Broadband Stock Acquisition in Local Exchanges Act or the Broadband SALE Act
This bill allows an exclusion from gross income, for income tax purposes, of gain from the sale or exchange of the entire interest in a wholly-owned rural incumbent local exchange carrier. A rural incumbent local exchange carrier is a carrier that serves (1) an area where it was required to provide communications services by a specified date to any customer regardless of cost, and (2) an area other than an urbanized area with not fewer than 50,000 people and a core where there are not fewer than 1,000 people per square mile. The bill requires recapture of tax for income from the sale or exchange of stock in a carrier not held for at least one year.
The bill allows an investment tax credit for 30% of expenditures to purchase, maintain, or improve property to provide voice telephone service or broadband internet access in rural empowerment zones.
[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1178 Introduced in House (IH)]
<DOC>
118th CONGRESS
1st Session
H. R. 1178
To amend the Internal Revenue Code of 1986 to exclude gain from the
sale or exchange of the entire interest in a wholly owned rural
incumbent local exchange carrier, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 24, 2023
Mr. Ferguson 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 exclude gain from the
sale or exchange of the entire interest in a wholly owned rural
incumbent local exchange carrier, 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. SHORT TITLE.
This Act may be cited as the ``Broadband Stock Acquisition in Local
Exchanges Act'' or as the ``Broadband SALE Act''.
SEC. 2. EXCLUSION OF GAIN FROM SALE OF RURAL INCUMBENT LOCAL EXCHANGE
CARRIER STOCK.
(a) In General.--Part III of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 is amended by inserting before section
140 the following new section:
``SEC. 139J. GAIN FROM SALE OF RURAL INCUMBENT LOCAL EXCHANGE CARRIER
STOCK.
``(a) Exclusion.--Gross income shall not include gain from the sale
or exchange of the entire interest in a wholly owned rural incumbent
local exchange carrier.
``(b) Apportionment.--In the case of a carrier described in
paragraph (1) that serves areas not described in paragraph (1), the
amount excluded under subsection (a) shall not exceed the product of
such amount (without regard to this paragraph) and the ratio of--
``(1) revenues attributable to the provision of
communications services in an area described in subsection (c)
during the 1-year period preceding such sale, to
``(2) all revenues during such period.
``(c) Rural Incumbent Local Exchange Carrier.--For purposes of this
section, the term `rural incumbent local exchange carrier' means an
incumbent local exchange carrier that serves an area that is an area--
``(1) where the carrier was required (on the date of the
enactment of the Telecommunications Act of 1996) by law or
regulation to provide communications services to any customer
regardless of cost, and
``(2) other than an urbanized area with--
``(A) not fewer than 50,000 people, and
``(B) a core where there are not fewer than 1,000
people per square mile.
``(d) Definitions.--For purposes of this section, terms defined in
the Communications Act of 1934 have the meaning given such terms in
such Act.
``(e) Termination.--This section shall not apply to sales or
exchanges for which an application for a certificate under section 214
of the Communications Act of 1934 is filed after the date that is 5
years after the date of the enactment of this section.''.
(b) Conforming Amendment.--Section 338(a) of such Code is amended
by inserting ``(other than section 139J)'' after ``For purposes of this
subtitle''.
(c) Clerical Amendment.--The table of sections for part III of
subchapter B of chapter 1 of such Code is amended by inserting before
the item relating to section 140 the following new item:
``Sec. 139J. Gain from sale of rural incumbent local exchange carrier
stock.''.
(d) Effective Date.--The amendments made by this section shall
apply to sales or exchanges after the date of the enactment of this
Act.
SEC. 3. RECAPTURE OF EXCLUSION OF GAIN FROM SALE OF RURAL INCUMBENT
LOCAL EXCHANGE CARRIER STOCK.
(a) In General.--Subchapter B of chapter 1 of the Internal Revenue
Code of 1986 is amended by adding at the end the following new part:
``PART XII--RECAPTURE OF EXCLUSION OF GAIN FROM SALE OF RURAL INCUMBENT
LOCAL EXCHANGE CARRIER STOCK
``Sec. 292. Recapture of exclusion of gain from sale of rural incumbent
local exchange carrier stock.
``SEC. 292. RECAPTURE OF EXCLUSION OF GAIN FROM SALE OF RURAL INCUMBENT
LOCAL EXCHANGE CARRIER STOCK.
``(a) In General.--If a taxpayer acquired stock of a rural
incumbent local exchange carrier in a sale or exchange described in
section 139J and such carrier is not, for a qualified 1-year period
with respect to such sale or exchange, a rural incumbent local exchange
carrier, such taxpayer's taxable income under this chapter for the
taxable year in which such 1-year period ends shall be increased by
product of 1/6 and any amount excluded from tax by any person with
respect to such sale or exchange under such section. Such increase
shall be treated as capital gain.
``(b) Rural Incumbent Local Exchange Carrier.--For purposes of this
section, the term `rural incumbent local exchange carrier' means, with
respect to a qualified 1-year period, a rural incumbent local exchange
carrier (as defined in section 48F) that offers broadband internet
access service at upload and download speeds of at least 1,000 megabits
per second--
``(1) in the case of the 4th qualified 1-year period, to
not less than 30 percent of locations in an area described in
section 139J(c)(2),
``(2) in the case of the 5th qualified 1-year period, to
not less than 40 percent of such locations, and
``(3) in the case of the 6th qualified 1-year period, to
not less than 50 percent of such locations.
``(c) Qualified 1-Year Period.--For purposes of this section, the
term `qualified 1-year period' means, with respect to a rural incumbent
local exchange carrier with respect to a sale or exchange described in
subsection 139J, the 1-year period starting on the date of such sale or
exchange, and each of the 5 subsequent 1-year periods.
``(d) Definitions.--For purposes of this section, terms defined in
the Communications Act of 1934 have the meaning given such terms in
such Act.''.
(b) Clerical Amendment.--The table of parts of subchapter B of
chapter 1 of such Code is amended by adding at the end the following
new item:
``Part XII--Recapture of Exclusion of Gain From Sale of Rural Incumbent
Local Exchange Carrier Stock''.
(c) Effective Date.--The amendments made by this section shall
apply after the date of the enactment of this Act.
SEC. 4. RURAL COMMUNICATIONS INVESTMENT TAX CREDIT.
(a) In General.--Subpart E of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by inserting after
subsection 48E the following new section:
``SEC. 48F. RURAL COMMUNICATIONS INVESTMENT CREDIT.
``(a) In General.--
``(1) Credit amount.--For the purposes of section 46, in
the case of a rural incumbent local exchange carrier, the rural
communications investment credit for any taxable year is an
amount equal to 30 percent of the amounts that are paid or
incurred by such carrier during any qualified 1-year period
ending in such taxable year to purchase, maintain, or improve
property for the purpose of providing voice telephone service
or broadband internet access service in an area described in
section 139J(c)(2).
``(2) Exclusion of certain federal funds.--Amounts paid or
incurred which are otherwise taken into account under paragraph
(1) with respect to any qualified 1-year period shall be
reduced (including for purposes of subsection (b)) by the
amount of any Federal universal service support under section
254 of the Communications Act of 1934 for the deployment of
communications infrastructure, or any Federal grant for the
deployment of communications infrastructure received by such
carrier and properly attributable to such period.
``(b) Rural Incumbent Local Exchange Carrier.--For purposes of this
section, the term `rural incumbent local exchange carrier' means, for a
1-year period, an incumbent local exchange carrier--
``(1) whose stock has been acquired in a sale or exchange
described in section 139J,
``(2) for which--
``(A) the ratio of--
``(i) the amount described in subsection
(a)(1), divided by
``(ii) the average active voice telephone
service or broadband internet access service
connections during the qualified 1-year period
referred to in subsection (a)(1), is not less
than; and
``(B) the ratio of--
``(i) the product of 1.25 and the
annualized average of the amounts described in
subsection (a)(1) for the 3-year period
preceding the sale or exchange, divided by
``(ii) the average active voice telephone
service or broadband internet access service
connections during such 3-year period; and
``(3) in the case of the 3rd qualified 1-year period, that
offers broadband internet access service described in section
292(b) to not less than 20 percent of locations in an area
described in section 139J(c)(2).
``(c) Qualified 1-Year Period.--For purposes of this section, the
term `qualified 1-year period' means, with respect to a rural incumbent
local exchange carrier with respect to a sale or exchange described in
subsection 139J, the 1-year period starting on the date of such sale or
exchange, and each of the 2 subsequent 1-year periods.
``(d) Definitions.--For purposes of this section, terms defined in
the Communications Act of 1934 have the meaning given such terms in
such Act.
``(e) Transfer of Credit.--If, with respect to a credit under
subsection (a) for any taxable year, the taxpayer elects the
application of this paragraph for such taxable year with respect to all
(or any portion specified in such election) of such credit, the person
specified in such election, and not the taxpayer, shall be treated as
the taxpayer for purposes of this title with respect to such credit (or
such portion thereof).''.
(b) Conforming Amendment.--Section 46 of such Code is amended by
striking ``and'' at the end of paragraph (6), by striking the period at
the end of paragraph (7) and inserting ``, and'', and by adding at the
end the following new paragraph:
``(8) the rural communications investment credit.''.
(c) Clerical Amendment.--The table of sections for subpart E of
part IV of subchapter A of chapter 1 of such Code is amended by
inserting after the item relating to section 48E the following new
item:
``Sec. 48F. Rural communications investment credit.''.
(d) Effective Date.--The amendments made by this section shall
apply to amounts paid or incurred after the date of the enactment of
this Act.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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