,,ii  #aagth ,,congress  #ast ,session  
,s4 #aiig  ,,in ,,the ,,senate ,,of     
,,the ,,united ,,states  ,june #i1      
#bjba,mrs4 ,shaheen 7for herself1 ,ms4  
,murkowski1 and ,ms4 ,hassan7 introduced
 the following bill2 which was read     
twice and referred to the ,committee on 
,finance  ,a ,,bill  ,to amend the      
,internal ,revenue ,code of #aihf to    
provide that certain contributions by   
government entities are treated as      
contributions to capital4  #a4          
,treatment of certain contributions by  
government entities as contributions to 
capital  7a7 ,in general ,section #aah  
of the ,internal ,revenue ,code of #aihf
 is amended-- 7#a7 by redesignating     
subsection 7d7 as subsection 7e71 and   
7#b7 by striking subsections 7b7 and 7c7
 and inserting the following3  7b7      
,contributions in aid of ,construction1 
etc ,for purposes of subsection 7a71    
except as provided in subsection 7c71   
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 customer4  7c7 ,special ,rules
 for water and sewerage disposal        
utilities  7#a7 ,general rule ,for      
purposes of this section1 the term      
contribution to the capital of the      
taxpayer includes any amount of money or
 other property received from any person
 7whether or not a shareholder7 by a    
regulated public utility which provides 
water or sewerage disposal services if--
 7,a7 such amount is a contribution in  
aid of construction1  7,b7 in the case  
of contribution of property other than  
water or sewerage disposal facilities1  
such amount meets the requirements of   
the expenditure rule of paragraph 7#b71 
and  7,c7 such amount 7or any property  
acquired or constructed with such       
amount7 is not included in the          
taxpayer's rate base for ratemaking     
purposes4  7#b7 ,expenditure rule ,an   
amount meets the requirements of this   
paragraph if-- 7,a7 an amount equal to  

such amount is expended for the         
acquisition or construction of tangible 
property described in section           
#abca7;b7-- 7i7 which is the property   
for which the contribution was made or  
is of the same type as such property1   
and  7ii7 which is used predominantly in
 the trade or business of furnishing    
water or sewerage disposal services1    
7,b7 the expenditure referred to in     
subparagraph 7,a7 occurs before the end 
of the second taxable year after the    
year in which such amount was received1 
and  7,c7 accurate records are kept of  
the amounts contributed and expenditures
 made1 the expenditures to which        
contributions are allocated1 and the    
year in which the contributions and     
expenditures are received and made4     
7#c7 ,definitions ,for purposes of this 
subsection-- 7,a7 ,contribution in aid  
of construction ,the term contribution  
in aid of construction shall be defined 
by regulations prescribed by the        
,secretary1 except that such term shall 

not include amounts paid as service     
charges for starting or stopping        
services4  7,b7 ,predominantly ,the term
 predominantly means #hj percent or     
more4  7,c7 ,regulated public utility   
,the term regulated public utility has  
the meaning given such term by section  
#ggja7;a77#cc71 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 area4
  7#d7 ,disallowance of deductions and  
credits2 adjusted basis ,notwithstanding
 any other provision of this subtitle1  
no deduction or credit shall be allowed 
for1 or by reason of1 any expenditure   
which constitutes a contribution in aid 
of construction to which this subsection
 applies4 ,the adjusted basis of any    
property acquired with contributions in 
aid of construction to which this       
subsection applies shall be zero4  7d7  
,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 
7c71 then-- 7#a7 the statutory period   
for the assessment of any deficiency    
attributable to any part of such amount 
shall not expire before the expiration  
of #c years from the date the ,secretary
 is notified by the taxpayer 7in such   
manner as the ,secretary may prescribe7 
of-- 7,a7 the amount of the expenditure 
referred to in subparagraph 7,a7 of     
subsection 7c77#b71  7,b7 the taxpayer's
 intention not to make the expenditures 
referred to in such subparagraph1 or    
7,c7 a failure to make such expenditure 
within the period described in          
subparagraph 7,b7 of subsection 7c77#b71
 and  7#b7 such deficiency may be       
assessed before the expiration of such  
#c-year period notwithstanding the      
provisions of any other law or rule of  
law which would otherwise prevent such  
assessment4  4  7b7 ,effective date ,the
 amendments made by this section shall  
apply to contributions made after       

,december #bb1 #bjag4