received with respect to
production or service described in subparagraph
(A) or (B).
‘‘(2) EXCEPTION
FOR
TELECOMMUNICATIONS
SERVICES, ETC.—Paragraph (1)(A)(ii) shall not
apply to—
‘‘(A) any telecommunications service pro-
vided from earth orbit,
‘‘(B) any service provided by a weather or
other earth observation satellite, and
‘‘(C) any other service provided on or be-
fore the date of the enactment of this section of
transporting property to or from outer space.
‘‘(3) EXCEPTION FOR WAGES.—Paragraph (1)
shall not apply to wages (as defined in section 3401)
received by any employee of an employer.
‘‘(4) PROPORTIONAL
ALLOCATION
BETWEEN
SPACE-BASED
AND
EARTH-BASED
ACTIVITIES.—In
the case of any product or article which is produced
partly in space, space-related income shall be an
amount which bears the same ratio to the amount
of gross income attributable to the sale of such prod-
uct or article as the expenses attributable to pro-
ducing such product or article in space bears to the
total expenses incurred in producing such product or
article.
‘‘(5) PRODUCED.—For purposes of this section,
the term ‘produced’ includes created, fabricated, de-
veloped, grown, manufactured, extracted, processed,
cured, and aged.
‘‘(c) 
EXCLUSION
FROM
TARIFFS, 
ETC.—Any
product—
‘‘(1) which is manufactured in outer space, and
‘‘(2) which was—
‘‘(A) launched from, and returned to
Earth, 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, 2012, the amount
excluded under subsection (a) shall be reduced (but not
below zero) by x/10th’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, 2013. A similar rule shall apply to the
benefits under subsection (c).’’.
(b) CLERICAL AMENDMENT.—The table of sections
for part III of subchapter B of chapter 1 of such Code
is amended by striking the last item and inserting the fol-
lowing new items: