[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 155 Introduced in Senate (IS)]
103d CONGRESS
1st Session
S. 155
To amend the Internal Revenue Code of 1986 with respect to the
treatment of certain amounts received by a cooperative telephone
company.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
January 21 (legislative day, January 5), 1993
Mr. Daschle (for himself, Mr. Conrad, Mr. Grassley, Mr. Packwood, Mr.
Harkin, and Mr. Baucus) introduced the following bill; which was read
twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 with respect to the
treatment of certain amounts received by a cooperative telephone
company.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. TREATMENT OF CERTAIN AMOUNTS RECEIVED BY A COOPERATIVE
TELEPHONE COMPANY.
(a) Nonmember Income.--
(1) In general.--Paragraph (12) of section 501(c) of the
Internal Revenue Code of 1986 (relating to list of exempt
organizations) is amended by adding at the end thereof the
following new subparagraph:
``(E) In the case of a mutual or cooperative
telephone company (hereafter in this subparagraph
referred to as the `cooperative'), 50 percent of the
income received or accrued directly or indirectly from
a nonmember telephone company for the performance of
communication services by the cooperative shall be
treated for purposes of subparagraph (A) as collected
from members of the cooperative for the sole purpose of
meeting the losses and expenses of the cooperative.''
(2) Certain billing and collection service fees not taken
into account.--Subparagraph (B) of section 501(c)(12) of such
Code is amended by striking ``or'' at the end of clause (iii),
by striking the period at the end of clause (iv) and inserting
``, or'', and by adding at the end thereof the following new
clause:
``(v) from billing and collection services
performed for a nonmember telephone company.''.
(3) Conforming amendment.--Clause (i) of section
501(c)(12)(B) of such Code is amended by inserting before the
comma at the end thereof ``, other than income described in
subparagraph (E)''.
(4) Effective date.--The amendments made by this subsection
shall apply to amounts received or accrued after December 31,
1992.
(5) No inference as to unrelated business income treatment
of billing and collection service fees.--Nothing in the
amendments made by this subsection shall be construed to
indicate the proper treatment of billing and collection service
fees under part III of subchapter F of chapter 1 of the
Internal Revenue Code of 1986 (relating to taxation of business
income of certain exempt organizations).
(b) Treatment of Certain Investment Income of Mutual or Cooperative
Telephone Companies.--
(1) In general.--Paragraph (12) of section 501(c) of such
Code (relating to list of exempt organizations) is amended by
adding at the end thereof the following new subparagraph:
``(F) In the case of a mutual or cooperative
telephone company, subparagraph (A) shall be applied
without taking into account reserve income (as defined
in section 512(d)(2)) if such income, when added to
other income not collected from members for the sole
purpose of meeting losses and expenses, does not exceed
35 percent of the company's total income. For the
purposes of the preceding sentence, income referred to
in subparagraph (B) shall not be taken into account.''
(2) Portion of investment income subject to unrelated
business income tax.--Section 512 of such Code is amended by
adding at the end thereof the following new subsection:
``(d) Investment Income of Certain Mutual or Cooperative Telephone
Companies.--
``(1) In general.--In determining the unrelated business
taxable income of a mutual or cooperative telephone company
described in section 501(c)(12)--
``(A) there shall be included, as an item of gross
income derived from an unrelated trade or business,
reserve income to the extent such reserve income, when
added to other income not collected from members for
the sole purpose of meeting losses and expenses,
exceeds 15 percent of the company's total income, and
``(B) there shall be allowed all deductions
directly connected with the portion of the reserve
income which is so included.
For purposes of the preceding sentence, income referred to in
section 501(c)(12)(B) shall not be taken into account.
``(2) Reserve income.--For purposes of paragraph (1), the
term `reserve income' means income--
``(A) which would (but for this subsection) be
excluded under subsection (b), and
``(B) which is derived from assets set aside for
the repair or replacement of telephone system
facilities of such company.''
(3) Effective date.--The amendments made by this subsection
shall apply to amounts received or accrued after December 31,
1992.
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