CAN Act

I 117TH CONGRESS 1ST SESSION H. R. 2977 To amend the Internal Revenue Code of 1986 to exclude gain from the sale or exchange of the entire interest in a wholly-owned rural incumbent local exchange carrier, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MAY 4, 2021 Mr. FERGUSON 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 exclude gain from the sale or exchange of the entire interest in a wholly-owned rural incumbent local exchange carrier, 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 ‘‘Connect America Now 4 Act’’ or as the ‘‘CAN Act’’. 5 VerDate Sep 11 2014 22:53 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2977.IH H2977 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 2977 IH SEC. 2. EXCLUSION OF GAIN FROM SALE OF RURAL INCUM- 1 BENT LOCAL EXCHANGE CARRIER STOCK. 2 (a) IN GENERAL.—Part III of subchapter B of chap- 3 ter 1 of the Internal Revenue Code of 1986 is amended 4 by inserting before section 140 the following new section: 5 ‘‘SEC. 139I. GAIN FROM SALE OF RURAL INCUMBENT LOCAL 6 EXCHANGE CARRIER STOCK. 7 ‘‘(a) EXCLUSION.—Gross income shall not include 8 gain from the sale or exchange of the entire interest in 9 a wholly-owned rural incumbent local exchange carrier. 10 ‘‘(b) APPORTIONMENT.—In the case of a carrier de- 11 scribed in paragraph (1) that serves areas not described 12 in paragraph (1), the amount excluded under subsection 13 (a) shall not exceed the product of such amount (without 14 regard to this paragraph) and the ratio of— 15 ‘‘(1) revenues attributable to the provision of 16 communications services in an area described in sub- 17 section (c) during the 1-year period preceding such 18 sale, to 19 ‘‘(2) all revenues during such period. 20 ‘‘(c) RURAL INCUMBENT LOCAL EXCHANGE CAR- 21 RIER.—For purposes of this section, the term ‘rural in- 22 cumbent local exchange carrier’ means an incumbent local 23 exchange carrier that serves an area that is an area— 24 ‘‘(1) where the carrier was required (on the 25 date of the enactment of the Telecommunications 26 VerDate Sep 11 2014 22:53 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2977.IH H2977 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 2977 IH Act of 1996) by law or regulation to provide commu- 1 nications services to any customer regardless of cost, 2 and 3 ‘‘(2) other than an urbanized area with— 4 ‘‘(A) not fewer than 50,000 people, and 5 ‘‘(B) a core where there are not fewer than 6 1,000 people per square mile. 7 ‘‘(d) DEFINITIONS.—For purposes of this section, 8 terms defined in the Communications Act of 1934 have 9 the meaning given such terms in such Act. 10 ‘‘(e) TERMINATION.—This section shall not apply to 11 sales or exchanges for which an application for a certifi- 12 cate under section 214 of the Communications Act of 13 1934 is filed after the date that is 5 years after the date 14 of the enactment of this section.’’. 15 (b) CONFORMING AMENDMENT.—Section 338(a) of 16 such Code is amended by inserting ‘‘(other than section 17 139I)’’ after ‘‘For purposes of this subtitle’’. 18 (c) CLERICAL AMENDMENT.—The table of sections 19 for part III of subchapter B of chapter 1 of such Code 20 is amended by inserting before the item relating to section 21 140 the following new item: 22 ‘‘Sec. 139I. Gain from sale of rural incumbent local exchange carrier stock.’’. (d) EFFECTIVE DATE.—The amendments made by 23 this section shall apply to sales or exchanges after the date 24 of the enactment of this Act. 25 VerDate Sep 11 2014 22:53 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2977.IH H2977 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 2977 IH SEC. 3. RECAPTURE OF EXCLUSION OF GAIN FROM SALE 1 OF RURAL INCUMBENT LOCAL EXCHANGE 2 CARRIER STOCK. 3 (a) IN GENERAL.—Subchapter B of chapter 1 of the 4 Internal Revenue Code of 1986 is amended by adding at 5 the end the following new part: 6 ‘‘PART XII—RECAPTURE OF EXCLUSION OF GAIN 7 FROM SALE OF RURAL INCUMBENT LOCAL 8 EXCHANGE CARRIER STOCK 9 ‘‘Sec. 292. Recapture of exclusion of gain from sale of rural incumbent local exchange carrier stock. ‘‘SEC. 292. RECAPTURE OF EXCLUSION OF GAIN FROM SALE 10 OF RURAL INCUMBENT LOCAL EXCHANGE 11 CARRIER STOCK. 12 ‘‘(a) IN GENERAL.—If a taxpayer acquired stock of 13 a rural incumbent local exchange carrier in a sale or ex- 14 change described in section 139I and such carrier is not, 15 for a qualified 1-year period with respect to such sale or 16 exchange, a rural incumbent local exchange carrier, such 17 taxpayer’s taxable income under this chapter for the tax- 18 able year in which such 1-year period ends shall be in- 19 creased by product of 1/6 and any amount excluded from 20 tax by any person with respect to such sale or exchange 21 under such section. Such increase shall be treated as cap- 22 ital gain. 23 VerDate Sep 11 2014 22:53 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2977.IH H2977 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 2977 IH ‘‘(b) RURAL INCUMBENT LOCAL EXCHANGE CAR- 1 RIER.—For purposes of this section, the term ‘rural in- 2 cumbent local exchange carrier’ means, with respect to a 3 qualified 1-year period, a rural incumbent local exchange 4 carrier (as defined in section 48D) that offers broadband 5 internet access service at upload and download speeds of 6 at least 1,000 megabits per second— 7 ‘‘(1) in the case of the 4th qualified 1-year pe- 8 riod, to not less than 30 percent of locations in an 9 area described in section 139I(c)(2), 10 ‘‘(2) in the case of the 5th qualified 1-year pe- 11 riod, to not less than 40 percent of such locations, 12 and 13 ‘‘(3) in the case of the 6th qualified 1-year pe- 14 riod, to not less than 50 percent of such locations. 15 ‘‘(c) QUALIFIED 1-YEAR PERIOD.—For purposes of 16 this section, the term ‘qualified 1-year period’ means, with 17 respect to a rural incumbent local exchange carrier with 18 respect to a sale or exchange described in subsection 139I, 19 the 1-year period starting on the date of such sale or ex- 20 change, and each of the 5 subsequent 1-year periods. 21 ‘‘(d) DEFINITIONS.—For purposes of this section, 22 terms defined in the Communications Act of 1934 have 23 the meaning given such terms in such Act.’’. 24 VerDate Sep 11 2014 22:53 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2977.IH H2977 pamtmann on DSKBC07HB2PROD with BILLS 6 •HR 2977 IH (b) CLERICAL AMENDMENT.—The table of parts of 1 subchapter B of chapter 1 of such Code is amended by 2 adding at the end the following new item: 3 ‘‘PART XII—RECAPTURE OF EXCLUSION OF GAIN FROM SALE OF RURAL INCUMBENT LOCAL EXCHANGE CARRIER STOCK’’. (c) EFFECTIVE DATE.—The amendments made by 4 this section shall apply after the date of the enactment 5 of this Act. 6 SEC. 4. RURAL COMMUNICATIONS INVESTMENT TAX CRED- 7 IT. 8 (a) IN GENERAL.—Subpart E of part IV of sub- 9 chapter A of chapter 1 of the Internal Revenue Code of 10 1986 is amended by inserting after subsection 48C the 11 following new section: 12 ‘‘SEC. 48D. RURAL COMMUNICATIONS INVESTMENT CRED- 13 IT. 14 ‘‘(a) IN GENERAL.— 15 ‘‘(1) CREDIT AMOUNT.—For the purposes of 16 section 46, in the case of a rural incumbent local ex- 17 change carrier, the rural communications investment 18 credit for any taxable year is an amount equal to 30 19 percent of the amounts that are paid or incurred by 20 such carrier during any qualified 1-year period end- 21 ing in such taxable year to purchase, maintain, or 22 improve property for the purpose of providing voice 23 VerDate Sep 11 2014 22:53 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2977.IH H2977 pamtmann on DSKBC07HB2PROD with BILLS 7 •HR 2977 IH telephone service or broadband internet access serv- 1 ice in an area described in section 139I(c)(2). 2 ‘‘(2) EXCLUSION OF CERTAIN FEDERAL 3 FUNDS.—Amounts paid or incurred which are other- 4 wise taken into account under paragraph (1) with 5 respect to any qualified 1-year period shall be re- 6 duced (including for purposes of subsection (b)) by 7 the amount of any Federal universal service support 8 under section 254 of the Communications Act of 9 1934 for the deployment of communications infra- 10 structure, or any Federal grant for the deployment 11 of communications infrastructure received by such 12 carrier and properly attributable to such period. 13 ‘‘(b) RURAL INCUMBENT LOCAL EXCHANGE CAR- 14 RIER.—For purposes of this section, the term ‘rural in- 15 cumbent local exchange carrier’ means, for a 1-year pe- 16 riod, an incumbent local exchange carrier— 17 ‘‘(1) whose stock has been acquired in a sale or 18 exchange described in section 139I, 19 ‘‘(2) for which— 20 ‘‘(A) the ratio of— 21 ‘‘(i) the amount described in sub- 22 section (a)(1), divided by 23 ‘‘(ii) the average active voice telephone 24 service or broadband internet access serv- 25 VerDate Sep 11 2014 22:53 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H2977.IH H2977 pamtmann on DSKBC07HB2PROD with BILLS 8 •HR 2977 IH ice connections during the qualified 1-year 1 period referred to in subsection (a)(1), is 2 not less than 3 ‘‘(B) the ratio of— 4 ‘‘(i) the product of 1.25 and the 5 annualized average of the amounts de- 6 scribed in subsection (a)(1) for the 3-year 7 period preceding the sale or exchange, di- 8 vided by 9 ‘‘(ii) the average active voice telephone 10 service or broadband internet access serv- 11 ice connections during such 3-year period, 12 and 13 ‘‘(3) in the case of the 3rd qualified 1-year pe- 14 riod, that offers broadband internet access service 15 described in section 292(b) to not less than 20 per- 16 cent of locations in an area described in section 17 139I(c)(2). 18 ‘‘(c) QUALIFIED 1-YEAR PERIOD.—For purposes of 19 this section, the term ‘qualified 1-year period’ means, with 20 respect to a rural incumbent local exchange carrier with 21 respect to a sale or exchange described in subsection 139I, 22 the 1-year period starting on the date of such sale or ex- 23 change, and each of the 2 subsequent 1-year periods. 24 VerDate Sep 11 2014 22:53 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H2977.IH H2977 pamtmann on DSKBC07HB2PROD with BILLS 9 •HR 2977 IH ‘‘(d) DEFINITIONS.—For purposes of this section, 1 terms defined in the Communications Act of 1934 have 2 the meaning given such terms in such Act. 3 ‘‘(e) TRANSFER OF CREDIT.—If, with respect to a 4 credit under subsection (a) for any taxable year, the tax- 5 payer elects the application of this paragraph for such tax- 6 able year with respect to all (or any portion specified in 7 such election) of such credit, the person specified in such 8 election, and not the taxpayer, shall be treated as the tax- 9 payer for purposes of this title with respect to such credit 10 (or such portion thereof).’’. 11 (b) CONFORMING AMENDMENT.—Paragraph (6) of 12 section 46 of such Code is amended to read as follows: 13 ‘‘(6) the rural communications investment cred- 14 it.’’. 15 (c) CLERICAL AMENDMENT.—The table of sections 16 for subpart E of part IV of subchapter A of chapter 1 17 of such Code is amended by inserting after the item relat- 18 ing to section 48C the following new item: 19 ‘‘Sec. 48D. Rural communications investment credit.’’. (d) EFFECTIVE DATE.—The amendments made by 20 this section shall apply to amounts paid or incurred after 21 the date of the enactment of this Act. 22 VerDate Sep 11 2014 22:53 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2977.IH H2977 pamtmann on DSKBC07HB2PROD with BILLS 10 •HR 2977 IH SEC. 5. INCREASE AND EXPANSION OF PRIVATE ACTIVITY 1 BONDS. 2 (a) INCREASE IN VOLUME CAP.—Section 146(d)(1) 3 of the Internal Revenue Code of 1986 is amended by in- 4 serting ‘‘120 percent of’’ before ‘‘the greater of’’. 5 (b) EXEMPT FACILITY BONDS FOR BROADBAND IN- 6 FRASTRUCTURE.—Section 142(a) of such Code is amend- 7 ed by striking ‘‘or’’ at the end of paragraph (14), by strik- 8 ing the period at the end of paragraph (15) and inserting 9 ‘‘, or’’, and by adding at the end the following new para- 10 graph: 11 ‘‘(16) infrastructure for the provision of 12 broadband internet access service.’’. 13 (c) EFFECTIVE DATES.— 14 (1) INCREASE IN VOLUME CAP.—The amend- 15 ment made by subsection (a) shall apply to calendar 16 years after 2020. 17 (2) EXEMPT FACILITY BONDS FOR BROADBAND 18 INFRASTRUCTURE.—The amendments made by sub- 19 section (b) shall apply to bonds issued after the date 20 of the enactment of this Act. 21 Æ VerDate Sep 11 2014 22:53 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6301 E:\BILLS\H2977.IH H2977 pamtmann on DSKBC07HB2PROD with BILLS