[107th Congress Public Law 147]
[From the U.S. Government Printing Office]
<DOC>
[DOCID: f:publ147.107]
[[Page 116 STAT. 21]]
Public Law 107-147
107th Congress
An Act
To provide tax incentives for economic recovery. <<NOTE: Mar. 9,
2002 - [H.R. 3090]>>
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress <<NOTE: Job Creation and Worker
Assistance Act of 2002. Inter-governmental relations.>> assembled,
SECTION 1. SHORT TITLE; ETC.
(a) <<NOTE: 26 USC 1 note.>> Short Title.--This Act may be cited as
the ``Job Creation and Worker Assistance Act of 2002''.
(b) References to Internal Revenue Code of 1986.--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.--
Sec. 1. Short title; etc.
TITLE I--BUSINESS PROVISIONS
Sec. 101. Special depreciation allowance for certain property acquired
after
September 10, 2001, and before September 11, 2004.
Sec. 102. Carryback of certain net operating losses allowed for 5 years;
temporary suspension of 90 percent AMT limit.
TITLE II--UNEMPLOYMENT ASSISTANCE
Sec. 201. Short title.
Sec. 202. Federal-State agreements.
Sec. 203. Temporary extended unemployment compensation account.
Sec. 204. Payments to States having agreements for the payment of
temporary
extended unemployment compensation.
Sec. 205. Financing provisions.
Sec. 206. Fraud and overpayments.
Sec. 207. Definitions.
Sec. 208. Applicability.
Sec. 209. Special Reed Act transfer in fiscal year 2002.
TITLE III--TAX INCENTIVES FOR NEW YORK CITY AND DISTRESSED AREAS
Sec. 301. Tax benefits for area of New York City damaged in terrorist
attacks on September 11, 2001.
TITLE IV--MISCELLANEOUS AND TECHNICAL PROVISIONS
Subtitle A--General Miscellaneous Provisions
Sec. 401. Allowance of electronic 1099's.
Sec. 402. Excluded cancellation of indebtedness income of S corporation
not to
result in adjustment to basis of stock of shareholders.
Sec. 403. Limitation on use of nonaccrual experience method of
accounting.
Sec. 404. Exclusion for foster care payments to apply to payments by
qualified placement agencies.
Sec. 405. Interest rate range for additional funding requirements.
Sec. 406. Adjusted gross income determined by taking into account
certain
expenses of elementary and secondary school teachers.
[[Page 116 STAT. 22]]
Subtitle B--Technical Corrections
Sec. 411. Amendments related to Economic Growth and Tax Relief
Reconciliation Act of 2001.
Sec. 412. Amendments related to Community Renewal Tax Relief Act of
2000.
Sec. 413. Amendments related to the Tax Relief Extension Act of 1999.
Sec. 414. Amendments related to the Taxpayer Relief Act of 1997.
Sec. 415. Amendment related to the Balanced Budget Act of 1997.
Sec. 416. Other technical corrections.
Sec. 417. Clerical amendments.
Sec. 418. Additional corrections.
TITLE V--SOCIAL SECURITY HELD HARMLESS; BUDGETARY TREATMENT OF ACT
Sec. 501. No impact on social security trust funds.
Sec. 502. Emergency designation.
TITLE VI--EXTENSIONS OF CERTAIN EXPIRING PROVISIONS
Sec. 601. Allowance of nonrefundable personal credits against regular
and minimum tax liability.
Sec. 602. Credit for qualified electric vehicles.
Sec. 603. Credit for electricity produced from certain renewable
resources.
Sec. 604. Work opportunity credit.
Sec. 605. Welfare-to-work credit.
Sec. 606. Deduction for clean-fuel vehicles and certain refueling
property.
Sec. 607. Taxable income limit on percentage depletion for oil and
natural gas produced from marginal properties.
Sec. 608. Qualified zone academy bonds.
Sec. 609. Cover over of tax on distilled spirits.
Sec. 610. Parity in the application of certain limits to mental health
benefits.
Sec. 611. Temporary special rules for taxation of life insurance
companies.
Sec. 612. Availability of medical savings accounts.
Sec. 613. Incentives for Indian employment and property on Indian
reservations.
Sec. 614. Subpart F exemption for active financing.
Sec. 615. Repeal of requirement for approved diesel or kerosene
terminals.
Sec. 616. Reauthorization of TANF supplemental grants for population
increases for fiscal year 2002.
Sec. 617. 1-year extension of contingency fund under the TANF program.
TITLE I--BUSINESS PROVISIONS
SEC. 101. SPECIAL DEPRECIATION ALLOWANCE FOR CERTAIN PROPERTY ACQUIRED
AFTER SEPTEMBER 10, 2001, AND BEFORE SEPTEMBER 11, 2004.
(a) In General.--Section 168 <<NOTE: 26 USC 168.>> (relating to
accelerated cost recovery system) is amended by adding at the end the
following new subsection:
``(k) Special Allowance for Certain Property Acquired After
September 10, 2001, and Before September 11, 2004.--
``(1) Additional allowance.--In the case of any qualified
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 30
percent of the adjusted basis of the qualified property,
and
``(B) the adjusted basis of the qualified 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 property.--For purposes of this subsection--
``(A) In general.--The term `qualified property'
means property--
[[Page 116 STAT. 23]]
``(i)(I) to which this section applies which
has a recovery period of 20 years or less,
``(II) which is computer software (as defined
in section 167(f)(1)(B)) for which a deduction is
allowable under section 167(a) without regard to
this subsection,
``(III) which is water utility property, or
``(IV) which is qualified leasehold
improvement property,
``(ii) the original use of which commences
with the taxpayer after September 10, 2001,
``(iii) which is--
``(I) acquired by the taxpayer after
September 10, 2001, and before September
11, 2004, but only if no written binding
contract for the acquisition was in
effect before September 11, 2001, or
``(II) acquired by the taxpayer
pursuant to a written binding contract
which was entered into after September
10, 2001, and before September 11, 2004,
and
``(iv) which is placed in service by the
taxpayer before January 1, 2005, or, in the case
of property described in subparagraph (B), before
January 1, 2006.
``(B) Certain property having longer production
periods treated as qualified property.--
``(i) In general.--The term `qualified
property' includes property--
``(I) which meets the requirements
of clauses (i), (ii), and (iii) of
subparagraph (A),
``(II) which has a recovery period
of at least 10 years or is
transportation property, and
``(III) which is subject to section
263A by reason of clause (ii) or (iii)
of subsection (f)(1)(B) thereof.
``(ii) <<NOTE: Applicability.>> Only pre-
september 11, 2004, basis eligible for additional
allowance.--In the case of property which is
qualified property solely by reason of clause (i),
paragraph (1) shall apply only to the extent of
the adjusted basis thereof attributable to
manufacture, construction, or production before
September 11, 2004.
``(iii) Transportation property.--For purposes
of this subparagraph, the term `transportation
property' means tangible personal property used in
the trade or business of transporting persons or
property.
``(C) Exceptions.--
``(i) Alternative depreciation property.--The
term `qualified property' shall not include any
property to which the alternative depreciation
system under subsection (g) applies, determined--
``(I) without regard to paragraph
(7) of subsection (g) (relating to
election to have system apply), and
``(II) after application of section
280F(b) (relating to listed property
with limited business use).
``(ii) Qualified new york liberty zone
leasehold improvement property.--The term
`qualified property' shall not include any
qualified New York
[[Page 116 STAT. 24]]
Liberty Zone leasehold improvement property (as
defined in section 1400L(c)(2)).
``(iii) 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.
``(D) Special rules.--
``(i) Self-constructed property.--In the case
of a taxpayer manufacturing, constructing, or
producing property for the taxpayer's own use, the
requirements of clause (iii) of subparagraph (A)
shall be treated as met if the taxpayer begins
manufacturing, constructing, or producing the
property after September 10, 2001, and before
September 11, 2004.
``(ii) Sale-leasebacks.--For purposes of
subparagraph (A)(ii), if property--
``(I) is originally placed in
service after September 10, 2001, by a
person, and
``(II) sold and leased back by such
person within 3 months after the date
such property was originally placed in
service,
such property shall be treated as originally
placed in service not earlier than the date on
which such property is used under the leaseback
referred to in subclause (II).
``(E) Coordination with section 280f.--For purposes
of section 280F--
``(i) Automobiles.--In the case of a passenger
automobile (as defined in section 280F(d)(5))
which is qualified property, the Secretary shall
increase the limitation under section
280F(a)(1)(A)(i) by $4,600.
``(ii) Listed property.--The deduction
allowable under paragraph (1) shall be taken into
account in computing any recapture amount under
section 280F(b)(2).
``(F) Deduction allowed in computing miniumum tax.--
For purposes of determining alternative minimum taxable
income under section 55, the deduction under subsection
(a) for qualified property shall be determined under
this section without regard to any adjustment under
section 56.
``(3) Qualified leasehold improvement property.--For
purposes of this subsection--
``(A) In general.--The term `qualified leasehold
improvement property' means any improvement to an
interior portion of a building which is nonresidential
real property if--
``(i) such improvement is made under or
pursuant to a lease (as defined in subsection
(h)(7))--
``(I) by the lessee (or any
sublessee) of such portion, or
``(II) by the lessor of such
portion,
``(ii) such portion is to be occupied
exclusively by the lessee (or any sublessee) of
such portion, and
[[Page 116 STAT. 25]]
``(iii) such improvement is placed in service
more than 3 years after the date the building was
first placed in service.
``(B) Certain improvements not included.--Such term
shall not include any improvement for which the
expenditure is attributable to--
``(i) the enlargement of the building,
``(ii) any elevator or escalator,
``(iii) any structural component benefiting a
common area, and
``(iv) the internal structural framework of
the building.
``(C) Definitions and special rules.--For purposes
of this paragraph--
``(i) Commitment to lease treated as lease.--A
commitment to enter into a lease shall be treated
as a lease, and the parties to such commitment
shall be treated as lessor and lessee,
respectively.
``(ii) Related persons.--A lease between
related persons shall not be considered a lease.
For purposes of the preceding sentence, the term
`related persons' means--
``(I) members of an affiliated group
(as defined in section 1504), and
``(II) persons having a relationship
described in subsection (b) of section
267; except that, for purposes of this
clause, the phrase `80 percent or more'
shall be substituted for the phrase
`more than 50 percent' each place it
appears in such subsection.''.
(b) <<NOTE: Applicability. 26 USC 168 note.>> Effective Date.--The
amendments made by this section shall apply to property placed in
service after September 10, 2001, in taxable years ending after such
date.
SEC. 102. CARRYBACK OF CERTAIN NET OPERATING LOSSES ALLOWED FOR 5 YEARS;
TEMPORARY SUSPENSION OF 90 PERCENT AMT LIMIT.
(a) In General.--Paragraph (1) of section 172(b) <<NOTE: 26 USC
172.>> (relating to years to which loss may be carried) is amended by
adding at the end the following new subparagraph:
``(H) In the case of a taxpayer which has a net
operating loss for any taxable year ending during 2001
or 2002, subparagraph (A)(i) shall be applied by
substituting `5' for `2' and subparagraph (F) shall not
apply.''.
(b) Election To Disregard 5-Year Carryback.--Section 172 (relating
to net operating loss deduction) is amended by redesignating subsection
(j) as subsection (k) and by inserting after subjection (i) the
following new subsection:
``(j) Election To Disregard 5-Year Carryback for Certain Net
Operating Losses.--Any taxpayer entitled to a 5-year carryback under
subsection (b)(1)(H) from any loss year may elect to have the carryback
period with respect to such loss year determined without regard to
subsection (b)(1)(H). Such election 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 net
[[Page 116 STAT. 26]]
operating loss. Such election, once made for any taxable year, shall be
irrevocable for such taxable year.''.
(c) Temporary Suspension of 90 Percent Limit on Certain NOL
Carryovers.--
(1) <<NOTE: 26 USC 56.>> In general.--Subparagraph (A) of
section 56(d)(1) (relating to general rule defining alternative
tax net operating loss deduction) is amended to read as follows:
``(A) the amount of such deduction shall not exceed
the sum of--
``(i) the lesser of--
``(I) the amount of such deduction
attributable to net operating losses
(other than the deduction attributable
to carryovers described in clause
(ii)(I)), or
``(II) 90 percent of alternative
minimum taxable income determined
without regard to such deduction, plus
``(ii) the lesser of--
``(I) the amount of such deduction
attributable to the sum of carrybacks of
net operating losses for taxable years
ending during 2001 or 2002 and
carryforwards of net operating losses to
taxable years ending during 2001 and
2002, or
``(II) alternative minimum taxable
income determined without regard to such
deduction reduced by the amount
determined under clause (i), and''.
(2) <<NOTE: Applicability. 26 USC 56 note.>> Effective
date.--The amendment made by this subsection shall apply to
taxable years ending before January 1, 2003.
(d) <<NOTE: Applicability. 26 USC 172 note.>> Effective Date.--
Except as provided in subsection (c), the amendments made by this
section shall apply to net operating losses for taxable years ending
after December 31, 2000.
TITLE <<NOTE: Temporary Extended Unemployment Compensation Act of
2002. Inter-governmental relations. 26 USC 3304 note.>> II--
UNEMPLOYMENT ASSISTANCE
SEC. 201. SHORT TITLE.
This title may be cited as the ``Temporary Extended Unemployment
Compensation Act of 2002''.
SEC. 202. FEDERAL-STATE AGREEMENTS.
(a) In General.--Any State which desires to do so may enter into and
participate in an agreement under this title with the Secretary of Labor
(in this title referred to as the ``Secretary''). Any State which is a
party to an agreement under this title may, upon providing 30 days'
written notice to the Secretary, terminate such agreement.
(b) Provisions of Agreement.--Any agreement under subsection (a)
shall provide that the State agency of the State will make payments of
temporary extended unemployment compensation to individuals who--
(1) have exhausted all rights to regular compensation under
the State law or under Federal law with respect to a benefit
year (excluding any benefit year that ended before March 15,
2001);
[[Page 116 STAT. 27]]
(2) have no rights to regular compensation or extended
compensation with respect to a week under such law or any other
State unemployment compensation law or to compensation under any
other Federal law;
(3) are not receiving compensation with respect to such week
under the unemployment compensation law of Canada; and
(4) filed an initial claim for regular compensation on or
after March 15, 2001.
(c) Exhaustion of Benefits.--For purposes of subsection (b)(1), an
individual shall be deemed to have exhausted such individual's rights to
regular compensation under a State law when--
(1) no payments of regular compensation can be made under
such law because such individual has received all regular
compensation available to such individual based on employment or
wages during such individual's base period; or
(2) such individual's rights to such compensation have been
terminated by reason of the expiration of the benefit year with
respect to which such rights existed.
(d) Weekly Benefit Amount, Etc.--For purposes of any agreement under
this title--
(1) the amount of temporary extended unemployment
compensation which shall be payable to any individual for any
week of total unemployment shall be equal to the amount of the
regular compensation (including dependents' allowances) payable
to such individual during such individual's benefit year under
the State law for a week of total unemployment;
(2) the terms and conditions of the State law which apply to
claims for regular compensation and to the payment thereof shall
apply to claims for temporary extended unemployment compensation
and the payment thereof, except--
(A) that an individual shall not be eligible for
temporary extended unemployment compensation under this
title unless, in the base period with respect to which
the individual exhausted all rights to regular
compensation under the State law, the individual had 20
weeks of full-time insured employment or the equivalent
in insured wages, as determined under the provisions of
the State law implementing section 202(a)(5) of the
Federal-State Extended Unemployment Compensation Act of
1970 (26 U.S.C. 3304 note); and
(B) where otherwise inconsistent with the provisions
of this title or with the regulations or operating
instructions of the Secretary promulgated to carry out
this title; and
(3) the maximum amount of temporary extended unemployment
compensation payable to any individual for whom a temporary
extended unemployment compensation account is established under
section 203 shall not exceed the amount established in such
account for such individual.
(e) Election by States.--Notwithstanding any other provision of
Federal law (and if State law permits), the Governor of a State that is
in an extended benefit period may provide for the payment of temporary
extended unemployment compensation in lieu of extended compensation to
individuals who otherwise meet the requirements of this section. Such an
election shall not require a State to trigger off an extended benefit
period.
[[Page 116 STAT. 28]]
SEC. 203. TEMPORARY EXTENDED UNEMPLOYMENT COMPENSATION ACCOUNT.
(a) In General.--Any agreement under this title shall provide that
the State will establish, for each eligible individual who files an
application for temporary extended unemployment compensation, a
temporary extended unemployment compensation account with respect to
such individual's benefit year.
(b) Amount in Account.--
(1) In general.--The amount established in an account under
subsection (a) shall be equal to the lesser of--
(A) 50 percent of the total amount of regular
compensation (including dependents' allowances) payable
to the individual during the individual's benefit year
under such law, or
(B) 13 times the individual's average weekly benefit
amount for the benefit year.
(2) Weekly benefit amount.--For purposes of this subsection,
an individual's weekly benefit amount for any week is the amount
of regular compensation (including dependents' allowances) under
the State law payable to such individual for such week for total
unemployment.
(c) Special Rule.--
(1) In general.--Notwithstanding any other provision of this
section, if, at the time that the individual's account is
exhausted, such individual's State is in an extended benefit
period (as determined under paragraph (2)), then, such account
shall be augmented by an amount equal to the amount originally
established in such account (as determined under subsection
(b)(1)).
(2) Extended benefit period.--For purposes of paragraph (1),
a State shall be considered to be in an extended benefit period
if, at the time of exhaustion (as described in paragraph (1))--
(A) such a period is then in effect for such State
under the Federal-State Extended Unemployment
Compensation Act of 1970; or
(B) such a period would then be in effect for such
State under such Act if section 203(d) of such Act were
applied as if it had been amended by striking ``5'' each
place it appears and inserting ``4''.
SEC. 204. PAYMENTS TO STATES HAVING AGREEMENTS FOR THE PAYMENT OF
TEMPORARY EXTENDED UNEMPLOYMENT COMPENSATION.
(a) General Rule.--There shall be paid to each State that has
entered into an agreement under this title an amount equal to 100
percent of the temporary extended unemployment compensation paid to
individuals by the State pursuant to such agreement.
(b) Treatment of Reimbursable Compensation.--No payment shall be
made to any State under this section in respect of any compensation to
the extent the State is entitled to reimbursement in respect of such
compensation under the provisions of any Federal law other than this
title or chapter 85 of title 5, United States Code. A State shall not be
entitled to any reimbursement under such chapter 85 in respect of any
compensation to the extent the State is entitled to reimbursement under
this title in respect of such compensation.
[[Page 116 STAT. 29]]
(c) Determination of Amount.--Sums payable to any State by reason of
such State having an agreement under this title shall be payable, either
in advance or by way of reimbursement (as may be determined by the
Secretary), in such amounts as the Secretary estimates the State will be
entitled to receive under this title for each calendar month, reduced or
increased, as the case may be, by any amount by which the Secretary
finds that the Secretary's estimates for any prior calendar month were
greater or less than the amounts which should have been paid to the
State. Such estimates may be made on the basis of such statistical,
sampling, or other method as may be agreed upon by the Secretary and the
State agency of the State involved.
SEC. 205. FINANCING PROVISIONS.
(a) In General.--Funds in the extended unemployment compensation
account (as established by section 905(a) of the Social Security Act (42
U.S.C. 1105(a)) of the Unemployment Trust Fund (as established by
section 904(a) of such Act (42 U.S.C. 1104(a)) shall be used for the
making of payments to States having agreements entered into under this
title.
(b) Certification.--The Secretary shall from time to time certify to
the Secretary of the Treasury for payment to each State the sums payable
to such State under this title. The Secretary of the Treasury, prior to
audit or settlement by the General Accounting Office, shall make
payments to the State in accordance with such certification, by
transfers from the extended unemployment compensation account (as so
established) to the account of such State in the Unemployment Trust Fund
(as so established).
(c) Assistance to States.--There are appropriated out of the
employment security administration account (as established by section
901(a) of the Social Security Act (42 U.S.C. 1101(a)) of the
Unemployment Trust Fund, without fiscal year limitation, such funds as
may be necessary for purposes of assisting States (as provided in title
III of the Social Security Act (42 U.S.C. 501 et seq.)) in meeting the
costs of administration of agreements under this title.
(d) Appropriations for Certain Payments.--There are appropriated
from the general fund of the Treasury, without fiscal year limitation,
to the extended unemployment compensation account (as so established) of
the Unemployment Trust Fund (as so established) such sums as the
Secretary estimates to be necessary to make the payments under this
section in respect of--
(1) compensation payable under chapter 85 of title 5, United
States Code; and
(2) compensation payable on the basis of services to which
section 3309(a)(1) of the Internal Revenue Code of 1986 applies.
Amounts appropriated pursuant to the preceding sentence shall not be
required to be repaid.
SEC. 206. FRAUD AND OVERPAYMENTS.
(a) In General.--If an individual knowingly has made, or caused to
be made by another, a false statement or representation of a material
fact, or knowingly has failed, or caused another to fail, to disclose a
material fact, and as a result of such false statement or representation
or of such nondisclosure such individual has received an amount of
temporary extended unemployment compensation under this title to which
he was not entitled, such individual--
[[Page 116 STAT. 30]]
(1) shall be ineligible for further temporary extended
unemployment compensation under this title in accordance with
the provisions of the applicable State unemployment compensation
law relating to fraud in connection with a claim for
unemployment compensation; and
(2) shall be subject to prosecution under section 1001 of
title 18, United States Code.
(b) Repayment.--In the case of individuals who have received amounts
of temporary extended unemployment compensation under this title to
which they were not entitled, the State shall require such individuals
to repay the amounts of such temporary extended unemployment
compensation to the State agency, except that the State agency may waive
such repayment if it determines that--
(1) the payment of such temporary extended unemployment
compensation was without fault on the part of any such
individual; and
(2) such repayment would be contrary to equity and good
conscience.
(c) Recovery by State Agency.--
(1) In general.--The State agency may recover the amount to
be repaid, or any part thereof, by deductions from any temporary
extended unemployment compensation payable to such individual
under this title or from any unemployment compensation payable
to such individual under any Federal unemployment compensation
law administered by the State agency or under any other Federal
law administered by the State agency which provides for the
payment of any assistance or allowance with respect to any week
of unemployment, during the 3-year period after the date such
individuals received the payment of the temporary extended
unemployment compensation to which they were not entitled,
except that no single deduction may exceed 50 percent of the
weekly benefit amount from which such deduction is made.
(2) Opportunity for hearing.--No repayment shall be
required, and no deduction shall be made, until a determination
has been made, notice thereof and an opportunity for a fair
hearing has been given to the individual, and the determination
has become final.
(d) Review.--Any determination by a State agency under this section
shall be subject to review in the same manner and to the same extent as
determinations under the State unemployment compensation law, and only
in that manner and to that extent.
SEC. 207. DEFINITIONS.
In this title, the terms ``compensation'', ``regular compensation'',
``extended compensation'', ``additional compensation'', ``benefit
year'', ``base period'', ``State'', ``State agency'', ``State law'', and
``week'' have the respective meanings given such terms under section 205
of the Federal-State Extended Unemployment Compensation Act of 1970 (26
U.S.C. 3304 note).
SEC. 208. APPLICABILITY.
An agreement entered into under this title shall apply to weeks of
unemployment--
(1) beginning after the date on which such agreement is
entered into; and
(2) ending before January 1, 2003.
[[Page 116 STAT. 31]]
SEC. 209. SPECIAL REED ACT TRANSFER IN FISCAL YEAR 2002.
(a) Repeal of Certain Provisions Added by the Balanced Budget Act of
1997.--
(1) In general.--The following provisions of section 903 of
the Social Security Act (42 U.S.C. 1103) are repealed:
(A) Paragraph (3) of subsection (a).
(B) The last sentence of subsection (c)(2).
(2) Savings provision.--Any amounts transferred before the
date of enactment of this Act under the provision repealed by
paragraph (1)(A) shall remain subject to section 903 of the
Social Security Act, as last in effect before such date of
enactment.
(b) Special Transfer in Fiscal Year 2002.--Section 903 of the Social
Security Act is amended by adding at the end the following:
``Special Transfer in Fiscal Year 2002
``(d)(1) The Secretary of the Treasury shall transfer (as of the
date determined under paragraph (5)) from the Federal unemployment
account to the account of each State in the Unemployment Trust Fund the
amount determined with respect to such State under paragraph (2).
``(2)(A) The amount to be transferred under this subsection to a
State account shall (as determined by the Secretary of Labor and
certified by such Secretary to the Secretary of the Treasury) be equal
to--
``(i) the amount which would have been required to have been
transferred under this section to such account at the beginning
of fiscal year 2002 if--
``(I) section 209(a)(1) of the Temporary Extended
Unemployment Compensation Act of 2002 had been enacted
before the close of fiscal year 2001, and
``(II) section 5402 of Public Law 105-33 (relating
to increase in Federal unemployment account ceiling) had
not been enacted,
minus
``(ii) the amount which was in fact transferred under this
section to such account at the beginning of fiscal year 2002.
``(B) Notwithstanding the provisions of subparagraph (A)--
``(i) the aggregate amount transferred to the States under
this subsection may not exceed a total of $8,000,000,000; and
``(ii) all amounts determined under subparagraph (A) shall
be reduced ratably, if and to the extent necessary in order to
comply with the limitation under clause (i).
``(3)(A) Except as provided in paragraph (4), amounts transferred to
a State account pursuant to this subsection may be used only in the
payment of cash benefits--
``(i) to individuals with respect to their unemployment, and
``(ii) which are allowable under subparagraph (B) or (C).
``(B)(i) At the option of the State, cash benefits under this
paragraph may include amounts which shall be payable as--
``(I) regular compensation, or
``(II) additional compensation, upon the exhaustion of any
temporary extended unemployment compensation (if such State has
entered into an agreement under the Temporary Extended
[[Page 116 STAT. 32]]
Unemployment Compensation Act of 2002), for individuals eligible
for regular compensation under the unemployment compensation law
of such State.
``(ii) Any additional compensation under clause (i) may not be taken
into account for purposes of any determination relating to the amount of
any extended compensation for which an individual might be eligible.
``(C)(i) At the option of the State, cash benefits under this
paragraph may include amounts which shall be payable to 1 or more
categories of individuals not otherwise eligible for regular
compensation under the unemployment compensation law of such State,
including those described in clause (iii).
``(ii) The benefits paid under this subparagraph to any individual
may not, for any period of unemployment, exceed the maximum amount of
regular compensation authorized under the unemployment compensation law
of such State for that same period, plus any additional compensation
(described in subparagraph (B)(i)) which could have been paid with
respect to that amount.
``(iii) The categories of individuals described in this clause
include the following:
``(I) Individuals who are seeking, or available for, only
part-time (and not full-time) work.
``(II) Individuals who would be eligible for regular
compensation under the unemployment compensation law of such
State under an alternative base period.
``(D) Amounts transferred to a State account under this subsection
may be used in the payment of cash benefits to individuals only for
weeks of unemployment beginning after the date of enactment of this
subsection.
``(4) Amounts transferred to a State account under this subsection
may be used for the administration of its unemployment compensation law
and public employment offices (including in connection with benefits
described in paragraph (3) and any recipients thereof), subject to the
same conditions as set forth in subsection (c)(2) (excluding
subparagraph (B) thereof, and deeming the reference to `subsections (a)
and (b)' in subparagraph (D) thereof to include this subsection).
``(5) <<NOTE: Deadline.>> Transfers under this subsection shall be
made within 10 days after the date of enactment of this paragraph.''.
(c) <<NOTE: Applicability.>> Limitations on Transfers.--Section
903(b) of the Social Security Act shall apply to transfers under section
903(d) of such Act (as amended by this section). For purposes of the
preceding sentence, such section 903(b) <<NOTE: 42 USC 1103.>> shall be
deemed to be amended as follows:
(1) By substituting ``the transfer date described in
subsection (d)(5)'' for ``October 1 of any fiscal year''.
(2) By substituting ``remain in the Federal unemployment
account'' for ``be transferred to the Federal unemployment
account as of the beginning of such October 1''.
(3) By substituting ``fiscal year 2002 (after the transfer
date described in subsection (d)(5))'' for ``the fiscal year
beginning on such October 1''.
(4) By substituting ``under subsection (d)'' for ``as of
October 1 of such fiscal year''.
(5) By substituting ``(as of the close of fiscal year
2002)'' for ``(as of the close of such fiscal year)''.
[[Page 116 STAT. 33]]
(d) Technical Amendments.--(1) Sections 3304(a)(4)(B) and 3306(f)(2)
of the Internal Revenue Code of 1986 <<NOTE: 26 USC 3304, 3306.>> are
amended by inserting ``or 903(d)(4)'' before ``of the Social Security
Act''.
(2) Section 303(a)(5) of the Social Security Act <<NOTE: 42 USC
503.>> is amended in the second proviso by inserting ``or 903(d)(4)''
after ``903(c)(2)''.
(e) Regulations.--The Secretary of Labor may prescribe any operating
instructions or regulations necessary to carry out this section and the
amendments made by this section.
TITLE III--TAX INCENTIVES FOR NEW YORK CITY AND DISTRESSED AREAS
SEC. 301. TAX BENEFITS FOR AREA OF NEW YORK CITY DAMAGED IN TERRORIST
ATTACKS ON SEPTEMBER 11, 2001.
(a) In General.--Chapter 1 is amended by adding at the end the
following new subchapter:
``Subchapter Y--New York Liberty Zone Benefits
``Sec. 1400L. Tax benefits for New York Liberty Zone.
``SEC. 1400L. TAX BENEFITS FOR NEW YORK LIBERTY ZONE.
``(a) Expansion of Work Opportunity Tax Credit.--
``(1) In general.--For purposes of section 51, a New York
Liberty Zone business employee shall be treated as a member of a
targeted group.
``(2) New york liberty zone business employee.--For purposes
of this subsection--
``(A) In general.--The term `New York Liberty Zone
business employee' means, with respect to any period,
any employee of a New York Liberty Zone business if
substantially all the services performed during such
period by such employee for such business are performed
in the New York Liberty Zone.
``(B) Inclusion of certain employees outside the new
york liberty zone.--
``(i) In general.--In the case of a New York
Liberty Zone business described in subclause (II)
of subparagraph (C)(i), the term `New York Liberty
Zone business employee' includes any employee of
such business (not described in subparagraph (A))
if substantially all the services performed during
such period by such employee for such business are
performed in the City of New York, New York.
``(ii) Limitation.--The number of employees of
such a business that are treated as New York
Liberty Zone business employees on any day by
reason of clause (i) shall not exceed the excess
of--
``(I) the number of employees of
such business on September 11, 2001, in
the New York Liberty Zone, over
``(II) the number of New York
Liberty Zone business employees
(determined without regard to this
subparagraph) of such business on the
day to which the limitation is being
applied.
[[Page 116 STAT. 34]]
The Secretary may require any trade or business to
have the number determined under subclause (I)
verified by the New York State Department of
Labor.
``(C) New york liberty zone business.--
``(i) In general.--The term `New York Liberty
Zone business' means any trade or business which
is--
``(I) located in the New York
Liberty Zone, or
``(II) located in the City of New
York, New York, outside the New York
Liberty Zone, as a result of the
physical destruction or damage of such
place of business by the September 11,
2001, terrorist attack.
``(ii) Credit not allowed for large
businesses.--The term `New York Liberty Zone
business' shall not include any trade or business
for any taxable year if such trade or business
employed an average of more than 200 employees on
business days during the taxable year.
``(D) Special rules for determining amount of
credit.--For purposes of applying subpart F of part IV
of subchapter B of this chapter to wages paid or
incurred to any New York Liberty Zone business
employee--
``(i) section 51(a) shall be applied by
substituting `qualified wages' for `qualified
first-year wages',
``(ii) the rules of section 52 shall apply for
purposes of determining the number of employees
under subparagraph (B),
``(iii) subsections (c)(4) and (i)(2) of
section 51 shall not apply, and
``(iv) in determining qualified wages, the
following shall apply in lieu of section 51(b):
``(I) Qualified wages.--The term
`qualified wages' means wages paid or
incurred by the employer to individuals
who are New York Liberty Zone business
employees of such employer for work
performed during calendar year 2002 or
2003.
``(II) Only first $6,000 of wages
per calendar year taken into account.--
The amount of the qualified wages which
may be taken into account with respect
to any individual shall not exceed
$6,000 per calendar year.
``(b) Special Allowance for Certain Property Acquired After
September 10, 2001.--
``(1) Additional allowance.--In the case of any qualified
New York Liberty 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 30
percent of the adjusted basis of such property, and
``(B) the adjusted basis of the qualified New York
Liberty 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.
[[Page 116 STAT. 35]]
``(2) Qualified new york liberty zone property.--For
purposes of this subsection--
``(A) In general.--The term `qualified New York
Liberty 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, which is described
in subparagraph (B),
``(ii) substantially all of the use of which
is in the New York Liberty 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 New
York Liberty Zone commences with the taxpayer
after September 10, 2001,
``(iv) which is acquired by the taxpayer by
purchase (as defined in section 179(d)) after
September 10, 2001, but only if no written binding
contract for the acquisition was in effect before
September 11, 2001, and
``(v) which is placed in service by the
taxpayer on or before the termination date.
The term `termination date' means December 31, 2006
(December 31, 2009, in the case of nonresidential real
property and residential rental property).
``(B) Eligible real property.--Nonresidential real
property or residential rental property is described in
this subparagraph only to the extent it rehabilitates
real property damaged, or replaces real property
destroyed or condemned, as a result of the September 11,
2001, terrorist attack. For purposes of the preceding
sentence, property shall be treated as replacing real
property destroyed or condemned if, as part of an
integrated plan, such property replaces real property
which is included in a continuous area which includes
real property destroyed or condemned.
``(C) Exceptions.--
``(i) 30 percent additional allowance
property.--Such term shall not include property to
which section 168(k) applies.
``(ii) Alternative depreciation property.--The
term `qualified New York Liberty Zone property'
shall not include any property described in
section 168(k)(2)(C)(i).
``(iii) Qualified new york liberty zone
leasehold improvement property.--Such term shall
not include any qualified New York Liberty Zone
leasehold improvement property.
``(iv) <<NOTE: Applicability.>> Election
out.--For purposes of this subsection, rules
similar to the rules of section 168(k)(2)(C)(iii)
shall apply.
``(D) <<NOTE: Applicability.>> Special rules.--For
purposes of this subsection, rules similar to the rules
of section 168(k)(2)(D) shall apply, except that clause
(i) thereof shall be applied without regard to `and
before September 11, 2004'.
``(E) <<NOTE: Applicability.>> Allowance against
alternative minimum tax.--For purposes of this
subsection, rules similar to the rules of section
168(k)(2)(F) shall apply.
[[Page 116 STAT. 36]]
``(c) 5-Year Recovery Period for Depreciation of Certain Leasehold
Improvements.--
``(1) In general.--For purposes of section 168, the term `5-
year property' includes any qualified New York Liberty Zone
leasehold improvement property.
``(2) Qualified new york liberty zone leasehold improvement
property.--For purposes of this section, the term `qualified New
York Liberty Zone leasehold improvement property' means
qualified leasehold improvement property (as defined in section
168(k)(3)) if--
``(A) such building is located in the New York
Liberty Zone,
``(B) such improvement is placed in service after
September 10, 2001, and before January 1, 2007, and
``(C) no written binding contract for such
improvement was in effect before September 11, 2001.
``(3) Requirement to use straight line method.--The
applicable depreciation method under section 168 shall be the
straight line method in the case of qualified New York Liberty
Zone leasehold improvement property.
``(4) 9-year recovery period under alternative system.--For
purposes of section 168(g), the class life of qualified New York
Liberty Zone leasehold improvement property shall be 9 years.
``(d) Tax-Exempt Bond Financing.--
``(1) In general.--For purposes of this title, any qualified
New York Liberty Bond shall be treated as an exempt facility
bond.
``(2) Qualified new york liberty bond.--For purposes of this
subsection, the term `qualified New York Liberty Bond' means any
bond issued as part of an issue if--
``(A) 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,
``(B) such bond is issued by the State of New York
or any political subdivision thereof,
``(C) the Governor or the Mayor designates such bond
for purposes of this section, and
``(D) such bond is issued after the date of the
enactment of this section and before January 1, 2005.
``(3) Limitations on amount of bonds.--
``(A) Aggregate amount designated.--The maximum
aggregate face amount of bonds which may be designated
under this subsection shall not exceed $8,000,000,000,
of which not to exceed $4,000,000,000 may be designated
by the Governor and not to exceed $4,000,000,000 may be
designated by the Mayor.
``(B) Specific limitations.--The aggregate face
amount of bonds issued which are to be used for--
``(i) costs for property located outside the
New York Liberty Zone shall not exceed
$2,000,000,000,
``(ii) residential rental property shall not
exceed $1,600,000,000, and
``(iii) costs with respect to property used
for retail sales of tangible property and
functionally related and subordinate property
shall not exceed $800,000,000.
[[Page 116 STAT. 37]]
The limitations under clauses (i), (ii), and (iii) shall
be allocated proportionately between the bonds
designated by the Governor and the bonds designated by
the Mayor in proportion to the respective amounts of
bonds designated by each.
``(C) 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--
``(A) In general.--The term `qualified project
costs' means the cost of acquisition, construction,
reconstruction, and renovation of--
``(i) nonresidential real property and
residential rental property (including fixed
tenant improvements associated with such property)
located in the New York Liberty Zone, and
``(ii) public utility property (as defined in
section 168(i)(10)) located in the New York
Liberty Zone.
``(B) Costs for certain property outside zone
included.--Such term includes the cost of acquisition,
construction, reconstruction, and renovation of
nonresidential real property (including fixed tenant
improvements associated with such property) located
outside the New York Liberty Zone but within the City of
New York, New York, if such property is part of a
project which consists of at least 100,000 square feet
of usable office or other commercial space located in a
single building or multiple adjacent buildings.
``(5) Special rules.--In applying this title to any
qualified New York Liberty Bond, the following modifications
shall apply:
``(A) Section 146 (relating to volume cap) shall not
apply.
``(B) <<NOTE: Applicability.>> Section 147(d)
(relating to acquisition of existing property not
permitted) shall be applied by substituting `50 percent'
for `15 percent' each place it appears.
``(C) <<NOTE: Applicability.>> 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
issued under this section.
``(D) Repayments of principal on financing provided
by the issue--
``(i) may not be used to provide financing,
and
``(ii) must be used not later than the close
of the 1st semiannual period beginning after the
date of the repayment to redeem bonds which are
part of such issue.
The requirement of clause (ii) shall be treated as met
with respect to amounts received within 10 years after
the date of issuance of the issue (or, in the case of a
refunding bond, the date of issuance of the original
bond) if such amounts are used by the close of such 10
years to redeem bonds which are part of such issue.
``(E) Section 57(a)(5) 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
[[Page 116 STAT. 38]]
bond (determined without regard to paragraph (1)), if the issuer
elects to so treat such portion.
``(e) Advance Refundings of Certain Tax-Exempt Bonds.--
``(1) In general.--With respect to a bond described in
paragraph (2) issued as part of an issue 90 percent (95 percent
in the case of a bond described in paragraph (2)(C)) or more of
the net proceeds (as defined in section 150(a)(3)) of which were
used to finance facilities located within the City of New York,
New York (or property which is functionally related and
subordinate to facilities located within the City of New York
for the furnishing of water), one additional advanced refunding
after the date of the enactment of this section and before
January 1, 2005, shall be allowed under the applicable rules of
section 149(d) if--
``(A) the Governor or the Mayor designates the
advance refunding bond for purposes of this subsection,
and
``(B) the requirements of paragraph (4) are met.
``(2) Bonds described.--A bond is described in this
paragraph if such bond was outstanding on September 11, 2001,
and is--
``(A) a State or local bond (as defined in section
103(c)(1)) which is a general obligation of the City of
New York, New York,
``(B) a State or local bond (as so defined) other
than a private activity bond (as defined in section
141(a)) issued by the New York Municipal Water Finance
Authority or the Metropolitan Transportation Authority
of the State of New York, or
``(C) a qualified 501(c)(3) bond (as defined in
section 145(a)) which is a qualified hospital bond (as
defined in section 145(c)) issued by or on behalf of the
State of New York or the City of New York, New York.
``(3) Aggregate limit.--For purposes of paragraph (1), the
maximum aggregate face amount of bonds which may be designated
under this subsection by the Governor shall not exceed
$4,500,000,000 and the maximum aggregate face amount of bonds
which may be designated under this subsection by the Mayor shall
not exceed $4,500,000,000.
``(4) Additional requirements.--The requirements of this
paragraph are met with respect to any advance refunding of a
bond described in paragraph (2) if--
``(A) no advance refundings of such bond would be
allowed under any provision of law after September 11,
2001,
``(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.
``(f) Increase in Expensing Under Section 179.--
``(1) In general.--For purposes of section 179--
``(A) the limitation under section 179(b)(1) shall
be increased by the lesser of--
``(i) $35,000, or
``(ii) the cost of section 179 property which
is qualified New York Liberty Zone property placed
in service during the taxable year, and
[[Page 116 STAT. 39]]
``(B) the amount taken into account under section
179(b)(2) with respect to any section 179 property which
is qualified New York Liberty Zone property shall be 50
percent of the cost thereof.
``(2) Qualified new york liberty zone property.--For
purposes of this subsection, the term `qualified New York
Liberty Zone property' has the meaning given such term by
subsection (b)(2).
``(3) <<NOTE: Applicability.>> Recapture.--Rules similar to
the rules under section 179(d)(10) shall apply with respect to
any qualified New York Liberty Zone property which ceases to be
used in the New York Liberty Zone.
``(g) <<NOTE: Applicability.>> Extension of Replacement Period for
Nonrecognition of Gain.--Notwithstanding subsections (g) and (h) of
section 1033, clause (i) of section 1033(a)(2)(B) shall be applied by
substituting `5 years' for `2 years' with respect to property which is
compulsorily or involuntarily converted as a result of the terrorist
attacks on September 11, 2001, in the New York Liberty Zone but only if
substantially all of the use of the replacement property is in the City
of New York, New York.
``(h) New York Liberty Zone.--For purposes of this section, the term
`New York Liberty Zone' means the area located on or south of Canal
Street, East Broadway (east of its intersection with Canal Street), or
Grand Street (east of its intersection with East Broadway) in the
Borough of Manhattan in the City of New York, New York.
``(i) References to Governor and Mayor.--For purposes of this
section, the terms `Governor' and `Mayor' mean the Governor of the State
of New York and the Mayor of the City of New York, New York,
respectively.''.
(b) Credit Allowed Against Regular and Minimum Tax.--
(1) In general.--Subsection (c) of section 38 <<NOTE: 26 USC
38.>> (relating to limitation based on amount of tax) is
amended by redesignating paragraph (3) as paragraph (4) and by
inserting after paragraph (2) the following new paragraph:
``(3) Special rules for new york liberty zone business
employee credit.--
``(A) In general.--In the case of the New York
Liberty Zone business employee credit--
``(i) <<NOTE: Applicability.>> this section
and section 39 shall be applied separately with
respect to such credit, and
``(ii) in applying paragraph (1) to such
credit--
``(I) the tentative minimum tax
shall be treated as being zero, and
``(II) the limitation under
paragraph (1) (as modified by subclause
(I)) shall be reduced by the credit
allowed under subsection (a) for the
taxable year (other than the New York
Liberty Zone business employee credit).
``(B) New york liberty zone business employee
credit.--For purposes of this subsection, the term `New
York Liberty Zone business employee credit' means the
portion of work opportunity credit under section 51
determined under section 1400L(a).''.
(2) Conforming amendment.--Subclause (II) of section
38(c)(2)(A)(ii) is amended by inserting ``or the New York
Liberty Zone business employee credit'' after ``employment
credit''.
[[Page 116 STAT. 40]]
(3) <<NOTE: Applicability. 26 USC 38 note.>> Effective
date.--The amendments made by this subsection shall apply to
taxable years ending after December 31, 2001.
(c) Clerical Amendment.--The table of subchapters for chapter 1 is
amended by adding at the end the following new item:
``Subchapter Y--New York Liberty Zone Benefits.''.
TITLE IV--MISCELLANEOUS AND TECHNICAL PROVISIONS
Subtitle A--General Miscellaneous Provisions
SEC. 401. ALLOWANCE OF ELECTRONIC 1099'S. <<NOTE: 26 USC 6041 note.>>
Any person required to furnish a statement under any section of
subpart B of part III of subchapter A of chapter 61 of the Internal
Revenue Code of 1986 for any taxable year ending after the date of the
enactment of this Act, may electronically furnish such statement
(without regard to any first class mailing requirement) to any recipient
who has consented to the electronic provision of the statement in a
manner similar to the one permitted under regulations issued under
section 6051 of such Code or in such other manner as provided by the
Secretary.
SEC. 402. EXCLUDED CANCELLATION OF INDEBTEDNESS INCOME OF S CORPORATION
NOT TO RESULT IN ADJUSTMENT TO BASIS OF STOCK OF
SHAREHOLDERS.
(a) In General.--Subparagraph (A) of section <<NOTE: 26 USC 108.>>
108(d)(7) (relating to certain provisions to be applied at corporate
level) is amended by inserting before the period ``, including by not
taking into account under section 1366(a) any amount excluded under
subsection (a) of this section''.
(b) <<NOTE: 26 USC 108 note.>> Effective Date.--
(1) <<NOTE: Applicability.>> In general.--Except as
provided in paragraph (2), the amendment made by this section
shall apply to discharges of indebtedness after October 11,
2001, in taxable years ending after such date.
(2) Exception.--The amendment made by this section shall not
apply to any discharge of indebtedness before March 1, 2002,
pursuant to a plan of reorganization filed with a bankruptcy
court on or before October 11, 2001.
SEC. 403. LIMITATION ON USE OF NONACCRUAL EXPERIENCE METHOD OF
ACCOUNTING.
(a) In General.--Paragraph (5) of section 448(d) is amended to read
as follows:
``(5) Special rule for certain services.--
``(A) In general.--In the case of any person using
an accrual method of accounting with respect to amounts
to be received for the performance of services by such
person, such person shall not be required to accrue any
portion of such amounts which (on the basis of such
person's experience) will not be collected if--
[[Page 116 STAT. 41]]
``(i) such services are in fields referred to
in paragraph (2)(A), or
``(ii) such person meets the gross receipts
test of subsection (c) for all prior taxable
years.
``(B) Exception.--This paragraph shall not apply to
any amount if interest is required to be paid on such
amount or there is any penalty for failure to timely pay
such amount.
``(C) Regulations.--The Secretary shall prescribe
regulations to permit taxpayers to determine amounts
referred to in subparagraph (A) using computations or
formulas which, based on experience, accurately reflect
the amount of income that will not be collected by such
person. A taxpayer may adopt, or request consent of the
Secretary to change to, a computation or formula that
clearly reflects the taxpayer's experience. A request
under the preceding sentence shall be approved if such
computation or formula clearly reflects the taxpayer's
experience.''.
(b) <<NOTE: 26 USC 448 note.>> Effective Date.--
(1) <<NOTE: Applicability.>> In general.--The amendments
made by this section shall apply to taxable years ending after
the date of the enactment of this Act.
(2) Change in method of accounting.--In the case of any
taxpayer required by the amendments made by this section to
change its method of accounting for its first taxable year
ending after the date of the enactment of this Act--
(A) such change shall be treated as initiated by the
taxpayer,
(B) such change shall be treated as made with the
consent of the Secretary of the Treasury, and
(C) the net amount of the adjustments required to be
taken into account by the taxpayer under section 481 of
the Internal Revenue Code of 1986 shall be taken into
account over a period of 4 years (or if less, the number
of taxable years that the taxpayer used the method
permitted under section 448(d)(5) of such Code as in
effect before the date of the enactment of this Act)
beginning with such first taxable year.
SEC. 404. EXCLUSION FOR FOSTER CARE PAYMENTS TO APPLY TO PAYMENTS BY
QUALIFIED PLACEMENT AGENCIES.
(a) In General.--The matter preceding subparagraph (B) of section
131(b)(1) <<NOTE: 26 USC 131.>> (defining qualified foster care
payment) is amended to read as follows:
``(1) In general.--The term `qualified foster care payment'
means any payment made pursuant to a foster care program of a
State or political subdivision thereof--
``(A) which is paid by--
``(i) a State or political subdivision
thereof, or
``(ii) a qualified foster care placement
agency, and''.
(b) Qualified Foster Individuals To Include Individuals Placed by
Qualified Placement Agencies.--Subparagraph (B) of section 131(b)(2)
(defining qualified foster individual) is amended to read as follows:
``(B) a qualified foster care placement agency.''.
(c) Qualified Foster Care Placement Agency Defined.--Subsection (b)
of section 131 is amended by redesignating paragraph
[[Page 116 STAT. 42]]
(3) as paragraph (4) and by inserting after paragraph (2) the following
new paragraph:
``(3) Qualified foster care placement agency.--The term
`qualified foster care placement agency' means any placement
agency which is licensed or certified by--
``(A) a State or political subdivision thereof, or
``(B) an entity designated by a State or political
subdivision thereof,
for the foster care program of such State or political
subdivision to make foster care payments to providers of foster
care.''.
(d) <<NOTE: Applicability. 26 USC 131 note.>> Effective Date.--The
amendments made by this section shall apply to taxable years beginning
after December 31, 2001.
SEC. 405. INTEREST RATE RANGE FOR ADDITIONAL FUNDING REQUIREMENTS.
(a) Amendments to the Internal Revenue Code of 1986.--
(1) Special rule.--Clause (i) of section <<NOTE: 26 USC
412.>> 412(l)(7)(C) (relating to interest rate) is amended by
adding at the end the following new subclause:
``(III) Special rule for 2002 and
2003.--For a plan year beginning in 2002
or 2003, notwithstanding subclause (I),
in the case that the rate of interest
used under subsection (b)(5) exceeds the
highest rate permitted under subclause
(I), the rate of interest used to
determine current liability under this
subsection may exceed the rate of
interest otherwise permitted under
subclause (I); except that such rate of
interest shall not exceed 120 percent of
the weighted average referred to in
subsection (b)(5)(B)(ii).''.
(2) Quarterly contributions.--Subsection (m) of section 412
is amended by adding at the end the following new paragraph:
``(7) Special rules for 2002 and 2004.--In any case in which
the interest rate used to determine current liability is
determined under subsection (l)(7)(C)(i)(III)--
``(A) 2002.--For purposes of applying paragraphs (1)
and (4)(B)(ii) for plan years beginning in 2002, the
current liability for the preceding plan year shall be
redetermined using 120 percent as the specified
percentage determined under subsection (l)(7)(C)(i)(II).
``(B) 2004.--For purposes of applying paragraphs (1)
and (4)(B)(ii) for plan years beginning in 2004, the
current liability for the preceding plan year shall be
redetermined using 105 percent as the specified
percentage determined under subsection
(l)(7)(C)(i)(II).''.
(b) Amendments to the Employee Retirement Income Security Act of
1974.--
(1) Special rule.--Clause (i) of section 302(d)(7)(C) of
such Act (29 U.S.C. 1082(d)(7)(C)) is amended by adding at the
end the following new subclause:
``(III) Special rule for 2002 and
2003.--For a plan year beginning in 2002
or 2003, notwithstanding subclause (I),
in the case that the rate of interest
used under subsection (b)(5) exceeds the
highest rate permitted under subclause
(I), the rate of interest used to
determine current
[[Page 116 STAT. 43]]
liability under this subsection may
exceed the rate of interest otherwise
permitted under subclause (I); except
that such rate of interest shall not
exceed 120 percent of the weighted
average referred to in subsection
(b)(5)(B)(ii).''.
(2) Quarterly contributions.--Subsection (e) of section 302
of such Act (29 U.S.C. 1082) is amended by adding at the end the
following new paragraph:
``(7) Special rules for 2002 and 2004.--In any case in which
the interest rate used to determine current liability is
determined under subsection (d)(7)(C)(i)(III)--
``(A) 2002.--For purposes of applying paragraphs (1)
and (4)(B)(ii) for plan years beginning in 2002, the
current liability for the preceding plan year shall be
redetermined using 120 percent as the specified
percentage determined under subsection (d)(7)(C)(i)(II).
``(B) 2004.--For purposes of applying paragraphs (1)
and (4)(B)(ii) for plan years beginning in 2004, the
current liability for the preceding plan year shall be
redetermined using 105 percent as the specified
percentage determined under subsection
(d)(7)(C)(i)(II).''.
(c) PBGC.--Clause (iii) of section 4006(a)(3)(E) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1306(a)(3)(E)) is
amended by adding at the end the following new subclause:
``(IV) <<NOTE: Applicability.>> In the case of plan years beginning
after December 31, 2001, and before January 1, 2004, subclause (II)
shall be applied by substituting `100 percent' for `85 percent'.
Subclause (III) shall be applied for such years without regard to the
preceding sentence. Any reference to this clause by any other sections
or subsections shall be treated as a reference to this clause without
regard to this subclause.''.
SEC. 406. ADJUSTED GROSS INCOME DETERMINED BY TAKING INTO ACCOUNT
CERTAIN EXPENSES OF ELEMENTARY AND SECONDARY SCHOOL
TEACHERS.
(a) In General.--Section 62(a)(2) <<NOTE: 26 USC 62.>> (relating to
certain trade and business deductions of employees) is amended by adding
at the end the following:
``(D) Certain expenses of elementary and secondary
school teachers.--In the case of taxable years beginning
during 2002 or 2003, the deductions allowed by section
162 which consist of expenses, not in excess of $250,
paid or incurred by an eligible educator in connection
with books, supplies (other than nonathletic supplies
for courses of instruction in health or physical
education), computer equipment (including related
software and services) and other equipment, and
supplementary materials used by the eligible educator in
the classroom.''.
(b) Eligible Educator.--Section 62 is amended by adding at the end
the following:
``(d) Definition; Special Rules.--
``(1) Eligible educator.--
``(A) In general.--For purposes of subsection
(a)(2)(D), the term `eligible educator' means, with
respect to any taxable year, an individual who is a
kindergarten through grade 12 teacher, instructor,
counselor, principal, or aide in a school for at least
900 hours during a school year.
[[Page 116 STAT. 44]]
``(B) School.--The term `school' means any school
which provides elementary education or secondary
education (kindergarten through grade 12), as determined
under State law.
``(2) Coordination with exclusions.--A deduction shall be
allowed under subsection (a)(2)(D) for expenses only to the
extent the amount of such expenses exceeds the amount excludable
under section 135, 529(c)(1), or 530(d)(2) for the taxable
year.''.
(c) <<NOTE: Applicability. 26 USC 62 note.>> Effective Date.--The
amendments made by this section shall apply to taxable years beginning
after December 31, 2001.
Subtitle B--Technical Corrections
SEC. 411. AMENDMENTS RELATED TO ECONOMIC GROWTH AND TAX RELIEF
RECONCILIATION ACT OF 2001.
(a) Amendments Related to Section 101 of the Act.--
(1) In general.--Subsection (b) of section 6428 <<NOTE: 26
USC 6428.>> is amended to read as follows:
``(b) Credit Treated as Nonrefundable Personal Credit.--For purposes
of this title, the credit allowed under this section shall be treated as
a credit allowable under subpart A of part IV of subchapter A of chapter
1.''.
(2) Conforming amendments.--
(A) Subsection (d) of section 6428 is amended to
read as follows:
``(d) Coordination with Advance Refunds of Credit.--
``(1) In general.--The amount of credit which would (but for
this paragraph) be allowable under this section shall be reduced
(but not below zero) by the aggregate refunds and credits made
or allowed to the taxpayer under subsection (e). Any failure to
so reduce the credit shall be treated as arising out of a
mathematical or clerical error and assessed according to section
6213(b)(1).
``(2) Joint returns.--In the case of a refund or credit made
or allowed under subsection (e) with respect to a joint return,
half of such refund or credit shall be treated as having been
made or allowed to each individual filing such return.''.
(B) Paragraph (2) of section 6428(e) is amended to
read as follows:
``(2) Advance refund amount.--For purposes of paragraph (1),
the advance refund amount is the amount that would have been
allowed as a credit under this section for such first taxable
year if--
``(A) this section (other than subsections (b) and
(d) and this subsection) had applied to such taxable
year, and
``(B) the credit for such taxable year were not
allowed to exceed the excess (if any) of--
``(i) the sum of the regular tax liability (as
defined in section 26(b)) plus the tax imposed by
section 55, over
``(ii) the sum of the credits allowable under
part IV of subchapter A of chapter 1 (other than
the credits allowable under subpart C thereof,
relating to refundable credits).''.
[[Page 116 STAT. 45]]
(b) Amendment Related to Section 201 of the Act.--Subparagraph (B)
of section 24(d)(1) <<NOTE: 26 USC 24.>> is amended by striking
``amount of credit allowed by this section'' and inserting ``aggregate
amount of credits allowed by this subpart''.
(c) Amendments Related to Section 202 of the Act.--
(1) Corrections to credit for adoption expenses.--
(A) Paragraph (1) of section 23(a) is amended to
read as follows:
``(1) In general.--In the case of an individual, there shall
be allowed as a credit against the tax imposed by this chapter
the amount of the qualified adoption expenses paid or incurred
by the taxpayer.''.
(B) Subsection (a) of section 23 is amended by
adding at the end the following new paragraph:
``(3) $10,000 credit for adoption of child with special
needs regardless of expenses.--In the case of an adoption of a
child with special needs which becomes final during a taxable
year, the taxpayer shall be treated as having paid during such
year qualified adoption expenses with respect to such adoption
in an amount equal to the excess (if any) of $10,000 over the
aggregate qualified adoption expenses actually paid or incurred
by the taxpayer with respect to such adoption during such
taxable year and all prior taxable years.''.
(C) Paragraph (2) of section 23(a) is amended by
striking the last sentence.
(D) Paragraph (1) of section 23(b) is amended by
striking ``subsection (a)(1)(A)'' and inserting
``subsection (a)''.
(E) Subsection (i) of section 23 is amended by
striking ``the dollar limitation in subsection (b)(1)''
and inserting ``the dollar amounts in subsections (a)(3)
and (b)(1)''.
(F) <<NOTE: 26 USC 23 note.>> Expenses paid or
incurred during any taxable year beginning before
January 1, 2002, may be taken into account in
determining the credit under section 23 of the Internal
Revenue Code of 1986 only to the extent the aggregate of
such expenses does not exceed the applicable limitation
under section 23(b)(1) of such Code as in effect on the
day before the date of the enactment of the Economic
Growth and Tax Relief Reconciliation Act of 2001.
(2) Corrections to exclusion for employer-provided adoption
assistance.--
(A) Subsection (a) of section 137 is amended to read
as follows:
``(a) Exclusion.--
``(1) In general.--Gross income of an employee does not
include amounts paid or expenses incurred by the employer for
qualified adoption expenses in connection with the adoption of a
child by an employee if such amounts are furnished pursuant to
an adoption assistance program.
``(2) $10,000 exclusion for adoption of child with special
needs regardless of expenses.--In the case of an adoption of a
child with special needs which becomes final during a taxable
year, the qualified adoption expenses with respect to such
adoption for such year shall be increased by an amount equal to
the excess (if any) of $10,000 over the actual aggregate
qualified adoption expenses with respect to such adoption during
such taxable year and all prior taxable years.''.
[[Page 116 STAT. 46]]
(B) Paragraph (2) of section 137(b) <<NOTE: 26 USC
137.>> is amended by striking ``subsection (a)(1)'' and
inserting ``subsection (a)''.
(3) <<NOTE: Applicability. 26 USC 23 note.>> Effective
date.--The amendments made by this subsection shall apply to
taxable years beginning after December 31, 2002; except that the
amendments made by paragraphs (1)(C), (1)(D), and (2)(B) shall
apply to taxable years beginning after December 31, 2001.
(d) Amendments Related to Section 205 of the Act.--
(1) Section 45F(d)(4)(B) is amended by striking ``subpart A,
B, or D of this part'' and inserting ``this chapter or for
purposes of section 55''.
(2) Section 38(b)(15) is amended by striking ``45F'' and
inserting ``45F(a)''.
(e) Amendments Related to Section 301 of the Act.--
(1) Section 63(c)(2) is amended--
(A) in subparagraph (A), by striking ``subparagraph
(C)'' and inserting ``subparagraph (D)'',
(B) by striking ``or'' at the end of subparagraph
(B),
(C) by redesignating subparagraph (C) as
subparagraph (D),
(D) by inserting after subparagraph (B) the
following new subparagraph:
``(C) one-half of the amount in effect under
subparagraph (A) in the case of a married individual
filing a separate return, or'', and
(E) by inserting the following flush sentence at the
end:
``If any amount determined under subparagraph (A) is not
a multiple of $50, such amount shall be rounded to the
next lowest multiple of $50.''.
(2)(A) Section 63(c)(4) is amended by striking ``paragraph
(2) or (5)'' and inserting ``paragraph (2)(B), (2)(D), or (5)''.
(B) Section 63(c)(4)(B)(i) is amended by striking
``paragraph (2)'' and inserting ``paragraph (2)(B), (2)(D),''.
(C) Section 63(c)(4) is amended by striking the flush
sentence at the end (as added by section 301(c)(2) of Public Law
107-17).
(f) Amendment Related to Section 401 of the Act.--Section
530(d)(4)(B)(iv) is amended by striking ``because the taxpayer elected
under paragraph (2)(C) to waive the application of paragraph (2)'' and
inserting ``by application of paragraph (2)(C)(i)(II)''.
(g) Amendments Related to Section 511 of the Act.--
(1) Section 2511(c) is amended by striking ``taxable gift
under section 2503,'' and inserting ``transfer of property by
gift,''.
(2) Section 2101(b) is amended by striking the last
sentence.
(h) Amendment Related to Section 532 of the Act.--Section 2016 is
amended by striking ``any State, any possession of the United States, or
the District of Columbia,''.
(i) Amendments Relating to Section 602 of the Act.--
(1) Subparagraph (A) of section 408(q)(3) is amended to read
as follows:
``(A) Qualified employer plan.--The term `qualified
employer plan' has the meaning given such term by
section 72(p)(4)(A)(i); except that such term shall also
include an eligible deferred compensation plan (as
defined in section
[[Page 116 STAT. 47]]
457(b)) of an eligible employer described in section
457(e)(1)(A).''.
(2) Section 4(c) of Employee Retirement Income Security Act
of 1974 <<NOTE: 29 USC 1003.>> is amended--
(A) by inserting ``and part 5 (relating to
administration and enforcement)'' before the period at
the end, and
(B) by adding at the end the following new sentence:
``Such <<NOTE: Applicability.>> provisions shall apply
to such accounts and annuities in a manner similar to
their application to a simplified employee pension under
section 408(k) of the Internal Revenue Code of 1986.''.
(j) Amendments Relating to Section 611 of the Act.--
(1) Section 408(k) <<NOTE: 26 USC 408.>> is amended--
(A) in paragraph (2)(C) by striking ``$300'' and
inserting ``$450'', and
(B) in paragraph (8) by striking ``$300'' both
places it appears and inserting ``$450''.
(2) Section 409(o)(1)(C)(ii) is amended--
(A) by striking ``$500,000'' both places it appears
and inserting ``$800,000'', and
(B) by striking ``$100,000'' and inserting
``$160,000''.
(3) Section 611(i) of the Economic Growth and Tax Relief
Reconciliation Act of 2001 <<NOTE: 26 USC 415 note.>> is
amended by adding at the end the following new paragraph:
``(3) Special rule.--In the case of plan that, on June 7,
2001, incorporated by reference the limitation of section
415(b)(1)(A) of the Internal Revenue Code of 1986, section
411(d)(6) of such Code and section 204(g)(1) of the Employee
Retirement Income Security Act of 1974 do not apply to a plan
amendment that--
``(A) is adopted on or before June 30, 2002,
``(B) reduces benefits to the level that would have
applied without regard to the amendments made by
subsection (a) of this section, and
``(C) is effective no earlier than the years
described in paragraph (2).''.
(k) Amendments Relating to Section 613 of the Act.--
(1) Section 416(c)(1)(C)(iii) is amended by striking
``Exception for frozen plan'' and inserting ``Exception for plan
under which no key employee (or former key employee) benefits
for plan year''.
(2) Section 416(g)(3)(B) is amended by striking ``separation
from service'' and inserting ``severance from employment''.
(l) Amendments Relating to Sections 614 and 616 of the Act.--
(1) Section 404(a)(12) is amended by striking ``(9),'' and
inserting ``(9) and subsection (h)(1)(C),''.
(2) Section 404(n) is amended by striking ``subsection
(a),'' and inserting ``subsection (a) or paragraph (1)(C) of
subsection (h)''.
(3) Section 402(h)(2)(A) is amended by striking ``15
percent'' and inserting ``25 percent''.
(4) Section 404(a)(7)(C) is amended to read as follows:
``(C) Paragraph not to apply in certain cases.--
``(i) Beneficiary test.--This paragraph shall
not have the effect of reducing the amount
otherwise deductible under paragraphs (1), (2),
and (3), if no
[[Page 116 STAT. 48]]
employee is a beneficiary under more than 1 trust
or under a trust and an annuity plan.
``(ii) Elective deferrals.--If, in connection
with 1 or more defined contribution plans and 1 or
more defined benefit plans, no amounts (other than
elective deferrals (as defined in section
402(g)(3))) are contributed to any of the defined
contribution plans for the taxable year, then
subparagraph (A) shall not apply with respect to
any of such defined contribution plans and defined
benefit plans.''.
(m) Amendment Relating to Section 618 of the Act.--Section
25B(d)(2)(A) <<NOTE: 26 USC 25B.>> is amended to read as follows:
``(A) In general.--The qualified retirement savings
contributions determined under paragraph (1) shall be
reduced (but not below zero) by the aggregate
distributions received by the individual during the
testing period from any entity of a type to which
contributions under paragraph (1) may be made. The
preceding sentence shall not apply to the portion of any
distribution which is not includible in gross income by
reason of a trustee-to-trustee transfer or a rollover
distribution.''.
(n) Amendments Relating to Section 619 of the Act.--
(1) Section 45E(e)(1) is amended by striking ``(n)'' and
inserting ``(m)''.
(2) Section 619(d) of the Economic Growth and Tax Relief
Reconciliation Act of 2001 <<NOTE: 26 USC 38 note.>> is amended
by striking ``established'' and inserting ``first effective''.
(o) Amendments Relating to Section 631 of the Act.--
(1) Section 402(g)(1) is amended by adding at the end the
following:
``(C) Catch-up contributions.--In addition to
subparagraph (A), in the case of an eligible participant
(as defined in section 414(v)), gross income shall not
include elective deferrals in excess of the applicable
dollar amount under subparagraph (B) to the extent that
the amount of such elective deferrals does not exceed
the applicable dollar amount under section
414(v)(2)(B)(i) for the taxable year (without regard to
the treatment of the elective deferrals by an applicable
employer plan under section 414(v)).''.
(2) Section 401(a)(30) is amended by striking ``402(g)(1)''
and inserting ``402(g)(1)(A)''.
(3) Section 414(v)(2) is amended by adding at the end the
following:
``(D) Aggregation of plans.--For purposes of this
paragraph, plans described in clauses (i), (ii), and
(iv) of paragraph (6)(A) that are maintained by the same
employer (as determined under subsection (b), (c), (m)
or (o)) shall be treated as a single plan, and plans
described in clause (iii) of paragraph (6)(A) that are
maintained by the same employer shall be treated as a
single plan.''.
(4) Section 414(v)(3)(A)(i) is amended by striking ``section
402(g), 402(h), 403(b), 404(a), 404(h), 408(k), 408(p), 415, or
457'' and inserting ``sections 401(a)(30), 402(h), 403(b), 408,
415(c), and 457(b)(2) (determined without regard to section
457(b)(3))''.
(5) Section 414(v)(3)(B) is amended by striking ``section
401(a)(4), 401(a)(26), 401(k)(3), 401(k)(11), 401(k)(12),
[[Page 116 STAT. 49]]
403(b)(12), 408(k), 408(p), 408B, 410(b), or 416'' and inserting
``section 401(a)(4), 401(k)(3), 401(k)(11), 403(b)(12), 408(k),
410(b), or 416''.
(6) Section 414(v)(4)(B) <<NOTE: 26 USC 414.>> is amended
by inserting before the period at the end the following: ``,
except that a plan described in clause (i) of section
410(b)(6)(C) shall not be treated as a plan of the employer
until the expiration of the transition period with respect to
such plan (as determined under clause (ii) of such section)''.
(7) Section 414(v)(5) is amended--
(A) by striking ``, with respect to any plan year,''
in the matter preceding subparagraph (A),
(B) by amending subparagraph (A) to read as follows:
``(A) who would attain age 50 by the end of the
taxable year,'', and
(C) in subparagraph (B) by striking ``plan year''
and inserting ``plan (or other applicable) year''.
(8) Section 414(v)(6)(C) is amended to read as follows:
``(C) Exception for section 457 plans.--This
subsection shall not apply to a participant for any year
for which a higher limitation applies to the participant
under section 457(b)(3).''.
(9) Section 457(e) is amended by adding at the end the
following new paragraph:
``(18) Coordination with catch-up contributions for
individuals age 50 or older.--In the case of an individual who
is an eligible participant (as defined by section 414(v)) and
who is a participant in an eligible deferred compensation plan
of an employer described in paragraph (1)(A), subsections (b)(3)
and (c) shall be applied by substituting for the amount
otherwise determined under the applicable subsection the greater
of--
``(A) the sum of--
``(i) the plan ceiling established for
purposes of subsection (b)(2) (without regard to
subsection (b)(3)), plus
``(ii) the applicable dollar amount for the
taxable year determined under section
414(v)(2)(B)(i), or
``(B) the amount determined under the applicable
subsection (without regard to this paragraph).''.
(p) Amendments Relating to Section 632 of the Act.--
(1) Section 403(b)(1) is amended in the matter following
subparagraph (E) by striking ``then amounts contributed'' and
all that follows and inserting the following:
``then contributions and other additions by such employer
for such annuity contract shall be excluded from the gross
income of the employee for the taxable year to the extent that
the aggregate of such contributions and additions (when
expressed as an annual addition (within the meaning of section
415(c)(2))) does not exceed the applicable limit under section
415. The amount actually distributed to any distributee under
such contract shall be taxable to the distributee (in the year
in which so distributed) under section 72 (relating to
annuities). For purposes of applying the rules of this
subsection to contributions and other additions by an employer
for a taxable year, amounts transferred to a contract described
in this paragraph by reason of a rollover contribution described
in paragraph
[[Page 116 STAT. 50]]
(8) of this subsection or section 408(d)(3)(A)(ii) shall not be
considered contributed by such employer.''.
(2) Section 403(b) <<NOTE: 26 USC 403.>> is amended by
striking paragraph (6).
(3) Section 403(b)(3) is amended--
(A) in the first sentence by inserting the following
before the period at the end: ``, and which precedes the
taxable year by no more than five years'', and
(B) in the second sentence by striking ``or any
amount received by a former employee after the fifth
taxable year following the taxable year in which such
employee was terminated''.
(4) Section 415(c)(7) is amended to read as follows:
``(7) Special rules relating to church plans.--
``(A) Alternative contribution limitation.--
``(i) In general.--Notwithstanding any other
provision of this subsection, at the election of a
participant who is an employee of a church or a
convention or association of churches, including
an organization described in section
414(e)(3)(B)(ii), contributions and other
additions for an annuity contract or retirement
income account described in section 403(b) with
respect to such participant, when expressed as an
annual addition to such participant's account,
shall be treated as not exceeding the limitation
of paragraph (1) if such annual addition is not in
excess of $10,000.
``(ii) $40,000 aggregate limitation.--The
total amount of additions with respect to any
participant which may be taken into account for
purposes of this subparagraph for all years may
not exceed $40,000.
``(B) Number of years of service for duly ordained,
commissioned, or licensed ministers or lay employees.--
For purposes of this paragraph--
``(i) all years of service by--
``(I) a duly ordained, commissioned,
or licensed minister of a church, or
``(II) a lay person,
as an employee of a church, a convention or
association of churches, including an organization
described in section 414(e)(3)(B)(ii), shall be
considered as years of service for 1 employer, and
``(ii) all amounts contributed for annuity
contracts by each such church (or convention or
association of churches) or such organization
during such years for such minister or lay person
shall be considered to have been contributed by 1
employer.
``(C) Foreign missionaries.--In the case of any
individual described in subparagraph (D) performing
services outside the United States, contributions and
other additions for an annuity contract or retirement
income account described in section 403(b) with respect
to such employee, when expressed as an annual addition
to such employee's account, shall not be treated as
exceeding the limitation of paragraph (1) if such annual
addition is not in excess of the greater of $3,000 or
the employee's includible compensation determined under
section 403(b)(3).
[[Page 116 STAT. 51]]
``(D) Annual addition.--For purposes of this
paragraph, the term `annual addition' has the meaning
given such term by paragraph (2).
``(E) Church, convention or association of
churches.--For purposes of this paragraph, the terms
`church' and `convention or association of churches'
have the same meaning as when used in section 414(e).''.
(5) Section 457(e)(5) <<NOTE: 26 USC 457.>> is amended to
read as follows:
``(5) Includible compensation.--The term `includible
compensation' has the meaning given to the term `participant's
compensation' by section 415(c)(3).''.
(6) Section 402(g)(7)(B) is amended by striking ``2001.''
and inserting ``2001).''.
(q) Amendments Relating to Section 643 of the Act.--
(1) Section 401(a)(31)(C)(i) is amended by inserting ``is a
qualified trust which is part of a plan which is a defined
contribution plan and'' before ``agrees''.
(2) Section 402(c)(2) is amended by adding at the end the
following flush sentence:
``In the case of a transfer described in subparagraph (A) or
(B), the amount transferred shall be treated as consisting first
of the portion of such distribution that is includible in gross
income (determined without regard to paragraph (1)).''.
(r) Amendments Relating to Section 648 of the Act.--
(1) Section 417(e) is amended--
(A) in paragraph (1) by striking ``exceed the dollar
limit under section 411(a)(11)(A)'' and inserting
``exceed the amount that can be distributed without the
participant's consent under section 411(a)(11)'', and
(B) in paragraph (2)(A) by striking ``exceeds the
dollar limit under section 411(a)(11)(A)'' and inserting
``exceeds the amount that can be distributed without the
participant's consent under section 411(a)(11)''.
(2) Section 205(g) of the Employee Retirement Income
Security Act of 1974 <<NOTE: 29 USC 1055.>> is amended--
(A) in paragraph (1) by striking ``exceed the dollar
limit under section 203(e)(1)'' and inserting ``exceed
the amount that can be distributed without the
participant's consent under section 203(e)'', and
(B) in paragraph (2)(A) by striking ``exceeds the
dollar limit under section 203(e)(1)'' and inserting
``exceeds the amount that can be distributed without the
participant's consent under section 203(e)''.
(s) Amendment Relating to Section 652 of the Act.--Section
404(a)(1)(D)(iv) is amended by striking ``Plans maintained by
professional service employers'' and inserting ``Special rule for
terminating plans''.
(t) Amendments Relating to Section 657 of the Act.--Section
404(c)(3) of the Employee Retirement Income Security Act of
1974 <<NOTE: 29 USC 1104.>> is amended--
(1) by striking ``the earlier of'' in subparagraph (A) the
second place it appears, and
(2) by striking ``if the transfer'' and inserting ``a
transfer that''.
(u) Amendments Relating to Section 659 of the Act.--
(1) Section 4980F is amended--
[[Page 116 STAT. 52]]
(A) in subsection (e)(1) by striking ``written
notice'' and inserting ``the notice described in
paragraph (2)'',
(B) by amending subsection (f)(2)(A) to read as
follows:
``(A) any defined benefit plan described in section
401(a) which includes a trust exempt from tax under
section 501(a), or'', and
(C) in subsection (f)(3) by striking
``significantly'' both places it appears.
(2) Section 204(h)(9) of the Employee Retirement Income
Security Act of 1974 <<NOTE: 29 USC 1054.>> is amended by
striking ``significantly'' both places it appears.
(3) Section 659(c)(3)(B) of the Economic Growth and Tax
Relief Reconciliation Act of 2001 <<NOTE: 26 USC 4980F note.>>
is amended by striking ``(or'' and inserting ``(and''.
(v) Amendments Relating to Section 661 of the Act.--
(1) Section 412(c)(9)(B) <<NOTE: 26 USC 412.>> is amended--
(A) in clause (ii) by striking ``125 percent'' and
inserting ``100 percent'', and
(B) by adding at the end the following new clause:
``(iv) Limitation.--A change in funding method
to use a prior year valuation, as provided in
clause (ii), may not be made unless as of the
valuation date within the prior plan year, the
value of the assets of the plan are not less than
125 percent of the plan's current liability (as
defined in paragraph (7)(B)).''.
(2) Section 302(c)(9)(B) of the Employee Retirement Income
Security Act of 1974 <<NOTE: 29 USC 1082.>> is amended--
(A) in clause (ii) by striking ``125 percent'' and
inserting ``100 percent'', and
(B) by adding at the end the following new clause:
``(iv) A change in funding method to use a prior year valuation, as
provided in clause (ii), may not be made unless as of the valuation date
within the prior plan year, the value of the assets of the plan are not
less than 125 percent of the plan's current liability (as defined in
paragraph (7)(B)).''.
(w) Amendments Relating to Section 662 of the Act.--
(1) Section 404(k) is amended--
(A) in paragraph (1) by striking ``during the
taxable year'',
(B) in paragraph (2)(B) by striking ``(A)(iii)'' and
inserting ``(A)(iv)'',
(C) in paragraph (4)(B) by striking ``(iii)'' and
inserting ``(iv)'', and
(D) by redesignating subparagraph (B) of paragraph
(4) (as amended by subparagraph (C)) as subparagraph (C)
of paragraph (4) and by inserting after subparagraph (A)
the following new subparagraph:
``(B) Reinvestment dividends.--For purposes of
subparagraph (A), an applicable dividend reinvested
pursuant to clause (iii)(II) of paragraph (2)(A) shall
be treated as paid in the taxable year of the
corporation in which such dividend is reinvested in
qualifying employer securities or in which the election
under clause (iii) of paragraph (2)(A) is made,
whichever is later.''.
(2) Section 404(k) is amended by adding at the end the
following new paragraph:
[[Page 116 STAT. 53]]
``(7) Full vesting.--In accordance with section 411, an
applicable dividend described in clause (iii)(II) of paragraph
(2)(A) shall be subject to the requirements of section
411(a)(1).''.
(x) <<NOTE: 26 USC 25B note.>> Effective Date.--Except as provided
in subsection (c), 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. 412. AMENDMENTS RELATED TO COMMUNITY RENEWAL TAX RELIEF ACT OF
2000.
(a) Amendment Related to Section 101 of the Act.--Section
469(i)(3)(E) <<NOTE: 26 USC 469.>> is amended by striking clauses (ii),
(iii), and (iv) and inserting the following:
``(ii) second to the portion of such loss to
which subparagraph (C) applies,
``(iii) third to the portion of the passive
activity credit to which subparagraph (B) or (D)
does not apply,
``(iv) fourth to the portion of such credit to
which subparagraph (B) applies, and''.
(b) Amendment Related to Section 306 of the Act.--Section
151(c)(6)(C) is amended--
(1) by striking ``for earned income credit.--For purposes of
section 32, an'' and inserting ``for principal place of abode
requirements.--An'', and
(2) by striking ``requirement of section 32(c)(3)(A)(ii)''
and inserting ``principal place of abode requirements of section
2(a)(1)(B), section 2(b)(1)(A), and section 32(c)(3)(A)(ii)''.
(c) Amendment Related to Section 309 of the Act.--Subparagraph (A)
of section 358(h)(1) is amended to read as follows:
``(A) which is assumed by another person as part of
the exchange, and''.
(d) Amendments Related to Section 401 of the Act.--
(1)(A) Section 1234A is amended by inserting ``or'' after
the comma at the end of paragraph (1), by striking ``or'' at the
end of paragraph (2), and by striking paragraph (3).
(B)(i) Section 1234B is amended in subsection (a)(1) and in
subsection (b) by striking ``sale or exchange'' the first place
it appears in each subsection and inserting ``sale, exchange, or
termination''.
(ii) Section 1234B is amended by adding at the end the
following new subsection:
``(f) Cross Reference.--
``For special rules relating to dealer securities
futures contracts, see section 1256.''.
(2) Section 1091(e) is amended--
(A) in the heading, by striking ``Securities.--''
and inserting ``Securities and Securities Futures
Contracts To Sell.--'',
(B) by inserting after ``closing of a short sale
of'' the following: ``(or the sale, exchange, or
termination of a securities futures contract to sell)'',
(C) in paragraph (2), by inserting after ``short
sale of'' the following: ``(or securities futures
contracts to sell)'', and
(D) by adding at the end the following:
``For purposes of this subsection, the term `securities futures
contract' has the meaning provided by section 1234B(c).''.
[[Page 116 STAT. 54]]
(3)(A) Section 1233(e)(2) <<NOTE: 26 USC 1233.>> is amended
by striking ``and'' at the end of subparagraph (C), by striking
the period and inserting ``; and'' at the end of subparagraph
(D), and inserting after subparagraph (D) the following:
``(E) entering into a securities futures contract
(as so defined) to sell shall be considered to be a
short sale, and the settlement of such contract shall be
considered to be the closing of such short sale.''.
(B) Section 1234B(b) is amended by inserting after ``or this
section,'' the following: ``or in section 1233,''.
(e) <<NOTE: 26 USC 151 note.>> Effective Date.--The amendments made
by this section shall take effect as if included in the provisions of
the Community Renewal Tax Relief Act of 2000 to which they relate.
SEC. 413. AMENDMENTS RELATED TO THE TAX RELIEF EXTENSION ACT OF 1999.
(a) Amendments Related to Section 545 of the Act.--Section 857(b)(7)
is amended--
(1) in clause (i) of subparagraph (B), by striking ``the
amount of which'' and inserting ``to the extent the amount of
the rents'', and
(2) in subparagraph (C), by striking ``if the amount'' and
inserting ``to the extent the amount''.
(b) <<NOTE: 26 USC 857 note.>> Effective Date.--The amendments made
by this section shall take effect as if included in section 545 of the
Tax Relief Extension Act of 1999.
SEC. 414. AMENDMENTS RELATED TO THE TAXPAYER RELIEF ACT OF 1997.
(a) Amendments Related to Section 311 of the Act.--Section 311(e) of
the Taxpayer Relief Act of 1997 (Public Law 105-34; 111 Stat.
836) <<NOTE: 26 USC 1 note.>> is amended--
(1) in paragraph (2)(A), by striking ``recognized'' and
inserting ``included in gross income'', and
(2) by adding at the end the following new paragraph:
``(5) Disposition of interest in passive activity.--Section
469(g)(1)(A) of the Internal Revenue Code of 1986 shall not
apply by reason of an election made under paragraph (1).''.
(b) <<NOTE: 26 USC 1 note.>> Effective Date.--The amendments made
by this section shall take effect as if included in section 311 of the
Taxpayer Relief Act of 1997.
SEC. 415. AMENDMENT RELATED TO THE BALANCED BUDGET ACT OF 1997.
(a) Amendment Related to Section 4006 of the Act.--Section 26(b)(2)
is amended by striking ``and'' at the end of subparagraph (P), by
striking the period and inserting ``, and'' at the end of subparagraph
(Q), and by adding at the end the following new subparagraph:
``(R) section 138(c)(2) (relating to penalty for
distributions from Medicare+Choice MSA not used for
qualified medical expenses if minimum balance not
maintained).''.
(b) <<NOTE: 26 USC 26 note.>> Effective Date.--The amendment made
by this section shall take effect as if included in section 4006 of the
Balanced Budget Act of 1997.
[[Page 116 STAT. 55]]
SEC. 416. OTHER TECHNICAL CORRECTIONS.
(a) Coordination of Advanced Payments of Earned Income Credit.--
(1) Section 32(g)(2) <<NOTE: 26 USC 32.>> is amended by
striking ``subpart'' and inserting ``part''.
(2) <<NOTE: Effective date. 26 USC 32 note.>> The amendment
made by this subsection shall take effect as if included in
section 474 of the Tax Reform Act of 1984.
(b) Special Rule Related to Wash Sale Losses.--
(1) Section 1256(f) is amended by adding at the end the
following new paragraph:
``(5) Special rule related to losses.--Section 1091
(relating to loss from wash sales of stock or
securities) shall not apply to any loss taken into
account by reason of paragraph (1) of subsection (a).''.
(2) <<NOTE: Effective date. 26 USC 1256 note.>> The
amendment made by this subsection shall take effect as if
included in section 5075 of the Technical and Miscellaneous
Revenue Act of 1988.
(c) Disclosure by Social Security Administration to Federal Child
Support Agencies.--
(1) Section 6103(l)(8) is amended--
(A) in the heading, by striking ``state and local''
and inserting ``federal, state, and local'', and
(B) in subparagraph (A), by inserting ``Federal or''
before ``State or local''.
(2) <<NOTE: Effective date. 26 USC 6103 note.>> The
amendments made by this subsection shall take effect on the date
of the enactment of this Act.
(d) Treatment of Settlements Under Partnership Audit Rules.--
(1) The following provisions are each amended by inserting
``or the Attorney General (or his delegate)'' after
``Secretary'' each place it appears:
(A) Paragraphs (1) and (2) of section 6224(c).
(B) Section 6229(f)(2).
(C) Section 6231(b)(1)(C).
(D) Section 6234(g)(4)(A).
(2) <<NOTE: Applicability. 26 USC 6224 note.>> The
amendments made by this subsection shall apply with respect to
settlement agreements entered into after the date of the
enactment of this Act.
(e) Amendment Related to Procedure and Administration.--
(1) Section 6331(k)(3) (relating to no levy while certain
offers pending or installment agreement pending or in effect) is
amended to read as follows:
``(3) Certain rules to apply.--Rules similar to the rules
of--
``(A) paragraphs (3) and (4) of subsection (i), and
``(B) except in the case of paragraph (2)(C),
paragraph (5) of subsection (i),
shall apply for purposes of this subsection.''.
(2) <<NOTE: Effective date. 26 USC 6331 note.>> The
amendment made by this subsection shall take effect on the date
of the enactment of this Act.
(f) <<NOTE: Applicability.>> Modified Endowment Contracts.--
Paragraph (2) of section 318(a) of the Community Renewal Tax Relief Act
of 2000 (114 Stat. 2763A-645) <<NOTE: 26 USC 7702A and note.>> is
repealed, and clause (ii) of section 7702A(c)(3)(A) shall read and be
applied as if the amendment made by such paragraph had not been enacted.
[[Page 116 STAT. 56]]
SEC. 417. CLERICAL AMENDMENTS.
(1) The subsection (g) of section 25B <<NOTE: 26 USC 25B.>>
that relates to termination is redesignated as subsection (h).
(2) The second sentence of section 42(h)(3)(C) is amended by
striking ``the amounts described in'' and all that follows
through the period and inserting ``the amounts described in
clauses (ii) through (iv) over the aggregate housing credit
dollar amount allocated for such year.''.
(3) Clause (ii) of section 42(m)(1)(B) is amended by
striking the second ``and'' at the end of subclause (II) and by
inserting ``and'' at the end of subclause (III).
(4) Section 51A(c)(1) is amended by striking ``51(d)(10)''
and inserting ``51(d)(11)''.
(5) The flush sentence at the end of clause (ii) of section
56(a)(1)(A) is amended by striking ``such 1250'' and inserting
``such section 1250''.
(6) Section 151(c)(6)(B)(iii) is amended by inserting ``as''
before ``such terms''.
(7) Section 170(e)(6)(B)(i)(III) is amended by striking
``2000,'' and inserting ``2000),''.
(8) Section 172(b)(1)(F)(i) is amended--
(A) by striking ``3 years'' and inserting ``3
taxable years'', and
(B) by striking ``2 years'' and inserting ``2
taxable years''.
(9) Section 351(h)(1) is amended by inserting a comma after
``liability''.
(10) Section 475(g)(3) is amended by striking ``sections''
and inserting ``section''.
(11) Section 529(e)(3)(B)(i) is amended by striking
``subsection (b)(7)'' and inserting ``subsection (b)(6)''.
(12) Section 741 is amended by striking ``which have
appreciated substantially in value''.
(13) Section 857(b)(7)(B)(i) is amended by striking
``subsection 856(d)'' and inserting ``section 856(d)''.
(14) Subparagraph (B) of section 943(e)(4) is amended by
aligning the left margin of the flush language with subparagraph
(A).
(15) Subparagraph (B) of section 995(b)(3) is amended by
striking ``International Security Assistance and Arms Export
Control Act of 1976'' and inserting ``Arms Export Control Act''.
(16) Section 1394(c)(2) is amended by striking
``subparagraph (A)'' and inserting ``paragraph (1)''.
(17)(A) The section heading for section 4980E is amended to
read as follows:
``SEC. 4980E. FAILURE OF EMPLOYER TO MAKE COMPARABLE ARCHER MSA
CONTRIBUTIONS.''.
(B) The item relating to section 4980E in the table of
sections for chapter 43 is amended to read as follows:
``Sec. 4980E. Failure of employer to make comparable Archer MSA
contributions.''.
(18) Section 6105(c)(1) is amended by striking ``any'' in
subparagraphs (C) and (E).
(19)(A) Section 6227(d) is amended by striking ``subsection
(b)'' and inserting ``subsection (c)''.
(B) Section 6228 is amended--
[[Page 116 STAT. 57]]
(i) in subsection (a)(1), by striking ``subsection
(b) of section 6227'' and inserting ``subsection (c) of
section 6227'',
(ii) in subsection (a)(3)(A), by striking
``subsection (b) of'', and
(iii) in subsections (b)(1) and (b)(2)(A), by
striking ``subsection (c) of section 6227'' and
inserting ``subsection (d) of section 6227''.
(C) Section 6231(b)(2)(B)(i) <<NOTE: 26 USC 6231.>> is
amended by striking ``section 6227(c)'' and inserting ``section
6227(d)''.
(20) Section 1221(b)(1)(B)(i) is amended by striking
``1256(b))'' and inserting ``1256(b)))''.
(21) Section 159 of the Community Renewal Tax Relief Act of
2000 (114 Stat. 2763A-624) <<NOTE: 26 USC 1400E note.>> is
amended by striking ``fuctions'' and inserting ``functions''.
(22) <<NOTE: Applicability.>> The amendment to section
170(e)(6)(B)(iv) made by section 165(b)(1) of the Community
Renewal Tax Relief Act of 2000 (114 Stat. 2763A-626) <<NOTE: 26
USC 170.>> shall be applied as if it struck ``in any of the
grades K-12''.
(23) Section 618(b)(2) of the Economic Growth and Tax Relief
Reconciliation Act of 2001 (Public Law 107-16; 115 Stat. 108) is
amended--
(A) <<NOTE: 26 USC 24.>> in subparagraph (A) by
striking ``203(d)'' and inserting ``202(f)'', and
(B) <<NOTE: 26 USC 26, 904, 1400C.>> in
subparagraphs (C), (D), and (E) by striking ``203'' and
inserting ``202(f)''.
(24)(A) Section 525 of the Ticket to Work and Work
Incentives Improvement Act of 1999 (Public Law 106-170; 113
Stat. 1928) <<NOTE: 7 USC 7212 note.>> is amended by striking
``7200'' and inserting ``7201''.
(B) Section 532(c)(2) of such Act (113 Stat. 1930) is
amended--
(i) <<NOTE: 26 USC 341.>> in subparagraph (D), by
striking ``341(d)(3)'' and inserting ``341(d)'', and
(ii) <<NOTE: 26 USC 954.>> in subparagraph (Q), by
striking ``954(c)(1)(B)(iii) and inserting
``954(c)(1)(B)''.
SEC. 418. ADDITIONAL CORRECTIONS.
(a) Amendments Related to Section 202 of the Economic Growth and Tax
Relief Reconciliation Act of 2001.--
(1) Subsection (h) of section 23 is amended--
(A) by striking ``subsection (a)(1)(B)'' and
inserting ``subsection (a)(3)'', and
(B) by adding at the end the following new flush
sentence:
``If any amount as increased under the preceding sentence is not a
multiple of $10, such amount shall be rounded to the nearest multiple of
$10.''.
(2) Subsection (f) of section 137 is amended by adding at
the end the following new flush sentence:
``If any amount as increased under the preceding sentence is not a
multiple of $10, such amount shall be rounded to the nearest multiple of
$10.''.
(b) Amendments Related to Section 204 of the Economic Growth and Tax
Relief Reconciliation Act of 2001.--Section 21(d)(2) is amended--
(1) in subparagraph (A) by striking ``$200'' and inserting
``$250'', and
[[Page 116 STAT. 58]]
(2) in subparagraph (B) by striking ``$400'' and inserting
``$500''.
(c) <<NOTE: 26 USC 21 note.>> 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.
TITLE V--SOCIAL SECURITY HELD HARMLESS; BUDGETARY TREATMENT OF ACT
SEC. 501. NO IMPACT ON SOCIAL SECURITY TRUST FUNDS. <<NOTE: 42 USC 401
note.>>
(a) In General.--Nothing in this Act (or an amendment made by this
Act) shall be construed to alter or amend title II of the Social
Security Act (or any regulation promulgated under that Act).
(b) Transfers.--
(1) Estimate of secretary.--The Secretary of the Treasury
shall annually estimate the impact that the enactment of this
Act has on the income and balances of the trust funds
established under section 201 of the Social Security Act (42
U.S.C. 401).
(2) Transfer of funds.--If, under paragraph (1), the
Secretary of the Treasury estimates that the enactment of this
Act has a negative impact on the income and balances of the
trust funds established under section 201 of the Social Security
Act (42 U.S.C. 401), the Secretary shall transfer, not less
frequently than quarterly, from the general revenues of the
Federal Government an amount sufficient so as to ensure that the
income and balances of such trust funds are not reduced as a
result of the enactment of this Act.
SEC. 502. EMERGENCY DESIGNATION.
Congress designates as emergency requirements pursuant to section
252(e) of the Balanced Budget and Emergency Deficit Control Act of 1985
the following amounts:
(1) An amount equal to the amount by which revenues are
reduced by this Act below the recommended levels of Federal
revenues for fiscal year 2002, the total of fiscal years 2002
through 2006, and the total of fiscal years 2002 through 2011,
provided in the conference report accompanying H. Con. Res. 83,
the concurrent resolution on the budget for fiscal year 2002.
(2) Amounts equal to the amounts of new budget authority and
outlays provided in this Act in excess of the allocations under
section 302(a) of the Congressional Budget Act of 1974 to the
Committee on Finance of the Senate for fiscal year 2002, the
total of fiscal years 2002 through 2006, and the total of fiscal
years 2002 through 2011.
[[Page 116 STAT. 59]]
TITLE VI--EXTENSIONS OF CERTAIN EXPIRING PROVISIONS
SEC. 601. ALLOWANCE OF NONREFUNDABLE PERSONAL CREDITS AGAINST REGULAR
AND MINIMUM TAX LIABILITY.
(a) In General.--Paragraph (2) of section 26(a) <<NOTE: 26 USC
26.>> is amended--
(1) by striking ``rule for 2000 and 2001.--'' and inserting
``rule for 2000, 2001, 2002, and 2003.--'', and
(2) by striking ``during 2000 or 2001,'' and inserting
``during 2000, 2001, 2002, or 2003,''.
(b) Conforming Amendments.--
(1) Section 904(h) is amended by striking ``during 2000 or
2001'' and inserting ``during 2000, 2001, 2002, or 2003''.
(2) <<NOTE: 26 USC 23 note.>> The amendments made by
sections 201(b), 202(f), and 618(b) of the Economic Growth and
Tax Relief Reconciliation Act of 2001 shall not apply to taxable
years beginning during 2002 and 2003.
(c) <<NOTE: Applicability. 26 USC 26 note.>> Effective Date.--The
amendments made by this section shall apply to taxable years beginning
after December 31, 2001.
SEC. 602. CREDIT FOR QUALIFIED ELECTRIC VEHICLES.
(a) In General.--Section 30 is amended--
(1) in subsection (b)(2)--
(A) by striking ``December 31, 2001,'' and inserting
``December 31, 2003,'', and
(B) in subparagraphs (A), (B), and (C), by striking
``2002'', ``2003'', and ``2004'', respectively, and
inserting ``2004'', ``2005'', and ``2006'',
respectively, and
(2) in subsection (e), by striking ``December 31, 2004'' and
inserting ``December 31, 2006''.
(b) Conforming Amendments.--
(1) Subparagraph (C) of section 280F(a)(1) is amended by
adding at the end the following new clause:
``(iii) Application of subparagraph.--This
subparagraph shall apply to property placed in
service after August 5, 1997, and before January
1, 2007.''.
(2) Subsection (b) of section 971 of the Taxpayer Relief Act
of 1997 <<NOTE: 26 USC 280F note.>> is amended by striking
``and before January 1, 2005''.
(c) <<NOTE: Applicability. 26 USC 30 note.>> Effective Date.--The
amendments made by this section shall apply to property placed in
service after December 31, 2001.
SEC. 603. CREDIT FOR ELECTRICITY PRODUCED FROM CERTAIN RENEWABLE
RESOURCES.
(a) In General.--Subparagraphs (A), (B), and (C) of section 45(c)(3)
are both amended by striking ``2002'' and inserting ``2004''.
(b) <<NOTE: Applicability. 26 USC 45 note.>> Effective Date.--The
amendments made by subsection (a) shall apply to facilities placed in
service after December 31, 2001.
SEC. 604. WORK OPPORTUNITY CREDIT.
(a) In General.--Subparagraph (B) of section 51(c)(4) is amended by
striking ``2001'' and inserting ``2003''.
(b) <<NOTE: Applicability. 26 USC 51 note.>> Effective Date.--The
amendment made by subsection (a) shall apply to individuals who begin
work for the employer after December 31, 2001.
[[Page 116 STAT. 60]]
SEC. 605. WELFARE-TO-WORK CREDIT.
(a) In General.--Subsection (f) of section 51A <<NOTE: 26 USC
51A.>> is amended by striking ``2001'' and inserting ``2003''.
(b) <<NOTE: Applicability. 26 USC 51A note.>> Effective Date.--The
amendment made by subsection (a) shall apply to individuals who begin
work for the employer after December 31, 2001.
SEC. 606. DEDUCTION FOR CLEAN-FUEL VEHICLES AND CERTAIN REFUELING
PROPERTY.
(a) In General.--Section 179A is amended--
(1) in subsection (b)(1)(B)--
(A) by striking ``December 31, 2001,'' and inserting
``December 31, 2003,'', and
(B) in clauses (i), (ii), and (iii), by striking
``2002'', ``2003'', and ``2004'', respectively, and
inserting ``2004'', ``2005'', and ``2006'',
respectively, and
(2) in subsection (f), by striking ``December 31, 2004'' and
inserting ``December 31, 2006''.
(b) <<NOTE: Applicability. 26 USC 179A note.>> Effective Date.--The
amendments made by subsection (a) shall apply to property placed in
service after December 31, 2001.
SEC. 607. TAXABLE INCOME LIMIT ON PERCENTAGE DEPLETION FOR OIL AND
NATURAL GAS PRODUCED FROM MARGINAL PROPERTIES.
(a) In General.--Subparagraph (H) of section 613A(c)(6) is amended
by striking ``2002'' and inserting ``2004''.
(b) <<NOTE: Applicability. 26 USC 613A note.>> Effective Date.--The
amendment made by subsection (a) shall apply to taxable years beginning
after December 31, 2001.
SEC. 608. QUALIFIED ZONE ACADEMY BONDS.
(a) In General.--Paragraph (1) of section 1397E(e) is amended by
striking ``2000, and 2001'' and inserting ``2000, 2001, 2002, and
2003''.
(b) <<NOTE: Applicability. 26 USC 1397E note.>> Effective Date.--
The amendment made by subsection (a) shall apply to obligations issued
after the date of the enactment of this Act.
SEC. 609. COVER OVER OF TAX ON DISTILLED SPIRITS.
(a) In General.--Paragraph (1) of section 7652(f) is amended by
striking ``January 1, 2002'' and inserting ``January 1, 2004''.
(b) <<NOTE: Applicability. 26 USC 7652 note.>> Effective Date.--The
amendment made by subsection (a) shall apply to articles brought into
the United States after December 31, 2001.
SEC. 610. PARITY IN THE APPLICATION OF CERTAIN LIMITS TO MENTAL HEALTH
BENEFITS.
(a) In General.--Subsection (f) of section 9812, as amended by the
Departments of Labor, Health and Human Services, and Education, and
Related Agencies Appropriations Act, 2002, is amended to read as
follows:
``(f) Application of Section.--This section shall not apply to
benefits for services furnished--
``(1) on or after September 30, 2001, and before January 10,
2002, and
``(2) after December 31, 2003.''.
(b) <<NOTE: 26 USC 9812 note.>> Effective Date.--The amendment made
by subsection (a) shall apply to plan years beginning after December 31,
2000.
[[Page 116 STAT. 61]]
SEC. 611. TEMPORARY SPECIAL RULES FOR TAXATION OF LIFE INSURANCE
COMPANIES.
(a) Reduction in Mutual Life Insurance Company Deductions Not To
Apply in Certain Years.--Section 809 <<NOTE: 26 USC 809.>> (relating to
reduction in certain deductions of material life insurance companies) is
amended by adding at the end the following:
``(j) Differential Earnings Rate Treated as Zero for Certain
Years.--Notwithstanding subsection (c) or (f), the differential earnings
rate shall be treated as zero for purposes of computing both the
differential earnings amount and the recomputed differential earnings
amount for a mutual life insurance company's taxable years beginning in
2001, 2002, or 2003.''.
(b) <<NOTE: Applicability. 26 USC 809 note.>> Effective Date.--The
amendment made by this section shall apply to taxable years beginning
after December 31, 2000.
SEC. 612. AVAILABILITY OF MEDICAL SAVINGS ACCOUNTS.
(a) In General.--Paragraphs (2) and (3)(B) of section 220(i)
(defining cut-off year) are each amended by striking ``2002'' each place
it appears and inserting ``2003''.
(b) Conforming Amendments.--
(1) Paragraph (2) of section 220(j) is amended by striking
``1998, 1999, or 2001'' each place it appears and inserting
``1998, 1999, 2001, or 2002''.
(2) Subparagraph (A) of section 220(j)(4) is amended by
striking ``and 2001'' and inserting ``2001, and 2002''.
(c) <<NOTE: 26 USC 220 note.>> Effective Date.--The amendments made
by this section shall take effect on January 1, 2002.
SEC. 613. INCENTIVES FOR INDIAN EMPLOYMENT AND PROPERTY ON INDIAN
RESERVATIONS.
(a) Employment.--Subsection (f) of section 45A is amended by
striking ``December 31, 2003'' and inserting ``December 31, 2004''.
(b) Property.--Paragraph (8) of section 168(j) is amended by
striking ``December 31, 2003'' and inserting ``December 31, 2004''.
SEC. 614. SUBPART F EXEMPTION FOR ACTIVE FINANCING.
(a) In General.--
(1) Section 953(e)(10) is amended--
(A) by striking ``January 1, 2002'' and inserting
``January 1, 2007'', and
(B) by striking ``December 31, 2001'' and inserting
``December 31, 2006''.
(2) Section 954(h)(9) is amended by striking ``January 1,
2002'' and inserting ``January 1, 2007''.
(b) Life Insurance and Annuity Contracts.--
(1) In general.--Subparagraph (B) of section 954(i)(4) is
amended to read as follows:
``(B) Life insurance and annuity contracts.--
``(i) In general.--Except as provided in
clause (ii), the amount of the reserve of a
qualifying insurance company or qualifying
insurance company branch for any life insurance or
annuity contract shall be equal to the greater
of--
``(I) the net surrender value of
such contract (as defined in section
807(e)(1)(A)), or
``(II) the reserve determined under
paragraph (5).
[[Page 116 STAT. 62]]
``(ii) Ruling request, etc.--The amount of the
reserve under clause (i) shall be the foreign
statement reserve for the contract (less any
catastrophe, deficiency, equalization, or similar
reserves), if, pursuant to a ruling request
submitted by the taxpayer or as provided in
published guidance, the Secretary determines that
the factors taken into account in determining the
foreign statement reserve provide an appropriate
means of measuring income.''.
(c) <<NOTE: Applicability. 26 USC 953 note.>> Effective Date.--The
amendments made by this section shall apply to taxable years beginning
after December 31, 2001.
SEC. 615. REPEAL OF REQUIREMENT FOR APPROVED DIESEL OR KEROSENE
TERMINALS.
(a) In General.--Subsection (e) of section 4101 <<NOTE: 26 USC
4101.>> is hereby repealed.
(b) <<NOTE: 26 USC 4101 note.>> Effective Date.--The amendment made
by subsection (a) shall take effect on January 1, 2002.
SEC. 616. REAUTHORIZATION OF TANF SUPPLEMENTAL GRANTS FOR POPULATION
INCREASES FOR FISCAL YEAR 2002.
Section 403(a)(3) of the Social Security Act (42 U.S.C. 603(a)(3))
is amended by adding at the end the following:
``(H) Reauthorization of grants for fiscal year
2002.--Notwithstanding any other provision of this
paragraph--
``(i) any State that was a qualifying State
under this paragraph for fiscal year 2001 or any
prior fiscal year shall be entitled to receive
from the Secretary for fiscal year 2002 a grant in
an amount equal to the amount required to be paid
to the State under this paragraph for the most
recent fiscal year in which the State was a
qualifying State;
``(ii) <<NOTE: Applicability.>> subparagraph
(G) shall be applied as if `2002' were substituted
for `2001'; and
``(iii) out of any money in the Treasury of
the United States not otherwise appropriated,
there are appropriated for fiscal year 2002 such
sums as are necessary for grants under this
subparagraph.''.
SEC. 617. 1-YEAR EXTENSION OF CONTINGENCY FUND UNDER THE TANF PROGRAM.
Section 403(b) of the Social Security Act (42 U.S.C. 603(b)) is
amended--
(1) in paragraph (2), by striking ``and 2001'' and inserting
``2001, and 2002''; and
[[Page 116 STAT. 63]]
(2) in paragraph (3)(C)(ii), by striking ``2001'' and
inserting ``2002''.
Approved March 9, 2002.
LEGISLATIVE HISTORY--H.R. 3090:
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HOUSE REPORTS: No. 107-251 (Comm. on Ways and Means).
CONGRESSIONAL RECORD:
Vol. 147 (2001):
Oct. 24, considered and passed
House.
Nov. 13, 14, considered in Senate.
Vol. 148 (2002):
Feb. 14, considered and passed
Senate, amended.
Mar. 7, House concurred in Senate
amendment with an amendment.
House amendment considered in
Senate.
Mar. 8, Senate concurred in House
amendment.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 38 (2002):
Mar. 9, Presidential remarks.
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