Modernizing Agricultural and Manufacturing Bonds Act

Bill: 118-s-2723
Sponsor: full_name: Sen. Brown, Sherrod [D-OH]
Introduced: 2023-09-05
Policy area: Taxation
Latest action: action_date: 2023-09-05
text: Read twice and referred to the Committee on Finance.

Summaries:
action_date: 2023-09-05
action_desc: Introduced in Senate
text: <p><b>Modernizing Agricultural and Manufacturing Bonds Act</b></p> <p>This bill modifies provisions relating to qualified small issue bonds for manufacturing purposes by expanding the definition of <em>manufacturing facility</em> 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 $30 million the maximum bond size limitation. </p> <p>The bill modifies requirements for private activity bond financing for first-time farmers. The modified provisions (1) increase from $450,000 to $1 million (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 <em>substantial farmland</em> 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.</p>

tv_txt: II 118th CONGRESS 1st Session S. 2723 IN THE SENATE OF THE UNITED STATES September 5, 2023 Mr. Brown (for himself and Ms. Ernst ) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL 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.

1. Short title This Act may be cited as the Modernizing Agricultural and Manufacturing Bonds Act . 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 (1) In general Section 144(a)(4) of such Code is amended— (A) in subparagraph (A)(i), by striking $10,000,000 and inserting $30,000,000 , and (B) in the heading, by striking $10,000,000 and inserting $30,000,000 . (2) Increase in additional capital expenditures not taken into account Section 144(a)(4)(G) of such Code is amended by inserting $30,000,000, in the case of bonds issued after the date of the enactment of the Modernizing Agricultural and Manufacturing Bonds Act . (3) Increase in aggregate limit per taxpayer Section 144(a)(10)(A) of such Code is amended by striking $40,000,000 and inserting $120,000,000 . (4) Adjustment for inflation Section 144(a) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: (13) Adjustment for inflation In the case of any calendar year after 2023, the $30,000,000 amounts in paragraph (4)(A), the $30,000,000 amount in paragraph (4)(G), and the $120,000,000 amount in paragraph (10)(A) shall each be increased by an amount equal to— (A) such dollar amount, multiplied by (B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year, determined by substituting calendar year 2022 for calendar year 2016 in subparagraph (A)(ii) thereof. If any amount as increased under the preceding sentence is not a multiple of $100,000, such amount shall be rounded to the nearest multiple of $100,000. . (c) Effective date The amendments made by this section shall apply to obligations issued after the date of the enactment of this Act. 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 $1,000,000 . (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 $1,000,000 . (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 2024, the dollar amounts in subparagraph (A) and section 144(a)(11)(A) shall each be increased , (ii) in clause (ii), by striking 2007 and inserting 2023 , and (iii) in the last sentence, by striking $100 each place it appears and inserting $10,000 . (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 December 31, 2023.