HR 1818 IHCommentsClose CommentsPermalink

To amend the Internal Revenue Code of 1986 to provide for the expensing of broadband Internet access expenditures, and for other purposes.CommentsClose CommentsPermalink

March 29, 2007

Ms. MATSUI (for herself, Mr. ENGLISH of Pennsylvania, Mr. THOMPSON of California, Mr. KUHL of New York, Mr. BOUCHER, Mr. MCINTYRE, Mr. CROWLEY, Mr. GILLMOR, Mr. KIND, Mr. SCHIFF, and Mrs. CUBIN) introduced the following bill; which was referred to the Committee on Ways and MeansCommentsClose CommentsPermalink

To amend the Internal Revenue Code of 1986 to provide for the expensing of broadband Internet access expenditures, and for other purposes.CommentsClose CommentsPermalink

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

SECTION 1. SHORT TITLE.

This Act may be cited as the `Broadband Deployment Acceleration Act of 2007'.CommentsClose CommentsPermalink

SEC. 2. EXPENSING OF BROADBAND INTERNET ACCESS EXPENDITURES.

(a) In General- Part VI of subchapter B of chapter 1 of the Internal Revenue Code of 1986 (relating to itemized deductions for individuals and corporations) is amended by inserting after section 190 the following new section:CommentsClose CommentsPermalink

`SEC. 191. BROADBAND EXPENDITURES.

`(a) Treatment of Expenditures-CommentsClose CommentsPermalink





`(1) IN GENERAL- A taxpayer may elect to treat any qualified broadband expenditure which is paid or incurred by the taxpayer as an expense which is not chargeable to capital account. Any expenditure which is so treated shall be allowed as a deduction.CommentsClose CommentsPermalink





`(2) ELECTION- An election under paragraph (1) shall be made at such time and in such manner as the Secretary may prescribe by regulation.CommentsClose CommentsPermalink





`(b) Qualified Broadband Expenditures- For purposes of this section--CommentsClose CommentsPermalink





`(1) IN GENERAL- The term `qualified broadband expenditure' means, with respect to any taxable year, any direct or indirect costs incurred after the date of the enactment of this section and before the date which is 4 years after such date and properly taken into account with respect to--CommentsClose CommentsPermalink





`(A) the purchase or installation of qualified equipment (including any upgrades thereto), andCommentsClose CommentsPermalink





`(B) the connection of such qualified equipment to any qualified subscriber.CommentsClose CommentsPermalink





`(2) CERTAIN SATELLITE EXPENDITURES EXCLUDED- Such term shall not include any costs incurred with respect to the launching of any satellite equipment.CommentsClose CommentsPermalink





`(3) LEASED EQUIPMENT- Such term shall include so much of the purchase price paid by the lessor of qualified equipment subject to a lease described in subsection (c)(2)(B) as is attributable to expenditures incurred by the lessee which would otherwise be described in paragraph (1).CommentsClose CommentsPermalink





`(4) LIMITATION WITH REGARD TO CURRENT GENERATION BROADBAND SERVICES- Only 50 percent of the amounts taken into account under paragraph (1) with respect to qualified equipment through which current generation broadband services are provided shall be treated as qualified broadband expenditures.CommentsClose CommentsPermalink





`(c) When Expenditures Taken Into Account- For purposes of this section--CommentsClose CommentsPermalink





`(1) IN GENERAL- Qualified broadband expenditures with respect to qualified equipment shall be taken into account with respect to the first taxable year in which--CommentsClose CommentsPermalink





`(A) current generation broadband services are provided through such equipment to qualified subscribers, orCommentsClose CommentsPermalink





`(B) next generation broadband services are provided through such equipment to qualified subscribers.CommentsClose CommentsPermalink





`(2) LIMITATION-CommentsClose CommentsPermalink





`(A) IN GENERAL- Qualified expenditures shall be taken into account under paragraph (1) only with respect to qualified equipment--CommentsClose CommentsPermalink





`(i) the original use of which commences with the taxpayer, andCommentsClose CommentsPermalink





`(ii) which is placed in service, after the date of the enactment of this section.CommentsClose CommentsPermalink





`(B) SALE-LEASEBACKS- For purposes of subparagraph (A), if property--CommentsClose CommentsPermalink





`(i) is originally placed in service after the date of the enactment of this section by any person, andCommentsClose CommentsPermalink





`(ii) sold and leased back by such person within 3 months after the date such property was originally placed in service,CommentsClose CommentsPermalink





such property shall be treated as originally placed in service not earlier than the date on which such property is used under the leaseback referred to in clause (ii).CommentsClose CommentsPermalink





`(d) Special Allocation Rules-CommentsClose CommentsPermalink





`(1) CURRENT GENERATION BROADBAND SERVICES- For purposes of determining the amount of qualified broadband expenditures under subsection (a)(1) with respect to qualified equipment through which current generation broadband services are provided, if the qualified equipment is capable of serving both qualified subscribers and other subscribers, the qualified broadband expenditures shall be multiplied by a fraction--CommentsClose CommentsPermalink





`(A) the numerator of which is the sum of the number of potential qualified subscribers within the rural areas and the underserved areas which the equipment is capable of serving with current generation broadband services, andCommentsClose CommentsPermalink





`(B) the denominator of which is the total potential subscriber population of the area which the equipment is capable of serving with current generation broadband services.CommentsClose CommentsPermalink





`(2) NEXT GENERATION BROADBAND SERVICES- For purposes of determining the amount of qualified broadband expenditures under subsection (a)(1) with respect to qualified equipment through which next generation broadband services are provided, if the qualified equipment is capable of serving both qualified subscribers and other subscribers, the qualified expenditures shall be multiplied by a fraction--CommentsClose CommentsPermalink





`(A) the numerator of which is the sum of--CommentsClose CommentsPermalink





`(i) the number of potential qualified subscribers within the rural areas and underserved areas, plusCommentsClose CommentsPermalink





`(ii) the number of potential qualified subscribers within the area consisting only of residential subscribers not described in clause (i),CommentsClose CommentsPermalink





which the equipment is capable of serving with next generation broadband services, andCommentsClose CommentsPermalink





`(B) the denominator of which is the total potential subscriber population of the area which the equipment is capable of serving with next generation broadband services.CommentsClose CommentsPermalink





`(e) Definitions- For purposes of this section--CommentsClose CommentsPermalink





`(1) ANTENNA- The term `antenna' means any device used to transmit or receive signals through the electromagnetic spectrum, including satellite equipment.CommentsClose CommentsPermalink





`(2) CABLE OPERATOR- The term `cable operator' has the meaning given such term by section 602(5) of the Communications Act of 1934 (47 U.S.C. 522(5)).CommentsClose CommentsPermalink





`(3) COMMERCIAL MOBILE SERVICE CARRIER- The term `commercial mobile service carrier' means any person authorized to provide commercial mobile radio service as defined in section 20.3 of title 47, Code of Federal Regulations.CommentsClose CommentsPermalink





`(4) CURRENT GENERATION BROADBAND SERVICE- The term `current generation broadband service' means the transmission of signals at a rate of at least 5,000,000 bits per second to the subscriber and at least 1,000,000 bits per second from the subscriber.CommentsClose CommentsPermalink





`(5) MULTIPLEXING OR DEMULTIPLEXING- The term `multiplexing' means the transmission of 2 or more signals over a single channel, and the term `demultiplexing' means the separation of 2 or more signals previously combined by compatible multiplexing equipment.CommentsClose CommentsPermalink





`(6) NEXT GENERATION BROADBAND SERVICE- The term `next generation broadband service' means the transmission of signals at a rate of at least 50,000,000 bits per second to the subscriber and at least 10,000,000 bits per second from the subscriber.CommentsClose CommentsPermalink





`(7) NONRESIDENTIAL SUBSCRIBER- The term `nonresidential subscriber' means any person who purchases broadband services which are delivered to the permanent place of business of such person.CommentsClose CommentsPermalink





`(8) OPEN VIDEO SYSTEM OPERATOR- The term `open video system operator' means any person authorized to provide service under section 653 of the Communications Act of 1934 (47 U.S.C. 573).CommentsClose CommentsPermalink





`(9) OTHER WIRELESS CARRIER- The term `other wireless carrier' means any person (other than a telecommunications carrier, commercial mobile service carrier, cable operator, open video system operator, or satellite carrier) providing current generation broadband services or next generation broadband service to subscribers through the radio transmission of energy.CommentsClose CommentsPermalink





`(10) PACKET SWITCHING- The term `packet switching' means controlling or routing the path of any digitized transmission signal which is assembled into packets or cells.CommentsClose CommentsPermalink





`(11) PROVIDER- The term `provider' means, with respect to any qualified equipment--CommentsClose CommentsPermalink





`(A) a cable operator,CommentsClose CommentsPermalink





`(B) a commercial mobile service carrier,CommentsClose CommentsPermalink





`(C) an open video system operator,CommentsClose CommentsPermalink





`(D) a satellite carrier,CommentsClose CommentsPermalink





`(E) a telecommunications carrier, orCommentsClose CommentsPermalink





`(F) any other wireless carrier,CommentsClose CommentsPermalink





providing current generation broadband services or next generation broadband services to subscribers through such qualified equipment.CommentsClose CommentsPermalink





`(12) PROVISION OF SERVICES- A provider shall be treated as providing services to 1 or more subscribers if--CommentsClose CommentsPermalink





`(A) such a subscriber has been passed by the provider's equipment and can be connected to such equipment for a standard connection fee,CommentsClose CommentsPermalink





`(B) the provider is physically able to deliver current generation broadband services or next generation broadband services, as applicable, to such a subscriber without making more than an insignificant investment with respect to such subscriber,CommentsClose CommentsPermalink





`(C) the provider has made reasonable efforts to make such subscribers aware of the availability of such services,CommentsClose CommentsPermalink





`(D) such services have been purchased by 1 or more such subscribers, andCommentsClose CommentsPermalink





`(E) such services are made available to such subscribers at average prices comparable to those at which the provider makes available similar services in any areas in which the provider makes available such services.CommentsClose CommentsPermalink





`(13) QUALIFIED EQUIPMENT-CommentsClose CommentsPermalink





`(A) IN GENERAL- The term `qualified equipment' means equipment which provides current generation broadband services or next generation broadband services--CommentsClose CommentsPermalink





`(i) at least a majority of the time during periods of maximum demand to each subscriber who is utilizing such services, andCommentsClose CommentsPermalink





`(ii) in a manner substantially the same as such services are provided by the provider to subscribers through equipment with respect to which no deduction is allowed under subsection (a)(1).CommentsClose CommentsPermalink





`(B) ONLY CERTAIN INVESTMENT TAKEN INTO ACCOUNT- Except as provided in subparagraph (C) or (D), equipment shall be taken into account under subparagraph (A) only to the extent it--CommentsClose CommentsPermalink





`(i) extends from the last point of switching to the outside of the unit, building, dwelling, or office owned or leased by a subscriber in the case of a telecommunications carrier,CommentsClose CommentsPermalink





`(ii) extends from the customer side of the mobile telephone switching office to a transmission/receive antenna (including such antenna) owned or leased by a subscriber in the case of a commercial mobile service carrier,CommentsClose CommentsPermalink





`(iii) extends from the customer side of the headend to the outside of the unit, building, dwelling, or office owned or leased by a subscriber in the case of a cable operator or open video system operator, orCommentsClose CommentsPermalink





`(iv) extends from a transmission/receive antenna (including such antenna) which transmits and receives signals to or from multiple subscribers, to a transmission/receive antenna (including such antenna) on the outside of the unit, building, dwelling, or office owned or leased by a subscriber in the case of a satellite carrier or other wireless carrier, unless such other wireless carrier is also a telecommunications carrier.CommentsClose CommentsPermalink





`(C) PACKET SWITCHING EQUIPMENT- Packet switching equipment, regardless of location, shall be taken into account under subparagraph (A) only if it is deployed in connection with equipment described in subparagraph (B) and is uniquely designed to perform the function of packet switching for current generation broadband services or next generation broadband services, but only if such packet switching is the last in a series of such functions performed in the transmission of a signal to a subscriber or the first in a series of such functions performed in the transmission of a signal from a subscriber.CommentsClose CommentsPermalink





`(D) MULTIPLEXING AND DEMULTIPLEXING EQUIPMENT- Multiplexing and demultiplexing equipment shall be taken into account under subparagraph (A) only to the extent it is deployed in connection with equipment described in subparagraph (B) and is uniquely designed to perform the function of multiplexing and demultiplexing packets or cells of data and making associated application adaptions, but only if such multiplexing or demultiplexing equipment is located between packet switching equipment described in subparagraph (C) and the subscriber's premises.CommentsClose CommentsPermalink





`(14) QUALIFIED SUBSCRIBER- The term `qualified subscriber' means--CommentsClose CommentsPermalink





`(A) with respect to the provision of current generation broadband services--CommentsClose CommentsPermalink





`(i) any nonresidential subscriber maintaining a permanent place of business in a rural area or underserved area, orCommentsClose CommentsPermalink





`(ii) any residential subscriber residing in a dwelling located in a rural area or underserved area which is not a saturated market, andCommentsClose CommentsPermalink





`(B) with respect to the provision of next generation broadband services--CommentsClose CommentsPermalink





`(i) any nonresidential subscriber maintaining a permanent place of business in a rural area or underserved area, orCommentsClose CommentsPermalink





`(ii) any residential subscriber.CommentsClose CommentsPermalink





`(15) RESIDENTIAL SUBSCRIBER- The term `residential subscriber' means any individual who purchases broadband services which are delivered to such individual's dwelling.CommentsClose CommentsPermalink





`(16) RURAL AREA- The term `rural area' means any census tract which--CommentsClose CommentsPermalink





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





`(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.CommentsClose CommentsPermalink





`(17) RURAL SUBSCRIBER- The term `rural subscriber' means any residential subscriber residing in a dwelling located in a rural area or nonresidential subscriber maintaining a permanent place of business located in a rural area.CommentsClose CommentsPermalink





`(18) SATELLITE CARRIER- The term `satellite carrier' means any person using the facilities of a satellite or satellite service licensed by the Federal Communications Commission and operating in the Fixed-Satellite Service under part 25 of title 47 of the Code of Federal Regulations or the Direct Broadcast Satellite Service under part 100 of title 47 of such Code to establish and operate a channel of communications for distribution of signals, and owning or leasing a capacity or service on a satellite in order to provide such point-to-multipoint distribution.CommentsClose CommentsPermalink





`(19) SATURATED MARKET- The term `saturated market' means any census tract in which, as of the date of the enactment of this section--CommentsClose CommentsPermalink





`(A) current generation broadband services have been provided by a single provider to 85 percent or more of the total number of potential residential subscribers residing in dwellings located within such census tract, andCommentsClose CommentsPermalink





`(B) such services can be utilized--CommentsClose CommentsPermalink





`(i) at least a majority of the time during periods of maximum demand by each such subscriber who is utilizing such services, andCommentsClose CommentsPermalink





`(ii) in a manner substantially the same as such services are provided by the provider to subscribers through equipment with respect to which no deduction is allowed under subsection (a)(1).CommentsClose CommentsPermalink





`(20) SUBSCRIBER- The term `subscriber' means any person who purchases current generation broadband services or next generation broadband services.CommentsClose CommentsPermalink





`(21) TELECOMMUNICATIONS CARRIER- The term `telecommunications carrier' has the meaning given such term by section 3(44) of the Communications Act of 1934 (47 U.S.C. 153(44)), but--CommentsClose CommentsPermalink





`(A) includes all members of an affiliated group of which a telecommunications carrier is a member, andCommentsClose CommentsPermalink





`(B) does not include a commercial mobile service carrier.CommentsClose CommentsPermalink





`(22) TOTAL POTENTIAL SUBSCRIBER POPULATION- The term `total potential subscriber population' means, with respect to any area and based on the most recent census data, the total number of potential residential subscribers residing in dwellings located in such area and potential nonresidential subscribers maintaining permanent places of business located in such area.CommentsClose CommentsPermalink





`(23) UNDERSERVED AREA- The term `underserved area' means--CommentsClose CommentsPermalink





`(A) any census tract which is located in--CommentsClose CommentsPermalink





`(i) an empowerment zone or enterprise community designated under section 1391, orCommentsClose CommentsPermalink





`(ii) the District of Columbia Enterprise Zone established under section 1400, orCommentsClose CommentsPermalink





`(B) any census tract--CommentsClose CommentsPermalink





`(i) the poverty level of which is at least 30 percent (based on the most recent census data), andCommentsClose CommentsPermalink





`(ii) the median family income of which does not exceed--CommentsClose CommentsPermalink





`(I) in the case of a census tract located in a metropolitan statistical area, 70 percent of the greater of the metropolitan area median family income or the statewide median family income, andCommentsClose CommentsPermalink





`(II) in the case of a census tract located in a nonmetropolitan statistical area, 70 percent of the nonmetropolitan statewide median family income.CommentsClose CommentsPermalink





`(24) UNDERSERVED SUBSCRIBER- The term `underserved subscriber' means any residential subscriber residing in a dwelling located in an underserved area or nonresidential subscriber maintaining a permanent place of business located in an underserved area.CommentsClose CommentsPermalink





`(f) Special Rules-CommentsClose CommentsPermalink





`(1) PROPERTY USED OUTSIDE THE UNITED STATES, ETC., NOT QUALIFIED- No expenditures shall be taken into account under subsection (a)(1) with respect to the portion of the cost of any property referred to in section 50(b) or with respect to the portion of the cost of any property specified in an election under section 179.CommentsClose CommentsPermalink





`(2) BASIS REDUCTION-CommentsClose CommentsPermalink





`(A) IN GENERAL- For purposes of this title, the basis of any property shall be reduced by the portion of the cost of such property taken into account under subsection (a)(1).CommentsClose CommentsPermalink





`(B) ORDINARY INCOME RECAPTURE- For purposes of section 1245, the amount of the deduction allowable under subsection (a)(1) with respect to any property which is of a character subject to the allowance for depreciation shall be treated as a deduction allowed for depreciation under section 167.CommentsClose CommentsPermalink





`(3) COORDINATION WITH SECTION 38- No credit shall be allowed under section 38 with respect to any amount for which a deduction is allowed under subsection (a)(1).'.CommentsClose CommentsPermalink





(b) Special Rule for Mutual or Cooperative Telephone Companies- Section 512(b) of the Internal Revenue Code of 1986 (relating to modifications) is amended by adding at the end the following new paragraph:CommentsClose CommentsPermalink





`(20) SPECIAL RULE FOR MUTUAL OR COOPERATIVE TELEPHONE COMPANIES- A mutual or cooperative telephone company which for the taxable year satisfies the requirements of section 501(c)(12)(A) may elect to reduce its unrelated business taxable income for such year, if any, by an amount that does not exceed the qualified broadband expenditures which would be taken into account under section 191 for such year by such company if such company was not exempt from taxation. Any amount which is allowed as a deduction under this paragraph shall not be allowed as a deduction under section 191 and the basis of any property to which this paragraph applies shall be reduced under section 1016(a)(38).'.CommentsClose CommentsPermalink





(c) Conforming Amendments-CommentsClose CommentsPermalink





(1) Section 263(a)(1) of the Internal Revenue Code of 1986 (relating to capital expenditures) is amended by striking `or' at the end of subparagraph (J), by striking the period at the end of subparagraph (K) and inserting `, or', and by adding at the end the following new subparagraph:CommentsClose CommentsPermalink





`(L) expenditures for which a deduction is allowed under section 191.'.CommentsClose CommentsPermalink





(2) Section 1016(a) of such Code is amended by striking `and' at the end of paragraph (36), by striking the period at the end of paragraph (37) and inserting `, and', and by adding at the end the following new paragraph:CommentsClose CommentsPermalink





`(38) to the extent provided in section 191(f)(2).'.CommentsClose CommentsPermalink





(3) The table of sections for part VI of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 190 the following new item:CommentsClose CommentsPermalink





`Sec. 191. Broadband expenditures.'.CommentsClose CommentsPermalink





(d) Designation of Census Tracts-CommentsClose CommentsPermalink





(1) IN GENERAL- The Secretary of the Treasury shall, not later than 90 days after the date of the enactment of this Act, designate and publish those census tracts meeting the criteria described in paragraphs (16), (22), and (23) of section 191(e) of the Internal Revenue Code of 1986 (as added by this section). In making such designations, the Secretary of the Treasury shall consult with such other departments and agencies as the Secretary determines appropriate.CommentsClose CommentsPermalink





(2) SATURATED MARKET-CommentsClose CommentsPermalink





(A) IN GENERAL- For purposes of designating and publishing those census tracts meeting the criteria described in subsection (e)(19) of such section 191--CommentsClose CommentsPermalink





(i) the Secretary of the Treasury shall prescribe not later than 30 days after the date of the enactment of this Act the form upon which any provider which takes the position that it meets such criteria with respect to any census tract shall submit a list of such census tracts (and any other information required by the Secretary) not later than 60 days after the date of the publication of such form, andCommentsClose CommentsPermalink





(ii) the Secretary of the Treasury shall publish an aggregate list of such census tracts and the applicable providers not later than 30 days after the last date such submissions are allowed under clause (i).CommentsClose CommentsPermalink





(B) NO SUBSEQUENT LISTS REQUIRED- The Secretary of the Treasury shall not be required to publish any list of census tracts meeting such criteria subsequent to the list described in subparagraph (A)(ii).CommentsClose CommentsPermalink





(e) Other Regulatory Matters-CommentsClose CommentsPermalink





(1) PROHIBITION- No Federal or State agency or instrumentality shall adopt regulations or ratemaking procedures that would have the effect of eliminating or reducing any deduction or portion thereof allowed under section 191 of the Internal Revenue Code of 1986 (as added by this section) or otherwise subverting the purpose of this section.CommentsClose CommentsPermalink





(2) TREASURY REGULATORY AUTHORITY- It is the intent of Congress in providing the election to deduct qualified broadband expenditures under section 191 of the Internal Revenue Code of 1986 (as added by this section) to provide incentives for the purchase, installation, and connection of equipment and facilities offering expanded broadband access to the Internet for users in certain low income and rural areas of the United States, as well as to residential users nationwide, in a manner that maintains competitive neutrality among the various classes of providers of broadband services. Accordingly, the Secretary of the Treasury shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of section 191 of such Code, including--CommentsClose CommentsPermalink





(A) regulations to determine how and when a taxpayer that incurs qualified broadband expenditures satisfies the requirements of section 191 of such Code to provide broadband services, andCommentsClose CommentsPermalink





(B) regulations describing the information, records, and data taxpayers are required to provide the Secretary to substantiate compliance with the requirements of section 191 of such Code.CommentsClose CommentsPermalink





(f) Effective Date- The amendments made by this section shall apply to expenditures incurred after the date of the enactment of this Act.CommentsClose CommentsPermalink