H. R. 5705
IN THE HOUSE OF REPRESENTATIVES
May 9, 2012
Mr. Reed (for himself and Mr. Neal) introduced the following bill; which was referred to the Committee on Ways and Means
To amend the Internal Revenue Code of 1986 to permanently modify the limitations on the deduction of interest by financial institutions which hold tax-exempt bonds, and for other purposes.
This Act may be cited as the
Municipal Bond Market Support Act of
Permanent modification of small issuer exception to tax-exempt interest expense allocation rules for financial institutions
Permanent increase in limitation
Subparagraphs (C)(i), (D)(i), and
(D)(iii)(II) of section 265(b)(3) of the Internal Revenue Code of 1986 are each
amended by striking
$10,000,000 and inserting
Permanent modification of other special rules
Paragraph (3) of section 265(b) of the Internal Revenue Code of 1986 is amended—
by redesignating clauses (iv), (v), and (vi) of subparagraph (G) as clauses (ii), (iii), and (iv) of such subparagraph, respectively, and
by striking so much of subparagraph (G) as precedes such clauses and inserting the following:
Qualified 501(c)(3) bonds treated as issued by exempt organization
In the case of a qualified 501(c)(3) bond (as defined in section 145), this paragraph shall be applied by treating the 501(c)(3) organization for whose benefit such bond was issued as the issuer.
Special rule for qualified financings
In the case of a qualified financing issue—
subparagraph (F) shall not apply, and
any obligation issued as a part of such issue shall be treated as a qualified tax-exempt obligation if the requirements of this paragraph are met with respect to each qualified portion of the issue (determined by treating each qualified portion as a separate issue which is issued by the qualified borrower with respect to which such portion relates).
Paragraph (3) of section 265(b) of the Internal Revenue Code of 1986, as amended by subsection (b), is amended by adding at the end the following new subparagraph:
In the case of any calendar year after 2012, the $30,000,000 amounts contained in subparagraphs (C)(i), (D)(i), and (D)(iii)(II) shall each be increased by an amount equal to—
such dollar amount, multiplied by
cost-of-living adjustment determined under section 1(f)(3) for such calendar
year, determined by substituting
calendar year 2011 for
calendar year 1992 in subparagraph (B) thereof.
The amendments made by this section shall apply to obligations issued after the date of the enactment of this Act.