Modernizing Agricultural and Manufacturing Bonds Act

I 117TH CONGRESS 1ST SESSION H. R. 2737 To amend the Internal Revenue Code of 1986 to modify certain rules applica- ble to qualified small issue manufacturing bonds, to expand certain exceptions to the private activity bond rules for first-time farmers, and for other purposes. IN THE HOUSE OF REPRESENTATIVES APRIL 21, 2021 Mrs. MURPHY of Florida (for herself and Mr. LAHOOD) 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 modify certain rules applicable to qualified small issue manufac- turing 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 Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Modernizing Agricul- 4 tural and Manufacturing Bonds Act’’. 5 VerDate Sep 11 2014 02:38 Jun 04, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2737.IH H2737 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 2737 IH SEC. 2. MODIFICATIONS TO QUALIFIED SMALL ISSUE 1 BONDS. 2 (a) MANUFACTURING FACILITIES TO INCLUDE PRO- 3 DUCTION OF INTANGIBLE PROPERTY AND FUNCTIONALLY 4 RELATED FACILITIES.—Subparagraph (C) of section 5 144(a)(12) of the Internal Revenue Code of 1986 is 6 amended to read as follows: 7 ‘‘(C) MANUFACTURING FACILITY.—For 8 purposes of this paragraph— 9 ‘‘(i) IN GENERAL.—The term ‘manu- 10 facturing facility’ means any facility 11 which— 12 ‘‘(I) is used in the manufacturing 13 or production of tangible personal 14 property (including the processing re- 15 sulting in a change in the condition of 16 such property), 17 ‘‘(II) is used in the creation or 18 production of intangible property 19 which is described in section 20 197(d)(1)(C)(iii), or 21 ‘‘(III) is functionally related and 22 subordinate to a facility described in 23 subclause (I) or (II) if such facility is 24 located on the same site as the facility 25 described in subclause (I) or (II). 26 VerDate Sep 11 2014 02:38 Jun 04, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2737.IH H2737 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 2737 IH ‘‘(ii) CERTAIN FACILITIES IN- 1 CLUDED.—The term ‘manufacturing facil- 2 ity’ includes facilities that are directly re- 3 lated and ancillary to a manufacturing fa- 4 cility (determined without regard to this 5 clause) if— 6 ‘‘(I) those facilities are located on 7 the same site as the manufacturing 8 facility, and 9 ‘‘(II) not more than 25 percent 10 of the net proceeds of the issue are 11 used to provide those facilities. 12 ‘‘(iii) LIMITATION ON OFFICE 13 SPACE.—A rule similar to the rule of sec- 14 tion 142(b)(2) shall apply for purposes of 15 clause (i). 16 ‘‘(iv) LIMITATION ON REFUNDINGS 17 FOR CERTAIN PROPERTY.—Subclauses (II) 18 and (III) of clause (i) shall not apply to 19 any bond issued on or before the date of 20 the enactment of the Modernizing Agricul- 21 tural and Manufacturing Bonds Act, or to 22 any bond issued to refund a bond issued 23 on or before such date (other than a bond 24 to which clause (iii) of this subparagraph 25 VerDate Sep 11 2014 02:38 Jun 04, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2737.IH H2737 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 2737 IH (as in effect before the date of the enact- 1 ment of the Modernizing Agricultural and 2 Manufacturing Bonds Act applies)), either 3 directly or in a series of refundings.’’. 4 (b) INCREASE IN LIMITATIONS.—Section 144(a)(4) 5 of such Code is amended— 6 (1) in subparagraph (A)(i), by striking 7 ‘‘$10,000,000’’ and inserting ‘‘$50,000,000’’; and 8 (2) in the heading, by striking ‘‘$10,000,000’’ and 9 inserting ‘‘$50,000,000’’. 10 (c) ADJUSTMENT FOR INFLATION.—Section 11 144(a)(4) of the Internal Revenue Code of 1986 is amend- 12 ed by adding at the end the following new subparagraph: 13 ‘‘(H) ADJUSTMENT FOR INFLATION.—In 14 the case of any calendar year after 2021, the 15 $50,000,000 amount in subparagraph (A) shall 16 be increased by an amount equal to— 17 ‘‘(i) such dollar amount, multiplied by 18 ‘‘(ii) the cost-of-living adjustment de- 19 termined under section 1(f)(3) for the cal- 20 endar year, determined by substituting 21 ‘calendar year 2020’ for ‘calendar year 22 2016’ in subparagraph (A)(ii) thereof. 23 If any amount as increased under the preceding 24 sentence is not a multiple of $100, such amount 25 VerDate Sep 11 2014 02:38 Jun 04, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2737.IH H2737 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 2737 IH shall be rounded to the nearest multiple of 1 $100.’’. 2 (d) EFFECTIVE DATE.—The amendments made by 3 this section shall apply to obligations issued after the date 4 of the enactment of this Act. 5 SEC. 3. EXPANSION OF CERTAIN EXCEPTIONS TO THE PRI- 6 VATE ACTIVITY BOND RULES FOR FIRST- 7 TIME FARMERS. 8 (a) INCREASE IN DOLLAR LIMITATION.— 9 (1) IN GENERAL.—Section 147(c)(2)(A) of the 10 Internal Revenue Code of 1986 is amended by strik- 11 ing ‘‘$450,000’’ and inserting ‘‘$552,500’’. 12 (2) REPEAL OF SEPARATE LOWER DOLLAR LIM- 13 ITATION ON USED FARM EQUIPMENT.—Section 14 147(c)(2) of such Code is amended by striking sub- 15 paragraph (F) and by redesignating subparagraphs 16 (G) and (H) as subparagraphs (F) and (G), respec- 17 tively. 18 (3) QUALIFIED SMALL ISSUE BOND LIMITATION 19 CONFORMED TO INCREASED DOLLAR LIMITATION.— 20 Section 144(a)(11)(A) of such Code is amended by 21 striking ‘‘$250,000’’ and inserting ‘‘$552,500’’. 22 (4) INFLATION ADJUSTMENT.— 23 VerDate Sep 11 2014 02:38 Jun 04, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2737.IH H2737 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 2737 IH (A) IN GENERAL.—Section 147(c)(2)(G) of 1 such Code, as redesignated by paragraph (2), is 2 amended— 3 (i) by striking ‘‘after 2008, the dollar 4 amount in subparagraph (A) shall be in- 5 creased’’ and inserting ‘‘after 2021, the 6 dollar amounts in subparagraph (A) and 7 section 144(a)(11)(A) shall each be in- 8 creased’’; and 9 (ii) in clause (ii), by striking ‘‘2007’’ 10 and inserting ‘‘2020’’. 11 (B) CROSS-REFERENCE.—Section 12 144(a)(11) of such Code is amended by adding 13 at the end the following new subparagraph: 14 ‘‘(D) INFLATION ADJUSTMENT.—For infla- 15 tion adjustment of dollar amount contained in 16 subparagraph (A), see section 147(c)(2)(G).’’. 17 (b) SUBSTANTIAL FARMLAND DETERMINED ON 18 BASIS OF AVERAGE RATHER THAN MEDIAN FARM 19 SIZE.—Section 147(c)(2)(E) of such Code is amended by 20 striking ‘‘median’’ and inserting ‘‘average’’. 21 (c) EFFECTIVE DATE.—The amendments made by 22 this section shall apply to bonds issued after the date of 23 the enactment of this Act. 24 Æ VerDate Sep 11 2014 02:38 Jun 04, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\H2737.IH H2737 kjohnson on DSK79L0C42PROD with BILLS