This bill allows an exclusion from gross income, for income tax purposes, of certain amounts received as contributions to capital by a regulated public utility that provides water or sewerage disposal services. It also provides a three-year statute of limitations period for any deficiency attributable to the treatment of such amounts as a contribution to capital.
[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5366 Introduced in House (IH)]
<DOC>
117th CONGRESS
1st Session
H. R. 5366
To amend the Internal Revenue Code of 1986 to provide that certain
contributions by government entities are treated as contributions to
capital.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 24, 2021
Ms. Kuster 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 provide that certain
contributions by government entities are treated as contributions to
capital.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. TREATMENT OF CERTAIN CONTRIBUTIONS BY GOVERNMENT ENTITIES AS
CONTRIBUTIONS TO CAPITAL.
(a) In General.--Section 118 of the Internal Revenue Code of 1986
is amended--
(1) by redesignating subsection (d) as subsection (e), and
(2) by striking subsections (b) and (c) and inserting the
following:
``(b) Contributions in Aid of Construction, etc.--For purposes of
subsection (a), except as provided in subsection (c), the term
`contribution to the capital of the taxpayer' does not include any
contribution in aid of construction or any other contribution as a
customer or potential customer.
``(c) Special Rules for Water and Sewerage Disposal Utilities.--
``(1) General rule.--For purposes of this section, the term
`contribution to the capital of the taxpayer' includes any
amount of money or other property received from any person
(whether or not a shareholder) by a regulated public utility
which provides water or sewerage disposal services if--
``(A) such amount is a contribution in aid of
construction,
``(B) in the case of contribution of property other
than water or sewerage disposal facilities, such amount
meets the requirements of the expenditure rule of
paragraph (2), and
``(C) such amount (or any property acquired or
constructed with such amount) is not included in the
taxpayer's rate base for ratemaking purposes.
``(2) Expenditure rule.--An amount meets the requirements
of this paragraph if--
``(A) an amount equal to such amount is expended
for the acquisition or construction of tangible
property described in section 1231(b)--
``(i) which is the property for which the
contribution was made or is of the same type as
such property, and
``(ii) which is used predominantly in the
trade or business of furnishing water or
sewerage disposal services,
``(B) the expenditure referred to in subparagraph
(A) occurs before the end of the second taxable year
after the year in which such amount was received, and
``(C) accurate records are kept of the amounts
contributed and expenditures made, the expenditures to
which contributions are allocated, and the year in
which the contributions and expenditures are received
and made.
``(3) Definitions.--For purposes of this subsection--
``(A) Contribution in aid of construction.--The
term `contribution in aid of construction' shall be
defined by regulations prescribed by the Secretary,
except that such term shall not include amounts paid as
service charges for starting or stopping services.
``(B) Predominantly.--The term `predominantly'
means 80 percent or more.
``(C) Regulated public utility.--The term
`regulated public utility' has the meaning given such
term by section 7701(a)(33), except that such term
shall not include any utility which is not required to
provide water or sewerage disposal services to members
of the general public in its service area.
``(4) Disallowance of deductions and credits; adjusted
basis.--Notwithstanding any other provision of this subtitle,
no deduction or credit shall be allowed for, or by reason of,
any expenditure which constitutes a contribution in aid of
construction to which this subsection applies. The adjusted
basis of any property acquired with contributions in aid of
construction to which this subsection applies shall be zero.
``(d) Statute of Limitations.--If the taxpayer for any taxable year
treats an amount as a contribution to the capital of the taxpayer
described in subsection (c), then--
``(1) the statutory period for the assessment of any
deficiency attributable to any part of such amount shall not
expire before the expiration of 3 years from the date the
Secretary is notified by the taxpayer (in such manner as the
Secretary may prescribe) of--
``(A) the amount of the expenditure referred to in
subparagraph (A) of subsection (c)(2),
``(B) the taxpayer's intention not to make the
expenditures referred to in such subparagraph, or
``(C) a failure to make such expenditure within the
period described in subparagraph (B) of subsection
(c)(2), and
``(2) such deficiency may be assessed before the expiration
of such 3-year period notwithstanding the provisions of any
other law or rule of law which would otherwise prevent such
assessment.''.
(b) Effective Date.--The amendments made by this section shall
apply to contributions made after December 22, 2017.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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