S 2321 IS

To amend the Internal Revenue Code of 1986 to allow a tax credit for development costs of telecommunications facilities in rural areas.

March 29, 2000

Mr. ROCKEFELLER (for himself and Ms. SNOWE) introduced the following bill; which was read twice and referred to the Committee on Finance

To amend the Internal Revenue Code of 1986 to allow a tax credit for development costs of telecommunications facilities in rural areas.

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 `Rural Telecommunications Modernization Act of 2000'.

SEC. 2. CREDIT FOR TELECOMMUNICATIONS FACILITIES DEVELOPMENT IN RURAL AREAS.

(a) IN GENERAL- Section 46(a) of the Internal Revenue Code of 1986 (relating to amount of investment credit) is amended by striking `and' at the end of paragraph (2), by striking the period at the end of paragraph (3) and inserting `, and', and by adding at the end the following:

`(4) the rural telecommunications facilities credit.'

(b) AMOUNT OF CREDIT- Subpart E of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to rules for computing investment credit) is amended by inserting after section 47 the following:

`SEC. 47A. RURAL TELECOMMUNICATIONS FACILITIES CREDIT.

`(a) IN GENERAL- For purposes of section 46, the rural telecommunications facilities credit for any taxable year is an amount equal to the applicable percentage of the qualified broadband local access facilities expenditures for such taxable year.

`(b) APPLICABLE PERCENTAGE- For purposes of subsection (a), the applicable percentage in the case of qualified broadband local access facilities expenditures in connection with--

`(1) broadband telecommunications facilities, is 10 percent, and

`(2) enhanced broadband telecommunications facilities, is 15 percent.

`(c) QUALIFIED BROADBAND LOCAL ACCESS FACILITIES EXPENDITURE- For purposes of this section, the term `qualified broadband local access facilities expenditure' means any expenditure--

`(1) chargeable to capital account--

`(A) for property for which depreciation is allowable under section 168, and

`(B) incurred in connection with broadband telecommunications facilities or enhanced broadband telecommunications facilities serving rural subscribers, and

`(2) incurred during the period--

`(A) beginning with the taxpayer's (or any predecessor's) first taxable year beginning after the date of the enactment of this section, and

`(B) ending with the taxpayer's (or any predecessor's) third taxable year beginning after such date.

`(d) DEFINITIONS AND SPECIAL RULES- For purposes of this section--

`(1) BROADBAND TELECOMMUNICATIONS FACILITIES- The term `broadband telecommunications facilities' means broadband local access facilities capable of--

`(A) transmitting voice, and

`(B) downloading data at a rate of 1.5 MBPS and uploading data at a rate of .5 MBPS.

`(2) ENHANCED BROADBAND TELECOMMUNICATIONS FACILITIES- The term `enhanced broadband telecommunications facilities' means the broadband local access facilities capable of--

`(A) transmitting voice, and

`(B) downloading and uploading data at a rate of 10 MBPS.

`(3) DETERMINATION OF BROADBAND LOCAL ACCESS FACILITIES- Broadband local access facilities--

`(A) begin at the switching point closest to the rural subscriber, which is--

`(i) the subscriber side of the nearest switching facility in the case of local exchange carriers,

`(ii) the subscriber side of the headend or the node in the case of cable television operators, and

`(iii) the subscriber side of the transmission and reception facilities in the case of a wireless or satellite carrier,

`(B) end at the interface between the network and the rural subscriber's location, and

`(C) do not include any switching facility.

`(4) RURAL SUBSCRIBER- The term `rural subscriber' means a subscriber who lives in area which--

`(A) is not within 10 miles of any incorporated or census designated places containing more than 25,000 people, and

`(B) is not within a county or county equivalent which has an overall population density of more than 500 people per square mile of land.'

(c) SPECIAL RULE FOR MUTUAL OR COOPERATIVE TELEPHONE COMPANIES- Section 501(c)(12)(B) of the Internal Revenue Code of 1986 (relating to list of exempt organizations) is amended by striking `or' at the end of clause (iii), by striking the period at the end of clause (iv) and inserting `, or', and by adding at the end the following new clause:

`(v) which is not described in subparagraph (A), in an amount which does not exceed in any year an amount equal to the applicable percentage of the qualified broadband local access facilities expenditures (as determined in section 47A) of the mutual or cooperative telephone company for such year.'

(d) CONFORMING AMENDMENT- The table of sections for subpart E of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 47 the following:

`Sec. 47A. Rural telecommunications facilities credit.'

(e) EFFECTIVE DATES-

(1) IN GENERAL- Except as provided in paragraph (2), the amendments made by this section shall apply to expenditures incurred after the date of the enactment of this Act.

(2) SPECIAL RULE- The amendments made by subsection (c) shall apply to amounts received after the date of the enactment of this Act.

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