To amend the Internal Revenue Code of 1986 to make technical corrections, and for other purposes.

December 8, 2003

Mr. THOMAS (for himself and Mr. RANGEL) introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to make technical corrections, 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 `Tax Technical Corrections Act of 2003'.

(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 for this Act is as follows:

Sec. 1. Short title; etc.

Sec. 2. Amendments related to Jobs and Growth Tax Relief Reconciliation Act of 2003.

Sec. 3. Amendments related to Job Creation and Worker Assistance Act of 2002.

Sec. 4. Amendments related to Economic Growth and Tax Relief Reconciliation Act of 2001.

Sec. 5. Amendment related to Victims of Terrorism Tax Relief Act of 2001.

Sec. 6. Amendments related to Community Renewal Tax Relief Act of 2000.

Sec. 7. Amendments related to Taxpayer Relief Act of 1997.

Sec. 8. Amendment related to Small Business Job Protection Act of 1996.

Sec. 9. Clerical amendments.

SEC. 2. AMENDMENTS RELATED TO JOBS AND GROWTH TAX RELIEF RECONCILIATION ACT OF 2003.

(a) AMENDMENTS RELATED TO SECTION 302 OF THE ACT-

(1) Clause (i) of section 1(h)(1)(D) is amended by inserting `(determined without regard to paragraph (11))' after `net capital gain'.

(2) Subclause (I) of section 1(h)(11)(B)(iii) is amended--

(A) by striking `section 246(c)(1)' and inserting `section 246(c)',

(B) by striking `120-day period' and inserting `121-day period', and

(C) by striking `90-day period' and inserting `91-day period'.

(3) Clause (ii) of section 1(h)(11)(D) is amended by striking `an individual' and inserting `a taxpayer to whom this section applies'.

(4)(A) Subparagraph (B) of section 854(b)(1) is amended--

(i) by striking clauses (iii) and (iv), and

(ii) by amending clause (i) to read as follows:

`(i) IN GENERAL- In any case in which--

`(I) a dividend is received from a regulated investment company (other than a dividend to which subsection (a) applies),

`(II) such investment company meets the requirements of section 852(a) for the taxable year during which it paid such dividend, and

`(III) the qualified dividend income of such investment company for such taxable year is less than 95 percent of its gross income,

then, in computing qualified dividend income, there shall be taken into account only that portion of such dividend designated by the regulated investment company.'.

(B) Subparagraph (C) of section 854(b)(1) is amended to read as follows:

`(C) LIMITATIONS-

`(i) SUBPARAGRAPH (A)- The aggregate amount which may be designated as dividends under subparagraph (A) shall not exceed the aggregate dividends received by the company for the taxable year.

`(ii) SUBPARAGRAPH (B)- The aggregate amount which may be designated as qualified dividend income under subparagraph (B) shall not exceed the sum of--

`(I) the qualified dividend income of the company for the taxable year, and

`(II) the amount of any earnings and profits which were distributed by the company for such taxable year in order to comply with the requirements of section 852(a)(2)(B) and accumulated in a taxable year with respect to which this part did not apply.'.

(C) Paragraph (2) of section 854(b) is amended by striking `as a dividend for purposes of the maximum rate under section 1(h)(11) and' and inserting `as qualified dividend income for purposes of section 1(h)(11) and as dividends for purposes of'.

(D) Paragraph (5) of section 854(b) is amended to read as follows:

`(5) QUALIFIED DIVIDEND INCOME- For purposes of this subsection, the term `qualified dividend income' has the meaning given such term by section 1(h)(11)(B).'.

(E) Paragraph (2) of section 857(c) is amended to read as follows:

`(2) Section (1)(h)(11)-

`(A) IN GENERAL- In any case in which--

`(i) a dividend is received from a real estate investment trust (other than a capital gain dividend), and

`(ii) such trust meets the requirements of section 856(a) for the taxable year during which it paid such dividend,

then, in computing qualified dividend income, there shall be taken into account only that portion of such dividend designated by the real estate investment trust.

`(B) LIMITATION- The aggregate amount which may be designated as qualified dividend income under subparagraph (A) shall not exceed the sum of--

`(i) the qualified dividend income of the trust for the taxable year,

`(ii) the excess of--

`(I) the sum of the real estate investment trust taxable income computed under section 857(b)(2) for the preceding taxable year and the income subject to tax by reason of the application of the regulations under section 337(d) for such preceding taxable year, over

`(II) the sum of the taxes imposed on the trust for such preceding taxable year under section 857(b)(1) and by reason of the application of such regulations, and

`(iii) the amount of any earnings and profits which were--

`(I) distributed by the trust for such taxable year in order to comply with the requirements of section 857(a)(2)(B), and

`(II) accumulated in a taxable year with respect to which this part did not apply.

`(C) NOTICE TO SHAREHOLDERS- The amount of any distribution by a real estate investment trust which may be taken into account as qualified dividend income shall not exceed the amount so designated by the trust in a written notice to its shareholders mailed not later than 60 days after the close of its taxable year.

`(D) QUALIFIED DIVIDEND INCOME- For purposes of this paragraph, the term `qualified dividend income' has the meaning given such term by section 1(h)(11)(B).'.

(F) With respect to any taxable year of a regulated investment company or real estate investment trust ending on or before November 30, 2003, the period for providing notice of the qualified dividend amount to shareholders under sections 854(b)(2) and 857(c)(2)(C) of the Internal Revenue Code of 1986, as amended by this section, shall not expire before the date on which the statement under section 6042(c) of such Code is required to be furnished with respect to the last calendar year beginning in such taxable year.

(5) Paragraph (2) of section 302(f) of the Jobs and Growth Tax Relief Reconciliation Act of 2003 is amended to read as follows:

`(2) PASS-THRU ENTITIES- In the case of a pass-thru entity described in subparagraph (A), (B), (C), (D), (E), or (F) of section 1(h)(10) of the Internal Revenue Code of 1986, as amended by this Act, the amendments made by this section shall apply to taxable years ending after December 31, 2002; except that dividends received by such an entity on or before such date shall not be treated as qualified dividend income (as defined in section 1(h)(11)(B) of such Code, as added by this Act).'.

(b) EFFECTIVE DATE- The amendments made by subsection (a) shall take effect as if included in section 302 of the Jobs and Growth Tax Relief Reconciliation Act of 2003.

SEC. 3. AMENDMENTS RELATED TO JOB CREATION AND WORKER ASSISTANCE ACT OF 2002.

(a) AMENDMENTS RELATED TO SECTION 101 OF THE ACT-

(1) Subparagraph (D) of section 168(k)(2) is amended by adding at the end the following new clauses:

`(iii) SYNDICATION- For purposes of subparagraph (A)(ii), if--

`(I) property is originally placed in service after September 10, 2001, by the lessor of such property,

`(II) such property is sold by such lessor or any subsequent purchaser within 3 months after the date such property was originally placed in service, and

`(III) the user of such property after the last sale during such 3-month period remains the same as when such property was originally placed in service,

such property shall be treated as originally placed in service not earlier than the date of such last sale.

`(iv) LIMITATIONS RELATED TO USERS AND RELATED PARTIES- The term `qualified property' shall not include any property if--

`(I) the user of such property (as of the date on which such property is originally placed in service) or a person which is related (within the meaning of section 267(b) or 707(b)) to such user or to the taxpayer had a written binding contract in effect for the acquisition of such property at any time before September 11, 2001, or

`(II) in the case of property manufactured, constructed, or produced for such user's or person's own use, the manufacture, construction, or production of such property began at any time before September 11, 2001.'.

(2) Clause (ii) of section 168(k)(2)(D) is amended by inserting `clause (iii) and' before `subparagraph (A)(ii)'.

(b) AMENDMENTS RELATED TO SECTION 102 OF THE ACT-

(1) Subparagraph (H) of section 172(b)(1) is amended by striking `a taxpayer which has'.

(2) In the case of a net operating loss for a taxable year ending during 2001 or 2002--

(A) an application under section 6411(a) of the Internal Revenue Code of 1986 with respect to such loss shall not fail to be treated as timely filed if filed before November 1, 2002,

(B) any election made under section 172(b)(3) of such Code may (notwithstanding such section) be revoked before November 1, 2002, and

(C) any election made under section 172(j) of such Code shall (notwithstanding such section) be treated as timely made if made before November 1, 2002.

(3) Section 102(c)(2) of the Job Creation and Worker Assistance Act of 2002 (Public Law 107-147) is amended by striking `before January 1, 2003' and inserting `after December 31, 1990'.

(4)(A) Subclause (I) of section 56(d)(1)(A)(i) is amended by striking `attributable to carryovers'.

(B) Subclause (I) of section 56(d)(1)(A)(ii) is amended--

(i) by striking `for taxable years' and inserting `from taxable years', and

(ii) by striking `carryforwards' and inserting `carryovers'.

(c) AMENDMENTS RELATED TO SECTION 301 OF THE ACT-

(1) Subparagraph (D) of section 1400L(a)(2) is amended--

(A) by striking `subchapter B' and inserting `subchapter A', and

(B) in clause (ii), by striking `subparagraph (B)' and inserting `this paragraph'.

(2) Subparagraph (D) of section 1400L(b)(2) is amended by inserting `, and clause (iv) thereof shall be applied by substituting `qualified New York Liberty Zone property' for `qualified property' before the period at the end.

(3) Subsection (c) of section 1400L is amended by adding at the end the following new paragraph:

`(5) ELECTION OUT- For purposes of this subsection, rules similar to the rules of section 168(k)(2)(C)(iii) shall apply.'.

(4) Paragraph (2) of section 1400L(f) is amended by inserting before the period `, determined without regard to subparagraph (C)(i) thereof'.

(d) AMENDMENT RELATED TO SECTION 405 OF THE ACT- The last sentence of section 4006(a)(3)(E)(iii)(IV) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1306(a)(3)(E)(iii)(IV)) is amended--

(1) by inserting `or this subparagraph' after `this clause' both places it appears, and

(2) by inserting `(other than sections 4005, 4010, 4011, and 4043)' after `subsections'.

(e) AMENDMENT RELATED TO SECTION 411 OF THE ACT- Subparagraph (B) of section 411(c)(2) of the Job Creation and Worker Assistance Act of 2002 is amended by striking `Paragraph (2)' and inserting `Paragraph (1)'.

(f) EFFECTIVE DATE- The amendments made by this section shall take effect as if included in the provisions of the Job Creation and Worker Assistance Act of 2002 to which they relate.

SEC. 4. AMENDMENTS RELATED TO ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION ACT OF 2001.

(a) AMENDMENT RELATED TO SECTION 401 OF THE ACT- Clause (i) of section 530(d)(2)(C) is amended by striking `higher' after `qualified'.

(b) AMENDMENTS RELATED TO SECTION 611 OF THE ACT-

(1) Paragraph (3) of section 45A(c) is amended by inserting `, except that the base period taken into account for purposes of such adjustment shall be the calendar quarter beginning October 1, 1993' before the period at the end.

(2) Subparagraph (A) of section 415(d)(4) is amended by adding at the end the following new sentence: `This subparagraph shall also apply for purposes of any provision of this title that provides for adjustments in accordance with the method contained in this subsection, except to the extent provided in such provision.'.

(c) AMENDMENT RELATED TO SECTION 614 OF THE ACT- Clause (ii) of section 4972(c)(6)(A) is amended to read as follows:

`(ii) the amount of contributions described in section 401(m)(4)(A), or'.

(d) AMENDMENT RELATED TO SECTION 637 OF THE ACT- Section 408(p)(6)(A)(i) is amended by adding at the end the following new sentence: `For purposes of the preceding sentence, amounts described in section 6051(a)(3) shall be determined without regard to section 3401(a)(3).'.

(e) AMENDMENT RELATED TO SECTION 641 OF THE ACT- Subparagraph (B) of section 403(a)(4) is amended to read as follows:

`(B) CERTAIN RULES MADE APPLICABLE- The rules of paragraphs (2) through (7) and (9) of section 402(c) and section 402(f) shall apply for purposes of subparagraph (A).'.

(f) 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. 5. AMENDMENT RELATED TO VICTIMS OF TERRORISM TAX RELIEF ACT OF 2001.

(a) AMENDMENT RELATED TO SECTION 201 OF THE ACT- Subparagraph (A) of section 6103(i)(7) is amended by adding at the end the following new clause:

`(v) TAXPAYER IDENTITY- For purposes of this subparagraph, a taxpayer's

identity shall not be treated as taxpayer return information.'.

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall take effect as if included in section 201 of the Victims of Terrorism Tax Relief Act of 2001.

SEC. 6. AMENDMENTS RELATED TO COMMUNITY RENEWAL TAX RELIEF ACT OF 2000.

(a) AMENDMENTS RELATED TO SECTION 401 OF THE ACT-

(1) Subsection (c) of section 1234B is amended by adding at the end the following new sentence: `The Secretary may prescribe regulations regarding the status of contracts the values of which are determined directly or indirectly by reference to any index which becomes (or ceases to be) a narrow-based security index (as defined for purposes of section 1256(g)(6)).'.

(2) Paragraph (6) of section 1256(g) is amended by adding at the end the following new sentence: `The Secretary may prescribe regulations regarding the status of options the values of which are determined directly or indirectly by reference to any index which becomes (or ceases to be) a narrow-based security index (as so defined).'.

(b) EFFECTIVE DATE- The amendments made by subsection (a) shall take effect as if included in section 401 of the Community Renewal Tax Relief Act of 2000.

SEC. 7. AMENDMENTS RELATED TO TAXPAYER RELIEF ACT OF 1997.

(a) AMENDMENT RELATED TO SECTION 211 OF THE ACT- Subparagraph (B) of section 529(c)(5) is amended to read as follows:

`(B) TREATMENT OF DESIGNATION OF NEW BENEFICIARY- The taxes imposed by chapters 12 and 13 shall apply to a transfer by reason of a change in the designated beneficiary under the program (or a rollover to the account of a new beneficiary) unless the new beneficiary is--

`(i) assigned to the same generation as (or a higher generation than) the old beneficiary (determined in accordance with section 2651), and

`(ii) a member of the family of the old beneficiary.'.

(b) AMENDMENT RELATED TO SECTION 213 OF THE ACT- Clause (iii) of section 530(d)(4)(B) is amended by striking `account holder' and inserting `designated beneficiary'.

(c) AMENDMENTS RELATED TO SECTION 1001 OF THE ACT-

(1) Paragraph (2) of section 1259(c) is amended by striking `The term `constructive sale' shall not include any contract' and inserting `A taxpayer shall not be treated as having made a constructive sale solely because the taxpayer enters into a contract'.

(2) Subparagraphs (A) and (B)(i) of section 1259(c)(3) are each amended by striking `be treated as a constructive sale' and inserting `cause a constructive sale'.

(3) Clause (i) of section 1259(c)(3)(A) is amended by striking `before the end of' and inserting `on or before'.

(4) Clause (ii) of section 1259(c)(3)(B) is amended by striking `substantially similar'.

(5) Subclause (I) of section 1259(c)(3)(B)(ii) is amended to read as follows:

`(I) which would (but for this subparagraph) cause the requirement of subparagraph (A)(iii) not to be met with respect to the transaction described in clause (i) of this subparagraph,'.

(6) Subclause (II) of such section is amended by inserting `on or' before `before the 30th day'.

(7) The heading for subparagraph (B) of section 1259(c)(3) is amended by striking `POSITIONS WHICH ARE REESTABLISHED' and inserting `CERTAIN CLOSED TRANSACTIONS WHERE RISK OF LOSS ON APPRECIATED FINANCIAL POSITION DIMINISHED'.

(d) AMENDMENTS RELATED TO SECTION 1015 OF THE ACT-

(1) Section 246(c)(1)(A) is amended by striking `90-day period' and inserting `91-day period'.

(2) Section 246(c)(2)(B) is amended--

(A) by striking `180-day period' and inserting `181-day period', and

(B) by striking `90-day period' and inserting `91-day period'.

(e) AMENDMENT RELATED TO SECTION 1031 OF THE ACT- Section 4261(e)(4) is amended by adding at the end the following new subparagraph:

`(D) SPECIAL RULE FOR AMOUNTS PAID FOR DOMESTIC SEGMENTS BEGINNING AFTER 2002- If an amount is paid during a calendar year for a domestic segment beginning in a later calendar year, then the rate of tax under subsection (b) on such amount shall be the rate in effect for the calendar year in which such amount is paid.'

(f) AMENDMENTS RELATED TO SECTION 1053 OF THE ACT-

(1) Section 901(k)(1)(A)(i) is amended by striking `30-day period' and inserting `31-day period'.

(2) Section 901(k)(3)(B) is amended--

(A) by striking `90-day period' and inserting `91-day period', and

(B) by striking `30-day period' and inserting `31-day period'.

(g) EFFECTIVE DATE-

(1) IN GENERAL- Except as provided in paragraph (2), 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.

(2) AMENDMENTS RELATED TO SECTION 1031- The amendment made by subsection (e) shall apply to segments beginning after December 31, 2002.

SEC. 8. AMENDMENT RELATED TO SMALL BUSINESS JOB PROTECTION ACT OF 1996.

(a) AMENDMENT RELATED TO SECTION 1307- Subsection (b) of section 1377 (relating to post-termination transition period) is amended by adding at the end the following new paragraph:

`(3) SPECIAL RULES FOR AUDIT RELATED POST-TERMINATION TRANSITION PERIODS-

`(A) NO APPLICATION TO CARRYOVERS- Paragraph (1)(B) shall not apply for purposes of section 1366(d)(3).

`(B) LIMITATION ON APPLICATION TO DISTRIBUTIONS- Paragraph (1)(B) shall apply to a distribution described in section 1371(e) only to the extent that the amount of such distribution does not exceed the aggregate increase (if any) in the accumulated adjustments account (within the meaning of section 1368(e)) by reason of the adjustments referred to in such paragraph.'.

(b) EFFECTIVE DATE- The amendment made by this section shall take effect as if included in section 1307 of the Small Business Job Protection Act of 1996.

SEC. 9. CLERICAL AMENDMENTS.

(a) Subclause (II) of section 1(g)(7)(B)(ii) is amended by striking `10 percent.' and inserting `10 percent'.

(b) Section 1(h)(6)(A)(ii) is amended--

(1) in subclause (I), by striking `(5)(B)' and inserting `(4)(B)', and

(2) in subclause (II), by striking `(5)(A)' and inserting `(4)(A)'.

(c) Section 72(f) is amended by striking `Economic Growth and Tax Relief Reconciliation Act of 2001' and inserting `Economic Growth and Tax Relief Reconciliation Act of 2001)'.

(d) Clause (ii) of section 168(k)(2)(D) is amended--

(1) by inserting `is' after `if property', and

(2) by striking `is' in subclause (I).

(e) The heading for subparagraph (F) of section 168(k)(2) is amended by striking `MINIUMUM' and inserting `MINIMUM'.

(f) Section 246A(b)(1) is amended by striking `section 243(c)(4)' and inserting `section 243(d)(4)'.

(g) Section 403(b)(7)(A)(ii) is amended by striking `section 3121(a)(1)(D)' and inserting `section 3121(a)(5)(D)'.

(h) Section 408(a)(1) is amended by striking `457(e)(16)' and inserting `457(e)(16),'.

(i) Paragraph (2) of section 408(n) is amended by striking `section 101(6)' and inserting `paragraph (6) or (7) of section 101'.

(j) Section 416(i)(1)(A) is amended in the matter following clause (iii) by striking `in the case of plan years' and inserting `In the case of plan years'.

(k) The item relating to section 1234B in the table of sections for part IV of subchapter P of chapter 1 is amended to read as follows:

(l) Subsection (h) of section 1296 is amended by striking `paragraphs (2) and (3) of section 851(b)' and inserting `section 851(b)(2)'.

(m) The table of sections for part II of subchapter A of chapter 11 is amended by inserting after the item relating to section 2010 the following new item:

(n) The table of sections for subchapter A of chapter 13 is amended by inserting after the item relating to section 2603 the following new item:

(o) Subsection (c) of section 4973 is amended by striking `subsection (a)(2)' and inserting `subsection (a)(3)'.

(p) Paragraph (4) of section 6103(p) is amended by striking `subsection (l)(16) or (17)' each place it appears and inserting `subsection (l)(16) or (18)'.

(q) Subsection (c) of section 156 of the Community Renewal Tax Relief Act of 2000 (114 Stat. 2763A-623) is amended in the first sentence by inserting `than' after `not later'.

(r) Paragraph (6) of section 1(a) of Public Law 107-22 shall be applied by substituting `part VIII' for `part VII' in such paragraph.

(s) Subparagraph (A) of section 1(b)(3) of Public Law 107-22 shall be applied by substituting `EDUCATIONAL' for `EDUCATION' in the matter preceding subparagraph (A) in such section.

(t) Paragraph (1) of section 204(e) of the Railroad Retirement and Survivors' Improvement Act of 2001 shall be applied by substituting `Section 24(d)(2)(A)(iii)' for `Section 24(d)(3)(A)(iii)' in such paragraph.

(u) Paragraph (2) of section 412(b) of the Economic Growth and Tax Relief Reconciliation Act of 2001 shall be applied by substituting `Section 221(f)(1)' for `Section 221(g)(1)' in such paragraph.

(v) Subsection (b) of section 531 of the Economic Growth and Tax Relief Reconciliation Act of 2001 shall be applied by substituting `section' for `subsection' in such subsection.

(w) Paragraph (3) of section 619(c) of the Economic Growth and Tax Relief Reconciliation Act of 2001 shall be applied by substituting `after the item relating to section 45D' for `at the end' in such paragraph.

(x) Paragraph (3) of section 652(b) of the Economic Growth and Tax Relief Reconciliation Act of 2001 shall be applied by inserting `each place it appears' before `in the next to last sentence' in such paragraph.

END