Text: H.R.3003 — 110th Congress (2007-2008)All Information (Except Text)

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Introduced in House (07/11/2007)


110th CONGRESS
1st Session
H. R. 3003


To amend the Internal Revenue Code of 1986 to provide tax incentives to encourage diversity of ownership of telecommunications businesses, and for other purposes.


IN THE HOUSE OF REPRESENTATIVES

July 11, 2007

Mr. Rangel introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Small Business, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned


A BILL

To amend the Internal Revenue Code of 1986 to provide tax incentives to encourage diversity of ownership of telecommunications businesses, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. Nonrecognition of gain on qualified sales of telecommunications businesses.

(a) In general.—Subchapter O of chapter 1 of the Internal Revenue Code of 1986 (relating to gain or loss on disposition of property) is amended by inserting after part IV the following new part:

“PART VCERTAIN SALES OF TELECOMMUNICATIONS BUSINESSES

“Sec. 1071. Nonrecognition of gain on certain sales of telecommunications businesses.

“SEC. 1071. Nonrecognition of gain on certain sales of telecommunications businesses.

“(a) In general.—In the case of any qualified telecommunications sale, at the election of the taxpayer, such sale shall be treated as an involuntary conversion of property within the meaning of section 1033.

“(b) Limitation on amount of gain on which tax may be deferred.—The amount of gain on any qualified telecommunications sale which is not recognized by reason of this section shall not exceed $50,000,000.

“(c) Qualified telecommunications sale.—For purposes of this section, the term ‘qualified telecommunications sale’ means any sale to a qualified business of—

“(1) the assets of a telecommunications business, or

“(2) stock in a corporation if, immediately after such sale—

“(A) the qualified business controls (within the meaning of section 368(c)) such corporation, and

“(B) substantially all of the assets of such corporation are assets of 1 or more telecommunications businesses.

“(d) Qualified business.—For purposes of this section—

“(1) IN GENERAL.—The term ‘qualified business’ means—

“(A) in the case of a telecommunications sale which includes the sale of any interest in a broadcast station (as defined in section 3(5) of the Communications Act of 1934), any person if—

“(i) such person owns, directly or indirectly, a qualified interest in 10 or fewer broadcast stations (as so defined), and

“(ii) the fair market value of the aggregate interests of such person in broadcast stations (as so defined) is equal to or greater than 50 percent of the net assets of such entity, and

“(B) in the case of any other telecommunications sale—

“(i) any individual, and

“(ii) any partnership or corporation if—

“(I) the net assets of such entity do not exceed $30,000,000, and

“(II) the average after-tax income of such entity for the preceding 2 taxable years does not exceed $10,000,000.

“(2) QUALIFIED INTEREST IN BROADCAST STATIONS.—An interest in a broadcast station shall be treated as qualified if such interest represents 50 percent or more of the total assets of the station.

“(3) EACH BUSINESS LIMITED TO 3 PURCHASES.—A person shall not be a qualified business with respect to a qualified telecommunications sale if such person (or any predecessor) was the purchaser in more than 2 prior qualified telecommunications sales for which an election under this section was made by the seller.

“(4) SPECIAL RULES FOR QUALIFIED BUSINESS DETERMINATION.—For purposes of paragraph (1)—

“(A) NET ASSETS.—The term ‘net assets’ means the excess of the aggregate gross assets (as defined in section 1202(d)(2)) of the entity over the indebtedness of such entity.

“(B) AFTER-TAX INCOME.—The term ‘after-tax income’ means taxable income reduced by the net income tax for the taxable year. For purposes of the preceding sentence, the term ‘net income tax’ means the tax imposed by this chapter reduced by the sum of the credits allowable under part IV of subchapter A of this chapter. Rules similar to the rules of subparagraphs (A), (B), and (D) of section 448(c)(3) shall apply in determining average after-tax income.

“(5) AGGREGATION RULES.—For purposes of this subsection, all persons treated as a single employer under subsection (a) or (b) of section 52 or subsection (m) or (o) of section 414 shall be treated as one person.

“(e) Telecommunications business.—The term ‘telecommunications business’ means any business providing communication services by wire, cable, radio, satellite, or other technology if the providing of such services is governed by the Communications Act of 1934 or the Telecommunications Act of 1996.

“(f) Special rules.—

“(1) IN GENERAL.—In applying section 1033 for purposes of subsection (a) of this section, stock of a corporation operating a telecommunications business, whether or not representing control of such corporation, shall be treated as property similar or related in service or use to the property sold in the qualified telecommunications sale.

“(2) ELECTION TO REDUCE BASIS RATHER THAN RECOGNIZE REMAINDER OF GAIN.—If—

“(A) a taxpayer elects the treatment under subsection (a) with respect to any qualified telecommunications sale, and

“(B) an amount of gain would (but for this paragraph) be recognized on such sale other than by reason of subsection (b),

then the amount of such gain shall not be recognized to the extent that the taxpayer elects to reduce the basis of depreciable property (as defined in section 1017(b)(3)) held by the taxpayer immediately after the sale or acquired in the same taxable year. The manner and amount of such reduction shall be determined under regulations prescribed by the Secretary.

“(3) BASIS.—For basis of property acquired on a sale or exchange treated as an involuntary conversion under subsection (a), see section 1033(b).

“(g) Recapture of tax benefit if telecommunications business resold within 5 years, etc.—

“(1) IN GENERAL.—If, within 5 years after the date of any qualified telecommunications sale, there is a recapture event with respect to the property involved in such sale, then the purchaser’s tax imposed by this chapter for the taxable year in which such event occurs shall be increased by 20 percent of the lesser of the consideration furnished by the purchaser in such sale or the dollar limitation of subsection (b).

“(2) EXCEPTION FOR REINVESTED AMOUNTS.—Paragraph (1) shall not apply to any recapture event which is a sale if—

“(A) the sale is a qualified telecommunications sale, or

“(B) during the 60-day period beginning on the date of such sale, the taxpayer is the purchaser in another qualified telecommunications sale in which the consideration furnished by the taxpayer is not less than the amount realized on the recapture event sale.

“(3) RECAPTURE EVENT.—For purposes of this subsection, the term ‘recapture event’ means, with respect to any qualified telecommunications sale—

“(A) any sale or other disposition of the assets or stock referred to in subsection (c) which were acquired by the taxpayer in such sale, and

“(B) in the case of a qualified telecommunications sale described in subsection (c)(2)—

“(i) any sale or other disposition of a telecommunications business by the corporation referred to in such subsection, or

“(ii) any other transaction which results in the qualified business not having control (as defined in subsection (c)(2)(A)) of such corporation.

Such term shall not include any sale or other disposition resulting from the default, or imminent default, of any indebtedness of the taxpayer.”.

(b) Clerical amendment.—The table of parts for subchapter O of chapter 1 of such Code is amended by inserting after the item relating to part IV the following new item:

“PART V. CERTAIN SALES OF TELECOMMUNICATIONS BUSINESSES.”.

(c) Effective date.—The amendments made by this section shall apply to sales in taxable years beginning after the date of the enactment of this Act.

SEC. 2. Loan guarantee program to encourage diversity of ownership of telecommunications businesses.

(a) In general.—The Administrator of the Small Business Administration may guarantee any loan made to a qualified business for the purchase of assets or stock described in section 1071(c) of the Internal Revenue Code of 1986 (relating to qualified telecommunications sale).

(b) Limitations.—

(1) SECURITY.—The Administrator shall not guarantee any loan under subsection (a) unless the guaranteed portion of such loan is secured by a first lien position or first mortgage on the stock or assets financed by the loan.

(2) GUARANTEE PERCENTAGE.—The amount of any loan guaranteed by the Administrator under subsection (a) shall not exceed 95 percent of the balance of the financing outstanding at the time of disbursement of the loan.

(3) FEES.—With respect to each loan guaranteed under subsection (a) (other than a loan that is repayable in 1 year or less), the Administrator may collect a guarantee fee, which shall be payable by the participating lender, and may be charged to the borrower.

(4) FORFEITURE OF FCC LICENSE.—The Administrator shall not guarantee any loan under subsection (a) unless such loan provides that any license issued by the Federal Communications Commission to the borrower shall be returned and forfeited by the borrower to the Federal Communications Commission immediately upon a finding by the Administrator that such borrower is in default under such loan.

(c) General authority.—For purposes of carrying out this section, the Administrator may—

(1) enter into contracts with private and Federal entities for professional and other services;

(2) enter into memorandums of understanding with other Federal agencies; and

(3) issue regulations, including regulations regarding—

(A) notice of and opportunity to cure a default;

(B) procedures related to foreclosure; and

(C) such other matters as the Administrator considers appropriate.

(d) Definitions.—For purposes of this section:

(1) ADMINISTRATOR.—The term “Administrator” means the Administrator of the Small Business Administration.

(2) QUALIFIED BUSINESS.—The term “qualified business” has the meaning given such term in section 1071(d) of the Internal Revenue Code of 1986.

(e) Authorization of appropriations.—There are authorized to be appropriated such sums as may be necessary to carry out the purposes of this section.