; and (2) by striking subsections (b) and (c) and inserting the following: (b) Contributions in aid of construction, etc For purposes of subsection (a), except as provided in subsection (c), the term contribution to the capital of the taxpayer does not include any contribution in aid of construction or any other contribution as a customer or potential customer. (c) Special rules for water and sewerage disposal utilities (1) General rule For purposes of this section, the term contribution to the capital of the taxpayer includes any amount of money or other property received from any person (whether or not a shareholder) by a regulated public utility which provides water or sewerage disposal services if— (A) such amount is a contribution in aid of construction, (B) in the case of contribution of property other than water or sewerage disposal facilities, such amount meets the requirements of the expenditure rule of paragraph (2), and (C) such amount (or any property acquired or constructed with such amount) is not included in the taxpayer's rate base for ratemaking purposes. (2) Expenditure rule An amount meets the requirements of this paragraph if— (A) an amount equal to such amount is expended for the acquisition or construction of tangible property described in section 1231(b)— (i) which is the property for which the contribution was made or is of the same type as such property, and (ii) which is used predominantly in the trade or business of furnishing water or sewerage disposal services, (B) the expenditure referred to in subparagraph (A) occurs before the end of the second taxable year after the year in which such amount was received, and (C) accurate records are kept of the amounts contributed and expenditures made, the expenditures to which contributions are allocated, and the year in which the contributions and expenditures are received and made. (3) Definitions For purposes of this subsection— (A) Contribution in aid of construction The term contribution in aid of construction shall be defined by