[109th Congress Public Law 135]
[From the U.S. Government Printing Office]
[DOCID: f:publ135.109]
[[Page 119 STAT. 2577]]
Public Law 109-135
109th Congress
An Act
To amend the Internal Revenue Code of 1986 to provide tax benefits for
the Gulf Opportunity Zone and certain areas affected by Hurricanes Rita
and Wilma, and for other purposes. <<NOTE: Dec. 21, 2005 - [H.R.
4440]>>
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, <<NOTE: Gulf Opportunity
Zone Act of 2005.>>
SECTION 1. SHORT TITLE; ETC.
(a) Short Title.--This <<NOTE: 26 USC 1 note.>> Act may be cited as
the ``Gulf Opportunity Zone Act of 2005''.
(b) Amendment of 1986 Code.--Except as otherwise expressly provided,
whenever in this Act an amendment or repeal is expressed in terms of an
amendment to, or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other provision of the
Internal Revenue Code of 1986.
(c) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; etc.
TITLE I--ESTABLISHMENT OF GULF OPPORTUNITY ZONE
Sec. 101. Tax benefits for Gulf Opportunity Zone.
Sec. 102. Expansion of Hope Scholarship and Lifetime Learning Credit for
students in the Gulf Opportunity Zone.
Sec. 103. Housing relief for individuals affected by Hurricane Katrina.
Sec. 104. Extension of special rules for mortgage revenue bonds.
Sec. 105. Special extension of bonus depreciation placed in service date
for taxpayers affected by Hurricanes Katrina, Rita, and
Wilma.
TITLE II--TAX BENEFITS RELATED TO HURRICANES RITA AND WILMA
Sec. 201. Extension of certain emergency tax relief for Hurricane
Katrina to Hurricanes Rita and Wilma.
TITLE III--OTHER PROVISIONS
Sec. 301. Gulf Coast Recovery Bonds.
Sec. 302. Election to include combat pay as earned income for purposes
of earned income credit.
Sec. 303. Modification of effective date of exception from suspension
rules for certain listed and reportable transactions.
Sec. 304. Authority for undercover operations.
Sec. 305. Disclosures of certain tax return information.
TITLE IV--TECHNICALS
Subtitle A--Tax Technicals
Sec. 401. Short title.
Sec. 402. Amendments related to Energy Policy Act of 2005.
Sec. 403. Amendments related to the American Jobs Creation Act of 2004.
Sec. 404. Amendments related to the Working Families Tax Relief Act of
2004.
Sec. 405. Amendments related to the Jobs and Growth Tax Relief
Reconciliation Act of 2003.
Sec. 406. Amendment related to the Victims of Terrorism Tax Relief Act
of 2001.
[[Page 119 STAT. 2578]]
Sec. 407. Amendments related to the Economic Growth and Tax Relief
Reconciliation Act of 2001.
Sec. 408. Amendments related to the Internal Revenue Service
Restructuring and Reform Act of 1998.
Sec. 409. Amendments related to the Taxpayer Relief Act of 1997.
Sec. 410. Amendment related to the Omnibus Budget Reconciliation Act of
1990.
Sec. 411. Amendment related to the Omnibus Budget Reconciliation Act of
1987.
Sec. 412. Clerical corrections.
Sec. 413. Other corrections related to the American Jobs Creation Act of
2004.
Subtitle B--Trade Technicals
Sec. 421. Technical corrections to regional value content methods for
rules of origin under Public Law 109-53.
TITLE V--EMERGENCY REQUIREMENT
Sec. 501. Emergency requirement.
TITLE I--ESTABLISHMENT OF GULF OPPORTUNITY ZONE
SEC. 101. TAX BENEFITS FOR GULF OPPORTUNITY ZONE.
(a) In General.--Subchapter Y of chapter 1 is amended by adding at
the end the following new part:
``PART II--TAX BENEFITS FOR GO ZONES
``Sec. 1400M. Definitions.
``Sec. 1400N. Tax benefits for Gulf Opportunity Zone.
``SEC. 1400M. DEFINITIONS.
``For purposes of this part--
``(1) Gulf opportunity zone.--The terms `Gulf Opportunity
Zone' and `GO Zone' mean that portion of the Hurricane Katrina
disaster area determined by the President to warrant individual
or individual and public assistance from the Federal Government
under the Robert T. Stafford Disaster Relief and Emergency
Assistance Act by reason of Hurricane Katrina.
``(2) Hurricane katrina disaster area.--The term `Hurricane
Katrina disaster area' means an area with respect to which a
major disaster has been declared by the President before
September 14, 2005, under section 401 of such Act by reason of
Hurricane Katrina.
``(3) Rita go zone.--The term `Rita GO Zone' means that
portion of the Hurricane Rita disaster area determined by the
President to warrant individual or individual and public
assistance from the Federal Government under such Act by reason
of Hurricane Rita.
``(4) Hurricane rita disaster area.--The term `Hurricane
Rita disaster area' means an area with respect to which a major
disaster has been declared by the President before October 6,
2005, under section 401 of such Act by reason of Hurricane Rita.
``(5) Wilma go zone.--The term `Wilma GO Zone' means that
portion of the Hurricane Wilma disaster area determined by the
President to warrant individual or individual and public
assistance from the Federal Government under such Act by reason
of Hurricane Wilma.
``(6) Hurricane wilma disaster area.--The term `Hurricane
Wilma disaster area' means an area with respect to which
[[Page 119 STAT. 2579]]
a major disaster has been declared by the President before
November 14, 2005, under section 401 of such Act by reason of
Hurricane Wilma.
``SEC. 1400N. TAX BENEFITS FOR GULF OPPORTUNITY ZONE.
``(a) Tax-Exempt Bond Financing.--
``(1) In general.--For purposes of this title--
``(A) any qualified Gulf Opportunity Zone Bond
described in paragraph (2)(A)(i) shall be treated as an
exempt facility bond, and
``(B) any qualified Gulf Opportunity Zone Bond
described in paragraph (2)(A)(ii) shall be treated as a
qualified mortgage bond.
``(2) Qualified gulf opportunity zone bond.--For purposes of
this subsection, the term `qualified Gulf Opportunity Zone Bond'
means any bond issued as part of an issue if--
``(A)(i) 95 percent or more of the net proceeds (as
defined in section 150(a)(3)) of such issue are to be
used for qualified project costs, or
``(ii) such issue meets the requirements of a
qualified mortgage issue, except as otherwise provided
in this subsection,
``(B) such bond is issued by the State of Alabama,
Louisiana, or Mississippi, or any political subdivision
thereof,
``(C) such bond is designated for purposes of this
section by--
``(i) in the case of a bond which is required
under State law to be approved by the bond
commission of such State, such bond commission,
and
``(ii) in the case of any other bond, the
Governor of such State,
``(D) such bond is issued after the date of the
enactment of this section and before January 1, 2011,
and
``(E) no portion of the proceeds of such issue is to
be used to provide any property described in section
144(c)(6)(B).
``(3) Limitations on bonds.--
``(A) Aggregate amount designated.--The maximum
aggregate face amount of bonds which may be designated
under this subsection with respect to any State shall
not exceed the product of $2,500 multiplied by the
portion of the State population which is in the Gulf
Opportunity Zone (as determined on the basis of the most
recent census estimate of resident population released
by the Bureau of Census before August 28, 2005).
``(B) Movable property.--No bonds shall be issued
which are to be used for movable fixtures and equipment.
``(4) Qualified project costs.--For purposes of this
subsection, the term `qualified project costs' means--
``(A) the cost of any qualified residential rental
project (as defined in section 142(d)) located in the
Gulf Opportunity Zone, and
``(B) the cost of acquisition, construction,
reconstruction, and renovation of--
[[Page 119 STAT. 2580]]
``(i) nonresidential real property (including
fixed improvements associated with such property)
located in the Gulf Opportunity Zone, and
``(ii) public utility property (as defined in
section 168(i)(10)) located in the Gulf
Opportunity Zone.
``(5) Special rules.--In <<NOTE: Applicability.>> applying
this title to any qualified Gulf Opportunity Zone Bond, the
following modifications shall apply:
``(A) Section 142(d)(1) (defining qualified
residential rental project) shall be applied--
``(i) by substituting `60 percent' for `50
percent' in subparagraph (A) thereof, and
``(ii) by substituting `70 percent' for `60
percent' in subparagraph (B) thereof.
``(B) Section 143 (relating to mortgage revenue
bonds: qualified mortgage bond and qualified veterans'
mortgage bond) shall be applied--
``(i) only with respect to owner-occupied
residences in the Gulf Opportunity Zone,
``(ii) by treating any such residence in the
Gulf Opportunity Zone as a targeted area
residence,
``(iii) by applying subsection (f)(3) thereof
without regard to subparagraph (A) thereof, and
``(iv) by substituting `$150,000' for
`$15,000' in subsection (k)(4) thereof.
``(C) Except as provided in section 143, repayments
of principal on financing provided by the issue of which
such bond is a part may not be used to provide
financing.
``(D) Section 146 (relating to volume cap) shall not
apply.
``(E) Section 147(d)(2) (relating to acquisition of
existing property not permitted) shall be applied by
substituting `50 percent' for `15 percent' each place it
appears.
``(F) Section 148(f)(4)(C) (relating to exception
from rebate for certain proceeds to be used to finance
construction expenditures) shall apply to the available
construction proceeds of bonds which are part of an
issue described in paragraph (2)(A)(i).
``(G) Section 57(a)(5) (relating to tax-exempt
interest) shall not apply.
``(6) Separate issue treatment of portions of an issue.--
This subsection shall not apply to the portion of an issue which
(if issued as a separate issue) would be treated as a qualified
bond or as a bond that is not a private activity bond
(determined without regard to paragraph (1)), if the issuer
elects to so treat such portion.
``(b) Advance Refundings of Certain Tax-Exempt Bonds.--
``(1) In general.--With respect to a bond described in
paragraph (3), one additional advance refunding after the date
of the enactment of this section and before January 1, 2011,
shall be allowed under the applicable rules of section 149(d)
if--
``(A) the Governor of the State designates the
advance refunding bond for purposes of this subsection,
and
``(B) the requirements of paragraph (5) are met.
``(2) Certain private activity bonds.--With respect to a
bond described in paragraph (3) which is an exempt facility
[[Page 119 STAT. 2581]]
bond described in paragraph (1) or (2) of section 142(a), one
advance refunding after the date of the enactment of this
section and before January 1, 2011, shall be allowed under the
applicable rules of section 149(d) (notwithstanding paragraph
(2) thereof) if the requirements of subparagraphs (A) and (B) of
paragraph (1) are met.
``(3) Bonds described.--A bond is described in this
paragraph if such bond was outstanding on August 28, 2005, and
is issued by the State of Alabama, Louisiana, or Mississippi, or
a political subdivision thereof.
``(4) Aggregate limit.--The maximum aggregate face amount of
bonds which may be designated under this subsection by the
Governor of a State shall not exceed--
``(A) $4,500,000,000 in the case of the State of
Louisiana,
``(B) $2,250,000,000 in the case of the State of
Mississippi, and
``(C) $1,125,000,000 in the case of the State of
Alabama.
``(5) Additional requirements.--The requirements of this
paragraph are met with respect to any advance refunding of a
bond described in paragraph (3) if--
``(A) no advance refundings of such bond would be
allowed under this title on or after August 28, 2005,
``(B) the advance refunding bond is the only other
outstanding bond with respect to the refunded bond, and
``(C) the requirements of section 148 are met with
respect to all bonds issued under this subsection.
``(6) Use of proceeds requirement.--This subsection shall
not apply to any advance refunding of a bond which is issued as
part of an issue if any portion of the proceeds of such issue
(or any prior issue) was (or is to be) used to provide any
property described in section 144(c)(6)(B).
``(c) Low-Income Housing Credit.--
``(1) Additional housing credit dollar amount for gulf
opportunity zone.--
``(A) In general.--For purposes of section 42, in
the case of calendar years 2006, 2007, and 2008, the
State housing credit ceiling of each State, any portion
of which is located in the Gulf Opportunity Zone, shall
be increased by the lesser of--
``(i) the aggregate housing credit dollar
amount allocated by the State housing credit
agency of such State to buildings located in the
Gulf Opportunity Zone for such calendar year, or
``(ii) the Gulf Opportunity housing amount for
such State for such calendar year.
``(B) Gulf opportunity housing amount.--For purposes
of subparagraph (A), the term `Gulf Opportunity housing
amount' means, for any calendar year, the amount equal
to the product of $18.00 multiplied by the portion of
the State population which is in the Gulf Opportunity
Zone (as determined on the basis of the most recent
census estimate of resident population released by the
Bureau of Census before August 28, 2005).
``(C) Allocations treated as made first from
additional allocation amount for purposes of determining
carryover.--For purposes of determining the
[[Page 119 STAT. 2582]]
unused State housing credit ceiling under section
42(h)(3)(C) for any calendar year, any increase in the
State housing credit ceiling under subparagraph (A)
shall be treated as an amount described in clause (ii)
of such section.
``(2) Additional housing credit dollar amount for texas and
florida.--For purposes of section 42, in the case of calendar
year 2006, the State housing credit ceiling of Texas and Florida
shall each be increased by $3,500,000.
``(3) Difficult development area.--
``(A) In general.--For purposes of section 42, in
the case of property placed in service during 2006,
2007, or 2008, the Gulf Opportunity Zone, the Rita GO
Zone, and the Wilma GO Zone--
``(i) shall be treated as difficult
development areas designated under subclause (I)
of section 42(d)(5)(C)(iii), and
``(ii) shall not be taken into account for
purposes of applying the limitation under
subclause (II) of such section.
``(B) Application.--Subparagraph (A) shall apply
only to--
``(i) housing credit dollar amounts allocated
during the period beginning on January 1, 2006,
and ending on December 31, 2008, and
``(ii) buildings placed in service during such
period to the extent that paragraph (1) of section
42(h) does not apply to any building by reason of
paragraph (4) thereof, but only with respect to
bonds issued after December 31, 2005.
``(4) Special rule for applying income tests.--In the case
of property placed in service--
``(A) during 2006, 2007, or 2008,
``(B) in the Gulf Opportunity Zone, and
``(C) in a nonmetropolitan area (as defined in
section 42(d)(5)(C)(iv)(IV)),
section 42 shall be applied by substituting `national
nonmetropolitan median gross income (determined under rules
similar to the rules of section 142(d)(2)(B))' for `area median
gross income' in subparagraphs (A) and (B) of section 42(g)(1).
``(5) Definitions.--Any term used in this subsection which
is also used in section 42 shall have the same meaning as when
used in such section.
``(d) Special Allowance for Certain Property Acquired on or After
August 28, 2005.--
``(1) Additional allowance.--In the case of any qualified
Gulf Opportunity Zone property--
``(A) the depreciation deduction provided by section
167(a) for the taxable year in which such property is
placed in service shall include an allowance equal to 50
percent of the adjusted basis of such property, and
``(B) the adjusted basis of the qualified Gulf
Opportunity Zone property shall be reduced by the amount
of such deduction before computing the amount otherwise
allowable as a depreciation deduction under this chapter
for such taxable year and any subsequent taxable year.
``(2) Qualified gulf opportunity zone property.--For
purposes of this subsection--
[[Page 119 STAT. 2583]]
``(A) In general.--The term `qualified Gulf
Opportunity Zone property' means property--
``(i)(I) which is described in section
168(k)(2)(A)(i), or
``(II) which is nonresidential real property
or residential rental property,
``(ii) substantially all of the use of which
is in the Gulf Opportunity Zone and is in the
active conduct of a trade or business by the
taxpayer in such Zone,
``(iii) the original use of which in the Gulf
Opportunity Zone commences with the taxpayer on or
after August 28, 2005,
``(iv) which is acquired by the taxpayer by
purchase (as defined in section 179(d)) on or
after August 28, 2005, but only if no written
binding contract for the acquisition was in effect
before August 28, 2005, and
``(v) which is placed in service by the
taxpayer on or before December 31, 2007 (December
31, 2008, in the case of nonresidential real
property and residential rental property).
``(B) Exceptions.--
``(i) Alternative depreciation property.--Such
term shall not include any property described in
section 168(k)(2)(D)(i).
``(ii) Tax-exempt bond-financed property.--
Such term shall not include any property any
portion of which is financed with the proceeds of
any obligation the interest on which is exempt
from tax under section 103.
``(iii) Qualified revitalization buildings.--
Such term shall not include any qualified
revitalization building with respect to which the
taxpayer has elected the application of paragraph
(1) or (2) of section 1400I(a).
``(iv) Election out.--If a taxpayer makes an
election under this clause with respect to any
class of property for any taxable year, this
subsection shall not apply to all property in such
class placed in service during such taxable year.
``(3) Special rules.--For <<NOTE: Applicability.>> purposes
of this subsection, rules similar to the rules of subparagraph
(E) of section 168(k)(2) shall apply, except that such
subparagraph shall be applied--
``(A) by substituting `August 27, 2005' for
`September 10, 2001' each place it appears therein,
``(B) by substituting `January 1, 2008' for `January
1, 2005' in clause (i) thereof, and
``(C) by substituting `qualified Gulf Opportunity
Zone property' for `qualified property' in clause (iv)
thereof.
``(4) Allowance <<NOTE: Applicability.>> against alternative
minimum tax.--For purposes of this subsection, rules similar to
the rules of section 168(k)(2)(G) shall apply.
``(5) Recapture.--For <<NOTE: Applicability.>> purposes of
this subsection, rules similar to the rules under section
179(d)(10) shall apply with respect to any qualified Gulf
Opportunity Zone property which ceases to be qualified Gulf
Opportunity Zone property.
``(e) Increase in Expensing Under Section 179.--
``(1) In general.--For purposes of section 179--
[[Page 119 STAT. 2584]]
``(A) the dollar amount in effect under section
179(b)(1) for the taxable year shall be increased by the
lesser of--
``(i) $100,000, or
``(ii) the cost of qualified section 179 Gulf
Opportunity Zone property placed in service during
the taxable year, and
``(B) the dollar amount in effect under section
179(b)(2) for the taxable year shall be increased by the
lesser of--
``(i) $600,000, or
``(ii) the cost of qualified section 179 Gulf
Opportunity Zone property placed in service during
the taxable year.
``(2) Qualified section 179 gulf opportunity zone
property.--For purposes of this subsection, the term `qualified
section 179 Gulf Opportunity Zone property' means section 179
property (as defined in section 179(d)) which is qualified Gulf
Opportunity Zone property (as defined in subsection (d)(2)).
``(3) Coordination with empowerment zones and renewal
communities.--For purposes of sections 1397A and 1400J,
qualified section 179 Gulf Opportunity Zone property shall not
be treated as qualified zone property or qualified renewal
property, unless the taxpayer elects not to take such qualified
section 179 Gulf Opportunity Zone property into account for
purposes of this subsection.
``(4) Recapture.--For <<NOTE: Applicability.>> purposes of
this subsection, rules similar to the rules under section
179(d)(10) shall apply with respect to any qualified section 179
Gulf Opportunity Zone property which ceases to be qualified
section 179 Gulf Opportunity Zone property.
``(f) Expensing for Certain Demolition and Clean-up Costs.--
``(1) In general.--A taxpayer may elect to treat 50 percent
of any qualified Gulf Opportunity Zone clean-up cost as an
expense which is not chargeable to capital account. Any cost so
treated shall be allowed as a deduction for the taxable year in
which such cost is paid or incurred.
``(2) Qualified gulf opportunity zone clean-up cost.--For
purposes of this subsection, the term `qualified Gulf
Opportunity Zone clean-up cost' means any amount paid or
incurred during the period beginning on August 28, 2005, and
ending on December 31, 2007, for the removal of debris from, or
the demolition of structures on, real property which is located
in the Gulf Opportunity Zone and which is--
``(A) held by the taxpayer for use in a trade or
business or for the production of income, or
``(B) property described in section 1221(a)(1) in
the hands of the taxpayer.
For purposes of the preceding sentence, amounts paid or incurred
shall be taken into account only to the extent that such amount
would (but for paragraph (1)) be chargeable to capital account.
``(g) Extension of Expensing for Environmental Remediation Costs.--
With respect to any qualified environmental remediation expenditure (as
defined in section 198(b)) paid or incurred on or after August 28, 2005,
in connection with a qualified contaminated site located in the Gulf
Opportunity Zone, section 198
[[Page 119 STAT. 2585]]
(relating to expensing of environmental remediation costs) shall be
applied--
``(1) in the case of expenditures paid or incurred on or
after August 28, 2005, and before January 1, 2008, by
substituting `December 31, 2007' for the date contained in
section 198(h), and
``(2) except as provided in section 198(d)(2), by treating
petroleum products (as defined in section 4612(a)(3)) as a
hazardous substance.
``(h) Increase in Rehabilitation Credit.--In the case of qualified
rehabilitation expenditures (as defined in section 47(c)) paid or
incurred during the period beginning on August 28, 2005, and ending on
December 31, 2008, with respect to any qualified rehabilitated building
or certified historic structure (as defined in section 47(c)) located in
the Gulf Opportunity Zone, subsection (a) of section 47 (relating to
rehabilitation credit) shall be applied--
``(1) by substituting `13 percent' for `10 percent' in
paragraph (1) thereof, and
``(2) by substituting `26 percent' for `20 percent' in
paragraph (2) thereof.
``(i) Special Rules for Small Timber Producers.--
``(1) Increased expensing for qualified timber property.--In
the case of qualified timber property any portion of which is
located in the Gulf Opportunity Zone, in that portion of the
Rita GO Zone which is not part of the Gulf Opportunity Zone, or
in the Wilma GO Zone, the limitation under subparagraph (B) of
section 194(b)(1) shall be increased by the lesser of--
``(A) the limitation which would (but for this
subsection) apply under such subparagraph, or
``(B) the amount of reforestation expenditures (as
defined in section 194(c)(3)) paid or incurred by the
taxpayer with respect to such qualified timber property
during the specified portion of the taxable year.
``(2) 5 year nol carryback of certain timber losses.--For
purposes of determining any farming loss under section 172(i),
income and deductions which are allocable to the specified
portion of the taxable year and which are attributable to
qualified timber property any portion of which is located in the
Gulf Opportunity Zone, in that portion of the Rita GO Zone which
is not part of the Gulf Opportunity Zone, or in the Wilma GO
Zone shall be treated as attributable to farming businesses.
``(3) Rules not applicable to certain entities.--Paragraphs
(1) and (2) shall not apply to any taxpayer which--
``(A) is a corporation the stock of which is
publicly traded on an established securities market, or
``(B) is a real estate investment trust.
``(4) Rules not applicable to large timber producers.--
``(A) Expensing.--Paragraph (1) shall not apply to
any taxpayer if such taxpayer holds more than 500 acres
of qualified timber property at any time during the
taxable year.
``(B) NOL carryback.--Paragraph (2) shall not apply
with respect to any qualified timber property unless--
``(i) such property was held by the taxpayer--
[[Page 119 STAT. 2586]]
``(I) on August 28, 2005, in the
case of qualified timber property any
portion of which is located in the Gulf
Opportunity Zone,
``(II) on September 23, 2005, in the
case of qualified timber property (other
than property described in subclause
(I)) any portion of which is located in
that portion of the Rita GO Zone which
is not part of the Gulf Opportunity
Zone, or
``(III) on October 23, 2005, in the
case of qualified timber property (other
than property described in subclause (I)
or (II)) any portion of which is located
in the Wilma GO Zone, and
``(ii) such taxpayer held not more than 500
acres of qualified timber property on such date.
``(5) Definitions.--For purposes of this subsection--
``(A) Specified portion.--
``(i) In general.--The term `specified
portion' means--
``(I) in the case of qualified
timber property any portion of which is
located in the Gulf Opportunity Zone,
that portion of the taxable year which
is on or after August 28, 2005, and
before the termination date,
``(II) in the case of qualified
timber property (other than property
described in clause (i)) any portion of
which is located in the Rita GO Zone,
that portion of the taxable year which
is on or after September 23, 2005, and
before the termination date, or
``(III) in the case of qualified
timber property (other than property
described in clause (i) or (ii)) any
portion of which is located in the Wilma
GO Zone, that portion of the taxable
year which is on or after October 23,
2005, and before the termination date.
``(ii) Termination date.--The term
`termination date' means--
``(I) for purposes of paragraph (1),
January 1, 2008, and
``(II) for purposes of paragraph
(2), January 1, 2007.
``(B) Qualified timber property.--The term
`qualified timber property' has the meaning given such
term in section 194(c)(1).
``(j) Special Rule for Gulf Opportunity Zone Public Utility Casualty
Losses.--
``(1) In general.--The amount described in section
172(f)(1)(A) for any taxable year shall be increased by the Gulf
Opportunity Zone public utility casualty loss for such taxable
year.
``(2) Gulf opportunity zone public utility casualty loss.--
For purposes of this subsection, the term `Gulf Opportunity Zone
public utility casualty loss' means any casualty loss of public
utility property (as defined in section 168(i)(10)) located in
the Gulf Opportunity Zone if--
[[Page 119 STAT. 2587]]
``(A) such loss is allowed as a deduction under
section 165 for the taxable year,
``(B) such loss is by reason of Hurricane Katrina,
and
``(C) the taxpayer elects the application of this
subsection with respect to such loss.
``(3) Reduction for gains from involuntary conversion.--The
amount of any Gulf Opportunity Zone public utility casualty loss
which would (but for this paragraph) be taken into account under
paragraph (1) for any taxable year shall be reduced by the
amount of any gain recognized by the taxpayer for such year from
the involuntary conversion by reason of Hurricane Katrina of
public utility property (as so defined) located in the Gulf
Opportunity Zone.
``(4) Coordination with general disaster loss rules.--
Subsection (k) and section 165(i) shall not apply to any Gulf
Opportunity Zone public utility casualty loss to the extent such
loss is taken into account under paragraph (1).
``(5) Election.--Any election under paragraph (2)(C) shall
be made in such manner as may be prescribed by the Secretary and
shall be made by the due date (including extensions of time) for
filing the taxpayer's return for the taxable year of the loss.
Such election, once made for any taxable year, shall be
irrevocable for such taxable year.
``(k) Treatment of Net Operating Losses Attributable to Gulf
Opportunity Zone Losses.--
``(1) In general.--If a <<NOTE: Applicability.>> portion of
any net operating loss of the taxpayer for any taxable year is a
qualified Gulf Opportunity Zone loss, the following rules shall
apply:
``(A) Extension of carryback period.--Section
172(b)(1) shall be applied with respect to such
portion--
``(i) by substituting `5 taxable years' for `2
taxable years' in subparagraph (A)(i), and
``(ii) by not taking such portion into account
in determining any eligible loss of the taxpayer
under subparagraph (F) thereof for the taxable
year.
``(B) Suspension of 90 percent amt limitation.--
Section 56(d)(1) shall be applied by increasing the
amount determined under subparagraph (A)(ii)(I) thereof
by the sum of the carrybacks and carryovers of any net
operating loss attributable to such portion.
``(2) Qualified gulf opportunity zone loss.--For purposes of
paragraph (1), the term `qualified Gulf Opportunity Zone loss'
means the lesser of--
``(A) the excess of--
``(i) the net operating loss for such taxable
year, over
``(ii) the specified liability loss for such
taxable year to which a 10-year carryback applies
under section 172(b)(1)(C), or
``(B) the aggregate amount of the following
deductions to the extent taken into account in computing
the net operating loss for such taxable year:
``(i) Any deduction for any qualified Gulf
Opportunity Zone casualty loss.
``(ii) Any deduction for moving expenses paid
or incurred after August 27, 2005, and before
January
[[Page 119 STAT. 2588]]
1, 2008, and allowable under this chapter to any
taxpayer in connection with the employment of any
individual--
``(I) whose principal place of abode
was located in the Gulf Opportunity Zone
before August 28, 2005,
``(II) who was unable to remain in
such abode as the result of Hurricane
Katrina, and
``(III) whose principal place of
employment with the taxpayer after such
expense is located in the Gulf
Opportunity Zone.
For purposes of this clause, the term `moving
expenses' has the meaning given such term by
section 217(b), except that the taxpayer's former
residence and new residence may be the same
residence if the initial vacating of the residence
was as the result of Hurricane Katrina.
``(iii) Any deduction allowable under this
chapter for expenses paid or incurred after August
27, 2005, and before January 1, 2008, to
temporarily house any employee of the taxpayer
whose principal place of employment is in the Gulf
Opportunity Zone.
``(iv) Any deduction for depreciation (or
amortization in lieu of depreciation) allowable
under this chapter with respect to any qualified
Gulf Opportunity Zone property (as defined in
subsection (d)(2), but without regard to
subparagraph (B)(iv) thereof)) for the taxable
year such property is placed in service.
``(v) Any deduction allowable under this
chapter for repair expenses (including expenses
for removal of debris) paid or incurred after
August 27, 2005, and before January 1, 2008, with
respect to any damage attributable to Hurricane
Katrina and in connection with property which is
located in the Gulf Opportunity Zone.
``(3) Qualified gulf opportunity zone casualty loss.--
``(A) In general.--For purposes of paragraph
(2)(B)(i), the term `qualified Gulf Opportunity Zone
casualty loss' means any uncompensated section 1231 loss
(as defined in section 1231(a)(3)(B)) of property
located in the Gulf Opportunity Zone if--
``(i) such loss is allowed as a deduction
under section 165 for the taxable year, and
``(ii) such loss is by reason of Hurricane
Katrina.
``(B) Reduction for gains from involuntary
conversion.--The amount of qualified Gulf Opportunity
Zone casualty loss which would (but for this
subparagraph) be taken into account under subparagraph
(A) for any taxable year shall be reduced by the amount
of any gain recognized by the taxpayer for such year
from the involuntary conversion by reason of Hurricane
Katrina of property located in the Gulf Opportunity
Zone.
``(C) Coordination with general disaster loss
rules.--Section 165(i) shall not apply to any qualified
Gulf Opportunity Zone casualty loss to the extent such
loss is taken into account under this subsection.
[[Page 119 STAT. 2589]]
``(4) Special rules.--For <<NOTE: Applicability.>> purposes
of paragraph (1), rules similar to the rules of paragraphs (2)
and (3) of section 172(i) shall apply with respect to such
portion.
``(l) Credit to Holders of Gulf Tax Credit Bonds.--
``(1) Allowance of credit.--If a taxpayer holds a Gulf tax
credit bond on one or more credit allowance dates of the bond
occurring during any taxable year, there shall be allowed as a
credit against the tax imposed by this chapter for the taxable
year an amount equal to the sum of the credits determined under
paragraph (2) with respect to such dates.
``(2) Amount of credit.--
``(A) In general.--The amount of the credit
determined under this paragraph with respect to any
credit allowance date for a Gulf tax credit bond is 25
percent of the annual credit determined with respect to
such bond.
``(B) Annual credit.--The annual credit determined
with respect to any Gulf tax credit bond is the product
of--
``(i) the credit rate determined by the
Secretary under subparagraph (C) for the day on
which such bond was sold, multiplied by
``(ii) the outstanding face amount of the
bond.
``(C) Determination.--For purposes of subparagraph
(B), with respect to any Gulf tax credit bond, the
Secretary shall determine daily or cause to be
determined daily a credit rate which shall apply to the
first day on which there is a binding, written contract
for the sale or exchange of the bond. The credit rate
for any day is the credit rate which the Secretary or
the Secretary's designee estimates will permit the
issuance of Gulf tax credit bonds with a specified
maturity or redemption date without discount and without
interest cost to the issuer.
``(D) Credit allowance date.--For purposes of this
subsection, the term `credit allowance date' means March
15, June 15, September 15, and December 15. Such term
also includes the last day on which the bond is
outstanding.
``(E) Special rule for issuance and redemption.--In
the case of a bond which is issued during the 3-month
period ending on a credit allowance date, the amount of
the credit determined under this paragraph with respect
to such credit allowance date shall be a ratable portion
of the credit otherwise determined based on the portion
of the 3-month period during which the bond is
outstanding. A similar rule shall apply when the bond is
redeemed or matures.
``(3) Limitation based on amount of tax.--The credit allowed
under paragraph (1) for any taxable year shall not exceed the
excess of--
``(A) the sum of the regular tax liability (as
defined in section 26(b)) plus the tax imposed by
section 55, over
``(B) the sum of the credits allowable under part IV
of subchapter A (other than subpart C and this
subsection).
``(4) Gulf tax credit bond.--For purposes of this
subsection--
``(A) In general.--The term `Gulf tax credit bond'
means any bond issued as part of an issue if--
[[Page 119 STAT. 2590]]
``(i) the bond is issued by the State of
Alabama, Louisiana, or Mississippi,
``(ii) 95 percent or more of the proceeds of
such issue are to be used to--
``(I) pay principal, interest, or
premiums on qualified bonds issued by
such State or any political subdivision
of such State, or
``(II) make a loan to any political
subdivision of such State to pay
principal, interest, or premiums on
qualified bonds issued by such political
subdivision,
``(iii) the Governor of such State designates
such bond for purposes of this subsection,
``(iv) the bond is a general obligation of
such State and is in registered form (within the
meaning of section 149(a)),
``(v) the maturity of such bond does not
exceed 2 years, and
``(vi) the bond is issued after December 31,
2005, and before January 1, 2007.
``(B) State matching requirement.--A bond shall not
be treated as a Gulf tax credit bond unless--
``(i) the issuer of such bond pledges as of
the date of the issuance of the issue an amount
equal to the face amount of such bond to be used
for payments described in subclause (I) of
subparagraph (A)(ii), or loans described in
subclause (II) of such subparagraph, as the case
may be, with respect to the issue of which such
bond is a part, and
``(ii) any such payment or loan is made in
equal amounts from the proceeds of such issue and
from the amount pledged under clause (i).
The requirement of clause (ii) shall be treated as met
with respect to any such payment or loan made during the
1-year period beginning on the date of the issuance (or
any successor 1-year period) if such requirement is met
when applied with respect to the aggregate amount of
such payments and loans made during such period.
``(C) Aggregate limit on bond designations.--The
maximum aggregate face amount of bonds which may be
designated under this subsection by the Governor of a
State shall not exceed--
``(i) $200,000,000 in the case of the State of
Louisiana,
``(ii) $100,000,000 in the case of the State
of Mississippi, and
``(iii) $50,000,000 in the case of the State
of Alabama.
``(D) Special rules relating to arbitrage.--A bond
which is part of an issue shall not be treated as a Gulf
tax credit bond unless, with respect to the issue of
which the bond is a part, the issuer satisfies the
arbitrage requirements of section 148 with respect to
proceeds of the issue and any loans made with such
proceeds.
``(5) Qualified bond.--For purposes of this subsection--
[[Page 119 STAT. 2591]]
``(A) In general.--The term `qualified bond' means
any obligation of a State or political subdivision
thereof which was outstanding on August 28, 2005.
``(B) Exception for private activity bonds.--Such
term shall not include any private activity bond.
``(C) Exception for advance refundings.--Such term
shall not include any bond with respect to which there
is any outstanding refunded or refunding bond during the
period in which a Gulf tax credit bond is outstanding
with respect to such bond.
``(D) Use of proceeds requirement.--Such term shall
not include any bond issued as part of an issue if any
portion of the proceeds of such issue was (or is to be)
used to provide any property described in section
144(c)(6)(B).
``(6) Credit included in gross income.--Gross income
includes the amount of the credit allowed to the taxpayer under
this subsection (determined without regard to paragraph (3)) and
the amount so included shall be treated as interest income.
``(7) Other definitions and special rules.--For purposes of
this subsection--
``(A) Bond.--The term `bond' includes any
obligation.
``(B) Partnership;
s <<NOTE: Applicability.>> corporation; and other pass-
thru entities.--
``(i) In general.--
Under <<NOTE: Regulations.>> regulations
prescribed by the Secretary, in the case of a
partnership, trust, S corporation, or other pass-
thru entity, rules similar to the rules of section
41(g) shall apply with respect to the credit
allowable under paragraph (1).
``(ii) No basis adjustment.--In the case of a
bond held by a partnership or an S corporation,
rules similar to the rules under section 1397E(i)
shall apply.
``(C) Bonds held by <<NOTE: Procedures.>> regulated
investment companies.--If any Gulf tax credit bond is
held by a regulated investment company, the credit
determined under paragraph (1) shall be allowed to
shareholders of such company under procedures prescribed
by the Secretary.
``(D) Reporting.--Issuers of Gulf tax credit bonds
shall submit reports similar to the reports required
under section 149(e).
``(E) Credit treated as nonrefundable bondholder
credit.--For purposes of this title, the credit allowed
by this subsection shall be treated as a credit
allowable under subpart H of part IV of subchapter A of
this chapter.
``(m) Application of New Markets Tax Credit to Investments in
Community Development Entities Serving Gulf Opportunity Zone.--For
purposes of section 45D--
``(1) a qualified community development entity shall be
eligible for an allocation under subsection (f)(2) thereof of
the increase in the new markets tax credit limitation described
in paragraph (2) only if a significant mission of such entity is
the recovery and redevelopment of the Gulf Opportunity Zone,
``(2) the new markets tax credit limitation otherwise
determined under subsection (f)(1) thereof shall be increased by
an amount equal to--
[[Page 119 STAT. 2592]]
``(A) $300,000,000 for 2005 and 2006, to be
allocated among qualified community development entities
to make qualified low-income community investments
within the Gulf Opportunity Zone, and
``(B) $400,000,000 for 2007, to be so allocated, and
``(3) subsection (f)(3) thereof shall be applied separately
with respect to the amount of the increase under paragraph (2).
``(n) Treatment of Representations Regarding Income Eligibility for
Purposes of Qualified Residential Rental Project Requirements.--For
purposes of determining if any residential rental project meets the
requirements of section 142(d)(1) and if any certification with respect
to such project meets the requirements under section 142(d)(7), the
operator of the project may rely on the representations of any
individual applying for tenancy in such project that such individual's
income will not exceed the applicable income limits of section 142(d)(1)
upon commencement of the individual's tenancy if such tenancy begins
during the 6-month period beginning on and after the date such
individual was displaced by reason of Hurricane Katrina.
``(o) Treatment of Public Utility Property Disaster Losses.--
``(1) In general.--Upon the election of the taxpayer, in the
case of any eligible public utility property loss--
``(A) section 165(i) shall be applied by
substituting `the fifth taxable year immediately
preceding' for `the taxable year immediately preceding',
``(B) an application for a tentative carryback
adjustment of the tax for any prior taxable year
affected by the application of subparagraph (A) may be
made under section 6411, and
``(C) section 6611 shall not apply to any
overpayment attributable to such loss.
``(2) Eligible public utility property loss.--For purposes
of this subsection--
``(A) In general.--The term `eligible public utility
property loss' means any loss with respect to public
utility property located in the Gulf Opportunity Zone
and attributable to Hurricane Katrina.
``(B) Public utility property.--The term `public
utility property' has the meaning given such term by
section 168(i)(10) without regard to the matter
following subparagraph (D) thereof.
``(3) Waiver of limitations.--If refund or credit of any
overpayment of tax resulting from the application of paragraph
(1) is prevented at any time before the close of the 1-year
period beginning on the date of the enactment of this section by
the operation of any law or rule of law (including res
judicata), such refund or credit may nevertheless be made or
allowed if claim therefor is filed before the close of such
period.
``(p) Tax Benefits Not Available With Respect to Certain Property.--
``(1) Qualified gulf opportunity zone property.--For
purposes of subsections (d), (e), and (k)(2)(B)(iv), the term
`qualified Gulf Opportunity Zone property' shall not include any
property described in paragraph (3).
[[Page 119 STAT. 2593]]
``(2) Qualified gulf opportunity zone casualty losses.--For
purposes of subsection (k)(2)(B)(i), the term `qualified Gulf
Opportunity Zone casualty loss' shall not include any loss with
respect to any property described in paragraph (3).
``(3) Property described.--
``(A) In general.--For purposes of this subsection,
property is described in this paragraph if such property
is--
``(i) any property used in connection with any
private or commercial golf course, country club,
massage parlor, hot tub facility, suntan facility,
or any store the principal business of which is
the sale of alcoholic beverages for consumption
off premises, or
``(ii) any gambling or animal racing property.
``(B) Gambling or animal racing property.--For
purposes of subparagraph (A)(ii)--
``(i) In general.--The term `gambling or
animal racing property' means--
``(I) any equipment, furniture,
software, or other property used
directly in connection with gambling,
the racing of animals, or the on-site
viewing of such racing, and
``(II) the portion of any real
property (determined by square footage)
which is dedicated to gambling, the
racing of animals, or the on-site
viewing of such racing.
``(ii) De minimis portion.--Clause (i)(II)
shall not apply to any real property if the
portion so dedicated is less than 100 square
feet.''.
(b) Conforming Amendments.--
(1) Paragraph (2) of section 54(c) is <<NOTE: 26 USC
54.>> amended by inserting ``, section 1400N(l),'' after
``subpart C''.
(2) Subparagraph (A) of section 6049(d)(8) is amended--
(A) by inserting ``or 1400N(l)(6)'' after ``section
54(g)'', and
(B) by inserting ``or 1400N(l)(2)(D), as the case
may be'' after ``section 54(b)(4)''.
(3) So much of subchapter Y of chapter 1 as precedes section
1400L is amended to read as follows:
``Subchapter Y--Short-Term Regional Benefits
``Part I--Tax Benefits for New York Liberty Zone
``Part II--Tax Benefits for GO Zones
``PART I--TAX BENEFITS FOR NEW YORK LIBERTY ZONE
``Sec. 1400L. Tax benefits for New York Liberty Zone.''.
(4) The item relating to subchapter Y in the table of
subchapters for chapter 1 is amended to read as follows:
``subchapter y--short-term regional benefits''.
(c) Effective <<NOTE: 26 USC 1400N note.>> Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
ending on or after August 28, 2005.
[[Page 119 STAT. 2594]]
(2) Carrybacks.--Subsections (i)(2), (j), and (k) of section
1400N of the Internal Revenue Code of 1986 (as added by this
section) shall apply to losses arising in such taxable years.
SEC. 102. EXPANSION OF HOPE SCHOLARSHIP AND LIFETIME LEARNING CREDIT FOR
STUDENTS IN THE GULF OPPORTUNITY ZONE.
(a) In General.--Part II of subchapter Y of chapter 1 (as added by
this Act) is amended by adding at the end the following new section:
``SEC. 1400O. EDUCATION TAX BENEFITS.
``In the case of an individual who attends an eligible educational
institution (as defined in section 25A(f)(2)) located in the Gulf
Opportunity Zone for any taxable year beginning during 2005 or 2006--
``(1) in applying section 25A, the term `qualified tuition
and related expenses' shall include any costs which are
qualified higher education expenses (as defined in section
529(e)(3)),
``(2) each of the dollar amounts in effect under of
subparagraphs (A) and (B) of section 25A(b)(1) shall be twice
the amount otherwise in effect before the application of this
subsection, and
``(3) section 25A(c)(1) shall be applied by substituting `40
percent' for `20 percent'.''.
(b) Conforming Amendment.--The table of sections for part II of
subchapter Y of chapter 1 is amended by adding at the end the following
new item:
``Sec. 1400O. Education tax benefits.''.
SEC. 103. HOUSING RELIEF FOR INDIVIDUALS AFFECTED BY HURRICANE KATRINA.
(a) In General.--Part II of subchapter Y of chapter 1 (as added by
this Act) is amended by adding at the end the following new section:
``SEC. 1400P. HOUSING TAX BENEFITS .
``(a) Exclusion of Employer Provided Housing for Individual Affected
by Hurricane Katrina.--
``(1) In general.--Gross income of a qualified employee
shall not include the value of any lodging furnished in-kind to
such employee (and such employee's spouse or any of such
employee's dependents) by or on behalf of a qualified employer
for any month during the taxable year.
``(2) Limitation.--The amount which may be excluded under
paragraph (1) for any month for which lodging is furnished
during the taxable year shall not exceed $600.
``(3) Treatment of exclusion.--The exclusion under paragraph
(1) shall be treated as an exclusion under section 119 (other
than for purposes of sections 3121(a)(19) and 3306(b)(14)).
``(b) Employer Credit for Housing Employees Affected by Hurricane
Katrina.--For purposes of section 38, in the case of a qualified
employer, the Hurricane Katrina housing credit for any month during the
taxable year is an amount equal to 30 percent of any amount which is
excludable from the gross income of a qualified employee of such
employer under subsection (a) and not otherwise excludable under section
119.
[[Page 119 STAT. 2595]]
``(c) Qualified Employee.--For purposes of this section, the term
`qualified employee' means, with respect to any month, an individual--
``(1) who had a principal residence (as defined in section
121) in the Gulf Opportunity Zone on August 28, 2005, and
``(2) who performs substantially all employment services--
``(A) in the Gulf Opportunity Zone, and
``(B) for the qualified employer which furnishes
lodging to such individual.
``(d) Qualified Employer.--For purposes of this section, the term
`qualified employer' means any employer with a trade or business located
in the Gulf Opportunity Zone.
``(e) Certain Rules to Apply.--For purposes of this subsection,
rules similar to the rules of sections 51(i)(1) and 52 shall apply.
``(f) Application of Section.--This section shall apply to lodging
furnished during the period--
``(1) beginning on the first day of the first month
beginning after the date of the enactment of this section, and
``(2) ending on the date which is 6 months after the first
day described in paragraph (1).''.
(b) Conforming Amendments.--
(1) Subsection (b) of <<NOTE: 26 USC 38.>> section 38 is
amended by striking ``and'' at the end of paragraph (25), by
striking the period at the end of paragraph (26) and inserting
``, and'', and by adding at the end the following new paragraph:
``(27) the Hurricane Katrina housing credit determined under
section 1400P(b).''.
(2) Section 280C(a) is amended by striking ``and 1396(a)''
and inserting ``1396(a), and 1400P(b)''.
(3) The table of sections for part II of subchapter Y of
chapter 1 is amended by adding at the end the following new
item:
``Sec. 1400P. Housing tax benefits.''.
SEC. 104. EXTENSION OF SPECIAL RULES FOR MORTGAGE REVENUE BONDS.
Section 404(d) of the Katrina Emergency Tax Relief Act of 2005 is
amended by <<NOTE: Ante, p. 2027.>> striking ``December 31, 2007'' and
inserting ``December 31, 2010''.
SEC. 105. SPECIAL EXTENSION OF BONUS DEPRECIATION PLACED IN SERVICE DATE
FOR TAXPAYERS AFFECTED BY HURRICANES KATRINA, RITA, AND
WILMA.
In applying the rule under section 168(k)(2)(A)(iv) of the Internal
Revenue Code of 1986 to any property described in subparagraph (B) or
(C) of section 168(k)(2) of such Code--
(1) the placement in service of which--
(A) is to be located in the GO Zone (as defined in
section 1400M(1) of such Code), the Rita GO Zone (as
defined in section 1400M(3) of such Code), or the Wilma
GO Zone (as defined in section 1400M(5) of such Code),
and
(B) is to be made by any taxpayer affected by
Hurricane Katrina, Rita, or Wilma, or
(2) which is manufactured in such Zone by any person
affected by Hurricane Katrina, Rita, or Wilma,
[[Page 119 STAT. 2596]]
the Secretary of the Treasury may, on a taxpayer by taxpayer basis,
extend the required date of the placement in service of such property
under such section by such period of time as is determined necessary by
the Secretary but not to exceed 1 year. For purposes of the preceding
sentence, the determination shall be made by only taking into account
the effect of one or more hurricanes on the date of such placement by
the taxpayer.
TITLE II--TAX BENEFITS RELATED TO HURRICANES RITA AND WILMA
SEC. 201. EXTENSION OF CERTAIN EMERGENCY TAX RELIEF FOR HURRICANE
KATRINA TO HURRICANES RITA AND WILMA.
(a) In General.--Part II of subchapter Y of chapter 1 (as added by
this Act) is amended by adding at the end the following new sections:
``SEC. 1400Q. SPECIAL RULES FOR USE OF RETIREMENT FUNDS.
``(a) Tax-Favored Withdrawals From Retirement Plans.--
``(1) In general.--Section 72(t) shall not apply to any
qualified hurricane distribution.
``(2) Aggregate dollar limitation.--
``(A) In general.--For purposes of this subsection,
the aggregate amount of distributions received by an
individual which may be treated as qualified hurricane
distributions for any taxable year shall not exceed the
excess (if any) of--
``(i) $100,000, over
``(ii) the aggregate amounts treated as
qualified hurricane distributions received by such
individual for all prior taxable years.
``(B) Treatment of plan distributions.--If a
distribution to an individual would (without regard to
subparagraph (A)) be a qualified hurricane distribution,
a plan shall not be treated as violating any requirement
of this title merely because the plan treats such
distribution as a qualified hurricane distribution,
unless the aggregate amount of such distributions from
all plans maintained by the employer (and any member of
any controlled group which includes the employer) to
such individual exceeds $100,000.
``(C) Controlled group.--For purposes of
subparagraph (B), the term `controlled group' means any
group treated as a single employer under subsection (b),
(c), (m), or (o) of section 414.
``(3) Amount distributed may be repaid.--
``(A) In general.--Any individual who receives a
qualified hurricane distribution may, at any time during
the 3-year period beginning on the day after the date on
which such distribution was received, make one or more
contributions in an aggregate amount not to exceed the
amount of such distribution to an eligible retirement
plan of which such individual is a beneficiary and to
which a rollover contribution of such distribution could
be made under section 402(c), 403(a)(4), 403(b)(8),
408(d)(3), or 457(e)(16), as the case may be.
[[Page 119 STAT. 2597]]
``(B) Treatment of repayments of distributions from
eligible retirement plans other than iras.--For purposes
of this title, if a contribution is made pursuant to
subparagraph (A) with respect to a qualified hurricane
distribution from an eligible retirement plan other than
an individual retirement plan, then the taxpayer shall,
to the extent of the amount of the contribution, be
treated as having received the qualified hurricane
distribution in an eligible rollover distribution (as
defined in section 402(c)(4)) and as having transferred
the amount to the eligible retirement plan in a direct
trustee to trustee transfer within 60 days of the
distribution.
``(C) Treatment of repayments for distributions from
iras.--For purposes of this title, if a contribution is
made pursuant to subparagraph (A) with respect to a
qualified hurricane distribution from an individual
retirement plan (as defined by section 7701(a)(37)),
then, to the extent of the amount of the contribution,
the qualified hurricane distribution shall be treated as
a distribution described in section 408(d)(3) and as
having been transferred to the eligible retirement plan
in a direct trustee to trustee transfer within 60 days
of the distribution.
``(4) Definitions.--For purposes of this subsection--
``(A) Qualified hurricane distribution.--Except as
provided in paragraph (2), the term `qualified hurricane
distribution' means--
``(i) any distribution from an eligible
retirement plan made on or after August 25, 2005,
and before January 1, 2007, to an individual whose
principal place of abode on August 28, 2005, is
located in the Hurricane Katrina disaster area and
who has sustained an economic loss by reason of
Hurricane Katrina,
``(ii) any distribution (which is not
described in clause (i)) from an eligible
retirement plan made on or after September 23,
2005, and before January 1, 2007, to an individual
whose principal place of abode on September 23,
2005, is located in the Hurricane Rita disaster
area and who has sustained an economic loss by
reason of Hurricane Rita, and
``(iii) any distribution (which is not
described in clause (i) or (ii)) from an eligible
retirement plan made on or after October 23, 2005,
and before January 1, 2007, to an individual whose
principal place of abode on October 23, 2005, is
located in the Hurricane Wilma disaster area and
who has sustained an economic loss by reason of
Hurricane Wilma.
``(B) Eligible retirement plan.--The term `eligible
retirement plan' shall have the meaning given such term
by section 402(c)(8)(B).
``(5) Income inclusion spread over 3-year period.--
``(A) In general.--In the case of any qualified
hurricane distribution, unless the taxpayer elects not
to have this paragraph apply for any taxable year, any
amount required to be included in gross income for such
taxable year shall be so included ratably over the 3-
taxable year period beginning with such taxable year.
[[Page 119 STAT. 2598]]
``(B) Special rule.--
For <<NOTE: Applicability.>> purposes of subparagraph
(A), rules similar to the rules of subparagraph (E) of
section 408A(d)(3) shall apply.
``(6) Special rules.--
``(A) Exemption of distributions from trustee to
trustee transfer and withholding rules.--For purposes of
sections 401(a)(31), 402(f), and 3405, qualified
hurricane distributions shall not be treated as eligible
rollover distributions.
``(B) Qualified hurricane distributions treated as
meeting plan distribution requirements.--For purposes
this title, a qualified hurricane distribution shall be
treated as meeting the requirements of sections
401(k)(2)(B)(i), 403(b)(7)(A)(ii), 403(b)(11), and
457(d)(1)(A).
``(b) Recontributions of Withdrawals for Home Purchases.--
``(1) Recontributions.--
``(A) In general.--Any individual who received a
qualified distribution may, during the applicable
period, make one or more contributions in an aggregate
amount not to exceed the amount of such qualified
distribution to an eligible retirement plan (as defined
in section 402(c)(8)(B)) of which such individual is a
beneficiary and to which a rollover contribution of such
distribution could be made under section 402(c),
403(a)(4), 403(b)(8), or 408(d)(3), as the case may be.
``(B) Treatment of repayments.--Rules similar to the
rules of subparagraphs (B) and (C) of subsection (a)(3)
shall apply for purposes of this subsection.
``(2) Qualified distribution.--For purposes of this
subsection--
``(A) In general.--The term `qualified distribution'
means any qualified Katrina distribution, any qualified
Rita distribution, and any qualified Wilma distribution.
``(B) Qualified katrina distribution.--The term
`qualified Katrina distribution' means any
distribution--
``(i) described in section
401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii) (but only to
the extent such distribution relates to financial
hardship), 403(b)(11)(B), or 72(t)(2)(F),
``(ii) received after February 28, 2005, and
before August 29, 2005, and
``(iii) which was to be used to purchase or
construct a principal residence in the Hurricane
Katrina disaster area, but which was not so
purchased or constructed on account of Hurricane
Katrina.
``(C) Qualified rita distribution.--The term
`qualified Rita distribution' means any distribution
(other than a qualified Katrina distribution)--
``(i) described in section
401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii) (but only to
the extent such distribution relates to financial
hardship), 403(b)(11)(B), or 72(t)(2)(F),
``(ii) received after February 28, 2005, and
before September 24, 2005, and
``(iii) which was to be used to purchase or
construct a principal residence in the Hurricane
Rita disaster
[[Page 119 STAT. 2599]]
area, but which was not so purchased or
constructed on account of Hurricane Rita.
``(D) Qualified wilma distribution.--The term
`qualified Wilma distribution' means any distribution
(other than a qualified Katrina distribution or a
qualified Rita distribution)--
``(i) described in section
401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii) (but only to
the extent such distribution relates to financial
hardship), 403(b)(11)(B), or 72(t)(2)(F),
``(ii) received after February 28, 2005, and
before October 24, 2005, and
``(iii) which was to be used to purchase or
construct a principal residence in the Hurricane
Wilma disaster area, but which was not so
purchased or constructed on account of Hurricane
Wilma.
``(3) Applicable period.--For purposes of this subsection,
the term `applicable period' means--
``(A) with respect to any qualified Katrina
distribution, the period beginning on August 25, 2005,
and ending on February 28, 2006,
``(B) with respect to any qualified Rita
distribution, the period beginning on September 23,
2005, and ending on February 28, 2006, and
``(C) with respect to any qualified Wilma
distribution, the period beginning on October 23, 2005,
and ending on February 28, 2006.
``(c) Loans From Qualified Plans.--
``(1) Increase in <<NOTE: Applicability.>> limit on loans
not treated as distributions.--In the case of any loan from a
qualified employer plan (as defined under section 72(p)(4)) to a
qualified individual made during the applicable period--
``(A) clause (i) of section 72(p)(2)(A) shall be
applied by substituting `$100,000' for `$50,000', and
``(B) clause (ii) of such section shall be applied
by substituting `the present value of the nonforfeitable
accrued benefit of the employee under the plan' for
`one-half of the present value of the nonforfeitable
accrued benefit of the employee under the plan'.
``(2) Delay of repayment.--In the case of a qualified
individual with an outstanding loan on or after the qualified
beginning date from a qualified employer plan (as defined in
section 72(p)(4))--
``(A) if the due date pursuant to subparagraph (B)
or (C) of section 72(p)(2) for any repayment with
respect to such loan occurs during the period beginning
on the qualified beginning date and ending on December
31, 2006, such due date shall be delayed for 1 year,
``(B) any subsequent repayments with respect to any
such loan shall be appropriately adjusted to reflect the
delay in the due date under paragraph (1) and any
interest accruing during such delay, and
``(C) in determining the 5-year period and the term
of a loan under subparagraph (B) or (C) of section
72(p)(2), the period described in subparagraph (A) shall
be disregarded.
[[Page 119 STAT. 2600]]
``(3) Qualified individual.--For purposes of this sub-
section--
``(A) In general.--The term `qualified individual'
means any qualified Hurricane Katrina individual, any
qualified Hurricane Rita individual, and any qualified
Hurricane Wilma individual.
``(B) Qualified hurricane katrina individual.--The
term `qualified Hurricane Katrina individual' means an
individual whose principal place of abode on August 28,
2005, is located in the Hurricane Katrina disaster area
and who has sustained an economic loss by reason of
Hurricane Katrina.
``(C) Qualified hurricane rita individual.--The term
`qualified Hurricane Rita individual' means an
individual (other than a qualified Hurricane Katrina
individual) whose principal place of abode on September
23, 2005, is located in the Hurricane Rita disaster area
and who has sustained an economic loss by reason of
Hurricane Rita.
``(D) Qualified hurricane wilma individual.--The
term `qualified Hurricane Wilma individual' means an
individual (other than a qualified Hurricane Katrina
individual or a qualified Hurricane Rita individual)
whose principal place of abode on October 23, 2005, is
located in the Hurricane Wilma disaster area and who has
sustained an economic loss by reason of Hurricane Wilma.
``(4) Applicable period; qualified beginning date.--For
purposes of this subsection--
``(A) Hurricane katrina.--In the case of any
qualified Hurricane Katrina individual--
``(i) the applicable period is the period
beginning on September 24, 2005, and ending on
December 31, 2006, and
``(ii) the qualified beginning date is August
25, 2005.
``(B) Hurricane rita.--In the case of any qualified
Hurricane Rita individual--
``(i) the applicable period is the period
beginning on the date of the enactment of this
subsection and ending on December 31, 2006, and
``(ii) the qualified beginning date is
September 23, 2005.
``(C) Hurricane wilma.--In the case of any qualified
Hurricane Wilma individual--
``(i) the applicable period is the period
beginning on the date of the enactment of this
subparagraph and ending on December 31, 2006, and
``(ii) the qualified beginning date is October
23, 2005.
``(d) Provisions Relating to Plan Amendments.--
``(1) In general.--If this subsection applies to any
amendment to any plan or annuity contract, such plan or contract
shall be treated as being operated in accordance with the terms
of the plan during the period described in paragraph (2)(B)(i).
``(2) Amendments to which subsection applies.--
[[Page 119 STAT. 2601]]
``(A) In general.--This subsection shall apply to
any amendment to any plan or annuity contract which is
made--
``(i) pursuant to any provision of this
section, or pursuant to any regulation issued by
the Secretary or the Secretary of Labor under any
provision of this section, and
``(ii) on or before the last day of the first
plan year beginning on or after January 1, 2007,
or such later date as the Secretary may prescribe.
In the case of a governmental plan (as defined in
section 414(d)), clause (ii) shall be applied by
substituting the date which is 2 years after the date
otherwise applied under clause (ii).
``(B) Conditions.--This subsection shall not apply
to any amendment unless--
``(i) during the period--
``(I) beginning on the date that
this section or the regulation described
in subparagraph (A)(i) takes effect (or
in the case of a plan or contract
amendment not required by this section
or such regulation, the effective date
specified by the plan), and
``(II) ending on the date described
in subparagraph (A)(ii) (or, if earlier,
the date the plan or contract amendment
is adopted),
the plan or contract is operated as if such plan
or contract amendment were in effect; and
``(ii) such plan or contract amendment applies
retroactively for such period.
``SEC. 1400R. EMPLOYMENT RELIEF.
``(a) Employee Retention Credit for Employers Affected by Hurricane
Katrina.--
``(1) In general.--For purposes of section 38, in the case
of an eligible employer, the Hurricane Katrina employee
retention credit for any taxable year is an amount equal to 40
percent of the qualified wages with respect to each eligible
employee of such employer for such taxable year. For purposes of
the preceding sentence, the amount of qualified wages which may
be taken into account with respect to any individual shall not
exceed $6,000.
``(2) Definitions.--For purposes of this subsection--
``(A) Eligible employer.--The term `eligible
employer' means any employer--
``(i) which conducted an active trade or
business on August 28, 2005, in the GO Zone, and
``(ii) with respect to whom the trade or
business described in clause (i) is inoperable on
any day after August 28, 2005, and before January
1, 2006, as a result of damage sustained by reason
of Hurricane Katrina.
``(B) Eligible employee.--The term `eligible
employee' means with respect to an eligible employer an
employee whose principal place of employment on August
28, 2005, with such eligible employer was in the GO
Zone.
[[Page 119 STAT. 2602]]
``(C) Qualified wages.--The term `qualified wages'
means wages (as defined in section 51(c)(1), but without
regard to section 3306(b)(2)(B)) paid or incurred by an
eligible employer with respect to an eligible employee
on any day after August 28, 2005, and before January 1,
2006, which occurs during the period--
``(i) beginning on the date on which the trade
or business described in subparagraph (A) first
became inoperable at the principal place of
employment of the employee immediately before
Hurricane Katrina, and
``(ii) ending on the date on which such trade
or business has resumed significant operations at
such principal place of employment.
Such term shall include wages paid without regard to
whether the employee performs no services, performs
services at a different place of employment than such
principal place of employment, or performs services at
such principal place of employment before significant
operations have resumed.
``(3) Certain rules to apply.--For purposes of this
subsection, rules similar to the rules of sections 51(i)(1) and
52 shall apply.
``(4) Employee not taken into account more than once.--An
employee shall not be treated as an eligible employee for
purposes of this subsection for any period with respect to any
employer if such employer is allowed a credit under section 51
with respect to such employee for such period.
``(b) Employee Retention Credit for Employers Affected by Hurricane
Rita.--
``(1) In general.--For purposes of section 38, in the case
of an eligible employer, the Hurricane Rita employee retention
credit for any taxable year is an amount equal to 40 percent of
the qualified wages with respect to each eligible employee of
such employer for such taxable year. For purposes of the
preceding sentence, the amount of qualified wages which may be
taken into account with respect to any individual shall not
exceed $6,000.
``(2) Definitions.--For purposes of this subsection--
``(A) Eligible employer.--The term `eligible
employer' means any employer--
``(i) which conducted an active trade or
business on September 23, 2005, in the Rita GO
Zone, and
``(ii) with respect to whom the trade or
business described in clause (i) is inoperable on
any day after September 23, 2005, and before
January 1, 2006, as a result of damage sustained
by reason of Hurricane Rita.
``(B) Eligible employee.--The term `eligible
employee' means with respect to an eligible employer an
employee whose principal place of employment on
September 23, 2005, with such eligible employer was in
the Rita GO Zone.
``(C) Qualified wages.--The term `qualified wages'
means wages (as defined in section 51(c)(1), but without
regard to section 3306(b)(2)(B)) paid or incurred by an
eligible employer with respect to an eligible employee
on
[[Page 119 STAT. 2603]]
any day after September 23, 2005, and before January 1,
2006, which occurs during the period--
``(i) beginning on the date on which the trade
or business described in subparagraph (A) first
became inoperable at the principal place of
employment of the employee immediately before
Hurricane Rita, and
``(ii) ending on the date on which such trade
or business has resumed significant operations at
such principal place of employment.
Such term shall include wages paid without regard to
whether the employee performs no services, performs
services at a different place of employment than such
principal place of employment, or performs services at
such principal place of employment before significant
operations have resumed.
``(3) Certain rules to apply.--For purposes of this
subsection, rules similar to the rules of sections 51(i)(1) and
52 shall apply.
``(4) Employee not taken into account more than once.--An
employee shall not be treated as an eligible employee for
purposes of this subsection for any period with respect to any
employer if such employer is allowed a credit under subsection
(a) or section 51 with respect to such employee for such period.
``(c) Employee Retention Credit for Employers Affected by Hurricane
Wilma.--
``(1) In general.--For purposes of section 38, in the case
of an eligible employer, the Hurricane Wilma employee retention
credit for any taxable year is an amount equal to 40 percent of
the qualified wages with respect to each eligible employee of
such employer for such taxable year. For purposes of the
preceding sentence, the amount of qualified wages which may be
taken into account with respect to any individual shall not
exceed $6,000.
``(2) Definitions.--For purposes of this subsection--
``(A) Eligible employer.--The term `eligible
employer' means any employer--
``(i) which conducted an active trade or
business on October 23, 2005, in the Wilma GO
Zone, and
``(ii) with respect to whom the trade or
business described in clause (i) is inoperable on
any day after October 23, 2005, and before January
1, 2006, as a result of damage sustained by reason
of Hurricane Wilma.
``(B) Eligible employee.--The term `eligible
employee' means with respect to an eligible employer an
employee whose principal place of employment on October
23, 2005, with such eligible employer was in the Wilma
GO Zone.
``(C) Qualified wages.--The term `qualified wages'
means wages (as defined in section 51(c)(1), but without
regard to section 3306(b)(2)(B)) paid or incurred by an
eligible employer with respect to an eligible employee
on any day after October 23, 2005, and before January 1,
2006, which occurs during the period--
``(i) beginning on the date on which the trade
or business described in subparagraph (A) first
became inoperable at the principal place of
employment of
[[Page 119 STAT. 2604]]
the employee immediately before Hurricane Wilma,
and
``(ii) ending on the date on which such trade
or business has resumed significant operations at
such principal place of employment.
Such term shall include wages paid without regard to
whether the employee performs no services, performs
services at a different place of employment than such
principal place of employment, or performs services at
such principal place of employment before significant
operations have resumed.
``(3) Certain rules to apply.--For purposes of this
subsection, rules similar to the rules of sections 51(i)(1) and
52 shall apply.
``(4) Employee not taken into account more than once.--An
employee shall not be treated as an eligible employee for
purposes of this subsection for any period with respect to any
employer if such employer is allowed a credit under subsection
(a) or (b) or section 51 with respect to such employee for such
period.
``SEC. 1400S. ADDITIONAL TAX RELIEF PROVISIONS.
``(a) Temporary Suspension of Limitations on Charitable
Contributions.--
``(1) In general.--Except as otherwise provided in paragraph
(2), section 170(b) shall not apply to qualified contributions
and such contributions shall not be taken into account for
purposes of applying subsections (b) and (d) of section 170 to
other contributions.
``(2) Treatment of excess contributions.--For purposes of
section 170--
``(A) Individuals.--In the case of an individual--
``(i) Limitation.--Any qualified contribution
shall be allowed only to the extent that the
aggregate of such contributions does not exceed
the excess of the taxpayer's contribution base (as
defined in subparagraph (F) of section 170(b)(1))
over the amount of all other charitable
contributions allowed under section 170(b)(1).
``(ii) Carryover.--If the aggregate amount of
qualified contributions made in the contribution
year (within the meaning of section 170(d)(1))
exceeds the limitation of clause (i), such excess
shall be added to the excess described in the
portion of subparagraph (A) of such section which
precedes clause (i) thereof for purposes of
applying such section.
``(B) Corporations.--In the case of a corporation--
``(i) Limitation.--Any qualified contribution
shall be allowed only to the extent that the
aggregate of such contributions does not exceed
the excess of the taxpayer's taxable income (as
determined under paragraph (2) of section 170(b))
over the amount of all other charitable
contributions allowed under such paragraph.
``(ii) Carryover.--Rules similar to the rules
of subparagraph (A)(ii) shall apply for purposes
of this subparagraph.
[[Page 119 STAT. 2605]]
``(3) Exception to overall limitation on itemized
deductions.--So much of any deduction allowed under section 170
as does not exceed the qualified contributions paid during the
taxable year shall not be treated as an itemized deduction for
purposes of section 68.
``(4) Qualified contributions.--
``(A) In general.--For purposes of this subsection,
the term `qualified contribution' means any charitable
contribution (as defined in section 170(c)) if--
``(i) such contribution is paid during the
period beginning on August 28, 2005, and ending on
December 31, 2005, in cash to an organization
described in section 170(b)(1)(A) (other than an
organization described in section 509(a)(3)),
``(ii) in the case of a contribution paid by a
corporation, such contribution is for relief
efforts related to Hurricane Katrina, Hurricane
Rita, or Hurricane Wilma, and
``(iii) the taxpayer has elected the
application of this subsection with respect to
such contribution.
``(B) Exception.--Such term shall not include a
contribution if the contribution is for establishment of
a new, or maintenance in an existing, segregated fund or
account with respect to which the donor (or any person
appointed or designated by such donor) has, or
reasonably expects to have, advisory privileges with
respect to distributions or investments by reason of the
donor's status as a donor.
``(C) Application of election to partnerships and s
corporations.--In the case of a partnership or S
corporation, the election under subparagraph (A)(iii)
shall be made separately by each partner or shareholder.
``(b) Suspension of Certain Limitations on Personal Casualty
Losses.--Paragraphs (1) and (2)(A) of section 165(h) shall not apply to
losses described in section 165(c)(3)--
``(1) which arise in the Hurricane Katrina disaster area on
or after August 25, 2005, and which are attributable to
Hurricane Katrina,
``(2) which arise in the Hurricane Rita disaster area on or
after September 23, 2005, and which are attributable to
Hurricane Rita, or
``(3) which arise in the Hurricane Wilma disaster area on or
after October 23, 2005, and which are attributable to Hurricane
Wilma.
In the case of any other losses, section 165(h)(2)(A) shall be applied
without regard to the losses referred to in the preceding sentence.
``(c) Required Exercise of <<NOTE: Termination date.>> Authority
Under Section 7508A.--In the case of any taxpayer determined by the
Secretary to be affected by the Presidentially declared disaster
relating to Hurricane Katrina, Hurricane Rita, or Hurricane Wilma, any
relief provided by the Secretary under section 7508A shall be for a
period ending not earlier than February 28, 2006.
``(d) Special Rule for Determining Earned Income.--
``(1) In general.--In the case of a qualified individual, if
the earned income of the taxpayer for the taxable year which
includes the applicable date is less than the earned income of
the taxpayer for the preceding taxable year, the
[[Page 119 STAT. 2606]]
credits allowed under sections 24(d) and 32 may, at the election
of the taxpayer, be determined by substituting--
``(A) such earned income for the preceding taxable
year, for
``(B) such earned income for the taxable year which
includes the applicable date.
``(2) Qualified individual.--For purposes of this
subsection--
``(A) In general.--The term `qualified individual'
means any qualified Hurricane Katrina individual, any
qualified Hurricane Rita individual, and any qualified
Hurricane Wilma individual.
``(B) Qualified hurricane katrina individual.--The
term `qualified Hurricane Katrina individual' means any
individual whose principal place of abode on August 25,
2005, was located--
``(i) in the GO Zone, or
``(ii) in the Hurricane Katrina disaster area
(but outside the GO Zone) and such individual was
displaced from such principal place of abode by
reason of Hurricane Katrina.
``(C) Qualified hurricane rita individual.--The term
`qualified Hurricane Rita individual' means any
individual (other than a qualified Hurricane Katrina
individual) whose principal place of abode on September
23, 2005, was located--
``(i) in the Rita GO Zone, or
``(ii) in the Hurricane Rita disaster area
(but outside the Rita GO Zone) and such individual
was displaced from such principal place of abode
by reason of Hurricane Rita.
``(D) Qualified hurricane wilma individual.--The
term `qualified Hurricane Wilma individual' means any
individual whose principal place of abode on October 23,
2005, was located--
``(i) in the Wilma GO Zone, or
``(ii) in the Hurricane Wilma disaster area
(but outside the Wilma GO Zone) and such
individual was displaced from such principal place
of abode by reason of Hurricane Wilma.
``(3) Applicable date.--For purposes of this subsection, the
term `applicable date' means--
``(A) in the case of a qualified Hurricane Katrina
individual, August 25, 2005,
``(B) in the case of a qualified Hurricane Rita
individual, September 23, 2005, and
``(C) in the case of a qualified Hurricane Wilma
individual, October 23, 2005.
``(4) Earned income.--For purposes of this subsection, the
term `earned income' has the meaning given such term under
section 32(c).
``(5) Special rules.--
``(A) Application to joint returns.--For purposes of
paragraph (1), in the case of a joint return for a
taxable year which includes the applicable date--
``(i) such paragraph shall apply if either
spouse is a qualified individual, and
[[Page 119 STAT. 2607]]
``(ii) the earned income of the taxpayer for
the preceding taxable year shall be the sum of the
earned income of each spouse for such preceding
taxable year.
``(B) Uniform application of election.--Any election
made under paragraph (1) shall apply with respect to
both sections 24(d) and section 32.
``(C) Errors treated as mathematical error.--For
purposes of section 6213, an incorrect use on a return
of earned income pursuant to paragraph (1) shall be
treated as a mathematical or clerical error.
``(D) No effect on determination of gross income,
etc.--Except as otherwise provided in this subsection,
this title shall be applied without regard to any
substitution under paragraph (1).
``(e) Secretarial Authority To Make Adjustments Regarding Taxpayer
and Dependency Status.--With respect to taxable years beginning in 2005
or 2006, the Secretary may make such adjustments in the application of
the internal revenue laws as may be necessary to ensure that taxpayers
do not lose any deduction or credit or experience a change of filing
status by reason of temporary relocations by reason of Hurricane
Katrina, Hurricane Rita, or Hurricane Wilma. Any adjustments made under
the preceding sentence shall ensure that an individual is not taken into
account by more than one taxpayer with respect to the same tax benefit.
``SEC. 1400T. SPECIAL RULES FOR MORTGAGE REVENUE BONDS.
``(a) In General.--In the case of <<NOTE: Applicability.>> financing
provided with respect to owner-occupied residences in the GO Zone, the
Rita GO Zone, or the Wilma GO Zone, section 143 shall be applied--
``(1) by treating any such residence in the Rita GO Zone or
the Wilma GO Zone as a targeted area residence,
``(2) by applying subsection (f)(3) thereof without regard
to subparagraph (A) thereof, and
``(3) by substituting `$150,000' for `$15,000' in subsection
(k)(4) thereof.
``(b) Application.--Subsection (a) shall not apply to financing
provided after December 31, 2010.''.
(b) Conforming Amendments.--
(1) Subsection (b) of section 38, <<NOTE: 26 USC 38.>> as
amended by this Act, is amended by striking ``and'' at the end
of paragraph (26), by striking the period at the end of
paragraph (27) and inserting a comma, and by adding at the end
the following new paragraphs:
``(28) the Hurricane Katrina employee retention credit
determined under section 1400R(a),
``(29) the Hurricane Rita employee retention credit
determined under section 1400R(b), and
``(30) the Hurricane Wilma employee retention credit
determined under section 1400R(c).''.
(2) Section 280C(a), as amended by this Act, is amended by
striking ``and 1400P(b)'' and inserting ``1400P(b), and 1400R''.
(3) The table of sections for part II of subchapter Y of
chapter 1 is amended by adding at the end the following new
items:
``Sec. 1400Q. Special rules for use of retirement funds.
``Sec. 1400R. Employment relief.
``Sec. 1400S. Additional tax relief provisions.''.
[[Page 119 STAT. 2608]]
(4) The <<NOTE: Repeal.>> following provisions of the
Katrina Emergency Tax Relief Act of 2005 are hereby repealed:
(A) <<NOTE: Ante, p. 2017.>> Title I.
(B) <<NOTE: Ante, pp. 2021, 2022, 2027-
2029.>> Sections 202, 301, 402, 403(b), 406, and 407.
TITLE III--OTHER PROVISIONS
SEC. 301. GULF COAST RECOVERY BONDS.
It is the sense of the Congress that the Secretary of the Treasury,
or the Secretary's delegate, should designate one or more series of
bonds or certificates (or any portion thereof) issued under section 3105
of title 31, United States Code, as ``Gulf Coast Recovery Bonds'' in
response to Hurricanes Katrina, Rita, and Wilma.
SEC. 302. ELECTION TO INCLUDE COMBAT PAY AS EARNED INCOME FOR PURPOSES
OF EARNED INCOME CREDIT.
(a) In General.--Subclause (II) of section 32(c)(2)(B)(vi) is
amended by striking ``January 1, 2006'' and inserting ``January 1,
2007''.
(b) Effective Date.--The <<NOTE: 26 USC 32 note.>> amendment made by
subsection (a) shall apply to taxable years beginning after December 31,
2005.
SEC. 303. MODIFICATION OF EFFECTIVE DATE OF EXCEPTION FROM SUSPENSION
RULES FOR CERTAIN LISTED AND REPORTABLE TRANSACTIONS.
(a) Effective Date Modification.--
(1) In general.--Paragraph (2) of section 903(d) of the
American Jobs Creation Act of 2004 is <<NOTE: 26 USC 6404
note.>> amended to read as follows:
``(2) Exception for reportable or listed transactions.--
``(A) In general.--The amendments made by subsection
(c) shall apply with respect to interest accruing after
October 3, 2004.
``(B) Special rule for certain listed and reportable
transactions.--
``(i) In general.--Except as provided in
clauses (ii), (iii), and (iv), the amendments made
by subsection (c) shall also apply with respect to
interest accruing on or before October 3, 2004.
``(ii) Participants in settlement
initiatives.--Clause (i) shall not apply to any
transaction if, as of January 23, 2006--
``(I) the taxpayer is participating
in a settlement initiative described in
Internal Revenue Service Announcement
2005-80 with respect to such
transaction, or
``(II) the taxpayer has entered into
a settlement agreement pursuant to such
an initiative.
Subclause (I) shall not apply to any taxpayer if,
after January 23, 2006, the taxpayer withdraws
from, or terminates, participation in the
initiative or the Secretary of the Treasury or the
Secretary's delegate determines that a settlement
agreement will not be reached pursuant to the
initiative within a reasonable period of time.
[[Page 119 STAT. 2609]]
``(iii) Taxpayers acting in good faith.--The
Secretary of the Treasury may except from the
application of clause (i) any transaction in which
the taxpayer has acted reasonably and in good
faith.
``(iv) Closed transactions.--Clause (i) shall
not apply to a transaction if, as of December 14,
2005--
``(I) the assessment of all Federal
income taxes for the taxable year in
which the tax liability to which the
interest relates arose is prevented by
the operation of any law or rule of law,
or
``(II) a closing agreement under
section 7121 has been entered into with
respect to the tax liability arising in
connection with the transaction.''.
(2) Effective date.--The <<NOTE: 26 USC 6404
note.>> amendment made by this subsection shall take effect as
if included in the provisions of the American Jobs Creation Act
of 2004 to which it relates.
(b) Treatment of Amended Returns and Other Similar Notices of
Additional Tax Owed.--
(1) In general.--Section <<NOTE: 26 USC 6404.>> 6404(g)(1)
(relating to suspension) is amended by adding at the end the
following new sentence: ``If, after the return for a taxable
year is filed, the taxpayer provides to the Secretary 1 or more
signed written documents showing that the taxpayer owes an
additional amount of tax for the taxable year, clause (i) shall
be applied by substituting the date the last of the documents
was provided for the date on which the return is filed.''.
(2) Effective date.--The <<NOTE: 26 USC 6404
note.>> amendment made by this subsection shall apply to
documents provided on or after the date of the enactment of this
Act.
SEC. 304. AUTHORITY FOR UNDERCOVER OPERATIONS.
Paragraph (6) of section 7608(c) (relating to application of
section) is amended by striking ``January 1, 2006'' both places is
appears and inserting ``January 1, 2007''.
SEC. 305. DISCLOSURES OF CERTAIN TAX RETURN INFORMATION.
(a) Disclosures To Facilitate Combined Employment Tax Reporting.--
(1) In general.--Subparagraph (B) of section 6103(d)(5)
(relating to termination) is amended by striking ``December 31,
2005'' and inserting ``December 31, 2006''.
(2) Effective date.--The <<NOTE: 26 USC 6103
note.>> amendment made by paragraph (1) shall apply to
disclosures after December 31, 2005.
(b) Disclosures Relating to Terrorist Activities.--
(1) In general.--Clause (iv) of section 6103(i)(3)(C) and
subparagraph (E) of section 6103(i)(7) are each amended by
striking ``December 31, 2005'' and inserting ``December 31,
2006''.
(2) Effective date.--The <<NOTE: 26 USC 6103
note.>> amendments made by paragraph (1) shall apply to
disclosures after December 31, 2005.
(c) Disclosures Relating to Student Loans.--
(1) In general.--Subparagraph (D) of section 6103(l)(13)
(relating to termination) is amended by striking ``December 31,
2005'' and inserting ``December 31, 2006''.
(2) Effective date.--The <<NOTE: 26 USC 6103
note.>> amendment made by paragraph (1) shall apply to requests
made after December 31, 2005.
[[Page 119 STAT. 2610]]
TITLE IV--TECHNICALS
Subtitle A--Tax <<NOTE: Tax Technical Corrections Act of
2005.>> Technicals
SEC. 401. <<NOTE: 26 USC 1 note.>> SHORT TITLE.
This subtitle may be cited as the ``Tax Technical Corrections Act of
2005''.
SEC. 402. AMENDMENTS RELATED TO ENERGY POLICY ACT OF 2005.
(a) Amendments Related to Section 1263.--
(1) Part <<NOTE: Repeal. 26 USC 1081-1083.>> VI of
subchapter O of chapter 1 is repealed.
(2) Section 1223 is amended by striking paragraph (3) and by
redesignating paragraphs (4) through (16) as paragraphs (3)
through (15), respectively.
(3) Section 121(g) is amended by striking ``1223(7)'' and
inserting ``1223(6)''.
(4) Section 246(c)(3)(B) is amended by striking ``paragraph
(4) of section 1223'' and inserting ``paragraph (3) of section
1223''.
(5) Section 247(b)(2)(D) is amended by inserting ``as in
effect before its repeal'' after ``part VI of subchapter O''.
(6)(A) Section 1245(b) is amended by striking paragraph (5)
and redesignating paragraphs (6) through (9) as paragraphs (5)
through (8), respectively.
(B) Section 1245(b)(3) is amended by striking ``paragraph
(7)'' and inserting ``paragraph (6)''.
(7)(A) Section 1250(d) is amended by striking paragraph (5)
and redesignating paragraphs (6) through (8) as paragraphs (5)
through (7), respectively.
(B) Section 1250(e)(2) is amended by striking ``(3), or
(5)'' and inserting ``or (3)''.
(b) Amendment Related to Section 1301.--Clause (ii) of section
45(c)(3)(A) is amended by striking ``nonhazardous lignin waste
material'' and inserting ``lignin material''.
(c) Amendments Related to Section 1303.--
(1) Subsection (l) of section 54 is amended by striking
paragraph (5), and by redesignating paragraphs (6) and (7) as
paragraphs (5) and (6), respectively.
(2) Subsection (e) of section 1303 of the Energy Policy Act
of 2005 <<NOTE: Ante, p. 991.>> is amended to read as follows:
``(e) Effective Dates.--
``(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to bonds issued
after December 31, 2005.
``(2) Subsection (c).--The amendments made by subsection (c)
shall apply to taxable years beginning after December 31,
2005.''.
(d) Amendments Related to Section 1306.--
(1) Paragraph (2) of section 45J(c) is amended to read as
follows:
``(2) Phaseout of credit.--
``(A) In general.--The amount of the credit
determined under subsection (a) shall be reduced by an
amount which bears the same ratio to the amount of the
credit (determined without regard to this paragraph)
as--
[[Page 119 STAT. 2611]]
``(i) the amount by which the reference price
(as defined in section 45(e)(2)(C)) for the
calendar year in which the sale occurs exceeds 8
cents, bears to
``(ii) 3 cents.
``(B) Phaseout adjustment based on inflation.--The 8
cent amount in subparagraph (A) shall be adjusted by
multiplying such amount by the inflation adjustment
factor (as defined in section 45(e)(2)(B)) for the
calendar year in which the sale occurs. If any amount as
increased under the preceding sentence is not a multiple
of 0.1 cent, such amount shall be rounded to the nearest
multiple of 0.1 cent.''.
(2) Subsection (e) of <<NOTE: 26 USC 45J.>> section 45J is
amended by striking ``(2),''.
(e) Amendment Related to Section 1309.--Subparagraph (B) of section
169(d)(5) is amended by adding at beginning thereof ``in the case of
facility placed in service in connection with a plant or other property
placed in operation after December 31, 1975,''.
(f) Amendments Related to Section 1311.--
(1) Clause (i) of section 172(b)(1)(I) is amended to read as
follows:
``(i) In general.--At the election of the
taxpayer for any taxable year ending after
December 31, 2005, and before January 1, 2009, in
the case of a net operating loss for a taxable
year ending after December 31, 2002, and before
January 1, 2006, there shall be a net operating
loss carryback to each of the 5 taxable years
preceding the taxable year of such loss to the
extent that such loss does not exceed 20 percent
of the sum of the electric transmission property
capital expenditures and the pollution control
facility capital expenditures of the taxpayer for
the taxable year preceding the taxable year for
which such election is made.''.
(2) Clause (ii) of section 172(b)(1)(I) is amended by
striking ``in a taxable year'' and inserting ``for a taxable
year''.
(3) Subparagraph (I) of section 172(b)(1) is amended by
striking clause (iv) and (v), by redesignating clause (vi) as
clause (v), and by inserting after clause (iii) the following:
``(iv) Special rules relating to credit or
refund.--In the case of the portion of the loss
which is carried back 5 years by reason of clause
(i)--
``(I) an application under section
6411(a) with respect to such portion
shall not fail to be treated as timely
filed if filed within 24 months after
the due date specified under such
section, and
``(II) references in sections
6501(h), 6511(d)(2)(A), and 6611(f)(1)
to the taxable year in which such net
operating loss arises or results in a
net operating loss carryback shall be
treated as references to the taxable
year for which such election is made.''.
(g) Amendment Related to Section 1322.--Subsection (a) of section
45K is amended by striking ``if the taxpayer elects to have this section
apply,''.
(h) Amendment Related to Section 1331.--Paragraph (3) of section
1250(b) is amended by striking ``or by section 179D''.
[[Page 119 STAT. 2612]]
(i) Amendments Related to Section 1335.--
(1) Paragraph (1) of <<NOTE: 26 USC 25D.>> section 25D(b) is
amended by inserting ``(determined without regard to subsection
(c))'' after ``subsection (a)''.
(2) Subparagraphs (A) and (B) of section 25D(e)(4) are
amended to read as follows:
``(A) Maximum expenditures.--The maximum amount of
expenditures which may be taken into account under
subsection (a) by all such individuals with respect to
such dwelling unit during such calendar year shall be--
``(i) $6,667 in the case of any qualified
photovoltaic property expenditures,
``(ii) $6,667 in the case of any qualified
solar water heating property expenditures, and
``(iii) $1,667 in the case of each half
kilowatt of capacity of qualified fuel cell
property (as defined in section 48(c)(1)) for
which qualified fuel cell property expenditures
are made.
``(B) Allocation of expenditures.--The expenditures
allocated to any individual for the taxable year in
which such calendar year ends shall be an amount equal
to the lesser of--
``(i) the amount of expenditures made by such
individual with respect to such dwelling during
such calendar year, or
``(ii) the maximum amount of such expenditures
set forth in subparagraph (A) multiplied by a
fraction--
``(I) the numerator of which is the
amount of such expenditures with respect
to such dwelling made by such individual
during such calendar year, and
``(II) the denominator of which is
the total expenditures made by all such
individuals with respect to such
dwelling during such calendar year.''.
(3)(A)(i) The matter preceding subparagraph (A) of section
23(b)(4) is amended by striking ``The credit'' and inserting
``In the case of a taxable year to which section 26(a)(2) does
not apply, the credit''.
(ii) Subsection (c) of section 23 is amended to read as
follows:
``(c) Carryforwards of Unused Credit.--
``(1) Rule for years in which all personal credits allowed
against regular and alternative minimum tax.--In the case of a
taxable year to which section 26(a)(2) applies, if the credit
allowable under subsection (a) for any taxable year exceeds the
limitation imposed by section 26(a)(2) for such taxable year
reduced by the sum of the credits allowable under this subpart
(other than this section and sections 25D and 1400C), such
excess shall be carried to the succeeding taxable year and added
to the credit allowable under subsection (a) for such taxable
year.
``(2) Rule for other years.--In the case of a taxable year
to which section 26(a)(2) does not apply, if the credit
allowable under subsection (a) for any taxable year exceeds the
limitation imposed by subsection (b)(4) for such taxable year,
such excess shall be carried to the succeeding taxable
[[Page 119 STAT. 2613]]
year and added to the credit allowable under subsection (a) for
such taxable year.
``(3) Limitation.--No credit may be carried forward under
this subsection to any taxable year following the fifth taxable
year after the taxable year in which the credit arose. For
purposes of the preceding sentence, credits shall be treated as
used on a first-in first-out basis.''.
(B)(i) The matter preceding subparagraph (A) of section
24(b)(3) is amended <<NOTE: 26 USC 24.>> by striking ``The
credit'' and inserting ``In the case of a taxable year to which
section 26(a)(2) does not apply, the credit''.
(ii) Paragraph (1) of section 24(d) is amended to read as
follows:
``(1) In general.--The aggregate credits allowed to a
taxpayer under subpart C shall be increased by the lesser of--
``(A) the credit which would be allowed under this
section without regard to this subsection and the
limitation under section 26(a)(2) or subsection (b)(3),
as the case may be, or
``(B) the amount by which the aggregate amount of
credits allowed by this subpart (determined without
regard to this subsection) would increase if the
limitation imposed by section 26(a)(2) or subsection
(b)(3), as the case may be, were increased by the excess
(if any) of--
``(i) 15 percent of so much of the taxpayer's
earned income (within the meaning of section 32)
which is taken into account in computing taxable
income for the taxable year as exceeds $10,000, or
``(ii) in the case of a taxpayer with 3 or
more qualifying children, the excess (if any) of--
``(I) the taxpayer's social security
taxes for the taxable year, over
``(II) the credit allowed under
section for the taxable year.
The amount of the credit allowed under this subsection shall not
be treated as a credit allowed under this subpart and shall
reduce the amount of credit otherwise allowable under subsection
(a) without regard to section 26(a)(2) or subsection (b)(3), as
the case may be. For purposes of subparagraph (B), any amount
excluded from gross income by reason of section 112 shall be
treated as earned income which is taken into account in
computing taxable income for the taxable year.''.
(C) Subparagraph (C) of section 25(e)(1) is amended to read
as follows:
``(C) Applicable tax limit.--For purposes of this
paragraph, the term `applicable tax limit' means--
``(i) in the case of a taxable year to which
section 26(a)(2) applies, the limitation imposed
by section 26(a)(2) for the taxable year reduced
by the sum of the credits allowable under this
subpart (other than this section and sections 23,
25D, and 1400C), and
``(ii) in the case of a taxable year to which
section 26(a)(2) does not apply, the limitation
imposed by section 26(a)(1) for the taxable year
reduced by the sum of the credits allowable under
this subpart (other than this section and sections
23, 24, 25B, 25D, and 1400C).''.
[[Page 119 STAT. 2614]]
(D) The matter preceding <<NOTE: 26 USC 25B.>> paragraph (1)
of section 25B(g) is amended by striking ``The credit'' and
inserting ``In the case of a taxable year to which section
26(a)(2) does not apply, the credit''.
(E) Subsection (c) of section 25D is amended to read as
follows:
``(c) Carryforward of Unused Credit.--
``(1) Rule for years in which all personal credits allowed
against regular and alternative minimum tax.--In the case of a
taxable year to which section 26(a)(2) applies, if the credit
allowable under subsection (a) exceeds the limitation imposed by
section 26(a)(2) for such taxable year reduced by the sum of the
credits allowable under this subpart (other than this section),
such excess shall be carried to the succeeding taxable year and
added to the credit allowable under subsection (a) for such
succeeding taxable year.
``(2) Rule for other years.--In the case of a taxable year
to which section 26(a)(2) does not apply, if the credit
allowable under subsection (a) exceeds the limitation imposed by
section 26(a)(1) for such taxable year reduced by the sum of the
credits allowable under this subpart (other than this section
and sections 23, 24, and 25B), such excess shall be carried to
the succeeding taxable year and added to the credit allowable
under subsection (a) for such succeeding taxable year.''.
(F) Subsection (d) of section 1400C is amended to read as
follows:
``(d) Carryforward of Unused Credit.--
``(1) Rule for years in which all personal credits allowed
against regular and alternative minimum tax.--In the case of a
taxable year to which section 26(a)(2) applies, if the credit
allowable under subsection (a) exceeds the limitation imposed by
section 26(a)(2) for such taxable year reduced by the sum of the
credits allowable under subpart A of part IV of subchapter A
(other than this section and section 25D), such excess shall be
carried to the succeeding taxable year and added to the credit
allowable under subsection (a) for such taxable year.
``(2) Rule for other years.--In the case of a taxable year
to which section 26(a)(2) does not apply, if the credit
allowable under subsection (a) exceeds the limitation imposed by
section 26(a)(1) for such taxable year reduced by the sum of the
credits allowable under subpart A of part IV of subchapter A
(other than this section and sections 23, 24, 25B, and 25D),
such excess shall be carried to the succeeding taxable year and
added to the credit allowable under subsection (a) for such
taxable year.''.
(G) Subsection (i) of section 904 is amended to read as
follows:
``(i) Coordination With Nonrefundable Personal Credits.--In the case
of any taxable year of an individual to which section 26(a)(2) does not
apply, for purposes of subsection (a), the tax against which the credit
is taken is such tax reduced by the sum of the credits allowable under
subpart A of part IV of subchapter A of this chapter (other than
sections 23, 24, and 25B).''.
[[Page 119 STAT. 2615]]
(H) Application of egtrra sunset.--The <<NOTE: 26 USC 23
note.>> amendments made by this paragraph (and each part
thereof) shall be subject to title IX of the Economic Growth and
Tax Relief Reconciliation Act of 2001 in the same manner as the
provisions of such Act to which such amendment (or part thereof)
relates.
(4) Subsection (b) of section 1335 of the Energy Policy Act
of 2005 is amended <<NOTE: Ante, p. 1033.>> by striking
paragraphs (1), (2), and (3).
The <<NOTE: Applicability.>> Internal Revenue Code of 1986 shall
be applied and administered as if the amendments made such
paragraphs had never been enacted.
(j) Amendment Related to Section 1341.--Paragraph (6) of section
30B(h) is <<NOTE: 26 USC 30B.>> amended by adding at the end the
following sentence: ``For purposes of subsection (g), property to which
this paragraph applies shall be treated as of a character subject to an
allowance for depreciation.''.
(k) Amendment Related to Section 1342.--Paragraph (2) of section
30C(e) is amended by adding at the end the following sentence: ``For
purposes of subsection (d), property to which this paragraph applies
shall be treated as of a character subject to an allowance for
depreciation.''.
(l) Amendments Related to Section 1351.--
(1) Paragraph (6) of section 41(f) (relating to special
rules) is amended by adding at the end the following:
``(C) Foreign research.--For purposes of subsection
(a)(3), amounts paid or incurred for any energy research
conducted outside the United States, the Commonwealth of
Puerto Rico, or any possession of the United States
shall not be taken into account.
``(D) Denial of double benefit.--Any amount taken
into account under subsection (a)(3) shall not be taken
into account under paragraph (1) or (2) of subsection
(a).''.
(2) Clause (ii) of section 41(b)(3)(C) is amended by
striking ``(other than an energy research consortium)''.
(m) Effective <<NOTE: 26 USC 23 note.>> Date.--
(1) In general.--Except as provided in paragraphs (2) and
(3), the amendments made by this section shall take effect as if
included in the provisions of the Energy Policy Act of 2005 to
which they relate.
(2) Repeal of public utility holding company act of 1935.--
The amendments made by subsection (a) shall not apply with
respect to any transaction ordered in compliance with the Public
Utility Holding Company Act of 1935 before its repeal.
(3) Coordination of personal credits.--The amendments made
by subsection (i)(3) shall apply to taxable years beginning
after December 31, 2005.
SEC. 403. AMENDMENTS RELATED TO THE AMERICAN JOBS CREATION ACT OF 2004.
(a) Amendments Related to Section 102 of the Act.--
(1) Paragraph (1) of section 199(b) is amended by striking
``the employer'' and inserting ``the taxpayer''.
(2) Paragraph (2) of section 199(b) is amended to read as
follows:
``(2) W-2 wages.--For purposes of this section, the term `W-
2 wages' means, with respect to any person for any taxable year
of such person, the sum of the amounts described in
[[Page 119 STAT. 2616]]
paragraphs (3) and (8) of section 6051(a) paid by such person
with respect to employment of employees by such person during
the calendar year ending during such taxable year. Such term
shall not include any amount which is not properly included in a
return filed with the Social Security Administration on or
before the 60th day after the due date (including extensions)
for such return.''.
(3) Subparagraph (B) of <<NOTE: 26 USC 199.>> section
199(c)(1) is amended by inserting ``and'' at the end of clause
(i), by striking clauses (ii) and (iii), and by inserting after
clause (i) the following:
``(ii) other expenses, losses, or deductions
(other than the deduction allowed under this
section), which are properly allocable to such
receipts.''.
(4) Paragraph (2) of section 199(c) is amended to read as
follows:
``(2) Allocation method.--
The <<NOTE: Regulations.>> Secretary shall prescribe rules for
the proper allocation of items described in paragraph (1) for
purposes of determining qualified production activities income.
Such rules shall provide for the proper allocation of items
whether or not such items are directly allocable to domestic
production gross receipts.''.
(5) Subparagraph (A) of section 199(c)(4) is amended by
striking clauses (ii) and (iii) and inserting the following new
clauses:
``(ii) in the case of a taxpayer engaged in
the active conduct of a construction trade or
business, construction of real property performed
in the United States by the taxpayer in the
ordinary course of such trade or business, or
``(iii) in the case of a taxpayer engaged in
the active conduct of an engineering or
architectural services trade or business,
engineering or architectural services performed in
the United States by the taxpayer in the ordinary
course of such trade or business with respect to
the construction of real property in the United
States.''.
(6) Subparagraph (B) of section 199(c)(4) is amended by
striking ``and'' at the end of clause (i), by striking the
period at the end of clause (ii) and inserting ``, or'', and by
adding at the end the following:
``(iii) the lease, rental, license, sale,
exchange, or other disposition of land.''.
(7) Paragraph (4) of section 199(c) is amended by adding at
the end the following new subparagraphs:
``(C) Special rule for certain government
contracts.--Gross receipts derived from the manufacture
or production of any property described in subparagraph
(A)(i)(I) shall be treated as meeting the requirements
of subparagraph (A)(i) if--
``(i) such property is manufactured or
produced by the taxpayer pursuant to a contract
with the Federal Government, and
``(ii) the Federal Acquisition Regulation
requires that title or risk of loss with respect
to such property be transferred to the Federal
Government before the manufacture or production of
such property is complete.
[[Page 119 STAT. 2617]]
``(D) Partnerships owned by expanded affiliated
groups.--For purposes of this paragraph, if all of the
interests in the capital and profits of a partnership
are owned by members of a single expanded affiliated
group at all times during the taxable year of such
partnership, the partnership and all members of such
group shall be treated as a single taxpayer during such
period.''.
(8) Paragraph (1) of <<NOTE: 26 USC 199.>> section 199(d) is
amended to read as follows:
``(1) Application of section to pass-thru entities.--
``(A) Partnerships and s corporations.--In the case
of a partnership or S corporation--
``(i) this section shall be applied at the
partner or shareholder level,
``(ii) each partner or shareholder shall take
into account such person's allocable share of each
item described in subparagraph (A) or (B) of
subsection (c)(1) (determined without regard to
whether the items described in such subparagraph
(A) exceed the items described in such
subparagraph (B)), and
``(iii) each partner or shareholder shall be
treated for purposes of subsection (b) as having
W-2 wages for the taxable year in an amount equal
to the lesser of--
``(I) such person's allocable share
of the W-2 wages of the partnership or S
corporation for the taxable year (as
determined under regulations prescribed
by the Secretary), or
``(II) 2 times 9 percent of so much
of such person's qualified production
activities income as is attributable to
items allocated under clause (ii) for
the taxable year.
``(B) Trusts and estates.--In the case of a trust or
estate--
``(i) the items referred to in subparagraph
(A)(ii) (as determined therein) and the W-2 wages
of the trust or estate for the taxable year, shall
be apportioned between the beneficiaries and the
fiduciary (and among the beneficiaries) under
regulations prescribed by the Secretary, and
``(ii) for purposes of paragraph (2), adjusted
gross income of the trust or estate shall be
determined as provided in section 67(e) with the
adjustments described in such paragraph.
``(C) Regulations.--The Secretary may prescribe
rules requiring or restricting the allocation of items
and wages under this paragraph and may prescribe such
reporting requirements as the Secretary determines
appropriate.''.
(9) Paragraph (3) of section 199(d) is amended to read as
follows:
``(3) Agricultural and horticultural cooperatives.--
``(A) Deduction allowed to patrons.--Any person who
receives a qualified payment from a specified
agricultural or horticultural cooperative shall be
allowed for the taxable year in which such payment is
received a deduction under subsection (a) equal to the
portion of the deduction
[[Page 119 STAT. 2618]]
allowed under subsection (a) to such cooperative which
is--
``(i) allowed with respect to the portion of
the qualified production activities income to
which such payment is attributable, and
``(ii) identified by such cooperative in a
written notice mailed to such person during the
payment period described in section 1382(d).
``(B) Cooperative denied deduction for portion of
qualified payments.--The taxable income of a specified
agricultural or horticultural cooperative shall not be
reduced under section 1382 by reason of that portion of
any qualified payment as does not exceed the deduction
allowable under subparagraph (A) with respect to such
payment.
``(C) Taxable income of cooperatives determined
without regard to certain deductions.--For purposes of
this section, the taxable income of a specified
agricultural or horticultural cooperative shall be
computed without regard to any deduction allowable under
subsection (b) or (c) of section 1382 (relating to
patronage dividends, per-unit retain allocations, and
nonpatronage distributions).
``(D) Special rule for marketing cooperatives.--For
purposes of this section, a specified agricultural or
horticultural cooperative described in subparagraph
(F)(ii) shall be treated as having manufactured,
produced, grown, or extracted in whole or significant
part any qualifying production property marketed by the
organization which its patrons have so manufactured,
produced, grown, or extracted.
``(E) Qualified payment.--For purposes of this
paragraph, the term `qualified payment' means, with
respect to any person, any amount which--
``(i) is described in paragraph (1) or (3) of
section 1385(a),
``(ii) is received by such person from a
specified agricultural or horticultural
cooperative, and
``(iii) is attributable to qualified
production activities income with respect to which
a deduction is allowed to such cooperative under
subsection (a).
``(F) Specified agricultural or horticultural
cooperative.--For purposes of this paragraph, the term
`specified agricultural or horticultural cooperative'
means an organization to which part I of subchapter T
applies which is engaged--
``(i) in the manufacturing, production,
growth, or extraction in whole or significant part
of any agricultural or horticultural product, or
``(ii) in the marketing of agricultural or
horticultural products.''.
(10) Clause (i) of <<NOTE: 26 USC 199.>> section
199(d)(4)(B) is amended--
(A) by striking ``50 percent'' and inserting ``more
than 50 percent'', and
(B) by striking ``80 percent'' and inserting ``at
least 80 percent''.
[[Page 119 STAT. 2619]]
(11)(A) Paragraph (6) of section 199(d) is amended to read
as follows:
``(6) Coordination with minimum tax.--For purposes of
determining alternative minimum taxable income under section
55--
``(A) qualified production activities income shall
be determined without regard to any adjustments under
sections 56 through 59, and
``(B) in the case of a corporation, subsection
(a)(1)(B) shall be applied by substituting `alternative
minimum taxable income' for `taxable income'.''.
(B) Paragraph (2) of section 199(a) is <<NOTE: 26 USC
199.>> amended by striking ``subsections (d)(1) and (d)(6)'' and
inserting ``subsection (d)(1)''.
(12) Subsection (d) of section 199 is amended by
redesignating paragraph (7) as paragraph (8) and by inserting
after paragraph (6) the following new paragraph:
``(7) Unrelated <<NOTE: Applicability.>> business taxable
income.--For purposes of determining the tax imposed by section
511, subsection (a)(1)(B) shall be applied by substituting
`unrelated business taxable income' for `taxable income'.''.
(13) Paragraph (8) of section 199(d), as redesignated by
paragraph (12), is amended by inserting ``, including
regulations which prevent more than 1 taxpayer from being
allowed a deduction under this section with respect to any
activity described in subsection (c)(4)(A)(i)'' before the
period at the end.
(14) Clauses (i)(II) and (ii)(II) of section 56(d)(1)(A) are
each amended by striking ``such deduction'' and inserting ``such
deduction and the deduction under section 199''.
(15) Clause (i) of section 163(j)(6)(A) is amended by
striking ``and'' at the end of subclause (II), by redesignating
subclause (III) as subclause (IV), and by inserting after
subclause (II) the following new subclause:
``(III) any deduction allowable
under section 199, and''.
(16) Paragraph (2) of section 170(b) is amended by
redesignating subparagraphs (C) and (D) as subparagraphs (D) and
(E), respectively, and by inserting after subparagraph (B) the
following new subparagraph:
``(C) section 199,''.
(17) Subsection (d) of section 172 is amended by adding at
the end the following new paragraph:
``(7) Manufacturing deduction.--The deduction under section
199 shall not be allowed.''.
(18) Paragraph (1) of section 613A(d) is amended by
redesignating subparagraphs (B), (C), and (D) as subparagraphs
(C), (D), and (E), respectively, and by inserting after
subparagraph (A) the following new subparagraph:
``(B) any deduction allowable under section 199,''.
(19) Subsection (e) of section 102 of the American Jobs
Creation Act of 2004 is <<NOTE: 26 USC 56 note.>> amended to
read as follows:
``(e) Effective Date.--
``(1) In general.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2004.
``(2) Application to pass-thru entities, etc.--In
determining the deduction under section 199 of the Internal
Revenue Code of 1986 (as added by this section), items arising
from
[[Page 119 STAT. 2620]]
a taxable year of a partnership, S corporation, estate, or trust
beginning before January 1, 2005, shall not be taken into
account for purposes of subsection (d)(1) of such section.''.
(b) Amendment Related to Section 231 of the Act.--Paragraph (1) of
section 1361(c) is <<NOTE: 26 USC 1361.>> amended to read as follows:
``(1) Members of a family treated as 1 shareholder.--
``(A) In general.--For purposes of subsection
(b)(1)(A), there shall be treated as one shareholder--
``(i) a husband and wife (and their estates),
and
``(ii) all members of a family (and their
estates).
``(B) Members of a family.--For purposes of this
paragraph--
``(i) In general.--The term `members of a
family' means a common ancestor, any lineal
descendant of such common ancestor, and any spouse
or former spouse of such common ancestor or any
such lineal descendant.
``(ii) Common ancestor.--An individual shall
not be considered to be a common ancestor if, on
the applicable date, the individual is more than 6
generations removed from the youngest generation
of shareholders who would (but for this
subparagraph) be members of the family. For
purposes of the preceding sentence, a spouse (or
former spouse) shall be treated as being of the
same generation as the individual to whom such
spouse is (or was) married.
``(iii) Applicable date.--The term `applicable
date' means the latest of--
``(I) the date the election under
section 1362(a) is made,
``(II) the earliest date that an
individual described in clause (i) holds
stock in the S corporation, or
``(III) October 22, 2004.
``(C) Effect of adoption, etc.--Any legally adopted
child of an individual, any child who is lawfully placed
with an individual for legal adoption by the individual,
and any eligible foster child of an individual (within
the meaning of section 152(f)(1)(C)), shall be treated
as a child of such individual by blood.''.
(c) Amendment Related to Section 235 of the Act.--Subsection (b) of
section 235 of the American Jobs Creation Act of 2004 is <<NOTE: 26 USC
1366 note.>> amended by striking ``taxable years beginning'' and
inserting ``transfers''.
(d) Amendments Related to Section 243 of the Act.--
(1) Paragraph (7) of section 856(c) is amended to read as
follows:
``(7) Rules of application for failure to satisfy paragraph
(4).--
``(A) In general.--A corporation, trust, or
association that fails to meet the requirements of
paragraph (4) (other than a failure to meet the
requirements of paragraph (4)(B)(iii) which is described
in subparagraph (B)(i) of this paragraph) for a
particular quarter shall nevertheless be considered to
have satisfied the requirements of such paragraph for
such quarter if--
[[Page 119 STAT. 2621]]
``(i) following the corporation, trust, or
association's identification of the failure to
satisfy the requirements of such paragraph for a
particular quarter, a description of each asset
that causes the corporation, trust, or association
to fail to satisfy the requirements of such
paragraph at the close of such quarter of any
taxable year is set forth in a schedule for such
quarter filed in accordance with regulations
prescribed by the Secretary,
``(ii) the failure to meet the requirements of
such paragraph for a particular quarter is due to
reasonable cause and not due to willful neglect,
and
``(iii)(I) the corporation, trust, or
association disposes of the assets set forth on
the schedule specified in clause (i) within 6
months after the last day of the quarter in which
the corporation, trust or association's
identification of the failure to satisfy the
requirements of such paragraph occurred or such
other time period prescribed by the Secretary and
in the manner prescribed by the Secretary, or
``(II) the requirements of such paragraph are
otherwise met within the time period specified in
subclause (I).
``(B) Rule for certain de minimis failures.--A
corporation, trust, or association that fails to meet
the requirements of paragraph (4)(B)(iii) for a
particular quarter shall nevertheless be considered to
have satisfied the requirements of such paragraph for
such quarter if--
``(i) such failure is due to the ownership of
assets the total value of which does not exceed
the lesser of--
``(I) 1 percent of the total value
of the trust's assets at the end of the
quarter for which such measurement is
done, and
``(II) $10,000,000, and
``(ii)(I) the corporation, trust, or
association, following the identification of such
failure, disposes of assets in order to meet the
requirements of such paragraph within 6 months
after the last day of the quarter in which the
corporation, trust or association's identification
of the failure to satisfy the requirements of such
paragraph occurred or such other time period
prescribed by the Secretary and in the manner
prescribed by the Secretary, or
``(II) the requirements of such paragraph are
otherwise met within the time period specified in
subclause (I).
``(C) Tax.--
``(i) Tax imposed.--If subparagraph (A)
applies to a corporation, trust, or association
for any taxable year, there is hereby imposed on
such corporation, trust, or association a tax in
an amount equal to the greater of--
``(I) $50,000, or
``(II)
the <<NOTE: Regulations.>> amount
determined (pursuant to regulations
promulgated by the Secretary) by
multiplying the net income generated by
the assets
[[Page 119 STAT. 2622]]
described in the schedule specified in
subparagraph (A)(i) for the period
specified in clause (ii) by the highest
rate of tax specified in section 11.
``(ii) Period.--For purposes of clause
(i)(II), the period described in this clause is
the period beginning on the first date that the
failure to satisfy the requirements of such
paragraph (4) occurs as a result of the ownership
of such assets and ending on the earlier of the
date on which the trust disposes of such assets or
the end of the first quarter when there is no
longer a failure to satisfy such paragraph (4).
``(iii) Administrative provisions.--For
purposes of subtitle F, the taxes imposed by this
subparagraph shall be treated as excise taxes with
respect to which the deficiency procedures of such
subtitle apply.''.
(2) Subsection (m) of <<NOTE: 26 USC 856.>> section 856 is
amended by adding at the end the following new paragraph:
``(6) Transition rule.--
``(A) In general.--Notwithstanding paragraph (2)(C),
securities held by a trust shall not be considered
securities held by the trust for purposes of subsection
(c)(4)(B)(iii)(III) during any period beginning on or
before October 22, 2004, if such securities--
``(i) are held by such trust continuously
during such period, and
``(ii) would not be taken into account for
purposes of such subsection by reason of paragraph
(7)(C) of subsection (c) (as in effect on October
22, 2004) if the amendments made by section 243 of
the American Jobs Creation Act of 2004 had never
been enacted.
``(B) Rule not to apply to securities held after
maturity date.--Subparagraph (A) shall not apply with
respect to any security after the later of October 22,
2004, or the latest maturity date under the contract (as
in effect on October 22, 2004) taking into account any
renewal or extension permitted under the contract if
such renewal or extension does not significantly modify
any other terms of the contract.
``(C) Successors.--If the successor of a trust to
which this paragraph applies acquires securities in a
transaction to which section 381 applies, such trusts
shall be treated as a single entity for purposes of
determining the holding period of such securities under
subparagraph (A).''.
(3) Subparagraph (E) of section 857(b)(2) is amended by
striking ``section 856(c)(7)(B)(iii), and section 856(g)(1).''
and inserting ``section 856(c)(7)(C), and section 856(g)(5)''.
(4) Subsection (g) of section 243 of the American Jobs
Creation Act of 2004 is <<NOTE: 26 USC 856 note.>> amended to
read as follows:
``(g) Effective Dates.--
``(1) Subsections (a) and (b).--The amendments made by
subsections (a) and (b) shall apply to taxable years beginning
after December 31, 2000.
``(2) Subsections (c) and (e).--The amendments made by
subsections (c) and (e) shall apply to taxable years beginning
after the date of the enactment of this Act.
[[Page 119 STAT. 2623]]
``(3) Subsection (d).--The amendment made by subsection (d)
shall apply to transactions entered into after December 31,
2004.
``(4) Subsection (f).--
``(A) The amendment made by paragraph (1) of
subsection (f) shall apply to failures with respect to
which the requirements of subparagraph (A) or (B) of
section 856(c)(7) of the Internal Revenue Code of 1986
(as added by such paragraph) are satisfied after the
date of the enactment of this Act.
``(B) The amendment made by paragraph (2) of
subsection (f) shall apply to failures with respect to
which the requirements of paragraph (6) of section
856(c) of the Internal Revenue Code of 1986 (as amended
by such paragraph) are satisfied after the date of the
enactment of this Act.
``(C) The amendments made by paragraph (3) of
subsection (f) shall apply to failures with respect to
which the requirements of paragraph (5) of section
856(g) of the Internal Revenue Code of 1986 (as added by
such paragraph) are satisfied after the date of the
enactment of this Act.
``(D) The amendment made by paragraph (4) of
subsection (f) shall apply to taxable years ending after
the date of the enactment of this Act.
``(E) The amendments made by paragraph (5) of
subsection (f) shall apply to statements filed after the
date of the enactment of this Act.''.
(e) Amendments Related to Section 244 of the Act.--
(1) Paragraph (2) of section 181(d) is <<NOTE: 26 USC
181.>> amended by striking the last sentence in subparagraph
(A), by redesignating subparagraph (B) as subparagraph (C), and
by inserting after subparagraph (A) the following new
subparagraph:
``(B) Special rules for television series.--In the
case of a television series--
``(i) each episode of such series shall be
treated as a separate production, and
``(ii) only the first 44 episodes of such
series shall be taken into account.''.
(2) Subparagraph (C) of section 1245(a)(2) is amended by
inserting ``181,'' after ``179B,''.
(f) Amendments Related to Section 245 of the Act.--
(1) Subsection (b) of section 45G is amended to read as
follows:
``(b) Limitation.--
``(1) In general.--The credit allowed under subsection (a)
for any taxable year shall not exceed the product of--
``(A) $3,500, multiplied by
``(B) the sum of--
``(i) the number of miles of railroad track
owned or leased by the eligible taxpayer as of the
close of the taxable year, and
``(ii) the number of miles of railroad track
assigned for purposes of this subsection to the
eligible taxpayer by a Class II or Class III
railroad which owns or leases such railroad track
as of the close of the taxable year.
[[Page 119 STAT. 2624]]
``(2) Assignments.--With respect to any assignment of a mile
of railroad track under paragraph (1)(B)(ii)--
``(A) such assignment may be made only once per
taxable year of the Class II or Class III railroad and
shall be treated as made as of the close of such taxable
year,
``(B) such mile may not be taken into account under
this section by such railroad for such taxable year, and
``(C) such assignment shall be taken into account
for the taxable year of the assignee which includes the
date that such assignment is treated as effective.''.
(2) Paragraph (2) of section 45G(c) is <<NOTE: 26 USC
45G.>> amended to read as follows:
``(2) any person who transports property using the rail
facilities of a Class II or Class III railroad or who furnishes
railroad-related property or services to a Class II or Class III
railroad, but only with respect to miles of railroad track
assigned to such person by such Class II or Class III railroad
for purposes of subsection (b).''.
(g) Amendments Related to Section 248 of the Act.--
(1)(A) Subsection (d) of section 1353 is amended by striking
``ownership and charter interests'' and inserting ``ownership,
charter, and operating agreement interests''.
(B) Subsection (a) of section 1355 is amended by striking
paragraph (8).
(C) Paragraph (1) of section 1355(b) is amended to read as
follows:
``(1) In general.--Except as provided in paragraph (2), a
person is treated as operating any vessel during any period if--
``(A)(i) such vessel is owned by, or chartered
(including a time charter) to, the person, or
``(ii) the person provides services for such vessel
pursuant to an operating agreement, and
``(B) such vessel is in use as a qualifying vessel
during such period.''.
(D) Paragraph (3) of section 1355(d) is amended to read as
follows:
``(3) the extent of a partner's ownership, charter, or
operating agreement interest in any vessel operated by the
partnership shall be determined on the basis of the partner's
interest in the partnership.''.
(2) Paragraph (3) of section 1355(c) is amended by striking
``determined--'' and all that follows and inserting ``determined
by treating all members of such group as 1 person.''.
(3) Subsection (c) of section 1356 is amended--
(A) by striking paragraph (3), and
(B) by adding at the end of paragraph (2) the
following new flush sentence:
``Such term shall not include any core qualifying activities.''.
(4) The last sentence of section 1354(b) is amended by
inserting ``on or'' after ``only if made''.
(h) Amendment Related to Section 314 of the Act.--Paragraph (2) of
section 55(c) is amended by striking ``regular tax'' and inserting
``regular tax liability''.
(i) Amendments Related to Section 322 of the Act.--
(1)(A) Subparagraph (B) of section 194(b)(1) is amended to
read as follows:
[[Page 119 STAT. 2625]]
``(B) Dollar limitation.--The aggregate amount of
reforestation expenditures which may be taken into
account under subparagraph (A) with respect to each
qualified timber property for any taxable year shall not
exceed--
``(i) except as provided in clause (ii) or
(iii), $10,000,
``(ii) in the case of a separate return by a
married individual (as defined in section 7703),
$5,000, and
``(iii) in the case of a trust, zero.''.
(B) Paragraph (4) of <<NOTE: 26 USC 194.>> section 194(c) is
amended to read as follows:
``(4) Treatment of trusts and estates.--The aggregate amount
of reforestation expenditures incurred by any trust or estate
shall be apportioned between the income beneficiaries and the
fiduciary under regulations prescribed by the Secretary. Any
amount so apportioned to a beneficiary shall be taken into
account as expenditures incurred by such beneficiary in applying
this section to such beneficiary.''.
(2) Subparagraph (C) of section 1245(a)(2) is amended by
striking ``or 193'' and inserting ``193, or 194''.
(j) Amendments Related to Section 336 of the Act.--
(1) Clause (iv) of section 168(k)(2)(A) is amended by
striking ``subparagraphs (B) and (C)'' and inserting
``subparagraph (B) or (C)''.
(2) Clause (iii) of section 168(k)(4)(B) is amended by
striking ``and paragraph (2)(C)'' and inserting ``or paragraph
(2)(C) (as so modified)''.
(k) Amendment Related to Section 402 of the Act.--Paragraph (2) of
section 904(g) is amended to read as follows:
``(2) Overall domestic loss.--For purposes of this
subsection--
``(A) In general.--The term `overall domestic loss'
means--
``(i) with respect to any qualified taxable
year, the domestic loss for such taxable year to
the extent such loss offsets taxable income from
sources without the United States for the taxable
year or for any preceding qualified taxable year
by reason of a carryback, and
``(ii) with respect to any other taxable year,
the domestic loss for such taxable year to the
extent such loss offsets taxable income from
sources without the United States for any
preceding qualified taxable year by reason of a
carryback.
``(B) Domestic loss.--For purposes of subparagraph
(A), the term `domestic loss' means the amount by which
the gross income for the taxable year from sources
within the United States is exceeded by the sum of the
deductions properly apportioned or allocated thereto
(determined without regard to any carryback from a
subsequent taxable year).
``(C) Qualified taxable year.--For purposes of
subparagraph (A), the term `qualified taxable year'
means any taxable year for which the taxpayer chose the
benefits of this subpart.''.
(l) Amendment Related to <<NOTE: 26 USC 864 note.>> Section 403 of
the Act.--Section 403 of the American Jobs Creation Act of 2004 is
amended by adding at the end the following new subsection:
[[Page 119 STAT. 2626]]
``(d) Transition Rule.--If the <<NOTE: Applicability.>> taxpayer
elects (at such time and in such form and manner as the Secretary of the
Treasury may prescribe) to have the rules of this subsection apply--
``(1) the amendments made by this section shall not apply to
taxable years beginning after December 31, 2002, and before
January 1, 2005, and
``(2) in the case of taxable years beginning after December
31, 2004, clause (iv) of section 904(d)(4)(C) of the Internal
Revenue Code of 1986 (as amended by this section) shall be
applied by substituting `January 1, 2005' for `January 1, 2003'
both places it appears.''.
(m) Amendment Related to Section 412 of the Act.--Subparagraph (B)
of section 954(c)(4) is <<NOTE: 26 USC 954.>> amended by adding at the
end the following: ``If a controlled foreign corporation is treated as
owning a capital or profits interest in a partnership under constructive
ownership rules similar to the rules of section 958(b), the controlled
foreign corporation shall be treated as owning such interest directly
for purposes of this subparagraph.''.
(n) Amendments Related to Section 413 of the Act.--
(1) Subsection (b) of section 532 is amended by striking
paragraph (2) and redesignating paragraphs (3) and (4) as
paragraphs (2) and (3), respectively.
(2) Subsection (b) of section 535 is amended by adding at
the end the following new paragraph:
``(10) Controlled foreign corporations.--There shall be
allowed as a deduction the amount of the corporation's income
for the taxable year which is included in the gross income of a
United States shareholder under section 951(a). In the case of
any corporation the accumulated taxable income of which would
(but for this sentence) be determined without allowance of any
deductions, the deduction under this paragraph shall be allowed
and shall be appropriately adjusted to take into account any
deductions which reduced such inclusion.''.
(3)(A) Section 6683 is repealed.
(B) The table of sections for part I of subchapter B of
chapter 68 is amended by striking the item relating to section
6683.
(o) Amendment Related to Section 415 of the Act.--Subparagraph (D)
of section 904(d)(2) is amended by inserting ``as in effect before its
repeal'' after ``section 954(f)''.
(p) Amendments Related to Section 418 of the Act.--
(1) The second sentence of section 897(h)(1) is amended--
(A) by striking ``any distribution'' and all that
follows through ``any class of stock'' and inserting
``any distribution by a real estate investment trust
with respect to any class of stock'', and
(B) by striking ``the taxable year'' and inserting
``the 1-year period ending on the date of the
distribution''.
(2) Subsection (c) of section 418 of the American Jobs
Creation Act of 2004 is <<NOTE: 26 USC 857 note.>> amended to
read as follows:
``(c) Effective Date.--The amendments made by this section shall
apply to--
``(1) any distribution by a real estate investment trust
which is treated as a deduction for a taxable year of such trust
beginning after the date of the enactment of this Act, and
[[Page 119 STAT. 2627]]
``(2) any distribution by a real estate investment trust
made after such date which is treated as a deduction under
section 860 for a taxable year of such trust beginning on or
before such date.''.
(q) Amendments Related to Section 422 of the Act.--
(1) Subparagraph (B) of section 965(a)(2) is <<NOTE: 26 USC
965.>> amended by inserting ``from another controlled foreign
corporation in such chain of ownership'' before ``, but only to
the extent''.
(2) Subparagraph (A) of section 965(b)(2) is amended by
inserting ``cash'' before ``dividends''.
(3) Paragraph (3) of section 965(b) is amended by adding at
the end the following: ``The Secretary may prescribe such
regulations as may be necessary or appropriate to prevent the
avoidance of the purposes of this paragraph, including
regulations which provide that cash dividends shall not be taken
into account under subsection (a) to the extent such dividends
are attributable to the direct or indirect transfer (including
through the use of intervening entities or capital
contributions) of cash or other property from a related person
(as so defined) to a controlled foreign corporation.''.
(4) Paragraph (1) of section 965(c) is amended to read as
follows:
``(1) Applicable financial statement.--The term `applicable
financial statement' means--
``(A) with respect to a United States shareholder
which is required to file a financial statement with the
Securities and Exchange Commission (or which is included
in such a statement so filed by another person), the
most recent audited annual financial statement
(including the notes which form an integral part of such
statement) of such shareholder (or which includes such
shareholder)--
``(i) which was so filed on or before June 30,
2003, and
``(ii) which was certified on or before June
30, 2003, as being prepared in accordance with
generally accepted accounting principles, and
``(B) with respect to any other United States
shareholder, the most recent audited financial statement
(including the notes which form an integral part of such
statement) of such shareholder (or which includes such
shareholder)--
``(i) which was certified on or before June
30, 2003, as being prepared in accordance with
generally accepted accounting principles, and
``(ii) which is used for the purposes of a
statement or report--
``(I) to creditors,
``(II) to shareholders, or
``(III) for any other substantial
nontax purpose.''.
(5) Paragraph (2) of section 965(d) is amended by striking
``properly allocated and apportioned'' and inserting ``directly
allocable''.
(6) Subsection (d) of section 965 is amended by adding at
the end the following new paragraph:
[[Page 119 STAT. 2628]]
``(4) Coordination with section 78.--Section 78 shall not
apply to any tax which is not allowable as a credit under
section 901 by reason of this subsection.''.
(7) The last sentence of section 965(e)(1) is <<NOTE: 26 USC
965.>> amended by inserting ``which are imposed by foreign
countries and possessions of the United States and are'' after
``taxes''.
(8) Subsection (f) of section 965 is amended by inserting
``on or'' before ``before the due date''.
(r) Amendments Related to Section 501 of the Act.--
(1) Subparagraph (A) of section 164(b)(5) is amended to read
as follows:
``(A) Election to <<NOTE: Applicability.>> deduct
state and local sales taxes in lieu of state and local
income taxes.--At the election of the taxpayer for the
taxable year, subsection (a) shall be applied--
``(i) without regard to the reference to State
and local income taxes, and
``(ii) as if State and local general sales
taxes were referred to in a paragraph thereof.''.
(2) Clause (ii) of section 56(b)(1)(A) is amended by
inserting ``or clause (ii) of section 164(b)(5)(A)'' before the
period at the end.
(s) Amendments Related to Section 708 of the Act.--Section 708 of
the <<NOTE: 26 USC 460 note.>> American Jobs Creation Act of 2004 is
amended--
(1) in subsection (a), by striking ``contract commencement
date'' and inserting ``construction commencement date'', and
(2) by redesignating subsection (d) as subsection (e) and
inserting after subsection (c) the following new subsection:
``(d) Certain Adjustments Not to Apply.--Section 481 of the Internal
Revenue Code of 1986 shall not apply with respect to any change in the
method of accounting which is required by this section.''.
(t) Amendment Related to Section 710 of the Act.--Clause (i) of
section 45(c)(7)(A) is amended by striking ``synthetic''.
(u) Amendment Related to Section 801 of the Act.--Paragraph (3) of
section 7874(a) is amended to read as follows:
``(3) Coordination with subsection (b).--A corporation which
is treated as a domestic corporation under subsection (b) shall
not be treated as a surrogate foreign corporation for purposes
of paragraph (2)(A).''.
(v) Amendments Related to Section 804 of the Act.--
(1) Subparagraph (C) of section 877(g)(2) is amended by
striking ``section 7701(b)(3)(D)(ii)'' and inserting ``section
7701(b)(3)(D)''.
(2) Subsection (n) of section 7701 is amended to read as
follows:
``(n) Special Rules for Determining When an Individual Is No Longer
a United States Citizen or Long-Term Resident.--For purposes of this
chapter--
``(1) United states citizens.--An individual who would (but
for this paragraph) cease to be treated as a citizen of the
United States shall continue to be treated as a citizen of the
United States until such individual--
``(A) gives notice of an expatriating act (with the
requisite intent to relinquish citizenship) to the
Secretary of State, and
[[Page 119 STAT. 2629]]
``(B) provides a statement in accordance with
section 6039G (if such a statement is otherwise
required).
``(2) Long-term residents.--A long-term resident (as defined
in section 877(e)(2)) who would (but for this paragraph) be
described in section 877(e)(1) shall be treated as a lawful
permanent resident of the United States and as not described in
section 877(e)(1) until such individual--
``(A) gives notice of termination of residency (with
the requisite intent to terminate residency) to the
Secretary of Homeland Security, and
``(B) provides a statement in accordance with
section 6039G (if such a statement is otherwise
required).''.
(w) Amendment Related to Section 811 of the Act.--Subsection (c) of
section 811 of the American Jobs Creation Act of 2004 is <<NOTE: 26 USC
6707A note.>> amended by inserting ``and which were not filed before
such date'' before the period at the end.
(x) Amendments Related to Section 812 of the Act.--
(1) Subsection (b) of section 6662 is <<NOTE: 26 USC
6662.>> amended by adding at the end the following new sentence:
``Except as provided in paragraph (1) or (2)(B) of section
6662A(e), this section shall not apply to the portion of any
underpayment which is attributable to a reportable transaction
understatement on which a penalty is imposed under section
6662A.''.
(2) Paragraph (2) of section 6662A(e) is amended to read as
follows:
``(2) Coordination with other penalties.--
``(A) Coordination with fraud penalty.--This section
shall not apply to any portion of an understatement on
which a penalty is imposed under section 6663.
``(B) Coordination with gross valuation misstatement
penalty.--This section shall not apply to any portion of
an understatement on which a penalty is imposed under
section 6662 if the rate of the penalty is determined
under section 6662(h).''.
(3) Subsection (f) of section 812 of the American Jobs
Creation Act of 2004 is <<NOTE: 26 USC 6662 note.>> amended to
read as follows:
``(f) Effective Dates.--
``(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
ending after the date of the enactment of this Act.
``(2) Disqualified opinions.--Section 6664(d)(3)(B) of the
Internal Revenue Code of 1986 (as added by subsection (c)) shall
not apply to the opinion of a tax advisor if--
``(A) the opinion was provided to the taxpayer
before the date of the enactment of this Act,
``(B) the opinion relates to one or more
transactions all of which were entered into before such
date, and
``(C) the tax treatment of items relating to each
such transaction was included on a return or statement
filed by the taxpayer before such date.''.
(y) Amendment Related to Section 814 of the Act.--Subparagraph (B)
of section 6501(c)(10) is amended by striking ``(as defined in section
6111)''.
(z) Amendment Related to Section 815 of the Act.--Paragraph (1) of
section 6112(b) is amended by inserting ``(or was required to maintain a
list under subsection (a) as in effect before
[[Page 119 STAT. 2630]]
the enactment of the American Jobs Creation Act of 2004)'' after ``a
list under subsection (a)''.
(aa) Amendments Related to Section 832 of the Act.--
(1) Subsection (e) of section 853 is <<NOTE: 26 USC
853.>> amended to read as follows:
``(e) Treatment of Certain Taxes Not Allowed as a Credit Under
Section 901.--This section shall not apply to any tax with respect to
which the regulated investment company is not allowed a credit under
section 901 by reason of subsection (k) or (l) of such section.''.
(2) Clause (i) of section 901(l)(2)(C) is amended by
striking ``if such security were stock''.
(bb) Amendments Related to Section 833 of the Act.--
(1) Subsection (a) of section 734 is amended by inserting
``with respect to such distribution'' before the period at the
end.
(2) So much of subsection (b) of section 734 as precedes
paragraph (1) is amended to read as follows:
``(b) Method of Adjustment.--In the case of a distribution of
property to a partner by a partnership with respect to which the
election provided in section 754 is in effect or with respect to which
there is a substantial basis reduction, the partnership shall--''.
(cc) Amendment Related to Section 835 of the Act.--Paragraph (3) of
section 860G(a) is amended--
(1) in subparagraph (A)(iii)(I), by striking ``the
obligation'' and inserting ``a reverse mortgage loan or other
obligation'', and
(2) by striking all that follows subparagraph (C) and
inserting the following:
``For purposes of subparagraph (A), any obligation secured by
stock held by a person as a tenant-stockholder (as defined in
section 216) in a cooperative housing corporation (as so
defined) shall be treated as secured by an interest in real
property. For purposes of subparagraph (A), any obligation
originated by the United States or any State (or any political
subdivision, agency, or instrumentality of the United States or
any State) shall be treated as principally secured by an
interest in real property if more than 50 percent of such
obligations which are transferred to, or purchased by, the REMIC
are principally secured by an interest in real property
(determined without regard to this sentence).''.
(dd) Amendments Related to Section 836 of the Act.--
(1) Paragraph (1) of section 334(b) is amended by striking
``except that'' and all that follows and inserting ``except
that, in the hands of such distributee--
``(A) the basis of such property shall be the fair
market value of the property at the time of the
distribution in any case in which gain or loss is
recognized by the liquidating corporation with respect
to such property, and
``(B) the basis of any property described in section
362(e)(1)(B) shall be the fair market value of the
property at the time of the distribution in any case in
which such distributee's aggregate adjusted basis of
such property would (but for this subparagraph) exceed
the fair market value of such property immediately after
such liquidation.''.
[[Page 119 STAT. 2631]]
(2) Clause (ii) of section 362(e)(2)(C) is <<NOTE: 26 USC
362.>> amended to read as follows:
``(ii) Election.--Any election under clause
(i) shall be made at such time and in such form
and manner as the Secretary may prescribe, and,
once made, shall be irrevocable.''.
(ee) Amendment Related to Section 840 of the Act.--Subsection (d) of
section 121 is amended--
(1) by redesignating the paragraph (10) relating to property
acquired from a decedent as paragraph (11) and by moving such
paragraph to the end of such subsection, and
(2) by amending the paragraph (10) relating to property
acquired in like-kind exchange to read as follows:
``(10) Property acquired in like-kind exchange.--If a
taxpayer acquires property in an exchange with respect to which
gain is not recognized (in whole or in part) to the taxpayer
under subsection (a) or (b) of section 1031, subsection (a)
shall not apply to the sale or exchange of such property by such
taxpayer (or by any person whose basis in such property is
determined, in whole or in part, by reference to the basis in
the hands of such taxpayer) during the 5-year period beginning
with the date of such acquisition.''.
(ff) Amendment Related to Section 849 of the Act.--Subsection (a) of
section 849 of the American Jobs Creation Act of 2004 is <<NOTE: 26 USC
470 note.>> amended by inserting ``, and in the case of property treated
as tax-exempt use property other than by reason of a lease, to property
acquired after March 12, 2004'' before the period at the end.
(gg) Amendment Related to Section 884 of the Act.--Subparagraph (B)
of section 170(f)(12) is amended by adding at the end the following new
clauses:
``(v) Whether the donee organization provided
any goods or services in consideration, in whole
or in part, for the qualified vehicle.
``(vi) A description and good faith estimate
of the value of any goods or services referred to
in clause (v) or, if such goods or services
consist solely of intangible religious benefits
(as defined in paragraph (8)(B)), a statement to
that effect.''.
(hh) Amendments Related to Section 885 of the Act.--
(1) Paragraph (2) of section 26(b) is amended by striking
``and'' at the end of subparagraph (R), by striking the period
at the end of subparagraph (S) and inserting ``, and'', and by
adding at the end the following new subparagraph:
``(T) subsections (a)(1)(B)(i) and (b)(4)(A) of
section 409A (relating to interest and additional tax
with respect to certain deferred compensation).''.
(2) Clause (ii) of section 409A(a)(4)(C) is amended by
striking ``first''.
(3)(A) Notwithstanding <<NOTE: Effective date. 26 USC 409A
note.>> section 885(d)(1) of the American Jobs Creation Act of
2004, subsection (b) of section 409A of the Internal Revenue
Code of 1986 shall take effect on January 1, 2005.
(B) Not later than 90
days <<NOTE: Deadline. Guidance.>> after the date of the
enactment of this Act, the Secretary of the Treasury shall issue
guidance under which a nonqualified deferred compensation plan
which is in violation of the requirements of section 409A(b) of
such
[[Page 119 STAT. 2632]]
Code shall be treated as not having violated such requirements
if such plan comes into conformance with such requirements
during such limited period as the Secretary may specify in such
guidance.
(4) Subsection (f) of section 885 of the American Jobs
Creation Act of 2004 is <<NOTE: 26 USC 409A note.>> amended by
striking ``December 31, 2004'' the first place it appears and
inserting ``January 1, 2005''.
(ii) Amendment Related to Section 888 of the Act.--Paragraph (2) of
section 1092(a) <<NOTE: 26 USC 1092.>> is amended by striking the last
sentence and adding at the end the following new subparagraph:
``(C) Regulations.--The Secretary shall prescribe
such regulations or other guidance as may be necessary
or appropriate to carry out the purposes of this
paragraph. Such regulations or other guidance may
specify the proper methods for clearly identifying a
straddle as an identified straddle (and for identifying
the positions comprising such straddle), the rules for
the application of this section to a taxpayer which
fails to comply with those identification requirements,
and the ordering rules in cases where a taxpayer
disposes (or otherwise ceases to be the holder) of any
part of any position which is part of an identified
straddle.''.
(jj) Amendments Related to Section 898 of the Act.--
(1) Paragraph (3) of section 361(b) is amended by inserting
``(reduced by the amount of the liabilities assumed (within the
meaning of section 357(c)))'' before the period at the end.
(2) Paragraph (1) of section 357(d) is amended by inserting
``section 361(b)(3),'' after ``section 358(h),''.
(kk) Amendment Related to Section 899 of the Act.--Subparagraph (A)
of section 351(g)(3) is amended by adding at the end the following: ``If
there is not a real and meaningful likelihood that dividends beyond any
limitation or preference will actually be paid, the possibility of such
payments will be disregarded in determining whether stock is limited and
preferred as to dividends.''.
(ll) Amendment Related to Section 902 of the Act.--Paragraph (1) of
section 709(b) is amended by striking ``taxpayer'' both places it
appears and inserting ``partnership''.
(mm) Amendments Related to Section 907 of the Act.--Clause (ii) of
section 274(e)(2)(B) is amended--
(1) in subclause (I), by inserting ``or a related party to
the taxpayer'' after ``the taxpayer'',
(2) in subclause (II), by inserting ``(or such related
party)'' after ``the taxpayer'', and
(3) by adding at the end the following new flush sentence:
``For purposes of this clause, a person is a
related party with respect to another person if
such person bears a relationship to such other
person described in section 267(b) or 707(b).''.
(nn) Effective Date.--The <<NOTE: 26 USC 26 note.>> amendments made
by this section shall take effect as if included in the provisions of
the American Jobs Creation Act of 2004 to which they relate.
SEC. 404. AMENDMENTS RELATED TO THE WORKING FAMILIES TAX RELIEF ACT OF
2004.
(a) Amendment Related to Section 201 of the Act.--Subsection (e) of
section 152 is amended to read as follows:
[[Page 119 STAT. 2633]]
``(e) Special Rule for Divorced Parents, Etc.--
``(1) In general.--Notwithstanding subsection (c)(1)(B),
(c)(4), or (d)(1)(C), if--
``(A) a child receives over one-half of the child's
support during the calendar year from the child's
parents--
``(i) who are divorced or legally separated
under a decree of divorce or separate maintenance,
``(ii) who are separated under a written
separation agreement, or
``(iii) who live apart at all times during the
last 6 months of the calendar year, and--
``(B) such child is in the custody of 1 or both of
the child's parents for more than one-half of the
calendar year, such child shall be treated as being the
qualifying child or qualifying relative of the
noncustodial parent for a calendar year if the
requirements described in paragraph (2) or (3) are met.
``(2) Exception where custodial parent releases claim to
exemption for the year.--For purposes of paragraph (1), the
requirements described in this paragraph are met with respect to
any calendar year if--
``(A) the <<NOTE: Regulations.>> custodial parent
signs a written declaration (in such manner and form as
the Secretary may by regulations prescribe) that such
custodial parent will not claim such child as a
dependent for any taxable year beginning in such
calendar year, and
``(B) the noncustodial parent attaches such written
declaration to the noncustodial parent's return for the
taxable year beginning during such calendar year.
``(3) Exception for certain pre-1985 instruments.--
``(A) In general .--For purposes of paragraph (1),
the requirements described in this paragraph are met
with respect to any calendar year if--
``(i) a qualified pre-1985 instrument between
the parents applicable to the taxable year
beginning in such calendar year provides that the
noncustodial parent shall be entitled to any
deduction allowable under section 151 for such
child, and
``(ii) the noncustodial parent provides at
least $600 for the support of such child during
such calendar year.
For purposes of this subparagraph, amounts expended for
the support of a child or children shall be treated as
received from the noncustodial parent to the extent that
such parent provided amounts for such support.
``(B) Qualified pre-1985 instrument.--For purposes
of this paragraph, the term `qualified pre-1985
instrument' means any decree of divorce or separate
maintenance or written agreement--
``(i) which is executed before January 1,
1985,
``(ii) which on such date contains the
provision described in subparagraph (A)(i), and
``(iii) which is not modified on or after such
date in a modification which expressly provides
that this paragraph shall not apply to such decree
or agreement.
``(4) Custodial parent and noncustodial parent.--For
purposes of this subsection--
[[Page 119 STAT. 2634]]
``(A) Custodial parent.--The term `custodial parent'
means the parent having custody for the greater portion
of the calendar year.
``(B) Noncustodial parent.--The term `noncustodial
parent' means the parent who is not the custodial
parent.
``(5) Exception for multiple-support agreement.--This
subsection shall not apply in any case where over one-half of
the support of the child is treated as having been received from
a taxpayer under the provision of subsection (d)(3).
``(6) Special rule for support received from new spouse of
parent.--For purposes of this subsection, in the case of the
remarriage of a parent, support of a child received from the
parent's spouse shall be treated as received from the parent.''.
(b) Amendment Related to Section 203 of the Act.--Subparagraph (B)
of section 21(b)(1) is <<NOTE: 26 USC 21.>> amended by inserting ``(as
defined in section 152, determined without regard to subsections (b)(1),
(b)(2), and (d)(1)(B))'' after ``dependent of the taxpayer''.
(c) Amendment Related to Section 207 of the Act.--Subparagraph (A)
of section 223(d)(2) is amended by inserting ``, determined without
regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof'' after
``section 152''.
(d) Effective Date.--The <<NOTE: 26 USC 21 note.>> amendments made
by this section shall take effect as if included in the provisions of
the Working Families Tax Relief Act of 2004 to which they relate.
SEC. 405. AMENDMENTS RELATED TO THE JOBS AND GROWTH TAX RELIEF
RECONCILIATION ACT OF 2003.
(a) Amendments Related to Section 201 of the Act.--
(1) Clause (ii) of section 168(k)(4)(B) is amended to read
as follows:
``(ii) which is--
``(I) acquired by the taxpayer after
May 5, 2003, and before January 1, 2005,
but only if no written binding contract
for the acquisition was in effect before
May 6, 2003, or
``(II) acquired by the taxpayer
pursuant to a written binding contract
which was entered into after May 5,
2003, and before January 1, 2005, and''.
(2) Subparagraph (D) of section 1400L(b)(2) is amended by
striking ``September 11, 2004'' and inserting ``January 1,
2005''.
(b) Effective Date.--The <<NOTE: 26 USC 168 note.>> amendments made
by this section shall take effect as if included in section 201 of the
Jobs and Growth Tax Relief and Reconciliation Act of 2003.
SEC. 406. AMENDMENT RELATED TO THE VICTIMS OF TERRORISM TAX RELIEF ACT
OF 2001.
(a) Amendment Related to Section 201 of the Act.--Paragraph (17) of
section 6103(l) is amended by striking ``subsection (f), (i)(7), or
(p)'' and inserting ``subsection (f), (i)(8), or (p)''.
(b) Effective Date.--The <<NOTE: 26 USC 6103 note.>> amendment made
by this section shall take effect as if included in section 201 of the
Victims of Terrorism Tax Relief Act of 2001.
[[Page 119 STAT. 2635]]
SEC. 407. AMENDMENTS RELATED TO THE ECONOMIC GROWTH AND TAX RELIEF
RECONCILIATION ACT OF 2001.
(a) Amendments Related to Section 617 of the Act.--
(1) Clause (ii) of section 402(g)(7)(A) is <<NOTE: 26 USC
402.>> amended to read as follows:
``(ii) $15,000 reduced by the sum of--
``(I) the amounts not included in
gross income for prior taxable years by
reason of this paragraph, plus
``(II) the aggregate amount of
designated Roth contributions (as
defined in section 402A(c)) for prior
taxable years, or''.
(2) Subparagraph (A) of section 402(g)(1) is amended by
inserting ``to'' after ``shall not apply''.
(b) Amendment Related to Section 632 of the Act.--Subparagraph (C)
of section 415(c)(7) is amended by striking ``the greater of $3,000''
and all that follows and inserting ``$3,000. This subparagraph shall not
apply with respect to any taxable year to any individual whose adjusted
gross income for such taxable year (determined separately and without
regard to community property laws) exceeds $17,000.''.
(c) Effective Date.--The <<NOTE: 26 USC 402 note.>> amendments made
by this section shall take effect as if included in the provisions of
the Economic Growth and Tax Relief Reconciliation Act of 2001 to which
they relate.
SEC. 408. AMENDMENTS RELATED TO THE INTERNAL REVENUE SERVICE
RESTRUCTURING AND REFORM ACT OF 1998.
(a) Amendments Related to Section 3415 of the Act.--
(1) Paragraph (2) of section 7609(c) is amended by inserting
``or'' at the end of subparagraph (D), by striking ``; or'' at
the end of subparagraph (E) and inserting a period, and by
striking subparagraph (F).
(2) Subsection (c) of section 7609 is amended by
redesignating paragraph (3) as paragraph (4) and by inserting
after paragraph (2) the following new paragraph:
``(3) John doe and certain other summonses.--Subsection (a)
shall not apply to any summons described in subsection (f) or
(g).''.
(b) Effective Date.--The <<NOTE: 26 USC 7609 note.>> amendments made
by this section shall take effect as if included in section 3415 of the
Internal Revenue Service Restructuring and Reform Act of 1998.
SEC. 409. AMENDMENTS RELATED TO THE TAXPAYER RELIEF ACT OF 1997.
(a) Amendments Related to Section 1055 of the Act.--
(1) The last sentence of section 6411(a) is amended by
striking ``6611(f)(3)(B)'' and inserting ``6611(f)(4)(B)''.
(2) Paragraph (4) of section 6601(d) is amended by striking
``6611(f)(3)(A)'' and inserting ``6611(f)(4)(A)''.
(b) Amendment Related to Section 1112 of the Act.--Subsection (c) of
section 961 is amended to read as follows:
``(c) Basis Adjustments in <<NOTE: Regulations.>> Stock Held by
Foreign Corporations.--Under regulations prescribed by the Secretary, if
a United States shareholder is treated under section 958(a)(2) as owning
stock in a controlled foreign corporation which is owned by another
controlled foreign corporation, then adjustments similar to the
[[Page 119 STAT. 2636]]
adjustments provided by subsections (a) and (b) shall be made to--
``(1) the basis of such stock, and
``(2) the basis of stock in any other controlled foreign
corporation by reason of which the United States shareholder is
considered under section 958(a)(2) as owning the stock described
in paragraph (1),
but only for the purposes of determining the amount included under
section 951 in the gross income of such United States shareholder (or
any other United States shareholder who acquires from any person any
portion of the interest of such United States shareholder by reason of
which such shareholder was treated as owning such stock, but only to the
extent of such portion, and subject to such proof of identity of such
interest as the Secretary may prescribe by regulations). The preceding
sentence shall not apply with respect to any stock to which a basis
adjustment applies under subsection (a) or (b).''.
(c) Amendment Related to Section 1144 of the Act.--Subparagraph (B)
of section 6038B(a)(1) is <<NOTE: 26 USC 6038B.>> amended by inserting
``or'' at the end.
(d) Effective Date.--The <<NOTE: 26 USC 961 note.>> amendments made
by this section shall take effect as if included in the provisions of
the Taxpayer Relief Act of 1997 to which they relate.
SEC. 410. AMENDMENT RELATED TO THE OMNIBUS BUDGET RECONCILIATION ACT OF
1990.
(a) Amendment Related to Section 11813 of the Act.--Subclause (I) of
section 168(e)(3)(B)(vi) is amended by striking ``if `solar and wind'
were substituted for `solar' in clause (i) thereof'' and inserting ``if
`solar or wind energy' were substituted for `solar energy' in clause (i)
thereof''.
(b) Effective Date.--The <<NOTE: 26 USC 168 note.>> amendment made
by this section shall take effect as if included in section 11813 of the
Omnibus Budget Reconciliation Act of 1990.
SEC. 411. AMENDMENT RELATED TO THE OMNIBUS BUDGET RECONCILIATION ACT OF
1987.
(a) Amendment Related to Section 10227 of the Act.--Section 1363(d)
is amended by adding at the end the following new paragraph:
``(5) Special rule.--Sections 1367(a)(2)(D) and 1371(c)(1)
shall not apply with respect to any increase in the tax imposed
by reason of this subsection.''.
(b) Effective Date.--The <<NOTE: 26 USC 1363 note.>> amendment made
by this section shall take effect as if included in section 10227 of the
Omnibus Budget Reconciliation Act of 1987.
SEC. 412. CLERICAL CORRECTIONS.
(a) Subparagraph (C) of section 2(b)(2) is amended by striking
``subparagraph (C)'' and inserting ``subparagraph (B)''.
(b) Paragraph (2) of section 25C(b) is amended by striking
``subsection (c)(3)(B)'' and inserting ``subsection (c)(2)(B)''.
(c) Subparagraph (E) of section 26(b)(2) is amended by striking
``section 530(d)(3)'' and inserting ``section 530(d)(4)''.
(d) Subparagraph (A) of section 30B(g)(2) and subparagraph (A) of
section 30C(d)(2) are each amended by striking ``regular tax'' and
inserting ``regular tax liability (as defined in section 26(b))''.
[[Page 119 STAT. 2637]]
(e) The table of sections for subpart B of part IV of subchapter A
of chapter 1 is amended by striking the item relating to section 30C and
inserting the following new item:
``Sec. 30C. Alternative fuel vehicle refueling property credit.''.
(f)(1) Subclause (II) of section 38(c)(2)(A)(ii) is <<NOTE: 26 USC
38.>> amended by striking ``or the New York Liberty Zone business
employee credit or the specified credits'' and inserting ``, the New
York Liberty Zone business employee credit, and the specified credits''.
(2) Subclause (II) of section 38(c)(3)(A)(ii) is amended by striking
``or the specified credits'' and inserting ``and the specified
credits''.
(3) Subparagraph (B) of section 38(c)(4) is amended--
(A) by striking ``includes'' and inserting ``means'', and
(B) by inserting ``and'' at the end of clause (i).
(g)(1) Subparagraph (A) of section 39(a)(1) is amended by striking
``each of the 1 taxable years'' and inserting ``the taxable year''.
(2) Subparagraph (B) of section 39(a)(3) is amended to read as
follows:
``(B) paragraph (1) <<NOTE: Applicability.>> shall
be applied by substituting `each of the 5 taxable years'
for `the taxable year' in subparagraph (A) thereof,
and''.
(h) Subparagraph (B) of section 40A(b)(5) is amended by striking
``(determined without regard to the last sentence of subsection
(d)(2))''.
(i) Paragraph (5) of section 43(c) is amended to read as follows:
``(5) Alaska natural gas.--For purposes of paragraph
(1)(D)--
``(A) In general.--The term `Alaska natural gas'
means natural gas entering the Alaska natural gas
pipeline (as defined in section 168(i)(16) (determined
without regard to subparagraph (B) thereof)) which is
produced from a well--
``(i) located in the area of the State of
Alaska lying north of 64 degrees North latitude,
determined by excluding the area of the Alaska
National Wildlife Refuge (including the
continental shelf thereof within the meaning of
section 638(1)), and
``(ii) pursuant to the applicable State and
Federal pollution prevention, control, and permit
requirements from such area (including the
continental shelf thereof within the meaning of
section 638(1)).
``(B) Natural gas.--The term `natural gas' has the
meaning given such term by section 613A(e)(2).''.
(j) Subsection (d) of section 45 is amended--
(1) in paragraph (8) by striking ``The term'' and inserting
``In the case of a facility that produces refined coal, the
term'', and
(2) in paragraph (10) by striking ``The term'' and inserting
``In the case of a facility that produces Indian coal, the
term''.
(k) Paragraph (2) of section 45I(a) is amended by striking
``qualified credit oil production'' and inserting ``qualified crude oil
production''.
(l) Subsection (g) of section 45K, as redesignated by section 1322
of the <<NOTE: Ante, p. 1011.>> Energy Policy Act of 2005, is amended--
(1) in the matter preceding paragraph (1), by striking
``subsection (f)'' and inserting ``subsection (e)'', and
[[Page 119 STAT. 2638]]
(2) in paragraph (2)(C), by striking ``subsection (g)'' and
inserting ``subsection (f)''.
(m) Paragraph (1) of section 48(a), as amended by section 1336 of
the Energy Policy Act of 2005, is <<NOTE: Ante, p. 1036.>> amended by
striking ``paragraph (1)(B) or (2)(B) of subsection (d)'' and inserting
``paragraphs (1)(B) and (2)(B) of subsection (c)''.
(n) Subparagraph (A) of section 48(a)(3) is amended--
(1) by redesignating clause (iii) (relating to qualified
fuel cell property or qualified microturbine property), as added
by section 1336 of the Energy Policy Act of 2005, as clause (iv)
and by moving such clause to the end of such subparagraph, and
(2) by striking ``or'' at the end of clause (ii).
(o) Subparagraph (E) of section 50(a)(2) is <<NOTE: 26 USC
50.>> amended by striking ``section 48(a)(5)'' and inserting ``section
48(b)''.
(p)(1) Paragraph (3) of section 55(c) is amended by inserting
``30B(g)(2), 30C(d)(2),'' after ``30(b)(3),''.
(2) Section 1341(b)(3) of the <<NOTE: Repeal.3Ante, p.
1038.>> Energy Policy Act of 2005 is repealed.
(3) Section 1342(b)(3) of the <<NOTE: Repeal.3Ante, p.
1049.>> Energy Policy Act of 2005 is repealed.
(q)(1) Subsection (a) of section 62 is amended--
(A) by redesignating paragraph (19) (relating to costs
involving discrimination suits, etc.), as added by section 703
of the American Jobs Creation Act of 2004, as paragraph (20),
and
(B) by moving such paragraph after paragraph (19) (relating
to health savings accounts).
(2) Subsection (e) of section 62 is amended by striking ``subsection
(a)(19)'' and inserting ``subsection (a)(20)''.
(r) Paragraph (3) of section 167(f) is amended by striking ``section
197(e)(7)'' and inserting ``section 197(e)(6)''.
(s) Subparagraph (D) of section 168(i)(15) is amended by striking
``This paragraph shall not apply to'' and inserting ``Such term shall
not include''.
(t) Paragraph (2) of section 221(d) is amended by striking ``this
Act'' and inserting ``the Taxpayer Relief Act of 1997''.
(u) Paragraph (8) of section 318(b) is amended by striking ``section
6038(d)(2)'' and inserting ``section 6038(e)(2)''.
(v) Subparagraph (B) of section 332(d)(1) is amended by striking
``distribution to which section 301 applies'' and inserting
``distribution of property to which section 301 applies''.
(w) Subparagraph (B) of section 403(b)(9) is amended by inserting
``or'' before ``a convention''.
(x)(1) Clause (i) of section 412(m)(4)(B) is amended by striking
``subsection (c)'' and inserting ``subsection (d)''.
(2) Clause (i) of section 302(e)(4)(B) of the Employee Retirement
Income Security Act of 1974 is <<NOTE: 29 USC 1082.>> amended by
striking ``subsection (c)'' and inserting ``subsection (d)''.
(y) Paragraph (1) of section 415(l) is amended by striking
``individual medical account'' and inserting ``individual medical
benefit account''.
(z) The matter following clause (iv) of section 415(n)(3)(C) is
amended by striking ``clauses'' and inserting ``clause''.
(aa) Subparagraph (C) of section 461(i)(3) is amended by striking
``section 6662(d)(2)(C)(iii)'' and inserting ``section
6662(d)(2)(C)(ii)''.
[[Page 119 STAT. 2639]]
(bb) Paragraph (12) of <<NOTE: 26 USC 501.>> section 501(c) is
amended--
(1) by striking ``subparagraph (C)(iii)'' in subparagraph
(F) and inserting ``subparagraph (C)(iv)'', and
(2) by striking ``subparagraph (C)(iv)'' in subparagraph (G)
and inserting ``subparagraph (C)(v)''.
(cc) Clause (ii) of section 501(c)(22)(B) is amended by striking
``clause (ii) of paragraph (21)(B)'' and inserting ``clause (ii) of
paragraph (21)(D)''.
(dd) Paragraph (1) of section 512(b) is amended by striking
``section 512(a)(5)'' and inserting ``subsection (a)(5)''.
(ee)(1) Subsection (b) of section 512 is amended--
(A) by redesignating paragraph (18) (relating to the
treatment of gain or loss on sale or exchange of certain
brownfield sites), as added by section 702 of the American Jobs
Creation Act of 2004, as paragraph (19), and
(B) by moving such paragraph to the end of such subsection.
(2) Subparagraph (E) of section 514(b)(1) is amended by striking
``section 512(b)(18)'' and inserting ``section 512(b)(19)''.
(3) Paragraph (6) of section 529(c) is amended by striking
``education individual retirement account'' and inserting ``Coverdell
education savings account''.
(ff)(1) Subsection (b) of section 530 is amended by striking
paragraph (3) and by redesignating paragraphs (4) and (5) as paragraphs
(3) and (4), respectively.
(2) Clause (ii) of section 530(b)(2)(A) is amended by striking
``paragraph (4)'' and inserting ``paragraph (3)''.
(gg) Subparagraph (H) of section 613(c)(4) is amended by inserting
``(including in situ retorting)'' after ``and retorting''.
(hh) Subparagraph (A) of section 856(g)(5) is amended by striking
``subsection (c)(6) or (c)(7) of section 856'' and inserting ``paragraph
(2), (3), or (4) of subsection (c)''.
(ii) Paragraph (6) of section 857(b) is amended--
(1) in subparagraph (E), by striking ``subparagraph (C)''
and inserting ``subparagraphs (C) and (D)'', and
(2) in subparagraph (F)--
(A) by striking ``subparagraph (C) of this
paragraph'' and inserting ``subparagraph (C) or (D)'',
and
(B) by striking ``subparagraphs (C) and (D)'' and
inserting ``subparagraphs (C), (D), and (E)''.
(jj) Subparagraph (C) of section 881(e)(1) is amended by inserting
``interest-related dividend received by a controlled foreign
corporation'' after ``shall apply to any''.
(kk) Clause (ii) of section 952(c)(1)(B) is amended--
(1) by striking ``clause (iii)(III) or (IV)'' and inserting
``subclause (II) or (III) of clause (iii)'', and
(2) by striking ``clause (iii)(II)'' and inserting ``clause
(iii)(I)''.
(ll) Clause (i) of section 954(c)(1)(C) is amended by striking
``paragraph (4)(A)'' and inserting ``paragraph (5)(A)''.
(mm) Subparagraph (F) of section 954(c)(1) is amended by striking
``Net income from notional principal contracts.'' after ``Income from
notional principal contracts.--''.
(nn) Paragraph (23) of section 1016(a) is amended by striking
``1045(b)(4)'' and inserting ``1045(b)(3)''.
(oo) Paragraph (1) of section 1256(f) is amended by striking
``subsection (e)(2)(C)'' and inserting ``subsection (e)(2)''.
[[Page 119 STAT. 2640]]
(pp) The matter preceding clause (i) of <<NOTE: 26 USC
1031.>> section 1031(h)(2)(B) is amended by striking ``subparagraph''
and inserting ``subparagraphs''.
(qq) Paragraphs (1) and (2) of section 1375(d) are each amended by
striking ``subchapter C'' and inserting ``accumulated''.
(rr) Each of the following provisions are amended by striking
``General Accounting Office'' each place it appears therein and
inserting ``Government Accountability Office'':
(1) Clause (ii) of section 1400E(c)(4)(A).
(2) Paragraph (1) of section 6050M(b).
(3) Subparagraphs (A), (B)(i), and (B)(ii) of section
6103(i)(8).
(4) Paragraphs (3)(C)(i), (4), (5), and (6)(B) of section
6103(p).
(5) Subsection (e) of section 8021.
(ss)(1) Clause (ii) of section 1400L(b)(2)(C) is amended by striking
``section 168(k)(2)(C)(i)'' and inserting ``section 168(k)(2)(D)(i)''.
(2) Clause (iv) of section 1400L(b)(2)(C) is amended by striking
``section 168(k)(2)(C)(iii)'' and inserting ``section
168(k)(2)(D)(iii)''.
(3) Subparagraph (D) of section 1400L(b)(2) is amended by striking
``section 168(k)(2)(D)'' and inserting ``section 168(k)(2)(E)''.
(4) Subparagraph (E) of section 1400L(b)(2) is amended by striking
``section 168(k)(2)(F)'' and inserting ``section 168(k)(2)(G)''.
(5) Paragraph (5) of section 1400L(c) is amended by striking
``section 168(k)(2)(C)(iii)'' and inserting ``section
168(k)(2)(D)(iii)''.
(tt) Section 3401 is amended by redesignating subsection (h) as
subsection (g).
(uu) Paragraph (2) of section 4161(a) is amended to read as follows:
``(2) 3 percent rate of tax for electric outboard motors.--
In the case of an electric outboard motor, paragraph (1) shall
be <<NOTE: Applicability.>> applied by substituting `3 percent'
for `10 percent'.''.
(vv) Subparagraph (C) of section 4261(e)(4) is amended by striking
``imposed subsection (b)'' and inserting ``imposed by subsection (b)''.
(ww) Subsection (a) of section 4980D is amended by striking
``plans'' and inserting ``plan''.
(xx) The matter following clause (iii) of section 6045(e)(5)(A) is
amended by striking ``for `$250,000'.'' and all that follows through
``to the Treasury.'' and inserting ``for `$250,000'. The Secretary may
by regulation increase the dollar amounts under this subparagraph if the
Secretary determines that such an increase will not materially reduce
revenues to the Treasury.''.
(yy) Subsection (p) of section 6103 is amended--
(1) by striking so much of paragraph (4) as precedes
subparagraph (A) and inserting the following:
``(4) Safeguards.--Any Federal agency described in
subsection (h)(2), (h)(5), (i)(1), (2), (3), (5), or (7),
(j)(1), (2), or (5), (k)(8), (l)(1), (2), (3), (5), (10), (11),
(13), (14), or (17) or (o)(1), the Government Accountability
Office, the Congressional Budget Office, or any agency, body, or
commission described in subsection (d), (i)(3)(B)(i) or
7(A)(ii), or (l)(6), (7), (8), (9), (12), (15), or (16) or any
other person described in subsection (l)(16), (18), (19), or
(20) shall, as a condition for receiving returns or return
information--'',
(2) by amending paragraph (4)(F)(i) to read as follows:
[[Page 119 STAT. 2641]]
``(i) in the case of an agency, body, or
commission described in subsection (d),
(i)(3)(B)(i), or (l)(6), (7), (8), (9), or (16),
or any other person described in subsection
(l)(16), (18), (19), or (20) return to the
Secretary such returns or return information
(along with any copies made therefrom) or make
such returns or return information undisclosable
in any manner and furnish a written report to the
Secretary describing such manner,'', and
(3) by striking the first full sentence in the matter
following subparagraph (F) of paragraph (4) and inserting the
following: ``If the Secretary determines that any such agency,
body, or commission, including an agency or any other person
described in subsection (l)(16), (18), (19), or (20), or the
Government Accountability Office or the Congressional Budget
Office, has failed to, or does not, meet the requirements of
this paragraph, he may, after any proceedings for review
established under paragraph (7), take such actions as are
necessary to ensure such requirements are met, including
refusing to disclose returns or return information to such
agency, body, or commission, including an agency or any other
person described in subsection (l)(16), (18), (19), or (20), or
the Government Accountability Office or the Congressional Budget
Office, until he determines that such requirements have been or
will be met.''.
(zz) Clause (ii) of <<NOTE: 26 USC 6111.>> section 6111(b)(1)(A) is
amended by striking ``advice or assistance'' and inserting ``aid,
assistance, or advice''.
(aaa) Paragraph (3) of section 6662(d) is amended by striking
``the'' before ``1 or more''.
SEC. 413. OTHER CORRECTIONS RELATED TO THE AMERICAN JOBS CREATION ACT OF
2004.
(a) Amendments Related to Section 233 of the Act.--
(1) Clause (vi) of section 1361(c)(2)(A) is amended--
(A) by inserting ``or a depository institution
holding company (as defined in section 3(w)(1) of the
Federal Deposit Insurance Act (12 U.S.C. 1813(w)(1))''
after ``a bank (as defined in section 581)'', and
(B) by inserting ``or company'' after ``such bank''.
(2) Paragraph (16) of section 4975(d) is amended--
(A) in subparagraph (A), by inserting ``or a
depository institution holding company (as defined in
section 3(w)(1) of the Federal Deposit Insurance Act (12
U.S.C. 1813(w)(1))'' after ``a bank (as defined in
section 581)'', and
(B) in subparagraph (C), by inserting ``or company''
after ``such bank''.
(b) Amendment Related to Section 237 of the Act.--Subparagraph (F)
of section 1362(d)(3) is amended by striking ``a bank holding company''
and all that follows through ``section 2(p) of such Act)'' and inserting
``a depository institution holding company (as defined in section
3(w)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1813(w)(1))''.
(c) Amendments Related to Section 239 of the Act.--Paragraph (3) of
section 1361(b) is amended--
(1) in subparagraph (A), by striking ``and in the case of
information returns required under part III of subchapter A of
chapter 61'', and
[[Page 119 STAT. 2642]]
(2) by adding at the end the following new subparagraph:
``(E) Information returns.--Except to the extent
provided by the Secretary, this paragraph shall not
apply to part III of subchapter A of chapter 61
(relating to information returns).''.
(d) Effective Date.--The <<NOTE: 26 USC 1361 note.>> amendments made
by this section shall take effect as if included in the provisions of
the American Jobs Creation Act of 2004 to which they relate.
Subtitle B--Trade Technicals
SEC. 421. TECHNICAL CORRECTIONS TO REGIONAL VALUE-CONTENT METHODS FOR
RULES OF ORIGIN UNDER PUBLIC LAW 109-53.
Section 203(c) of the Dominican Republic-Central America-United
States Free Trade Agreement Implementation Act (Public Law 109-53; 19
U.S.C. 4033(c)) is amended as follows:
(1) In paragraph (2)(A), by striking all that follows ``the
following build-down method:'' and inserting the following:
av-vnm
``rvc = -------- <dbl-dagger> 100''.
av
(2) In paragraph (3)(A), by striking all that follows ``the
following build-up method:'' and inserting the following:
vom
``rvc = -------- <dbl-dagger> 100''.
av
(3) In paragraph (4)(A), by striking all that follows ``the
following net cost method:'' and inserting the following:
nc-vnm
``rvc = -------- <dbl-dagger> 100''.
nc
TITLE V--EMERGENCY REQUIREMENT
SEC. 501. EMERGENCY REQUIREMENT.
Any provision of this Act causing an effect on receipts, budget
authority, or outlays is designated as an emergency requirement pursuant
to section 402 of H. Con. Res. 95 (109th Congress).
Approved December 21, 2005.
LEGISLATIVE HISTORY--H.R. 4440:
---------------------------------------------------------------------------
CONGRESSIONAL RECORD, Vol. 151 (2005):
Dec. 7, considered and passed House.
Dec. 16, considered and passed Senate, amended. House
concurred in Senate amendment.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 41 (2005):
Dec. 21, Presidential remarks.
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