Modernizing Agricultural and Manufacturing Bonds Act
Bill: H.R.2737 | Sponsor: Rep. Murphy, Stephanie N. (D-FL)
Policy area: Taxation

Summary:
Modernizing Agricultural and Manufacturing Bonds Act
This bill modifies provisions relating to qualified small issue bonds for manufacturing purposes by expanding the definition of manufacturing facility to include a facility that (1) is used in the creation or production of intangible property; or (2) is functionally related, subordinate to, and located on the same site as a facility used in the manufacturing or production of tangible or intangible personal property. The bill also increases from $10 million to $50 million the maximum bond size limitation.
The bill modifies requirements for private activity bond financing for first-time farmers. The modified provisions (1) increase from $450,000 to $552,500 (adjusted annually for inflation) the amount of bond proceeds that may be used by a first-time farmer to acquire land for farming purposes, (2) repeal the separate dollar limitation on the use of bond proceeds for used farm equipment, and (3) revise the definition of substantial farmland to determine farm size by reference to the average (instead of median) size of a farm in the county in which the farm is located.

To amend the Internal Revenue Code of 1986 to modify certain rules 
  applicable to qualified small issue manufacturing bonds, to expand 
 certain exceptions to the private activity bond rules for first-time 
                    farmers, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Modernizing Agricultural and 
Manufacturing Bonds Act''.

SEC. 2. MODIFICATIONS TO QUALIFIED SMALL ISSUE BONDS.

    (a) Manufacturing Facilities To Include Production of Intangible 
Property and Functionally Related Facilities.--Subparagraph (C) of 
section 144(a)(12) of the Internal Revenue Code of 1986 is amended to 
read as follows:
                    ``(C) Manufacturing facility.--For purposes of this 
                paragraph--
                            ``(i) In general.--The term `manufacturing 
                        facility' means any facility which--
                                    ``(I) is used in the manufacturing 
                                or production of tangible personal 
                                property (including the processing 
                                resulting in a change in the condition 
                                of such property),
                                    ``(II) is used in the creation or 
                                production of intangible property which 
                                is described in section 
                                197(d)(1)(C)(iii), or
                                    ``(III) is functionally related and 
                                subordinate to a facility described in 
                                subclause (I) or (II) if such facility 
                                is located on the same site as the 
                                facility described in subclause (I) or 
                                (II).
                            ``(ii) Certain facilities included.--The 
                        term `manufacturing facility' includes 
                        facilities that are directly related and 
                        ancillary to a manufacturing facility 
                        (determined without regard to this clause) if--
                                    ``(I) those facilities are located 
                                on the same site as the manufacturing 
                                facility, and
                                    ``(II) not more than 25 percent of 
                                the net proceeds of the issue are used 
                                to provide those facilities.
                            ``(iii) Limitation on office space.--A rule 
                        similar to the rule of section 142(b)(2) shall 
                        apply for purposes of clause (i).
                            ``(iv) Limitation on refundings for certain 
                        property.--Subclauses (II) and (III) of clause 
                        (i) shall not apply to any bond issued on or 
                        before the date of the enactment of the 
                        Modernizing Agricultural and Manufacturing 
                        Bonds Act, or to any bond issued to refund a 
                        bond issued on or before such date (other than 
                        a bond to which clause (iii) of this 
                        subparagraph (as in effect before the date of 
                        the enactment of the Modernizing Agricultural 
                        and Manufacturing Bonds Act applies)), either 
                        directly or in a series of refundings.''.
    (b) Increase in Limitations.--Section 144(a)(4) of such Code is 
amended--
            (1) in subparagraph (A)(i), by striking ``$10,000,000'' and 
        inserting ``$50,000,000''; and
            (2) in the heading, by striking ``$10,000,000'' and 
        inserting ``$50,000,000''.
    (c) Adjustment for Inflation.--Section 144(a)(4) of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
subparagraph:
                    ``(H) Adjustment for inflation.--In the case of any 
                calendar year after 2021, the $50,000,000 amount in 
                subparagraph (A) shall be increased by an amount equal 
                to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for the 
                        calendar year, determined by substituting 
                        `calendar year 2020' for `calendar year 2016' 
                        in subparagraph (A)(ii) thereof.
                If any amount as increased under the preceding sentence 
                is not a multiple of $100, such amount shall be rounded 
                to the nearest multiple of $100.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to obligations issued after the date of the enactment of this 
Act.

SEC. 3. EXPANSION OF CERTAIN EXCEPTIONS TO THE PRIVATE ACTIVITY BOND 
              RULES FOR FIRST-TIME FARMERS.

    (a) Increase in Dollar Limitation.--
            (1) In general.--Section 147(c)(2)(A) of the Internal 
        Revenue Code of 1986 is amended by striking ``$450,000'' and 
        inserting ``$552,500''.
            (2) Repeal of separate lower dollar limitation on used farm 
        equipment.--Section 147(c)(2) of such Code is amended by 
        striking subparagraph (F) and by redesignating subparagraphs 
        (G) and (H) as subparagraphs (F) and (G), respectively.
            (3) Qualified small issue bond limitation conformed to 
        increased dollar limitation.--Section 144(a)(11)(A) of such 
        Code is amended by striking ``$250,000'' and inserting 
        ``$552,500''.
            (4) Inflation adjustment.--
                    (A) In general.--Section 147(c)(2)(G) of such Code, 
                as redesignated by paragraph (2), is amended--
                            (i) by striking ``after 2008, the dollar 
                        amount in subparagraph (A) shall be increased'' 
                        and inserting ``after 2021, the dollar amounts 
                        in subparagraph (A) and section 144(a)(11)(A) 
                        shall each be increased''; and
                            (ii) in clause (ii), by striking ``2007'' 
                        and inserting ``2020''.
                    (B) Cross-reference.--Section 144(a)(11) of such 
                Code is amended by adding at the end the following new 
                subparagraph:
                    ``(D) Inflation adjustment.--For inflation 
                adjustment of dollar amount contained in subparagraph 
                (A), see section 147(c)(2)(G).''.
    (b) Substantial Farmland Determined on Basis of Average Rather Than 
Median Farm Size.--Section 147(c)(2)(E) of such Code is amended by 
striking ``median'' and inserting ``average''.
    (c) Effective Date.--The amendments made by this section shall 
apply to bonds issued after the date of the enactment of this Act.
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