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.
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.
{"src": "billsum_test", "title": "To amend the Internal Revenue Code of 1986 to modify the qualified small issue bond provisions."}