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

November 19, 2004

Mr. THOMAS 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.

This Act may be cited as the `Tax Technical Corrections Act of 2004'.

SEC. 2. TECHNICAL CORRECTIONS.

(a) AMENDMENTS RELATED TO THE AMERICAN JOBS CREATION ACT OF 2004-

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

(A) Paragraph (2) of section 199(c) of the Internal Revenue Code of 1986 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.'.

(B) Clause (i) of section 199(d)(4)(B) of such Code is amended--

(i) by striking `50 percent' and inserting `more than 50 percent', and

(ii) by striking `80 percent' and inserting `at least 80 percent'.

(2) AMENDMENT RELATED TO SECTION 231 OF THE ACT- Subparagraph (C) of section 1361(c)(1) of such Code is amended to read as follows:

`(C) EFFECT OF ADOPTION, ETC- For purposes of this paragraph, 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.'.

(3) AMENDMENT RELATED TO SECTION 248 OF THE ACT- Subsection (c) of section 1356 of such Code 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) AMENDMENT RELATED TO SECTION 314 OF THE ACT- Paragraph (2) of section 55(c) of such Code is amended by striking `regular tax' and inserting `regular tax liability'.

(5) AMENDMENT RELATED TO SECTION 415 OF THE ACT- Subparagraph (D) of section 904(d)(2) of such Code is amended by inserting `as in effect before its repeal' after `section 954(f)'.

(6) AMENDMENTS RELATED TO SECTION 418 OF THE ACT-

(A) The second sentence of section 897(h)(1) of such Code is amended 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'.

(B) Subsection (c) of section 418 of the American Jobs Creation Act of 2004 is amended by striking `taxable years beginning after the date of the enactment of this Act' and inserting `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'.

(7) AMENDMENTS RELATED TO SECTION 422 OF THE ACT-

(A) Subparagraph (A) of section 965(b)(2) of such Code is amended by inserting `cash' before `dividends'.

(B) Paragraph (3) of section 965(b) of such Code 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.'.

(C) Paragraph (1) of section 965(c) of such Code 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--

`(I) to creditors,

`(II) to shareholders, or

`(III) for any other substantial nontax purpose.'.

(D) Paragraph (2) of section 965(d) of such Code is amended by striking `properly allocated and apportioned' and inserting `directly allocable'.

(E) Subsection (d) of section 965 of such Code 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.'.

(F) The last sentence of section 965(e)(1) of such Code is amended by inserting `which are imposed by foreign countries and possessions of the United States and are' after `taxes'.

(8) AMENDMENTS RELATED TO SECTION 501 OF THE ACT-

(A) Subparagraph (A) of section 164(b)(5) of such Code 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.'.

(B) Clause (ii) of section 56(b)(1)(A) of such Code is amended by inserting `or clause (ii) of section 164(b)(5)(A)' before the period at the end.

(9) AMENDMENT RELATED TO SECTION 835 OF THE ACT- The last sentence of paragraph (3) of section 860G(a) of such Code is amended by striking `treated as secured' and inserting `treated as principally secured'.

(10) AMENDMENTS RELATED TO SECTION 885 OF THE ACT-

(A) Paragraph (2) of section 26(b) of such Code 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).'.

(B) Clause (ii) of section 409A(a)(4)(C) of such Code is amended by striking `first'.

(C)(i) Notwithstanding section 885(d)(1) of the American Jobs Creation Act of 2004, subsection (b) of section 409A of such Code shall take effect on January 1, 2005.

(ii) 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.

(D) 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'.

(11) EFFECTIVE DATE- The amendments made by this subsection shall take effect as if included in the provisions of the American Jobs Creation Act of 2004 to which they relate.

(b) AMENDMENTS RELATED TO THE WORKING FAMILIES TAX RELIEF ACT OF 2004-

(1) AMENDMENT RELATED TO SECTION 203 OF THE ACT- Subparagraph (B) of section 21(b)(1) of the Internal Revenue Code of 1986 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'.

(2) AMENDMENT RELATED TO SECTION 207 OF THE ACT- Subparagraph (A) of section 223(d)(2) of such Code is amended by inserting `, determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof' after `section 152'.

(3) EFFECTIVE DATE- The amendments made by this subsection shall take effect as if included in the provisions of the Working Families Tax Relief Act of 2004 to which they relate.

(c) AMENDMENT RELATED TO THE JOBS AND GROWTH TAX RELIEF RECONCILIATION ACT OF 2003-

(1) AMENDMENT RELATED TO SECTION 201 OF THE ACT- Subparagraph (D) of section 1400L(b)(2) of the Internal Revenue Code of 1986 is amended by striking `September 11, 2004' and inserting `January 1, 2005'.

(2) EFFECTIVE DATE- The amendment made by this subsection shall take effect as if included in section 201 of the Jobs and Growth Tax Relief and Reconciliation Act of 2003.

(d) AMENDMENTS RELATED TO THE TRADE ACT OF 2002-

(1) Paragraph (4) of section 6103(p) of the Internal Revenue Code of 1986 is amended by striking `(l)(16), (17), (19), or (20)' each place it appears and inserting `(l)(16), (18), (19), or (20)'.

(2) The Internal Revenue Code of 1986 shall be applied and administered as if the amendments made by section 408(a)(24) of the Working Families Tax Relief Act of 2004 had never been enacted.

(e) AMENDMENT RELATED TO THE VICTIMS OF TERRORISM TAX RELIEF ACT OF 2001-

(1) AMENDMENT RELATED TO SECTION 201 OF THE ACT- Paragraph (17) of section 6103(l) of the Internal Revenue Code of 1986 is amended by striking `subsection (f), (i)(7), or (p)' and inserting `subsection (f), (i)(8), or (p)'.

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

(f) AMENDMENTS RELATED TO THE TAXPAYER RELIEF ACT OF 1997-

(1) AMENDMENTS RELATED TO SECTION 1055 OF THE ACT-

(A) The last sentence of section 6411(a) of the Internal Revenue Code of 1986 is amended by striking `6611(f)(3)(B)' and inserting `6611(f)(4)(B)'.

(B) Paragraph (4) of section 6601(d) of such Code is amended by striking `6611(f)(3)(A)' and inserting `6611(f)(4)(A)'.

(2) AMENDMENT RELATED TO SECTION 1144 OF THE ACT- Subparagraph (B) of section 6038B(a)(1) of such Code is amended by inserting `or' at the end.

(3) EFFECTIVE DATE- The amendments made by this subsection shall take effect as if included in the provisions of the Taxpayer Relief Act of 1997 to which they relate.

(g) CLERICAL CORRECTIONS-

(1) Subparagraph (E) of section 26(b)(2) of the Internal Revenue Code of 1986 is amended by striking `section 530(d)(3)' and inserting `section 530(d)(4)'.

(2)(A) Subclause (II) of section 38(c)(2)(A)(ii) of such Code 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'.

(B) Subclause (II) of section 38(c)(3)(A)(ii) of such Code is amended by striking `or the specified credits' and inserting `and the specified credits'.

(3) Subparagraph (A) of section 39(a)(1) of such Code is amended by striking `each of the 1 taxable years' and by inserting `the taxable year'.

(4)(A) Subsection (a) of section 62 of such Code is amended--

(i) 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

(ii) by moving such paragraph after paragraph (19) (relating to health savings accounts).

(B) Subsection (e) of section 62 of such Code is amended by striking `subsection (a)(19)' and inserting `subsection (a)(20)'.

(5) Subsection (d) of section 121 of such Code is amended by redesignating paragraph (10) (relating to property acquired in like-kind exchange), as added by section 840 of the American Jobs Creation Act of 2004, as paragraph (11).

(6) Paragraph (2) of section 221(d) of such Code is amended by striking `this Act' and inserting `the Taxpayer Relief Act of 1997'.

(7) Subparagraph (B) of section 332(d)(1) of such Code is amended by striking `distribution to which section 301 applies' and inserting `distribution of property to which section 301 applies'.

(8) The matter following clause (iv) of section 415(n)(3)(C) of such Code is amended by striking `clauses' and inserting `clause'.

(9) Paragraph (1) of section 512(b) of such Code is amended by striking `section 512(a)(5)' and inserting `subsection (a)(5)'.

(10)(A) Subsection (b) of section 512 of such Code is amended--

(i) 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

(ii) by moving such paragraph to the end of such subsection.

(B) Subparagraph (E) of section 514(b)(1) of such Code is amended by striking `section 512(b)(18)' and inserting `section 512(b)(19)'.

(11)(A) Subsection (b) of section 530 of such Code is amended by striking paragraph (3) and by redesignating paragraphs (4) and (5) as paragraphs (3) and (4), respectively.

(B) Clause (ii) of section 530(b)(2)(A) of such Code is amended by striking `paragraph (4)' and inserting `paragraph (3)'.

(12) Clause (i) of section 954(c)(1)(C) of such Code is amended by striking `paragraph (4)(A)' and inserting `paragraph (5)(A)'.

(13) Subparagraph (F) of section 954(c)(1) of such Code is amended by striking `Net income from notional principal contracts.' after `INCOME FROM NOTIONAL PRINCIPAL CONTRACTS- '.

(14) The matter preceding clause (i) of section 1031(h)(2)(B) of such Code is amended by striking `subparagraph' and inserting `subparagraphs'.

(15) Paragraphs (1) and (2) of section 1375(d) of such Code are each amended by striking `subchapter C' and inserting `accumulated'.

(16) Each of the following provisions of such Code are amended by striking `General Accounting Office' each place it appears therein and inserting `Government Accountability Office':

(A) Clause (ii) of section 1400E(c)(4)(A).

(B) Paragraph (1) of section 6050M(b).

(C) Subparagraphs (A), (B)(i), and (B)(ii) of section 6103(i)(8).

(D) Paragraphs (3)(C)(i), (4), (5), and (6)(B) of section 6103(p).

(E) Subsection (e) of section 8021.

(17) Section 3401 of such Code is amended by redesignating subsection (h) as subsection (g).

(18) Paragraph (2) of section 4161(a) of such Code 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'.'.

(19) Subparagraph (C) of section 4261(e)(4) of such Code is amended by striking `imposed subsection (b)' and inserting `imposed by subsection (b)'.

(20) Section 6427 of such Code is amended by striking subsection (o) and redesignating subsection (p) as subsection (o).

(21) Subsection (a) of section 4980D of such Code is amended by striking `plans' and inserting `plan'.

(22) The matter following clause (iii) of section 6045(e)(5)(A) of such Code 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.'.

END