October 1, 2022 – Senators Mark Warner (D-VA) and Jerry Moran (R-KS) have introduced the Broadband Grant Tax Treatment Act (S. 5021) in the U.S. Senate.[1] If passed, the bill would amend the Internal Revenue Code (IRC) to exclude certain broadband grants from taxable gross income.

Senators Tim Kaine (D-VA), Roger Wicker (R-MS), Raphael Warnock (D-GA), and Shelley Moore Capito (R-WV) have joined as co-sponsors. The Broadband Grant Tax Treatment Act has been referred to the Senate Committee on Finance.

The Broadband Grant Tax Treatment Act  would amend Part III of subchapter B of chapter 1 of the IRC by inserting a new subsection 139J. The part contains a list of items specifically excluded from gross income. The text of the proposed amendment is below:

Sec. 139J. Certain Broadband Grants.

(a) In general.—Gross income shall not include any qualified broadband grant made for purposes of broadband deployment.

(b) Denial of double benefit.—Notwithstanding any other provision of this subtitle, no deduction or credit shall be allowed for, or by reason of, any expenditure to the extent of the amount excluded under subsection (a) for any qualified broadband grant which was provided with respect to such expenditure. The adjusted basis of any property shall be reduced by the amount excluded under subsection (a) which was provided with respect to such property.

(c) Qualified broadband grant.—For purposes of this section, the term ‘qualified broadband grant’ means—

(1) any grant or subgrant received under the Broadband Equity, Access, and Deployment Program established under section 60102 of the Infrastructure Investment and Jobs Act,

(2) any grant or subgrant received under the State Digital Equity Capacity Grant Program established under section 60304 of such Act,

(3) any grant received under the Digital Equity Competitive Grant Program established under section 60305 of such Act,

(4) any grant received under section 60401 of such Act (relating to middle mile grants),

(5) any grant received—

(A) under the broadband loan and grant pilot program established by section 779 of Public Law 115–141 under the Rural Electrification Act of 1936; and

(B) from funds made available for such program under the heading ‘Distance Learning, Telemedicine, and Broadband Program’ under the heading ‘Rural Utilities Service’ under title I of division J of the Infrastructure Investment and Jobs Act,

(6) any grant received from a State, territory, Tribal government, or unit of local government to the extent such grant was—

(A) funded by amounts provided to the State or local government under section 602, 603, or 604 of the Social Security Act, and

(B) provided for the stated purposes of making investments in broadband infrastructure, or

(7) any grant or subgrant received under section 905 of division N of the Consolidated Appropriations Act, 2021.

(d) Regulations.—The Secretary shall issue such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section.

(b) Clerical amendment.—The table of sections for part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item related to section 139I the following new item:
Sec. 139J. Certain broadband grants.

(c) Effective date.—The amendments made by this section shall apply to amounts received in taxable years ending after March 11, 2021.

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[1] Broadband Grant Tax Treatment Act, S. 5021, 17th Cong., 2d Sess. (Sep. 29, 2022).