One Hundred Ninth Congress
of the
United States of America
AT THE FIRST SESSION
Begun and held at the City of Washington on Tuesday,
the fourth day of January, two thousand and five
An Act
To amend the Internal Revenue Code of 1986 to provide tax benefits
for the Gulf Opportunity Zone and certain areas affected by Hurricanes Rita
and Wilma, 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; ETC.
(a) Short Title- This Act may be cited as the `Gulf Opportunity Zone Act
of 2005'.
(b) Amendment of 1986 Code- Except as otherwise expressly provided, whenever
in this Act an amendment or repeal is expressed in terms of an amendment
to, or repeal of, a section or other provision, the reference shall be considered
to be made to a section or other provision of the Internal Revenue Code
of 1986.
(c) Table of Contents- The table of contents of this Act is as follows:
Sec. 1. Short title; etc.
TITLE I--ESTABLISHMENT OF GULF OPPORTUNITY ZONE
Sec. 101. Tax benefits for Gulf Opportunity Zone.
Sec. 102. Expansion of Hope Scholarship and Lifetime Learning Credit for
students in the Gulf Opportunity Zone.
Sec. 103. Housing relief for individuals affected by Hurricane Katrina.
Sec. 104. Extension of special rules for mortgage revenue bonds.
Sec. 105. Special extension of bonus depreciation placed in service date
for taxpayers affected by Hurricanes Katrina, Rita, and Wilma.
TITLE II--TAX BENEFITS RELATED TO HURRICANES RITA AND WILMA
Sec. 201. Extension of certain emergency tax relief for Hurricane Katrina
to Hurricanes Rita and Wilma.
TITLE III--OTHER PROVISIONS
Sec. 301. Gulf Coast Recovery Bonds.
Sec. 302. Election to include combat pay as earned income for purposes
of earned income credit.
Sec. 303. Modification of effective date of exception from suspension
rules for certain listed and reportable transactions.
Sec. 304. Authority for undercover operations.
Sec. 305. Disclosures of certain tax return information.
TITLE IV--TECHNICALS
Subtitle A--Tax Technicals
Sec. 402. Amendments related to Energy Policy Act of 2005.
Sec. 403. Amendments related to the American Jobs Creation Act of 2004.
Sec. 404. Amendments related to the Working Families Tax Relief Act of
2004.
Sec. 405. Amendments related to the Jobs and Growth Tax Relief Reconciliation
Act of 2003.
Sec. 406. Amendment related to the Victims of Terrorism Tax Relief Act
of 2001.
Sec. 407. Amendments related to the Economic Growth and Tax Relief Reconciliation
Act of 2001.
Sec. 408. Amendments related to the Internal Revenue Service Restructuring
and Reform Act of 1998.
Sec. 409. Amendments related to the Taxpayer Relief Act of 1997.
Sec. 410. Amendment related to the Omnibus Budget Reconciliation Act of
1990.
Sec. 411. Amendment related to the Omnibus Budget Reconciliation Act of
1987.
Sec. 412. Clerical corrections.
Sec. 413. Other corrections related to the American Jobs Creation Act
of 2004.
Subtitle B--Trade Technicals
Sec. 421. Technical corrections to regional value content methods for
rules of origin under Public Law 109-53.
TITLE V--EMERGENCY REQUIREMENT
Sec. 501. Emergency requirement.
TITLE I--ESTABLISHMENT OF GULF OPPORTUNITY ZONE
SEC. 101. TAX BENEFITS FOR GULF OPPORTUNITY ZONE.
(a) In General- Subchapter Y of chapter 1 is amended by adding at the end
the following new part:
`PART II--TAX BENEFITS FOR GO ZONES
`Sec. 1400M. Definitions.
`Sec. 1400N. Tax benefits for Gulf Opportunity Zone.
`SEC. 1400M. DEFINITIONS.
`For purposes of this part--
`(1) GULF OPPORTUNITY ZONE- The terms `Gulf Opportunity Zone' and `GO
Zone' mean that portion of the Hurricane Katrina disaster area determined
by the President to warrant individual or individual and public assistance
from the Federal Government under the Robert T. Stafford Disaster Relief
and Emergency Assistance Act by reason of Hurricane Katrina.
`(2) HURRICANE KATRINA DISASTER AREA- The term `Hurricane Katrina disaster
area' means an area with respect to which a major disaster has been declared
by the President before September 14, 2005, under section 401 of such
Act by reason of Hurricane Katrina.
`(3) RITA GO ZONE- The term `Rita GO Zone' means that portion of the Hurricane
Rita disaster area determined by the President to warrant individual or
individual and public assistance from the Federal Government under such
Act by reason of Hurricane Rita.
`(4) HURRICANE RITA DISASTER AREA- The term `Hurricane Rita disaster area'
means an area with respect to which a major disaster has been declared
by the President before October 6, 2005, under section 401 of such Act
by reason of Hurricane Rita.
`(5) WILMA GO ZONE- The term `Wilma GO Zone' means that portion of the
Hurricane Wilma disaster area determined by the President to warrant individual
or individual and public assistance from the Federal Government under
such Act by reason of Hurricane Wilma.
`(6) HURRICANE WILMA DISASTER AREA- The term `Hurricane Wilma disaster
area' means an area with respect to which a major disaster has been declared
by the President before November 14, 2005, under section 401 of such Act
by reason of Hurricane Wilma.
`SEC. 1400N. TAX BENEFITS FOR GULF OPPORTUNITY ZONE.
`(a) Tax-Exempt Bond Financing-
`(1) IN GENERAL- For purposes of this title--
`(A) any qualified Gulf Opportunity Zone Bond described in paragraph
(2)(A)(i) shall be treated as an exempt facility bond, and
`(B) any qualified Gulf Opportunity Zone Bond described in paragraph
(2)(A)(ii) shall be treated as a qualified mortgage bond.
`(2) QUALIFIED GULF OPPORTUNITY ZONE BOND- For purposes of this subsection,
the term `qualified Gulf Opportunity Zone Bond' means any bond issued
as part of an issue if--
`(A)(i) 95 percent or more of the net proceeds (as defined in section
150(a)(3)) of such issue are to be used for qualified project costs,
or
`(ii) such issue meets the requirements of a qualified mortgage issue,
except as otherwise provided in this subsection,
`(B) such bond is issued by the State of Alabama, Louisiana, or Mississippi,
or any political subdivision thereof,
`(C) such bond is designated for purposes of this section by--
`(i) in the case of a bond which is required under State law to be
approved by the bond commission of such State, such bond commission,
and
`(ii) in the case of any other bond, the Governor of such State,
`(D) such bond is issued after the date of the enactment of this section
and before January 1, 2011, and
`(E) no portion of the proceeds of such issue is to be used to provide
any property described in section 144(c)(6)(B).
`(3) LIMITATIONS ON BONDS-
`(A) AGGREGATE AMOUNT DESIGNATED- The maximum aggregate face amount
of bonds which may be designated under this subsection with respect
to any State shall not exceed the product of $2,500 multiplied by the
portion of the State population which is in the Gulf Opportunity Zone
(as determined on the basis of the most recent census estimate of resident
population released by the Bureau of Census before August 28, 2005).
`(B) MOVABLE PROPERTY- No bonds shall be issued which are to be used
for movable fixtures and equipment.
`(4) QUALIFIED PROJECT COSTS- For purposes of this subsection, the term
`qualified project costs' means--
`(A) the cost of any qualified residential rental project (as defined
in section 142(d)) located in the Gulf Opportunity Zone, and
`(B) the cost of acquisition, construction, reconstruction, and renovation
of--
`(i) nonresidential real property (including fixed improvements associated
with such property) located in the Gulf Opportunity Zone, and
`(ii) public utility property (as defined in section 168(i)(10)) located
in the Gulf Opportunity Zone.
`(5) SPECIAL RULES- In applying this title to any qualified Gulf Opportunity
Zone Bond, the following modifications shall apply:
`(A) Section 142(d)(1) (defining qualified residential rental project)
shall be applied--
`(i) by substituting `60 percent' for `50 percent' in subparagraph
(A) thereof, and
`(ii) by substituting `70 percent' for `60 percent' in subparagraph
(B) thereof.
`(B) Section 143 (relating to mortgage revenue bonds: qualified mortgage
bond and qualified veterans' mortgage bond) shall be applied--
`(i) only with respect to owner-occupied residences in the Gulf Opportunity
Zone,
`(ii) by treating any such residence in the Gulf Opportunity Zone
as a targeted area residence,
`(iii) by applying subsection (f)(3) thereof without regard to subparagraph
(A) thereof, and
`(iv) by substituting `$150,000' for `$15,000' in subsection (k)(4)
thereof.
`(C) Except as provided in section 143, repayments of principal on financing
provided by the issue of which such bond is a part may not be used to
provide financing.
`(D) Section 146 (relating to volume cap) shall not apply.
`(E) Section 147(d)(2) (relating to acquisition of existing property
not permitted) shall be applied by substituting `50 percent' for `15
percent' each place it appears.
`(F) Section 148(f)(4)(C) (relating to exception from rebate for certain
proceeds to be used to finance construction expenditures) shall apply
to the available construction proceeds of bonds which are part of an
issue described in paragraph (2)(A)(i).
`(G) Section 57(a)(5) (relating to tax-exempt interest) shall not apply.
`(6) SEPARATE ISSUE TREATMENT OF PORTIONS OF AN ISSUE- This subsection
shall not apply to the portion of an issue which (if issued as a separate
issue) would be treated as a qualified bond or as a bond that is not a
private activity bond (determined without regard to paragraph (1)), if
the issuer elects to so treat such portion.
`(b) Advance Refundings of Certain Tax-Exempt Bonds-
`(1) IN GENERAL- With respect to a bond described in paragraph (3), one
additional advance refunding after the date of the enactment of this section
and before January 1, 2011, shall be allowed under the applicable rules
of section 149(d) if--
`(A) the Governor of the State designates the advance refunding bond
for purposes of this subsection, and
`(B) the requirements of paragraph (5) are met.
`(2) CERTAIN PRIVATE ACTIVITY BONDS- With respect to a bond described
in paragraph (3) which is an exempt facility bond described in paragraph
(1) or (2) of section 142(a), one advance refunding after the date of
the enactment of this section and before January 1, 2011, shall be allowed
under the applicable rules of section 149(d) (notwithstanding paragraph
(2) thereof) if the requirements of subparagraphs (A) and (B) of paragraph
(1) are met.
`(3) BONDS DESCRIBED- A bond is described in this paragraph if such bond
was outstanding on August 28, 2005, and is issued by the State of Alabama,
Louisiana, or Mississippi, or a political subdivision thereof.
`(4) AGGREGATE LIMIT- The maximum aggregate face amount of bonds which
may be designated under this subsection by the Governor of a State shall
not exceed--
`(A) $4,500,000,000 in the case of the State of Louisiana,
`(B) $2,250,000,000 in the case of the State of Mississippi, and
`(C) $1,125,000,000 in the case of the State of Alabama.
`(5) ADDITIONAL REQUIREMENTS- The requirements of this paragraph are met
with respect to any advance refunding of a bond described in paragraph
(3) if--
`(A) no advance refundings of such bond would be allowed under this
title on or after August 28, 2005,
`(B) the advance refunding bond is the only other outstanding bond with
respect to the refunded bond, and
`(C) the requirements of section 148 are met with respect to all bonds
issued under this subsection.
`(6) USE OF PROCEEDS REQUIREMENT- This subsection shall not apply to any
advance refunding of a bond which is issued as part of an issue if any
portion of the proceeds of such issue (or any prior issue) was (or is
to be) used to provide any property described in section 144(c)(6)(B).
`(c) Low-Income Housing Credit-
`(1) ADDITIONAL HOUSING CREDIT DOLLAR AMOUNT FOR GULF OPPORTUNITY ZONE-
`(A) IN GENERAL- For purposes of section 42, in the case of calendar
years 2006, 2007, and 2008, the State housing credit ceiling of each
State, any portion of which is located in the Gulf Opportunity Zone,
shall be increased by the lesser of--
`(i) the aggregate housing credit dollar amount allocated by the State
housing credit agency of such State to buildings located in the Gulf
Opportunity Zone for such calendar year, or
`(ii) the Gulf Opportunity housing amount for such State for such
calendar year.
`(B) GULF OPPORTUNITY HOUSING AMOUNT- For purposes of subparagraph (A),
the term `Gulf Opportunity housing amount' means, for any calendar year,
the amount equal to the product of $18.00 multiplied by the portion
of the State population which is in the Gulf Opportunity Zone (as determined
on the basis of the most recent census estimate of resident population
released by the Bureau of Census before August 28, 2005).
`(C) ALLOCATIONS TREATED AS MADE FIRST FROM ADDITIONAL ALLOCATION AMOUNT
FOR PURPOSES OF DETERMINING CARRYOVER- For purposes of determining the
unused State housing credit ceiling under section 42(h)(3)(C) for any
calendar year, any increase in the State housing credit ceiling under
subparagraph (A) shall be treated as an amount described in clause (ii)
of such section.
`(2) ADDITIONAL HOUSING CREDIT DOLLAR AMOUNT FOR TEXAS AND FLORIDA- For
purposes of section 42, in the case of calendar year 2006, the State housing
credit ceiling of Texas and Florida shall each be increased by $3,500,000.
`(3) DIFFICULT DEVELOPMENT AREA-
`(A) IN GENERAL- For purposes of section 42, in the case of property
placed in service during 2006, 2007, or 2008, the Gulf Opportunity Zone,
the Rita GO Zone, and the Wilma GO Zone--
`(i) shall be treated as difficult development areas designated under
subclause (I) of section 42(d)(5)(C)(iii), and
`(ii) shall not be taken into account for purposes of applying the
limitation under subclause (II) of such section.
`(B) APPLICATION- Subparagraph (A) shall apply only to--
`(i) housing credit dollar amounts allocated during the period beginning
on January 1, 2006, and ending on December 31, 2008, and
`(ii) buildings placed in service during such period to the extent
that paragraph (1) of section 42(h) does not apply to any building
by reason of paragraph (4) thereof, but only with respect to bonds
issued after December 31, 2005.
`(4) SPECIAL RULE FOR APPLYING INCOME TESTS- In the case of property placed
in service--
`(A) during 2006, 2007, or 2008,
`(B) in the Gulf Opportunity Zone, and
`(C) in a nonmetropolitan area (as defined in section 42(d)(5)(C)(iv)(IV)),
section 42 shall be applied by substituting `national nonmetropolitan
median gross income (determined under rules similar to the rules of section
142(d)(2)(B))' for `area median gross income' in subparagraphs (A) and
(B) of section 42(g)(1).
`(5) DEFINITIONS- Any term used in this subsection which is also used
in section 42 shall have the same meaning as when used in such section.
`(d) Special Allowance for Certain Property Acquired on or After August
28, 2005-
`(1) ADDITIONAL ALLOWANCE- In the case of any qualified Gulf Opportunity
Zone property--
`(A) the depreciation deduction provided by section 167(a) for the taxable
year in which such property is placed in service shall include an allowance
equal to 50 percent of the adjusted basis of such property, and
`(B) the adjusted basis of the qualified Gulf Opportunity Zone property
shall be reduced by the amount of such deduction before computing the
amount otherwise allowable as a depreciation deduction under this chapter
for such taxable year and any subsequent taxable year.
`(2) QUALIFIED GULF OPPORTUNITY ZONE PROPERTY- For purposes of this subsection--
`(A) IN GENERAL- The term `qualified Gulf Opportunity Zone property'
means property--
`(i)(I) which is described in section 168(k)(2)(A)(i), or
`(II) which is nonresidential real property or residential rental
property,
`(ii) substantially all of the use of which is in the Gulf Opportunity
Zone and is in the active conduct of a trade or business by the taxpayer
in such Zone,
`(iii) the original use of which in the Gulf Opportunity Zone commences
with the taxpayer on or after August 28, 2005,
`(iv) which is acquired by the taxpayer by purchase (as defined in
section 179(d)) on or after August 28, 2005, but only if no written
binding contract for the acquisition was in effect before August 28,
2005, and
`(v) which is placed in service by the taxpayer on or before December
31, 2007 (December 31, 2008, in the case of nonresidential real property
and residential rental property).
`(i) ALTERNATIVE DEPRECIATION PROPERTY- Such term shall not include
any property described in section 168(k)(2)(D)(i).
`(ii) TAX-EXEMPT BOND-FINANCED PROPERTY- Such term shall not include
any property any portion of which is financed with the proceeds of
any obligation the interest on which is exempt from tax under section
103.
`(iii) QUALIFIED REVITALIZATION BUILDINGS- Such term shall not include
any qualified revitalization building with respect to which the taxpayer
has elected the application of paragraph (1) or (2) of section 1400I(a).
`(iv) ELECTION OUT- If a taxpayer makes an election under this clause
with respect to any class of property for any taxable year, this subsection
shall not apply to all property in such class placed in service during
such taxable year.
`(3) SPECIAL RULES- For purposes of this subsection, rules similar to
the rules of subparagraph (E) of section 168(k)(2) shall apply, except
that such subparagraph shall be applied--
`(A) by substituting `August 27, 2005' for `September 10, 2001' each
place it appears therein,
`(B) by substituting `January 1, 2008' for `January 1, 2005' in clause
(i) thereof, and
`(C) by substituting `qualified Gulf Opportunity Zone property' for
`qualified property' in clause (iv) thereof.
`(4) ALLOWANCE AGAINST ALTERNATIVE MINIMUM TAX- For purposes of this subsection,
rules similar to the rules of section 168(k)(2)(G) shall apply.
`(5) RECAPTURE- For purposes of this subsection, rules similar to the
rules under section 179(d)(10) shall apply with respect to any qualified
Gulf Opportunity Zone property which ceases to be qualified Gulf Opportunity
Zone property.
`(e) Increase in Expensing Under Section 179-
`(1) IN GENERAL- For purposes of section 179--
`(A) the dollar amount in effect under section 179(b)(1) for the taxable
year shall be increased by the lesser of--
`(ii) the cost of qualified section 179 Gulf Opportunity Zone property
placed in service during the taxable year, and
`(B) the dollar amount in effect under section 179(b)(2) for the taxable
year shall be increased by the lesser of--
`(ii) the cost of qualified section 179 Gulf Opportunity Zone property
placed in service during the taxable year.
`(2) QUALIFIED SECTION 179 GULF OPPORTUNITY ZONE PROPERTY- For purposes
of this subsection, the term `qualified section 179 Gulf Opportunity Zone
property' means section 179 property (as defined in section 179(d)) which
is qualified Gulf Opportunity Zone property (as defined in subsection
(d)(2)).
`(3) COORDINATION WITH EMPOWERMENT ZONES AND RENEWAL COMMUNITIES- For
purposes of sections 1397A and 1400J, qualified section 179 Gulf Opportunity
Zone property shall not be treated as qualified zone property or qualified
renewal property, unless the taxpayer elects not to take such qualified
section 179 Gulf Opportunity Zone property into account for purposes of
this subsection.
`(4) RECAPTURE- For purposes of this subsection, rules similar to the
rules under section 179(d)(10) shall apply with respect to any qualified
section 179 Gulf Opportunity Zone property which ceases to be qualified
section 179 Gulf Opportunity Zone property.
`(f) Expensing for Certain Demolition and Clean-up Costs-
`(1) IN GENERAL- A taxpayer may elect to treat 50 percent of any qualified
Gulf Opportunity Zone clean-up cost as an expense which is not chargeable
to capital account. Any cost so treated shall be allowed as a deduction
for the taxable year in which such cost is paid or incurred.
`(2) QUALIFIED GULF OPPORTUNITY ZONE CLEAN-UP COST- For purposes of this
subsection, the term `qualified Gulf Opportunity Zone clean-up cost' means
any amount paid or incurred during the period beginning on August 28,
2005, and ending on December 31, 2007, for the removal of debris from,
or the demolition of structures on, real property which is located in
the Gulf Opportunity Zone and which is--
`(A) held by the taxpayer for use in a trade or business or for the
production of income, or
`(B) property described in section 1221(a)(1) in the hands of the taxpayer.
For purposes of the preceding sentence, amounts paid or incurred shall
be taken into account only to the extent that such amount would (but for
paragraph (1)) be chargeable to capital account.
`(g) Extension of Expensing for Environmental Remediation Costs- With respect
to any qualified environmental remediation expenditure (as defined in section
198(b)) paid or incurred on or after August 28, 2005, in connection with
a qualified contaminated site located in the Gulf Opportunity Zone, section
198 (relating to expensing of environmental remediation costs) shall be
applied--
`(1) in the case of expenditures paid or incurred on or after August 28,
2005, and before January 1, 2008, by substituting `December 31, 2007'
for the date contained in section 198(h), and
`(2) except as provided in section 198(d)(2), by treating petroleum products
(as defined in section 4612(a)(3)) as a hazardous substance.
`(h) Increase in Rehabilitation Credit- In the case of qualified rehabilitation
expenditures (as defined in section 47(c)) paid or incurred during the period
beginning on August 28, 2005, and ending on December 31, 2008, with respect
to any qualified rehabilitated building or certified historic structure
(as defined in section 47(c)) located in the Gulf Opportunity Zone, subsection
(a) of section 47 (relating to rehabilitation credit) shall be applied--
`(1) by substituting `13 percent' for `10 percent' in paragraph (1) thereof,
and
`(2) by substituting `26 percent' for `20 percent' in paragraph (2) thereof.
`(i) Special Rules for Small Timber Producers-
`(1) INCREASED EXPENSING FOR QUALIFIED TIMBER PROPERTY- In the case of
qualified timber property any portion of which is located in the Gulf
Opportunity Zone, in that portion of the Rita GO Zone which is not part
of the Gulf Opportunity Zone, or in the Wilma GO Zone, the limitation
under subparagraph (B) of section 194(b)(1) shall be increased by the
lesser of--
`(A) the limitation which would (but for this subsection) apply under
such subparagraph, or
`(B) the amount of reforestation expenditures (as defined in section
194(c)(3)) paid or incurred by the taxpayer with respect to such qualified
timber property during the specified portion of the taxable year.
`(2) 5 YEAR NOL CARRYBACK OF CERTAIN TIMBER LOSSES- For purposes of determining
any farming loss under section 172(i), income and deductions which are
allocable to the specified portion of the taxable year and which are attributable
to qualified timber property any portion of which is located in the Gulf
Opportunity Zone, in that portion of the Rita GO Zone which is not part
of the Gulf Opportunity Zone, or in the Wilma GO Zone shall be treated
as attributable to farming businesses.
`(3) RULES NOT APPLICABLE TO CERTAIN ENTITIES- Paragraphs (1) and (2)
shall not apply to any taxpayer which--
`(A) is a corporation the stock of which is publicly traded on an established
securities market, or
`(B) is a real estate investment trust.
`(4) RULES NOT APPLICABLE TO LARGE TIMBER PRODUCERS-
`(A) EXPENSING- Paragraph (1) shall not apply to any taxpayer if such
taxpayer holds more than 500 acres of qualified timber property at any
time during the taxable year.
`(B) NOL CARRYBACK- Paragraph (2) shall not apply with respect to any
qualified timber property unless--
`(i) such property was held by the taxpayer--
`(I) on August 28, 2005, in the case of qualified timber property
any portion of which is located in the Gulf Opportunity Zone,
`(II) on September 23, 2005, in the case of qualified timber property
(other than property described in subclause (I)) any portion of
which is located in that portion of the Rita GO Zone which is not
part of the Gulf Opportunity Zone, or
`(III) on October 23, 2005, in the case of qualified timber property
(other than property described in subclause (I) or (II)) any portion
of which is located in the Wilma GO Zone, and
`(ii) such taxpayer held not more than 500 acres of qualified timber
property on such date.
`(5) DEFINITIONS- For purposes of this subsection--
`(i) IN GENERAL- The term `specified portion' means--
`(I) in the case of qualified timber property any portion of which
is located in the Gulf Opportunity Zone, that portion of the taxable
year which is on or after August 28, 2005, and before the termination
date,
`(II) in the case of qualified timber property (other than property
described in clause (i)) any portion of which is located in the
Rita GO Zone, that portion of the taxable year which is on or after
September 23, 2005, and before the termination date, or
`(III) in the case of qualified timber property (other than property
described in clause (i) or (ii)) any portion of which is located
in the Wilma GO Zone, that portion of the taxable year which is
on or after October 23, 2005, and before the termination date.
`(ii) TERMINATION DATE- The term `termination date' means--
`(I) for purposes of paragraph (1), January 1, 2008, and
`(II) for purposes of paragraph (2), January 1, 2007.
`(B) QUALIFIED TIMBER PROPERTY- The term `qualified timber property'
has the meaning given such term in section 194(c)(1).
`(j) Special Rule for Gulf Opportunity Zone Public Utility Casualty Losses-
`(1) IN GENERAL- The amount described in section 172(f)(1)(A) for any
taxable year shall be increased by the Gulf Opportunity Zone public utility
casualty loss for such taxable year.
`(2) GULF OPPORTUNITY ZONE PUBLIC UTILITY CASUALTY LOSS- For purposes
of this subsection, the term `Gulf Opportunity Zone public utility casualty
loss' means any casualty loss of public utility property (as defined in
section 168(i)(10)) located in the Gulf Opportunity Zone if--
`(A) such loss is allowed as a deduction under section 165 for the taxable
year,
`(B) such loss is by reason of Hurricane Katrina, and
`(C) the taxpayer elects the application of this subsection with respect
to such loss.
`(3) REDUCTION FOR GAINS FROM INVOLUNTARY CONVERSION- The amount of any
Gulf Opportunity Zone public utility casualty loss which would (but for
this paragraph) be taken into account under paragraph (1) for any taxable
year shall be reduced by the amount of any gain recognized by the taxpayer
for such year from the involuntary conversion by reason of Hurricane Katrina
of public utility property (as so defined) located in the Gulf Opportunity
Zone.
`(4) COORDINATION WITH GENERAL DISASTER LOSS RULES- Subsection (k) and
section 165(i) shall not apply to any Gulf Opportunity Zone public utility
casualty loss to the extent such loss is taken into account under paragraph
(1).
`(5) ELECTION- Any election under paragraph (2)(C) shall be made in such
manner as may be prescribed by the Secretary and shall be made by the
due date (including extensions of time) for filing the taxpayer's return
for the taxable year of the loss. Such election, once made for any taxable
year, shall be irrevocable for such taxable year.
`(k) Treatment of Net Operating Losses Attributable to Gulf Opportunity
Zone Losses-
`(1) IN GENERAL- If a portion of any net operating loss of the taxpayer
for any taxable year is a qualified Gulf Opportunity Zone loss, the following
rules shall apply:
`(A) EXTENSION OF CARRYBACK PERIOD- Section 172(b)(1) shall be applied
with respect to such portion--
`(i) by substituting `5 taxable years' for `2 taxable years' in subparagraph
(A)(i), and
`(ii) by not taking such portion into account in determining any eligible
loss of the taxpayer under subparagraph (F) thereof for the taxable
year.
`(B) SUSPENSION OF 90 PERCENT AMT LIMITATION- Section 56(d)(1) shall
be applied by increasing the amount determined under subparagraph (A)(ii)(I)
thereof by the sum of the carrybacks and carryovers of any net operating
loss attributable to such portion.
`(2) QUALIFIED GULF OPPORTUNITY ZONE LOSS- For purposes of paragraph (1),
the term `qualified Gulf Opportunity Zone loss' means the lesser of--
`(i) the net operating loss for such taxable year, over
`(ii) the specified liability loss for such taxable year to which
a 10-year carryback applies under section 172(b)(1)(C), or
`(B) the aggregate amount of the following deductions to the extent
taken into account in computing the net operating loss for such taxable
year:
`(i) Any deduction for any qualified Gulf Opportunity Zone casualty
loss.
`(ii) Any deduction for moving expenses paid or incurred after August
27, 2005, and before January 1, 2008, and allowable under this chapter
to any taxpayer in connection with the employment of any individual--
`(I) whose principal place of abode was located in the Gulf Opportunity
Zone before August 28, 2005,
`(II) who was unable to remain in such abode as the result of Hurricane
Katrina, and
`(III) whose principal place of employment with the taxpayer after
such expense is located in the Gulf Opportunity Zone.
For purposes of this clause, the term `moving expenses' has the meaning
given such term by section 217(b), except that the taxpayer's former
residence and new residence may be the same residence if the initial
vacating of the residence was as the result of Hurricane Katrina.
`(iii) Any deduction allowable under this chapter for expenses paid
or incurred after August 27, 2005, and before January 1, 2008, to
temporarily house any employee of the taxpayer whose principal place
of employment is in the Gulf Opportunity Zone.
`(iv) Any deduction for depreciation (or amortization in lieu of depreciation)
allowable under this chapter with respect to any qualified Gulf Opportunity
Zone property (as defined in subsection (d)(2), but without regard
to subparagraph (B)(iv) thereof)) for the taxable year such property
is placed in service.
`(v) Any deduction allowable under this chapter for repair expenses
(including expenses for removal of debris) paid or incurred after
August 27, 2005, and before January 1, 2008, with respect to any damage
attributable to Hurricane Katrina and in connection with property
which is located in the Gulf Opportunity Zone.
`(3) QUALIFIED GULF OPPORTUNITY ZONE CASUALTY LOSS-
`(A) IN GENERAL- For purposes of paragraph (2)(B)(i), the term `qualified
Gulf Opportunity Zone casualty loss' means any uncompensated section
1231 loss (as defined in section 1231(a)(3)(B)) of property located
in the Gulf Opportunity Zone if--
`(i) such loss is allowed as a deduction under section 165 for the
taxable year, and
`(ii) such loss is by reason of Hurricane Katrina.
`(B) REDUCTION FOR GAINS FROM INVOLUNTARY CONVERSION- The amount of
qualified Gulf Opportunity Zone casualty loss which would (but for this
subparagraph) be taken into account under subparagraph (A) for any taxable
year shall be reduced by the amount of any gain recognized by the taxpayer
for such year from the involuntary conversion by reason of Hurricane
Katrina of property located in the Gulf Opportunity Zone.
`(C) COORDINATION WITH GENERAL DISASTER LOSS RULES- Section 165(i) shall
not apply to any qualified Gulf Opportunity Zone casualty loss to the
extent such loss is taken into account under this subsection.
`(4) SPECIAL RULES- For purposes of paragraph (1), rules similar to the
rules of paragraphs (2) and (3) of section 172(i) shall apply with respect
to such portion.
`(l) Credit to Holders of Gulf Tax Credit Bonds-
`(1) ALLOWANCE OF CREDIT- If a taxpayer holds a Gulf tax credit bond on
one or more credit allowance dates of the bond occurring during any taxable
year, there shall be allowed as a credit against the tax imposed by this
chapter for the taxable year an amount equal to the sum of the credits
determined under paragraph (2) with respect to such dates.
`(A) IN GENERAL- The amount of the credit determined under this paragraph
with respect to any credit allowance date for a Gulf tax credit bond
is 25 percent of the annual credit determined with respect to such bond.
`(B) ANNUAL CREDIT- The annual credit determined with respect to any
Gulf tax credit bond is the product of--
`(i) the credit rate determined by the Secretary under subparagraph
(C) for the day on which such bond was sold, multiplied by
`(ii) the outstanding face amount of the bond.
`(C) DETERMINATION- For purposes of subparagraph (B), with respect to
any Gulf tax credit bond, the Secretary shall determine daily or cause
to be determined daily a credit rate which shall apply to the first
day on which there is a binding, written contract for the sale or exchange
of the bond. The credit rate for any day is the credit rate which the
Secretary or the Secretary's designee estimates will permit the issuance
of Gulf tax credit bonds with a specified maturity or redemption date
without discount and without interest cost to the issuer.
`(D) CREDIT ALLOWANCE DATE- For purposes of this subsection, the term
`credit allowance date' means March 15, June 15, September 15, and December
15. Such term also includes the last day on which the bond is outstanding.
`(E) SPECIAL RULE FOR ISSUANCE AND REDEMPTION- In the case of a bond
which is issued during the 3-month period ending on a credit allowance
date, the amount of the credit determined under this paragraph with
respect to such credit allowance date shall be a ratable portion of
the credit otherwise determined based on the portion of the 3-month
period during which the bond is outstanding. A similar rule shall apply
when the bond is redeemed or matures.
`(3) LIMITATION BASED ON AMOUNT OF TAX- The credit allowed under paragraph
(1) for any taxable year shall not exceed the excess of--
`(A) the sum of the regular tax liability (as defined in section 26(b))
plus the tax imposed by section 55, over
`(B) the sum of the credits allowable under part IV of subchapter A
(other than subpart C and this subsection).
`(4) GULF TAX CREDIT BOND- For purposes of this subsection--
`(A) IN GENERAL- The term `Gulf tax credit bond' means any bond issued
as part of an issue if--
`(i) the bond is issued by the State of Alabama, Louisiana, or Mississippi,
`(ii) 95 percent or more of the proceeds of such issue are to be used
to--
`(I) pay principal, interest, or premiums on qualified bonds issued
by such State or any political subdivision of such State, or
`(II) make a loan to any political subdivision of such State to
pay principal, interest, or premiums on qualified bonds issued by
such political subdivision,
`(iii) the Governor of such State designates such bond for purposes
of this subsection,
`(iv) the bond is a general obligation of such State and is in registered
form (within the meaning of section 149(a)),
`(v) the maturity of such bond does not exceed 2 years, and
`(vi) the bond is issued after December 31, 2005, and before January
1, 2007.
`(B) STATE MATCHING REQUIREMENT- A bond shall not be treated as a Gulf
tax credit bond unless--
`(i) the issuer of such bond pledges as of the date of the issuance
of the issue an amount equal to the face amount of such bond to be
used for payments described in subclause (I) of subparagraph (A)(ii),
or loans described in subclause (II) of such subparagraph, as the
case may be, with respect to the issue of which such bond is a part,
and
`(ii) any such payment or loan is made in equal amounts from the proceeds
of such issue and from the amount pledged under clause (i).
The requirement of clause (ii) shall be treated as met with respect
to any such payment or loan made during the 1-year period beginning
on the date of the issuance (or any successor 1-year period) if such
requirement is met when applied with respect to the aggregate amount
of such payments and loans made during such period.
`(C) AGGREGATE LIMIT ON BOND DESIGNATIONS- The maximum aggregate face
amount of bonds which may be designated under this subsection by the
Governor of a State shall not exceed--
`(i) $200,000,000 in the case of the State of Louisiana,
`(ii) $100,000,000 in the case of the State of Mississippi, and
`(iii) $50,000,000 in the case of the State of Alabama.
`(D) SPECIAL RULES RELATING TO ARBITRAGE- A bond which is part of an
issue shall not be treated as a Gulf tax credit bond unless, with respect
to the issue of which the bond is a part, the issuer satisfies the arbitrage
requirements of section 148 with respect to proceeds of the issue and
any loans made with such proceeds.
`(5) QUALIFIED BOND- For purposes of this subsection--
`(A) IN GENERAL- The term `qualified bond' means any obligation of a
State or political subdivision thereof which was outstanding on August
28, 2005.
`(B) EXCEPTION FOR PRIVATE ACTIVITY BONDS- Such term shall not include
any private activity bond.
`(C) EXCEPTION FOR ADVANCE REFUNDINGS- Such term shall not include any
bond with respect to which there is any outstanding refunded or refunding
bond during the period in which a Gulf tax credit bond is outstanding
with respect to such bond.
`(D) USE OF PROCEEDS REQUIREMENT- Such term shall not include any bond
issued as part of an issue if any portion of the proceeds of such issue
was (or is to be) used to provide any property described in section
144(c)(6)(B).
`(6) CREDIT INCLUDED IN GROSS INCOME- Gross income includes the amount
of the credit allowed to the taxpayer under this subsection (determined
without regard to paragraph (3)) and the amount so included shall be treated
as interest income.
`(7) OTHER DEFINITIONS AND SPECIAL RULES- For purposes of this subsection--
`(A) BOND- The term `bond' includes any obligation.
`(B) PARTNERSHIP; S CORPORATION; AND OTHER PASS-THRU ENTITIES-
`(i) IN GENERAL- Under regulations prescribed by the Secretary, in
the case of a partnership, trust, S corporation, or other pass-thru
entity, rules similar to the rules of section 41(g) shall apply with
respect to the credit allowable under paragraph (1).
`(ii) NO BASIS ADJUSTMENT- In the case of a bond held by a partnership
or an S corporation, rules similar to the rules under section 1397E(i)
shall apply.
`(C) BONDS HELD BY REGULATED INVESTMENT COMPANIES- If any Gulf tax credit
bond is held by a regulated investment company, the credit determined
under paragraph (1) shall be allowed to shareholders of such company
under procedures prescribed by the Secretary.
`(D) REPORTING- Issuers of Gulf tax credit bonds shall submit reports
similar to the reports required under section 149(e).
`(E) CREDIT TREATED AS NONREFUNDABLE BONDHOLDER CREDIT- For purposes
of this title, the credit allowed by this subsection shall be treated
as a credit allowable under subpart H of part IV of subchapter A of
this chapter.
`(m) Application of New Markets Tax Credit to Investments in Community Development
Entities Serving Gulf Opportunity Zone- For purposes of section 45D--
`(1) a qualified community development entity shall be eligible for an
allocation under subsection (f)(2) thereof of the increase in the new
markets tax credit limitation described in paragraph (2) only if a significant
mission of such entity is the recovery and redevelopment of the Gulf Opportunity
Zone,
`(2) the new markets tax credit limitation otherwise determined under
subsection (f)(1) thereof shall be increased by an amount equal to--
`(A) $300,000,000 for 2005 and 2006, to be allocated among qualified
community development entities to make qualified low-income community
investments within the Gulf Opportunity Zone, and
`(B) $400,000,000 for 2007, to be so allocated, and
`(3) subsection (f)(3) thereof shall be applied separately with respect
to the amount of the increase under paragraph (2).
`(n) Treatment of Representations Regarding Income Eligibility for Purposes
of Qualified Residential Rental Project Requirements- For purposes of determining
if any residential rental project meets the requirements of section 142(d)(1)
and if any certification with respect to such project meets the requirements
under section 142(d)(7), the operator of the project may rely on the representations
of any individual applying for tenancy in such project that such individual's
income will not exceed the applicable income limits of section 142(d)(1)
upon commencement of the individual's tenancy if such tenancy begins during
the 6-month period beginning on and after the date such individual was displaced
by reason of Hurricane Katrina.
`(o) Treatment of Public Utility Property Disaster Losses-
`(1) IN GENERAL- Upon the election of the taxpayer, in the case of any
eligible public utility property loss--
`(A) section 165(i) shall be applied by substituting `the fifth taxable
year immediately preceding' for `the taxable year immediately preceding',
`(B) an application for a tentative carryback adjustment of the tax
for any prior taxable year affected by the application of subparagraph
(A) may be made under section 6411, and
`(C) section 6611 shall not apply to any overpayment attributable to
such loss.
`(2) ELIGIBLE PUBLIC UTILITY PROPERTY LOSS- For purposes of this subsection--
`(A) IN GENERAL- The term `eligible public utility property loss' means
any loss with respect to public utility property located in the Gulf
Opportunity Zone and attributable to Hurricane Katrina.
`(B) PUBLIC UTILITY PROPERTY- The term `public utility property' has
the meaning given such term by section 168(i)(10) without regard to
the matter following subparagraph (D) thereof.
`(3) WAIVER OF LIMITATIONS- If refund or credit of any overpayment of
tax resulting from the application of paragraph (1) is prevented at any
time before the close of the 1-year period beginning on the date of the
enactment of this section by the operation of any law or rule of law (including
res judicata), such refund or credit may nevertheless be made or allowed
if claim therefor is filed before the close of such period.
`(p) TAX BENEFITS NOT AVAILABLE WITH RESPECT TO CERTAIN PROPERTY-
`(1) QUALIFIED GULF OPPORTUNITY ZONE PROPERTY- For purposes of subsections
(d), (e), and (k)(2)(B)(iv), the term `qualified Gulf Opportunity Zone
property' shall not include any property described in paragraph (3).
`(2) QUALIFIED GULF OPPORTUNITY ZONE CASUALTY LOSSES- For purposes of
subsection (k)(2)(B)(i), the term `qualified Gulf Opportunity Zone casualty
loss' shall not include any loss with respect to any property described
in paragraph (3).
`(A) IN GENERAL- For purposes of this subsection, property is described
in this paragraph if such property is--
`(i) any property used in connection with any private or commercial
golf course, country club, massage parlor, hot tub facility, suntan
facility, or any store the principal business of which is the sale
of alcoholic beverages for consumption off premises, or
`(ii) any gambling or animal racing property.
`(B) GAMBLING OR ANIMAL RACING PROPERTY- For purposes of subparagraph
(A)(ii)--
`(i) IN GENERAL- The term `gambling or animal racing property' means--
`(I) any equipment, furniture, software, or other property used
directly in connection with gambling, the racing of animals, or
the on-site viewing of such racing, and
`(II) the portion of any real property (determined by square footage)
which is dedicated to gambling, the racing of animals, or the on-site
viewing of such racing.
`(ii) DE MINIMIS PORTION- Clause (i)(II) shall not apply to any real
property if the portion so dedicated is less than 100 square feet.'.
(b) Conforming Amendments-
(1) Paragraph (2) of section 54(c) is amended by inserting `, section
1400N(l),' after `subpart C'.
(2) Subparagraph (A) of section 6049(d)(8) is amended--
(A) by inserting `or 1400N(l)(6)' after `section 54(g)', and
(B) by inserting `or 1400N(l)(2)(D), as the case may be' after `section
54(b)(4)'.
(3) So much of subchapter Y of chapter 1 as precedes section 1400L is
amended to read as follows:
`Subchapter Y--Short-Term Regional Benefits
`Part I--Tax Benefits for New York Liberty Zone
`Part II--Tax Benefits for GO Zones
`PART I--TAX BENEFITS FOR NEW YORK LIBERTY ZONE
`Sec. 1400L. Tax benefits for New York Liberty Zone.'.
(4) The item relating to subchapter Y in the table of subchapters for
chapter 1 is amended to read as follows:
`SUBCHAPTER Y--SHORT-TERM REGIONAL BENEFITS'.
(1) IN GENERAL- Except as provided in paragraph (2), the amendments made
by this section shall apply to taxable years ending on or after August
28, 2005.
(2) CARRYBACKS- Subsections (i)(2), (j), and (k) of section 1400N of the
Internal Revenue Code of 1986 (as added by this section) shall apply to
losses arising in such taxable years.
SEC. 102. EXPANSION OF HOPE SCHOLARSHIP AND LIFETIME LEARNING CREDIT FOR
STUDENTS IN THE GULF OPPORTUNITY ZONE.
(a) In General- Part II of subchapter Y of chapter 1 (as added by this Act)
is amended by adding at the end the following new section:
`SEC. 1400O. EDUCATION TAX BENEFITS.
`In the case of an individual who attends an eligible educational institution
(as defined in section 25A(f)(2)) located in the Gulf Opportunity Zone for
any taxable year beginning during 2005 or 2006--
`(1) in applying section 25A, the term `qualified tuition and related
expenses' shall include any costs which are qualified higher education
expenses (as defined in section 529(e)(3)),
`(2) each of the dollar amounts in effect under of subparagraphs (A) and
(B) of section 25A(b)(1) shall be twice the amount otherwise in effect
before the application of this subsection, and
`(3) section 25A(c)(1) shall be applied by substituting `40 percent' for
`20 percent'.'.
(b) Conforming Amendment- The table of sections for part II of subchapter
Y of chapter 1 is amended by adding at the end the following new item:
`Sec. 1400O. Education tax benefits.'.
SEC. 103. HOUSING RELIEF FOR INDIVIDUALS AFFECTED BY HURRICANE KATRINA.
(a) In General- Part II of subchapter Y of chapter 1 (as added by this Act)
is amended by adding at the end the following new section:
`SEC. 1400P. HOUSING TAX BENEFITS .
`(a) Exclusion of Employer Provided Housing for Individual Affected by Hurricane
Katrina-
`(1) IN GENERAL- Gross income of a qualified employee shall not include
the value of any lodging furnished in-kind to such employee (and such
employee's spouse or any of such employee's dependents) by or on behalf
of a qualified employer for any month during the taxable year.
`(2) LIMITATION- The amount which may be excluded under paragraph (1)
for any month for which lodging is furnished during the taxable year shall
not exceed $600.
`(3) TREATMENT OF EXCLUSION- The exclusion under paragraph (1) shall be
treated as an exclusion under section 119 (other than for purposes of
sections 3121(a)(19) and 3306(b)(14)).
`(b) Employer Credit for Housing Employees Affected by Hurricane Katrina-
For purposes of section 38, in the case of a qualified employer, the Hurricane
Katrina housing credit for any month during the taxable year is an amount
equal to 30 percent of any amount which is excludable from the gross income
of a qualified employee of such employer under subsection (a) and not otherwise
excludable under section 119.
`(c) Qualified Employee- For purposes of this section, the term `qualified
employee' means, with respect to any month, an individual--
`(1) who had a principal residence (as defined in section 121) in the
Gulf Opportunity Zone on August 28, 2005, and
`(2) who performs substantially all employment services--
`(A) in the Gulf Opportunity Zone, and
`(B) for the qualified employer which furnishes lodging to such individual.
`(d) Qualified Employer- For purposes of this section, the term `qualified
employer' means any employer with a trade or business located in the Gulf
Opportunity Zone.
`(e) Certain Rules to Apply- For purposes of this subsection, rules similar
to the rules of sections 51(i)(1) and 52 shall apply.
`(f) Application of Section- This section shall apply to lodging furnished
during the period--
`(1) beginning on the first day of the first month beginning after the
date of the enactment of this section, and
`(2) ending on the date which is 6 months after the first day described
in paragraph (1).'.
(b) Conforming Amendments-
(1) Subsection (b) of section 38 is amended by striking `and' at the end
of paragraph (25), by striking the period at the end of paragraph (26)
and inserting `, and', and by adding at the end the following new paragraph:
`(27) the Hurricane Katrina housing credit determined under section 1400P(b).'.
(2) Section 280C(a) is amended by striking `and 1396(a)' and inserting
`1396(a), and 1400P(b)'.
(3) The table of sections for part II of subchapter Y of chapter 1 is
amended by adding at the end the following new item:
`Sec. 1400P. Housing tax benefits.'.
SEC. 104. EXTENSION OF SPECIAL RULES FOR MORTGAGE REVENUE BONDS.
Section 404(d) of the Katrina Emergency Tax Relief Act of 2005 is amended
by striking `December 31, 2007' and inserting `December 31, 2010'.
SEC. 105. SPECIAL EXTENSION OF BONUS DEPRECIATION PLACED IN SERVICE DATE
FOR TAXPAYERS AFFECTED BY HURRICANES KATRINA, RITA, AND WILMA.
In applying the rule under section 168(k)(2)(A)(iv) of the Internal Revenue
Code of 1986 to any property described in subparagraph (B) or (C) of section
168(k)(2) of such Code--
(1) the placement in service of which--
(A) is to be located in the GO Zone (as defined in section 1400M(1)
of such Code), the Rita GO Zone (as defined in section 1400M(3) of such
Code), or the Wilma GO Zone (as defined in section 1400M(5) of such
Code), and
(B) is to be made by any taxpayer affected by Hurricane Katrina, Rita,
or Wilma, or
(2) which is manufactured in such Zone by any person affected by Hurricane
Katrina, Rita, or Wilma,
the Secretary of the Treasury may, on a taxpayer by taxpayer basis, extend
the required date of the placement in service of such property under such
section by such period of time as is determined necessary by the Secretary
but not to exceed 1 year. For purposes of the preceding sentence, the determination
shall be made by only taking into account the effect of one or more hurricanes
on the date of such placement by the taxpayer.
TITLE II--TAX BENEFITS RELATED TO HURRICANES RITA AND WILMA
SEC. 201. EXTENSION OF CERTAIN EMERGENCY TAX RELIEF FOR HURRICANE KATRINA
TO HURRICANES RITA AND WILMA.
(a) In General- Part II of subchapter Y of chapter 1 (as added by this Act)
is amended by adding at the end the following new sections:
`SEC. 1400Q. SPECIAL RULES FOR USE OF RETIREMENT FUNDS.
`(a) Tax-Favored Withdrawals From Retirement Plans-
`(1) IN GENERAL- Section 72(t) shall not apply to any qualified hurricane
distribution.
`(2) AGGREGATE DOLLAR LIMITATION-
`(A) IN GENERAL- For purposes of this subsection, the aggregate amount
of distributions received by an individual which may be treated as qualified
hurricane distributions for any taxable year shall not exceed the excess
(if any) of--
`(ii) the aggregate amounts treated as qualified hurricane distributions
received by such individual for all prior taxable years.
`(B) TREATMENT OF PLAN DISTRIBUTIONS- If a distribution to an individual
would (without regard to subparagraph (A)) be a qualified hurricane
distribution, a plan shall not be treated as violating any requirement
of this title merely because the plan treats such distribution as a
qualified hurricane distribution, unless the aggregate amount of such
distributions from all plans maintained by the employer (and any member
of any controlled group which includes the employer) to such individual
exceeds $100,000.
`(C) CONTROLLED GROUP- For purposes of subparagraph (B), the term `controlled
group' means any group treated as a single employer under subsection
(b), (c), (m), or (o) of section 414.
`(3) AMOUNT DISTRIBUTED MAY BE REPAID-
`(A) IN GENERAL- Any individual who receives a qualified hurricane distribution
may, at any time during the 3-year period beginning on the day after
the date on which such distribution was received, make one or more contributions
in an aggregate amount not to exceed the amount of such distribution
to an eligible retirement plan of which such individual is a beneficiary
and to which a rollover contribution of such distribution could be made
under section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16),
as the case may be.
`(B) TREATMENT OF REPAYMENTS OF DISTRIBUTIONS FROM ELIGIBLE RETIREMENT
PLANS OTHER THAN IRAS- For purposes of this title, if a contribution
is made pursuant to subparagraph (A) with respect to a qualified hurricane
distribution from an eligible retirement plan other than an individual
retirement plan, then the taxpayer shall, to the extent of the amount
of the contribution, be treated as having received the qualified hurricane
distribution in an eligible rollover distribution (as defined in section
402(c)(4)) and as having transferred the amount to the eligible retirement
plan in a direct trustee to trustee transfer within 60 days of the distribution.
`(C) TREATMENT OF REPAYMENTS FOR DISTRIBUTIONS FROM IRAS- For purposes
of this title, if a contribution is made pursuant to subparagraph (A)
with respect to a qualified hurricane distribution from an individual
retirement plan (as defined by section 7701(a)(37)), then, to the extent
of the amount of the contribution, the qualified hurricane distribution
shall be treated as a distribution described in section 408(d)(3) and
as having been transferred to the eligible retirement plan in a direct
trustee to trustee transfer within 60 days of the distribution.
`(4) DEFINITIONS- For purposes of this subsection--
`(A) QUALIFIED HURRICANE DISTRIBUTION- Except as provided in paragraph
(2), the term `qualified hurricane distribution' means--
`(i) any distribution from an eligible retirement plan made on or
after August 25, 2005, and before January 1, 2007, to an individual
whose principal place of abode on August 28, 2005, is located in the
Hurricane Katrina disaster area and who has sustained an economic
loss by reason of Hurricane Katrina,
`(ii) any distribution (which is not described in clause (i)) from
an eligible retirement plan made on or after September 23, 2005, and
before January 1, 2007, to an individual whose principal place of
abode on September 23, 2005, is located in the Hurricane Rita disaster
area and who has sustained an economic loss by reason of Hurricane
Rita, and
`(iii) any distribution (which is not described in clause (i) or (ii))
from an eligible retirement plan made on or after October 23, 2005,
and before January 1, 2007, to an individual whose principal place
of abode on October 23, 2005, is located in the Hurricane Wilma disaster
area and who has sustained an economic loss by reason of Hurricane
Wilma.
`(B) ELIGIBLE RETIREMENT PLAN- The term `eligible retirement plan' shall
have the meaning given such term by section 402(c)(8)(B).
`(5) INCOME INCLUSION SPREAD OVER 3-YEAR PERIOD-
`(A) IN GENERAL- In the case of any qualified hurricane distribution,
unless the taxpayer elects not to have this paragraph apply for any
taxable year, any amount required to be included in gross income for
such taxable year shall be so included ratably over the 3-taxable year
period beginning with such taxable year.
`(B) SPECIAL RULE- For purposes of subparagraph (A), rules similar to
the rules of subparagraph (E) of section 408A(d)(3) shall apply.
`(A) EXEMPTION OF DISTRIBUTIONS FROM TRUSTEE TO TRUSTEE TRANSFER AND
WITHHOLDING RULES- For purposes of sections 401(a)(31), 402(f), and
3405, qualified hurricane distributions shall not be treated as eligible
rollover distributions.
`(B) QUALIFIED HURRICANE DISTRIBUTIONS TREATED AS MEETING PLAN DISTRIBUTION
REQUIREMENTS- For purposes this title, a qualified hurricane distribution
shall be treated as meeting the requirements of sections 401(k)(2)(B)(i),
403(b)(7)(A)(ii), 403(b)(11), and 457(d)(1)(A).
`(b) Recontributions of Withdrawals for Home Purchases-
`(A) IN GENERAL- Any individual who received a qualified distribution
may, during the applicable period, make one or more contributions in
an aggregate amount not to exceed the amount of such qualified distribution
to an eligible retirement plan (as defined in section 402(c)(8)(B))
of which such individual is a beneficiary and to which a rollover contribution
of such distribution could be made under section 402(c), 403(a)(4),
403(b)(8), or 408(d)(3), as the case may be.
`(B) TREATMENT OF REPAYMENTS- Rules similar to the rules of subparagraphs
(B) and (C) of subsection (a)(3) shall apply for purposes of this subsection.
`(2) QUALIFIED DISTRIBUTION- For purposes of this subsection--
`(A) IN GENERAL- The term `qualified distribution' means any qualified
Katrina distribution, any qualified Rita distribution, and any qualified
Wilma distribution.
`(B) QUALIFIED KATRINA DISTRIBUTION- The term `qualified Katrina distribution'
means any distribution--
`(i) described in section 401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii) (but
only to the extent such distribution relates to financial hardship),
403(b)(11)(B), or 72(t)(2)(F),
`(ii) received after February 28, 2005, and before August 29, 2005,
and
`(iii) which was to be used to purchase or construct a principal residence
in the Hurricane Katrina disaster area, but which was not so purchased
or constructed on account of Hurricane Katrina.
`(C) QUALIFIED RITA DISTRIBUTION- The term `qualified Rita distribution'
means any distribution (other than a qualified Katrina distribution)--
`(i) described in section 401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii) (but
only to the extent such distribution relates to financial hardship),
403(b)(11)(B), or 72(t)(2)(F),
`(ii) received after February 28, 2005, and before September 24, 2005,
and
`(iii) which was to be used to purchase or construct a principal residence
in the Hurricane Rita disaster area, but which was not so purchased
or constructed on account of Hurricane Rita.
`(D) QUALIFIED WILMA DISTRIBUTION- The term `qualified Wilma distribution'
means any distribution (other than a qualified Katrina distribution
or a qualified Rita distribution)--
`(i) described in section 401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii) (but
only to the extent such distribution relates to financial hardship),
403(b)(11)(B), or 72(t)(2)(F),
`(ii) received after February 28, 2005, and before October 24, 2005,
and
`(iii) which was to be used to purchase or construct a principal residence
in the Hurricane Wilma disaster area, but which was not so purchased
or constructed on account of Hurricane Wilma.
`(3) APPLICABLE PERIOD- For purposes of this subsection, the term `applicable
period' means--
`(A) with respect to any qualified Katrina distribution, the period
beginning on August 25, 2005, and ending on February 28, 2006,
`(B) with respect to any qualified Rita distribution, the period beginning
on September 23, 2005, and ending on February 28, 2006, and
`(C) with respect to any qualified Wilma distribution, the period beginning
on October 23, 2005, and ending on February 28, 2006.
`(c) Loans From Qualified Plans-
`(1) INCREASE IN LIMIT ON LOANS NOT TREATED AS DISTRIBUTIONS- In the case
of any loan from a qualified employer plan (as defined under section 72(p)(4))
to a qualified individual made during the applicable period--
`(A) clause (i) of section 72(p)(2)(A) shall be applied by substituting
`$100,000' for `$50,000', and
`(B) clause (ii) of such section shall be applied by substituting `the
present value of the nonforfeitable accrued benefit of the employee
under the plan' for `one-half of the present value of the nonforfeitable
accrued benefit of the employee under the plan'.
`(2) DELAY OF REPAYMENT- In the case of a qualified individual with an
outstanding loan on or after the qualified beginning date from a qualified
employer plan (as defined in section 72(p)(4))--
`(A) if the due date pursuant to subparagraph (B) or (C) of section
72(p)(2) for any repayment with respect to such loan occurs during the
period beginning on the qualified beginning date and ending on December
31, 2006, such due date shall be delayed for 1 year,
`(B) any subsequent repayments with respect to any such loan shall be
appropriately adjusted to reflect the delay in the due date under paragraph
(1) and any interest accruing during such delay, and
`(C) in determining the 5-year period and the term of a loan under subparagraph
(B) or (C) of section 72(p)(2), the period described in subparagraph
(A) shall be disregarded.
`(3) QUALIFIED INDIVIDUAL- For purposes of this subsection--
`(A) IN GENERAL- The term `qualified individual' means any qualified
Hurricane Katrina individual, any qualified Hurricane Rita individual,
and any qualified Hurricane Wilma individual.
`(B) QUALIFIED HURRICANE KATRINA INDIVIDUAL- The term `qualified Hurricane
Katrina individual' means an individual whose principal place of abode
on August 28, 2005, is located in the Hurricane Katrina disaster area
and who has sustained an economic loss by reason of Hurricane Katrina.
`(C) QUALIFIED HURRICANE RITA INDIVIDUAL- The term `qualified Hurricane
Rita individual' means an individual (other than a qualified Hurricane
Katrina individual) whose principal place of abode on September 23,
2005, is located in the Hurricane Rita disaster area and who has sustained
an economic loss by reason of Hurricane Rita.
`(D) QUALIFIED HURRICANE WILMA INDIVIDUAL- The term `qualified Hurricane
Wilma individual' means an individual (other than a qualified Hurricane
Katrina individual or a qualified Hurricane Rita individual) whose principal
place of abode on October 23, 2005, is located in the Hurricane Wilma
disaster area and who has sustained an economic loss by reason of Hurricane
Wilma.
`(4) APPLICABLE PERIOD; QUALIFIED BEGINNING DATE- For purposes of this
subsection--
`(A) HURRICANE KATRINA- In the case of any qualified Hurricane Katrina
individual--
`(i) the applicable period is the period beginning on September 24,
2005, and ending on December 31, 2006, and
`(ii) the qualified beginning date is August 25, 2005.
`(B) HURRICANE RITA- In the case of any qualified Hurricane Rita individual--
`(i) the applicable period is the period beginning on the date of
the enactment of this subsection and ending on December 31, 2006,
and
`(ii) the qualified beginning date is September 23, 2005.
`(C) HURRICANE WILMA- In the case of any qualified Hurricane Wilma individual--
`(i) the applicable period is the period beginning on the date of
the enactment of this subparagraph and ending on December 31, 2006,
and
`(ii) the qualified beginning date is October 23, 2005.
`(d) Provisions Relating to Plan Amendments-
`(1) IN GENERAL- If this subsection applies to any amendment to any plan
or annuity contract, such plan or contract shall be treated as being operated
in accordance with the terms of the plan during the period described in
paragraph (2)(B)(i).
`(2) AMENDMENTS TO WHICH SUBSECTION APPLIES-
`(A) IN GENERAL- This subsection shall apply to any amendment to any
plan or annuity contract which is made--
`(i) pursuant to any provision of this section, or pursuant to any
regulation issued by the Secretary or the Secretary of Labor under
any provision of this section, and
`(ii) on or before the last day of the first plan year beginning on
or after January 1, 2007, or such later date as the Secretary may
prescribe.
In the case of a governmental plan (as defined in section 414(d)), clause
(ii) shall be applied by substituting the date which is 2 years after
the date otherwise applied under clause (ii).
`(B) CONDITIONS- This subsection shall not apply to any amendment unless--
`(I) beginning on the date that this section or the regulation described
in subparagraph (A)(i) takes effect (or in the case of a plan or
contract amendment not required by this section or such regulation,
the effective date specified by the plan), and
`(II) ending on the date described in subparagraph (A)(ii) (or,
if earlier, the date the plan or contract amendment is adopted),
the plan or contract is operated as if such plan or contract amendment
were in effect; and
`(ii) such plan or contract amendment applies retroactively for such
period.
`SEC. 1400R. EMPLOYMENT RELIEF.
`(a) Employee Retention Credit for Employers Affected by Hurricane Katrina-
`(1) IN GENERAL- For purposes of section 38, in the case of an eligible
employer, the Hurricane Katrina employee retention credit for any taxable
year is an amount equal to 40 percent of the qualified wages with respect
to each eligible employee of such employer for such taxable year. For
purposes of the preceding sentence, the amount of qualified wages which
may be taken into account with respect to any individual shall not exceed
$6,000.
`(2) DEFINITIONS- For purposes of this subsection--
`(A) ELIGIBLE EMPLOYER- The term `eligible employer' means any employer--
`(i) which conducted an active trade or business on August 28, 2005,
in the GO Zone, and
`(ii) with respect to whom the trade or business described in clause
(i) is inoperable on any day after August 28, 2005, and before January
1, 2006, as a result of damage sustained by reason of Hurricane Katrina.
`(B) ELIGIBLE EMPLOYEE- The term `eligible employee' means with respect
to an eligible employer an employee whose principal place of employment
on August 28, 2005, with such eligible employer was in the GO Zone.
`(C) QUALIFIED WAGES- The term `qualified wages' means wages (as defined
in section 51(c)(1), but without regard to section 3306(b)(2)(B)) paid
or incurred by an eligible employer with respect to an eligible employee
on any day after August 28, 2005, and before January 1, 2006, which
occurs during the period--
`(i) beginning on the date on which the trade or business described
in subparagraph (A) first became inoperable at the principal place
of employment of the employee immediately before Hurricane Katrina,
and
`(ii) ending on the date on which such trade or business has resumed
significant operations at such principal place of employment.
Such term shall include wages paid without regard to whether the employee
performs no services, performs services at a different place of employment
than such principal place of employment, or performs services at such
principal place of employment before significant operations have resumed.
`(3) CERTAIN RULES TO APPLY- For purposes of this subsection, rules similar
to the rules of sections 51(i)(1) and 52 shall apply.
`(4) EMPLOYEE NOT TAKEN INTO ACCOUNT MORE THAN ONCE- An employee shall
not be treated as an eligible employee for purposes of this subsection
for any period with respect to any employer if such employer is allowed
a credit under section 51 with respect to such employee for such period.
`(b) Employee Retention Credit for Employers Affected by Hurricane Rita-
`(1) IN GENERAL- For purposes of section 38, in the case of an eligible
employer, the Hurricane Rita employee retention credit for any taxable
year is an amount equal to 40 percent of the qualified wages with respect
to each eligible employee of such employer for such taxable year. For
purposes of the preceding sentence, the amount of qualified wages which
may be taken into account with respect to any individual shall not exceed
$6,000.
`(2) DEFINITIONS- For purposes of this subsection--
`(A) ELIGIBLE EMPLOYER- The term `eligible employer' means any employer--
`(i) which conducted an active trade or business on September 23,
2005, in the Rita GO Zone, and
`(ii) with respect to whom the trade or business described in clause
(i) is inoperable on any day after September 23, 2005, and before
January 1, 2006, as a result of damage sustained by reason of Hurricane
Rita.
`(B) ELIGIBLE EMPLOYEE- The term `eligible employee' means with respect
to an eligible employer an employee whose principal place of employment
on September 23, 2005, with such eligible employer was in the Rita GO
Zone.
`(C) QUALIFIED WAGES- The term `qualified wages' means wages (as defined
in section 51(c)(1), but without regard to section 3306(b)(2)(B)) paid
or incurred by an eligible employer with respect to an eligible employee
on any day after September 23, 2005, and before January 1, 2006, which
occurs during the period--
`(i) beginning on the date on which the trade or business described
in subparagraph (A) first became inoperable at the principal place
of employment of the employee immediately before Hurricane Rita, and
`(ii) ending on the date on which such trade or business has resumed
significant operations at such principal place of employment.
Such term shall include wages paid without regard to whether the employee
performs no services, performs services at a different place of employment
than such principal place of employment, or performs services at such
principal place of employment before significant operations have resumed.
`(3) CERTAIN RULES TO APPLY- For purposes of this subsection, rules similar
to the rules of sections 51(i)(1) and 52 shall apply.
`(4) EMPLOYEE NOT TAKEN INTO ACCOUNT MORE THAN ONCE- An employee shall
not be treated as an eligible employee for purposes of this subsection
for any period with respect to any employer if such employer is allowed
a credit under subsection (a) or section 51 with respect to such employee
for such period.
`(c) Employee Retention Credit for Employers Affected by Hurricane Wilma-
`(1) IN GENERAL- For purposes of section 38, in the case of an eligible
employer, the Hurricane Wilma employee retention credit for any taxable
year is an amount equal to 40 percent of the qualified wages with respect
to each eligible employee of such employer for such taxable year. For
purposes of the preceding sentence, the amount of qualified wages which
may be taken into account with respect to any individual shall not exceed
$6,000.
`(2) DEFINITIONS- For purposes of this subsection--
`(A) ELIGIBLE EMPLOYER- The term `eligible employer' means any employer--
`(i) which conducted an active trade or business on October 23, 2005,
in the Wilma GO Zone, and
`(ii) with respect to whom the trade or business described in clause
(i) is inoperable on any day after October 23, 2005, and before January
1, 2006, as a result of damage sustained by reason of Hurricane Wilma.
`(B) ELIGIBLE EMPLOYEE- The term `eligible employee' means with respect
to an eligible employer an employee whose principal place of employment
on October 23, 2005, with such eligible employer was in the Wilma GO
Zone.
`(C) QUALIFIED WAGES- The term `qualified wages' means wages (as defined
in section 51(c)(1), but without regard to section 3306(b)(2)(B)) paid
or incurred by an eligible employer with respect to an eligible employee
on any day after October 23, 2005, and before January 1, 2006, which
occurs during the period--
`(i) beginning on the date on which the trade or business described
in subparagraph (A) first became inoperable at the principal place
of employment of the employee immediately before Hurricane Wilma,
and
`(ii) ending on the date on which such trade or business has resumed
significant operations at such principal place of employment.
Such term shall include wages paid without regard to whether the employee
performs no services, performs services at a different place of employment
than such principal place of employment, or performs services at such
principal place of employment before significant operations have resumed.
`(3) CERTAIN RULES TO APPLY- For purposes of this subsection, rules similar
to the rules of sections 51(i)(1) and 52 shall apply.
`(4) EMPLOYEE NOT TAKEN INTO ACCOUNT MORE THAN ONCE- An employee shall
not be treated as an eligible employee for purposes of this subsection
for any period with respect to any employer if such employer is allowed
a credit under subsection (a) or (b) or section 51 with respect to such
employee for such period.
`SEC. 1400S. ADDITIONAL TAX RELIEF PROVISIONS.
`(a) Temporary Suspension of Limitations on Charitable Contributions-
`(1) IN GENERAL- Except as otherwise provided in paragraph (2), section
170(b) shall not apply to qualified contributions and such contributions
shall not be taken into account for purposes of applying subsections (b)
and (d) of section 170 to other contributions.
`(2) TREATMENT OF EXCESS CONTRIBUTIONS- For purposes of section 170--
`(A) INDIVIDUALS- In the case of an individual--
`(i) LIMITATION- Any qualified contribution shall be allowed only
to the extent that the aggregate of such contributions does not exceed
the excess of the taxpayer's contribution base (as defined in subparagraph
(F) of section 170(b)(1)) over the amount of all other charitable
contributions allowed under section 170(b)(1).
`(ii) CARRYOVER- If the aggregate amount of qualified contributions
made in the contribution year (within the meaning of section 170(d)(1))
exceeds the limitation of clause (i), such excess shall be added to
the excess described in the portion of subparagraph (A) of such section
which precedes clause (i) thereof for purposes of applying such section.
`(B) CORPORATIONS- In the case of a corporation--
`(i) LIMITATION- Any qualified contribution shall be allowed only
to the extent that the aggregate of such contributions does not exceed
the excess of the taxpayer's taxable income (as determined under paragraph
(2) of section 170(b)) over the amount of all other charitable contributions
allowed under such paragraph.
`(ii) CARRYOVER- Rules similar to the rules of subparagraph (A)(ii)
shall apply for purposes of this subparagraph.
`(3) EXCEPTION TO OVERALL LIMITATION ON ITEMIZED DEDUCTIONS- So much of
any deduction allowed under section 170 as does not exceed the qualified
contributions paid during the taxable year shall not be treated as an
itemized deduction for purposes of section 68.
`(4) QUALIFIED CONTRIBUTIONS-
`(A) IN GENERAL- For purposes of this subsection, the term `qualified
contribution' means any charitable contribution (as defined in section
170(c)) if--
`(i) such contribution is paid during the period beginning on August
28, 2005, and ending on December 31, 2005, in cash to an organization
described in section 170(b)(1)(A) (other than an organization described
in section 509(a)(3)),
`(ii) in the case of a contribution paid by a corporation, such contribution
is for relief efforts related to Hurricane Katrina, Hurricane Rita,
or Hurricane Wilma, and
`(iii) the taxpayer has elected the application of this subsection
with respect to such contribution.
`(B) EXCEPTION- Such term shall not include a contribution if the contribution
is for establishment of a new, or maintenance in an existing, segregated
fund or account with respect to which the donor (or any person appointed
or designated by such donor) has, or reasonably expects to have, advisory
privileges with respect to distributions or investments by reason of
the donor's status as a donor.
`(C) APPLICATION OF ELECTION TO PARTNERSHIPS AND S CORPORATIONS- In
the case of a partnership or S corporation, the election under subparagraph
(A)(iii) shall be made separately by each partner or shareholder.
`(b) Suspension of Certain Limitations on Personal Casualty Losses- Paragraphs
(1) and (2)(A) of section 165(h) shall not apply to losses described in
section 165(c)(3)--
`(1) which arise in the Hurricane Katrina disaster area on or after August
25, 2005, and which are attributable to Hurricane Katrina,
`(2) which arise in the Hurricane Rita disaster area on or after September
23, 2005, and which are attributable to Hurricane Rita, or
`(3) which arise in the Hurricane Wilma disaster area on or after October
23, 2005, and which are attributable to Hurricane Wilma.
In the case of any other losses, section 165(h)(2)(A) shall be applied without
regard to the losses referred to in the preceding sentence.
`(c) Required Exercise of Authority Under Section 7508A- In the case of
any taxpayer determined by the Secretary to be affected by the Presidentially
declared disaster relating to Hurricane Katrina, Hurricane Rita, or Hurricane
Wilma, any relief provided by the Secretary under section 7508A shall be
for a period ending not earlier than February 28, 2006.
`(d) Special Rule for Determining Earned Income-
`(1) IN GENERAL- In the case of a qualified individual, if the earned
income of the taxpayer for the taxable year which includes the applicable
date is less than the earned income of the taxpayer for the preceding
taxable year, the credits allowed under sections 24(d) and 32 may, at
the election of the taxpayer, be determined by substituting--
`(A) such earned income for the preceding taxable year, for
`(B) such earned income for the taxable year which includes the applicable
date.
`(2) QUALIFIED INDIVIDUAL- For purposes of this subsection--
`(A) IN GENERAL- The term `qualified individual' means any qualified
Hurricane Katrina individual, any qualified Hurricane Rita individual,
and any qualified Hurricane Wilma individual.
`(B) QUALIFIED HURRICANE KATRINA INDIVIDUAL- The term `qualified Hurricane
Katrina individual' means any individual whose principal place of abode
on August 25, 2005, was located--
`(ii) in the Hurricane Katrina disaster area (but outside the GO Zone)
and such individual was displaced from such principal place of abode
by reason of Hurricane Katrina.
`(C) QUALIFIED HURRICANE RITA INDIVIDUAL- The term `qualified Hurricane
Rita individual' means any individual (other than a qualified Hurricane
Katrina individual) whose principal place of abode on September 23,
2005, was located--
`(i) in the Rita GO Zone, or
`(ii) in the Hurricane Rita disaster area (but outside the Rita GO
Zone) and such individual was displaced from such principal place
of abode by reason of Hurricane Rita.
`(D) QUALIFIED HURRICANE WILMA INDIVIDUAL- The term `qualified Hurricane
Wilma individual' means any individual whose principal place of abode
on October 23, 2005, was located--
`(i) in the Wilma GO Zone, or
`(ii) in the Hurricane Wilma disaster area (but outside the Wilma
GO Zone) and such individual was displaced from such principal place
of abode by reason of Hurricane Wilma.
`(3) APPLICABLE DATE- For purposes of this subsection, the term `applicable
date' means--
`(A) in the case of a qualified Hurricane Katrina individual, August
25, 2005,
`(B) in the case of a qualified Hurricane Rita individual, September
23, 2005, and
`(C) in the case of a qualified Hurricane Wilma individual, October
23, 2005.
`(4) EARNED INCOME- For purposes of this subsection, the term `earned
income' has the meaning given such term under section 32(c).
`(A) APPLICATION TO JOINT RETURNS- For purposes of paragraph (1), in
the case of a joint return for a taxable year which includes the applicable
date--
`(i) such paragraph shall apply if either spouse is a qualified individual,
and
`(ii) the earned income of the taxpayer for the preceding taxable
year shall be the sum of the earned income of each spouse for such
preceding taxable year.
`(B) UNIFORM APPLICATION OF ELECTION- Any election made under paragraph
(1) shall apply with respect to both sections 24(d) and section 32.
`(C) ERRORS TREATED AS MATHEMATICAL ERROR- For purposes of section 6213,
an incorrect use on a return of earned income pursuant to paragraph
(1) shall be treated as a mathematical or clerical error.
`(D) NO EFFECT ON DETERMINATION OF GROSS INCOME, ETC- Except as otherwise
provided in this subsection, this title shall be applied without regard
to any substitution under paragraph (1).
`(e) Secretarial Authority To Make Adjustments Regarding Taxpayer and Dependency
Status- With respect to taxable years beginning in 2005 or 2006, the Secretary
may make such adjustments in the application of the internal revenue laws
as may be necessary to ensure that taxpayers do not lose any deduction or
credit or experience a change of filing status by reason of temporary relocations
by reason of Hurricane Katrina, Hurricane Rita, or Hurricane Wilma. Any
adjustments made under the preceding sentence shall ensure that an individual
is not taken into account by more than one taxpayer with respect to the
same tax benefit.
`SEC. 1400T. SPECIAL RULES FOR MORTGAGE REVENUE BONDS.
`(a) In General- In the case of financing provided with respect to owner-occupied
residences in the GO Zone, the Rita GO Zone, or the Wilma GO Zone, section
143 shall be applied--
`(1) by treating any such residence in the Rita GO Zone or the Wilma GO
Zone as a targeted area residence,
`(2) by applying subsection (f)(3) thereof without regard to subparagraph
(A) thereof, and
`(3) by substituting `$150,000' for `$15,000' in subsection (k)(4) thereof.
`(b) Application- Subsection (a) shall not apply to financing provided after
December 31, 2010.'.
(b) Conforming Amendments-
(1) Subsection (b) of section 38, as amended by this Act, is amended by
striking `and' at the end of paragraph (26), by striking the period at
the end of paragraph (27) and inserting a comma, and by adding at the
end the following new paragraphs:
`(28) the Hurricane Katrina employee retention credit determined under
section 1400R(a),
`(29) the Hurricane Rita employee retention credit determined under section
1400R(b), and
`(30) the Hurricane Wilma employee retention credit determined under section
1400R(c).'.
(2) Section 280C(a), as amended by this Act, is amended by striking `and
1400P(b)' and inserting `1400P(b), and 1400R'.
(3) The table of sections for part II of subchapter Y of chapter 1 is
amended by adding at the end the following new items:
`Sec. 1400Q. Special rules for use of retirement funds.
`Sec. 1400R. Employment relief.
`Sec. 1400S. Additional tax relief provisions.'.
(4) The following provisions of the Katrina Emergency Tax Relief Act of
2005 are hereby repealed:
(B) Sections 202, 301, 402, 403(b), 406, and 407.
TITLE III--OTHER PROVISIONS
SEC. 301. GULF COAST RECOVERY BONDS.
It is the sense of the Congress that the Secretary of the Treasury, or the
Secretary's delegate, should designate one or more series of bonds or certificates
(or any portion thereof) issued under section 3105 of title 31, United States
Code, as `Gulf Coast Recovery Bonds' in response to Hurricanes Katrina,
Rita, and Wilma.
SEC. 302. ELECTION TO INCLUDE COMBAT PAY AS EARNED INCOME FOR PURPOSES
OF EARNED INCOME CREDIT.
(a) In General- Subclause (II) of section 32(c)(2)(B)(vi) is amended by
striking `January 1, 2006' and inserting `January 1, 2007'.
(b) Effective Date- The amendment made by subsection (a) shall apply to
taxable years beginning after December 31, 2005.
SEC. 303. MODIFICATION OF EFFECTIVE DATE OF EXCEPTION FROM SUSPENSION
RULES FOR CERTAIN LISTED AND REPORTABLE TRANSACTIONS.
(a) Effective Date Modification-
(1) IN GENERAL- Paragraph (2) of section 903(d) of the American Jobs Creation
Act of 2004 is amended to read as follows:
`(2) EXCEPTION FOR REPORTABLE OR LISTED TRANSACTIONS-
`(A) IN GENERAL- The amendments made by subsection (c) shall apply with
respect to interest accruing after October 3, 2004.
`(B) SPECIAL RULE FOR CERTAIN LISTED AND REPORTABLE TRANSACTIONS-
`(i) IN GENERAL- Except as provided in clauses (ii), (iii), and (iv),
the amendments made by subsection (c) shall also apply with respect
to interest accruing on or before October 3, 2004.
`(ii) PARTICIPANTS IN SETTLEMENT INITIATIVES- Clause (i) shall not
apply to any transaction if, as of January 23, 2006--
`(I) the taxpayer is participating in a settlement initiative described
in Internal Revenue Service Announcement 2005-80 with respect to
such transaction, or
`(II) the taxpayer has entered into a settlement agreement pursuant
to such an initiative.
Subclause (I) shall not apply to any taxpayer if, after January 23,
2006, the taxpayer withdraws from, or terminates, participation in
the initiative or the Secretary of the Treasury or the Secretary's
delegate determines that a settlement agreement will not be reached
pursuant to the initiative within a reasonable period of time.
`(iii) TAXPAYERS ACTING IN GOOD FAITH- The Secretary of the Treasury
may except from the application of clause (i) any transaction in which
the taxpayer has acted reasonably and in good faith.
`(iv) CLOSED TRANSACTIONS- Clause (i) shall not apply to a transaction
if, as of December 14, 2005--
`(I) the assessment of all Federal income taxes for the taxable
year in which the tax liability to which the interest relates arose
is prevented by the operation of any law or rule of law, or
`(II) a closing agreement under section 7121 has been entered into
with respect to the tax liability arising in connection with the
transaction.'.
(2) EFFECTIVE DATE- The amendment made by this subsection shall take effect
as if included in the provisions of the American Jobs Creation Act of
2004 to which it relates.
(b) Treatment of Amended Returns and Other Similar Notices of Additional
Tax Owed-
(1) IN GENERAL- Section 6404(g)(1) (relating to suspension) is amended
by adding at the end the following new sentence: `If, after the return
for a taxable year is filed, the taxpayer provides to the Secretary 1
or more signed written documents showing that the taxpayer owes an additional
amount of tax for the taxable year, clause (i) shall be applied by substituting
the date the last of the documents was provided for the date on which
the return is filed.'.
(2) EFFECTIVE DATE- The amendment made by this subsection shall apply
to documents provided on or after the date of the enactment of this Act.
SEC. 304. AUTHORITY FOR UNDERCOVER OPERATIONS.
Paragraph (6) of section 7608(c) (relating to application of section) is
amended by striking `January 1, 2006' both places is appears and inserting
`January 1, 2007'.
SEC. 305. DISCLOSURES OF CERTAIN TAX RETURN INFORMATION.
(a) Disclosures To Facilitate Combined Employment Tax Reporting-
(1) IN GENERAL- Subparagraph (B) of section 6103(d)(5) (relating to termination)
is amended by striking `December 31, 2005' and inserting `December 31,
2006'.
(2) EFFECTIVE DATE- The amendment made by paragraph (1) shall apply to
disclosures after December 31, 2005.
(b) Disclosures Relating to Terrorist Activities-
(1) IN GENERAL- Clause (iv) of section 6103(i)(3)(C) and subparagraph
(E) of section 6103(i)(7) are each amended by striking `December 31, 2005'
and inserting `December 31, 2006'.
(2) EFFECTIVE DATE- The amendments made by paragraph (1) shall apply to
disclosures after December 31, 2005.
(c) Disclosures Relating to Student Loans-
(1) IN GENERAL- Subparagraph (D) of section 6103(l)(13) (relating to termination)
is amended by striking `December 31, 2005' and inserting `December 31,
2006'.
(2) EFFECTIVE DATE- The amendment made by paragraph (1) shall apply to
requests made after December 31, 2005.
TITLE IV--TECHNICALS
Subtitle A--Tax Technicals
SEC. 401. SHORT TITLE.
This subtitle may be cited as the `Tax Technical Corrections Act of 2005'.
SEC. 402. AMENDMENTS RELATED TO ENERGY POLICY ACT OF 2005.
(a) Amendments Related to Section 1263-
(1) Part VI of subchapter O of chapter 1 is repealed.
(2) Section 1223 is amended by striking paragraph (3) and by redesignating
paragraphs (4) through (16) as paragraphs (3) through (15), respectively.
(3) Section 121(g) is amended by striking `1223(7)' and inserting `1223(6)'.
(4) Section 246(c)(3)(B) is amended by striking `paragraph (4) of section
1223' and inserting `paragraph (3) of section 1223'.
(5) Section 247(b)(2)(D) is amended by inserting `as in effect before
its repeal' after `part VI of subchapter O'.
(6)(A) Section 1245(b) is amended by striking paragraph (5) and redesignating
paragraphs (6) through (9) as paragraphs (5) through (8), respectively.
(B) Section 1245(b)(3) is amended by striking `paragraph (7)' and inserting
`paragraph (6)'.
(7)(A) Section 1250(d) is amended by striking paragraph (5) and redesignating
paragraphs (6) through (8) as paragraphs (5) through (7), respectively.
(B) Section 1250(e)(2) is amended by striking `(3), or (5)' and inserting
`or (3)'.
(b) Amendment Related to Section 1301- Clause (ii) of section 45(c)(3)(A)
is amended by striking `nonhazardous lignin waste material' and inserting
`lignin material'.
(c) Amendments Related to Section 1303-
(1) Subsection (l) of section 54 is amended by striking paragraph (5),
and by redesignating paragraphs (6) and (7) as paragraphs (5) and (6),
respectively.
(2) Subsection (e) of section 1303 of the Energy Policy Act of 2005 is
amended to read as follows:
`(1) IN GENERAL- Except as provided in paragraph (2), the amendments made
by this section shall apply to bonds issued after December 31, 2005.
`(2) SUBSECTION (C)- The amendments made by subsection (c) shall apply
to taxable years beginning after December 31, 2005.'.
(d) Amendments Related to Section 1306-
(1) Paragraph (2) of section 45J(c) is amended to read as follows:
`(A) IN GENERAL- The amount of the credit determined under subsection
(a) shall be reduced by an amount which bears the same ratio to the
amount of the credit (determined without regard to this paragraph) as--
`(i) the amount by which the reference price (as defined in section
45(e)(2)(C)) for the calendar year in which the sale occurs exceeds
8 cents, bears to
`(B) PHASEOUT ADJUSTMENT BASED ON INFLATION- The 8 cent amount in subparagraph
(A) shall be adjusted by multiplying such amount by the inflation adjustment
factor (as defined in section 45(e)(2)(B)) for the calendar year in
which the sale occurs. If any amount as increased under the preceding
sentence is not a multiple of 0.1 cent, such amount shall be rounded
to the nearest multiple of 0.1 cent.'.
(2) Subsection (e) of section 45J is amended by striking `(2),'.
(e) Amendment Related to Section 1309- Subparagraph (B) of section 169(d)(5)
is amended by adding at beginning thereof `in the case of facility placed
in service in connection with a plant or other property placed in operation
after December 31, 1975,'.
(f) Amendments Related to Section 1311-
(1) Clause (i) of section 172(b)(1)(I) is amended to read as follows:
`(i) IN GENERAL- At the election of the taxpayer for any taxable year
ending after December 31, 2005, and before January 1, 2009, in the
case of a net operating loss for a taxable year ending after December
31, 2002, and before January 1, 2006, there shall be a net operating
loss carryback to each of the 5 taxable years preceding the taxable
year of such loss to the extent that such loss does not exceed 20
percent of the sum of the electric transmission property capital expenditures
and the pollution control facility capital expenditures of the taxpayer
for the taxable year preceding the taxable year for which such election
is made.'.
(2) Clause (ii) of section 172(b)(1)(I) is amended by striking `in a taxable
year' and inserting `for a taxable year'.
(3) Subparagraph (I) of section 172(b)(1) is amended by striking clause
(iv) and (v), by redesignating clause (vi) as clause (v), and by inserting
after clause (iii) the following:
`(iv) SPECIAL RULES RELATING TO CREDIT OR REFUND- In the case of the
portion of the loss which is carried back 5 years by reason of clause
(i)--
`(I) an application under section 6411(a) with respect to such portion
shall not fail to be treated as timely filed if filed within 24
months after the due date specified under such section, and
`(II) references in sections 6501(h), 6511(d)(2)(A), and 6611(f)(1)
to the taxable year in which such net operating loss arises or results
in a net operating loss carryback shall be treated as references
to the taxable year for which such election is made.'.
(g) Amendment Related to Section 1322- Subsection (a) of section 45K is
amended by striking `if the taxpayer elects to have this section apply,'.
(h) Amendment Related to Section 1331- Paragraph (3) of section 1250(b)
is amended by striking `or by section 179D'.
(i) Amendments Related to Section 1335-
(1) Paragraph (1) of section 25D(b) is amended by inserting `(determined
without regard to subsection (c))' after `subsection (a)'.
(2) Subparagraphs (A) and (B) of section 25D(e)(4) are amended to read
as follows:
`(A) MAXIMUM EXPENDITURES- The maximum amount of expenditures which
may be taken into account under subsection (a) by all such individuals
with respect to such dwelling unit during such calendar year shall be--
`(i) $6,667 in the case of any qualified photovoltaic property expenditures,
`(ii) $6,667 in the case of any qualified solar water heating property
expenditures, and
`(iii) $1,667 in the case of each half kilowatt of capacity of qualified
fuel cell property (as defined in section 48(c)(1)) for which qualified
fuel cell property expenditures are made.
`(B) ALLOCATION OF EXPENDITURES- The expenditures allocated to any individual
for the taxable year in which such calendar year ends shall be an amount
equal to the lesser of--
`(i) the amount of expenditures made by such individual with respect
to such dwelling during such calendar year, or
`(ii) the maximum amount of such expenditures set forth in subparagraph
(A) multiplied by a fraction--
`(I) the numerator of which is the amount of such expenditures with
respect to such dwelling made by such individual during such calendar
year, and
`(II) the denominator of which is the total expenditures made by
all such individuals with respect to such dwelling during such calendar
year.'.
(3)(A)(i) The matter preceding subparagraph (A) of section 23(b)(4) is
amended by striking `The credit' and inserting `In the case of a taxable
year to which section 26(a)(2) does not apply, the credit'.
(ii) Subsection (c) of section 23 is amended to read as follows:
`(c) Carryforwards of Unused Credit-
`(1) RULE FOR YEARS IN WHICH ALL PERSONAL CREDITS ALLOWED AGAINST REGULAR
AND ALTERNATIVE MINIMUM TAX- In the case of a taxable year to which section
26(a)(2) applies, if the credit allowable under subsection (a) for any
taxable year exceeds the limitation imposed by section 26(a)(2) for such
taxable year reduced by the sum of the credits allowable under this subpart
(other than this section and sections 25D and 1400C), such excess shall
be carried to the succeeding taxable year and added to the credit allowable
under subsection (a) for such taxable year.
`(2) RULE FOR OTHER YEARS- In the case of a taxable year to which section
26(a)(2) does not apply, if the credit allowable under subsection (a)
for any taxable year exceeds the limitation imposed by subsection (b)(4)
for such taxable year, such excess shall be carried to the succeeding
taxable year and added to the credit allowable under subsection (a) for
such taxable year.
`(3) LIMITATION- No credit may be carried forward under this subsection
to any taxable year following the fifth taxable year after the taxable
year in which the credit arose. For purposes of the preceding sentence,
credits shall be treated as used on a first-in first-out basis.'.
(B)(i) The matter preceding subparagraph (A) of section 24(b)(3) is amended
by striking `The credit' and inserting `In the case of a taxable year
to which section 26(a)(2) does not apply, the credit'.
(ii) Paragraph (1) of section 24(d) is amended to read as follows:
`(1) IN GENERAL- The aggregate credits allowed to a taxpayer under subpart
C shall be increased by the lesser of--
`(A) the credit which would be allowed under this section without regard
to this subsection and the limitation under section 26(a)(2) or subsection
(b)(3), as the case may be, or
`(B) the amount by which the aggregate amount of credits allowed by
this subpart (determined without regard to this subsection) would increase
if the limitation imposed by section 26(a)(2) or subsection (b)(3),
as the case may be, were increased by the excess (if any) of--
`(i) 15 percent of so much of the taxpayer's earned income (within
the meaning of section 32) which is taken into account in computing
taxable income for the taxable year as exceeds $10,000, or
`(ii) in the case of a taxpayer with 3 or more qualifying children,
the excess (if any) of--
`(I) the taxpayer's social security taxes for the taxable year,
over
`(II) the credit allowed under section for the taxable year.
The amount of the credit allowed under this subsection shall not be treated
as a credit allowed under this subpart and shall reduce the amount of
credit otherwise allowable under subsection (a) without regard to section
26(a)(2) or subsection (b)(3), as the case may be. For purposes of subparagraph
(B), any amount excluded from gross income by reason of section 112 shall
be treated as earned income which is taken into account in computing taxable
income for the taxable year.'.
(C) Subparagraph (C) of section 25(e)(1) is amended to read as follows:
`(C) APPLICABLE TAX LIMIT- For purposes of this paragraph, the term
`applicable tax limit' means--
`(i) in the case of a taxable year to which section 26(a)(2) applies,
the limitation imposed by section 26(a)(2) for the taxable year reduced
by the sum of the credits allowable under this subpart (other than
this section and sections 23, 25D, and 1400C), and
`(ii) in the case of a taxable year to which section 26(a)(2) does
not apply, the limitation imposed by section 26(a)(1) for the taxable
year reduced by the sum of the credits allowable under this subpart
(other than this section and sections 23, 24, 25B, 25D, and 1400C).'.
(D) The matter preceding paragraph (1) of section 25B(g) is amended by
striking `The credit' and inserting `In the case of a taxable year to
which section 26(a)(2) does not apply, the credit'.
(E) Subsection (c) of section 25D is amended to read as follows:
`(c) Carryforward of Unused Credit-
`(1) RULE FOR YEARS IN WHICH ALL PERSONAL CREDITS ALLOWED AGAINST REGULAR
AND ALTERNATIVE MINIMUM TAX- In the case of a taxable year to which section
26(a)(2) applies, if the credit allowable under subsection (a) exceeds
the limitation imposed by section 26(a)(2) for such taxable year reduced
by the sum of the credits allowable under this subpart (other than this
section), such excess shall be carried to the succeeding taxable year
and added to the credit allowable under subsection (a) for such succeeding
taxable year.
`(2) RULE FOR OTHER YEARS- In the case of a taxable year to which section
26(a)(2) does not apply, if the credit allowable under subsection (a)
exceeds the limitation imposed by section 26(a)(1) for such taxable year
reduced by the sum of the credits allowable under this subpart (other
than this section and sections 23, 24, and 25B), such excess shall be
carried to the succeeding taxable year and added to the credit allowable
under subsection (a) for such succeeding taxable year.'.
(F) Subsection (d) of section 1400C is amended to read as follows:
`(d) Carryforward of Unused Credit-
`(1) RULE FOR YEARS IN WHICH ALL PERSONAL CREDITS ALLOWED AGAINST REGULAR
AND ALTERNATIVE MINIMUM TAX- In the case of a taxable year to which section
26(a)(2) applies, if the credit allowable under subsection (a) exceeds
the limitation imposed by section 26(a)(2) for such taxable year reduced
by the sum of the credits allowable under subpart A of part IV of subchapter
A (other than this section and section 25D), such excess shall be carried
to the succeeding taxable year and added to the credit allowable under
subsection (a) for such taxable year.
`(2) RULE FOR OTHER YEARS- In the case of a taxable year to which section
26(a)(2) does not apply, if the credit allowable under subsection (a)
exceeds the limitation imposed by section 26(a)(1) for such taxable year
reduced by the sum of the credits allowable under subpart A of part IV
of subchapter A (other than this section and sections 23, 24, 25B, and
25D), such excess shall be carried to the succeeding taxable year and
added to the credit allowable under subsection (a) for such taxable year.'.
(G) Subsection (i) of section 904 is amended to read as follows:
`(i) Coordination With Nonrefundable Personal Credits- In the case of any
taxable year of an individual to which section 26(a)(2) does not apply,
for purposes of subsection (a), the tax against which the credit is taken
is such tax reduced by the sum of the credits allowable under subpart A
of part IV of subchapter A of this chapter (other than sections 23, 24,
and 25B).'.
(H) APPLICATION OF EGTRRA SUNSET- The amendments made by this paragraph
(and each part thereof) shall be subject to title IX of the Economic Growth
and Tax Relief Reconciliation Act of 2001 in the same manner as the provisions
of such Act to which such amendment (or part thereof) relates.
(4) Subsection (b) of section 1335 of the Energy Policy Act of 2005 is
amended by striking paragraphs (1), (2), and (3). The Internal Revenue
Code of 1986 shall be applied and administered as if the amendments made
such paragraphs had never been enacted.
(j) Amendment Related to Section 1341- Paragraph (6) of section 30B(h) is
amended by adding at the end the following sentence: `For purposes of subsection
(g), property to which this paragraph applies shall be treated as of a character
subject to an allowance for depreciation.'.
(k) Amendment Related to Section 1342- Paragraph (2) of section 30C(e) is
amended by adding at the end the following sentence: `For purposes of subsection
(d), property to which this paragraph applies shall be treated as of a character
subject to an allowance for depreciation.'.
(l) Amendments Related to Section 1351-
(1) Paragraph (6) of section 41(f) (relating to special rules) is amended
by adding at the end the following:
`(C) FOREIGN RESEARCH- For purposes of subsection (a)(3), amounts paid
or incurred for any energy research conducted outside the United States,
the Commonwealth of Puerto Rico, or any possession of the United States
shall not be taken into account.
`(D) DENIAL OF DOUBLE BENEFIT- Any amount taken into account under subsection
(a)(3) shall not be taken into account under paragraph (1) or (2) of
subsection (a).'.
(2) Clause (ii) of section 41(b)(3)(C) is amended by striking `(other
than an energy research consortium)'.
(1) IN GENERAL- Except as provided in paragraphs (2) and (3), the amendments
made by this section shall take effect as if included in the provisions
of the Energy Policy Act of 2005 to which they relate.
(2) REPEAL OF PUBLIC UTILITY HOLDING COMPANY ACT OF 1935- The amendments
made by subsection (a) shall not apply with respect to any transaction
ordered in compliance with the Public Utility Holding Company Act of 1935
before its repeal.
(3) COORDINATION OF PERSONAL CREDITS- The amendments made by subsection
(i)(3) shall apply to taxable years beginning after December 31, 2005.
SEC. 403. AMENDMENTS RELATED TO THE AMERICAN JOBS CREATION ACT OF 2004.
(a) Amendments Related to Section 102 of the Act-
(1) Paragraph (1) of section 199(b) is amended by striking `the employer'
and inserting `the taxpayer'.
(2) Paragraph (2) of section 199(b) is amended to read as follows:
`(2) W-2 WAGES- For purposes of this section, the term `W-2 wages' means,
with respect to any person for any taxable year of such person, the sum
of the amounts described in paragraphs (3) and (8) of section 6051(a)
paid by such person with respect to employment of employees by such person
during the calendar year ending during such taxable year. Such term shall
not include any amount which is not properly included in a return filed
with the Social Security Administration on or before the 60th day after
the due date (including extensions) for such return.'.
(3) Subparagraph (B) of section 199(c)(1) is amended by inserting `and'
at the end of clause (i), by striking clauses (ii) and (iii), and by inserting
after clause (i) the following:
`(ii) other expenses, losses, or deductions (other than the deduction
allowed under this section), which are properly allocable to such
receipts.'.
(4) Paragraph (2) of section 199(c) is amended to read as follows:
`(2) ALLOCATION METHOD- The Secretary shall prescribe rules for the proper
allocation of items described in paragraph (1) for purposes of determining
qualified production activities income. Such rules shall provide for the
proper allocation of items whether or not such items are directly allocable
to domestic production gross receipts.'.
(5) Subparagraph (A) of section 199(c)(4) is amended by striking clauses
(ii) and (iii) and inserting the following new clauses:
`(ii) in the case of a taxpayer engaged in the active conduct of a
construction trade or business, construction of real property performed
in the United States by the taxpayer in the ordinary course of such
trade or business, or
`(iii) in the case of a taxpayer engaged in the active conduct of
an engineering or architectural services trade or business, engineering
or architectural services performed in the United States by the taxpayer
in the ordinary course of such trade or business with respect to the
construction of real property in the United States.'.
(6) Subparagraph (B) of section 199(c)(4) is amended by striking `and'
at the end of clause (i), by striking the period at the end of clause
(ii) and inserting `, or', and by adding at the end the following:
`(iii) the lease, rental, license, sale, exchange, or other disposition
of land.'.
(7) Paragraph (4) of section 199(c) is amended by adding at the end the
following new subparagraphs:
`(C) SPECIAL RULE FOR CERTAIN GOVERNMENT CONTRACTS- Gross receipts derived
from the manufacture or production of any property described in subparagraph
(A)(i)(I) shall be treated as meeting the requirements of subparagraph
(A)(i) if--
`(i) such property is manufactured or produced by the taxpayer pursuant
to a contract with the Federal Government, and
`(ii) the Federal Acquisition Regulation requires that title or risk
of loss with respect to such property be transferred to the Federal
Government before the manufacture or production of such property is
complete.
`(D) PARTNERSHIPS OWNED BY EXPANDED AFFILIATED GROUPS- For purposes
of this paragraph, if all of the interests in the capital and profits
of a partnership are owned by members of a single expanded affiliated
group at all times during the taxable year of such partnership, the
partnership and all members of such group shall be treated as a single
taxpayer during such period.'.
(8) Paragraph (1) of section 199(d) is amended to read as follows:
`(1) APPLICATION OF SECTION TO PASS-THRU ENTITIES-
`(A) PARTNERSHIPS AND S CORPORATIONS- In the case of a partnership or
S corporation--
`(i) this section shall be applied at the partner or shareholder level,
`(ii) each partner or shareholder shall take into account such person's
allocable share of each item described in subparagraph (A) or (B)
of subsection (c)(1) (determined without regard to whether the items
described in such subparagraph (A) exceed the items described in such
subparagraph (B)), and
`(iii) each partner or shareholder shall be treated for purposes of
subsection (b) as having W-2 wages for the taxable year in an amount
equal to the lesser of--
`(I) such person's allocable share of the W-2 wages of the partnership
or S corporation for the taxable year (as determined under regulations
prescribed by the Secretary), or
`(II) 2 times 9 percent of so much of such person's qualified production
activities income as is attributable to items allocated under clause
(ii) for the taxable year.
`(B) TRUSTS AND ESTATES- In the case of a trust or estate--
`(i) the items referred to in subparagraph (A)(ii) (as determined
therein) and the W-2 wages of the trust or estate for the taxable
year, shall be apportioned between the beneficiaries and the fiduciary
(and among the beneficiaries) under regulations prescribed by the
Secretary, and
`(ii) for purposes of paragraph (2), adjusted gross income of the
trust or estate shall be determined as provided in section 67(e) with
the adjustments described in such paragraph.
`(C) REGULATIONS- The Secretary may prescribe rules requiring or restricting
the allocation of items and wages under this paragraph and may prescribe
such reporting requirements as the Secretary determines appropriate.'.
(9) Paragraph (3) of section 199(d) is amended to read as follows:
`(3) AGRICULTURAL AND HORTICULTURAL COOPERATIVES-
`(A) DEDUCTION ALLOWED TO PATRONS- Any person who receives a qualified
payment from a specified agricultural or horticultural cooperative shall
be allowed for the taxable year in which such payment is received a
deduction under subsection (a) equal to the portion of the deduction
allowed under subsection (a) to such cooperative which is--
`(i) allowed with respect to the portion of the qualified production
activities income to which such payment is attributable, and
`(ii) identified by such cooperative in a written notice mailed to
such person during the payment period described in section 1382(d).
`(B) COOPERATIVE DENIED DEDUCTION FOR PORTION OF QUALIFIED PAYMENTS-
The taxable income of a specified agricultural or horticultural cooperative
shall not be reduced under section 1382 by reason of that portion of
any qualified payment as does not exceed the deduction allowable under
subparagraph (A) with respect to such payment.
`(C) TAXABLE INCOME OF COOPERATIVES DETERMINED WITHOUT REGARD TO CERTAIN
DEDUCTIONS- For purposes of this section, the taxable income of a specified
agricultural or horticultural cooperative shall be computed without
regard to any deduction allowable under subsection (b) or (c) of section
1382 (relating to patronage dividends, per-unit retain allocations,
and nonpatronage distributions).
`(D) SPECIAL RULE FOR MARKETING COOPERATIVES- For purposes of this section,
a specified agricultural or horticultural cooperative described in subparagraph
(F)(ii) shall be treated as having manufactured, produced, grown, or
extracted in whole or significant part any qualifying production property
marketed by the organization which its patrons have so manufactured,
produced, grown, or extracted.
`(E) QUALIFIED PAYMENT- For purposes of this paragraph, the term `qualified
payment' means, with respect to any person, any amount which--
`(i) is described in paragraph (1) or (3) of section 1385(a),
`(ii) is received by such person from a specified agricultural or
horticultural cooperative, and
`(iii) is attributable to qualified production activities income with
respect to which a deduction is allowed to such cooperative under
subsection (a).
`(F) SPECIFIED AGRICULTURAL OR HORTICULTURAL COOPERATIVE- For purposes
of this paragraph, the term `specified agricultural or horticultural
cooperative' means an organization to which part I of subchapter T applies
which is engaged--
`(i) in the manufacturing, production, growth, or extraction in whole
or significant part of any agricultural or horticultural product,
or
`(ii) in the marketing of agricultural or horticultural products.'.
(10) Clause (i) of section 199(d)(4)(B) is amended--
(A) by striking `50 percent' and inserting `more than 50 percent', and
(B) by striking `80 percent' and inserting `at least 80 percent'.
(11)(A) Paragraph (6) of section 199(d) is amended to read as follows:
`(6) COORDINATION WITH MINIMUM TAX- For purposes of determining alternative
minimum taxable income under section 55--
`(A) qualified production activities income shall be determined without
regard to any adjustments under sections 56 through 59, and
`(B) in the case of a corporation, subsection (a)(1)(B) shall be applied
by substituting `alternative minimum taxable income' for `taxable income'.'.
(B) Paragraph (2) of section 199(a) is amended by striking `subsections
(d)(1) and (d)(6)' and inserting `subsection (d)(1)'.
(12) Subsection (d) of section 199 is amended by redesignating paragraph
(7) as paragraph (8) and by inserting after paragraph (6) the following
new paragraph:
`(7) UNRELATED BUSINESS TAXABLE INCOME- For purposes of determining the
tax imposed by section 511, subsection (a)(1)(B) shall be applied by substituting
`unrelated business taxable income' for `taxable income'.'.
(13) Paragraph (8) of section 199(d), as redesignated by paragraph (12),
is amended by inserting `, including regulations which prevent more than
1 taxpayer from being allowed a deduction under this section with respect
to any activity described in subsection (c)(4)(A)(i)' before the period
at the end.
(14) Clauses (i)(II) and (ii)(II) of section 56(d)(1)(A) are each amended
by striking `such deduction' and inserting `such deduction and the deduction
under section 199'.
(15) Clause (i) of section 163(j)(6)(A) is amended by striking `and' at
the end of subclause (II), by redesignating subclause (III) as subclause
(IV), and by inserting after subclause (II) the following new subclause:
`(III) any deduction allowable under section 199, and'.
(16) Paragraph (2) of section 170(b) is amended by redesignating subparagraphs
(C) and (D) as subparagraphs (D) and (E), respectively, and by inserting
after subparagraph (B) the following new subparagraph:
(17) Subsection (d) of section 172 is amended by adding at the end the
following new paragraph:
`(7) MANUFACTURING DEDUCTION- The deduction under section 199 shall not
be allowed.'.
(18) Paragraph (1) of section 613A(d) is amended by redesignating subparagraphs
(B), (C), and (D) as subparagraphs (C), (D), and (E), respectively, and
by inserting after subparagraph (A) the following new subparagraph:
`(B) any deduction allowable under section 199,'.
(19) Subsection (e) of section 102 of the American Jobs Creation Act of
2004 is amended to read as follows:
`(1) IN GENERAL- The amendments made by this section shall apply to taxable
years beginning after December 31, 2004.
`(2) APPLICATION TO PASS-THRU ENTITIES, ETC- In determining the deduction
under section 199 of the Internal Revenue Code of 1986 (as added by this
section), items arising from a taxable year of a partnership, S corporation,
estate, or trust beginning before January 1, 2005, shall not be taken
into account for purposes of subsection (d)(1) of such section.'.
(b) Amendment Related to Section 231 of the Act- Paragraph (1) of section
1361(c) is amended to read as follows:
`(1) MEMBERS OF A FAMILY TREATED AS 1 SHAREHOLDER-
`(A) IN GENERAL- For purposes of subsection (b)(1)(A), there shall be
treated as one shareholder--
`(i) a husband and wife (and their estates), and
`(ii) all members of a family (and their estates).
`(B) MEMBERS OF A FAMILY- For purposes of this paragraph--
`(i) IN GENERAL- The term `members of a family' means a common ancestor,
any lineal descendant of such common ancestor, and any spouse or former
spouse of such common ancestor or any such lineal descendant.
`(ii) COMMON ANCESTOR- An individual shall not be considered to be
a common ancestor if, on the applicable date, the individual is more
than 6 generations removed from the youngest generation of shareholders
who would (but for this subparagraph) be members of the family. For
purposes of the preceding sentence, a spouse (or former spouse) shall
be treated as being of the same generation as the individual to whom
such spouse is (or was) married.
`(iii) APPLICABLE DATE- The term `applicable date' means the latest
of--
`(I) the date the election under section 1362(a) is made,
`(II) the earliest date that an individual described in clause (i)
holds stock in the S corporation, or
`(C) EFFECT OF ADOPTION, ETC- Any legally adopted child of an individual,
any child who is lawfully placed with an individual for legal adoption
by the individual, and any eligible foster child of an individual (within
the meaning of section 152(f)(1)(C)), shall be treated as a child of
such individual by blood.'.
(c) Amendment Related to Section 235 of the Act- Subsection (b) of section
235 of the American Jobs Creation Act of 2004 is amended by striking `taxable
years beginning' and inserting `transfers'.
(d) Amendments Related to Section 243 of the Act-
(1) Paragraph (7) of section 856(c) is amended to read as follows:
`(7) RULES OF APPLICATION FOR FAILURE TO SATISFY PARAGRAPH (4)-
`(A) IN GENERAL- A corporation, trust, or association that fails to
meet the requirements of paragraph (4) (other than a failure to meet
the requirements of paragraph (4)(B)(iii) which is described in subparagraph
(B)(i) of this paragraph) for a particular quarter shall nevertheless
be considered to have satisfied the requirements of such paragraph for
such quarter if--
`(i) following the corporation, trust, or association's identification
of the failure to satisfy the requirements of such paragraph for a
particular quarter, a description of each asset that causes the corporation,
trust, or association to fail to satisfy the requirements of such
paragraph at the close of such quarter of any taxable year is set
forth in a schedule for such quarter filed in accordance with regulations
prescribed by the Secretary,
`(ii) the failure to meet the requirements of such paragraph for a
particular quarter is due to reasonable cause and not due to willful
neglect, and
`(iii)(I) the corporation, trust, or association disposes of the assets
set forth on the schedule specified in clause (i) within 6 months
after the last day of the quarter in which the corporation, trust
or association's identification of the failure to satisfy the requirements
of such paragraph occurred or such other time period prescribed by
the Secretary and in the manner prescribed by the Secretary, or
`(II) the requirements of such paragraph are otherwise met within
the time period specified in subclause (I).
`(B) RULE FOR CERTAIN DE MINIMIS FAILURES- A corporation, trust, or
association that fails to meet the requirements of paragraph (4)(B)(iii)
for a particular quarter shall nevertheless be considered to have satisfied
the requirements of such paragraph for such quarter if--
`(i) such failure is due to the ownership of assets the total value
of which does not exceed the lesser of--
`(I) 1 percent of the total value of the trust's assets at the end
of the quarter for which such measurement is done, and
`(ii)(I) the corporation, trust, or association, following the identification
of such failure, disposes of assets in order to meet the requirements
of such paragraph within 6 months after the last day of the quarter
in which the corporation, trust or association's identification of
the failure to satisfy the requirements of such paragraph occurred
or such other time period prescribed by the Secretary and in the manner
prescribed by the Secretary, or
`(II) the requirements of such paragraph are otherwise met within
the time period specified in subclause (I).
`(i) TAX IMPOSED- If subparagraph (A) applies to a corporation, trust,
or association for any taxable year, there is hereby imposed on such
corporation, trust, or association a tax in an amount equal to the
greater of--
`(II) the amount determined (pursuant to regulations promulgated
by the Secretary) by multiplying the net income generated by the
assets described in the schedule specified in subparagraph (A)(i)
for the period specified in clause (ii) by the highest rate of tax
specified in section 11.
`(ii) PERIOD- For purposes of clause (i)(II), the period described
in this clause is the period beginning on the first date that the
failure to satisfy the requirements of such paragraph (4) occurs as
a result of the ownership of such assets and ending on the earlier
of the date on which the trust disposes of such assets or the end
of the first quarter when there is no longer a failure to satisfy
such paragraph (4).
`(iii) ADMINISTRATIVE PROVISIONS- For purposes of subtitle F, the
taxes imposed by this subparagraph shall be treated as excise taxes
with respect to which the deficiency procedures of such subtitle apply.'.
(2) Subsection (m) of section 856 is amended by adding at the end the
following new paragraph:
`(A) IN GENERAL- Notwithstanding paragraph (2)(C), securities held by
a trust shall not be considered securities held by the trust for purposes
of subsection (c)(4)(B)(iii)(III) during any period beginning on or
before October 22, 2004, if such securities--
`(i) are held by such trust continuously during such period, and
`(ii) would not be taken into account for purposes of such subsection
by reason of paragraph (7)(C) of subsection (c) (as in effect on October
22, 2004) if the amendments made by section 243 of the American Jobs
Creation Act of 2004 had never been enacted.
`(B) RULE NOT TO APPLY TO SECURITIES HELD AFTER MATURITY DATE- Subparagraph
(A) shall not apply with respect to any security after the later of
October 22, 2004, or the latest maturity date under the contract (as
in effect on October 22, 2004) taking into account any renewal or extension
permitted under the contract if such renewal or extension does not significantly
modify any other terms of the contract.
`(C) SUCCESSORS- If the successor of a trust to which this paragraph
applies acquires securities in a transaction to which section 381 applies,
such trusts shall be treated as a single entity for purposes of determining
the holding period of such securities under subparagraph (A).'.
(3) Subparagraph (E) of section 857(b)(2) is amended by striking `section
856(c)(7)(B)(iii), and section 856(g)(1).' and inserting `section 856(c)(7)(C),
and section 856(g)(5)'.
(4) Subsection (g) of section 243 of the American Jobs Creation Act of
2004 is amended to read as follows:
`(1) SUBSECTIONS (a) AND (b)- The amendments made by subsections (a) and
(b) shall apply to taxable years beginning after December 31, 2000.
`(2) SUBSECTIONS (c) AND (e)- The amendments made by subsections (c) and
(e) shall apply to taxable years beginning after the date of the enactment
of this Act.
`(3) SUBSECTION (d)- The amendment made by subsection (d) shall apply
to transactions entered into after December 31, 2004.
`(A) The amendment made by paragraph (1) of subsection (f) shall apply
to failures with respect to which the requirements of subparagraph (A)
or (B) of section 856(c)(7) of the Internal Revenue Code of 1986 (as
added by such paragraph) are satisfied after the date of the enactment
of this Act.
`(B) The amendment made by paragraph (2) of subsection (f) shall apply
to failures with respect to which the requirements of paragraph (6)
of section 856(c) of the Internal Revenue Code of 1986 (as amended by
such paragraph) are satisfied after the date of the enactment of this
Act.
`(C) The amendments made by paragraph (3) of subsection (f) shall apply
to failures with respect to which the requirements of paragraph (5)
of section 856(g) of the Internal Revenue Code of 1986 (as added by
such paragraph) are satisfied after the date of the enactment of this
Act.
`(D) The amendment made by paragraph (4) of subsection (f) shall apply
to taxable years ending after the date of the enactment of this Act.
`(E) The amendments made by paragraph (5) of subsection (f) shall apply
to statements filed after the date of the enactment of this Act.'.
(e) Amendments Related to Section 244 of the Act-
(1) Paragraph (2) of section 181(d) is amended by striking the last sentence
in subparagraph (A), by redesignating subparagraph (B) as subparagraph
(C), and by inserting after subparagraph (A) the following new subparagraph:
`(B) SPECIAL RULES FOR TELEVISION SERIES- In the case of a television
series--
`(i) each episode of such series shall be treated as a separate production,
and
`(ii) only the first 44 episodes of such series shall be taken into
account.'.
(2) Subparagraph (C) of section 1245(a)(2) is amended by inserting `181,'
after `179B,'.
(f) Amendments Related to Section 245 of the Act-
(1) Subsection (b) of section 45G is amended to read as follows:
`(1) IN GENERAL- The credit allowed under subsection (a) for any taxable
year shall not exceed the product of--
`(A) $3,500, multiplied by
`(i) the number of miles of railroad track owned or leased by the
eligible taxpayer as of the close of the taxable year, and
`(ii) the number of miles of railroad track assigned for purposes
of this subsection to the eligible taxpayer by a Class II or Class
III railroad which owns or leases such railroad track as of the close
of the taxable year.
`(2) ASSIGNMENTS- With respect to any assignment of a mile of railroad
track under paragraph (1)(B)(ii)--
`(A) such assignment may be made only once per taxable year of the Class
II or Class III railroad and shall be treated as made as of the close
of such taxable year,
`(B) such mile may not be taken into account under this section by such
railroad for such taxable year, and
`(C) such assignment shall be taken into account for the taxable year
of the assignee which includes the date that such assignment is treated
as effective.'.
(2) Paragraph (2) of section 45G(c) is amended to read as follows:
`(2) any person who transports property using the rail facilities of a
Class II or Class III railroad or who furnishes railroad-related property
or services to a Class II or Class III railroad, but only with respect
to miles of railroad track assigned to such person by such Class II or
Class III railroad for purposes of subsection (b).'.
(g) Amendments Related to Section 248 of the Act-
(1)(A) Subsection (d) of section 1353 is amended by striking `ownership
and charter interests' and inserting `ownership, charter, and operating
agreement interests'.
(B) Subsection (a) of section 1355 is amended by striking paragraph (8).
(C) Paragraph (1) of section 1355(b) is amended to read as follows:
`(1) IN GENERAL- Except as provided in paragraph (2), a person is treated
as operating any vessel during any period if--
`(A)(i) such vessel is owned by, or chartered (including a time charter)
to, the person, or
`(ii) the person provides services for such vessel pursuant to an operating
agreement, and
`(B) such vessel is in use as a qualifying vessel during such period.'.
(D) Paragraph (3) of section 1355(d) is amended to read as follows:
`(3) the extent of a partner's ownership, charter, or operating agreement
interest in any vessel operated by the partnership shall be determined
on the basis of the partner's interest in the partnership.'.
(2) Paragraph (3) of section 1355(c) is amended by striking `determined--'
and all that follows and inserting `determined by treating all members
of such group as 1 person.'.
(3) Subsection (c) of section 1356 is amended--
(A) by striking paragraph (3), and
(B) by adding at the end of paragraph (2) the following new flush sentence:
`Such term shall not include any core qualifying activities.'.
(4) The last sentence of section 1354(b) is amended by inserting `on or'
after `only if made'.
(h) Amendment Related to Section 314 of the Act- Paragraph (2) of section
55(c) is amended by striking `regular tax' and inserting `regular tax liability'.
(i) Amendments Related to Section 322 of the Act-
(1)(A) Subparagraph (B) of section 194(b)(1) is amended to read as follows:
`(B) DOLLAR LIMITATION- The aggregate amount of reforestation expenditures
which may be taken into account under subparagraph (A) with respect
to each qualified timber property for any taxable year shall not exceed--
`(i) except as provided in clause (ii) or (iii), $10,000,
`(ii) in the case of a separate return by a married individual (as
defined in section 7703), $5,000, and
`(iii) in the case of a trust, zero.'.
(B) Paragraph (4) of section 194(c) is amended to read as follows:
`(4) TREATMENT OF TRUSTS AND ESTATES- The aggregate amount of reforestation
expenditures incurred by any trust or estate shall be apportioned between
the income beneficiaries and the fiduciary under regulations prescribed
by the Secretary. Any amount so apportioned to a beneficiary shall be
taken into account as expenditures incurred by such beneficiary in applying
this section to such beneficiary.'.
(2) Subparagraph (C) of section 1245(a)(2) is amended by striking `or
193' and inserting `193, or 194'.
(j) Amendments Related to Section 336 of the Act-
(1) Clause (iv) of section 168(k)(2)(A) is amended by striking `subparagraphs
(B) and (C)' and inserting `subparagraph (B) or (C)'.
(2) Clause (iii) of section 168(k)(4)(B) is amended by striking `and paragraph
(2)(C)' and inserting `or paragraph (2)(C) (as so modified)'.
(k) Amendment Related to Section 402 of the Act- Paragraph (2) of section
904(g) is amended to read as follows:
`(2) OVERALL DOMESTIC LOSS- For purposes of this subsection--
`(A) IN GENERAL- The term `overall domestic loss' means--
`(i) with respect to any qualified taxable year, the domestic loss
for such taxable year to the extent such loss offsets taxable income
from sources without the United States for the taxable year or for
any preceding qualified taxable year by reason of a carryback, and
`(ii) with respect to any other taxable year, the domestic loss for
such taxable year to the extent such loss offsets taxable income from
sources without the United States for any preceding qualified taxable
year by reason of a carryback.
`(B) DOMESTIC LOSS- For purposes of subparagraph (A), the term `domestic
loss' means the amount by which the gross income for the taxable year
from sources within the United States is exceeded by the sum of the
deductions properly apportioned or allocated thereto (determined without
regard to any carryback from a subsequent taxable year).
`(C) QUALIFIED TAXABLE YEAR- For purposes of subparagraph (A), the term
`qualified taxable year' means any taxable year for which the taxpayer
chose the benefits of this subpart.'.
(l) Amendment Related to Section 403 of the Act- Section 403 of the American
Jobs Creation Act of 2004 is amended by adding at the end the following
new subsection:
`(d) Transition Rule- If the taxpayer elects (at such time and in such form
and manner as the Secretary of the Treasury may prescribe) to have the rules
of this subsection apply--
`(1) the amendments made by this section shall not apply to taxable years
beginning after December 31, 2002, and before January 1, 2005, and
`(2) in the case of taxable years beginning after December 31, 2004, clause
(iv) of section 904(d)(4)(C) of the Internal Revenue Code of 1986 (as
amended by this section) shall be applied by substituting `January 1,
2005' for `January 1, 2003' both places it appears.'.
(m) Amendment Related to Section 412 of the Act- Subparagraph (B) of section
954(c)(4) is amended by adding at the end the following: `If a controlled
foreign corporation is treated as owning a capital or profits interest in
a partnership under constructive ownership rules similar to the rules of
section 958(b), the controlled foreign corporation shall be treated as owning
such interest directly for purposes of this subparagraph.'.
(n) Amendments Related to Section 413 of the Act-
(1) Subsection (b) of section 532 is amended by striking paragraph (2)
and redesignating paragraphs (3) and (4) as paragraphs (2) and (3), respectively.
(2) Subsection (b) of section 535 is amended by adding at the end the
following new paragraph:
`(10) CONTROLLED FOREIGN CORPORATIONS- There shall be allowed as a deduction
the amount of the corporation's income for the taxable year which is included
in the gross income of a United States shareholder under section 951(a).
In the case of any corporation the accumulated taxable income of which
would (but for this sentence) be determined without allowance of any deductions,
the deduction under this paragraph shall be allowed and shall be appropriately
adjusted to take into account any deductions which reduced such inclusion.'.
(3)(A) Section 6683 is repealed.
(B) The table of sections for part I of subchapter B of chapter 68 is
amended by striking the item relating to section 6683.
(o) Amendment Related to Section 415 of the Act- Subparagraph (D) of section
904(d)(2) is amended by inserting `as in effect before its repeal' after
`section 954(f)'.
(p) Amendments Related to Section 418 of the Act-
(1) The second sentence of section 897(h)(1) is amended--
(A) by striking `any distribution' and all that follows through `any
class of stock' and inserting `any distribution by a real estate investment
trust with respect to any class of stock', and
(B) by striking `the taxable year' and inserting `the 1-year period
ending on the date of the distribution'.
(2) Subsection (c) of section 418 of the American Jobs Creation Act of
2004 is amended to read as follows:
`(c) Effective Date- The amendments made by this section shall apply to--
`(1) any distribution by a real estate investment trust which is treated
as a deduction for a taxable year of such trust beginning after the date
of the enactment of this Act, and
`(2) any distribution by a real estate investment trust made after such
date which is treated as a deduction under section 860 for a taxable year
of such trust beginning on or before such date.'.
(q) Amendments Related to Section 422 of the Act-
(1) Subparagraph (B) of section 965(a)(2) is amended by inserting `from
another controlled foreign corporation in such chain of ownership' before
`, but only to the extent'.
(2) Subparagraph (A) of section 965(b)(2) is amended by inserting `cash'
before `dividends'.
(3) Paragraph (3) of section 965(b) is amended by adding at the end the
following: `The Secretary may prescribe such regulations as may be necessary
or appropriate to prevent the avoidance of the purposes of this paragraph,
including regulations which provide that cash dividends shall not be taken
into account under subsection (a) to the extent such dividends are attributable
to the direct or indirect transfer (including through the use of intervening
entities or capital contributions) of cash or other property from a related
person (as so defined) to a controlled foreign corporation.'.
(4) Paragraph (1) of section 965(c) is amended to read as follows:
`(1) APPLICABLE FINANCIAL STATEMENT- The term `applicable financial statement'
means--
`(A) with respect to a United States shareholder which is required to
file a financial statement with the Securities and Exchange Commission
(or which is included in such a statement so filed by another person),
the most recent audited annual financial statement (including the notes
which form an integral part of such statement) of such shareholder (or
which includes such shareholder)--
`(i) which was so filed on or before June 30, 2003, and
`(ii) which was certified on or before June 30, 2003, as being prepared
in accordance with generally accepted accounting principles, and
`(B) with respect to any other United States shareholder, the most recent
audited financial statement (including the notes which form an integral
part of such statement) of such shareholder (or which includes such
shareholder)--
`(i) which was certified on or before June 30, 2003, as being prepared
in accordance with generally accepted accounting principles, and
`(ii) which is used for the purposes of a statement or report--
`(II) to shareholders, or
`(III) for any other substantial nontax purpose.'.
(5) Paragraph (2) of section 965(d) is amended by striking `properly allocated
and apportioned' and inserting `directly allocable'.
(6) Subsection (d) of section 965 is amended by adding at the end the
following new paragraph:
`(4) COORDINATION WITH SECTION 78- Section 78 shall not apply to any tax
which is not allowable as a credit under section 901 by reason of this
subsection.'.
(7) The last sentence of section 965(e)(1) is amended by inserting `which
are imposed by foreign countries and possessions of the United States
and are' after `taxes'.
(8) Subsection (f) of section 965 is amended by inserting `on or' before
`before the due date'.
(r) Amendments Related to Section 501 of the Act-
(1) Subparagraph (A) of section 164(b)(5) is amended to read as follows:
`(A) ELECTION TO DEDUCT STATE AND LOCAL SALES TAXES IN LIEU OF STATE
AND LOCAL INCOME TAXES- At the election of the taxpayer for the taxable
year, subsection (a) shall be applied--
`(i) without regard to the reference to State and local income taxes,
and
`(ii) as if State and local general sales taxes were referred to in
a paragraph thereof.'.
(2) Clause (ii) of section 56(b)(1)(A) is amended by inserting `or clause
(ii) of section 164(b)(5)(A)' before the period at the end.
(s) Amendments Related to Section 708 of the Act- Section 708 of the American
Jobs Creation Act of 2004 is amended--
(1) in subsection (a), by striking `contract commencement date' and inserting
`construction commencement date', and
(2) by redesignating subsection (d) as subsection (e) and inserting after
subsection (c) the following new subsection:
`(d) Certain Adjustments Not to Apply- Section 481 of the Internal Revenue
Code of 1986 shall not apply with respect to any change in the method of
accounting which is required by this section.'.
(t) Amendment Related to Section 710 of the Act- Clause (i) of section 45(c)(7)(A)
is amended by striking `synthetic'.
(u) Amendment Related to Section 801 of the Act- Paragraph (3) of section
7874(a) is amended to read as follows:
`(3) COORDINATION WITH SUBSECTION (b)- A corporation which is treated
as a domestic corporation under subsection (b) shall not be treated as
a surrogate foreign corporation for purposes of paragraph (2)(A).'.
(v) Amendments Related to Section 804 of the Act-
(1) Subparagraph (C) of section 877(g)(2) is amended by striking `section
7701(b)(3)(D)(ii)' and inserting `section 7701(b)(3)(D)'.
(2) Subsection (n) of section 7701 is amended to read as follows:
`(n) Special Rules for Determining When an Individual Is No Longer a United
States Citizen or Long-Term Resident- For purposes of this chapter--
`(1) UNITED STATES CITIZENS- An individual who would (but for this paragraph)
cease to be treated as a citizen of the United States shall continue to
be treated as a citizen of the United States until such individual--
`(A) gives notice of an expatriating act (with the requisite intent
to relinquish citizenship) to the Secretary of State, and
`(B) provides a statement in accordance with section 6039G (if such
a statement is otherwise required).
`(2) LONG-TERM RESIDENTS- A long-term resident (as defined in section
877(e)(2)) who would (but for this paragraph) be described in section
877(e)(1) shall be treated as a lawful permanent resident of the United
States and as not described in section 877(e)(1) until such individual--
`(A) gives notice of termination of residency (with the requisite intent
to terminate residency) to the Secretary of Homeland Security, and
`(B) provides a statement in accordance with section 6039G (if such
a statement is otherwise required).'.
(w) Amendment Related to Section 811 of the Act- Subsection (c) of section
811 of the American Jobs Creation Act of 2004 is amended by inserting `and
which were not filed before such date' before the period at the end.
(x) Amendments Related to Section 812 of the Act-
(1) Subsection (b) of section 6662 is amended by adding at the end the
following new sentence: `Except as provided in paragraph (1) or (2)(B)
of section 6662A(e), this section shall not apply to the portion of any
underpayment which is attributable to a reportable transaction understatement
on which a penalty is imposed under section 6662A.'.
(2) Paragraph (2) of section 6662A(e) is amended to read as follows:
`(2) COORDINATION WITH OTHER PENALTIES-
`(A) COORDINATION WITH FRAUD PENALTY- This section shall not apply to
any portion of an understatement on which a penalty is imposed under
section 6663.
`(B) COORDINATION WITH GROSS VALUATION MISSTATEMENT PENALTY- This section
shall not apply to any portion of an understatement on which a penalty
is imposed under section 6662 if the rate of the penalty is determined
under section 6662(h).'.
(3) Subsection (f) of section 812 of the American Jobs Creation Act of
2004 is amended to read as follows:
`(1) IN GENERAL- Except as provided in paragraph (2), the amendments made
by this section shall apply to taxable years ending after the date of
the enactment of this Act.
`(2) DISQUALIFIED OPINIONS- Section 6664(d)(3)(B) of the Internal Revenue
Code of 1986 (as added by subsection (c)) shall not apply to the opinion
of a tax advisor if--
`(A) the opinion was provided to the taxpayer before the date of the
enactment of this Act,
`(B) the opinion relates to one or more transactions all of which were
entered into before such date, and
`(C) the tax treatment of items relating to each such transaction was
included on a return or statement filed by the taxpayer before such
date.'.
(y) Amendment Related to Section 814 of the Act- Subparagraph (B) of section
6501(c)(10) is amended by striking `(as defined in section 6111)'.
(z) Amendment Related to Section 815 of the Act- Paragraph (1) of section
6112(b) is amended by inserting `(or was required to maintain a list under
subsection (a) as in effect before the enactment of the American Jobs Creation
Act of 2004)' after `a list under subsection (a)'.
(aa) Amendments Related to Section 832 of the Act-
(1) Subsection (e) of section 853 is amended to read as follows:
`(e) Treatment of Certain Taxes Not Allowed as a Credit Under Section 901-
This section shall not apply to any tax with respect to which the regulated
investment company is not allowed a credit under section 901 by reason of
subsection (k) or (l) of such section.'.
(2) Clause (i) of section 901(l)(2)(C) is amended by striking `if such
security were stock'.
(bb) Amendments Related to Section 833 of the Act-
(1) Subsection (a) of section 734 is amended by inserting `with respect
to such distribution' before the period at the end.
(2) So much of subsection (b) of section 734 as precedes paragraph (1)
is amended to read as follows:
`(b) Method of Adjustment- In the case of a distribution of property to
a partner by a partnership with respect to which the election provided in
section 754 is in effect or with respect to which there is a substantial
basis reduction, the partnership shall--'.
(cc) Amendment Related to Section 835 of the Act- Paragraph (3) of section
860G(a) is amended--
(1) in subparagraph (A)(iii)(I), by striking `the obligation' and inserting
`a reverse mortgage loan or other obligation', and
(2) by striking all that follows subparagraph (C) and inserting the following:
`For purposes of subparagraph (A), any obligation secured by stock held
by a person as a tenant-stockholder (as defined in section 216) in a cooperative
housing corporation (as so defined) shall be treated as secured by an
interest in real property. For purposes of subparagraph (A), any obligation
originated by the United States or any State (or any political subdivision,
agency, or instrumentality of the United States or any State) shall be
treated as principally secured by an interest in real property if more
than 50 percent of such obligations which are transferred to, or purchased
by, the REMIC are principally secured by an interest in real property
(determined without regard to this sentence).'.
(dd) Amendments Related to Section 836 of the Act-
(1) Paragraph (1) of section 334(b) is amended by striking `except that'
and all that follows and inserting `except that, in the hands of such
distributee--
`(A) the basis of such property shall be the fair market value of the
property at the time of the distribution in any case in which gain or
loss is recognized by the liquidating corporation with respect to such
property, and
`(B) the basis of any property described in section 362(e)(1)(B) shall
be the fair market value of the property at the time of the distribution
in any case in which such distributee's aggregate adjusted basis of
such property would (but for this subparagraph) exceed the fair market
value of such property immediately after such liquidation.'.
(2) Clause (ii) of section 362(e)(2)(C) is amended to read as follows:
`(ii) ELECTION- Any election under clause (i) shall be made at such
time and in such form and manner as the Secretary may prescribe, and,
once made, shall be irrevocable.'.
(ee) Amendment Related to Section 840 of the Act- Subsection (d) of section
121 is amended--
(1) by redesignating the paragraph (10) relating to property acquired
from a decedent as paragraph (11) and by moving such paragraph to the
end of such subsection, and
(2) by amending the paragraph (10) relating to property acquired in like-kind
exchange to read as follows:
`(10) PROPERTY ACQUIRED IN LIKE-KIND EXCHANGE- If a taxpayer acquires
property in an exchange with respect to which gain is not recognized (in
whole or in part) to the taxpayer under subsection (a) or (b) of section
1031, subsection (a) shall not apply to the sale or exchange of such property
by such taxpayer (or by any person whose basis in such property is determined,
in whole or in part, by reference to the basis in the hands of such taxpayer)
during the 5-year period beginning with the date of such acquisition.'.
(ff) Amendment Related to Section 849 of the Act- Subsection (a) of section
849 of the American Jobs Creation Act of 2004 is amended by inserting `,
and in the case of property treated as tax-exempt use property other than
by reason of a lease, to property acquired after March 12, 2004' before
the period at the end.
(gg) Amendment Related to Section 884 of the Act- Subparagraph (B) of section
170(f)(12) is amended by adding at the end the following new clauses:
`(v) Whether the donee organization provided any goods or services
in consideration, in whole or in part, for the qualified vehicle.
`(vi) A description and good faith estimate of the value of any goods
or services referred to in clause (v) or, if such goods or services
consist solely of intangible religious benefits (as defined in paragraph
(8)(B)), a statement to that effect.'.
(hh) Amendments Related to Section 885 of the Act-
(1) Paragraph (2) of section 26(b) is amended by striking `and' at the
end of subparagraph (R), by striking the period at the end of subparagraph
(S) and inserting `, and', and by adding at the end the following new
subparagraph:
`(T) subsections (a)(1)(B)(i) and (b)(4)(A) of section 409A (relating
to interest and additional tax with respect to certain deferred compensation).'.
(2) Clause (ii) of section 409A(a)(4)(C) is amended by striking `first'.
(3)(A) Notwithstanding section 885(d)(1) of the American Jobs Creation
Act of 2004, subsection (b) of section 409A of the Internal Revenue Code
of 1986 shall take effect on January 1, 2005.
(B) Not later than 90 days after the date of the enactment of this Act,
the Secretary of the Treasury shall issue guidance under which a nonqualified
deferred compensation plan which is in violation of the requirements of
section 409A(b) of such Code shall be treated as not having violated such
requirements if such plan comes into conformance with such requirements
during such limited period as the Secretary may specify in such guidance.
(4) Subsection (f) of section 885 of the American Jobs Creation Act of
2004 is amended by striking `December 31, 2004' the first place it appears
and inserting `January 1, 2005'.
(ii) Amendment Related to Section 888 of the Act- Paragraph (2) of section
1092(a) is amended by striking the last sentence and adding at the end the
following new subparagraph:
`(C) REGULATIONS- The Secretary shall prescribe such regulations or
other guidance as may be necessary or appropriate to carry out the purposes
of this paragraph. Such regulations or other guidance may specify the
proper methods for clearly identifying a straddle as an identified straddle
(and for identifying the positions comprising such straddle), the rules
for the application of this section to a taxpayer which fails to comply
with those identification requirements, and the ordering rules in cases
where a taxpayer disposes (or otherwise ceases to be the holder) of
any part of any position which is part of an identified straddle.'.
(jj) Amendments Related to Section 898 of the Act-
(1) Paragraph (3) of section 361(b) is amended by inserting `(reduced
by the amount of the liabilities assumed (within the meaning of section
357(c)))' before the period at the end.
(2) Paragraph (1) of section 357(d) is amended by inserting `section 361(b)(3),'
after `section 358(h),'.
(kk) Amendment Related to Section 899 of the Act- Subparagraph (A) of section
351(g)(3) is amended by adding at the end the following: `If there is not
a real and meaningful likelihood that dividends beyond any limitation or
preference will actually be paid, the possibility of such payments will
be disregarded in determining whether stock is limited and preferred as
to dividends.'.
(ll) Amendment Related to Section 902 of the Act- Paragraph (1) of section
709(b) is amended by striking `taxpayer' both places it appears and inserting
`partnership'.
(mm) Amendments Related to Section 907 of the Act- Clause (ii) of section
274(e)(2)(B) is amended--
(1) in subclause (I), by inserting `or a related party to the taxpayer'
after `the taxpayer',
(2) in subclause (II), by inserting `(or such related party)' after `the
taxpayer', and
(3) by adding at the end the following new flush sentence:
`For purposes of this clause, a person is a related party with respect
to another person if such person bears a relationship to such other
person described in section 267(b) or 707(b).'.
(nn) Effective Date- The amendments made by this section shall take effect
as if included in the provisions of the American Jobs Creation Act of 2004
to which they relate.
SEC. 404. AMENDMENTS RELATED TO THE WORKING FAMILIES TAX RELIEF ACT OF
2004.
(a) Amendment Related to Section 201 of the Act- Subsection (e) of section
152 is amended to read as follows:
`(e) Special Rule for Divorced Parents, Etc-
`(1) IN GENERAL- Notwithstanding subsection (c)(1)(B), (c)(4), or (d)(1)(C),
if--
`(A) a child receives over one-half of the child's support during the
calendar year from the child's parents--
`(i) who are divorced or legally separated under a decree of divorce
or separate maintenance,
`(ii) who are separated under a written separation agreement, or
`(iii) who live apart at all times during the last 6 months of the
calendar year, and--
`(B) such child is in the custody of 1 or both of the child's parents
for more than one-half of the calendar year, such child shall be treated
as being the qualifying child or qualifying relative of the noncustodial
parent for a calendar year if the requirements described in paragraph
(2) or (3) are met.
`(2) EXCEPTION WHERE CUSTODIAL PARENT RELEASES CLAIM TO EXEMPTION FOR
THE YEAR- For purposes of paragraph (1), the requirements described in
this paragraph are met with respect to any calendar year if--
`(A) the custodial parent signs a written declaration (in such manner
and form as the Secretary may by regulations prescribe) that such custodial
parent will not claim such child as a dependent for any taxable year
beginning in such calendar year, and
`(B) the noncustodial parent attaches such written declaration to the
noncustodial parent's return for the taxable year beginning during such
calendar year.
`(3) EXCEPTION FOR CERTAIN PRE-1985 INSTRUMENTS-
`(A) IN GENERAL - For purposes of paragraph (1), the requirements described
in this paragraph are met with respect to any calendar year if--
`(i) a qualified pre-1985 instrument between the parents applicable
to the taxable year beginning in such calendar year provides that
the noncustodial parent shall be entitled to any deduction allowable
under section 151 for such child, and
`(ii) the noncustodial parent provides at least $600 for the support
of such child during such calendar year.
For purposes of this subparagraph, amounts expended for the support
of a child or children shall be treated as received from the noncustodial
parent to the extent that such parent provided amounts for such support.
`(B) QUALIFIED PRE-1985 INSTRUMENT- For purposes of this paragraph,
the term `qualified pre-1985 instrument' means any decree of divorce
or separate maintenance or written agreement--
`(i) which is executed before January 1, 1985,
`(ii) which on such date contains the provision described in subparagraph
(A)(i), and
`(iii) which is not modified on or after such date in a modification
which expressly provides that this paragraph shall not apply to such
decree or agreement.
`(4) CUSTODIAL PARENT AND NONCUSTODIAL PARENT- For purposes of this subsection--
`(A) CUSTODIAL PARENT- The term `custodial parent' means the parent
having custody for the greater portion of the calendar year.
`(B) NONCUSTODIAL PARENT- The term `noncustodial parent' means the parent
who is not the custodial parent.
`(5) EXCEPTION FOR MULTIPLE-SUPPORT AGREEMENT- This subsection shall not
apply in any case where over one-half of the support of the child is treated
as having been received from a taxpayer under the provision of subsection
(d)(3).
`(6) SPECIAL RULE FOR SUPPORT RECEIVED FROM NEW SPOUSE OF PARENT- For
purposes of this subsection, in the case of the remarriage of a parent,
support of a child received from the parent's spouse shall be treated
as received from the parent.'.
(b) Amendment Related to Section 203 of the Act- Subparagraph (B) of section
21(b)(1) is amended by inserting `(as defined in section 152, determined
without regard to subsections (b)(1), (b)(2), and (d)(1)(B))' after `dependent
of the taxpayer'.
(c) Amendment Related to Section 207 of the Act- Subparagraph (A) of section
223(d)(2) is amended by inserting `, determined without regard to subsections
(b)(1), (b)(2), and (d)(1)(B) thereof' after `section 152'.
(d) Effective Date- The amendments made by this section shall take effect
as if included in the provisions of the Working Families Tax Relief Act
of 2004 to which they relate.
SEC. 405. AMENDMENTS RELATED TO THE JOBS AND GROWTH TAX RELIEF RECONCILIATION
ACT OF 2003.
(a) Amendments Related to Section 201 of the Act-
(1) Clause (ii) of section 168(k)(4)(B) is amended to read as follows:
`(I) acquired by the taxpayer after May 5, 2003, and before January
1, 2005, but only if no written binding contract for the acquisition
was in effect before May 6, 2003, or
`(II) acquired by the taxpayer pursuant to a written binding contract
which was entered into after May 5, 2003, and before January 1,
2005, and'.
(2) Subparagraph (D) of section 1400L(b)(2) is amended by striking `September
11, 2004' and inserting `January 1, 2005'.
(b) Effective Date- The amendments made by this section shall take effect
as if included in section 201 of the Jobs and Growth Tax Relief and Reconciliation
Act of 2003.
SEC. 406. AMENDMENT RELATED TO THE VICTIMS OF TERRORISM TAX RELIEF ACT
OF 2001.
(a) Amendment Related to Section 201 of the Act- Paragraph (17) of section
6103(l) is amended by striking `subsection (f), (i)(7), or (p)' and inserting
`subsection (f), (i)(8), or (p)'.
(b) Effective Date- The amendment made by this section shall take effect
as if included in section 201 of the Victims of Terrorism Tax Relief Act
of 2001.
SEC. 407. AMENDMENTS RELATED TO THE ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION
ACT OF 2001.
(a) Amendments Related to Section 617 of the Act-
(1) Clause (ii) of section 402(g)(7)(A) is amended to read as follows:
`(ii) $15,000 reduced by the sum of--
`(I) the amounts not included in gross income for prior taxable
years by reason of this paragraph, plus
`(II) the aggregate amount of designated Roth contributions (as
defined in section 402A(c)) for prior taxable years, or'.
(2) Subparagraph (A) of section 402(g)(1) is amended by inserting `to'
after `shall not apply'.
(b) Amendment Related to Section 632 of the Act- Subparagraph (C) of section
415(c)(7) is amended by striking `the greater of $3,000' and all that follows
and inserting `$3,000. This subparagraph shall not apply with respect to
any taxable year to any individual whose adjusted gross income for such
taxable year (determined separately and without regard to community property
laws) exceeds $17,000.'.
(c) Effective Date- The amendments made by this section shall take effect
as if included in the provisions of the Economic Growth and Tax Relief Reconciliation
Act of 2001 to which they relate.
SEC. 408. AMENDMENTS RELATED TO THE INTERNAL REVENUE SERVICE RESTRUCTURING
AND REFORM ACT OF 1998.
(a) Amendments Related to Section 3415 of the Act-
(1) Paragraph (2) of section 7609(c) is amended by inserting `or' at the
end of subparagraph (D), by striking `; or' at the end of subparagraph
(E) and inserting a period, and by striking subparagraph (F).
(2) Subsection (c) of section 7609 is amended by redesignating paragraph
(3) as paragraph (4) and by inserting after paragraph (2) the following
new paragraph:
`(3) JOHN DOE AND CERTAIN OTHER SUMMONSES- Subsection (a) shall not apply
to any summons described in subsection (f) or (g).'.
(b) Effective Date- The amendments made by this section shall take effect
as if included in section 3415 of the Internal Revenue Service Restructuring
and Reform Act of 1998.
SEC. 409. AMENDMENTS RELATED TO THE TAXPAYER RELIEF ACT OF 1997.
(a) Amendments Related to Section 1055 of the Act-
(1) The last sentence of section 6411(a) is amended by striking `6611(f)(3)(B)'
and inserting `6611(f)(4)(B)'.
(2) Paragraph (4) of section 6601(d) is amended by striking `6611(f)(3)(A)'
and inserting `6611(f)(4)(A)'.
(b) Amendment Related to Section 1112 of the Act- Subsection (c) of section
961 is amended to read as follows:
`(c) Basis Adjustments in Stock Held by Foreign Corporations- Under regulations
prescribed by the Secretary, if a United States shareholder is treated under
section 958(a)(2) as owning stock in a controlled foreign corporation which
is owned by another controlled foreign corporation, then adjustments similar
to the adjustments provided by subsections (a) and (b) shall be made to--
`(1) the basis of such stock, and
`(2) the basis of stock in any other controlled foreign corporation by
reason of which the United States shareholder is considered under section
958(a)(2) as owning the stock described in paragraph (1),
but only for the purposes of determining the amount included under section
951 in the gross income of such United States shareholder (or any other
United States shareholder who acquires from any person any portion of the
interest of such United States shareholder by reason of which such shareholder
was treated as owning such stock, but only to the extent of such portion,
and subject to such proof of identity of such interest as the Secretary
may prescribe by regulations). The preceding sentence shall not apply with
respect to any stock to which a basis adjustment applies under subsection
(a) or (b).'.
(c) Amendment Related to Section 1144 of the Act- Subparagraph (B) of section
6038B(a)(1) is amended by inserting `or' at the end.
(d) Effective Date- The amendments made by this section shall take effect
as if included in the provisions of the Taxpayer Relief Act of 1997 to which
they relate.
SEC. 410. AMENDMENT RELATED TO THE OMNIBUS BUDGET RECONCILIATION ACT OF
1990.
(a) Amendment Related to Section 11813 of the Act- Subclause (I) of section
168(e)(3)(B)(vi) is amended by striking `if `solar and wind' were substituted
for `solar' in clause (i) thereof' and inserting `if `solar or wind energy'
were substituted for `solar energy' in clause (i) thereof'.
(b) Effective Date- The amendment made by this section shall take effect
as if included in section 11813 of the Omnibus Budget Reconciliation Act
of 1990.
SEC. 411. AMENDMENT RELATED TO THE OMNIBUS BUDGET RECONCILIATION ACT OF
1987.
(a) Amendment Related to Section 10227 of the Act- Section 1363(d) is amended
by adding at the end the following new paragraph:
`(5) SPECIAL RULE- Sections 1367(a)(2)(D) and 1371(c)(1) shall not apply
with respect to any increase in the tax imposed by reason of this subsection.'.
(b) Effective Date- The amendment made by this section shall take effect
as if included in section 10227 of the Omnibus Budget Reconciliation Act
of 1987.
SEC. 412. CLERICAL CORRECTIONS.
(a) Subparagraph (C) of section 2(b)(2) is amended by striking `subparagraph
(C)' and inserting `subparagraph (B)'.
(b) Paragraph (2) of section 25C(b) is amended by striking `subsection (c)(3)(B)'
and inserting `subsection (c)(2)(B)'.
(c) Subparagraph (E) of section 26(b)(2) is amended by striking `section
530(d)(3)' and inserting `section 530(d)(4)'.
(d) Subparagraph (A) of section 30B(g)(2) and subparagraph (A) of section
30C(d)(2) are each amended by striking `regular tax' and inserting `regular
tax liability (as defined in section 26(b))'.
(e) The table of sections for subpart B of part IV of subchapter A of chapter
1 is amended by striking the item relating to section 30C and inserting
the following new item:
`Sec. 30C. Alternative fuel vehicle refueling property credit.'.
(f)(1) Subclause (II) of section 38(c)(2)(A)(ii) is amended by striking
`or the New York Liberty Zone business employee credit or the specified
credits' and inserting `, the New York Liberty Zone business employee credit,
and the specified credits'.
(2) Subclause (II) of section 38(c)(3)(A)(ii) is amended by striking `or
the specified credits' and inserting `and the specified credits'.
(3) Subparagraph (B) of section 38(c)(4) is amended--
(A) by striking `includes' and inserting `means', and
(B) by inserting `and' at the end of clause (i).
(g)(1) Subparagraph (A) of section 39(a)(1) is amended by striking `each
of the 1 taxable years' and inserting `the taxable year'.
(2) Subparagraph (B) of section 39(a)(3) is amended to read as follows:
`(B) paragraph (1) shall be applied by substituting `each of the 5 taxable
years' for `the taxable year' in subparagraph (A) thereof, and'.
(h) Subparagraph (B) of section 40A(b)(5) is amended by striking `(determined
without regard to the last sentence of subsection (d)(2))'.
(i) Paragraph (5) of section 43(c) is amended to read as follows:
`(5) ALASKA NATURAL GAS- For purposes of paragraph (1)(D)--
`(A) IN GENERAL- The term `Alaska natural gas' means natural gas entering
the Alaska natural gas pipeline (as defined in section 168(i)(16) (determined
without regard to subparagraph (B) thereof)) which is produced from
a well--
`(i) located in the area of the State of Alaska lying north of 64
degrees North latitude, determined by excluding the area of the Alaska
National Wildlife Refuge (including the continental shelf thereof
within the meaning of section 638(1)), and
`(ii) pursuant to the applicable State and Federal pollution prevention,
control, and permit requirements from such area (including the continental
shelf thereof within the meaning of section 638(1)).
`(B) NATURAL GAS- The term `natural gas' has the meaning given such
term by section 613A(e)(2).'.
(j) Subsection (d) of section 45 is amended--
(1) in paragraph (8) by striking `The term' and inserting `In the case
of a facility that produces refined coal, the term', and
(2) in paragraph (10) by striking `The term' and inserting `In the case
of a facility that produces Indian coal, the term'.
(k) Paragraph (2) of section 45I(a) is amended by striking `qualified credit
oil production' and inserting `qualified crude oil production'.
(l) Subsection (g) of section 45K, as redesignated by section 1322 of the
Energy Policy Act of 2005, is amended--
(1) in the matter preceding paragraph (1), by striking `subsection (f)'
and inserting `subsection (e)', and
(2) in paragraph (2)(C), by striking `subsection (g)' and inserting `subsection
(f)'.
(m) Paragraph (1) of section 48(a), as amended by section 1336 of the Energy
Policy Act of 2005, is amended by striking `paragraph (1)(B) or (2)(B) of
subsection (d)' and inserting `paragraphs (1)(B) and (2)(B) of subsection
(c)'.
(n) Subparagraph (A) of section 48(a)(3) is amended--
(1) by redesignating clause (iii) (relating to qualified fuel cell property
or qualified microturbine property), as added by section 1336 of the Energy
Policy Act of 2005, as clause (iv) and by moving such clause to the end
of such subparagraph, and
(2) by striking `or' at the end of clause (ii).
(o) Subparagraph (E) of section 50(a)(2) is amended by striking `section
48(a)(5)' and inserting `section 48(b)'.
(p)(1) Paragraph (3) of section 55(c) is amended by inserting `30B(g)(2),
30C(d)(2),' after `30(b)(3),'.
(2) Section 1341(b)(3) of the Energy Policy Act of 2005 is repealed.
(3) Section 1342(b)(3) of the Energy Policy Act of 2005 is repealed.
(q)(1) Subsection (a) of section 62 is amended--
(A) by redesignating paragraph (19) (relating to costs involving discrimination
suits, etc.), as added by section 703 of the American Jobs Creation Act
of 2004, as paragraph (20), and
(B) by moving such paragraph after paragraph (19) (relating to health
savings accounts).
(2) Subsection (e) of section 62 is amended by striking `subsection (a)(19)'
and inserting `subsection (a)(20)'.
(r) Paragraph (3) of section 167(f) is amended by striking `section 197(e)(7)'
and inserting `section 197(e)(6)'.
(s) Subparagraph (D) of section 168(i)(15) is amended by striking `This
paragraph shall not apply to' and inserting `Such term shall not include'.
(t) Paragraph (2) of section 221(d) is amended by striking `this Act' and
inserting `the Taxpayer Relief Act of 1997'.
(u) Paragraph (8) of section 318(b) is amended by striking `section 6038(d)(2)'
and inserting `section 6038(e)(2)'.
(v) Subparagraph (B) of section 332(d)(1) is amended by striking `distribution
to which section 301 applies' and inserting `distribution of property to
which section 301 applies'.
(w) Subparagraph (B) of section 403(b)(9) is amended by inserting `or' before
`a convention'.
(x)(1) Clause (i) of section 412(m)(4)(B) is amended by striking `subsection
(c)' and inserting `subsection (d)'.
(2) Clause (i) of section 302(e)(4)(B) of the Employee Retirement Income
Security Act of 1974 is amended by striking `subsection (c)' and inserting
`subsection (d)'.
(y) Paragraph (1) of section 415(l) is amended by striking `individual medical
account' and inserting `individual medical benefit account'.
(z) The matter following clause (iv) of section 415(n)(3)(C) is amended
by striking `clauses' and inserting `clause'.
(aa) Subparagraph (C) of section 461(i)(3) is amended by striking `section
6662(d)(2)(C)(iii)' and inserting `section 6662(d)(2)(C)(ii)'.
(bb) Paragraph (12) of section 501(c) is amended--
(1) by striking `subparagraph (C)(iii)' in subparagraph (F) and inserting
`subparagraph (C)(iv)', and
(2) by striking `subparagraph (C)(iv)' in subparagraph (G) and inserting
`subparagraph (C)(v)'.
(cc) Clause (ii) of section 501(c)(22)(B) is amended by striking `clause
(ii) of paragraph (21)(B)' and inserting `clause (ii) of paragraph (21)(D)'.
(dd) Paragraph (1) of section 512(b) is amended by striking `section 512(a)(5)'
and inserting `subsection (a)(5)'.
(ee)(1) Subsection (b) of section 512 is amended--
(A) by redesignating paragraph (18) (relating to the treatment of gain
or loss on sale or exchange of certain brownfield sites), as added by
section 702 of the American Jobs Creation Act of 2004, as paragraph (19),
and
(B) by moving such paragraph to the end of such subsection.
(2) Subparagraph (E) of section 514(b)(1) is amended by striking `section
512(b)(18)' and inserting `section 512(b)(19)'.
(3) Paragraph (6) of section 529(c) is amended by striking `education individual
retirement account' and inserting `Coverdell education savings account'.
(ff)(1) Subsection (b) of section 530 is amended by striking paragraph (3)
and by redesignating paragraphs (4) and (5) as paragraphs (3) and (4), respectively.
(2) Clause (ii) of section 530(b)(2)(A) is amended by striking `paragraph
(4)' and inserting `paragraph (3)'.
(gg) Subparagraph (H) of section 613(c)(4) is amended by inserting `(including
in situ retorting)' after `and retorting'.
(hh) Subparagraph (A) of section 856(g)(5) is amended by striking `subsection
(c)(6) or (c)(7) of section 856' and inserting `paragraph (2), (3), or (4)
of subsection (c)'.
(ii) Paragraph (6) of section 857(b) is amended--
(1) in subparagraph (E), by striking `subparagraph (C)' and inserting
`subparagraphs (C) and (D)', and
(2) in subparagraph (F)--
(A) by striking `subparagraph (C) of this paragraph' and inserting `subparagraph
(C) or (D)', and
(B) by striking `subparagraphs (C) and (D)' and inserting `subparagraphs
(C), (D), and (E)'.
(jj) Subparagraph (C) of section 881(e)(1) is amended by inserting `interest-related
dividend received by a controlled foreign corporation' after `shall apply
to any'.
(kk) Clause (ii) of section 952(c)(1)(B) is amended--
(1) by striking `clause (iii)(III) or (IV)' and inserting `subclause (II)
or (III) of clause (iii)', and
(2) by striking `clause (iii)(II)' and inserting `clause (iii)(I)'.
(ll) Clause (i) of section 954(c)(1)(C) is amended by striking `paragraph
(4)(A)' and inserting `paragraph (5)(A)'.
(mm) Subparagraph (F) of section 954(c)(1) is amended by striking `Net income
from notional principal contracts.' after `Income from notional principal
contracts- '.
(nn) Paragraph (23) of section 1016(a) is amended by striking `1045(b)(4)'
and inserting `1045(b)(3)'.
(oo) Paragraph (1) of section 1256(f) is amended by striking `subsection
(e)(2)(C)' and inserting `subsection (e)(2)'.
(pp) The matter preceding clause (i) of section 1031(h)(2)(B) is amended
by striking `subparagraph' and inserting `subparagraphs'.
(qq) Paragraphs (1) and (2) of section 1375(d) are each amended by striking
`subchapter C' and inserting `accumulated'.
(rr) Each of the following provisions are amended by striking `General Accounting
Office' each place it appears therein and inserting `Government Accountability
Office':
(1) Clause (ii) of section 1400E(c)(4)(A).
(2) Paragraph (1) of section 6050M(b).
(3) Subparagraphs (A), (B)(i), and (B)(ii) of section 6103(i)(8).
(4) Paragraphs (3)(C)(i), (4), (5), and (6)(B) of section 6103(p).
(5) Subsection (e) of section 8021.
(ss)(1) Clause (ii) of section 1400L(b)(2)(C) is amended by striking `section
168(k)(2)(C)(i)' and inserting `section 168(k)(2)(D)(i)'.
(2) Clause (iv) of section 1400L(b)(2)(C) is amended by striking `section
168(k)(2)(C)(iii)' and inserting `section 168(k)(2)(D)(iii)'.
(3) Subparagraph (D) of section 1400L(b)(2) is amended by striking `section
168(k)(2)(D)' and inserting `section 168(k)(2)(E)'.
(4) Subparagraph (E) of section 1400L(b)(2) is amended by striking `section
168(k)(2)(F)' and inserting `section 168(k)(2)(G)'.
(5) Paragraph (5) of section 1400L(c) is amended by striking `section 168(k)(2)(C)(iii)'
and inserting `section 168(k)(2)(D)(iii)'.
(tt) Section 3401 is amended by redesignating subsection (h) as subsection
(g).
(uu) Paragraph (2) of section 4161(a) is amended to read as follows:
`(2) 3 PERCENT RATE OF TAX FOR ELECTRIC OUTBOARD MOTORS- In the case of
an electric outboard motor, paragraph (1) shall be applied by substituting
`3 percent' for `10 percent'.'.
(vv) Subparagraph (C) of section 4261(e)(4) is amended by striking `imposed
subsection (b)' and inserting `imposed by subsection (b)'.
(ww) Subsection (a) of section 4980D is amended by striking `plans' and
inserting `plan'.
(xx) The matter following clause (iii) of section 6045(e)(5)(A) is amended
by striking `for `$250,000'.' and all that follows through `to the Treasury.'
and inserting `for `$250,000'. The Secretary may by regulation increase
the dollar amounts under this subparagraph if the Secretary determines that
such an increase will not materially reduce revenues to the Treasury.'.
(yy) Subsection (p) of section 6103 is amended--
(1) by striking so much of paragraph (4) as precedes subparagraph (A)
and inserting the following:
`(4) SAFEGUARDS- Any Federal agency described in subsection (h)(2), (h)(5),
(i)(1), (2), (3), (5), or (7), (j)(1), (2), or (5), (k)(8), (l)(1), (2),
(3), (5), (10), (11), (13), (14), or (17) or (o)(1), the Government Accountability
Office, the Congressional Budget Office, or any agency, body, or commission
described in subsection (d), (i)(3)(B)(i) or 7(A)(ii), or (l)(6), (7),
(8), (9), (12), (15), or (16) or any other person described in subsection
(l)(16), (18), (19), or (20) shall, as a condition for receiving returns
or return information--',
(2) by amending paragraph (4)(F)(i) to read as follows:
`(i) in the case of an agency, body, or commission described in subsection
(d), (i)(3)(B)(i), or (l)(6), (7), (8), (9), or (16), or any other
person described in subsection (l)(16), (18), (19), or (20) return
to the Secretary such returns or return information (along with any
copies made therefrom) or make such returns or return information
undisclosable in any manner and furnish a written report to the Secretary
describing such manner,', and
(3) by striking the first full sentence in the matter following subparagraph
(F) of paragraph (4) and inserting the following: `If the Secretary determines
that any such agency, body, or commission, including an agency or any
other person described in subsection (l)(16), (18), (19), or (20), or
the Government Accountability Office or the Congressional Budget Office,
has failed to, or does not, meet the requirements of this paragraph, he
may, after any proceedings for review established under paragraph (7),
take such actions as are necessary to ensure such requirements are met,
including refusing to disclose returns or return information to such agency,
body, or commission, including an agency or any other person described
in subsection (l)(16), (18), (19), or (20), or the Government Accountability
Office or the Congressional Budget Office, until he determines that such
requirements have been or will be met.'.
(zz) Clause (ii) of section 6111(b)(1)(A) is amended by striking `advice
or assistance' and inserting `aid, assistance, or advice'.
(aaa) Paragraph (3) of section 6662(d) is amended by striking `the' before
`1 or more'.
SEC. 413. OTHER CORRECTIONS RELATED TO THE AMERICAN JOBS CREATION ACT
OF 2004.
(a) Amendments Related to Section 233 of the Act-
(1) Clause (vi) of section 1361(c)(2)(A) is amended--
(A) by inserting `or a depository institution holding company (as defined
in section 3(w)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1813(w)(1))'
after `a bank (as defined in section 581)', and
(B) by inserting `or company' after `such bank'.
(2) Paragraph (16) of section 4975(d) is amended--
(A) in subparagraph (A), by inserting `or a depository institution holding
company (as defined in section 3(w)(1) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(w)(1))' after `a bank (as defined in section 581)',
and
(B) in subparagraph (C), by inserting `or company' after `such bank'.
(b) Amendment Related to Section 237 of the Act- Subparagraph (F) of section
1362(d)(3) is amended by striking `a bank holding company' and all that
follows through `section 2(p) of such Act)' and inserting `a depository
institution holding company (as defined in section 3(w)(1) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(w)(1))'.
(c) Amendments Related to Section 239 of the Act- Paragraph (3) of section
1361(b) is amended--
(1) in subparagraph (A), by striking `and in the case of information returns
required under part III of subchapter A of chapter 61', and
(2) by adding at the end the following new subparagraph:
`(E) INFORMATION RETURNS- Except to the extent provided by the Secretary,
this paragraph shall not apply to part III of subchapter A of chapter
61 (relating to information returns).'.
(d) Effective Date- The amendments made by this section shall take effect
as if included in the provisions of the American Jobs Creation Act of 2004
to which they relate.
Subtitle B--Trade Technicals
SEC. 421. TECHNICAL CORRECTIONS TO REGIONAL VALUE-CONTENT METHODS FOR
RULES OF ORIGIN UNDER PUBLIC LAW 109-53.
Section 203(c) of the Dominican Republic-Central America-United States Free
Trade Agreement Implementation Act (Public Law 109-53; 19 U.S.C. 4033(c))
is amended as follows:
(1) In paragraph (2)(A), by striking all that follows `the following build-down
method:' and inserting the following:
av-vnm
`rvc = -------- .0A 100'.
av
(2) In paragraph (3)(A), by striking all that follows `the following build-up
method:' and inserting the following:
vom
`rvc = -------- .0A 100'.
av
(3) In paragraph (4)(A), by striking all that follows `the following net
cost method:' and inserting the following:
nc-vnm
`rvc = -------- .0A 100'.
nc
TITLE V--EMERGENCY REQUIREMENT
SEC. 501. EMERGENCY REQUIREMENT.
Any provision of this Act causing an effect on receipts, budget authority,
or outlays is designated as an emergency requirement pursuant to section
402 of H. Con. Res. 95 (109th Congress).
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.
END
