Connect America Now Act or the CAN 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.
The bill increases the volume cap for private activity bonds and allows the use of bond proceeds for infrastructure for broadband internet access service.
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 ``Connect America Now Act'' or as the 
``CAN 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. 139I. 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 139I)'' 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. 139I. 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 139I 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 48D) 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 139I(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 139I, 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 48C the following new section:

``SEC. 48D. 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 139I(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 139I,
            ``(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
                    ``(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 139I(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 139I, 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.--Paragraph (6) of section 46 of such Code 
is amended to read as follows:
            ``(6) 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 48C the following new 
item:

``Sec. 48D. 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.

SEC. 5. INCREASE AND EXPANSION OF PRIVATE ACTIVITY BONDS.

    (a) Increase in Volume Cap.--Section 146(d)(1) of the Internal 
Revenue Code of 1986 is amended by inserting ``120 percent of'' before 
``the greater of''.
    (b) Exempt Facility Bonds for Broadband Infrastructure.--Section 
142(a) of such Code is amended by striking ``or'' at the end of 
paragraph (14), by striking the period at the end of paragraph (15) and 
inserting ``, or'', and by adding at the end the following new 
paragraph:
            ``(16) infrastructure for the provision of broadband 
        internet access service.''.
    (c) Effective Dates.--
            (1) Increase in volume cap.--The amendment made by 
        subsection (a) shall apply to calendar years after 2020.
            (2) Exempt facility bonds for broadband infrastructure.--
        The amendments made by subsection (b) shall apply to bonds 
        issued after the date of the enactment of this Act.
                                 <all>
CAN Act
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.
CAN Act
Connect America Now Act
Rep. Ferguson, A. Drew, IV