To amend the Internal Revenue Code of 1986 to permanently modify the limitations on the deduction of interest by financial institutions which hold tax-exempt bonds, 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 ``Municipal Bond Market Support Act of 2012''.
SEC. 2. PERMANENT MODIFICATION OF SMALL ISSUER EXCEPTION TO TAX-EXEMPT INTEREST EXPENSE ALLOCATION RULES FOR FINANCIAL INSTITUTIONS.
(a) Permanent Increase in Limitation.--Subparagraphs (C)(i), (D)(i), and (D)(iii)(II) of section 265(b)(3) of the Internal Revenue Code of 1986 are each amended by striking ``$10,000,000'' and inserting ``$30,000,000''. (b) Permanent Modification of Other Special Rules.--Paragraph (3) of section 265(b) of the Internal Revenue Code of 1986 is amended-- (1) by redesignating clauses (iv), (v), and (vi) of subparagraph (G) as clauses (ii), (iii), and (iv) of such subparagraph, respectively, and (2) by striking so much of subparagraph (G) as precedes such clauses and inserting the following: ``(G) Qualified 501(c)(3) bonds treated as issued by exempt organization.--In the case of a qualified 501(c)(3) bond (as defined in section 145), this paragraph shall be applied by treating the 501(c)(3) organization for whose benefit such bond was issued as the issuer. ``(H) Special rule for qualified financings.-- ``(i) In general.--In the case of a qualified financing issue-- ``(I) subparagraph (F) shall not apply, and ``(II) any obligation issued as a part of such issue shall be treated as a...