text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Bond Financing Renewal Act of 
  2003''.
  
  SEC. 2. MODIFICATIONS TO SMALL ISSUE BOND PROVISIONS.
  
      (a) Increase in Amount of Qualified Small Issue Bonds Permitted for 
  Facilities To Be Used by Related Principal Users.--
              (1) In general.--Clause (i) of section 144(a)(4)(A) of the 
          Internal Revenue Code of 1986 (relating to $10,000,000 limit in 
          certain cases) is amended by striking ``$10,000,000'' and 
          inserting ``$20,000,000''.
              (2) Cost-of-living adjustment.--Section 144(a)(4) of such 
          Code is amended by adding at the end the following:
                      ``(G) Cost-of-living adjustment.--In the case of a 
                  taxable year beginning in a calendar year after 2003, 
                  the $20,000,000 amount under subparagraph (A) shall be 
                  increased by an amount equal to--
                              ``(i) such dollar amount, multiplied by
                              ``(ii) the cost-of-living adjustment under 
                          section 1(f)(3) for the calendar year in which 
                          the taxable year begins, determined by 
                          substituting `calendar year 2002' for `calendar 
                          year 1992' in subparagraph (B) thereof.''.
              (3) Clerical amendment.--The heading of paragraph (4) of 
          section 144(a) of such Code is amended by striking 
          ``$10,000,000'' and inserting ``$20,000,000''.
              (4) Effective date.--The amendments made by this subsection 
          shall apply to--
                      (A) obligations issued after the date of the 
                  enactment of this Act, and
                      (B) capital expenditures made after such date with 
                  respect to obligations issued on or before such date.
      (b) Definition of Manufacturing Facility.--
              (1) In general.--Section 144(a)(12)(C) of such Code 
          (defining manufacturing facility) is amended to read as 
          follows:
                      ``(C) Manufacturing facility.--For the purposes of 
                  this paragraph, the term `manufacturing facility' means 
                  any facility--
                              ``(i) which is used in the manufacture of 
                          tangible personal property (including the 
                          processing resulting in a change in the 
                          condition of such property),
                              ``(ii) which is used in the manufacture, 
                          development, or production of specifically 
                          developed software products or processes if--
                                      ``(I) it takes more than 6 months 
                                  to develop or produce such products,
                                      ``(II) the development or 
                                  production could not with due diligence 
                                  be reasonably expected to occur in less 
                                  than 6 months, and
                                      ``(III) the software product or 
                                  process comprises programs, routines, 
                                  and attendant documentation developed 
                                  and maintained for use in computer and 
                                  telecommunications technology, or
                              ``(iii) which is used in the manufacture, 
                          development, or production of specially 
                          developed biobased or bioenergy products or 
                          processes if--
                                      ``(I) it takes more than 6 months 
                                  to develop or produce,
                                      ``(II) the development or 
                                  production could not with due diligence 
                                  be reasonably expected to occur in less 
                                  than 6 months, and
                                      ``(III) the biobased or bioenergy 
                                  product or process comprises products, 
                                  processes, programs, routines, and 
                                  attendant documentation developed and 
                                  maintained or the utilization of 
                                  biological materials in commercial or 
                                  industrial products, or renewable 
                                  domestic agricultural or forestry 
                                  materials in commercial or industrial 
                                  products, or for the utilization of 
                                  biomass materials.
                      ``(D) Related facility.--For purposes of 
                  subparagraph (C), the term `manufacturing facility' 
                  includes facilities that are directly and functionally 
                  related to a manufacturing facility (determined without 
                  regard to this sentence) if--
                              ``(i) such facilities, including an office 
                          facility and a research and development 
                          facility, are located on the same site as the 
                          manufacturing facility, and
                              ``(ii) not more than 40 percent of the net 
                          proceeds of the issue are used to provide such 
                          facilities, but shall not include a facility 
                          solely for research and development 
                          activities.''.
              (2) Effective date.--The amendment made by this subsection 
          shall apply to obligations issued after the date of the 
          enactment of this Act.
  
  SEC. 3. ACQUISITION INTEREST EXPENSES OF FINANCIAL INSTITUTIONS FOR 
                SMALL ISSUE BONDS MADE DEDUCTIBLE.
  
      (a) In General.--Clause (ii) of section 265(b)(3)(B) of the 
  Internal Revenue Code of 1986 (relating to certain bonds not treated as 
  private activity bonds) is amended by striking ``or'' at the end of 
  subclause (I), by striking the period at the end of subclause (II) and 
  inserting ``, or'', and by inserting after subclause (II) the following 
  new subclause:
                                      ``(III) any obligation which is a 
                                  qualified small issue bond described in 
                                  section 144(a)(12)(B) if such 
                                  obligation is part of an issue the 
                                  aggregate authorized face amount of 
                                  which is less than $2,000,000.''.
      (b) Effective Date.--The amendment made by this section shall apply 
  to obligations issued after the date of the enactment of this Act.
target: Bond Financing Renewal Act of 2003 - Amends the Internal Revenue Code regarding qualified small issue bonds to: (1) increase the cap and capital expenditure amounts from $10 million to $20 million, with an inflation adjustment beginning in 2004; and (2) expand the definition of "manufacturing facility" to include certain biotech and software production.
feat_title: To amend the Internal Revenue Code of 1986 to modify the qualified small issue bond provisions.