,,ii  #aaf? ,,congress  #a/ ,session    
,s4 #bidb  ,,9 ,,! ,,s5ate ,,( ,,!      
,,unit$ ,,/ates  ,novemb] #ba1          
#bjai,mrs4 ,%ahe5 7= h]self1 ,ms4       
,murk[ski1 & ,ms4 ,hassan7 introduc$ !  
foll[+ bill2 :i* 0 read twice & ref]r$  
to ! ,committee on ,f9ance  ,a ,,bill   
,to am5d ! ,int]nal ,rev5ue ,code (     
#aihf to provide t c]ta9 contributions  
by gov]nm5t entities are treat$ z       
contributions to capital4  #a4 ,treatm5t
 ( c]ta9 contributions by gov]nm5t      
entities z contributions to capital  7a7
 ,9 g5]al ,section #aah ( ! ,int]nal    
,rev5ue ,code ( #aihf is am5d$-- 7#a7 by
 r$esignat+ subsection 7d7 z subsection 
7e72 &  7#b7 by /rik+ subsections 7b7 & 
7c7 & ins]t+ ! foll[+3  7b7             
,contributions 9 aid ( con/ruction1 etc 
,= purposes ( subsection 7a71 except z  
provid$ 9 subsection 7c71 ! t]m         
contribution to ! capital ( ! taxpay]   
does n include any contribution 9 aid ( 
con/ruction or any o!r contribution z a 
cu/om] or pot5tial cu/om]4  7c7 ,special

 rules = wat] & sew]age disposal        
utilities  7#a7 ,g5]al rule ,= purposes 
( ?is section1 ! t]m contribution to !  
capital ( ! taxpay] includes any am\nt (
 money or o!r prop]ty receiv$ f any     
p]son 7:e!r or n a %>ehold]7 by a       
regulat$ public utility :i* provides    
wat] or sew]age disposal s]vices if--   
7,a7 su* am\nt is a contribution 9 aid (
 con/ruction1  7,b7 9 ! case (          
contribution ( prop]ty o!r ?an wat] or  
sew]age disposal facilities1 su* am\nt  
meets ! requirem5ts ( ! exp5diture rule 
( p>agraph 7#b71 &  7,c7 su* am\nt 7or  
any prop]ty acquir$ or con/ruct$ ) su*  
am\nt7 is n includ$ 9 ! taxpay]'s rate  
base = ratemak+ purposes4  7#b7         
,exp5diture rule ,an am\nt meets !      
requirem5ts ( ?is p>agraph if-- 7,a7 an 
am\nt equal to su* am\nt is exp5d$ = !  
acquisition or con/ruction ( tangible   
prop]ty describ$ 9 section #abca7;b7--  
7i7 :i* is ! prop]ty = :i* !            
contribution 0 made or is ( ! same type 
z su* prop]ty1 &  7ii7 :i* is us$       

pr$om9antly 9 ! trade or bus9ess (      
furni%+ wat] or sew]age disposal        
s]vices1  7,b7 ! exp5diture ref]r$ to 9 
subp>agraph 7,a7 occurs be=e ! end ( !  
second taxable ye> aft] ! ye> 9 :i* su* 
am\nt 0 receiv$1 &  7,c7 accurate       
records are kept ( ! am\nts contribut$ &
 exp5ditures made1 ! exp5ditures to :i* 
contributions are allocat$1 & ! ye> 9   
:i* ! contributions & exp5ditures are   
receiv$ & made4  7#c7 ,def9itions ,=    
purposes ( ?is subsection-- 7,a7        
,contribution 9 aid ( con/ruction ,! t]m
 contribution 9 aid ( con/ruction %all  
be def9$ by regulations prescrib$ by !  
,secret>y1 except t su* t]m %all n      
include am\nts paid z s]vice *>ges =    
/>t+ or /opp+ s]vices4  7,b7            
,pr$om9antly ,! t]m pr$om9antly means   
#hj p]c5t or m4  7,c7 ,regulat$ public  
utility ,! t]m regulat$ public utility  
has ! mean+ giv5 su* t]m by section     
#ggja7;a77#cc71 except t su* t]m %all n 
include any utility :i* is n requir$ to 
provide wat] or sew]age disposal s]vices

 to memb]s ( ! g5]al public 9 its s]vice
 area4  7#d7 ,disall[ance ( d$uctions & 
cr$its2 adju/$ basis ,not)/&+ any o!r   
provision ( ?is subtitle1 no d$uction or
 cr$it %all be all[$ =1 or by reason (1 
any exp5diture :i* con/itutes a         
contribution 9 aid ( con/ruction to :i* 
?is subsection applies4 ,! adju/$ basis 
( any prop]ty acquir$ ) contributions 9 
aid ( con/ruction to :i* ?is subsection 
applies %all be z]o4  7d7 ,/atute (     
limitations ,if ! taxpay] = any taxable 
ye> treats an am\nt z a contribution to 
! capital ( ! taxpay] describ$ 9        
subsection 7c71 !n--  7#a7 ! /atutory   
p]iod = ! assessm5t ( any defici5cy     
attributable to any "p ( su* am\nt %all 
n expire be=e ! expiration ( #c ye>s f !
 date ! ,secret>y is notifi$ by !       
taxpay] 79 su* mann] z ! ,secret>y may  
prescribe7 (--  7,a7 ! am\nt ( !        
exp5diture ref]r$ to 9 subp>agraph 7,a7 
( subsection 7c77#b71  7,b7 ! taxpay]'s 
int5tion n to make ! exp5ditures ref]r$ 
to 9 su* subp>agraph1 or  7,c7 a failure

 to make su* exp5diture )9 ! p]iod      
describ$ 9 subp>agraph 7,b7 ( subsection
 7c77#b71 &  7#b7 su* defici5cy may be  
assess$ be=e ! expiration ( su* #c-ye>  
p]iod not)/&+ ! provisions ( any o!r law
 or rule ( law :i* w\ld o!rwise prev5t  
su* assessm5t4  4  7b7 ,effective date  
,! am5dm5ts made by ?is section %all    
apply to contributions made aft]        
,decemb] #bb1 #bjag4