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H.L.C.

DECEMBER 15, 2015

RULES COMMITTEE PRINT 114-40
TEXT OF HOUSE AMENDMENT #2 TO THE SENATE
AMENDMENT TO

H.R. 2029, MILITARY CON-STRUCTION AND VETERANS AFFAIRS AND RELATEDAGENCIESAPPROPRIATIONS

ACT,

2016
[Showing the text of the Protecting Americans from Tax
Hikes Act of 2015.]

At the end of House amendment #1, insert the following:

DIVISION
Q—PROTECTING
2
AMERICANS FROM TAX HIKES
3
ACT OF 2015
1

4

SECTION 1. SHORT TITLE, ETC.

5(a) SHORT TITLE.—This division may be cited as the

6 ‘‘Protecting Americans from Tax Hikes Act of 2015’’.
7(b) AMENDMENT OF 1986 CODE.—Except as other-

8 wise expressly provided, whenever in this division an
9 amendment or repeal is expressed in terms of an amend10 ment to, or repeal of, a section or other provision, the ref11 erence shall be considered to be made to a section or other12 provision of the Internal Revenue Code of 1986.

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H.L.C.

21(c) TABLE OF CONTENTS.—The table of contents for

2 this division is as follows:
DIVISION Q—PROTECTING AMERICANS FROM TAX HIKES ACT OF
2015
Sec. 1. Short title, etc.
TITLE I—EXTENDERS
Subtitle A—Permanent Extensions
PART 1—TAX RELIEF FOR FAMILIES AND INDIVIDUALS
Sec. 101. Enhanced child tax credit made permanent.
Sec. 102. Enhanced American opportunity tax credit made permanent.
Sec. 103. Enhanced earned income tax credit made permanent.
Sec. 104. Extension and modification of deduction for certain expenses of elementary and secondary school teachers.
Sec. 105. Extension of parity for exclusion from income for employer-provided
mass transit and parking benefits.
Sec. 106. Extension of deduction of State and local general sales taxes.
PART 2—INCENTIVES FOR CHARITABLE GIVING
Sec. 111. Extension and modification of special rule for contributions of capitalgain real property made for conservation purposes.
Sec. 112. Extension of tax-free distributions from individual retirement plansfor charitable purposes.
Sec. 113. Extension and modification of charitable deduction for contributionsof food inventory.
Sec. 114. Extension of modification of tax treatment of certain payments tocontrolling exempt organizations.
Sec. 115. Extension of basis adjustment to stock of S corporations making
charitable contributions of property.
PART 3—INCENTIVES FOR GROWTH, JOBS, INVESTMENT, AND INNOVATION
Sec. 121. Extension and modification of research credit.
Sec. 122. Extension and modification of employer wage credit for employees
who are active duty members of the uniformed services.
Sec. 123. Extension of 15-year straight-line cost recovery for qualified leasehold
improvements, qualified restaurant buildings and improvements, and qualified retail improvements.
Sec. 124. Extension and modification of increased expensing limitations andtreatment of certain real property as section 179 property.
Sec. 125. Extension of treatment of certain dividends of regulated investmentcompanies.
Sec. 126. Extension of exclusion of 100 percent of gain on certain small business stock.
Sec. 127. Extension of reduction in S-corporation recognition period for builtin gains tax.
Sec. 128. Extension of subpart F exception for active financing income.
PART 4—INCENTIVES FOR REAL ESTATE INVESTMENT

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3
Sec. 131. Extension of minimum low-income housing tax credit rate for nonFederally subsidized buildings.
Sec. 132. Extension of military housing allowance exclusion for determining
whether a tenant in certain counties is low-income.
Sec. 133. Extension of RIC qualified investment entity treatment under
FIRPTA.
Subtitle B—Extensions Through 2019Sec. 141. Extension of new markets tax credit.
Sec. 142. Extension and modification of work opportunity tax credit.
Sec. 143. Extension and modification of bonus depreciation.
Sec. 144. Extension of look-thru treatment of payments between related controlled foreign corporations under foreign personal holding
company rules.
Subtitle C—Extensions Through 2016
PART 1—TAX RELIEF FOR FAMILIES AND INDIVIDUALS
Sec. 151. Extension and modification of exclusion from gross income of discharge of qualified principal residence indebtedness.
Sec. 152. Extension of mortgage insurance premiums treated as qualified residence interest.
Sec. 153. Extension of above-the-line deduction for qualified tuition and related
expenses.
PART 2—INCENTIVES FOR GROWTH, JOBS, INVESTMENT, AND INNOVATION
Sec. 161. Extension of Indian employment tax credit.
Sec. 162. Extension and modification of railroad track maintenance credit.
Sec. 163. Extension of mine rescue team training credit.
Sec. 164. Extension of qualified zone academy bonds.
Sec. 165. Extension of classification of certain race horses as 3-year property.
Sec. 166. Extension of 7-year recovery period for motorsports entertainment
complexes.
Sec. 167. Extension and modification of accelerated depreciation for businessproperty on an Indian reservation.
Sec. 168. Extension of election to expense mine safety equipment.
Sec. 169. Extension of special expensing rules for certain film and television
productions; special expensing for live theatrical productions.
Sec. 170. Extension of deduction allowable with respect to income attributable
to domestic production activities in Puerto Rico.
Sec. 171. Extension and modification of empowerment zone tax incentives.
Sec. 172. Extension of temporary increase in limit on cover over of rum excise
taxes to Puerto Rico and the Virgin Islands.
Sec. 173. Extension of American Samoa economic development credit.
Sec. 174. Moratorium on medical device excise tax.
PART 3—INCENTIVES FOR ENERGY PRODUCTION AND CONSERVATION
Sec. 181. Extension and modification of credit for nonbusiness energy property.
Sec. 182. Extension of credit for alternative fuel vehicle refueling property.
Sec. 183. Extension of credit for 2-wheeled plug-in electric vehicles.
Sec. 184. Extension of second generation biofuel producer credit.
Sec. 185. Extension of biodiesel and renewable diesel incentives.

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4
Sec. 186. Extension and modification of production credit for Indian coal facilities.
Sec. 187. Extension of credits with respect to facilities producing energy fromcertain renewable resources.
Sec. 188. Extension of credit for energy-efficient new homes.
Sec. 189. Extension of special allowance for second generation biofuel plant
property.
Sec. 190. Extension of energy efficient commercial buildings deduction.
Sec. 191. Extension of special rule for sales or dispositions to implement FERC
or State electric restructuring policy for qualified electric utilities.
Sec. 192. Extension of excise tax credits relating to alternative fuels.
Sec. 193. Extension of credit for new qualified fuel cell motor vehicles.
TITLE II—PROGRAM INTEGRITY
Sec. 201. Modification of filing dates of returns and statements relating to employee wage information and nonemployee compensation to improve compliance.
Sec. 202. Safe harbor for de minimis errors on information returns and payee
statements.
Sec. 203. Requirements for the issuance of ITINs.
Sec. 204. Prevention of retroactive claims of earned income credit afterissuance of social security number.
Sec. 205. Prevention of retroactive claims of child tax credit.
Sec. 206. Prevention of retroactive claims of American opportunity tax credit.
Sec. 207. Procedures to reduce improper claims.
Sec. 208. Restrictions on taxpayers who improperly claimed credits in prioryear.
Sec. 209. Treatment of credits for purposes of certain penalties.
Sec. 210. Increase the penalty applicable to paid tax preparers who engage inwillful or reckless conduct.
Sec. 211. Employer identification number required for American opportunity
tax credit.
Sec. 212. Higher education information reporting only to include qualified tuition and related expenses actually paid.
TITLE III—MISCELLANEOUS PROVISIONS
Subtitle A—Family Tax Relief
Sec. 301. Exclusion for amounts received under the Work Colleges Program.
Sec. 302. Improvements to section 529 accounts.
Sec. 303. Elimination of residency requirement for qualified ABLE programs.
Sec. 304. Exclusion for wrongfully incarcerated individuals.
Sec. 305. Clarification of special rule for certain governmental plans.
Sec. 306. Rollovers permitted from other retirement plans into simple retirement accounts.
Sec. 307. Technical amendment relating to rollover of certain airline payment
amounts.
Sec. 308. Treatment of early retirement distributions for nuclear materials
couriers, United States Capitol Police, Supreme Court Police,
and diplomatic security special agents.
Sec. 309. Prevention of extension of tax collection period for members of theArmed Forces who are hospitalized as a result of combat zone
injuries.
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H.L.C.

5
Subtitle B—Real Estate Investment Trusts
Sec. 311. Restriction on tax-free spinoffs involving REITs.
Sec. 312. Reduction in percentage limitation on assets of REIT which may betaxable REIT subsidiaries.
Sec. 313. Prohibited transaction safe harbors.
Sec. 314. Repeal of preferential dividend rule for publicly offered REITs.
Sec. 315. Authority for alternative remedies to address certain REIT distribution failures.
Sec. 316. Limitations on designation of dividends by REITs.
Sec. 317. Debt instruments of publicly offered REITs and mortgages treatedas real estate assets.
Sec. 318. Asset and income test clarification regarding ancillary personal property.
Sec. 319. Hedging provisions.
Sec. 320. Modification of REIT earnings and profits calculation to avoid duplicate taxation.
Sec. 321. Treatment of certain services provided by taxable REIT subsidiaries.
Sec. 322. Exception from FIRPTA for certain stock of REITs.
Sec. 323. Exception for interests held by foreign retirement or pension funds.
Sec. 324. Increase in rate of withholding of tax on dispositions of United States
real property interests.
Sec. 325. Interests in RICs and REITs not excluded from definition of UnitedStates real property interests.
Sec. 326. Dividends derived from RICs and REITs ineligible for deduction for
United States source portion of dividends from certain foreign
corporations.
Subtitle C—Additional Provisions
Sec. 331. Deductibility of charitable contributions to agricultural research organizations.
Sec. 332. Removal of bond requirements and extending filing periods for certain taxpayers with limited excise tax liability.
Sec. 333. Modifications to alternative tax for certain small insurance companies.
Sec. 334. Treatment of timber gains.
Sec. 335. Modification of definition of hard cider.
Sec. 336. Church plan clarification.
Subtitle D—Revenue Provisions
Sec. 341. Updated ASHRAE standards for energy efficient commercial buildings deduction.
Sec. 342. Excise tax credit equivalency for liquified petroleum gas and liquified
natural gas.
Sec. 343. Exclusion from gross income of certain clean coal power grants tonon-corporate taxpayers.
Sec. 344. Clarification of valuation rule for early termination of certain charitable remainder unitrusts.
Sec. 345. Prevention of transfer of certain losses from tax indifferent parties.
Sec. 346. Treatment of certain persons as employers with respect to motion picture projects.
TITLE IV—TAX ADMINISTRATION
Subtitle A—Internal Revenue Service Reforms
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H.L.C.

6
Sec. 401. Duty to ensure that Internal Revenue Service employees are familiar
with and act in accord with certain taxpayer rights.
Sec. 402. IRS employees prohibited from using personal email accounts for official business.
Sec. 403. Release of information regarding the status of certain investigations.
Sec. 404. Administrative appeal relating to adverse determinations of tax-exempt status of certain organizations.
Sec. 405. Organizations required to notify Secretary of intent to operate under
501(c)(4).
Sec. 406. Declaratory judgments for 501(c)(4) and other exempt organizations.
Sec. 407. Termination of employment of Internal Revenue Service employees
for taking official actions for political purposes.
Sec. 408. Gift tax not to apply to contributions to certain exempt organizations.
Sec. 409. Extend Internal Revenue Service authority to require truncated Social Security numbers on Form W–2.
Sec. 410. Clarification of enrolled agent credentials.
Sec. 411. Partnership audit rules.
Subtitle B—United States Tax Court
PART 1—TAXPAYER ACCESS TO UNITED STATES TAX COURT
Sec. 421. Filing period for interest abatement cases.
Sec. 422. Small tax case election for interest abatement cases.
Sec. 423. Venue for appeal of spousal relief and collection cases.
Sec. 424. Suspension of running of period for filing petition of spousal relief
and collection cases.
Sec. 425. Application of Federal rules of evidence.
PART 2—UNITED STATES TAX COURT ADMINISTRATION
Sec. 431. Judicial conduct and disability procedures.
Sec. 432. Administration, judicial conference, and fees.
PART 3—CLARIFICATION RELATING TO UNITED STATES TAX COURT
Sec. 441. Clarification relating to United States Tax Court.
TITLE V—TRADE-RELATED PROVISIONS
Sec. 501. Modification of effective date of provisions relating to tariff classification of recreational performance outerwear.
Sec. 502. Agreement by Asia-Pacific Economic Cooperation members to reduce
rates of duty on certain environmental goods.
TITLE VI—BUDGETARY EFFECTS
Sec. 601. Budgetary effects.

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7

2

TITLE I—EXTENDERS
Subtitle A—Permanent Extensions

3

PART 1—TAX RELIEF FOR FAMILIES AND

4

INDIVIDUALS

5SEC. 101. ENHANCED CHILD TAX CREDIT MADE PERMA-

1

6

NENT.

7

(a) IN GENERAL.—Section 24(d)(1)(B)(i) is amend-

8 ed by striking ‘‘$10,000’’ and inserting ‘‘$3,000’’.
9(b) CONFORMING AMENDMENT.—Section 24(d) is

10 amended by striking paragraphs (3) and (4).
11(c) EFFECTIVE DATE.—The amendments made by

12 this section shall apply to taxable years beginning after
13 the date of the enactment of this Act.
14

SEC. 102. ENHANCED AMERICAN OPPORTUNITY TAX CRED-

15
16

IT MADE PERMANENT.

(a) IN GENERAL.—Section 25A(i) is amended by

17 striking ‘‘and before 2018’’.
18(b)

TREATMENTOF

POSSESSIONS.—Section

19 1004(c)(1) of division B of the American Recovery and
20 Reinvestment Tax Act of 2009 by striking ‘‘and before
21 2018’’ each place it appears.
22(c) EFFECTIVE DATE.—The amendments made by

23 this section shall apply to taxable years beginning after
24 the date of the enactment of this Act.

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H.L.C.

8
1

SEC. 103. ENHANCED EARNED INCOME TAX CREDIT MADE

2

PERMANENT.

3(a) INCREASE IN CREDIT PERCENTAGE FOR 3 OR

4 MORE QUALIFYING CHILDREN MADE PERMANENT.—Sec5 tion 32(b)(1) is amended to read as follows:6‘‘(1) PERCENTAGES.—The credit percentage

7

and the phaseout percentage shall be determined as

8

follows:‘‘In the case ofan eligible individual with:

The credit
percentage is:

1 qualifying child ........................................
2 qualifying children ...................................
3 or more qualifying children .....................
No qualifying children ................................

34
40
45
7.65

9

The phaseout
percentage is:
15.98
21.06
21.06
7.65’’.

(b) REDUCTION OF MARRIAGE PENALTY MADE PER-

10

MANENT.—

11

(1)

12

IN

GENERAL.—Section

32(b)(2)(B)isamended to read as follows:

13‘‘(B) JOINT RETURNS.—

14‘‘(i) IN GENERAL.—In the case of a15

joint return filed by an eligible individual

16

and such individual’s spouse, the phaseout

17

amount determined under subparagraph

18(A) shall be increased by $5,000.

19‘‘(ii) INFLATIONADJUSTMENT.—In20

the case of any taxable year beginning

21

after 2015, the $5,000 amount in clause

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91(i) shall be increased by an amount equal

2

to—

3

‘‘(I) such dollar amount, multi-

4

plied by5‘‘(II) the cost of living adjust-6ment determined under section 1(f)(3)7

for the calendar year in which the tax-

8

able year begins determined by sub-9

stituting ‘calendar year 2008’ for ‘cal-

10

endar year 1992’ in subparagraph (B)11thereof.

12‘‘(iii) ROUNDING.—Subparagraph (A)13of subsection (j)(2) shall apply after taking

14

into account any increase under clause

15(ii).’’.

16(c) CONFORMING AMENDMENT.—Section 32(b) is

17 amended by striking paragraph (3).
18(d) EFFECTIVE DATE.—The amendments made by

19 this section shall apply to taxable years beginning after
20 December 31, 2015.
21

SEC. 104. EXTENSION AND MODIFICATION OF DEDUCTION

22

FOR CERTAIN EXPENSES OF ELEMENTARY

23

AND SECONDARY SCHOOL TEACHERS.

24

(a)

DEDUCTIONMADE

PERMANENT.—Section

25 62(a)(2)(D) is amended by striking ‘‘In the case of taxable

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10
1 years beginning during 2002, 2003, 2004, 2005, 2006,
2 2007, 2008, 2009, 2010, 2011, 2012, 2013, or 2014, the3 deductions’’ and inserting ‘‘The deductions’’.
4(b) INFLATION ADJUSTMENT.—Section 62(d) is

5 amended by adding at the end the following new para6 graph:7‘‘(3) INFLATION ADJUSTMENT.—In the case of8

any taxable year beginning after 2015, the $250

9amount in subsection (a)(2)(D) shall be increased by10

an amount equal to—

11‘‘(A) such dollar amount, multiplied by

12‘‘(B) the cost-of-living adjustment deter-

13

mined under section 1(f)(3) for the calendar

14

year in which the taxable year begins, deter-

15

mined by substituting ‘calendar year 2014’ for16‘calendar year 1992’ in subparagraph (B)17thereof.

18

Any increase determined under the preceding sen-19

tence shall be rounded to the nearest multiple of20$50.’’.

21(c) PROFESSIONAL DEVELOPMENT EXPENSES.—Sec-

22 tion 62(a)(2)(D) is amended—23(1) by striking ‘‘educator in connection’’ and all

24

that follows and inserting ‘‘educator—’’, and25(2) by inserting at the end the following:

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111‘‘(i) by reason of the participation of2

the educator in professional development

3

courses related to the curriculum in which4

the educator provides instruction or to the5students for which the educator provides

6

instruction, and7‘‘(ii) in connection with books, sup-8plies (other than nonathletic supplies for9courses of instruction in health or physical10

education), computer equipment (including

11

related software and services) and other12

equipment, and supplementary materials

13

used by the eligible educator in the class-14

room.’’.

15(d) EFFECTIVE DATES.—

16(1) EXTENSION.—The amendment made by17

subsection (a) shall apply to taxable years beginning

18

after December 31, 2014.

19(2) MODIFICATIONS.—The amendments made20

by subsections (b) and (c) shall apply to taxable

21

years beginning after December 31, 2015.

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12
1

SEC. 105. EXTENSION OF PARITY FOR EXCLUSION FROM IN-

2

COME

3

TRANSIT AND PARKING BENEFITS.

4FOR

EMPLOYER-PROVIDED

MASS(a) MASS TRANSIT AND PARKING PARITY.—Section

5 132(f)(2) is amended—
6(1) by striking ‘‘$100’’ in subparagraph (A)7and inserting ‘‘$175’’, and

8(2) by striking the last sentence.

9(b) EFFECTIVE DATE.—The amendments made by

10 this section shall apply to months after December 31,
11 2014.
12

SEC. 106. EXTENSION OF DEDUCTION OF STATE AND LOCAL

13

GENERAL SALES TAXES.

14(a) IN GENERAL.—Section 164(b)(5) is amended by

15 striking subparagraph (I).
16(b) EFFECTIVE DATE.—The amendment made by

17 this section shall apply to taxable years beginning after
18 December 31, 2014.
19

PART 2—INCENTIVES FOR CHARITABLE GIVING

20

SEC. 111. EXTENSION AND MODIFICATION OF SPECIAL

21

RULE

22

GAIN REAL PROPERTY MADE FOR CONSERVA-

23

TION PURPOSES.

24

CONTRIBUTIONSOFCAPITAL(a) MADE PERMANENT.—

25
26

FOR

(1)

INDIVIDUALS.—Section

170(b)(1)(E)isamended by striking clause (vi).

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13
1(2) CORPORATIONS.—Section 170(b)(2)(B) is

2

amended by striking clause (iii).

3(b) CONTRIBUTIONS OF CAPITAL GAIN REAL PROP-

4

ERTY MADE FOR CONSERVATION PURPOSES BY NATIVE

5 CORPORATIONS.—
6(1) IN GENERAL.—Section 170(b)(2) is amend-7

ed by redesignating subparagraph (C) as subpara-

8graph (D), and by inserting after subparagraph (B)9the following new subparagraph:

10

‘‘(C)

11

TRIBUTIONS12TIONS.—QUALIFIEDBY

CONSERVATIONCERTAIN

NATIVECON-

CORPORA-13‘‘(i) IN GENERAL.—Any qualified con-14

servation contribution (as defined in sub-15

section (h)(1)) which—16‘‘(I) is made by a Native Cor-17

poration, and18‘‘(II) is a contribution of prop-

19

erty which was land conveyed under20

the Alaska Native Claims Settlement

21

Act,

22

shall be allowed to the extent that the ag-

23

gregate amount of such contributions does24

not exceed the excess of the taxpayer’s tax-

25

able income over the amount of charitable

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H.L.C.

14
1

contributions allowable under subpara-

2graph (A).

3‘‘(ii) CARRYOVER.—If the aggregate

4amount of contributions described in clause

5(i) exceeds the limitation of clause (i), such6

excess shall be treated (in a manner con-7

sistent with the rules of subsection (d)(2))

8

as a charitable contribution to which clause

9(i) applies in each of the 15 succeeding10

taxable years in order of time.

11‘‘(iii)

NATIVECORPORATION.—For12

purposes of this subparagraph, the term

13

‘Native Corporation’ has the meaning

14

given such term by section 3(m) of the15

Alaska Native Claims Settlement Act.’’.

16(2) CONFORMING AMENDMENTS.—

17(A) Section 170(b)(2)(A) is amended by18

striking ‘‘subparagraph (B) applies’’ and insert-

19

ing ‘‘subparagraph (B) or (C) applies’’.

20(B) Section 170(b)(2)(B)(ii) is amended by21

striking ‘‘15 succeeding years’’ and inserting

22‘‘15 succeeding taxable years’’.

23(3) VALID

EXISTING

RIGHTSPRESERVED.—

24

Nothing in this subsection (or any amendment made25

by this subsection) shall be construed to modify the

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H.L.C.

15
1

existing property rights validly conveyed to Native2

Corporations (within the meaning of section 3(m) of3

the Alaska Native Claims Settlement Act) under4

such Act.

5(c) EFFECTIVE DATES.—

6(1) EXTENSION.—The amendments made by7

subsection (a) shall apply to contributions made in

8

taxable years beginning after December 31, 2014.

9(2) MODIFICATION.—The amendments made by

10

subsection (b) shall apply to contributions made in

11

taxable years beginning after December 31, 2015.

12

SEC. 112. EXTENSION OF TAX-FREE DISTRIBUTIONS FROM13

INDIVIDUAL RETIREMENT PLANS FOR CHARI-

14

TABLE PURPOSES.

15(a) IN GENERAL.—Section 408(d)(8) is amended by

16 striking subparagraph (F).
17(b) EFFECTIVE DATE.—The amendment made by

18 this section shall apply to distributions made in taxable
19 years beginning after December 31, 2014.
20

SEC. 113. EXTENSION AND MODIFICATION OF CHARITABLE

21

DEDUCTION FOR CONTRIBUTIONS OF FOOD

22

INVENTORY.

23(a) PERMANENT EXTENSION.—Section 170(e)(3)(C)

24 is amended by striking clause (iv).

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H.L.C.

16
1(b)

MODIFICATIONS.—Section

170(e)(3)(C),as

2 amended by subsection (a), is amended by striking clause
3 (ii), by redesignating clause (iii) as clause (vi), and by in4 serting after clause (i) the following new clauses:
5‘‘(ii)

LIMITATION.—Theaggregate

6

amount of such contributions for any tax-

7

able year which may be taken into account8

under this section shall not exceed—9‘‘(I) in the case of any taxpayer

10other than a C corporation, 15 per-11

cent of the taxpayer’s aggregate net

12

income for such taxable year from all

13

trades or businesses from which such

14

contributions were made for such

15

year, computed without regard to this16

section, and17‘‘(II) in the case of a C corpora-

18

tion, 15 percent of taxable income (as19defined in subsection (b)(2)(D)).

20‘‘(iii) RULES

21

RELATEDTO

LIMITA-

TION.—

22‘‘(I) CARRYOVER.—If such aggre-

23

gate amount exceeds the limitation

24

imposed under clause (ii), such excess

25

shall be treated (in a manner con-

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H.L.C.

171

sistent with the rules of subsection2(d)) as a charitable contribution de-3

scribed in clause (i) in each of the 54

succeeding taxable years in order of

5

time.

6

‘‘(II) COORDINATION WITH OVER-

7

ALL CORPORATE LIMITATION.—In the8case of any charitable contribution

9

which is allowable after the applica-

10tion of clause (ii)(II), subsection

11(b)(2)(A) shall not apply to such con-12

tribution, but the limitation imposed13

by such subsection shall be reduced

14(but not below zero) by the aggregate

15

amount of such contributions. For

16

purposes of subsection (b)(2)(B), such17

contributions shall be treated as al-18

lowable under subsection (b)(2)(A).

19‘‘(iv) DETERMINATION OF BASIS FOR

20

CERTAIN TAXPAYERS.—If a taxpayer—

21‘‘(I) does not account for inven-22

tories under section 471, and23‘‘(II) is not required to capitalize

24

indirect costs under section 263A,

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H.L.C.

18
1

the taxpayer may elect, solely for purposes2

of subparagraph (B), to treat the basis of3

any apparently wholesome food as being

4

equal to 25 percent of the fair market

5value of such food.

6‘‘(v) DETERMINATION OF FAIR MAR-7

KET VALUE.—In the case of any such con-8

tribution of apparently wholesome food9

which cannot or will not be sold solely by

10reason of internal standards of the tax-

11

payer, lack of market, or similar cir-

12

cumstances, or by reason of being pro-13

duced by the taxpayer exclusively for the

14

purposes of transferring the food to an or-

15

ganization described in subparagraph (A),16

the fair market value of such contribution

17

shall be determined—

18‘‘(I) without regard to such inter-19

nal standards, such lack of market,

20such circumstances, or such exclusive

21

purpose, and22‘‘(II) by taking into account the23

price at which the same or substan-24

tially the same food items (as to both

25

type and quality) are sold by the tax-

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H.L.C.

19
1

payer at the time of the contribution

2(or, if not so sold at such time, in the3

recent past).’’4(c) EFFECTIVE DATES.—

5(1) EXTENSION.—The amendment made by6

subsection (a) shall apply to contributions made7

after December 31, 2014.

8(2) MODIFICATIONS.—The amendments made9

by subsection (b) shall apply to taxable years begin-

10

ning after December 31, 2015.

11

SEC. 114. EXTENSION OF MODIFICATION OF TAX TREAT-

12

MENT OF CERTAIN PAYMENTS TO CONTROL-

13

LING EXEMPT ORGANIZATIONS.

14(a) IN GENERAL.—Section 512(b)(13)(E) is amend-

15 ed by striking clause (iv).
16(b) EFFECTIVE DATE.—The amendment made by

17 this section shall apply to payments received or accrued
18 after December 31, 2014.
19

SEC. 115. EXTENSION OF BASIS ADJUSTMENT TO STOCK OF

20

S CORPORATIONS MAKING CHARITABLE CON-

21

TRIBUTIONS OF PROPERTY.

22(a) IN GENERAL.—Section 1367(a)(2) is amended by

23 striking the last sentence.

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H.L.C.

201(b) EFFECTIVE DATE.—The amendment made by

2 this section shall apply to contributions made in taxable
3 years beginning after December 31, 2014.
4PART 3—INCENTIVES FOR GROWTH, JOBS,5INVESTMENT, AND INNOVATION

6

SEC. 121. EXTENSION AND MODIFICATION OF RESEARCH

7

CREDIT.

8(a) MADE PERMANENT.—

9(1) IN GENERAL.—Section 41 is amended by10

striking subsection (h).

11

(2)

CONFORMINGAMENDMENT.—Section

12

45C(b)(1) is amended by striking subparagraph (D).

13(b) CREDIT ALLOWED AGAINST ALTERNATIVE MIN-

14

IMUM TAX IN CASE OF ELIGIBLE SMALL BUSINESS.—

15 Section 38(c)(4)(B) is amended by redesignating clauses
16 (ii) through (ix) as clauses (iii) through (x), respectively,
17 and by inserting after clause (i) the following new clause:
18‘‘(ii) the credit determined under sec-

19

tion 41 for the taxable year with respect to20

an eligible small business (as defined in

21paragraph (5)(C), after application of rules

22

similar to the rules of paragraph (5)(D)),’’.

23(c) TREATMENT OF RESEARCH CREDIT FOR CER-

24

TAIN STARTUP COMPANIES.—

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H.L.C.

21
1(1) IN GENERAL.—Section 41, as amended by2

subsection (a), is amended by adding at the end the3following new subsection:4‘‘(h) TREATMENT OF CREDIT FOR QUALIFIED SMALL

5 BUSINESSES.—
6‘‘(1) IN GENERAL.—At the election of a quali-

7

fied small business for any taxable year, section

83111(f) shall apply to the payroll tax credit portion

9of the credit otherwise determined under subsection

10(a) for the taxable year and such portion shall not

11

be treated (other than for purposes of section 280C)

12

as a credit determined under subsection (a).

13‘‘(2) PAYROLLTAXCREDITPORTION.—For

14

purposes of this subsection, the payroll tax credit

15

portion of the credit determined under subsection

16(a) with respect to any qualified small business for17

any taxable year is the least of—18‘‘(A) the amount specified in the election

19

made under this subsection,

20‘‘(B) the credit determined under sub-21

section (a) for the taxable year (determined be-22

fore the application of this subsection), or

23‘‘(C) in the case of a qualified small busi-

24

ness other than a partnership or S corporation,25

the amount of the business credit carryforward

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H.L.C.

221

under section 39 carried from the taxable year2

(determined before the application of this sub-3

section to the taxable year).

4‘‘(3) QUALIFIED SMALL BUSINESS.—For pur-5

poses of this subsection—

6‘‘(A) IN GENERAL.—The term ‘qualified

7

small business’ means, with respect to any tax-

8

able year—

9‘‘(i) a corporation or partnership, if—

10‘‘(I) the gross receipts (as deter-

11

mined under the rules of section

12448(c)(3), without regard to subpara-

13

graph (A) thereof) of such entity for

14

the

15

$5,000,000, andtaxable

year

is

less

than

16

‘‘(II) such entity did not have17

gross receipts (as so determined) for18

any taxable year preceding the 5-tax-

19

able-year period ending with such tax-

20

able year, and21‘‘(ii) any person (other than a cor-22

poration or partnership) who meets the re-23

quirements of subclauses (I) and (II) of

24

clause (i), determined—

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H.L.C.

231‘‘(I) by substituting ‘person’ for2‘entity’ each place it appears, and3‘‘(II) by only taking into account4

the aggregate gross receipts received

5

by such person in carrying on all

6

trades or businesses of such person.

7‘‘(B) LIMITATION.—Such term shall not

8

include an organization which is exempt from9taxation under section 501.

10‘‘(4) ELECTION.—

11‘‘(A) IN

12

GENERAL.—Anyelection under

this subsection for any taxable year—

13‘‘(i) shall specify the amount of the14

credit to which such election applies,

15‘‘(ii) shall be made on or before the16

due date (including extensions) of—17‘‘(I) in the case of a qualified

18

small business which is a partnership,19

the return required to be filed under20

section 6031,

21‘‘(II) in the case of a qualified

22

small business which is an S corpora-23

tion, the return required to be filed

24

under section 6037, and

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H.L.C.

24
1‘‘(III) in the case of any other2

qualified small business, the return of3

tax for the taxable year, and4‘‘(iii) may be revoked only with the5consent of the Secretary.

6‘‘(B) LIMITATIONS.—

7‘‘(i) AMOUNT.—The amount specified

8

in any election made under this subsection

9

shall not exceed $250,000.

10‘‘(ii) NUMBER OF TAXABLE YEARS.—

11

A person may not make an election under

12

this subsection if such person (or any other13

person treated as a single taxpayer with

14

such person under paragraph (5)(A)) has

15

made an election under this subsection for

16

5 or more preceding taxable years.

17‘‘(C) SPECIAL RULE FOR PARTNERSHIPS

18

AND S CORPORATIONS.—In the case of a quali-

19

fied small business which is a partnership or S

20

corporation, the election made under this sub-21

section shall be made at the entity level.

22‘‘(5) AGGREGATION RULES.—

23‘‘(A) IN GENERAL.—Except as provided in24

subparagraph (B), all persons or entities treat-25

ed as a single taxpayer under subsection (f)(1)

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H.L.C.

25
1

shall be treated as a single taxpayer for pur-2

poses of this subsection.

3‘‘(B) SPECIAL RULES.—For purposes of4

this subsection and section 3111(f)—5‘‘(i) each of the persons treated as a6single taxpayer under subparagraph (A)7may separately make the election under8

paragraph (1) for any taxable year, and9‘‘(ii) the $250,000 amount under10

paragraph (4)(B)(i) shall be allocated11

among all persons treated as a single tax-

12

payer under subparagraph (A) in the same13

manner as under subparagraph (A)(ii) or

14(B)(ii) of subsection (f)(1), whichever is

15

applicable.

16‘‘(6) REGULATIONS.—The Secretary shall pre-17

scribe such regulations as may be necessary to carry18

out the purposes of this subsection, including—19‘‘(A) regulations to prevent the avoidance

20of the purposes of the limitations and aggrega-

21tion rules under this subsection through the use

22

of successor companies or other means,

23‘‘(B) regulations to minimize compliance24

and record-keeping burdens under this sub-25

section, and

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H.L.C.

26
1‘‘(C) regulations for recapturing the ben-2efit of credits determined under section 3111(f)3

in cases where there is a subsequent adjustment4

to the payroll tax credit portion of the credit

5

determined under subsection (a), including re-6quiring amended income tax returns in the7cases where there is such an adjustment.’’.

8(2) CREDIT ALLOWED AGAINST FICA TAXES.—

9

Section 3111 is amended by adding at the end the10following new subsection:

11‘‘(f) CREDIT FOR RESEARCH EXPENDITURES OF

12 QUALIFIED SMALL BUSINESSES.—
13‘‘(1) IN GENERAL.—In the case of a taxpayer

14

who has made an election under section 41(h) for a

15

taxable year, there shall be allowed as a credit

16

against the tax imposed by subsection (a) for the17

first calendar quarter which begins after the date on

18

which the taxpayer files the return specified in sec-

19

tion 41(h)(4)(A)(ii) an amount equal to the payroll

20

tax

21

41(h)(2).

creditportiondeterminedundersection22‘‘(2) LIMITATION.—The credit allowed by para-

23

graph (1) shall not exceed the tax imposed by sub-24

section (a) for any calendar quarter on the wages

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H.L.C.

27
1

paid with respect to the employment of all individ-2

uals in the employ of the employer.

3‘‘(3) CARRYOVER OF UNUSED CREDIT.—If the4amount of the credit under paragraph (1) exceeds

5

the limitation of paragraph (2) for any calendar

6

quarter, such excess shall be carried to the suc-7

ceeding calendar quarter and allowed as a credit

8

under paragraph (1) for such quarter.

9‘‘(4) DEDUCTIONALLOWEDFORCREDITED

10AMOUNTS.—The credit allowed under paragraph (1)11shall not be taken into account for purposes of de-12

termining the amount of any deduction allowed

13

under chapter 1 for taxes imposed under subsection

14(a).’’.

15(d) EFFECTIVE DATES.—

16(1) EXTENSION.—The amendments made by17

subsection (a) shall apply to shall apply to amounts

18

paid or incurred after December 31, 2014.

19(2) CREDIT ALLOWED AGAINST ALTERNATIVE20MINIMUM TAX IN CASE OF ELIGIBLE SMALL BUSI-

21

NESS.—The

22

shall apply to credits determined for taxable years

23

beginning after December 31, 2015.

24
25

amendments made by subsection (b)(3) TREATMENT OF RESEARCH CREDIT FOR
CERTAIN STARTUP COMPANIES.—The

amendments

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H.L.C.

28
1

made by subsection (c) shall apply to taxable years

2

beginning after December 31, 2015.

3

SEC. 122. EXTENSION AND MODIFICATION OF EMPLOYER

4WAGE CREDIT FOR EMPLOYEES WHO ARE AC-

5

TIVE DUTY MEMBERS OF THE UNIFORMED

6

SERVICES.

7(a) IN GENERAL.—Section 45P is amended by strik-

8 ing subsection (f).
9(b) APPLICABILITY TO ALL EMPLOYERS.—

10(1) IN GENERAL.—Section 45P(a) is amended

11

by striking ‘‘, in the case of an eligible small busi-

12

ness employer’’.

13

(2)

14

CONFORMINGAMENDMENT.—Section

45P(b)(3) is amended to read as follows:15‘‘(3) CONTROLLED GROUPS.—All persons treat-16

ed as a single employer under subsection (b), (c),17(m), or (o) of section 414 shall be treated as a single

18

employer.’’.

19(c) EFFECTIVE DATE.—

20(1) EXTENSION.—The amendment made by21

subsection (a) shall apply to payments made after

22

December 31, 2014.

23(2) MODIFICATION.—The amendments made by24

subsection (b) shall apply to taxable years beginning

25

after December 31, 2015.

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H.L.C.

29
1

SEC. 123. EXTENSION OF 15-YEAR STRAIGHT-LINE COST RE-

2

COVERY FOR QUALIFIED LEASEHOLD IM-

3

PROVEMENTS,

4BUILDINGS5QUALIFIED RETAIL IMPROVEMENTS.

6(a) QUALIFIED LEASEHOLD IMPROVEMENT PROP-

7

ERTY AND QUALIFIED RESTAURANT PROPERTY.—Clauses

QUALIFIEDAND

RESTAURANT

IMPROVEMENTS,

AND

8 (iv) and (v) of section 168(e)(3)(E) are each amended by
9 striking ‘‘placed in service before January 1, 2015’’.
10(b) QUALIFIED RETAIL IMPROVEMENT PROPERTY.—

11 Section 168(e)(3)(E)(ix) is amended by striking ‘‘placed
12 in service after December 31, 2008, and before January
13 1, 2015’’.
14(c) EFFECTIVE DATE.—The amendments made by

15 this section shall apply to property placed in service after
16 December 31, 2014.
17

SEC. 124. EXTENSION AND MODIFICATION OF INCREASED18

EXPENSING LIMITATIONS AND TREATMENT

19

OF CERTAIN REAL PROPERTY AS SECTION

20

179 PROPERTY.

21(a) MADE PERMANENT.—

22(1) DOLLAR LIMITATION.—Section 179(b)(1) is

23

amended by striking ‘‘shall not exceed—’’ and all

24

that

25

$500,000.’’.

follows

andinserting‘‘shallnotexceed

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H.L.C.

30
1(2)

REDUCTION

LIMITATION.—SectionIN2

179(b)(2) is amended by striking ‘‘exceeds—’’ and3

all that follows and inserting ‘‘exceeds $2,000,000.’’.

4(b)

COMPUTERSOFTWARE.—Section

5 179(d)(1)(A)(ii) is amended by striking ‘‘, to which section
6 167 applies, and which is placed in service in a taxable
7 year beginning after 2002 and before 2015’’ and inserting
8 ‘‘and to which section 167 applies’’.
9(c) SPECIAL RULES FOR TREATMENT OF QUALIFIED

10 REAL PROPERTY.—
1112(1) EXTENSION FOR 2015.—Section 179(f) is
amended—

13(A) by striking ‘‘2015’’ in paragraph (1)14and inserting ‘‘2016’’,

15(B) by striking ‘‘2014’’ each place it ap-

16

pears in paragraph (4) and inserting ‘‘2015’’,

17

and

18

(C) by striking ‘‘AND 2013’’ in the heading

19of paragraph (4)(C) and inserting ‘‘2013, AND

20

2014’’.

21(2) MADE

22

PERMANENT.—Section

179(f), as

amended by paragraph (1), is amended—

23(A) by striking ‘‘beginning after 2009 and24

before 2016’’ in paragraph (1), and25(B) by striking paragraphs (3) and (4).

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H.L.C.

311(d) ELECTION.—Section 179(c)(2) is amended—23(1) by striking ‘‘may not be revoked’’ and allthat follows through ‘‘and before 2015’’, and

4(2) by striking ‘‘IRREVOCABLE’’ in the heading

5

thereof.

6(e) AIR CONDITIONING AND HEATING UNITS.—Sec-

7 tion 179(d)(1) is amended by striking ‘‘and shall not in8 clude air conditioning or heating units’’.
9(f) INFLATION ADJUSTMENT.—Section 179(b) is

10 amended by adding at the end the following new para11 graph:12‘‘(6) INFLATION ADJUSTMENT.—

13‘‘(A) IN GENERAL.—In the case of any

14

taxable year beginning after 2015, the dollar

15

amounts in paragraphs (1) and (2) shall each16

be increased by an amount equal to—17‘‘(i) such dollar amount, multiplied by

18‘‘(ii) the cost-of-living adjustment de-19

termined under section 1(f)(3) for the cal-

20

endar year in which the taxable year be-

21

gins, determined by substituting ‘calendar

22

year 2014’ for ‘calendar year 1992’ in sub-23

paragraph (B) thereof.

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H.L.C.

32
1‘‘(B) ROUNDING.—The amount of any in-2crease under subparagraph (A) shall be round-3

ed to the nearest multiple of $10,000.’’.

4(g) EFFECTIVE DATES.—

5(1) EXTENSION.—Except as provided in para-

6graph (2), the amendments made by this section

7

shall apply to taxable years beginning after Decem-8

ber 31, 2014.

9(2) MODIFICATIONS.—The amendments made10

by subsections (c)(2) and (e) shall apply to taxable

11

years beginning after December 31, 2015.

12

SEC. 125. EXTENSION OF TREATMENT OF CERTAIN DIVI-

13

DENDS OF REGULATED INVESTMENT COMPA-

14

NIES.

15

(a) IN GENERAL.—Section 871(k) is amended by

16 striking clause (v) of paragraph (1)(C) and clause (v) of
17 paragraph (2)(C).
18(b) EFFECTIVE DATE.—The amendments made by

19 this section shall apply to taxable years beginning after
20 December 31, 2014.
21

SEC. 126. EXTENSION OF EXCLUSION OF 100 PERCENT OF

22

GAIN ON CERTAIN SMALL BUSINESS STOCK.

23(a) IN GENERAL.—Section 1202(a)(4) is amended—24(1) by striking ‘‘and before January 1, 2015’’,

25

and

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H.L.C.

33
1(2) by striking ‘‘, 2011, 2012, 2013, AND 2014’’ in2

the heading thereof and inserting ‘‘AND THERE-

3

AFTER’’.

4(b) EFFECTIVE DATE.—The amendments made by

5 this section shall apply to stock acquired after December
6 31, 2014.
7

SEC. 127. EXTENSION OF REDUCTION IN S-CORPORATION

8RECOGNITION PERIOD FOR BUILT-IN GAINS

9

TAX.

10

(a) IN GENERAL.—Section 1374(d)(7) is amended to

11 read as follows:12‘‘(7) RECOGNITION PERIOD.—

13‘‘(A) IN GENERAL.—The term ‘recognition

14

period’ means the 5-year period beginning with15

the 1st day of the 1st taxable year for which16

the corporation was an S corporation. For pur-17

poses of applying this section to any amount in-

18

cludible in income by reason of distributions to19

shareholders pursuant to section 593(e), the20preceding sentence shall be applied without re-21

gard to the phrase ‘5-year’.

22‘‘(B) INSTALLMENT SALES.—If an S cor-23

poration sells an asset and reports the income

24from the sale using the installment method

25

under section 453, the treatment of all pay-

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H.L.C.

34
1

ments received shall be governed by the provi-2

sions of this paragraph applicable to the taxable

3

year in which such sale was made.’’.

4(b) EFFECTIVE DATE.—The amendments made by

5 this section shall apply to taxable years beginning after
6 December 31, 2014.
7

SEC. 128. EXTENSION OF SUBPART F EXCEPTION FOR AC-

8

TIVE FINANCING INCOME.

9(a) INSURANCE BUSINESSES.—Section 953(e) is

10 amended by striking paragraph (10) and by redesignating
11 paragraph (11) as paragraph (10).
1213(b) BANKING, FINANCING,
NESSES.—Section

OR

SIMILAR BUSI-

954(h) is amended by striking para-

14 graph (9).
15(c) EFFECTIVE DATE.—The amendments made by

16 this section shall apply to taxable years of foreign corpora17 tions beginning after December 31, 2014, and to taxable
18 years of United States shareholders with or within which
19 any such taxable year of such foreign corporation ends.

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H.L.C.

35
1

PART 4—INCENTIVES FOR REAL ESTATE2

INVESTMENT

3

SEC. 131. EXTENSION OF MINIMUM LOW-INCOME HOUSING

4TAX CREDIT RATE FOR NON-FEDERALLY SUB-

5SIDIZED BUILDINGS.

6(a) IN GENERAL.—Section 42(b)(2) is amended by

7 striking ‘‘with respect to housing credit dollar amount al8 locations made before January 1, 2015’’.
9(b) CLERICAL AMENDMENT.—The heading for sec-

10 tion 42(b)(2) is amended by striking ‘‘TEMPORARY MIN11

IMUM’’ and inserting ‘‘MINIMUM’’.

12(c) EFFECTIVE DATES.—The amendments made by

13 this section shall take effect on January 1, 2015.
14

SEC. 132. EXTENSION OF MILITARY HOUSING ALLOWANCE

15EXCLUSION FOR DETERMINING WHETHER A

16

TENANT IN CERTAIN COUNTIES IS LOW-IN-

17

COME.

18

(a) IN GENERAL.—Section 3005(b) of the Housing

19 Assistance Tax Act of 2008 is amended by striking ‘‘and
20 before January 1, 2015’’ each place it appears.
21(b) EFFECTIVE DATE.—The amendments made by

22 this section shall take effect as if included in the enact23 ment of section 3005 of the Housing Assistance Tax Act
24 of 2008.

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H.L.C.

36
1

SEC. 133. EXTENSION OF RIC QUALIFIED INVESTMENT EN-

2

TITY TREATMENT UNDER FIRPTA.

3(a) IN GENERAL.—Section 897(h)(4)(A) is amend-

4 ed—
5

(1) by striking clause (ii), and

6(2) by striking all that precedes ‘‘regulated in-7

vestment company which’’ and inserting the fol-8

lowing:9‘‘(A) QUALIFIED INVESTMENT ENTITY.—10

The term ‘qualified investment entity’ means—11‘‘(i) any real estate investment trust,

12

and

13

‘‘(ii) any’’.

14(b) EFFECTIVE DATE.—

15(1) IN GENERAL.—The amendments made by16

this section shall take effect on January 1, 2015.

17

Notwithstanding

18

amendments shall not apply with respect to the19

withholding requirement under section 1445 of the

20

Internal Revenue Code of 1986 for any payment

21

made before the date of the enactment of this Act.

22(2) AMOUNTS WITHHELD ON OR BEFORE DATE23OF ENACTMENT.—In the case of a regulated invest-

24

ment company—

theprecedingsentence,such

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H.L.C.

37
1(A) which makes a distribution after De-

2

cember 31, 2014, and before the date of the en-3

actment of this Act, and

4(B) which would (but for the second sen-5

tence of paragraph (1)) have been required to6withhold with respect to such distribution under7

section 1445 of such Code,8

such investment company shall not be liable to any

9person to whom such distribution was made for any

10amount so withheld and paid over to the Secretary

11of the Treasury.

Subtitle B—Extensions Through
2019

12
13
14

SEC. 141. EXTENSION OF NEW MARKETS TAX CREDIT.

15(a) IN GENERAL.—Section 45D(f)(1)(G) is amended

16 by striking ‘‘for 2010, 2011, 2012, 2013, and 2014’’ and
17 inserting ‘‘for each of calendar years 2010 through 2019’’.
18(b) CARRYOVER OF UNUSED LIMITATION.—Section

19 45D(f)(3) is amended by striking ‘‘2019’’ and inserting
20 ‘‘2024’’.
21(c) EFFECTIVE DATE.—The amendments made by

22 this section shall apply to calendar years beginning after
23 December 31, 2014.

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H.L.C.

38
1

SEC. 142. EXTENSION AND MODIFICATION OF WORK OP-

2

PORTUNITY TAX CREDIT.

3(a) IN GENERAL.—Section 51(c)(4) is amended by

4 striking ‘‘December 31, 2014’’ and inserting ‘‘December
5 31, 2019’’.
67(b) CREDIT FOR HIRING LONG-TERM UNEMPLOYMENT RECIPIENTS.—

8(1) IN GENERAL.—Section 51(d)(1) is amended

9

by striking ‘‘or’’ at the end of subparagraph (H), by10

striking the period at the end of subparagraph (I)11and inserting ‘‘, or’’, and by adding at the end the12following new subparagraph:13‘‘(J) a qualified long-term unemployment

14

recipient.’’.

15(2) QUALIFIEDLONG-TERM

UNEMPLOYMENT16RECIPIENT.—Section 51(d) is amended by adding at

17

the end the following new paragraph:18‘‘(15) QUALIFIED LONG-TERM UNEMPLOYMENT

19RECIPIENT.—The20

ployment recipient’ means any individual who is cer-21

tified by the designated local agency as being in a22

period of unemployment which—23

term ‘qualified long-term unem-‘‘(A) is not less than 27 consecutive weeks,

24

and

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H.L.C.

391‘‘(B) includes a period in which the indi-2

vidual was receiving unemployment compensa-

3tion under State or Federal law.’’.

4(c) EFFECTIVE DATES.—

5(1) EXTENSION.—The amendment made by6

subsection (a) shall apply to individuals who begin

7

work for the employer after December 31, 2014.

8(2) MODIFICATION.—The amendments made by

9subsection (b) shall apply to individuals who begin

10

work for the employer after December 31, 2015.

11

SEC. 143. EXTENSION AND MODIFICATION OF BONUS DE-

12

PRECIATION.

13(a) EXTENDED FOR 2015.—

1415(1) IN GENERAL.—Section 168(k)(2) is amended—

16(A) by striking ‘‘January 1, 2016’’ in sub-17

paragraph (A)(iv) and inserting ‘‘January 1,

18

2017’’, and19(B) by striking ‘‘January 1, 2015’’ each

20

place it appears and inserting ‘‘January 1,

21

2016’’.

22(2) SPECIAL RULE FOR FEDERAL LONG-TERM

23

CONTRACTS.—Section

24

by striking ‘‘January 1, 2015 (January 1, 2016’’

25

and inserting ‘‘January 1, 2016 (January 1, 2017’’.

460(c)(6)(B)(ii) is amended

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H.L.C.

4012(3) EXTENSION OF ELECTION TO ACCELERATEAMT CREDIT IN LIEU OF BONUS DEPRECIATION.—

3

(A)

IN

GENERAL.—Section

4

168(k)(4)(D)(iii)(II) is amended by striking

5‘‘January 1, 2015’’ and inserting ‘‘January 1,

62016’’.

7(B) ROUND

5 EXTENSION PROPERTY.—

8

Section 168(k)(4) is amended by adding at the9end the following new subparagraph:10‘‘(L) SPECIAL RULES FOR ROUND 5 EX-

11

TENSION PROPERTY.—

12‘‘(i) IN

GENERAL.—In

the case of13

round 5 extension property, in applying

14

this paragraph to any taxpayer—

15‘‘(I) the limitation described in

16

subparagraph (B)(i) and the business

17

credit increase amount under sub-18

paragraph (E)(iii) thereof shall not

19

apply, and20‘‘(II)

thebonus

depreciation

21

amount, maximum amount, and max-

22

imum increase amount shall be com-23

puted separately from amounts com-24

puted with respect to eligible qualified

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H.L.C.

41
1

property which is not round 5 exten-

2sion property.

3‘‘(ii) ELECTION.—

4‘‘(I) A taxpayer who has an elec-

5tion in effect under this paragraph for

6round 4 extension property shall be7treated as having an election in effect8

for round 5 extension property unless9

the taxpayer elects to not have this10

paragraph apply to round 5 extension

11

property.

12‘‘(II) A taxpayer who does not13

have an election in effect under this14

paragraph for round 4 extension prop-

15

erty may elect to have this paragraph16

apply to round 5 extension property.

17‘‘(iii) ROUND

5

EXTENSION

PROP-

18

ERTY.—For

19

graph, the term ‘round 5 extension prop-

20

erty’ means property which is eligible

21

qualified property solely by reason of the22extension of the application of the special

23

allowance under paragraph (1) pursuant to

24

the

25

143(a)(1) of the Protecting Americans

purposes of this subpara-

amendments

made

by

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H.L.C.

42
1from Tax Hikes Act of 2015 (and the ap-

2

plication of such extension to this para-

3graph pursuant to the amendment made4

by section 143(a)(3) of such Act).’’.

5(4) CONFORMING AMENDMENTS.—

6(A) The heading for section 168(k) is

7amended by striking ‘‘JANUARY 1, 2015’’ and8

inserting ‘‘JANUARY 1, 2016’’.

9

(B)

The

headingforsection10

168(k)(2)(B)(ii) is amended by striking ‘‘PRE-11

JANUARY 1, 2015’’ and inserting ‘‘PRE-JANUARY

121, 2016’’.

13(5) EFFECTIVE DATE.—

14(A) IN GENERAL.—Except as provided in

15

subparagraph (B), the amendments made by16

this subsection shall apply to property placed in

17

service after December 31, 2014, in taxable

18

years ending after such date.

19

(B)

ELECTIONTOACCELERATE

AMT

20

CREDIT.—The amendments made by paragraph21(3) shall apply to taxable years ending after

22

December 31, 2014.

23(b) EXTENDED AND MODIFIED FOR 2016 THROUGH

24 2019.—

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H.L.C.

43
1

(1)

IN

GENERAL.—Section

168(k)(2),as

2amended by subsection (a), is amended to read as3

follows:

45‘‘(2) QUALIFIED PROPERTY.—For purposes ofthis subsection—

6‘‘(A) IN GENERAL.—The term ‘qualified

7

property’ means property—8‘‘(i)(I) to which this section applies

9which has a recovery period of 20 years or

10

less,

11

‘‘(II) which is computer software (as12defined in section 167(f)(1)(B)) for which

13

a deduction is allowable under section

14

167(a) without regard to this subsection,

15‘‘(III) which is water utility property,

16

or

17

‘‘(IV) which is qualified improvement

18

property,

19‘‘(ii) the original use of which com-20

mences with the taxpayer, and21‘‘(iii) which is placed in service by the22

taxpayer before January 1, 2020.

23‘‘(B) CERTAIN PROPERTY HAVING LONGER

24

PRODUCTION PERIODS TREATED AS QUALIFIED

25

PROPERTY.—

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H.L.C.

441‘‘(i) IN GENERAL.—The term ‘quali-

2

fied property’ includes any property if such3

property—4‘‘(I) meets the requirements of

5clauses (i) and (ii) of subparagraph

6

(A),

7

‘‘(II) is placed in service by the8taxpayer before January 1, 2021,

9‘‘(III) is acquired by the taxpayer

10(or acquired pursuant to a written

11

contract entered into) before January

12

1, 2020,

13‘‘(IV) has a recovery period of at

14

least 10 years or is transportation15

property,

16‘‘(V) is subject to section 263A,

17

and

18

‘‘(VI) meets the requirements of

19

clause (iii) of section 263A(f)(1)(B)

20(determined as if such clause also ap-

21

plies to property which has a long22

useful life (within the meaning of sec-

23

tion 263A(f))).

24‘‘(ii) ONLY

25

PRE-JANUARY

1,

2020

BASIS ELIGIBLE FOR ADDITIONAL ALLOW-

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H.L.C.

45
1

ANCE.—In2

qualified property solely by reason of3

clause (i), paragraph (1) shall apply only4

to the extent of the adjusted basis thereof

5

attributable to manufacture, construction,

6

or production before January 1, 2020.

the case of property which is

7‘‘(iii) TRANSPORTATION PROPERTY.—

8

For purposes of this subparagraph, the9term ‘transportation property’ means tan-

10gible personal property used in the trade11

or business of transporting persons or

12property.

13‘‘(iv)

14

GRAPH.—This

15

apply to any property which is described in

16

subparagraph (C).

17

‘‘(C)

18

APPLICATION

subparagraph

CERTAINSUBPARA-

OF

shall

AIRCRAFT.—The

not

term

‘qualified property’ includes property—

19‘‘(i) which meets the requirements of

20

subparagraph (A)(ii) and subclauses (II)21

and (III) of subparagraph (B)(i),

22‘‘(ii) which is an aircraft which is not

23

a transportation property (as defined in24

subparagraph (B)(iii)) other than for agri-

25

cultural or firefighting purposes,

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H.L.C.

46
1‘‘(iii) which is purchased and on which

2such purchaser, at the time of the contract3

for purchase, has made a nonrefundable

4

deposit of the lesser of—5‘‘(I) 10 percent of the cost, or

6‘‘(II) $100,000, and7‘‘(iv) which has—8‘‘(I) an estimated production pe-

9riod exceeding 4 months, and10‘‘(II) a cost exceeding $200,000.

11‘‘(D) EXCEPTION FOR ALTERNATIVE DE-

12

PRECIATION PROPERTY.—The13

property’ shall not include any property to14which the alternative depreciation system under15

subsection (g) applies, determined—

term ‘qualified

16‘‘(i) without regard to paragraph (7)17of subsection (g) (relating to election to18

have system apply), and19‘‘(ii)

after

applicationofsection20

280F(b) (relating to listed property with21

limited business use).

22‘‘(E) SPECIAL RULES.—

23

‘‘(i)

SELF-CONSTRUCTED

PROP-

24

ERTY.—In the case of a taxpayer manufac-

25

turing, constructing, or producing property

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H.L.C.

47
1

for the taxpayer’s own use, the require-2

ments of subclause (III) of subparagraph

3(B)(i) shall be treated as met if the tax-

4

payer begins manufacturing, constructing,5

or producing the property before January

6

1, 2020.

7‘‘(ii) SALE-LEASEBACKS.—For pur-8

poses of clause (iii) and subparagraph

9(A)(ii), if property is—

10‘‘(I) originally placed in service

11

by a person, and12‘‘(II) sold and leased back by

13such person within 3 months after the

14

date such property was originally15

placed in service,

16

such property shall be treated as originally17

placed in service not earlier than the date18

on which such property is used under the19leaseback referred to in subclause (II).

20‘‘(iii) SYNDICATION.—For purposes of21

subparagraph (A)(ii), if—22‘‘(I) property is originally placed23

in service by the lessor of such prop-

24

erty,

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H.L.C.

48
1‘‘(II) such property is sold by2such lessor or any subsequent pur-3

chaser within 3 months after the date4

such property was originally placed in

5

service (or, in the case of multiple

6

units of property subject to the same7

lease, within 3 months after the date8

the final unit is placed in service, so

9long as the period between the time10

the first unit is placed in service and11

the time the last unit is placed in

12

service does not exceed 12 months),

13

and

14

‘‘(III) the user of such property

15

after the last sale during such 3-16month period remains the same as17

when such property was originally18

placed in service,

19

such property shall be treated as originally20

placed in service not earlier than the date21

of such last sale.

22

‘‘(F)

23

COORDINATIONWITHSECTION

280F.—For purposes of section 280F—

24‘‘(i) AUTOMOBILES.—In the case of a25

passenger automobile (as defined in section

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H.L.C.

49
1

280F(d)(5)) which is qualified property,

2

the Secretary shall increase the limitation

3

under section 280F(a)(1)(A)(i) by $8,000.

4‘‘(ii) LISTED PROPERTY.—The deduc-5tion allowable under paragraph (1) shall be

6taken into account in computing any re-7

capture amount under section 280F(b)(2).

8‘‘(iii) PHASE DOWN.—In the case of a9passenger automobile placed in service by

10

the taxpayer after December 31, 2017,11

clause (i) shall be applied by substituting

12

for ‘$8,000’—13‘‘(I) in the case of an automobile

14

placed in service during 2018, $6,400,

15

and

16

‘‘(II) in the case of an automobile

17

placed in service during 2019, $4,800.

18‘‘(G) DEDUCTION ALLOWED IN COMPUTING19

MINIMUM TAX.—For20

alternative minimum taxable income under sec-

21

tion 55, the deduction under section 167 for

22

qualified property shall be determined without

23

regard to any adjustment under section 56.’’.

24(2) QUALIFIED

25

purposes of determining

IMPROVEMENTPROPERTY.—

Section 168(k)(3) is amended to read as follows:

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H.L.C.

5012‘‘(3) QUALIFIED IMPROVEMENT PROPERTY.—
For purposes of this subsection—

3‘‘(A) IN GENERAL.—The term ‘qualified

4

improvement property’ means any improvement5

to an interior portion of a building which is

6nonresidential real property if such improve-7

ment is placed in service after the date such8

building was first placed in service.

9‘‘(B) CERTAIN

IMPROVEMENTS NOT IN-

10

CLUDED.—Such term shall not include any im-

11

provement for which the expenditure is attrib-

12

utable to—13‘‘(i) the enlargement of the building,

14‘‘(ii) any elevator or escalator, or

15‘‘(iii) the internal structural frame-

16

work of the building.’’.

17(3) EXPANSION OF ELECTION TO ACCELERATE18

AMT CREDITS IN LIEU OF BONUS DEPRECIATION.—

19

Section 168(k)(4), as amended by subsection (a), is20

amended to read as follows:2122‘‘(4) ELECTION TO ACCELERATE AMT CREDITSIN LIEU OF BONUS DEPRECIATION.—

23‘‘(A) IN GENERAL.—If a corporation elects

24

to have this paragraph apply for any taxable

25

year—

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H.L.C.

511‘‘(i) paragraphs (1) and (2)(F) shall2

not apply to any qualified property placed3

in service during such taxable year,

4‘‘(ii) the applicable depreciation meth-5

od used under this section with respect to

6such property shall be the straight line7

method, and8‘‘(iii) the limitation imposed by section

953(c) for such taxable year shall be in-10

creased by the bonus depreciation amount11

which is determined for such taxable year

12

under subparagraph (B).

13‘‘(B) BONUS

14

DEPRECIATIONAMOUNT.—

For purposes of this paragraph—15‘‘(i) IN GENERAL.—The bonus depre-

16

ciation amount for any taxable year is an17amount equal to 20 percent of the excess

18(if any) of—

19‘‘(I) the aggregate amount of de-20

preciation which would be allowed

21

under this section for qualified prop-

22

erty placed in service by the taxpayer

23

during such taxable year if paragraph24(1) applied to all such property (and,25in the case of any such property which

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H.L.C.

521

is a passenger automobile (as defined2

in section 280F(d)(5)), if paragraph3(2)(F) applied to such automobile),

4

over

5

‘‘(II) the aggregate amount of

6

depreciation which would be allowed

7

under this section for qualified prop-8

erty placed in service by the taxpayer

9

during such taxable year if para-

10

graphs (1) and (2)(F) did not apply11

to any such property.

12

The aggregate amounts determined under13

subclauses (I) and (II) shall be determined

14

without regard to any election made under15

subparagraph (A) or subsection (b)(2)(D),16(b)(3)(D), or (g)(7).

17‘‘(ii) LIMITATION.—The bonus depre-

18

ciation amount for any taxable year shall19

not exceed the lesser of—20‘‘(I) 50 percent of the minimum

21

tax credit under section 53(b) for the

22

first taxable year ending after Decem-23

ber 31, 2015, or24‘‘(II) the minimum tax credit

25

under section 53(b) for such taxable

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H.L.C.

53
1

year determined by taking into ac-

2

count only the adjusted net minimum

3

tax for taxable years ending before

4

January 1, 2016 (determined by

5treating credits as allowed on a first-

6in, first-out basis).

7‘‘(iii) AGGREGATION RULE.—All cor-8

porations which are treated as a single em-

9ployer under section 52(a) shall be treat-

10

ed—

11

‘‘(I) as 1 taxpayer for purposes

12of this paragraph, and13‘‘(II) as having elected the appli-

14

cation of this paragraph if any such

15

corporation so elects.

16‘‘(C) CREDITREFUNDABLE.—For

pur-

17

poses of section 6401(b), the aggregate increase18

in the credits allowable under part IV of sub-19

chapter A for any taxable year resulting from20

the application of this paragraph shall be treat-21

ed as allowed under subpart C of such part22

(and not any other subpart).

23‘‘(D) OTHER RULES.—

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H.L.C.

541‘‘(i) ELECTION.—Any election under2

this paragraph may be revoked only with3

the consent of the Secretary.

4‘‘(ii) PARTNERSHIPS WITH ELECTING

5PARTNERS.—In the case of a corporation

6

which is a partner in a partnership and7which makes an election under subpara-

8graph (A) for the taxable year, for pur-9

poses of determining such corporation’s

10

distributive share of partnership items

11

under section 702 for such taxable year—12‘‘(I) paragraphs (1) and (2)(F)13

shall not apply to any qualified prop-

14

erty placed in service during such tax-

15

able year, and16‘‘(II) the applicable depreciation

17

method used under this section with18

respect to such property shall be the19straight line method.

20‘‘(iii) CERTAIN

PARTNERSHIPS.—In21

the case of a partnership in which more

22

than 50 percent of the capital and profits

23interests are owned (directly or indirectly)

24

at all times during the taxable year by 1

25

corporation (or by corporations treated as

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H.L.C.

55
1

1 taxpayer under subparagraph (B)(iii)),

2

each partner shall compute its bonus de-3

preciation amount under clause (i) of sub-4

paragraph (B) by taking into account its

5

distributive share of the amounts deter-

6

mined by the partnership under subclauses

7(I) and (II) of such clause for the taxable

8

year of the partnership ending with or9within the taxable year of the partner.’’.

10(4) SPECIAL

RULES

FOR

CERTAIN

11

BEARING FRUITS AND NUTS.—Section

12

amended—PLANTS

168(k) is13(A) by striking paragraph (5), and

14(B) by inserting after paragraph (4) the15

following new paragraph:16‘‘(5) SPECIAL

17

RULES FOR CERTAIN PLANTS

BEARING FRUITS AND NUTS.—

18‘‘(A) IN GENERAL.—In the case of any

19

specified plant which is planted before January20

1, 2020, or is grafted before such date to a21

plant that has already been planted, by the tax-

22

payer in the ordinary course of the taxpayer’s

23

farming24

263A(e)(4)) during a taxable year for which thebusiness(asdefinedinsectionL:\vr\121515\R121515.006.xml
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H.L.C.

56
1

taxpayer has elected the application of this2paragraph—3‘‘(i) a depreciation deduction equal to4

50 percent of the adjusted basis of such5

specified plant shall be allowed under sec-

6

tion 167(a) for the taxable year in which

7

such specified plant is so planted or graft-8

ed, and

9‘‘(ii) the adjusted basis of such speci-

10

fied plant shall be reduced by the amount11

of such deduction.

12‘‘(B) SPECIFIED PLANT.—For purposes of

13this paragraph, the term ‘specified plant’

14means—

15‘‘(i) any tree or vine which bears

16

fruits or nuts, and17‘‘(ii) any other plant which will have18

more than one yield of fruits or nuts and19which generally has a pre-productive period20

of more than 2 years from the time of21

planting or grafting to the time at which

22

such plant begins bearing fruits or nuts.

23

Such term shall not include any property which24

is planted or grafted outside of the United

25

States.

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H.L.C.

57
1‘‘(C) ELECTION REVOCABLE ONLY WITH

2

CONSENT.—An3

may be revoked only with the consent of the4

Secretary.

5election under this paragraph‘‘(D) ADDITIONAL DEPRECIATION MAY BE

6

CLAIMED ONLY ONCE.—If

7plies to any specified plant, such specified plant

8

shall not be treated as qualified property in the9taxable year in which placed in service.

10

this paragraph ap-‘‘(E) DEDUCTION ALLOWED IN COMPUTING11

MINIMUM TAX.—Rules

12

paragraph (2)(G) shall apply for purposes of

13this paragraph.

similar to the rules of

14‘‘(F) PHASE DOWN.—In the case of a spec-

15

ified plant which is planted after December 31,

16

2017 (or is grafted to a plant that has already17

been planted before such date), subparagraph

18(A)(i) shall be applied by substituting for ‘50

19percent’—20‘‘(i) in the case of a plant which is21

planted (or so grafted) in 2018, ‘40 per-22

cent’, and23‘‘(ii) in the case of a plant which is24

planted (or so grafted) during 2019, ‘30

25

percent’.’’.

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H.L.C.

58
1(5) PHASE DOWN OF BONUS DEPRECIATION.—

2

Section 168(k) is amended by adding at the end the3following new paragraph:4‘‘(6) PHASE DOWN.—In the case of qualified

5

property placed in service by the taxpayer after De-

6

cember 31, 2017, paragraph (1)(A) shall be applied

7

by substituting for ‘50 percent’—8‘‘(A) in the case of property placed in serv-

9

ice in 2018 (or in the case of property placed

10

in service in 2019 and described in paragraph

11(2)(B) or (C) (determined by substituting

12‘2019’ for ‘2020’ in paragraphs (2)(B)(i)(III)13

and (ii) and paragraph (2)(E)(i)), ‘40 percent’,14‘‘(B) in the case of property placed in serv-

15

ice in 2019 (or in the case of property placed

16

in service in 2020 and described in paragraph

17(2)(B) or (C), ‘30 percent’.’’.

18(6) CONFORMING AMENDMENTS.—

19(A) Section 168(e)(6) is amended—

20(i) by redesignating subparagraphs

21(A) and (B) as subparagraphs (D) and

22(E), respectively,

23(ii) by striking all that precedes sub-24

paragraph (D) (as so redesignated) and in-25

serting the following:

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H.L.C.

5912‘‘(6) QUALIFIEDLEASEHOLDIMPROVEMENTPROPERTY.—For purposes of this subsection—

3‘‘(A) IN GENERAL.—The term ‘qualified

4leasehold improvement property’ means any im-

5

provement to an interior portion of a building

6

which is nonresidential real property if—

7‘‘(i) such improvement is made under8

or pursuant to a lease (as defined in sub-9

section (h)(7))—10‘‘(I) by the lessee (or any subles-11see) of such portion, or12‘‘(II) by the lessor of such por-

13

tion,

14

‘‘(ii) such portion is to be occupied ex-

15

clusively by the lessee (or any sublessee) of

16

such portion, and17‘‘(iii) such improvement is placed in

18

service more than 3 years after the date19

the building was first placed in service.

20‘‘(B) CERTAIN

IMPROVEMENTS NOT IN-

21

CLUDED.—Such term shall not include any im-

22

provement for which the expenditure is attrib-

23

utable to—24‘‘(i) the enlargement of the building,25‘‘(ii) any elevator or escalator,

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H.L.C.

60
1‘‘(iii) any structural component bene-

2

fitting a common area, or

3‘‘(iv) the internal structural frame-4

work of the building.

5‘‘(C) DEFINITIONS AND SPECIAL RULES.—

6

For purposes of this paragraph—7‘‘(i) COMMITMENT TO LEASE TREAT-

8ED AS LEASE.—A

9

into a lease shall be treated as a lease, and10

the parties to such commitment shall be

11treated as lessor and lessee, respectively.

commitment to enter

12‘‘(ii) RELATED PERSONS.—A lease be-

13

tween related persons shall not be consid-

14

ered a lease. For purposes of the preceding

15

sentence,

16

means—

theterm‘related

persons’17‘‘(I) members of an affiliated18

group (as defined in section 1504),

19

and

20

‘‘(II) persons having a relation-

21

ship described in subsection (b) of

22

section 267; except that, for purposes

23of this clause, the phrase ‘80 percent

24

or more’ shall be substituted for the25phrase ‘more than 50 percent’ each

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H.L.C.

61
1

place it appears in such subsection.’’,

2

and

3

(iii) by striking ‘‘subparagraph (A)’’4

in subparagraph (E) (as so redesignated)

5

and inserting ‘‘subparagraph (D)’’.

6(B) Section 168(e)(7)(B) is amended by7

striking ‘‘qualified leasehold improvement prop-

8

erty’’ and inserting ‘‘qualified improvement

9

property’’.

10(C) Section 168(e)(8) is amended by strik-

11

ing subparagraph (D).

12

(D) Section 168(k), as amended by the13

preceding provisions of this section, is amended

14

by adding at the end the following new para-

15

graph:

16‘‘(7) ELECTION OUT.—If a taxpayer makes an

17election under this paragraph with respect to any

18class of property for any taxable year, paragraphs

19(1) and (2)(F) shall not apply to any qualified prop-

20

erty in such class placed in service during such tax-

21

able year. An election under this paragraph may be

22

revoked only with the consent of the Secretary.’’.

23(E) Section 168(l)(3) is amended—

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H.L.C.

621(i) by striking ‘‘section 168(k)’’ in2

subparagraph (A) and inserting ‘‘sub-3

section (k)’’, and

4

(ii)

by

striking‘‘section

5

168(k)(2)(D)(i)’’ in subparagraph (B) and6

inserting ‘‘subsection (k)(2)(D)’’.

7(F) Section 168(l)(4) is amended by strik-8

ing ‘‘subparagraph (E) of section 168(k)(2)’’9and all that follows and inserting ‘‘subsection

10(k)(2)(E) shall apply.’’.

11(G) Section 168(l)(5) is amended by strik-12

ing ‘‘section 168(k)(2)(G)’’ and inserting ‘‘sub-13

section (k)(2)(G)’’.

14(H) Section 263A(c) is amended by adding

15

at the end the following new paragraph:

16

‘‘(7)

COORDINATIONWITHSECTION

17

168(k)(5).—This section shall not apply to any

18amount allowed as a deduction by reason of section

19

168(k)(5) (relating to special rules for certain plants

20

bearing fruits and nuts).’’.

21(I) Section 460(c)(6)(B)(ii), as amended

22

by subsection (a), is amended to read as fol-

23

lows:

24

‘‘(ii) is placed in service before Janu-25

ary 1, 2020 (January 1, 2021 in the case

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H.L.C.

63
1

of

2

168(k)(2)(B)).’’.

3(J) Section 168(k), as amended by sub-4

section (a), is amended by striking ‘‘AND BE-

5

FORE JANUARY 1, 2016’’ in the heading thereof

6

and inserting ‘‘AND BEFORE JANUARY 1,

72020’’.

8(7) EFFECTIVE DATES.—

9property(A) IN

described

GENERAL.—Except

insectionas otherwise

10

provided in this paragraph, the amendments

11

made by this subsection shall apply to property

12

placed in service after December 31, 2015, in

13

taxable years ending after such date.

14(B) EXPANSION OF ELECTION TO ACCEL-

15

ERATE AMT CREDITS IN LIEU OF BONUS DE-

16

PRECIATION.—The amendments made by para-

17

graph (3) shall apply to taxable years ending

18

after December 31, 2015, except that in the19case of any taxable year beginning before Janu-20

ary 1, 2016, and ending after December 31,

21

2015,

22

168(k)(4)(B)(ii) of the Internal Revenue Code23

of 1986 (as amended by this section) shall be

24

the sum of—

25

the

limitation

under

section(i) the product of—

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H.L.C.

64
1

(I)

the

maximumincrease2

amount (within the meaning of sec-

3

tion 168(k)(4)(C)(iii) of such Code, as

4

in effect before the amendments made5by this subsection), multiplied by

6(II) a fraction the numerator of

7

which is the number of days in the

8taxable year before January 1, 2016,9

and the denominator of which is the

10number of days in the taxable year,

11

plus

12

(ii) the product of—13(I) such limitation (determined

14

without regard to this subparagraph),15

multiplied by

16(II) a fraction the numerator of

17

which is the number of days in the18

taxable year after December 31, 2015,19

and the denominator of which is the20

number of days in the taxable year.

21(C) SPECIAL RULES FOR CERTAIN PLANTS

22

BEARING FRUITS AND NUTS.—The amendments

23

made by paragraph (4) (other than subpara-

24

graph (A) thereof) shall apply to specified

25

plants (as defined in section 168(k)(5)(B) of

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H.L.C.

65
1

the Internal Revenue Code of 1986, as amended2by this subsection) planted or grafted after De-

3

cember 31, 2015.

4

SEC. 144. EXTENSION OF LOOK-THRU TREATMENT OF PAY-

5

MENTS

6

FOREIGN CORPORATIONS UNDER FOREIGN

7PERSONAL HOLDING COMPANY RULES.

8(a) IN GENERAL.—Section 954(c)(6)(C) is amended

BETWEEN

RELATEDCONTROLLED

9 by striking ‘‘January 1, 2015’’ and inserting ‘‘January 1,
10 2020’’.
11(b) EFFECTIVE DATE.—The amendment made by

12 this section shall apply to taxable years of foreign corpora13 tions beginning after December 31, 2014, and to taxable
14 years of United States shareholders with or within which
15 such taxable years of foreign corporations end.

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66

2

Subtitle C—Extensions Through2016

3PART 1—TAX RELIEF FOR FAMILIES AND

4

INDIVIDUALS

5SEC. 151. EXTENSION AND MODIFICATION OF EXCLUSION

6FROM GROSS INCOME OF DISCHARGE OF

7QUALIFIED PRINCIPAL RESIDENCE INDEBT-

8EDNESS.

19(a) EXTENSION.—Section 108(a)(1)(E) is amended

10 by striking ‘‘January 1, 2015’’ and inserting ‘‘January 1,
11 2017’’.
12(b)

MODIFICATION.—Section

108(a)(1)(E),as

13 amended by subsection (a), is amended by striking ‘‘dis14 charged before’’ and all that follows and inserting ‘‘dis15 charged—
16‘‘(i) before January 1, 2017, or

17‘‘(ii) subject to an arrangement that18

is entered into and evidenced in writing be-

19

fore January 1, 2017.’’.

20(c) EFFECTIVE DATES.—

21(1) EXTENSION.—The amendment made by22

subsection (a) shall apply to discharges of indebted-

23

ness after December 31, 2014.

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67
1(2) MODIFICATION.—The amendment made by2

subsection (b) shall apply to discharges of indebted-

3

ness after December 31, 2015.

4

SEC. 152. EXTENSION OF MORTGAGE INSURANCE PRE-

5

MIUMS TREATED AS QUALIFIED RESIDENCE

6INTEREST.

7

(a)

IN

GENERAL.—Subclause

(I)

of

section

8 163(h)(3)(E)(iv) is amended by striking ‘‘December 31,
9 2014’’ and inserting ‘‘December 31, 2016’’.
10(b) EFFECTIVE DATE.—The amendment made by

11 this section shall apply to amounts paid or accrued after
12 December 31, 2014.
13

SEC. 153. EXTENSION OF ABOVE-THE-LINE DEDUCTION FOR

14QUALIFIED

15

PENSES.

16

TUITIONAND

RELATEDEX-(a) IN GENERAL.—Section 222(e) is amended by

17 striking ‘‘December 31, 2014’’ and inserting ‘‘December
18 31, 2016’’.
19(b) EFFECTIVE DATE.—The amendment made by

20 this section shall apply to taxable years beginning after
21 December 31, 2014.

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68
1

PART 2—INCENTIVES FOR GROWTH, JOBS,2INVESTMENT, AND INNOVATION

3

SEC. 161. EXTENSION OF INDIAN EMPLOYMENT TAX CRED-

4

IT.

5

(a) IN GENERAL.—Section 45A(f) is amended by

6 striking ‘‘December 31, 2014’’ and inserting ‘‘December
7 31, 2016’’.
8(b) EFFECTIVE DATE.—The amendment made by

9 this section shall apply to taxable years beginning after
10 December 31, 2014.
11

SEC. 162. EXTENSION AND MODIFICATION OF RAILROAD

12

TRACK MAINTENANCE CREDIT.

13(a) EXTENSION.—Section 45G(f) is amended by

14 striking ‘‘January 1, 2015’’ and inserting ‘‘January 1,
15 2017’’.
16(b) MODIFICATION.—Section 45G(d) is amended by

17 striking ‘‘January 1, 2005,’’ and inserting ‘‘January 1,
18 2015,’’.
19(c) EFFECTIVE DATES.—

20(1) EXTENSION.—The amendment made by21

subsection (a) shall apply to expenditures paid or in-22

curred in taxable years beginning after December

23

31, 2014.

24(2) MODIFICATION.—The amendment made by25

subsection (b) shall apply to expenditures paid or in-

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69
1

curred in taxable years beginning after December2

31, 2015.

3

SEC. 163. EXTENSION OF MINE RESCUE TEAM TRAINING

4

CREDIT.

5(a) IN GENERAL.—Section 45N(e) is amended by

6 striking ‘‘December 31, 2014’’ and inserting ‘‘December
7 31, 2016’’.
8(b) EFFECTIVE DATE.—The amendment made by

9 this section shall apply to taxable years beginning after
10 December 31, 2014.
11

SEC. 164. EXTENSION OF QUALIFIED ZONE ACADEMY12BONDS.

13(a) EXTENSION.—Section 54E(c)(1) is amended by

14 striking ‘‘and 2014’’ and inserting ‘‘2014, 2015, and15 2016’’.
16(b) EFFECTIVE DATE.—The amendment made by

17 this section shall apply to obligations issued after Decem18 ber 31, 2014.
19

SEC. 165. EXTENSION OF CLASSIFICATION OF CERTAIN

20RACE HORSES AS 3-YEAR PROPERTY.

21(a) IN GENERAL.—Section 168(e)(3)(A)(i) is amend-

22 ed—
23
24(1) by striking ‘‘January 1, 2015’’ in subclause(I) and inserting ‘‘January 1, 2017’’, and

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H.L.C.

701(2) by striking ‘‘December 31, 2014’’ in sub-2

clause (II) and inserting ‘‘December 31, 2016’’.

3(b) EFFECTIVE DATE.—The amendments made by

4 this section shall apply to property placed in service after
5 December 31, 2014.
6

SEC. 166. EXTENSION OF 7-YEAR RECOVERY PERIOD FOR

7

MOTORSPORTS

8

PLEXES.

9ENTERTAINMENTCOM-(a) IN GENERAL.—Section 168(i)(15)(D) is amended

10 by striking ‘‘December 31, 2014’’ and inserting ‘‘Decem11 ber 31, 2016’’.
12(b) EFFECTIVE DATE.—The amendment made by

13 this section shall apply to property placed in service after
14 December 31, 2014.
15

SEC. 167. EXTENSION AND MODIFICATION OF ACCELER-

16

ATED DEPRECIATION FOR BUSINESS PROP-

17

ERTY ON AN INDIAN RESERVATION.

18(a) IN GENERAL.—Section 168(j)(8) is amended by

19 striking ‘‘December 31, 2014’’ and inserting ‘‘December
20 31, 2016’’.
21(b) ELECTIONTOHAVE SPECIAL RULES NOT

22 APPLY.—Section 168(j) is amended by redesignating
23 paragraph (8), as amended by subsection (a), as para24 graph (9), and by inserting after paragraph (7) the fol25 lowing new paragraph:

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H.L.C.

711‘‘(8) ELECTION OUT.—If a taxpayer makes an2election under this paragraph with respect to any

3class of property for any taxable year, this sub-4

section shall not apply to all property in such class

5

placed in service during such taxable year. Such

6election, once made, shall be irrevocable.’’.

7(c) EFFECTIVE DATES.—

8(1) EXTENSION.—The amendment made by

9subsection (a) shall apply to property placed in serv-

10

ice after December 31, 2014.

11(2) MODIFICATION.—The amendments made by

12

subsection (b) shall apply to taxable years beginning

13

after December 31, 2015.

14

SEC. 168. EXTENSION OF ELECTION TO EXPENSE MINE

1516

SAFETY EQUIPMENT.

(a) IN GENERAL.—Section 179E(g) is amended by

17 striking ‘‘December 31, 2014’’ and inserting ‘‘December
18 31, 2016’’.
19(b) EFFECTIVE DATE.—The amendment made by

20 this section shall apply to property placed in service after
21 December 31, 2014.

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72
1

SEC. 169. EXTENSION OF SPECIAL EXPENSING RULES FOR

2

CERTAIN FILM AND TELEVISION PRODUC-

3TIONS; SPECIAL EXPENSING FOR LIVE THE-

4

ATRICAL PRODUCTIONS.

5(a) IN GENERAL.—Section 181(f) is amended by

6 striking ‘‘December 31, 2014’’ and inserting ‘‘December
7 31, 2016’’.
8(b) APPLICATION TO LIVE PRODUCTIONS.—

9(1) IN GENERAL.—Paragraph (1) of section

10

181(a) is amended by inserting ‘‘, and any qualified

11

live theatrical production,’’ after ‘‘any qualified film

12

or television production’’.

13
14(2) CONFORMING AMENDMENTS.—Section 181
is amended—

15(A) by inserting ‘‘or any qualified live the-16atrical production’’ after ‘‘qualified film or tele-17

vision production’’ each place it appears in sub-18

sections (a)(2), (b), and (c)(1),19(B) by inserting ‘‘or qualified live theat-20

rical productions’’ after ‘‘qualified film or tele-21

vision productions’’ in subsection (f), and22(C) by inserting ‘‘AND

LIVE

THEAT-

23

RICAL’’

24

the heading.

25(3) CLERICAL AMENDMENT.—The item relating26

to section 181 in the table of sections for part VI

after ‘‘FILM AND TELEVISION’’ in

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73
1

of subchapter B of chapter 1 is amended to read as2

follows:‘‘Sec. 181. Treatment of certain qualified film and television and live theatrical
productions.’’.

3(c) QUALIFIED LIVE THEATRICAL PRODUCTION.—

4 Section 181 is amended—
5(1) by redesignating subsections (e) and (f), as

6

amended by subsections (a) and (b), as subsections

7(f) and (g), respectively, and

8(2) by inserting after subsection (d) the fol-9

lowing new subsection:10‘‘(e) QUALIFIED LIVE THEATRICAL PRODUCTION.—

11 For purposes of this section—
12‘‘(1) IN GENERAL.—The term ‘qualified live

13

theatrical production’ means any production de-

14

scribed in paragraph (2) if 75 percent of the total

15

compensation of the production is qualified com-16

pensation (as defined in subsection (d)(3)).

17‘‘(2) PRODUCTION.—

18‘‘(A) IN GENERAL.—A production is de-19

scribed in this paragraph if such production is20

a live staged production of a play (with or with-21

out music) which is derived from a written book22

or script and is produced or presented by a tax-

23

able entity in any venue which has an audience24

capacity of not more than 3,000 or a series of

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H.L.C.

74
1

venues the majority of which have an audience2capacity of not more than 3,000.

3‘‘(B) TOURING COMPANIES, ETC.—In the4case of multiple live staged productions—

5‘‘(i) for which the election under this6

section would be allowable to the same tax-

7

payer, and8‘‘(ii) which are—9‘‘(I) separate phases of a produc-10tion, or

11‘‘(II) separate simultaneous stag-

12

ings of the same production in dif-13

ferent geographical locations (not in-

14

cluding multiple performance locations

15of any one touring production),

16

each such live staged production shall be treat-17

ed as a separate production.

18‘‘(C) PHASE.—For purposes of subpara-

19

graph (B), the term ‘phase’ with respect to any

20

qualified live theatrical production refers to21each of the following, but only if each of the fol-22

lowing is treated by the taxpayer as a separate

23

activity for all purposes of this title:

24‘‘(i) The initial staging of a live theat-25

rical production.

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75
1‘‘(ii) Subsequent additional stagings

2or touring of such production which are

3

produced by the same producer as the ini-

4

tial staging.

5‘‘(D) SEASONAL PRODUCTIONS.—

6‘‘(i) IN GENERAL.—In the case of a7live staged production not described in

8

subparagraph (B) which is produced or

9presented by a taxable entity for not more

10

than 10 weeks of the taxable year, sub-11

paragraph (A) shall be applied by sub-12

stituting ‘6,500’ for ‘3,000’.

13‘‘(ii) SHORTTAXABLE YEARS.—For

14

purposes of clause (i), in the case of any

15

taxable year of less than 12 months, the16number of weeks for which a production is

17

produced or presented shall be annualized18

by multiplying the number of weeks the

19

production is produced or presented during

20

such taxable year by 12 and dividing the21

result by the number of months in such22

taxable year.

23‘‘(E) EXCEPTION.—A production is not de-24

scribed in this paragraph if such production in-25

cludes or consists of any performance of con-

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76
1

duct described in section 2257(h)(1) of title 18,

2

United States Code.’’.

3(d) EFFECTIVE DATE.—

4(1) EXTENSION.—The amendment made by5

subsection (a) shall apply to productions com-

6

mencing after December 31, 2014.

7(2) MODIFICATIONS.—

8(A) IN GENERAL.—The amendments made9

by subsections (b) and (c) shall apply to pro-10

ductions commencing after December 31, 2015.

11(B) COMMENCEMENT.—For purposes of

12

subparagraph (A), the date on which a qualified

13

live theatrical production commences is the date14of the first public performance of such produc-

15

tion for a paying audience.

16

SEC. 170. EXTENSION OF DEDUCTION ALLOWABLE WITH

17

RESPECT TO INCOME ATTRIBUTABLE TO DO-

18

MESTIC PRODUCTION ACTIVITIES IN PUERTO

19

RICO.

20

(a) IN GENERAL.—Section 199(d)(8)(C) is amend-

21 ed—
22
23(1) by striking ‘‘first 9 taxable years’’ and inserting ‘‘first 11 taxable years’’, and2425(2) by striking ‘‘January 1, 2015’’ and inserting ‘‘January 1, 2017’’.

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H.L.C.

771(b) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after
3 December 31, 2014.
4

SEC. 171. EXTENSION AND MODIFICATION OF EMPOWER-

56MENT ZONE TAX INCENTIVES.

(a) IN GENERAL.—

7(1) EXTENSION.—Section 1391(d)(1)(A)(i) is

8amended by striking ‘‘December 31, 2014’’ and in-

9serting ‘‘December 31, 2016’’.

10(2) TREATMENTOF

CERTAINTERMINATION11DATES SPECIFIED IN NOMINATIONS.—In the case of

12

a designation of an empowerment zone the nomina-

13

tion for which included a termination date which is

14

contemporaneous with the date specified in subpara-

15

graph (A)(i) of section 1391(d)(1) of the Internal

16

Revenue Code of 1986 (as in effect before the enact-

17

ment of this Act), subparagraph (B) of such section

18

shall not apply with respect to such designation if,

19

after the date of the enactment of this section, the20entity which made such nomination amends the21

nomination to provide for a new termination date in

22such manner as the Secretary of the Treasury (or23the Secretary’s designee) may provide.

24(b) MODIFICATION.—Section 1394(b)(3)(B)(i) is

25 amended—

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78
1
2(1) by striking ‘‘References’’ and inserting thefollowing:3‘‘(I) IN

4

provided5

erences’’, and

6
7

in

GENERAL.—Except

subclause

as

(II),

ref-

(2) by adding at the end the following new subclause:

8‘‘(II) SPECIAL

RULE

FOR

EM-

9

PLOYEE RESIDENCE TEST.—For pur-10

poses of subsection (b)(6) and (c)(5)11of section 1397C, an employee shall12

be treated as a resident of an em-

13

powerment zone if such employee is a

14

resident of an empowerment zone, an

15enterprise community, or a qualified

16

low-income community within an ap-

17

plicable nominating jurisdiction.’’.

18(c) DEFINITIONS.—

19(1) QUALIFIEDLOW-INCOME

COMMUNITY.—

20

Section 1394(b)(3) is amended by redesignating sub-21

paragraphs (C) and (D) as subparagraphs (D) and

22(E), respectively, and by inserting after subpara-

23

graph (B) the following new subparagraph:

24‘‘(C) QUALIFIED

25

LOW-INCOME

COMMU-

NITY.—For purposes of subparagraph (B)—

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H.L.C.

791‘‘(i) IN GENERAL.—The term ‘quali-

2

fied low-income community’ means any

3

population census tract if—

4‘‘(I) the poverty rate for such5

tract is at least 20 percent, or

6‘‘(II) the median family income

7

for such tract does not exceed 80 per-8cent of statewide median family in-

9come (or, in the case of a tract lo-

10cated within a metropolitan area, met-

11

ropolitan area median family income

12

if greater).

13

Subclause (II) shall be applied using

14

possessionwide median family income in15

the case of census tracts located within a16possession of the United States.

17‘‘(ii) TARGETED POPULATIONS.—The

18

Secretary shall prescribe regulations under

19

which 1 or more targeted populations

20(within the meaning of section 103(20) of

21

the Riegle Community Development and

22

Regulatory Improvement Act of 1994) may

23

be treated as qualified low-income commu-

24

nities.

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80
1‘‘(iii) AREAS

NOTWITHINCENSUS

2

TRACTS.—In the case of an area which is3

not tracted for population census tracts,

4

the equivalent county divisions (as defined5by the Bureau of the Census for purposes6

of defining poverty areas) shall be used for

7

purposes of determining poverty rates and8

median family income.

9‘‘(iv) MODIFICATION OF INCOME RE-

10QUIREMENT FOR CENSUS TRACTS WITHIN

11

HIGH MIGRATION RURAL COUNTIES.—

12‘‘(I) IN GENERAL.—In the case13of a population census tract located14

within a high migration rural county,

15

clause (i)(II) shall be applied to areas

16

not located within a metropolitan area17

by substituting ‘85 percent’ for ‘80

18

percent’.

19‘‘(II) HIGHMIGRATION

RURAL

20

COUNTY.—For21

clause, the term ‘high migration rural

22

county’ means any county which, dur-

23

ing the 20-year period ending with the24year in which the most recent census

25

was conducted, has a net out-migra-

purposesof

this

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81
1

tion of inhabitants from the county of2

at least 10 percent of the population3of the county at the beginning of such4

period.’’.

5(2) APPLICABLE NOMINATING JURISDICTION.—

6

Section 1394(b)(3)(D), as redesignated by para-

7

graph (1), is amended by adding at the end the fol-8

lowing new clause:

9‘‘(iii) APPLICABLENOMINATING JU-

10RISDICTION.—The

11

nating jurisdiction’ means, with respect to12

any empowerment zone or enterprise com-13

munity, any local government that nomi-

14

nated such community for designation

15

under section 1391.’’.

16

term ‘applicable nomi-(d) CONFORMING AMENDMENTS.—

17(1) Section 1394(b)(3)(B)(iii) is amended by18

striking ‘‘or an enterprise community’’ and inserting

19‘‘, an enterprise community, or a qualified low-in-

20

come community within an applicable nominating ju-

21

risdiction’’.

22(2) Section 1394(b)(3)(D), as redesignated by23

subsection (c)(1), is amended by striking ‘‘DEFINI-24

TIONS’’ and inserting ‘‘OTHER DEFINITIONS’’.

25(e) EFFECTIVE DATES.—

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H.L.C.

821(1) EXTENSIONS.—The amendment made by2

subsection (a) shall apply to taxable years beginning

3

after December 31, 2014.

4(2) MODIFICATIONS.—The amendments made5

by subsections (b), (c), and (d) shall apply to bonds

6

issued after December 31, 2015.

7

SEC. 172. EXTENSION OF TEMPORARY INCREASE IN LIMIT

8ON COVER OVER OF RUM EXCISE TAXES TO

9PUERTO RICO AND THE VIRGIN ISLANDS.

10(a) IN GENERAL.—Section 7652(f)(1) is amended by

11 striking ‘‘January 1, 2015’’ and inserting ‘‘January 1,
12 2017’’.
13(b) EFFECTIVE DATE.—The amendment made by

14 this section shall apply to distilled spirits brought into the
15 United States after December 31, 2014.
16

SEC. 173. EXTENSION OF AMERICAN SAMOA ECONOMIC DE-

17
18

VELOPMENT CREDIT.

(a) IN GENERAL.—Section 119(d) of division A of

19 the Tax Relief and Health Care Act of 2006 is amended—20
21(1) by striking ‘‘January 1, 2015’’ each place
it appears and inserting ‘‘January 1, 2017’’,22(2) by striking ‘‘first 9 taxable years’’ in para-

23

graph (1) and inserting ‘‘first 11 taxable years’’,

24

and

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H.L.C.

831(3) by striking ‘‘first 3 taxable years’’ in para-

2graph (2) and inserting ‘‘first 5 taxable years’’.

3(b) EFFECTIVE DATE.—The amendments made by

4 this section shall apply to taxable years beginning after
5 December 31, 2014.
6

SEC. 174. MORATORIUM ON MEDICAL DEVICE EXCISE TAX.

7(a) IN GENERAL.—Section 4191 is amended by add-

8 ing at the end the following new subsection:
9‘‘(c) MORATORIUM.—The tax imposed under sub-

10 section (a) shall not apply to sales during the period begin11 ning on January 1, 2016, and ending on December 31,
12 2017.’’.
13(b) EFFECTIVE DATE.—The amendment made by

14 this section shall apply to sales after December 31, 2015.
15 PART 3—INCENTIVES FOR ENERGY PRODUCTION
16

AND CONSERVATION

17

SEC. 181. EXTENSION AND MODIFICATION OF CREDIT FOR

18

NONBUSINESS ENERGY PROPERTY.

19(a) EXTENSION.—Section 25C(g)(2) is amended by

20 striking ‘‘December 31, 2014’’ and inserting ‘‘December
21 31, 2016’’.
22(b) UPDATED ENERGY STAR REQUIREMENTS.—

23(1) IN GENERAL.—Section 25C(c)(1) is amend-24

ed by striking ‘‘which meets’’ and all that follows

25

through ‘‘requirements)’’.

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H.L.C.

841(2) ENERGY EFFICIENT BUILDING ENVELOPE

2COMPONENT.—Section 25C(c) is amended by redes-

3

ignating paragraphs (2) and (3) as paragraphs (3)4and (4), respectively, and by inserting after para-

5graph (1) the following new paragraph:6‘‘(2) ENERGY EFFICIENT BUILDING ENVELOPE

7COMPONENT.—The8envelope component’ means a building envelope com-9

ponent which meets—

term ‘energy efficient building

10‘‘(A) applicable Energy Star program re-11

quirements, in the case of a roof or roof prod-

12

ucts,

13

‘‘(B) version 6.0 Energy Star program re-14

quirements, in the case of an exterior window,

15

a skylight, or an exterior door, and16‘‘(C) the prescriptive criteria for such com-17

ponent established by the 2009 International

18

Energy Conservation Code, as such Code (in-19

cluding supplements) is in effect on the date of20

the enactment of the American Recovery and21

Reinvestment Tax Act of 2009, in the case of22

any other component.’’.

23(c) EFFECTIVE DATES.—

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H.L.C.

851(1) EXTENSION.—The amendment made by2

subsection (a) shall apply to property placed in serv-

3

ice after December 31, 2014.

4(2) MODIFICATION.—The amendments made by5

subsection (b) shall apply to property placed in serv-

6

ice after December 31, 2015.

7

SEC. 182. EXTENSION OF CREDIT FOR ALTERNATIVE FUEL

8VEHICLE REFUELING PROPERTY.

9(a) IN GENERAL.—Section 30C(g) is amended by

10 striking ‘‘December 31, 2014’’ and inserting ‘‘December
11 31, 2016’’.
12(b) EFFECTIVE DATE.—The amendment made by

13 this section shall apply to property placed in service after
14 December 31, 2014.
15

SEC. 183. EXTENSION OF CREDIT FOR 2-WHEELED PLUG-IN

16
17

ELECTRIC VEHICLES.

(a) IN GENERAL.—Section 30D(g)(3)(E) is amended

18 by striking ‘‘acquired’’ and all that follows and inserting
19 the following: ‘‘acquired—
20‘‘(i) after December 31, 2011, and be-21

fore January 1, 2014, or22‘‘(ii) in the case of a vehicle that has

23

2 wheels, after December 31, 2014, and24

before January 1, 2017.’’.

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H.L.C.

861(b) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to vehicles acquired after Decem3 ber 31, 2014.
4

SEC. 184. EXTENSION OF SECOND GENERATION BIOFUEL

5

PRODUCER CREDIT.

6(a) IN GENERAL.—Section 40(b)(6)(J)(i) is amended

7 by striking ‘‘January 1, 2015’’ and inserting ‘‘January 1,
8 2017’’.
9(b) EFFECTIVE DATE.—The amendment made by

10 this subsection shall apply to qualified second generation
11 biofuel production after December 31, 2014.
12

SEC. 185. EXTENSION OF BIODIESEL AND RENEWABLE DIE-

13
14

SEL INCENTIVES.

(a) INCOME TAX CREDIT.—

15(1) IN GENERAL.—Subsection (g) of section

16

40A is amended by striking ‘‘December 31, 2014’’

17

and inserting ‘‘December 31, 2016’’.

18(2) EFFECTIVE DATE.—The amendment made19

by this subsection shall apply to fuel sold or used

20

after December 31, 2014.

21(b) EXCISE TAX INCENTIVES.—

22

(1)

IN

GENERAL.—Section

6426(c)(6)is23

amended by striking ‘‘December 31, 2014’’ and in-24

serting ‘‘December 31, 2016’’.

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H.L.C.

87
1(2)

PAYMENTS.—Section

6427(e)(6)(B)is2

amended by striking ‘‘December 31, 2014’’ and in-3

serting ‘‘December 31, 2016’’.

4(3) EFFECTIVE DATE.—The amendments made5by this subsection shall apply to fuel sold or used

6

after December 31, 2014.

7(4) SPECIAL RULE FOR 2015.—Notwithstanding

8

any other provision of law, in the case of any bio-

9

diesel mixture credit properly determined under sec-

10

tion 6426(c) of the Internal Revenue Code of 198611

for the period beginning on January 1, 2015, and12

ending on December 31, 2015, such credit shall be

13

allowed, and any refund or payment attributable to14

such credit (including any payment under section

156427(e) of such Code) shall be made, only in such16

manner as the Secretary of the Treasury (or the17

Secretary’s delegate) shall provide. Such Secretary

18

shall issue guidance within 30 days after the date of19

the enactment of this Act providing for a one-time

20

submission of claims covering periods described in21

the preceding sentence. Such guidance shall provide

22

for a 180-day period for the submission of such23

claims (in such manner as prescribed by such Sec-24

retary) to begin not later than 30 days after such

25

guidance is issued. Such claims shall be paid by such

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H.L.C.

881

Secretary not later than 60 days after receipt. If

2such Secretary has not paid pursuant to a claim

3

filed under this subsection within 60 days after the4date of the filing of such claim, the claim shall be5paid with interest from such date determined by6

using the overpayment rate and method under sec-

7

tion 6621 of such Code.

8

SEC. 186. EXTENSION AND MODIFICATION OF PRODUCTION

9CREDIT FOR INDIAN COAL FACILITIES.

10(a) IN GENERAL.—Section 45(e)(10)(A) is amended

11 by striking ‘‘9-year period’’ each place it appears and in12 serting ‘‘11-year period’’.
13(b) REPEAL OF LIMITATION BASED ON DATE FACIL-

14ITY IS PLACED IN SERVICE.—Section 45(d)(10) is amend-

15 ed to read as follows:
16‘‘(10) INDIAN COAL PRODUCTION FACILITY.—17

The term ‘Indian coal production facility’ means a18

facility that produces Indian coal.’’.

19(c) TREATMENT OF SALES TO RELATED PARTIES.—

20 Section 45(e)(10)(A)(ii)(I) is amended by inserting ‘‘(ei21 ther directly by the taxpayer or after sale or transfer to
22 one or more related persons)’’ after ‘‘unrelated person’’.
2324(d) CREDIT ALLOWED AGAINST ALTERNATIVE MINIMUM TAX.—

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H.L.C.

891(1) IN

GENERAL.—Section

38(c)(4)(B), as2

amended by the preceding provisions of this Act, is3amended by redesignating clauses (v) through (x) as

4clauses (vi) through (xi), respectively, and by insert-

5

ing after clause (iv) the following new clause:

6‘‘(v) the credit determined under sec-

7

tion 45 to the extent that such credit is at-

8

tributable to section 45(e)(10) (relating to

9

Indian coal production facilities),’’.

10

(2)

CONFORMINGAMENDMENT.—Section

1145(e)(10) is amended by striking subparagraph (D).

12(e) EFFECTIVE DATES.—

13(1) EXTENSION.—The amendments made by

14

subsection (a) shall apply to coal produced after De-

15

cember 31, 2014.

16(2) MODIFICATIONS.—The amendments made17

by subsections (b) and (c) shall apply to coal pro-18

duced and sold after December 31, 2015, in taxable

19

years ending after such date.

20(3) CREDIT ALLOWED AGAINST ALTERNATIVE21

MINIMUM TAX.—The

22

section (d) shall apply to credits determined for tax-

23

able years beginning after December 31, 2015.

amendments made by sub-

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H.L.C.

90
1

SEC. 187. EXTENSION OF CREDITS WITH RESPECT TO FA-

2CILITIES PRODUCING ENERGY FROM CER-

3

TAIN RENEWABLE RESOURCES.

4(a) IN GENERAL.—The following provisions of sec-

5 tion 45(d) are each amended by striking ‘‘January 1,
6 2015’’ each place it appears and inserting ‘‘January 1,
7 2017’’:8(1) Paragraph (2)(A).

9(2) Paragraph (3)(A).

10(3) Paragraph (4)(B).

11(4) Paragraph (6).

12(5) Paragraph (7).

13(6) Paragraph (9).

14(7) Paragraph (11)(B).

15(b) EXTENSION OF ELECTION TO TREAT QUALIFIED

16 FACILITIESASENERGYPROPERTY.—Section

17 48(a)(5)(C)(ii) is amended by striking ‘‘January 1, 2015’’
18 and inserting ‘‘January 1, 2017’’.
19(c) EFFECTIVE DATES.—The amendments made by

20 this section shall take effect on January 1, 2015.
21

SEC. 188. EXTENSION OF CREDIT FOR ENERGY-EFFICIENT

22
23

NEW HOMES.

(a) IN GENERAL.—Section 45L(g) is amended by

24 striking ‘‘December 31, 2014’’ and inserting ‘‘December
25 31, 2016’’.

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H.L.C.

911(b) EFFECTIVE DATE.—The amendment made by

2 this section shall apply to homes acquired after December
3 31, 2014.
4

SEC. 189. EXTENSION OF SPECIAL ALLOWANCE FOR SEC-

5OND GENERATION BIOFUEL PLANT PROP-

6

ERTY.

7

(a) IN GENERAL.—Section 168(l)(2)(D) is amended

8 by striking ‘‘January 1, 2015’’ and inserting ‘‘January 1,
9 2017’’.
10(b) EFFECTIVE DATE.—The amendment made by

11 this section shall apply to property placed in service after
12 December 31, 2014.
13

SEC. 190. EXTENSION OF ENERGY EFFICIENT COMMERCIAL

14
15

BUILDINGS DEDUCTION.

(a) IN GENERAL.—Section 179D(h) is amended by

16 striking ‘‘December 31, 2014’’ and inserting ‘‘December
17 31, 2016’’.
18(b) EFFECTIVE DATE.—The amendment made by

19 subsection (a) shall apply to property placed in service
20 after December 31, 2014.

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H.L.C.

92
1

SEC. 191. EXTENSION OF SPECIAL RULE FOR SALES OR DIS-

2POSITIONS TO IMPLEMENT FERC OR STATE

3

ELECTRIC4QUALIFIED ELECTRIC UTILITIES.

5

RESTRUCTURING

POLICYFOR(a) IN GENERAL.—Section 451(i)(3) is amended by

6 striking ‘‘January 1, 2015’’ and inserting ‘‘January 1,
7 2017’’.
8(b) EFFECTIVE DATE.—The amendment made by

9 this section shall apply to dispositions after December 31,
10 2014.
11

SEC. 192. EXTENSION OF EXCISE TAX CREDITS RELATING

12
13

TO ALTERNATIVE FUELS.

(a) EXTENSION OF ALTERNATIVE FUELS EXCISE

14 TAX CREDITS.—
15(1) IN

GENERAL.—Sections

6426(d)(5) and

16

6426(e)(3) are each amended by striking ‘‘December

1731, 2014’’ and inserting ‘‘December 31, 2016’’.

18(2) OUTLAYPAYMENTSFORALTERNATIVE

19

FUELS.—Section 6427(e)(6)(C) is amended by strik-

20

ing ‘‘December 31, 2014’’ and inserting ‘‘December

21

31, 2016’’.

22(b) EFFECTIVE DATE.—The amendments made by

23 this section shall apply to fuel sold or used after December
24 31, 2014.
25(c) SPECIAL RULE FOR 2015.—Notwithstanding any

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H.L.C.

93
1 credit properly determined under section 6426(d) of the
2 Internal Revenue Code of 1986 for the period beginning
3 on January 1, 2015, and ending on December 31, 2015,
4 such credit shall be allowed, and any refund or payment
5 attributable to such credit (including any payment under
6 section 6427(e) of such Code) shall be made, only in such
7 manner as the Secretary of the Treasury (or the Sec8 retary’s delegate) shall provide. Such Secretary shall issue
9 guidance within 30 days after the date of the enactment
10 of this Act providing for a one-time submission of claims
11 covering periods described in the preceding sentence. Such
12 guidance shall provide for a 180-day period for the sub13 mission of such claims (in such manner as prescribed by
14 such Secretary) to begin not later than 30 days after such
15 guidance is issued. Such claims shall be paid by such Sec16 retary not later than 60 days after receipt. If such Sec17 retary has not paid pursuant to a claim filed under this18 subsection within 60 days after the date of the filing of
19 such claim, the claim shall be paid with interest from such
20 date determined by using the overpayment rate and meth21 od under section 6621 of such Code.

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H.L.C.

94
1

SEC. 193. EXTENSION OF CREDIT FOR NEW QUALIFIED

2FUEL CELL MOTOR VEHICLES.

3(a) IN GENERAL.—Section 30B(k)(1) is amended by

4 striking ‘‘December 31, 2014’’ and inserting ‘‘December
5 31, 2016’’.
6(b) EFFECTIVE DATE.—The amendment made by

7 this section shall apply to property purchased after De8 cember 31, 2014.
9

TITLE II—PROGRAM INTEGRITY

10

SEC. 201. MODIFICATION OF FILING DATES OF RETURNS

11

AND STATEMENTS RELATING TO EMPLOYEE

12

WAGE

13

COMPENSATION TO IMPROVE COMPLIANCE.

14

INFORMATIONANDNONEMPLOYEE(a) IN GENERAL.—Section 6071 is amended by re-

15 designating subsection (c) as subsection (d), and by insert16 ing after subsection (b) the following new subsection:17‘‘(c) RETURNS AND STATEMENTS RELATING TO EM-

18

PLOYEE WAGE INFORMATION AND NONEMPLOYEE COM-

19

PENSATION.—Forms W–2 and W–3 and any returns or

20 statements required by the Secretary to report non21 employee compensation shall be filed on or before January
22 31 of the year following the calendar year to which such
23 returns relate.’’.
24(b) DATE FOR CERTAIN REFUNDS.—Section 6402 is

25 amended by adding at the end the following new sub26 section:
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H.L.C.

951‘‘(m) EARLIEST DATE FOR CERTAIN REFUNDS.—No

2 credit or refund of an overpayment for a taxable year shall
3 be made to a taxpayer before the 15th day of the second
4 month following the close of such taxable year if a credit
5 is allowed to such taxpayer under section 24 (by reason
6 of subsection (d) thereof) or 32 for such taxable year.’’.
7(c) CONFORMING AMENDMENT.—Section 6071(b) is

8 amended by striking ‘‘subparts B and C of part III of
9 this subchapter’’ and inserting ‘‘subpart B of part III of
10 this subchapter (other than returns and statements re11 quired to be filed with respect to nonemployee compensa12 tion)’’.
13(d) EFFECTIVE DATES.—

14(1) IN GENERAL.—Except as provided in para-

15

graph (2), the amendments made by this section

16

shall apply to returns and statements relating to cal-17

endar years beginning after the date of the enact-

18

ment of this Act.

19

(2)

DATE

FOR

CERTAINREFUNDS.—The20

amendment made by subsection (b) shall apply to21

credits or refunds made after December 31, 2016.

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H.L.C.

96
1

SEC. 202. SAFE HARBOR FOR DE MINIMIS ERRORS ON IN-

2

FORMATION RETURNS AND PAYEE STATE-

3

MENTS.

4(a) IN GENERAL.—Section 6721(c) is amended by

5 adding at the end the following new paragraph:67‘‘(3) SAFE HARBOR FOR CERTAIN DE MINIMISERRORS.—

8‘‘(A) IN GENERAL.—If, with respect to an

9

information return filed with the Secretary—10‘‘(i) there are 1 or more failures de-11

scribed in subsection (a)(2)(B) relating to

12

an incorrect dollar amount,

13‘‘(ii) no single amount in error differs

14from the correct amount by more than

15

$100, and16‘‘(iii) no single amount reported for17

tax withheld on any information return dif-18

fers from the correct amount by more than

19

$25,

20

then no correction shall be required and, for21

purposes of this section, such return shall be

22treated as having been filed with all of the cor-

23

rect required information.

24

‘‘(B)

EXCEPTION.—Subparagraph

(A)

25

shall not apply with respect to any incorrect26

dollar amount to the extent that such error re-

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H.L.C.

971

lates to an amount with respect to which an

2election is made under section 6722(c)(3)(B).

3‘‘(C) REGULATORY AUTHORITY.—The Sec-4

retary may issue regulations to prevent the5abuse of the safe harbor under this paragraph,6

including regulations providing that this para-

7

graph shall not apply to the extent necessary to8

prevent any such abuse.’’.

9(b) FAILURE TO FURNISH CORRECT PAYEE STATE-

10

MENT.—Section 6722(c) is amended by adding at the end

11 the following new paragraph:1213‘‘(3) SAFE HARBOR FOR CERTAIN DE MINIMISERRORS.—

14‘‘(A) IN GENERAL.—If, with respect to any

15

payee statement—

16‘‘(i) there are 1 or more failures de-17

scribed in subsection (a)(2)(B) relating to

18

an incorrect dollar amount,

19‘‘(ii) no single amount in error differs

20

from the correct amount by more than21

$100, and22‘‘(iii) no single amount reported for23

tax withheld on any information return dif-24

fers from the correct amount by more than

25

$25,

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H.L.C.

981

then no correction shall be required and, for2

purposes of this section, such statement shall be3treated as having been filed with all of the cor-4

rect required information.

5

‘‘(B)

EXCEPTION.—Subparagraph(A)

6

shall not apply to any payee statement if the7

person to whom such statement is required to8

be furnished makes an election (at such time9and in such manner as the Secretary may pre-10

scribe) that subparagraph (A) not apply with

11

respect to such statement.

12‘‘(C) REGULATORY AUTHORITY.—The Sec-13

retary may issue regulations to prevent the14

abuse of the safe harbor under this paragraph,15

including regulations providing that this para-

16

graph shall not apply to the extent necessary to17

prevent any such abuse.’’.

18(c) APPLICATIONTOBROKER REPORTING

OF

19 BASIS.—Section 6045(g)(2)(B) is amended by adding at
20 the end the following new clause:
21‘‘(iii) TREATMENT OF UNCORRECTED

22

DE MINIMIS ERRORS.—Except as otherwise

23

provided by the Secretary, the customer’s

24

adjusted basis shall be determined by25

treating any incorrect dollar amount which

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H.L.C.

99
1

is not required to be corrected by reason of2

section 6721(c)(3) or section 6722(c)(3) as

3the correct amount.’’.

4(d) CONFORMING AMENDMENTS.—

5(1) Section 6721(c) is amended by striking

6‘‘EXCEPTION FOR DE MINIMIS FAILURES TO IN-

7

CLUDE ALL REQUIRED INFORMATION’’ in the head-8

ing and inserting ‘‘EXCEPTIONS FOR CERTAIN DE

9MINIMIS FAILURES’’.

10(2) Section 6721(c)(1) is amended by striking

11‘‘IN GENERAL’’ in the heading and inserting ‘‘EX-

12

CEPTION FOR DE MINIMIS FAILURE TO INCLUDE ALL

13

REQUIRED INFORMATION’’.

14(e) EFFECTIVE DATE.—The amendments made by

15 this section shall apply to returns required to be filed, and16 payee statements required to be provided, after December
17 31, 2016.
18

SEC. 203. REQUIREMENTS FOR THE ISSUANCE OF ITINS.

19(a) IN GENERAL.—Section 6109 is amended by add-

20 ing at the end the following new subsection:2122‘‘(i) SPECIAL RULES RELATING TO THE ISSUANCE
OF ITINS.—23‘‘(1) IN GENERAL.—The Secretary is authorized24

to issue an individual taxpayer identification number

25

to an individual only if the applicant submits an ap-

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H.L.C.

100
1

plication, using such form as the Secretary may re-2quire and including the required documentation—

3‘‘(A) in the case of an applicant not de-4

scribed in subparagraph (B)—5‘‘(i) in person to an employee of the

6

Internal Revenue Service or a community-

7

based certified acceptance agent approved8

by the Secretary, or

9‘‘(ii) by mail, pursuant to rules pre-10

scribed by the Secretary, or

11‘‘(B) in the case of an applicant who re-12sides outside of the United States, by mail or13

in person to an employee of the Internal Rev-

14

enue Service or a designee of the Secretary at

15

a United States diplomatic mission or consular

16

post.

17

‘‘(2) REQUIRED

18

poses of this subsection—

19‘‘(A) IN

DOCUMENTATION.—For

GENERAL.—The

pur-term ‘required

20

documentation’ includes such documentation as

21

the Secretary may require that proves the indi-

22

vidual’s identity, foreign status, and residency.

23‘‘(B) VALIDITY OF DOCUMENTS.—The Sec-24

retary may accept only original documents or

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H.L.C.

1011

certified copies meeting the requirements of the2

Secretary.

3‘‘(3) TERM OF ITIN.—

4‘‘(A) IN

GENERAL.—An

individual tax-

5

payer identification number issued after Decem-

6

ber 31, 2012, shall remain in effect unless the7

individual to whom such number is issued does8

not file a return of tax (or is not included as

9

a dependent on the return of tax of another10

taxpayer) for 3 consecutive taxable years. In

11the case of an individual described in the pre-12

ceding sentence, such number shall expire on

13

the last day of such third consecutive taxable

14

year.

15

‘‘(B)

16

ITINS.—In17

spect to whom an individual taxpayer identifica-

18

tion number was issued before January 1,

19

2013, such number shall remain in effect until20

the earlier of—

SPECIAL

RULE

FOR

EXISTING

the case of an individual with re-21‘‘(i) the applicable date, or22‘‘(ii) if the individual does not file a23

return of tax (or is not included as a de-24pendent on the return of tax of another

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H.L.C.

102
1

taxpayer) for 3 consecutive taxable years,

2

the earlier of—3‘‘(I) the last day of such third4

consecutive taxable year, or

5‘‘(II) the last day of the taxable

6

year that includes the date of the en-7

actment of this subsection.

8‘‘(C) APPLICABLE DATE.—For purposes of

9subparagraph (B), the term ‘applicable date’

10means—

11‘‘(i) January 1, 2017, in the case of

12

an individual taxpayer identification num-13

ber issued before January 1, 2008,

14‘‘(ii) January 1, 2018, in the case of15

an individual taxpayer identification num-16

ber issued in 2008,17‘‘(iii) January 1, 2019, in the case of18

an individual taxpayer identification num-19

ber issued in 2009 or 2010, and20‘‘(iv) January 1, 2020, in the case of21

an individual taxpayer identification num-22

ber issued in 2011 or 2012.

23‘‘(4) DISTINGUISHINGITINS ISSUED SOLELY

24

FOR PURPOSES OF TREATY BENEFITS.—The25

retary shall implement a system that ensures thatSec-

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H.L.C.

103
1

individual taxpayer identification numbers issued

2

solely for purposes of claiming tax treaty benefits3

are used only for such purposes, by distinguishing4such numbers from other individual taxpayer identi-

5

fication numbers issued.’’.

6(b) AUDIT BY TIGTA.—Not later than 2 years after

7 the date of the enactment of this Act, and every 2 years
8 thereafter, the Treasury Inspector General for Tax Ad9 ministration shall conduct an audit of the program of the
10 Internal Revenue Service for the issuance of individual
11 taxpayer identification numbers pursuant to section
12 6109(i) of the Internal Revenue Code of 1986 (as added
13 by this section) and report the results of such audit to
14 the Committee on Finance of the Senate and the Com15 mittee on the Ways and Means of the House of Represent16 atives.
17(c) COMMUNITY-BASED CERTIFIED ACCEPTANCE

18 AGENTS.—The Secretary of the Treasury, or the Sec19 retary’s delegate, shall maintain a program for training
20 and approving community-based certified acceptance
21 agents for purposes of section 6109(i)(1)(A)(i) of the In22 ternal Revenue Code of 1986 (as added by this section).
23 Persons eligible to be acceptance agents under such pro24 gram include—

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H.L.C.

1041(1) financial institutions (as defined in section

2

265(b)(5) of such Code and the regulations there-

3

under),

4(2) colleges and universities which are described5

in section 501(c)(3) of such Code and exempt from6

taxation under section 501(a) of such Code,78(3) Federal agencies (as defined in section
6402(h) of such Code),910(4) State and local governments, including
agencies responsible for vital records,

11(5) community-based organizations which are

12

described in subsection (c)(3) or (d) of section 501

13

of such Code and exempt from taxation under sec-

14

tion 501(a) of such Code,1516(6) persons that provide assistance to taxpayers
in the preparation of their tax returns, and17(7) other persons or categories of persons as

18

authorized by regulations or other guidance of the19

Secretary of the Treasury.

20(d) ITIN STUDY.—

21(1) IN GENERAL.—The Secretary of the Treas-

22

ury, or the Secretary’s delegate, shall conduct a

23

study on the effectiveness of the application process24

for individual taxpayer identification numbers before

25

the implementation of the amendments made by this

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H.L.C.

1051

section, the effects of the amendments made by this2

section on such application process, the comparative3

effectiveness of an in-person review process for ap-

4

plication versus other methods of reducing fraud in

5

the ITIN program and improper payments to ITIN

6

holders as a result, and possible administrative and7legislative recommendations to improve such process.

89(2) SPECIFICREQUIREMENTS.—Such

studyshall include an evaluation of the following:

10(A) Possible administrative and legislative

11

recommendations to reduce fraud and improper

12

payments through the use of individual tax-

13

payer identification numbers (hereinafter re-14

ferred to as ‘‘ITINs’’).

15(B) If data supports an in-person initial

16

review of ITIN applications to reduce fraud and17

improper payments, the administrative and leg-18

islative steps needed to implement such an in-

19

person initial review of ITIN applications, in20

conjunction with an expansion of the commu-

21nity-based certified acceptance agent program

22

under

23

transitioning to such a program by 2020.

24

subsection

(c),

with

a

goal

of

(C) Strategies for more efficient processing

25of ITIN applications.

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H.L.C.

106
1(D) The acceptance agent program as in2existence on the date of the enactment of this3

Act and ways to expand the geographic avail-4

ability of agents through the community-based

5certified acceptance agent program under sub-6

section (c).

7(E) Strategies for the Internal Revenue

8

Service to work with other Federal agencies,

9

State and local governments, and other organi-

10

zations and persons described in subsection (c)11to encourage participation in the community-

12

based certified acceptance agent program under13

subsection (c) to facilitate in-person initial re-

14view of ITIN applications.

15(F) Typical characteristics (derived from

16

Form W–7 and other sources) of mail applica-

17

tions for ITINs as compared with typical char-

18

acteristics of in-person applications.

19(G) Typical characteristics (derived from20

17 Form W–7 and other sources) of ITIN ap-

21

plications before the Internal Revenue Service

22

revised its application procedures in 2012 as

23compared with typical characteristics of ITIN

24

applications made after such revisions went into

25

effect.

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H.L.C.

107
1(3) REPORT.—The Secretary, or the Secretary’s

2delegate, shall submit to the Committee on Finance3of the Senate and the Committee on Ways and4

Means of the House of Representatives a report de-5

tailing the study under paragraph (1) and its find-6

ings not later than 1 year after the date of the en-7

actment of this Act.

8(4) ADMINISTRATIVE STEPS.—The Secretary of

9

the Treasury shall implement any administrative

10

steps identified by the report under paragraph (3)11not later than 180 days after submitting such re-

12

port.

13

(e) MATHEMATICAL OR CLERICAL ERROR AUTHOR-

14

ITY.—Paragraph (2) of section 6213(g) of the Internal

15 Revenue Code of 1986 is amended by striking ‘‘and’’ at
16 the end of subparagraph (M), by striking the period at
17 the end of subparagraph (N) and inserting ‘‘, and’’, and18 by inserting after subparagraph (N) the following new
19 subparagraph:
20‘‘(O) the inclusion on a return of an indi-

21

vidual taxpayer identification number issued

22

under section 6109(i) which has expired, been

23

revoked by the Secretary, or is otherwise in-24

valid.’’.

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H.L.C.

1081(f) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to applications for individual tax3 payer identification numbers made after the date of the
4 enactment of this Act.
5

SEC. 204. PREVENTION OF RETROACTIVE CLAIMS OF

6

EARNED INCOME CREDIT AFTER ISSUANCE

7

OF SOCIAL SECURITY NUMBER.

8(a) IN GENERAL.—Section 32(m) is amended by in-

9 serting ‘‘on or before the due date for filing the return
10 for the taxable year’’ before the period at the end.
11(b) EFFECTIVE DATE.—

12(1) IN GENERAL.—Except as provided in para-

13

graph (2), the amendment made by this section shall14

apply to any return of tax, and any amendment or

15

supplement to any return of tax, which is filed after16

the date of the enactment of this Act.

17(2) EXCEPTION FOR TIMELY-FILED 2015 RE-

18

TURNS.—The amendment made by this section shall19

not apply to any return of tax (other than an

20

amendment or supplement to any return of tax) for21

any taxable year which includes the date of the en-22

actment of this Act if such return is filed on or be-23

fore the due date for such return of tax.

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H.L.C.

109
1

SEC. 205. PREVENTION OF RETROACTIVE CLAIMS OF CHILD

2

TAX CREDIT.

3(a) QUALIFYING CHILD IDENTIFICATION REQUIRE-

4MENT.—Section 24(e) is amended by inserting ‘‘and such

5 taxpayer identification number was issued on or before the
6 due date for filing such return’’ before the period at the
7 end.
8(b) TAXPAYER IDENTIFICATION REQUIREMENT.—

9 Section 24(e), as amended by subsection (a) is amended—
10(1) by striking ‘‘IDENTIFICATION REQUIRE-

11

MENT.—No

12

the following: ‘‘IDENTIFICATION REQUIREMENTS.—

13‘‘(1) QUALIFYING CHILD IDENTIFICATION RE-

14

credit shall be allowed’’ and inserting

QUIREMENT.—No credit shall be allowed’’, and

15(2) by adding at the end the following new

16

paragraph:

17

‘‘(2)

TAXPAYERIDENTIFICATIONREQUIRE-

18

MENT.—No credit shall be allowed under this section

19

if the identifying number of the taxpayer was issued

20

after the due date for filing the return for the tax-

21

able year.’’.

22(c) EFFECTIVE DATE.—

23(1) IN GENERAL.—The amendments made by24

this section shall apply to any return of tax, and any

25

amendment or supplement to any return of tax,

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H.L.C.

1101

which is filed after the date of the enactment of this

2

Act.

3

(2) EXCEPTION FOR TIMELY-FILED 2015 RE-

4TURNS.—The5

shall not apply to any return of tax (other than an

6amendment or supplement to any return of tax) for7

any taxable year which includes the date of the en-8

actment of this Act if such return is filed on or be-9fore the due date for such return of tax.

amendments made by this section

10

SEC. 206. PREVENTION OF RETROACTIVE CLAIMS OF AMER-

11

ICAN OPPORTUNITY TAX CREDIT.

12(a) IN GENERAL.—Section 25A(i) is amended—

13(1) by striking paragraph (6), and

14(2) by inserting after paragraph (5) the fol-15

lowing new paragraph:16‘‘(6) IDENTIFICATION NUMBERS.—

17‘‘(A) STUDENT.—The requirements of sub-18

section (g)(1) shall not be treated as met with19

respect to the Hope Scholarship Credit unless

20

the individual’s taxpayer identification number21

was issued on or before the due date for filing22

the return of tax for the taxable year.

23‘‘(B) TAXPAYER.—No Hope Scholarship

24

Credit shall be allowed under this section if the25

identifying number of the taxpayer was issued

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H.L.C.

111
1

after the due date for filing the return for the2

taxable year.’’.

3(b) EFFECTIVE DATES.—

4(1) IN GENERAL.—Except as provided in para-

5graph (2), the amendment made by subsection

6(a)(2) shall apply to any return of tax, and any

7amendment or supplement to any return of tax,

8

which is filed after the date of the enactment of this

9

Act.

10

(2) EXCEPTION FOR TIMELY-FILED 2015 RE-

11

TURNS.—The amendment made by subsection (a)(2)12

shall not apply to any return of tax (other than an

13amendment or supplement to any return of tax) for14

any taxable year which includes the date of the en-15

actment of this Act if such return is filed on or be-16

fore the due date for such return of tax.

17(3) REPEAL OF DEADWOOD.—The amendment

18

made by subsection (a)(1) shall take effect on the19date of the enactment of this Act.

20

SEC. 207. PROCEDURES TO REDUCE IMPROPER CLAIMS.

21

(a)

DUE

DILIGENCEREQUIREMENTS.—Section

22 6695(g) is amended—
23
24(1) by striking ‘‘section 32’’and inserting ‘‘section 24, 25A(a)(1), or 32’’, and

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H.L.C.

112
1(2) in the heading by inserting ‘‘CHILD TAX

2

CREDIT; AMERICAN OPPORTUNITY TAX CREDIT;

3

AND’’ before ‘‘EARNED INCOME CREDIT’’.

4(b) RETURN PREPARER DUE DILIGENCE STUDY.—

5(1) IN GENERAL.—The Secretary of the Treas-

6

ury, or his delegate, shall conduct a study of the ef-

7fectiveness of tax return preparer due diligence re-8quirements for claiming the earned income tax credit

9

under section 32 of the Internal Revenue Code of10

1986, the child tax credit under section 24 of such

11

Code, and the American opportunity tax credit

12

under section 25A(i) of such Code.

1314(2) REQUIREMENTS.—Such study shall include
an evaluation of the following:

15(A) The effectiveness of the questions cur-16

rently asked as part of the due-diligence re-17

quirement with respect to minimizing error and18

fraud.

19(B) Whether all such questions are nec-

20

essary and support improved compliance.

21(C) The comparative effectiveness of such

22questions relative to other means of deter-23

mining (i) eligibility for these tax credits and24(ii) the correct amount of tax credit.

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H.L.C.

113
1(D) Whether due diligence of this type2

should apply to other methods of tax filing and3

whether such requirements should vary based

4on the methods to increase effectiveness.

5(E) The effectiveness of the preparer pen-

6

alty under section 6695(g) in enforcing the due

7diligence requirements.

8(3) REPORT.—The Secretary, or his delegate,

9

shall submit to the Committee on Ways and Means

10of the House of Representatives and the Committee

11

on Finance of the Senate a report detailing the12

study and its findings—

13(A) in the case of the portion of the study

14

that relates to the earned income tax credit, not15later than 1 year after the date of enactment of

16

this Act, and

17(B) in the case of the portions of the study

18

that relate to the child tax credit and the Amer-19

ican opportunity tax credit, not later than 2

20years after the date of the enactment of this

21

Act.

22

(c) EFFECTIVE DATE.—The amendment made by

23 this section shall apply to taxable years beginning after
24 December 31, 2015.

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H.L.C.

114
1

SEC. 208. RESTRICTIONS ON TAXPAYERS WHO IMPROP-

2

ERLY CLAIMED CREDITS IN PRIOR YEAR.

3(a) RESTRICTIONS.—

4(1) CHILD TAX CREDIT.—Section 24 is amend-5

ed by adding at the end the following new sub-6

section:7‘‘(g) RESTRICTIONS ON TAXPAYERS WHO IMPROP-

8

ERLY CLAIMED CREDIT IN PRIOR YEAR.—

910‘‘(1) TAXPAYERS MAKING PRIOR FRAUDULENTOR RECKLESS CLAIMS.—

11‘‘(A) IN GENERAL.—No credit shall be al-

12

lowed under this section for any taxable year in13

the disallowance period.

14‘‘(B) DISALLOWANCE PERIOD.—For pur-15

poses of subparagraph (A), the disallowance pe-

16

riod is—17‘‘(i) the period of 10 taxable years

18

after the most recent taxable year for

19

which there was a final determination that20

the taxpayer’s claim of credit under this21

section was due to fraud, and22‘‘(ii) the period of 2 taxable years

23

after the most recent taxable year for24

which there was a final determination that25

the taxpayer’s claim of credit under this26

section was due to reckless or intentional

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H.L.C.

1151

disregard of rules and regulations (but not2

due to fraud).

3‘‘(2) TAXPAYERS

MAKING

IMPROPER

PRIOR

4CLAIMS.—In the case of a taxpayer who is denied

5

credit under this section for any taxable year as a6result of the deficiency procedures under subchapter

7

B of chapter 63, no credit shall be allowed under

8

this section for any subsequent taxable year unless9

the taxpayer provides such information as the Sec-10

retary may require to demonstrate eligibility for11such credit.’’.

12(2) AMERICAN OPPORTUNITY TAX CREDIT.—

13

Section 25A(i), as amended by the preceding provi-

14

sions of this Act, is amended by adding at the end

15

the following new paragraph:1617‘‘(7) RESTRICTIONS ON TAXPAYERS WHO IMPROPERLY CLAIMED CREDIT IN PRIOR YEAR.—

18‘‘(A) TAXPAYERS MAKING PRIOR FRAUDU-

19

LENT OR RECKLESS CLAIMS.—

20‘‘(i) IN GENERAL.—No credit shall be

21

allowed under this section for any taxable

22

year in the disallowance period.

23‘‘(ii) DISALLOWANCEPERIOD.—For24

purposes of clause (i), the disallowance pe-

25

riod is—L:\vr\121515\R121515.006.xml
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H.L.C.

116
1‘‘(I) the period of 10 taxable

2

years after the most recent taxable

3

year for which there was a final deter-

4mination that the taxpayer’s claim of5

credit under this section was due to6

fraud, and7‘‘(II) the period of 2 taxable

8

years after the most recent taxable

9

year for which there was a final deter-

10mination that the taxpayer’s claim of11

credit under this section was due to12

reckless or intentional disregard of13

rules and regulations (but not due to14

fraud).

15‘‘(B)

TAXPAYERS

MAKING

IMPROPER16

PRIOR CLAIMS.—In the case of a taxpayer who

17

is denied credit under this section for any tax-

18

able year as a result of the deficiency proce-

19

dures under subchapter B of chapter 63, no20

credit shall be allowed under this section for21

any subsequent taxable year unless the taxpayer

22

provides such information as the Secretary may

23

require to demonstrate eligibility for such cred-24

it.’’.

25(b) MATH ERROR AUTHORITY.—

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H.L.C.

117
1(1) EARNEDINCOMETAXCREDIT.—Section

26213(g)(2)(K) is amended by inserting before the3comma at the end the following: ‘‘or an entry on the4

return claiming the credit under section 32 for a

5

taxable year for which the credit is disallowed under

6

subsection (k)(1) thereof’’.

7(2) AMERICAN OPPORTUNITY TAX CREDIT AND

8

CHILD TAX CREDIT.—Section 6213(g)(2), as amend-9

ed by the preceding provisions of this Act, is amend-10

ed by striking ‘‘and’’ at the end of subparagraph

11(N), by striking the period at the end of subpara-

12

graph (O), and by inserting after subparagraph (O)13the following new subparagraphs:

14‘‘(P) an omission of information required15

by section 24(h)(2) or an entry on the return16

claiming the credit under section 24 for a tax-

17

able year for which the credit is disallowed

18

under subsection (h)(1) thereof, and19‘‘(Q) an omission of information required20

by section 25A(i)(8)(B) or an entry on the re-21

turn claiming the credit determined under sec-

22

tion 25A(i) for a taxable year for which the23credit is disallowed under paragraph (8)(A)24

thereof.’’.

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H.L.C.

1181(c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after
3 December 31, 2015.
4

SEC. 209. TREATMENT OF CREDITS FOR PURPOSES OF CER-

5

TAIN PENALTIES.

6(a) APPLICATION OF UNDERPAYMENT PENALTIES.—

7 Section 6664(a) is amended by adding at the end the fol8 lowing: ‘‘A rule similar to the rule of section 6211(b)(4)
9 shall apply for purposes of this subsection.’’.
10(b) PENALTY FOR ERRONEOUS CLAIM OF CREDIT

11 MADE APPLICABLE TO EARNED INCOME CREDIT.—Sec12 tion 6676(a) is amended by striking ‘‘(other than a claim
13 for a refund or credit relating to the earned income credit
14 under section 32)’’.
1516(c) REASONABLE CAUSE EXCEPTION FOR ERRONEOUS CLAIM FOR REFUND OR CREDIT.—

17(1) IN GENERAL.—Section 6676(a) is amended18

by striking ‘‘has a reasonable basis’’ and inserting

19‘‘is due to reasonable cause’’.

20

(2)

NONECONOMIC

SUBSTANCETRANS-

21

ACTIONS.—Section 6676(c) is amended by striking

22‘‘having a reasonable basis’’ and inserting ‘‘due to23

reasonable cause’’.

24(d) EFFECTIVE DATES.—

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H.L.C.

119
1(1) UNDERPAYMENT PENALTIES.—The amend-

2

ment made by subsection (a) shall apply to—3(A) returns filed after the date of the en-4

actment of this Act, and

5(B) returns filed on or before such date if

6

the period specified in section 6501 of the In-

7

ternal Revenue Code of 1986 for assessment of8

the taxes with respect to which such return re-9lates has not expired as of such date.

10(2) PENALTY FOR ERRONEOUS CLAIM OF CRED-

11

IT.—The amendment made by subsection (b) shall12

apply to claims filed after the date of the enactment

13of this Act.

14

SEC. 210. INCREASE THE PENALTY APPLICABLE TO PAID

15

TAX PREPARERS WHO ENGAGE IN WILLFUL

16

OR RECKLESS CONDUCT.

17(a) IN GENERAL.—Section 6694(b)(1)(B) is amend-

18 ed by striking ‘‘50 percent’’ and inserting ‘‘75 percent’’.
19(b) EFFECTIVE DATE.—The amendment made by

20 this section shall apply to returns prepared for taxable
21 years ending after the date of the enactment of this Act.

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H.L.C.

120
1

SEC. 211. EMPLOYER IDENTIFICATION NUMBER REQUIRED2
3

FOR AMERICAN OPPORTUNITY TAX CREDIT.

(a) IN GENERAL.—Section 25A(i)(6), as added by

4 this Act, is amended by adding at the end the following
5 new subparagraph:6‘‘(C) INSTITUTION.—No Hope Scholarship

7

Credit shall be allowed under this section unless

8

the taxpayer includes the employer identifica-

9tion number of any institution to which quali-

10

fied tuition and related expenses were paid with

11

respect to the individual.’’.

12

(b)

INFORMATIONREPORTING.—Section

13 6050S(b)(2) is amended by striking ‘‘and’’ at the end of
14 subparagraph (B), by redesignating subparagraph (C) as
15 subparagraph (D), and by inserting after subparagraph
16 (B) the following new subparagraph:17‘‘(C) the employer identification number of18

the institution, and’’.

19(c) EFFECTIVE DATE.—

20(1) SUBSECTION (a).—The amendments made21

by subsection (a) shall apply to taxable years begin-

22

ning after December 31, 2015.

23(2) SUBSECTION (b).—The amendments made24

by subsection (b) shall apply to expenses paid after25

December 31, 2015, for education furnished in aca-26

demic periods beginning after such date.

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H.L.C.

121
1

SEC. 212. HIGHER EDUCATION INFORMATION REPORTING

2

ONLY TO INCLUDE QUALIFIED TUITION AND

3

RELATED EXPENSES ACTUALLY PAID.

4(a) IN GENERAL.—Section 6050S(b)(2)(B)(i) is

5 amended by striking ‘‘or the aggregate amount billed’’.
6(b) EFFECTIVE DATE.—The amendments made by

7 subsection (b) shall apply to expenses paid after December
8 31, 2015, for education furnished in academic periods be9 ginning after such date.

12

TITLE III—MISCELLANEOUSPROVISIONS
Subtitle A—Family Tax Relief

13SEC. 301. EXCLUSION FOR AMOUNTS RECEIVED UNDER

14

THE WORK COLLEGES PROGRAM.

10
11

15

(a) IN GENERAL.—Paragraph (2) of section 117(c)16 is amended by striking ‘‘or’’ at the end of subparagraph
17 (A), by striking the period at the end of subparagraph
18 (B) and inserting ‘‘, or’’, and by adding at the end the
19 following new subparagraph:
20‘‘(C) a comprehensive student work-learn-21

ing-service program (as defined in section22448(e) of the Higher Education Act of 1965)

23

operated by a work college (as defined in such

24

section).’’.

25(b) EFFECTIVE DATE.—The amendments made by

26 this section shall apply to amounts received in taxable
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H.L.C.

122
1 years beginning after the date of the enactment of this2 Act.
3

SEC. 302. IMPROVEMENTS TO SECTION 529 ACCOUNTS.

4(a) COMPUTER TECHNOLOGY AND EQUIPMENT PER-

5

MANENTLY

6

CATION EXPENSE FOR SECTION 529 ACCOUNTS.—

78

ALLOWED AS A QUALIFIED HIGHER EDU-

(1) IN GENERAL.—Section 529(e)(3)(A)(iii) is
amended to read as follows:

9‘‘(iii) expenses for the purchase of10

computer or peripheral equipment (as de-11

fined in section 168(i)(2)(B)), computer

12

software13

197(e)(3)(B)), or Internet access and re-14

lated services, if such equipment, software,15

or services are to be used primarily by the16

beneficiary during any of the years the17

beneficiary is enrolled at an eligible edu-

18

cational institution.’’.

(asdefinedinsection19(2) EFFECTIVE DATE.—The amendment made20

by this subsection shall apply to taxable years begin-

21

ning after December 31, 2014.

22(b) ELIMINATION OF DISTRIBUTION AGGREGATION

23 REQUIREMENTS.—
24
25(1) IN GENERAL.—Section 529(c)(3) is amended by striking subparagraph (D).

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H.L.C.

123
1(2) EFFECTIVE DATE.—The amendment made2by this subsection shall apply to distributions after3

December 31, 2014.

4(c) RECONTRIBUTION OF REFUNDED AMOUNTS.—

5

(1)

IN

GENERAL.—Section

529(c)(3),as

6amended by subsection (b), is amended by adding at

7

the end the following new subparagraph:8‘‘(D) SPECIAL RULE FOR CONTRIBUTIONS

9OF REFUNDED AMOUNTS.—In10beneficiary who receives a refund of any quali-

11

fied higher education expenses from an eligible

12

educational institution, subparagraph (A) shall13

not apply to that portion of any distribution for14

the taxable year which is recontributed to a15

qualified tuition program of which such indi-

16

vidual is a beneficiary, but only to the extent

17such recontribution is made not later than 60

18days after the date of such refund and does not

19

exceed the refunded amount.’’.

20(2) EFFECTIVE DATE.—

the case of a

21(A) IN GENERAL.—The amendment made22by this subsection shall apply with respect to23

refunds of qualified higher education expenses

24

after December 31, 2014.

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H.L.C.

124
1(B) TRANSITION RULE.—In the case of a2

refund of qualified higher education expenses

3

received after December 31, 2014, and before

4

the date of the enactment of this Act, section

5529(c)(3)(D) of the Internal Revenue Code of61986 (as added by this subsection) shall be ap-

7

plied by substituting ‘‘not later than 60 days

8

after the date of the enactment of this subpara-

9graph’’ for ‘‘not later than 60 days after the

10date of such refund’’.

11

SEC. 303. ELIMINATION OF RESIDENCY REQUIREMENT FOR

12
13

QUALIFIED ABLE PROGRAMS.

(a) IN GENERAL.—Section 529A(b)(1) is amended by

14 striking subparagraph (C), by inserting ‘‘and’’ at the end
15 of subparagraph (B), and by redesignating subparagraph
16 (D) as subparagraph (C).
17(b) CONFORMING AMENDMENTS.—

18
19(1) The second sentence of section 529A(d)(3)is amended by striking ‘‘and State of residence’’.

20(2) Section 529A(e) is amended by striking

21

paragraph (7).

22(c) TECHNICAL AMENDMENTS.—

23
24(1) Section 529A(d)(4) is amended by striking‘‘section 4’’ and inserting ‘‘section 103’’.

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H.L.C.

125
1(2) Section 529A(c)(1)(C)(i) is amended by2

striking ‘‘family member’’ and inserting ‘‘member of3

the family’’.

4(d) EFFECTIVE DATE.—The amendments made by

5 this section shall apply to taxable years beginning after
6 December 31, 2014.
7

SEC. 304. EXCLUSION FOR WRONGFULLY INCARCERATED

8INDIVIDUALS.

9(a) IN GENERAL.—Part III of subchapter B of chap-

10 ter 1 is amended by inserting before section 140 the fol11 lowing new section:
12‘‘SEC. 139F. CERTAIN AMOUNTS RECEIVED BY WRONG-

13

FULLY INCARCERATED INDIVIDUALS.

14‘‘(a) EXCLUSION FROM GROSS INCOME.—In the case

15 of any wrongfully incarcerated individual, gross income
16 shall not include any civil damages, restitution, or other17 monetary award (including compensatory or statutory
18 damages and restitution imposed in a criminal matter) re19 lating to the incarceration of such individual for the cov20 ered offense for which such individual was convicted.
21‘‘(b) WRONGFULLY INCARCERATED INDIVIDUAL.—

22 For purposes of this section, the term ‘wrongfully incar23 cerated individual’ means an individual—
24‘‘(1) who was convicted of a covered offense,

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H.L.C.

1261‘‘(2) who served all or part of a sentence of im-2

prisonment relating to that covered offense, and3‘‘(3)(A) who was pardoned, granted clemency,

4

or granted amnesty for that covered offense because

5that individual was innocent of that covered offense,

6

or

7

‘‘(B)(i) for whom the judgment of conviction for

8that covered offense was reversed or vacated, and9‘‘(ii) for whom the indictment, information, or

10other accusatory instrument for that covered offense11

was dismissed or who was found not guilty at a new

12

trial after the judgment of conviction for that cov-

13

ered offense was reversed or vacated.

14‘‘(c) COVERED OFFENSE.—For purposes of this sec-

15 tion, the term ‘covered offense’ means any criminal offense
16 under Federal or State law, and includes any criminal of17 fense arising from the same course of conduct as that18 criminal offense.’’.
19(b) CONFORMING AMENDMENT.—The table of sec-

20 tions for part III of subchapter B of chapter 1 is amended
21 by inserting after the item relating to section 139E the
22 following new item:‘‘Sec. 139F. Certain amounts received by wrongfully incarcerated individuals.’’.

23(c) EFFECTIVE DATE.—The amendments made by

24 this section shall apply to taxable years beginning before,
25 on, or after the date of the enactment of this Act.
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H.L.C.

127
1(d) WAIVER OF LIMITATIONS.—If the credit or re-

2 fund of any overpayment of tax resulting from the applica3 tion of this Act to a period before the date of enactment
4 of this Act is prevented as of such date by the operation
5 of any law or rule of law (including res judicata), such
6 credit or refund may nevertheless be allowed or made if
7 the claim therefor is filed before the close of the 1-year
8 period beginning on the date of the enactment of this Act.
9

SEC. 305. CLARIFICATION OF SPECIAL RULE FOR CERTAIN

1011GOVERNMENTAL PLANS.

(a) IN GENERAL.—Paragraph (1) of section 105(j)12 is amended—13
14(1) by striking ‘‘the taxpayer’’ and inserting ‘‘aqualified taxpayer’’, and

15(2) by striking ‘‘deceased plan participant’s

16

beneficiary’’ and inserting ‘‘deceased employee’s ben-17

eficiary (other than an individual described in para-

18

graph (3)(B))’’.

19(b) QUALIFIED TAXPAYER.—Subsection (j) of section

20 105 is amended by adding at the end the following new
21 paragraph:22‘‘(3) QUALIFIED TAXPAYER.—For purposes of23paragraph (1), with respect to an accident or health

24plan described in paragraph (2), the term ‘qualified

25

taxpayer’ means a taxpayer who is—

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H.L.C.

1281‘‘(A) an employee, or2‘‘(B) the spouse, dependent (as defined for3

purposes of subsection (b)), or child (as defined4

for purposes of such subsection) of an em-

5ployee.’’.

6(c) APPLICATION TO POLITICAL SUBDIVISIONS OF

7 STATES.—Paragraph (2) of section 105(j) is amended—
8(1) by inserting ‘‘or established by or on behalf

9of a State or political subdivision thereof’’ after

10‘‘public retirement system’’, and

11(2) by inserting ‘‘or 501(c)(9)’’ after ‘‘section

12115’’ in subparagraph (B).

13(d) EFFECTIVE DATE.—The amendments made by

14 this section shall apply to payments after the date of the
15 enactment of this Act.
16

SEC. 306. ROLLOVERS PERMITTED FROM OTHER RETIRE-

17

MENT PLANS INTO SIMPLE RETIREMENT AC-

18

COUNTS.

19(a) IN GENERAL.—Section 408(p)(1)(B) is amended

20 by inserting ‘‘except in the case of a rollover contribution
21 described in subsection (d)(3)(G) or a rollover contribution
22 otherwise described in subsection (d)(3) or in section
23 402(c), 403(a)(4), 403(b)(8), or 457(e)(16), which is
24 made after the 2-year period described in section

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H.L.C.

129
1 72(t)(6),’’ before ‘‘with respect to which the only contribu2 tions allowed’’.
3(b) EFFECTIVE DATE.—The amendments made by

4 this section shall apply to contributions made after the
5 date of the enactment of this Act.
6

SEC. 307. TECHNICAL AMENDMENT RELATING TO ROLL-

7

OVER

8

AMOUNTS.

9OF

CERTAINAIRLINE

PAYMENT(a) IN GENERAL.—Section 1106(a) of the FAA Mod-

10 ernization and Reform Act of 2012 (26 U.S.C. 408 note)
11 is amended by adding at the end the following new para12 graph:13‘‘(6) SPECIAL RULE FOR CERTAIN AIRLINE PAY-

14

MENT AMOUNTS.—In the case of any amount which15

became an airline payment amount by reason of the16

amendments made by section 1(b) of Public Law

17

113–243 (26 U.S.C. 408 note), paragraph (1) shall18

be applied by substituting ‘(or, if later, within the

19

period beginning on December 18, 2014, and ending

20

on the date which is 180 days after the date of en-

21

actment of the Protecting Americans from Tax

22

Hikes Act of 2015)’ for ‘(or, if later, within 180

23days of the date of the enactment of this Act)’.’’.

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H.L.C.

1301(b) EFFECTIVE DATE.—The amendment made by

2 this section shall take effect as if included in Public Law
3 113–243 (26 U.S.C. 408 note).
4SEC. 308. TREATMENT OF EARLY RETIREMENT DISTRIBU-

5TIONS FOR NUCLEAR MATERIALS COURIERS,

6

UNITED STATES CAPITOL POLICE, SUPREME

7

COURT POLICE, AND DIPLOMATIC SECURITY

8

SPECIAL AGENTS.

9(a) IN GENERAL.—Section 72(t)(10)(B)(ii), as added

10 by Public Law 114–26, is amended by striking ‘‘or any’’
11 and inserting ‘‘any’’ and by inserting before the period at
12 the end the following: ‘‘, any nuclear materials courier de13 scribed in section 8331(27) or 8401(33) of such title, any
14 member of the United States Capitol Police, any member
15 of the Supreme Court Police, or any diplomatic security
16 special agent of the Department of State’’.
17(b) EFFECTIVE DATE.—The amendments made by

18 this section shall apply to distributions after December 31,
19 2015.
20

SEC. 309. PREVENTION OF EXTENSION OF TAX COLLEC-

21

TION PERIOD FOR MEMBERS OF THE ARMED

22

FORCES WHO ARE HOSPITALIZED AS A RE-

23

SULT OF COMBAT ZONE INJURIES.

24(a) IN GENERAL.—Section 7508(e) is amended by

25 adding at the end the following new paragraph:

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H.L.C.

1311‘‘(3) COLLECTION PERIOD AFTER ASSESSMENT

2NOT EXTENDED AS A RESULT OF HOSPITALIZA-

3

TION.—With

4

qualified hospitalization described in subsection (a)5and the next 180 days thereafter, subsection (a)6shall not apply in the application of section 6502.’’.

7(b) EFFECTIVE DATE.—The amendment made byrespect to any period of continuous

8 this section shall apply to taxes assessed before, on, or
9 after the date of the enactment of this Act.

Subtitle B—Real Estate Investment
11
Trusts1012SEC. 311. RESTRICTION ON TAX-FREE SPINOFFS INVOLV-

13
14

ING REITS.

(a) IN GENERAL.—Section 355 is amended by adding

15 at the end the following new subsection:
16‘‘(h) RESTRICTION ON DISTRIBUTIONS INVOLVING

17 REAL ESTATE INVESTMENT TRUSTS.—
18‘‘(1) IN GENERAL.—This section (and so much19of section 356 as relates to this section) shall not

20

apply to any distribution if either the distributing

21

corporation or controlled corporation is a real estate22

investment trust.

23‘‘(2) EXCEPTIONS FOR CERTAIN SPINOFFS.—

24‘‘(A) SPINOFFS OF A REAL ESTATE IN-

25

VESTMENT TRUST BY ANOTHER REAL ESTATE

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H.L.C.

132
1

INVESTMENT TRUST.—Paragraph (1) shall not2

apply to any distribution if, immediately after3

the distribution, the distributing corporation4and the controlled corporation are both real es-

5tate investment trusts.

6‘‘(B) SPINOFFSOFCERTAIN

7

REIT SUBSIDIARIES.—Paragraph8

apply to any distribution if—

TAXABLE(1) shall not

9‘‘(i) the distributing corporation has

10been a real estate investment trust at all

11times during the 3-year period ending on

12

the date of such distribution,

13‘‘(ii) the controlled corporation has

14

been a taxable REIT subsidiary (as de-15

fined in section 856(l)) of the distributing

16

corporation at all times during such pe-17riod, and18‘‘(iii) the distributing corporation had

19control (as defined in section 368(c) ap-

20

plied by taking into account stock owned

21

directly or indirectly, including through22

one or more corporations or partnerships,

23

by the distributing corporation) of the con-24

trolled corporation at all times during such

25

period.

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H.L.C.

133
1

A controlled corporation will be treated as2

meeting the requirements of clauses (ii) and3(iii) if the stock of such corporation was distrib-

4

uted by a taxable REIT subsidiary in a trans-

5

action to which this section (or so much of sec-

6

tion 356 as relates to this section) applies and7

the assets of such corporation consist solely of8the stock or assets of assets held by one or9more taxable REIT subsidiaries of the distrib-

10

uting corporation meeting the requirements of

11

clauses (ii) and (iii). For purposes of clause

12(iii), control of a partnership means ownership13of 80 percent of the profits interest and 80 per-14

cent of the capital interests.’’.

15(b) PREVENTION OF REIT ELECTION FOLLOWING

16 TAX-FREE SPIN OFF.—Section 856(c) is amended by re17 designating paragraph (8) as paragraph (9) and by insert18 ing after paragraph (7) the following new paragraph:19‘‘(8) ELECTION AFTER TAX-FREE REORGANIZA-

20

TION.—If a corporation was a distributing corpora-

21

tion or a controlled corporation (other than a con-22

trolled corporation with respect to a distribution de-23

scribed in section 355(h)(2)(A)) with respect to any

24

distribution to which section 355 (or so much of sec-

25

tion 356 as relates to section 355) applied, such cor-

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H.L.C.

1341

poration (and any successor corporation) shall not2

be eligible to make any election under paragraph (1)3

for any taxable year beginning before the end of the4

10-year period beginning on the date of such dis-5

tribution.’’.

6(c) EFFECTIVE DATE.—The amendments made by

7 this section shall apply to distributions on or after Decem8 ber 7, 2015, but shall not apply to any distribution pursu9 ant to a transaction described in a ruling request initially
10 submitted to the Internal Revenue Service on or before
11 such date, which request has not been withdrawn and with
12 respect to which a ruling has not been issued or denied
13 in its entirety as of such date.
14

SEC. 312. REDUCTION IN PERCENTAGE LIMITATION ON AS-

15

SETS OF REIT WHICH MAY BE TAXABLE REIT

16

SUBSIDIARIES.

17

(a)

IN

GENERAL.—Section

856(c)(4)(B)(ii)is18 amended by striking ‘‘25 percent’’ and inserting ‘‘20 per19 cent’’.
20(b) EFFECTIVE DATE.—The amendment made by

21 this section shall apply to taxable years beginning after
22 December 31, 2017.

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H.L.C.

135
1

SEC. 313. PROHIBITED TRANSACTION SAFE HARBORS.

2(a) ALTERNATIVE 3–YEAR AVERAGING TEST FOR

3 PERCENTAGE OF ASSETS THAT CAN BE SOLD ANNU4

ALLY.—

5(1) IN

GENERAL.—Clause(iii) of section

6857(b)(6)(C) is amended by inserting before the7semicolon at the end the following: ‘‘, or (IV) the8trust satisfies the requirements of subclause (II) ap-

9plied by substituting ‘20 percent’ for ‘10 percent’10

and the 3-year average adjusted bases percentage

11

for the taxable year (as defined in subparagraph12(G)) does not exceed 10 percent, or (V) the trust

13

satisfies the requirements of subclause (III) applied

14

by substituting ‘20 percent’ for ‘10 percent’ and the15

3-year average fair market value percentage for the

16

taxable year (as defined in subparagraph (H)) does17

not exceed 10 percent’’.

18(2) 3-YEAR AVERAGE ADJUSTED BASES AND

19

FAIR

20

(6) of section 857(b) is amended by redesignating

21

subparagraphs (G) and (H) as subparagraphs (I)22

and (J), respectively, and by inserting after subpara-

23

graph (F) the following new subparagraphs:

MARKET

24

VALUE

PERCENTAGES.—Paragraph‘‘(G) 3-YEAR AVERAGE ADJUSTED BASES

25

PERCENTAGE.—The26

justed bases percentage’ means, with respect toterm ‘3-year average ad-

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H.L.C.

1361

any taxable year, the ratio (expressed as a per-2

centage) of—3‘‘(i) the aggregate adjusted bases (as4determined for purposes of computing

5

earnings and profits) of property (other6

than sales of foreclosure property or sales

7

to which section 1033 applies) sold during

8

the 3 taxable year period ending with such9

taxable year, divided by

10‘‘(ii) the sum of the aggregate ad-11justed bases (as so determined) of all of

12

the assets of the trust as of the beginning13

of each of the 3 taxable years which are

14part of the period referred to in clause (i).

15‘‘(H) 3-YEAR

AVERAGEFAIR

MARKET

16

VALUE PERCENTAGE.—The17

age fair market value percentage’ means, with18

respect to any taxable year, the ratio (expressed19

as a percentage) of—

term ‘3-year aver-

20‘‘(i) the fair market value of property

21(other than sales of foreclosure property or

22sales to which section 1033 applies) sold23

during the 3 taxable year period ending

24

with such taxable year, divided by

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H.L.C.

137
1‘‘(ii) the sum of the fair market value

2of all of the assets of the trust as of the3

beginning of each of the 3 taxable years

4

which are part of the period referred to in

5clause (i).’’.

6(3) CONFORMING AMENDMENTS.—Clause (iv)7of section 857(b)(6)(D) is amended by adding ‘‘or’’8

at the end of subclause (III) and by adding at the9end the following new subclauses:

10‘‘(IV) the trust satisfies the re-11quirements of subclause (II) applied

12

by substituting ‘20 percent’ for ‘10

13

percent’ and the 3-year average ad-

14

justed bases percentage for the tax-

15

able year (as defined in subparagraph16(G)) does not exceed 10 percent, or

17‘‘(V) the trust satisfies the re-18

quirements of subclause (III) applied

19

by substituting ‘20 percent’ for ‘10

20

percent’ and the 3-year average fair21

market value percentage for the tax-

22

able year (as defined in subparagraph23(H)) does not exceed 10 percent,’’.

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H.L.C.

1381(b) APPLICATION OF SAFE HARBORS INDEPENDENT

2

OF DETERMINATION WHETHER REAL ESTATE ASSET IS

3 INVENTORY PROPERTY.—
4(1) IN GENERAL.—Subparagraphs (C) and (D)5of section 857(b)(6) are each amended by striking

6‘‘and which is described in section 1221(a)(1)’’ in7

the matter preceding clause (i).

8(2) NO INFERENCE FROM SAFE HARBORS.—

9

Subparagraph (F) of section 857(b)(6) is amended10

to read as follows:11‘‘(F) NO INFERENCE WITH RESPECT TO

12TREATMENT AS INVENTORY PROPERTY.—The13

determination of whether property is described

14

in section 1221(a)(1) shall be made without re-15

gard to this paragraph.’’.

16(c) EFFECTIVE DATES.—

17(1) IN GENERAL.—The amendments made by18

subsection (a) shall apply to taxable years beginning

19

after the date of the enactment of this Act.

20(2) APPLICATION OF SAFE HARBORS.—

21(A) IN GENERAL.—Except as provided in

22

subparagraph (B), the amendments made by23

subsection (b) shall take effect as if included in

24

section 3051 of the Housing Assistance Tax

25

Act of 2008.

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H.L.C.

139
1(B) RETROACTIVE APPLICATION OF NO IN-

2

FERENCE NOT APPLICABLE TO CERTAIN TIM-

3

BER PROPERTY PREVIOUSLY TREATED AS NOT

4

INVENTORY PROPERTY.—The amendment made5

by subsection (b)(2) shall not apply to any sale6of property to which section 857(b)(6)(G) of the

7

Internal Revenue Code of 1986 (as in effect on

8

the day before the date of the enactment of this9Act) applies.

10

SEC. 314. REPEAL OF PREFERENTIAL DIVIDEND RULE FOR

11
12

PUBLICLY OFFERED REITS.

(a) IN GENERAL.—Section 562(c) is amended by in-

13 serting ‘‘or a publicly offered REIT’’ after ‘‘a publicly of14 fered regulated investment company (as defined in section
15 67(c)(2)(B))’’.
16(b) PUBLICLY OFFERED REIT.—Section 562(c), as

17 amended by subsection (a), is amended—18
19(1) by striking ‘‘Except in the case of’’ and inserting the following:

20‘‘(1) IN GENERAL.—Except in the case of’’, and21(2) by adding at the end the following new22

paragraph:23‘‘(2) PUBLICLY OFFERED REIT.—For purposes

24of this subsection, the term ‘publicly offered REIT’

25

means a real estate investment trust which is re-

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H.L.C.

140
1

quired to file annual and periodic reports with the2

Securities and Exchange Commission under the Se-

3curities Exchange Act of 1934.’’.

4(c) EFFECTIVE DATE.—The amendments made by

5 this section shall apply to distributions in taxable years
6 beginning after December 31, 2014.
7

SEC. 315. AUTHORITY FOR ALTERNATIVE REMEDIES TO AD-

8DRESS CERTAIN REIT DISTRIBUTION FAIL-

9

URES.

10

(a) IN GENERAL.—Subsection (e) of section 562 is

11 amended—1213(1) by striking ‘‘In the case of a real estate investment trust’’ and inserting the following:

14‘‘(1) DETERMINATION OF EARNINGS AND PROF-

15

ITS FOR PURPOSES OF DIVIDENDS PAID DEDUC-

16

TION.—In

17

trust’’, and18
19

the case of a real estate investment(2) by adding at the end the following newparagraph:20‘‘(2) AUTHORITY

TO PROVIDE ALTERNATIVE

21

REMEDIES FOR CERTAIN FAILURES.—In the case of

22

a failure of a distribution by a real estate investment

23

trust to comply with the requirements of subsection

24(c), the Secretary may provide an appropriate rem-25

edy to cure such failure in lieu of not considering

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H.L.C.

1411

the distribution to be a dividend for purposes of

2computing the dividends paid deduction if—

3‘‘(A) the Secretary determines that such4

failure is inadvertent or is due to reasonable

5

cause and not due to willful neglect, or

6‘‘(B) such failure is of a type of failure

7

which the Secretary has identified for purposes

8of this paragraph as being described in sub-9

paragraph (A).’’.

10(b) EFFECTIVE DATE.—The amendments made by

11 this section shall apply to distributions in taxable years
12 beginning after December 31, 2015.
13

SEC. 316. LIMITATIONS ON DESIGNATION OF DIVIDENDS BY

14REITS.

15(a) IN GENERAL.—Section 857 is amended by redes-

16 ignating subsection (g) as subsection (h) and by inserting
17 after subsection (f) the following new subsection:
1819‘‘(g) LIMITATIONSONDESIGNATION

OF

DIVI-

DENDS.—

20‘‘(1) OVERALL

LIMITATION.—Theaggregate

21

amount of dividends designated by a real estate in-22vestment trust under subsections (b)(3)(C) and23(c)(2)(A) with respect to any taxable year may not

24

exceed the dividends paid by such trust with respect

25

to such year. For purposes of the preceding sen-

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H.L.C.

142
1

tence, dividends paid after the close of the taxable

2

year described in section 858 shall be treated as

3

paid with respect to such year.

4‘‘(2) PROPORTIONALITY.—The Secretary may

5prescribe regulations or other guidance requiring the

6

proportionality of the designation of particular types

7of dividends among shares or beneficial interests of

8a real estate investment trust.’’.

9(b) EFFECTIVE DATE.—The amendments made by

10 this section shall apply to distributions in taxable years
11 beginning after December 31, 2015.
12

SEC. 317. DEBT INSTRUMENTS OF PUBLICLY OFFERED

13

REITS AND MORTGAGES TREATED AS REAL

14

ESTATE ASSETS.

15(a) DEBT INSTRUMENTS OF PUBLICLY OFFERED

16 REITS TREATED AS REAL ESTATE ASSETS.—17
18(1) IN GENERAL.—Subparagraph (B) of section
856(c)(5) is amended—

19(A) by striking ‘‘and shares’’ and inserting20‘‘, shares’’, and21(B) by inserting ‘‘, and debt instruments

22

issued by publicly offered REITs’’ before the23

period at the end of the first sentence.

24(2) INCOME FROM NONQUALIFIED DEBT IN-

25

STRUMENTS

OF

PUBLICLY

OFFERED

REITS

NOT

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H.L.C.

143
1

QUALIFIED FOR PURPOSES OF SATISFYING THE 75

2PERCENT GROSS INCOME TEST.—Subparagraph (H)3of section 856(c)(3) is amended by inserting ‘‘(other4

than a nonqualified publicly offered REIT debt in-5

strument)’’ after ‘‘real estate asset’’.

6(3) 25 PERCENT ASSET LIMITATION ON HOLD-

7

ING OF NONQUALIFIED DEBT INSTRUMENTS OF PUB-

8LICLY OFFERED REITS.—Subparagraph (B) of sec-

9tion 856(c)(4) is amended by redesignating clause

10(iii) as clause (iv) and by inserting after clause (ii)11

the following new clause:

12‘‘(iii) not more than 25 percent of the

13value of its total assets is represented by

14

nonqualified publicly offered REIT debt in-15

struments, and’’.

16(4) DEFINITIONS RELATED TO DEBT INSTRU-

17

MENTS OF PUBLICLY OFFERED REITS.—Paragraph18(5) of section 856(c) is amended by adding at the19

end the following new subparagraph:20‘‘(L) DEFINITIONS RELATED TO DEBT IN-

21

STRUMENTS OF PUBLICLY OFFERED REITS.—

22‘‘(i) PUBLICLY OFFERED REIT.—The23

term ‘publicly offered REIT’ has the24meaning given such term by section

25562(c)(2).

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H.L.C.

144
1‘‘(ii) NONQUALIFIED

PUBLICLY

OF-

2

FERED

3

term ‘nonqualified publicly offered REIT

4

debt instrument’ means any real estate

5

asset which would cease to be a real estate

6

asset if subparagraph (B) were applied

7

without regard to the reference to ‘debt in-8

struments

9

REITs’.’’.

10

REIT

DEBT

issuedINSTRUMENT.—Thebypublicly

offered(b) INTERESTS IN MORTGAGES ON INTERESTS IN

11 REAL PROPERTY TREATED AS REAL ESTATE ASSETS.—
12 Subparagraph (B) of section 856(c)(5) is amended by in13 serting ‘‘or on interests in real property’’ after ‘‘interests
14 in mortgages on real property’’.
15(c) EFFECTIVE DATE.—The amendments made by

16 this section shall apply to taxable years beginning after
17 December 31, 2015.
18

SEC. 318. ASSET AND INCOME TEST CLARIFICATION RE-

19

GARDING ANCILLARY PERSONAL PROPERTY.

20(a) IN GENERAL.—Subsection (c) of section 856, as

21 amended by the preceding provisions of this Act, is amend22 ed by redesignating paragraph (9) as paragraph (10) and23 by inserting after paragraph (8) the following new para24 graph:

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H.L.C.

145
1‘‘(9) SPECIAL RULES FOR CERTAIN PERSONAL

2

PROPERTY WHICH IS ANCILLARY TO REAL PROP-

3

ERTY.—

4‘‘(A)

CERTAINPERSONAL

PROPERTY

5

LEASED IN CONNECTION WITH REAL PROP-

6

ERTY.—Personal property shall be treated as a7real estate asset for purposes of paragraph

8(4)(A) to the extent that rents attributable to9such personal property are treated as rents

10

from real property under subsection (d)(1)(C).

11

‘‘(B)

CERTAINPERSONAL

PROPERTY

12

MORTGAGED IN CONNECTION WITH REAL PROP-

13

ERTY.—In the case of an obligation secured by

14

a mortgage on both real property and personal

15

property, if the fair market value of such per-16

sonal property does not exceed 15 percent of17

the total fair market value of all such property,

18such obligation shall be treated—

19‘‘(i) for purposes of paragraph (3)(B),20

as an obligation described therein, and21‘‘(ii)

22

forpurposesofparagraph(4)(A), as a real estate asset.

23

For purposes of the preceding sentence, the fair24

market value of all such property shall be deter-

25

mined in the same manner as the fair market

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H.L.C.

146
1

value of real property is determined for pur-2

poses of apportioning interest income between

3

real property and personal property under para-

4graph (3)(B).’’.

5(b) EFFECTIVE DATE.—The amendments made by

6 this section shall apply to taxable years beginning after
7 December 31, 2015.
8

SEC. 319. HEDGING PROVISIONS.

910(a) MODIFICATION TO PERMIT THE TERMINATIONOF A

HEDGING TRANSACTION USING AN ADDITIONAL

11 HEDGING INSTRUMENT.—Subparagraph (G) of section
12 856(c)(5) is amended by striking ‘‘and’’ at the end of
13 clause (i), by striking the period at the end of clause (ii)
14 and inserting ‘‘, and’’, and by adding at the end the fol15 lowing new clause:
16‘‘(iii) if—

17‘‘(I) a real estate investment

18

trust enters into one or more positions

19

described in clause (i) with respect to20

indebtedness described in clause (i) or

21

one or more positions described in22clause (ii) with respect to property

23

which generates income or gain de-24

scribed in paragraph (2) or (3),

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H.L.C.

147
1‘‘(II) any portion of such indebt-

2

edness is extinguished or any portion3of such property is disposed of, and4‘‘(III) in connection with such ex-5tinguishment

6

trust enters into one or more trans-

7

actions which would be hedging trans-

8

actions described in clause (ii) or (iii)9of section 1221(b)(2)(A) with respect

10

to any position referred to in sub-11

clause (I) if such position were ordi-

12nary property,

ordisposition,

such

13

any income of such trust from any position14

referred to in subclause (I) and from any

15transaction referred to in subclause (III)16(including gain from the termination of17

any such position or transaction) shall not

18

constitute gross income under paragraphs

19(2) and (3) to the extent that such trans-

20

action hedges such position.’’.

21(b) IDENTIFICATION REQUIREMENTS.—

22(1) IN GENERAL.—Subparagraph (G) of section

23

856(c)(5), as amended by subsection (a), is amended

24

by striking ‘‘and’’ at the end of clause (ii), by strik-

25

ing the period at the end of clause (iii) and inserting

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H.L.C.

1481‘‘, and’’, and by adding at the end the following new2clause:3‘‘(iv) clauses (i), (ii), and (iii) shall4

not apply with respect to any transaction

5

unless such transaction satisfies the identi-

6

fication requirement described in section

71221(a)(7) (determined after taking into

8

account any curative provisions provided

9

under the regulations referred to there-

10in).’’.

11
12

(2)

CONFORMINGAMENDMENTS.—Subpara-graph (G) of section 856(c)(5) is amended—

13(A) by striking ‘‘which is clearly identified

14

pursuant to section 1221(a)(7)’’ in clause (i),

15

and

16

(B) by striking ‘‘, but only if such trans-

17

action is clearly identified as such before the18close of the day on which it was acquired, origi-

19

nated, or entered into (or such other time as

20

the Secretary may prescribe)’’ in clause (ii).

21(c) EFFECTIVE DATE.—The amendments made by

22 this section shall apply to taxable years beginning after
23 December 31, 2015.

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H.L.C.

149
1

SEC. 320. MODIFICATION OF REIT EARNINGS AND PROFITS

2CALCULATION TO AVOID DUPLICATE TAX-3

ATION.

4(a) EARNINGS AND PROFITS NOT INCREASED BY

5 AMOUNTS ALLOWED IN COMPUTING TAXABLE INCOME IN
6 PRIOR YEARS.—Section 857(d) is amended—78(1) by amending paragraph (1) to read as follows:9‘‘(1) IN GENERAL.—The earnings and profits of

10

a real estate investment trust for any taxable year

11

(but not its accumulated earnings) shall not be re-12

duced by any amount which—

13‘‘(A) is not allowable in computing its tax-

14

able income for such taxable year, and

15‘‘(B) was not allowable in computing its

16

taxable income for any prior taxable year.’’, and17(2) by adding at the end the following new18

paragraphs:

19‘‘(4) REAL ESTATE INVESTMENT TRUST.—For20

purposes of this subsection, the term ‘real estate in-21

vestment trust’ includes a domestic corporation,

22

trust, or association which is a real estate invest-

23

ment trust determined without regard to the require-

24

ments of subsection (a).

25‘‘(5) SPECIAL RULES FOR DETERMINING EARN-

26

INGS AND PROFITS FOR PURPOSES OF THE DEDUC-

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H.L.C.

150
1

TION FOR DIVIDENDS PAID.—For2

determining the earnings and profits of a real estate3

investment trust for purposes of the deduction for

4

dividends paid, see section 562(e)(1).’’.

5(b) EXCEPTION FOR PURPOSES OF DETERMINING

special rules for

6 DIVIDENDS PAID DEDUCTION.—Section 562(e)(1), as
7 amended by the preceding provisions of this Act, is amend8 ed by striking ‘‘deduction, the earnings’’ and all that fol9 lows and inserting the following: ‘‘deduction—
10‘‘(A) the earnings and profits of such trust

11

for any taxable year (but not its accumulated

12

earnings) shall be increased by the amount of

13

gain (if any) on the sale or exchange of real

14

property which is taken into account in deter-

15

mining the taxable income of such trust for

16

such taxable year (and not otherwise taken into

17

account in determining such earnings and prof-18its), and

19‘‘(B) section 857(d)(1) shall be applied

20

without regard to subparagraph (B) thereof.’’.

21(c) EFFECTIVE DATE.—The amendments made by

22 this section shall apply to taxable years beginning after
23 December 31, 2015.

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H.L.C.

151
1

SEC. 321. TREATMENT OF CERTAIN SERVICES PROVIDED

2

BY TAXABLE REIT SUBSIDIARIES.

3(a) TAXABLE REIT SUBSIDIARIES TREATED

IN

4 SAME MANNER AS INDEPENDENT CONTRACTORS FOR
5 CERTAIN PURPOSES.—
6(1) MARKETING AND DEVELOPMENT EXPENSES

7

UNDER RENTAL PROPERTY SAFE HARBOR.—Clause

8(v) of section 857(b)(6)(C) is amended by inserting

9‘‘or a taxable REIT subsidiary’’ before the period at10

the end.

11(2) MARKETING

EXPENSESUNDER

TIMBER

12

SAFE HARBOR.—Clause (v) of section 857(b)(6)(D)13

is amended by striking ‘‘, in the case of a sale on

14

or before the termination date,’’.

15(3) FORECLOSURE PROPERTY GRACE PERIOD.—

16

Subparagraph (C) of section 856(e)(4) is amended

17

by inserting ‘‘or through a taxable REIT subsidiary’’

18

after ‘‘receive any income’’.

19(b) TAX

20

ON

REDETERMINED TRS SERVICE IN-

COME.—

21(1) IN GENERAL.—Subparagraph (A) of section

22857(b)(7) is amended by striking ‘‘and excess inter-

23est’’ and inserting ‘‘excess interest, and redeter-

24

mined TRS service income’’.

25(2) REDETERMINED TRS SERVICE INCOME.—

26

Paragraph (7) of section 857(b) is amended by re-

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H.L.C.

1521

designating subparagraphs (E) and (F) as subpara-

2graphs (F) and (G), respectively, and inserting after

3

subparagraph (D) the following new subparagraph:4‘‘(E) REDETERMINED5TRSSERVICEIN-

COME.—

6‘‘(i) IN GENERAL.—The term ‘redeter-

7

mined TRS service income’ means gross8

income of a taxable REIT subsidiary of a9real estate investment trust attributable to10

services provided to, or on behalf of, such11

trust (less deductions properly allocable

12

thereto) to the extent the amount of such13

income (less such deductions) would (but14

for subparagraph (F)) be increased on dis-15

tribution,

16

under section 482.

apportionment,orallocation

17‘‘(ii) COORDINATION WITH REDETER-

18

MINED RENTS.—Clause (i) shall not apply

19with respect to gross income attributable20

to services furnished or rendered to a ten-21

ant of the real estate investment trust (or22

to deductions properly allocable thereto).’’.

23
24

(3)

CONFORMINGAMENDMENTS.—Subpara-graphs (B)(i) and (C) of section 857(b)(7) are each

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H.L.C.

153
1

amended by striking ‘‘subparagraph (E)’’ and insert-2

ing ‘‘subparagraph (F)’’.

3(c) EFFECTIVE DATE.—The amendments made by

4 this section shall apply to taxable years beginning after
5 December 31, 2015.
6

SEC. 322. EXCEPTION FROM FIRPTA FOR CERTAIN STOCK

78

OF REITS.

(a) MODIFICATIONS OF OWNERSHIP RULES.—

9(1) IN GENERAL.—Section 897 is amended by10

adding at the end the following new subsection:

11‘‘(k) SPECIAL RULES RELATING TO REAL ESTATE

12 INVESTMENT TRUSTS.—
13‘‘(1) INCREASEIN PERCENTAGE OWNERSHIP

14

FOR EXCEPTIONS FOR PERSONS HOLDING PUBLICLY

15

TRADED STOCK.—

16‘‘(A) DISPOSITIONS.—In the case of any

17

disposition of stock in a real estate investment

18

trust, paragraphs (3) and (6)(C) of subsection

19(c) shall each be applied by substituting ‘more

20

than 10 percent’ for ‘more than 5 percent’.

21‘‘(B) DISTRIBUTIONS.—In the case of any

22

distribution from a real estate investment trust,23

subsection (h)(1) shall be applied by sub-24

stituting ‘10 percent’ for ‘5 percent’.

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H.L.C.

15412‘‘(2) STOCK

HELD

BY

QUALIFIEDSHARE-HOLDERS NOT TREATED AS USRPI.—

3‘‘(A) IN GENERAL.—Except as provided in

4

subparagraph (B)—5‘‘(i) stock of a real estate investment

6

trust which is held directly (or indirectly

7

through 1 or more partnerships) by a8

qualified shareholder shall not be treated9

as a United States real property interest,

10

and

11

‘‘(ii)

notwithstanding

subsection

12(h)(1), any distribution to a qualified

13

shareholder shall not be treated as gain

14

recognized from the sale or exchange of a

15

United States real property interest to the16extent the stock of the real estate invest-

17

ment trust held by such qualified share-18

holder is not treated as a United States

19

real property interest under clause (i).

20‘‘(B) EXCEPTION.—In the case of a quali-

21

fied shareholder with 1 or more applicable in-22

vestors—23‘‘(i) subparagraph (A)(i) shall not

24

apply to so much of the stock of a real es-

25tate investment trust held by a qualified

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H.L.C.

155
1

shareholder as bears the same ratio to the2value of the interests (other than interests

3

held solely as a creditor) held by such ap-

4plicable investors in the qualified share-5

holder bears to value of all interests (other6

than interests held solely as a creditor) in7

the qualified shareholder, and8‘‘(ii) a percentage equal to the ratio

9

determined under clause (i) of the amounts

10

realized by the qualified shareholder with

11

respect to any disposition of stock in the12real estate investment trust or with respect

13

to any distribution from the real estate in-14

vestment trust attributable to gain from15

sales or exchanges of a United States real

16

property interest shall be treated as

17

amounts realized from the disposition of18

United States real property interests.

19‘‘(C) SPECIAL RULE FOR CERTAIN DIS-

20

TRIBUTIONS

21

CHANGE.—If a distribution by a real estate in-22vestment trust is treated as a sale or exchange

23of stock under section 301(c)(3), 302, or 331

24

with respect to a qualified shareholder—

TREATED

AS

SALE

OR

EX-

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H.L.C.

1561‘‘(i) in the case of an applicable inves-2

tor, subparagraph (B) shall apply with re-3spect to such distribution, and4‘‘(ii) in the case of any other person,

5such distribution shall be treated under6

section 857(b)(3)(F) as a dividend from a

7

real

8

standing any other provision of this title.

9‘‘(D) APPLICABLE

estateinvestment

trust

notwith-INVESTOR.—For

pur-

10

poses of this paragraph, the term ‘applicable in-11

vestor’ means, with respect to any qualified

12

shareholder holding stock in a real estate in-13

vestment trust, a person (other than a qualified

14

shareholder) which—15‘‘(i) holds an interest (other than an

16

interest solely as a creditor) in such quali-

17

fied shareholder, and18‘‘(ii) holds more than 10 percent of19

the stock of such real estate investment

20

trust (whether or not by reason of the per-21

son’s ownership interest in the qualified

22

shareholder).

23

‘‘(E)

CONSTRUCTIVEOWNERSHIP

24

RULES.—For purposes of subparagraphs (B)(i)25

and (C) and paragraph (4), the constructive

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H.L.C.

157
1

ownership rules under subsection (c)(6)(C) shall2

apply.

3‘‘(3) QUALIFIED SHAREHOLDER.—For purposes

4of this subsection—

5‘‘(A) IN GENERAL.—The term ‘qualified

6

shareholder’ means a foreign person which—7‘‘(i)(I) is eligible for benefits of a com-8

prehensive income tax treaty with the9United States which includes an exchange

10of information program and the principal

11class of interests of which is listed and reg-

12

ularly traded on 1 or more recognized

13

stock exchanges (as defined in such com-14

prehensive income tax treaty), or

15‘‘(II) is a foreign partnership that is

16

created or organized under foreign law as17

a limited partnership in a jurisdiction that18

has an agreement for the exchange of in-

19

formation with respect to taxes with the20

United States and has a class of limited

21

partnership units which is regularly traded22on the New York Stock Exchange or

23

Nasdaq Stock Market and such class of

24

limited partnership units value is greater

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H.L.C.

158
1

than 50 percent of the value of all the2partnership units,

3‘‘(ii) is a qualified collective invest-

4

ment vehicle, and5‘‘(iii) maintains records on the iden-

6

tity of each person who, at any time during

7

the foreign person’s taxable year, holds di-8

rectly 5 percent or more of the class of in-

9terest described in subclause (I) or (II) of

10

clause (i), as the case may be.

11

‘‘(B)

QUALIFIEDCOLLECTIVEINVEST-

12

MENT VEHICLE.—For

13

section, the term ‘qualified collective investment

14

vehicle’ means a foreign person—

purposes of this sub-15‘‘(i) which, under the comprehensive

16

income tax treaty described in subpara-

17

graph (A)(i), is eligible for a reduced rate18

of withholding with respect to ordinary

19

dividends paid by a real estate investment

20

trust even if such person holds more than21

10 percent of the stock of such real estate22

investment trust,23‘‘(ii) which—24‘‘(I) is a publicly traded partner-

25

ship (as defined in section 7704(b)) to

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H.L.C.

159
1

which subsection (a) of section 7704

2

does not apply,

3‘‘(II) is a withholding foreign

4

partnership for purposes of chapters5

3, 4, and 61,

6‘‘(III) if such foreign partnership

7

were a United States corporation,

8

would be a United States real prop-

9

erty holding corporation (determined

10

without regard to paragraph (1)) at11

any time during the 5-year period

12

ending on the date of disposition of,13

or distribution with respect to, such

14

partnership’s interests in a real estate15

investment trust, or

16‘‘(iii) which is designated as a quali-

17

fied collective investment vehicle by the18

Secretary and is either—19‘‘(I) fiscally transparent within

20

the meaning of section 894, or21‘‘(II) required to include divi-

22

dends in its gross income, but entitled23

to a deduction for distributions to per-24

sons holding interests (other than in-

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H.L.C.

160
1

terests solely as a creditor) in such2

foreign person.

3‘‘(4) PARTNERSHIP ALLOCATIONS.—

4‘‘(A) IN GENERAL.—For the purposes of5this subsection, in the case of an applicable in-6vestor who is a nonresident alien individual or7

a foreign corporation and is a partner in a part-8

nership that is a qualified shareholder, if such9

partner’s proportionate share of USRPI gain

10

for the taxable year exceeds such partner’s dis-11

tributive share of USRPI gain for the taxable

12

year, then13‘‘(i) such partner’s distributive share

14of the amount of gain taken into account15

under subsection (a)(1) by the partner for16

the taxable year (determined without re-17

gard to this paragraph) shall be increased18by the amount of such excess, and19‘‘(ii) such partner’s distributive share20of items of income or gain for the taxable

21

year that are not treated as gain taken

22

into account under subsection (a)(1) (de-23

termined without regard to this paragraph)24

shall be decreased (but not below zero) by

25

the amount of such excess.

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H.L.C.

161
1‘‘(B) USRPI GAIN.—For the purposes of2

this paragraph, the term ‘USRPI gain’ means3

the excess (if any) of—4‘‘(i) the sum of—5‘‘(I) any gain recognized from6

the disposition of a United States real

7

property interest, and8‘‘(II) any distribution by a real9

estate investment trust that is treated10

as gain recognized from the sale or

11exchange of a United States real

12

property interest, over13‘‘(ii) any loss recognized from the dis-

14

position of a United States real property

15

interest.

16‘‘(C) PROPORTIONATE

SHARE OF USRPI

17

GAIN.—For purposes of this paragraph, an ap-

18

plicable

19

USRPI gain shall be determined on the basis of20such investor’s share of partnership items of in-

21

come or gain (excluding gain allocated under22

section 704(c)), whichever results in the largest

23

proportionate share. If the investor’s share of24partnership items of income or gain (excluding

25

gain allocated under section 704(c)) may varyinvestor’s

proportionate

share

of

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H.L.C.

162
1

during the period such investor is a partner in2

the partnership, such share shall be the highest

3

share such investor may receive.’’.

4(2) CONFORMING AMENDMENTS.—

5(A) Section 897(c)(1)(A) is amended by in-

6serting ‘‘or subsection (k)’’ after ‘‘subparagraph

7(B)’’ in the matter preceding clause (i).

8(B) Section 857(b)(3)(F) is amended by

9inserting ‘‘or subparagraph (A)(ii) or (C) of

10

section 897(k)(2)’’ after ‘‘897(h)(1)’’.

11(b) DETERMINATION OF DOMESTIC CONTROL.—

12(1) SPECIAL OWNERSHIP RULES.—

13(A) IN

GENERAL.—Section

897(h)(4) is

14

amended by adding at the end the following

15

new subparagraph:

16‘‘(E) SPECIALOWNERSHIP RULES.—For17

purposes of determining the holder of stock

18

under subparagraphs (B) and (C)—19‘‘(i) in the case of any class of stock

20of the qualified investment entity which is21

regularly traded on an established securi-

22ties market in the United States, a person

23

holding less than 5 percent of such class of

24

stock at all times during the testing period

25

shall be treated as a United States person

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H.L.C.

163
1

unless the qualified investment entity has

2actual knowledge that such person is not a3

United States person,

4‘‘(ii) any stock in the qualified invest-

5

ment entity held by another qualified in-6

vestment entity—

7‘‘(I) any class of stock of which8

is regularly traded on an established9

securities market, or

10‘‘(II) which is a regulated invest-

11

ment company which issues redeem-

12

able securities (within the meaning of

13

section 2 of the Investment Company

14

Act of 1940),

15

shall be treated as held by a foreign per-16

son, except that if such other qualified in-17

vestment entity is domestically controlled18(determined after application of this sub-19

paragraph), such stock shall be treated as20

held by a United States person, and21‘‘(iii) any stock in the qualified invest-

22

ment entity held by any other qualified in-23

vestment entity not described in subclause

24(I) or (II) of clause (ii) shall only be treat-25

ed as held by a United States person in

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H.L.C.

164
1

proportion to the stock of such other quali-

2

fied investment entity which is (or is treat-3

ed under clause (ii) or (iii) as) held by a4

United States person.’’.

5(B)

CONFORMINGAMENDMENT.—The6

heading for paragraph (4) of section 897(h) is

7amended by inserting ‘‘AND SPECIAL RULES’’

8

after ‘‘DEFINITIONS’’.

9(2) TECHNICAL AMENDMENT.—Clause (ii) of

10

section 897(h)(4)(A) is amended by inserting ‘‘and11

for purposes of determining whether a real estate in-12vestment trust is a domestically controlled qualified

13

investment entity under this subsection’’ after ‘‘real

14

estate investment trust’’.

15(c) EFFECTIVE DATES.—

16(1) IN GENERAL.—The amendments made by17

subsection (a) shall take effect on the date of enact-

18

ment and shall apply to—19(A) any disposition on and after the date

20of the enactment of this Act, and

21(B) any distribution by a real estate in-22vestment trust on or after the date of the en-23

actment of this Act which is treated as a deduc-24tion for a taxable year of such trust ending

25

after such date.

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H.L.C.

165
1(2) DETERMINATION OF DOMESTIC CONTROL.—

2

The amendments made by subsection (b)(1) shall3

take effect on the date of the enactment of this Act.

4(3) TECHNICAL AMENDMENT.—The amendment

5

made by subsection (b)(2) shall take effect on Janu-6

ary 1, 2015.

7

SEC. 323. EXCEPTION FOR INTERESTS HELD BY FOREIGN

8RETIREMENT OR PENSION FUNDS.

9(a) IN GENERAL.—Section 897, as amended by the

10 preceding provisions of this Act, is amended by adding at
11 the end the following new subsection:12‘‘(l) EXCEPTION FOR INTERESTS HELD BY FOREIGN

13 PENSION FUNDS.—
14‘‘(1) IN GENERAL.—This section shall not apply15

to any United States real property interest held di-

16

rectly (or indirectly through 1 or more partnerships)

17

by, or to any distribution received from a real estate18

investment trust by—

19‘‘(A) a qualified foreign pension fund, or

20‘‘(B) any entity all of the interests of

21

which are held by a qualified foreign pension

22

fund.

23

‘‘(2) QUALIFIED FOREIGN PENSION FUND.—

24

For purposes of this subsection, the term ‘qualified

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H.L.C.

1661

foreign pension fund’ means any trust, corporation,2

or other organization or arrangement—

3‘‘(A) which is created or organized under4

the law of a country other than the United

5

States,6‘‘(B) which is established to provide retire-7

ment or pension benefits to participants or8

beneficiaries that are current or former employ-9ees (or persons designated by such employees)

10of one or more employers in consideration for

11

services rendered,

12‘‘(C) which does not have a single partici-

13

pant or beneficiary with a right to more than

14

five percent of its assets or income,15‘‘(D) which is subject to government regu-

16

lation and provides annual information report-

17

ing about its beneficiaries to the relevant tax

18

authorities in the country in which it is estab-

19

lished or operates, and20‘‘(E) with respect to which, under the laws

21of the country in which it is established or oper-

22

ates—

23

‘‘(i) contributions to such trust, cor-24

poration, organization, or arrangement

25

which would otherwise be subject to tax

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H.L.C.

167
1

under such laws are deductible or excluded

2

from the gross income of such entity or

3

taxed at a reduced rate, or

4‘‘(ii) taxation of any investment in-5come of such trust, corporation, organiza-

6

tion or arrangement is deferred or such in-

7

come is taxed at a reduced rate.

8‘‘(3) REGULATIONS.—The Secretary shall pre-9

scribe such regulations as may be necessary or ap-

10

propriate to carry out the purposes of this sub-11

section.’’.

12(b) EXEMPTION FROM WITHHOLDING.—Section

13 1445(f)(3) is amended by striking ‘‘any person’’ and all
14 that follows and inserting the following: ‘‘any person other15 than—
16‘‘(A) a United States person, and17‘‘(B) except as otherwise provided by the18

Secretary, an entity with respect to which sec-

19

tion 897 does not apply by reason of subsection

20(l) thereof.’’.

21(c) EFFECTIVE DATE.—The amendments made by

22 this section shall apply to dispositions and distributions
23 after the date of the enactment of this Act.

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H.L.C.

168
1

SEC. 324. INCREASE IN RATE OF WITHHOLDING OF TAX ON

2DISPOSITIONS

3

PROPERTY INTERESTS.

4

OF

UNITED

STATESREAL(a) IN GENERAL.—Subsections (a), (e)(3), (e)(4),

5 and (e)(5) of section 1445 are each amended by striking
6 ‘‘10 percent’’ and inserting ‘‘15 percent’’.
7(b) EXCEPTION FOR CERTAIN RESIDENCES.—Sec-

8 tion 1445(c) is amended by adding at the end the fol9 lowing new paragraph:10‘‘(4) REDUCED RATE OF WITHHOLDING FOR

11

RESIDENCE WHERE AMOUNT REALIZED DOES NOT

12EXCEED $1,000,000.—In the case of a disposition—

13‘‘(A) of property which is acquired by the14transferee for use by the transferee as a resi-

15

dence,

16‘‘(B) with respect to which the amount re-17

alized for such property does not exceed

18$1,000,000, and19‘‘(C) to which subsection (b)(5) does not

20

apply,

21

subsection (a) shall be applied by substituting ‘1022

percent’ for ‘15 percent’.’’.

23(c) EFFECTIVE DATE.—The amendments made by

24 this section shall apply to dispositions after the date which
25 is 60 days after the date of the enactment of this Act.

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H.L.C.

169
1

SEC. 325. INTERESTS IN RICS AND REITS NOT EXCLUDED

2

FROM DEFINITION OF UNITED STATES REAL

3

PROPERTY INTERESTS.

4(a) IN GENERAL.—Section 897(c)(1)(B) is amended

5 by striking ‘‘and’’ at the end of clause (i), by striking the
6 period at the end of clause (ii)(II) and inserting ‘‘, and’’,
7 and by adding at the end the following new clause:
8‘‘(iii) neither such corporation nor any

9predecessor of such corporation was a reg-10ulated investment company or a real estate

11

investment trust at any time during the12

shorter of the periods described in sub-13

paragraph (A)(ii).’’.

14(b) EFFECTIVE DATE.—The amendment made by

15 this section shall apply to dispositions on or after the date
16 of the enactment of this Act.
17

SEC. 326. DIVIDENDS DERIVED FROM RICS AND REITS IN-

18

ELIGIBLE

19

STATES SOURCE PORTION OF DIVIDENDS

20FROM CERTAIN FOREIGN CORPORATIONS.

21

FOR

DEDUCTIONFORUNITED(a) IN GENERAL.—Section 245(a) is amended by

22 adding at the end the following new paragraph:23‘‘(12) DIVIDENDS DERIVED FROM RICS AND

24

REITS INELIGIBLE FOR DEDUCTION.—Regulated in-25

vestment companies and real estate investment

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H.L.C.

170
1

trusts shall not be treated as domestic corporations

2for purposes of paragraph (5)(B).’’.

3(b) EFFECTIVE DATE.—The amendment made by

4 this section shall apply to dividends received from regu5 lated investment companies and real estate investment
6 trusts on or after the date of the enactment of this Act.
7(c) NO INFERENCE.—Nothing contained in this sec-

8 tion or the amendments made by this section shall be con9 strued to create any inference with respect to the proper
10 treatment under section 245 of the Internal Revenue Code
11 of 1986 of dividends received from regulated investment
12 companies or real estate investment trusts before the date
13 of the enactment of this Act.
14

Subtitle C—Additional Provisions

15

SEC. 331. DEDUCTIBILITY OF CHARITABLE CONTRIBU-

16

TIONS TO AGRICULTURAL RESEARCH ORGA-

17

NIZATIONS.

18(a) IN GENERAL.—Subparagraph (A) of section

19 170(b)(1) is amended by striking ‘‘or’’ at the end of clause
20 (vii), by striking the comma at the end of clause (viii) and21 inserting ‘‘, or’’, and by inserting after clause (viii) the
22 following new clause:
23‘‘(ix) an agricultural research organi-24

zation directly engaged in the continuous

25

active conduct of agricultural research (asL:\vr\121515\R121515.006.xml
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H.L.C.

1711

defined in section 1404 of the Agricultural

2

Research, Extension, and Teaching Policy

3

Act of 1977) in conjunction with a land-

4

grant college or university (as defined in5such section) or a non-land grant college of

6

agriculture (as defined in such section),7

and during the calendar year in which the8contribution is made such organization is9committed to spend such contribution for

10such research before January 1 of the fifth

11calendar year which begins after the date12

such contribution is made,’’.

13(b) EXPENDITURES TO INFLUENCE LEGISLATION.—

14 Paragraph (4) of section 501(h) is amended by redesig15 nating subparagraphs (E) and (F) as subparagraphs (F)16 and (G), respectively, and by inserting after subparagraph
17 (D) the following new subparagraph:18‘‘(E) section 170(b)(1)(A)(ix) (relating to

19
20

agricultural research organizations),’’.
(c) EFFECTIVE DATE.—The amendments made by

21 this section shall apply to contributions made on and after
22 the date of the enactment of this Act.

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H.L.C.

172
1

SEC. 332. REMOVAL OF BOND REQUIREMENTS AND EX-

2

TENDING

3

TAXPAYERS WITH LIMITED EXCISE TAX LI-

4

ABILITY.

5

FILINGPERIODSFORCERTAIN(a) FILING REQUIREMENTS.—Paragraph (4) of sec-

6 tion 5061(d) of the Internal Revenue Code of 1986 is
7 amended—
8(1) in subparagraph (A)—9(A) by striking ‘‘In the case of’’ and in-

10

serting the following:

11‘‘(i) MORE

THAN

$1,000

AND

NOT

12

MORE THAN $50,000 IN TAXES.—Except as

13

provided in clause (ii), in the case of’’,14(B) by striking ‘‘under bond for deferred

15

payment’’, and16(C) by adding at the end the following new17clause:18‘‘(ii) NOT

MORE

THAN

$1,000IN

19

TAXES.—In the case of any taxpayer who

20

reasonably expects to be liable for not

21

more than $1,000 in taxes imposed with22

respect to distilled spirits, wines, and beer

23

under subparts A, C, and D and section

247652 for the calendar year and who was25

liable for not more than $1,000 in such

26

taxes in the preceding calendar year, the

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H.L.C.

173
1

last day for the payment of tax on with-2

drawals, removals, and entries (and arti-

3cles brought into the United States from4

Puerto Rico) shall be the 14th day after5

the last day of the calendar year.’’, and

6(2) in subparagraph (B)—7(A) by striking ‘‘Subparagraph (A)’’ and8

inserting the following:

9‘‘(i) EXCEEDS

10

paragraph (A)(i)’’, and11(B) by adding at the end the following new

12$50,000

LIMIT.—Sub-

clause:13‘‘(ii) EXCEEDS$1,000

LIMIT.—Sub-

14

paragraph (A)(ii) shall not apply to any

15

taxpayer for any portion of the calendar

16

year following the first date on which the17

aggregate amount of tax due under sub-18

parts A, C, and D and section 7652 from19

such taxpayer during such calendar year

20

exceeds $1,000, and any tax under such21

subparts which has not been paid on such

22

date shall be due on the 14th day after the23

last day of the calendar quarter in which

24

such date occurs.’’.

25(b) BOND REQUIREMENTS.—

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H.L.C.

17412(1) IN GENERAL.—Section 5551 of such Codeis amended—

3(A) in subsection (a), by striking ‘‘No indi-

4

vidual’’ and inserting ‘‘Except as provided

5

under subsection (d), no individual’’, and

6(B) by adding at the end the following new

78subsection:‘‘(d) REMOVAL OF BOND REQUIREMENTS.—

9‘‘(1) IN GENERAL.—During any period to which

10subparagraph (A) of section 5061(d)(4) applies to a

11

taxpayer (determined after application of subpara-

12

graph (B) thereof), such taxpayer shall not be re-13

quired to furnish any bond covering operations or

14

withdrawals of distilled spirits or wines for non-15

industrial use or of beer.

16

‘‘(2)

SATISFACTION

OF

BOND

REQUIRE-

17

MENTS.—Any taxpayer for any period described in

18

paragraph (1) shall be treated as if sufficient bond19

has been furnished for purposes of covering oper-

20

ations and withdrawals of distilled spirits or wines

21

for nonindustrial use or of beer for purposes of any

22requirements relating to bonds under this chapter.’’.

23(2) CONFORMING AMENDMENTS.—

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H.L.C.

175
1

(A)

BONDS

2

PLANTS.—Section

3

amended—FOR

DISTILLEDSPIRITS

5173(a) of such Code is

4(i) in paragraph (1), by striking ‘‘No

5person’’ and inserting ‘‘Except as provided

6

under section 5551(d), no person’’, and7(ii) in paragraph (2), by striking ‘‘No

8

distilled spirits’’ and inserting ‘‘Except as

9provided under section 5551(d), no dis-10

tilled spirits’’.

11(B) BONDED

12

CELLARS.—Section

5351 of such Code is amended—13(i) by striking ‘‘Any person’’ and in-

14
15

WINE

serting the following:‘‘(a) IN GENERAL.—Any person’’,16(ii) by inserting ‘‘, except as provided

17

under section 5551(d),’’ before ‘‘file bond’’,18(iii) by striking ‘‘Such premises shall’’19

and all that follows through the period,

20

and

21

(iv) by adding at the end the following

22

new subsection:

23‘‘(b) DEFINITIONS.—For purposes of this chapter—

24‘‘(1) BONDED WINE CELLAR.—The term ‘bond-25

ed wine cellar’ means any premises described in sub-

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H.L.C.

176
1

section (a), including any such premises established2

by a taxpayer described in section 5551(d).

3‘‘(2) BONDED WINERY.—At the discretion of

4

the Secretary, any bonded wine cellar that engages

5in production operations may be designated as a

6‘bonded winery’.’’.

7(C) BONDSFOR

BREWERIES.—Section

85401 of such Code is amended by adding at the9end the following new subsection:

10‘‘(c) EXCEPTION FROM BOND REQUIREMENTS FOR

11 CERTAIN BREWERIES.—Subsection (b) shall not apply to
12 any taxpayer for any period described in section
13 5551(d).’’.
14(c) EFFECTIVE DATE.—The amendments made by

15 this section shall apply to any calendar quarters beginning
16 more than 1 year after the date of the enactment of this17 Act.
18

SEC. 333. MODIFICATIONS TO ALTERNATIVE TAX FOR CER-

19

TAIN SMALL INSURANCE COMPANIES.

20(a) ADDITIONAL REQUIREMENT FOR COMPANIES TO

21 WHICH ALTERNATIVE TAX APPLIES.—
22(1) ADDED REQUIREMENT.—

23(A) IN GENERAL.—Subparagraph (A) of

24

section 831(b)(2) is amended—

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H.L.C.

177
1

(i)

by

striking‘‘(includinginter-

2

insurers and reciprocal underwriters)’’, and3(ii) by striking ‘‘and’’ at the end of

4

clause (i), by redesignating clause (ii) as

5clause (iii), and by inserting after clause

6(i) the following new clause:

7‘‘(ii) such company meets the diver-8sification requirements of subparagraph

9(B), and’’.

10(B) DIVERSIFICATIONREQUIREMENT.—

11

Paragraph (2) of section 831(b) is amended by

12

redesignating subparagraphs (B) as subpara-

13

graph (C) and by inserting after subparagraph

14(A) the following new subparagraph:

15‘‘(B) DIVERSIFICATION REQUIREMENTS.—

16‘‘(i) IN GENERAL.—An insurance com-

17pany meets the requirements of this sub-18

paragraph if—

19‘‘(I) no more than 20 percent of20

the net written premiums (or, if

21

greater, direct written premiums) of

22such company for the taxable year is23

attributable to any one policyholder,24

or

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H.L.C.

178
1‘‘(II) such insurance company

2

does not meet the requirement of sub-3

clause (I) and no person who holds

4(directly or indirectly) an interest in

5such insurance company is a specified

6

holder who holds (directly or indi-

7

rectly) aggregate interests in such in-

8surance company which constitute a

9percentage of the entire interests in

10such insurance company which is11

more than a de minimis percentage

12higher than the percentage of inter-13

ests in the specified assets with re-14

spect to such insurance company held

15

(directly or indirectly) by such speci-

16

fied holder.

17‘‘(ii) DEFINITIONS.—For purposes of18

clause (i)(II)—19‘‘(I) SPECIFIEDHOLDER.—The20

term ‘specified holder’ means, with re-21

spect to any insurance company, any

22

individual who holds (directly or indi-

23

rectly) an interest in such insurance

24company and who is a spouse or lineal

25

descendant (including by adoption) of

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H.L.C.

1791

an individual who holds an interest

2(directly or indirectly) in the specified

3

assets with respect to such insurance

4company.

5‘‘(II) SPECIFIEDASSETS.—The

6

term ‘specified assets’ means, with re-7

spect to any insurance company, the8trades or businesses, rights, or assets

9with respect to which the net written

10

premiums (or direct written pre-11

miums) of such insurance company

12

are paid.

13‘‘(III) INDIRECT INTEREST.—An

14

indirect interest includes any interest

15

held through a trust, estate, partner-

16

ship, or corporation.

17‘‘(IV) DE

MINIMIS.—Except

as18

otherwise provided by the Secretary in

19

regulations or other guidance, 2 per-20

centage points or less shall be treated21

as de minimis.’’.

22

(C)

CONFORMINGAMENDMENTS.—The23

second sentence section 831(b)(2)(A) is amend-

24

ed—

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H.L.C.

1801(i) by striking ‘‘clause (ii)’’ and in-2

serting ‘‘clause (iii)’’, and3(ii) by striking ‘‘clause (i)’’ and in-

4

serting ‘‘clauses (i) and (ii)’’.

5(2)

TREATMENTOF

RELATEDPOLICY-

6

HOLDERS.—Clause7

redesignated by paragraph (1)(B), is amended—(i) of section 831(b)(2)(C), as

8(A) by striking ‘‘For purposes of subpara-

9graph (A), in determining’’ and inserting ‘‘For

10

purposes of this paragraph—11‘‘(I) in determining’’,

12(B) by striking the period at the end and13

inserting ‘‘, and’’, and

14(C) by adding at the end the following new

15

subclause:

16‘‘(II) in determining the attribu-

17

tion of premiums to any policyholder

18

under subparagraph (B)(i), all policy-

19

holders which are related (within the20

meaning of section 267(b) or 707(b))

21or are members of the same controlled

22

group shall be treated as one policy-

23

holder.’’.

24(3) REPORTING.—Section 831 is amended by25

redesignating subsection (d) as subsection (e) and by

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H.L.C.

181
1

inserting after subsection (c) the following new sub-2

section:3‘‘(d) REPORTING.—Every insurance company for

4 which an election is in effect under subsection (b) for any
5 taxable year shall furnish to the Secretary at such time
6 and in such manner as the Secretary shall prescribe such
7 information for such taxable year as the Secretary shall
8 require with respect to the requirements of subsection
9 (b)(2)(A)(ii).’’.
10(b) INCREASE IN LIMITATION ON PREMIUMS.—

11

(1)

IN

GENERAL.—Clause

(i)

of

section12831(b)(2)(A) is amended by striking ‘‘$1,200,000’’

13

and inserting ‘‘$2,200,000’’.

14(2) INFLATION ADJUSTMENT.—Paragraph (2)15of section 831(b), as amended by subsection

16(a)(1)(B), is amended by adding at the end the fol-17

lowing new subparagraph:18‘‘(D) INFLATIONADJUSTMENT.—In

the

19

case of any taxable year beginning in a calendar

20

year after 2015, the dollar amount set forth in21

subparagraph (A)(i) shall be increased by an

22amount equal to—23‘‘(i) such dollar amount, multiplied by

24‘‘(ii) the cost-of-living adjustment de-25

termined under section 1(f)(3) for such

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H.L.C.

182
1

calendar year by substituting ‘calendar

2

year 2013’ for ‘calendar year 1992’ in sub-3

paragraph (B) thereof.

4

If the amount as adjusted under the preceding

5

sentence is not a multiple of $50,000, such6

amount shall be rounded to the next lowest

7

multiple of $50,000.’’.

8(c) EFFECTIVE DATE.—The amendments made by

9 this section shall apply to taxable years beginning after
10 December 31, 2016.
11

SEC. 334. TREATMENT OF TIMBER GAINS.

12(a) IN GENERAL.—Section 1201(b) is amended to

13 read as follows:14‘‘(b) SPECIAL RATEFORQUALIFIED TIMBER

15 GAINS.—
16‘‘(1) IN GENERAL.—If, for any taxable year be-

17

ginning in 2016, a corporation has both a net cap-

18

ital gain and qualified timber gain—

19‘‘(A) subsection (a) shall apply to such cor-20

poration for the taxable year without regard to21

whether the applicable tax rate exceeds 35 per-22

cent, and

23‘‘(B) the tax computed under subsection

24(a)(2) shall be equal to the sum of—25‘‘(i) 23.8 percent of the least of—

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H.L.C.

1831‘‘(I) qualified timber gain,

2‘‘(II) net capital gain, or3‘‘(III) taxable income, plus

4‘‘(ii) 35 percent of the excess (if any)

5of taxable income over the sum of the6amounts for which a tax was determined

7

under subsection (a)(1) and clause (i).

8‘‘(2) QUALIFIED TIMBER GAIN.—For purposes

9of this section, the term ‘qualified timber gain’

10

means, with respect to any taxpayer for any taxable

11

year, the excess (if any) of—

12‘‘(A) the sum of the taxpayer’s gains de-13

scribed in subsections (a) and (b) of section 631

14

for such year, over

15‘‘(B) the sum of the taxpayer’s losses de-16

scribed in such subsections for such year.

17

For purposes of subparagraphs (A) and (B), only

18

timber held more than 15 years shall be taken into

19

account.’’.

20(b) CONFORMING AMENDMENT.—Section 55(b) is

21 amended by striking paragraph (4).
22(c) EFFECTIVE DATE.—The amendments made by

23 this section shall apply to taxable years beginning after
24 December 31, 2015.

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H.L.C.

184
1

SEC. 335. MODIFICATION OF DEFINITION OF HARD CIDER.

2(a) IN GENERAL.—Section 5041 of the Internal Rev-

3 enue Code of 1986 is amended—
4(1) in paragraph (6) of subsection (b), by strik-5

ing ‘‘which is a still wine’’ and all that follows

6through ‘‘alcohol by volume’’, and

7(2) by adding at the end the following new sub-8

section:9‘‘(g) HARD CIDER.—For purposes of subsection

10 (b)(6), the term ‘hard cider’ means a wine—
11‘‘(1) containing not more than 0.64 gram of12

carbon dioxide per hundred milliliters of wine, except

13

that the Secretary may by regulations prescribe such14

tolerances to this limitation as may be reasonably

15

necessary in good commercial practice,16‘‘(2) which is derived primarily—

17‘‘(A) from apples or pears, or

18‘‘(B) from—

19‘‘(i) apple juice concentrate or pear20

juice concentrate, and21‘‘(ii) water,

2223‘‘(3) which contains no fruit product or fruit
flavoring other than apple or pear, and24‘‘(4) which contains at least one-half of 1 per-25

cent and less than 8.5 percent alcohol by volume.’’.

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H.L.C.

1851(b) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to hard cider removed during cal3 endar years beginning after December 31, 2016.
4

SEC. 336. CHURCH PLAN CLARIFICATION.

5(a) APPLICATION OF CONTROLLED GROUP RULES TO

6 CHURCH PLANS.—
7(1) IN GENERAL.—Section 414(c) is amended—

8(A) by striking ‘‘For purposes’’ and insert-

9

ing the following:

10‘‘(1) IN GENERAL.—Except as provided in para-

11

graph (2), for purposes’’, and

12(B) by adding at the end the following new13

paragraph:14‘‘(2) SPECIAL RULES RELATING TO CHURCH

15

PLANS.—

16‘‘(A) GENERAL RULE.—Except as provided

17

in subparagraphs (B) and (C), for purposes of18

this subsection and subsection (m), an organi-19

zation that is otherwise eligible to participate in20

a church plan shall not be aggregated with an-21other such organization and treated as a single

22

employer with such other organization for a23

plan year beginning in a taxable year unless—

24‘‘(i) one such organization provides

25(directly or indirectly) at least 80 percent

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H.L.C.

186
1of the operating funds for the other orga-

2

nization during the preceding taxable year3of the recipient organization, and4‘‘(ii) there is a degree of common

5

management or supervision between the or-6ganizations such that the organization pro-7

viding the operating funds is directly in-

8

volved in the day-to-day operations of the9other organization.

10

‘‘(B)

11

TROLLED12

subparagraph (A), for purposes of this sub-13

section and subsection (m), an organization

14

that is a nonqualified church-controlled organi-

15

zation shall be aggregated with 1 or more other16

nonqualified church-controlled organizations, or17with an organization that is not exempt from18

tax under section 501, and treated as a single

19

employer with such other organization, if at

20

least 80 percent of the directors or trustees of

21such other organization are either representa-

22

tives of, or directly or indirectly controlled by,23

such nonqualified church-controlled organiza-

24

tion. For purposes of this subparagraph, the25term ‘nonqualified church-controlled organiza-

NONQUALIFIEDCHURCH-CON-

ORGANIZATIONS.—Notwithstanding

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H.L.C.

187
1

tion’ means a church-controlled tax-exempt or-2

ganization described in section 501(c)(3) that is3

not a qualified church-controlled organization4(as defined in section 3121(w)(3)(B)).

5‘‘(C) PERMISSIVE

AGGREGATION

AMONG

6

CHURCH-RELATED

7

church or convention or association of churches

8with which an organization described in sub-9

paragraph (A) is associated (within the mean-

10

ing of subsection (e)(3)(D)), or an organization

11

designated by such church or convention or as-

12sociation of churches, may elect to treat such

13

organizations as a single employer for a plan

14

year. Such election, once made, shall apply to

15

all succeeding plan years unless revoked with

16

notice provided to the Secretary in such manner17

as the Secretary shall prescribe.

18‘‘(D) PERMISSIVE

ORGANIZATIONS.—The

DISAGGREGATIONOF

19

CHURCH-RELATED ORGANIZATIONS.—For

pur-

20

poses of subparagraph (A), in the case of a21

church plan, an employer may elect to treat

22

churches (as defined in section 403(b)(12)(B))

23

separately from entities that are not churches

24(as so defined), without regard to whether such

25

entities maintain separate church plans. Such

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H.L.C.

188
1

election, once made, shall apply to all suc-2

ceeding plan years unless revoked with notice3

provided to the Secretary in such manner as the4

Secretary shall prescribe.’’.

5(2) CLARIFICATION RELATING TO APPLICATION

6

OF

7

1.414(c)–5(f) shall continue to apply to each para-

8graph of section 414(c) of the Internal Revenue

9

Code of 1986, as amended by paragraph (1).

ANTI-ABUSE

RULE.—The

rule of 26 CFR

10(3) EFFECTIVE DATE.—The amendments made11

by paragraph (1) shall apply to years beginning be-

12fore, on, or after the date of the enactment of this

13

Act.

14

(b) APPLICATION OF CONTRIBUTION AND FUNDING

15 LIMITATIONS

TO

403(b) GRANDFATHERED DEFINED

16 BENEFIT PLANS.—
17(1) IN GENERAL.—Section 251(e)(5) of the Tax

18

Equity and Fiscal Responsibility Act of 1982 (Public19

Law 97–248), is amended—

20(A) by striking ‘‘403(b)(2)’’ and inserting

21‘‘403(b)’’, and22(B) by inserting before the period at the23

end the following: ‘‘, and shall be subject to the24

applicable limitations of section 415(b) of such25

Code as if it were a defined benefit plan under

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H.L.C.

1891

section 401(a) of such Code (and not to the2limitations of section 415(c) of such Code).’’.

3(2) EFFECTIVE DATE.—The amendments made4by this subsection shall apply to years beginning be-

5fore, on, or after the date of the enactment of this

6

Act.

7

(c) AUTOMATIC ENROLLMENT BY CHURCH PLANS.—

8(1) IN GENERAL.—This subsection shall super-9

sede any law of a State that relates to wage, salary,10

or payroll payment, collection, deduction, garnish-

11

ment, assignment, or withholding which would di-12

rectly or indirectly prohibit or restrict the inclusion

13

in any church plan (as defined in section 414(e) of

14

the Internal Revenue Code of 1986) of an automatic

15

contribution arrangement.

16(2) DEFINITION OF AUTOMATIC CONTRIBUTION

17

ARRANGEMENT.—For18

the term ‘‘automatic contribution arrangement’’19

means an arrangement—

purposes of this subsection,

20(A) under which a participant may elect to21

have the plan sponsor or the employer make22

payments as contributions under the plan on

23

behalf of the participant, or to the participant

24

directly in cash,

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H.L.C.

190
1(B) under which a participant is treated as

2having elected to have the plan sponsor or the3

employer make such contributions in an amount4

equal to a uniform percentage of compensation

5

provided under the plan until the participant

6

specifically elects not to have such contributions

7

made (or specifically elects to have such con-8

tributions made at a different percentage), and

9(C) under which the notice and election re-

10quirements of paragraph (3), and the invest-

11

ment requirements of paragraph (4), are satis-

12

fied.

13

(3) NOTICE REQUIREMENTS.—

14(A) IN GENERAL.—The plan sponsor of, or

15

plan administrator or employer maintaining, an

16

automatic contribution arrangement shall, with-17

in a reasonable period before the first day of18each plan year, provide to each participant to

19

whom the arrangement applies for such plan

20

year notice of the participant’s rights and obli-

21

gations under the arrangement which—22(i) is sufficiently accurate and com-23

prehensive to apprise the participant of

24such rights and obligations, and

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H.L.C.

1911(ii) is written in a manner calculated2

to be understood by the average partici-

3

pant to whom the arrangement applies.

4(B) ELECTION REQUIREMENTS.—A notice

5

shall not be treated as meeting the require-

6

ments of subparagraph (A) with respect to a7participant unless—

8(i) the notice includes an explanation

9of the participant’s right under the ar-

10rangement not to have elective contribu-

11

tions made on the participant’s behalf (or12to elect to have such contributions made at

13

a different percentage),

14(ii) the participant has a reasonable

15

period of time, after receipt of the expla-

16

nation described in clause (i) and before

17

the first elective contribution is made, to18

make such election, and19(iii) the notice explains how contribu-

20

tions made under the arrangement will be

21

invested in the absence of any investment

22

election by the participant.

23(4) DEFAULT INVESTMENT.—If no affirmative

24

investment election has been made with respect to25

any automatic contribution arrangement, contribu-

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H.L.C.

192
1

tions to such arrangement shall be invested in a de-2

fault investment selected with the care, skill, pru-3

dence, and diligence that a prudent person selecting

4

an investment option would use.

5(5) EFFECTIVE DATE.—This subsection shall6

take effect on the date of the enactment of this Act.

7(d) ALLOW CERTAIN PLAN TRANSFERS AND MERG-

8

ERS.—

9

(1) IN GENERAL.—Section 414 is amended by10

adding at the end the following new subsection:

11‘‘(z) CERTAIN PLAN TRANSFERS AND MERGERS.—

12‘‘(1) IN GENERAL.—Under rules prescribed by

13

the Secretary, except as provided in paragraph (2),14

no amount shall be includible in gross income by15

reason of—

16‘‘(A) a transfer of all or a portion of the17

accrued benefit of a participant or beneficiary,

18

whether or not vested, from a church plan that19

is a plan described in section 401(a) or an an-

20

nuity contract described in section 403(b) to an

21

annuity contract described in section 403(b), if

22such plan and annuity contract are both main-

23

tained by the same church or convention or as-24sociation of churches,

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H.L.C.

1931‘‘(B) a transfer of all or a portion of the2

accrued benefit of a participant or beneficiary,

3

whether or not vested, from an annuity contract

4

described in section 403(b) to a church plan

5

that is a plan described in section 401(a), if

6such plan and annuity contract are both main-

7

tained by the same church or convention or as-8sociation of churches, or

9‘‘(C) a merger of a church plan that is a10

plan described in section 401(a), or an annuity

11

contract described in section 403(b), with an12annuity contract described in section 403(b), if

13such plan and annuity contract are both main-

14

tained by the same church or convention or as-15

sociation of churches.

16‘‘(2) LIMITATION.—Paragraph (1) shall not

17

apply to a transfer or merger unless the partici-

18

pant’s or beneficiary’s total accrued benefit imme-

19

diately after the transfer or merger is equal to or

20

greater than the participant’s or beneficiary’s total

21

accrued benefit immediately before the transfer or

22merger, and such total accrued benefit is nonforfeit-

23

able after the transfer or merger.

24‘‘(3) QUALIFICATION.—A plan or annuity con-25

tract shall not fail to be considered to be described

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H.L.C.

1941

in section 401(a) or 403(b) merely because such2plan or annuity contract engages in a transfer or3merger described in this subsection.

45‘‘(4) DEFINITIONS.—For purposes of this subsection—

6‘‘(A) CHURCH OR CONVENTION OR ASSO-

7

CIATION OF CHURCHES.—The term ‘church or

8

convention or association of churches’ includes

9

an organization described in subparagraph (A)10or (B)(ii) of subsection (e)(3).

11‘‘(B) ANNUITY CONTRACT.—The term ‘an-

12

nuity contract’ includes a custodial account de-13

scribed in section 403(b)(7) and a retirement

14

income account described in section 403(b)(9).

15‘‘(C) ACCRUED BENEFIT.—The term ‘ac-16

crued benefit’ means—17‘‘(i) in the case of a defined benefit

18

plan, the employee’s accrued benefit deter-

19

mined under the plan, and20‘‘(ii) in the case of a plan other than21

a defined benefit plan, the balance of the22

employee’s account under the plan.’’.

23(2) EFFECTIVE DATE.—The amendment made24

by this subsection shall apply to transfers or merg-

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H.L.C.

1951

ers occurring after the date of the enactment of this

2

Act.

3

(e) INVESTMENTS BY CHURCH PLANS IN COLLEC-

4

TIVE TRUSTS.—

5(1) IN GENERAL.—In the case of—

6(A) a church plan (as defined in section

7414(e) of the Internal Revenue Code of 1986),

8

including a plan described in section 401(a) of

9such Code and a retirement income account de-10

scribed in section 403(b)(9) of such Code, and

11(B) an organization described in section

12414(e)(3)(A) of such Code the principal pur-13

pose or function of which is the administration

14of such a plan or account,15

the assets of such plan, account, or organization (in-16

cluding any assets otherwise permitted to be com-17

mingled for investment purposes with the assets of18

such a plan, account, or organization) may be in-19vested in a group trust otherwise described in Inter-20

nal Revenue Service Revenue Ruling 81–100 (as21

modified by Internal Revenue Service Revenue Rul-

22

ings 2004–67, 2011–1, and 2014–24), or any subse-

23

quent revenue ruling that supersedes or modifies

24such revenue ruling, without adversely affecting the25

tax status of the group trust, such plan, account, or

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H.L.C.

196
1

organization, or any other plan or trust that invests

2in the group trust.

3(2) EFFECTIVE DATE.—This subsection shall4

apply to investments made after the date of the en-5actment of this Act.

6

Subtitle D—Revenue Provisions

7

SEC. 341. UPDATED ASHRAE STANDARDS FOR ENERGY EF-

8

FICIENT COMMERCIAL BUILDINGS DEDUC-

9

TION.

10

(a) IN GENERAL.—Paragraph (1) of section 179D(c)11 is amended by striking ‘‘Standard 90.1–2001’’ each place
12 it appears and inserting ‘‘Standard 90.1–2007’’.
13(b) CONFORMING AMENDMENTS.—

1415(1) Paragraph (2) of section 179D(c) is amended to read as follows:16‘‘(2) STANDARD 90.1–2007.—The term ‘Stand-17

ard 90.1–2007’ means Standard 90.1–2007 of the18

American Society of Heating, Refrigerating, and Air

19

Conditioning Engineers and the Illuminating Engi-

20

neering Society of North America (as in effect on

21

the day before the date of the adoption of Standard

22

90.1–2010 of such Societies).’’.

23(2) Subsection (f) of section 179D is amended

24

by striking ‘‘Standard 90.1–2001’’ each place it ap-

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H.L.C.

197
1

pears in paragraphs (1) and (2)(C)(i) and inserting

2‘‘Standard 90.1–2007’’.

3(3) Paragraph (1) of section 179D(f) is amend-

4

ed—

5

(A) by striking ‘‘Table 9.3.1.1’’ and insert-6

ing ‘‘Table 9.5.1’’, and

7(B) by striking ‘‘Table 9.3.1.2’’ and insert-8

ing ‘‘Table 9.6.1’’.

9(c) EFFECTIVE DATE.—The amendments made by

10 this subsection shall apply to property placed in service
11 after December 31, 2015.
12

SEC.

342.

EXCISETAXCREDIT

EQUIVALENCY

FOR

13

LIQUIFIED PETROLEUM GAS AND LIQUIFIED

14

NATURAL GAS.

15(a) IN GENERAL.—Section 6426 is amended by add-

16 ing at the end the following new subsection:
17‘‘(j) ENERGY EQUIVALENCY DETERMINATIONS FOR

18 LIQUEFIED PETROLEUM GAS AND LIQUEFIED NATURAL
19 GAS.—For purposes of determining any credit under this
20 section, any reference to the number of gallons of an alter21 native fuel or the gasoline gallon equivalent of such a fuel22 shall be treated as a reference to—23‘‘(1) in the case of liquefied petroleum gas, the24energy equivalent of a gallon of gasoline, as defined25

in section 4041(a)(2)(C), and

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H.L.C.

198
1‘‘(2) in the case of liquefied natural gas, the en-2

ergy equivalent of a gallon of diesel, as defined in

3

section 4041(a)(2)(D).’’.

4(b) EFFECTIVE DATE.—The amendments made by

5 this section shall apply to fuel sold or used after December
6 31, 2015.
7

SEC. 343. EXCLUSION FROM GROSS INCOME OF CERTAIN

8CLEAN COAL POWER GRANTS TO NON-COR-

9

PORATE TAXPAYERS.

10(a) GENERAL RULE.—In the case of an eligible tax-

11 payer other than a corporation, gross income for purposes
12 of the Internal Revenue Code of 1986 shall not include
13 any amount received under section 402 of the Energy Pol14 icy Act of 2005.
15(b) REDUCTION IN BASIS.—The basis of any prop-

16 erty subject to the allowance for depreciation under the
17 Internal Revenue Code of 1986 which is acquired with any
18 amount to which subsection (a) applies during the 1219 month period beginning on the day such amount is re20 ceived shall be reduced by an amount equal to such
21 amount. The excess (if any) of such amount over the
22 amount of the reduction under the preceding sentence
23 shall be applied to the reduction (as of the last day of
24 the period specified in the preceding sentence) of the basis
25 of any other property held by the taxpayer. The particular

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H.L.C.

199
1 properties to which the reductions required by this sub2 section are allocated shall be determined by the Secretary
3 of the Treasury (or the Secretary’s delegate) under regula4 tions similar to the regulations under section 362(c)(2) of
5 such Code.
6(c) LIMITATION TO AMOUNTS WHICH WOULD BE

7 CONTRIBUTIONS TO CAPITAL.—Subsection (a) shall not
8 apply to any amount unless such amount, if received by
9 a corporation, would be excluded from gross income under
10 section 118 of the Internal Revenue Code of 1986.
11(d) ELIGIBLE TAXPAYER.—For purposes of this sec-

12 tion, with respect to any amount received under section
13 402 of the Energy Policy Act of 2005, the term ‘‘eligible
14 taxpayer’’ means a taxpayer that makes a payment to the
15 Secretary of the Treasury (or the Secretary’s delegate)
16 equal to 1.18 percent of the amount so received. Such pay17 ment shall be made at such time and in such manner as
18 such Secretary (or the Secretary’s delegate) shall pre19 scribe. In the case of a partnership, such Secretary (or20 the Secretary’s delegate) shall prescribe regulations to de21 termine the allocation of such payment amount among the
22 partners.
23(e) EFFECTIVE DATE.—This section shall apply to

24 amounts received under section 402 of the Energy Policy

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H.L.C.

200
1 Act of 2005 in taxable years beginning after December
2 31, 2011.
3

SEC. 344. CLARIFICATION OF VALUATION RULE FOR EARLY

4

TERMINATION OF CERTAIN CHARITABLE RE-

5

MAINDER UNITRUSTS.

6(a) IN GENERAL.—Section 664(e) is amended—

7(1) by adding at the end the following: ‘‘In the8case of the early termination of a trust which is a9charitable remainder unitrust by reason of sub-10

section (d)(3), the valuation of interests in such11

trust for purposes of this section shall be made12

under rules similar to the rules of the preceding sen-13

tence.’’, and

14(2) by striking ‘‘FOR PURPOSES OF CHARI-

15

TABLE CONTRIBUTION’’ in the heading thereof and16

inserting ‘‘OF INTERESTS’’.

17(b) EFFECTIVE DATE.—The amendment made by

18 this section shall apply to terminations of trusts occurring
19 after the date of the enactment of this Act.
20

SEC. 345. PREVENTION OF TRANSFER OF CERTAIN LOSSES

21

FROM TAX INDIFFERENT PARTIES.

22(a) IN GENERAL.—Section 267(d) is amended to

23 read as follows:24‘‘(d) AMOUNT OF GAIN WHERE LOSS PREVIOUSLY

25 DISALLOWED.—

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H.L.C.

2011‘‘(1) IN GENERAL.—If—2‘‘(A) in the case of a sale or exchange of3

property to the taxpayer a loss sustained by the4transferor is not allowable to the transferor as

5

a deduction by reason of subsection (a)(1), and6‘‘(B) the taxpayer sells or otherwise dis-7

poses of such property (or of other property the8basis of which in the taxpayer’s hands is deter-

9mined directly or indirectly by reference to such10

property) at a gain,

11

then such gain shall be recognized only to the extent

12that it exceeds so much of such loss as is properly

13

allocable to the property sold or otherwise disposed

14

of by the taxpayer.

15‘‘(2) EXCEPTION

FOR

WASH

SALES.—Para-

16

graph (1) shall not apply if the loss sustained by the17transferor is not allowable to the transferor as a de-18

duction by reason of section 1091 (relating to wash

19

sales).

20‘‘(3) EXCEPTION FOR TRANSFERS FROM TAX

21

INDIFFERENT PARTIES.—Paragraph22

apply to the extent any loss sustained by the trans-

23

feror (if allowed) would not be taken into account in

24

determining a tax imposed under section 1 or 11 or(1) shall not

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H.L.C.

202
1

a tax computed as provided by either of such sec-

2

tions.’’.

3(b) EFFECTIVE DATE.—The amendment made by

4 this section shall apply to sales and other dispositions of
5 property acquired after December 31, 2015, by the tax6 payer in a sale or exchange to which section 267(a)(1)
7 of the Internal Revenue Code of 1986 applied.
8

SEC. 346. TREATMENT OF CERTAIN PERSONS AS EMPLOY-

9

ERS WITH RESPECT TO MOTION PICTURE

10PROJECTS.

11(a) IN GENERAL.—Chapter 25 (relating to general

12 provisions relating to employment taxes) is amended by
13 adding at the end the following new section:
14‘‘SEC. 3512. TREATMENT OF CERTAIN PERSONS AS EMPLOY-

15

ERS WITH RESPECT TO MOTION PICTURE

16PROJECTS.

17‘‘(a) IN GENERAL.—For purposes of sections

18 3121(a)(1) and 3306(b)(1), remuneration paid to a mo19 tion picture project worker by a motion picture project em20 ployer during a calendar year shall be treated as remu21 neration paid with respect to employment of such worker
22 by such employer during the calendar year. The identity
23 of such employer for such purposes shall be determined
24 as set forth in this section and without regard to the usual

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H.L.C.

203
1 common law rules applicable in determining the employer2 employee relationship.
3‘‘(b) DEFINITIONS.—For purposes of this section—

4‘‘(1) MOTION PICTURE PROJECT EMPLOYER.—

5

The term ‘motion picture project employer’ means

6

any person if—

7‘‘(A) such person (directly or through af-

8filiates)—

9‘‘(i) is a party to a written contract10

covering the services of motion picture

11

project workers with respect to motion pic-

12

ture projects in the course of a client’s

13

trade or business,

14‘‘(ii) is contractually obligated to pay

15

remuneration to the motion picture project16

workers without regard to payment or re-17

imbursement by any other person,

18‘‘(iii) controls the payment (within the19meaning of section 3401(d)(1)) of remu-

20

neration to the motion picture project

21

workers and pays such remuneration from22

its own account or accounts,

23‘‘(iv) is a signatory to one or more

24

collective bargaining agreements with a25labor organization (as defined in 29 U.S.C.

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H.L.C.

2041

152(5)) that represents motion picture

2

project workers, and3‘‘(v) has treated substantially all mo-

4tion picture project workers that such per-5

son pays as employees and not as inde-

6

pendent contractors during such calendar

7

year for purposes of determining employ-

8

ment taxes under this subtitle, and9‘‘(B) at least 80 percent of all remunera-

10tion (to which section 3121 applies) paid by

11such person in such calendar year is paid to12

motion picture project workers.

13‘‘(2) MOTIONPICTURE PROJECT WORKER.—

14

The term ‘motion picture project worker’ means any

15

individual who provides services on motion picture

16

projects for clients who are not affiliated with the17

motion picture project employer.

18‘‘(3) MOTIONPICTURE PROJECT.—The

term

19

‘motion picture project’ means the production of any

20

property described in section 168(f)(3). Such term

21

does not include property with respect to which

22

records are required to be maintained under section

23

2257 of title 18, United States Code.

24‘‘(4) AFFILIATE; AFFILIATED.—A person shall25

be treated as an affiliate of, or affiliated with, an-

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H.L.C.

205
1

other person if such persons are treated as a single

2

employer under subsection (b) or (c) of section

3414.’’.

4(b) CLERICAL AMENDMENT.—The table of sections

5 for such chapter 25 is amended by adding at the end the
6 following new item:‘‘Sec. 3512. Treatment of certain persons as employers with respect to motion
picture projects.’’.

7(c) EFFECTIVE DATE.—The amendments made by

8 this section shall apply to remuneration paid after Decem9 ber 31, 2015.
10(d) NO INFERENCE.—Nothing in the amendments

11 made by this section shall be construed to create any infer12 ence on the law before the date of the enactment of this13 Act.

TITLE IV—TAX ADMINISTRATION
15
Subtitle A—Internal Revenue
16
Service Reforms
14

17

SEC. 401. DUTY TO ENSURE THAT INTERNAL REVENUE

18

SERVICE EMPLOYEES ARE FAMILIAR WITH

19

AND ACT IN ACCORD WITH CERTAIN TAX-

20

PAYER RIGHTS.

21(a) IN GENERAL.—Section 7803(a) is amended by

22 redesignating paragraph (3) as paragraph (4) and by in23 serting after paragraph (2) the following new paragraph:

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H.L.C.

2061‘‘(3) EXECUTION OF DUTIES IN ACCORD WITH

2

TAXPAYER RIGHTS.—In discharging his duties, the3Commissioner shall ensure that employees of the In-

4

ternal Revenue Service are familiar with and act in5

accord with taxpayer rights as afforded by other6

provisions of this title, including—

7‘‘(A) the right to be informed,

8‘‘(B) the right to quality service,9‘‘(C) the right to pay no more than the10

correct amount of tax,

11‘‘(D) the right to challenge the position of

12

the Internal Revenue Service and be heard,

13‘‘(E) the right to appeal a decision of the

14

Internal Revenue Service in an independent

15

forum,

16‘‘(F) the right to finality,

17‘‘(G) the right to privacy,

18‘‘(H) the right to confidentiality,19‘‘(I) the right to retain representation, and20‘‘(J) the right to a fair and just tax sys-

21
22tem.’’.
(b) EFFECTIVE DATE.—The amendments made by

23 this section shall take effect on the date of the enactment
24 of this Act.

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H.L.C.

207
1

SEC. 402. IRS EMPLOYEES PROHIBITED FROM USING PER-

2

SONAL

3

BUSINESS.

4

EMAIL

ACCOUNTSFOROFFICIAL

No officer or employee of the Internal Revenue Serv-

5 ice may use a personal email account to conduct any offi6 cial business of the Government.
7

SEC. 403. RELEASE OF INFORMATION REGARDING THE STA-

8

TUS OF CERTAIN INVESTIGATIONS.

9(a) IN GENERAL.—Section 6103(e) is amended by

10 adding at the end the following new paragraph:11‘‘(11) DISCLOSURE OF INFORMATION REGARD-

12ING STATUS OF INVESTIGATION OF VIOLATION OF

13

THIS SECTION.—In the case of a person who pro-14

vides to the Secretary information indicating a viola-

15

tion of section 7213, 7213A, or 7214 with respect

16

to any return or return information of such person,

17

the Secretary may disclose to such person (or such18

person’s designee)—

19‘‘(A) whether an investigation based on the20

person’s provision of such information has been

21

initiated and whether it is open or closed,

22‘‘(B) whether any such investigation sub-23

stantiated such a violation by any individual,

24

and

25

‘‘(C) whether any action has been taken

26

with respect to such individual (including

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H.L.C.

208
1

whether a referral has been made for prosecu-

2tion of such individual).’’.

3(b) EFFECTIVE DATE.—The amendment made by

4 this section shall apply to disclosures made on or after
5 the date of the enactment of this Act.
6

SEC. 404. ADMINISTRATIVE APPEAL RELATING TO AD-

7

VERSE

8

STATUS OF CERTAIN ORGANIZATIONS.

9(a) IN GENERAL.—Section 7123 is amended by add-

DETERMINATIONSOFTAX-EXEMPT

10 ing at the end of the following:1112‘‘(c) ADMINISTRATIVE APPEAL RELATING TO ADVERSE

DETERMINATION OF TAX-EXEMPT STATUS OF

13 CERTAIN ORGANIZATIONS.—
14‘‘(1) IN GENERAL.—The Secretary shall pre-15

scribe procedures under which an organization which

16

claims to be described in section 501(c) may request

17

an administrative appeal (including a conference re-18

lating to such appeal if requested by the organiza-

19tion) to the Internal Revenue Service Office of Ap-

20

peals of an adverse determination described in para-

21

graph (2).

22‘‘(2) ADVERSE

DETERMINATIONS.—For

pur-

23

poses of paragraph (1), an adverse determination is24

described in this paragraph if such determination is25

adverse to an organization with respect to—

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H.L.C.

209
1‘‘(A) the initial qualification or continuing2

qualification of the organization as exempt from3

tax under section 501(a) or as an organization

4

described in section 170(c)(2),5‘‘(B) the initial classification or continuing

6classification of the organization as a private

7

foundation under section 509(a), or

8‘‘(C) the initial classification or continuing

9classification of the organization as a private

10

operating114942(j)(3).’’.

12

foundation

under

section(b) EFFECTIVE DATE.—The amendment made by

13 subsection (a) shall apply to determinations made on or
14 after May 19, 2014.
15

SEC. 405. ORGANIZATIONS REQUIRED TO NOTIFY SEC-16

RETARY OF INTENT TO OPERATE UNDER

17

501(c)(4).

18(a) IN GENERAL.—Part I of subchapter F of chapter

19 1 is amended by adding at the end the following new sec20 tion:
21‘‘SEC. 506. ORGANIZATIONS REQUIRED TO NOTIFY SEC-

22

RETARY OF INTENT TO OPERATE UNDER

23

501(c)(4).

24‘‘(a) IN GENERAL.—An organization described in

25 section 501(c)(4) shall, not later than 60 days after the

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H.L.C.

210
1 organization is established, notify the Secretary (in such
2 manner as the Secretary shall by regulation prescribe)
3 that it is operating as such.
4‘‘(b) CONTENTS OF NOTICE.—The notice required

5 under subsection (a) shall include the following informa6 tion:78‘‘(1) The name, address, and taxpayer identification number of the organization.

910‘‘(2) The date on which, and the State under
the laws of which, the organization was organized.

11‘‘(3) A statement of the purpose of the organi-

12

zation.

13‘‘(c) ACKNOWLEDGMENT OF RECEIPT.—Not later

14 than 60 days after receipt of such a notice, the Secretary
15 shall send to the organization an acknowledgment of such
16 receipt.
17‘‘(d) EXTENSION FOR REASONABLE CAUSE.—The18 Secretary may, for reasonable cause, extend the 60-day
19 period described in subsection (a).
20‘‘(e) USER FEE.—The Secretary shall impose a rea-

21 sonable user fee for submission of the notice under sub22 section (a).
23‘‘(f) REQUEST FOR DETERMINATION.—Upon request

24 by an organization to be treated as an organization de25 scribed in section 501(c)(4), the Secretary may issue a de-

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H.L.C.

211
1 termination with respect to such treatment. Such request
2 shall be treated for purposes of section 6104 as an applica3 tion for exemption from taxation under section 501(a).’’.
45(b) SUPPORTING INFORMATION WITH FIRST RETURN.—Section 6033(f) is amended—67(1) by striking the period at the end and inserting ‘‘, and’’,

8(2) by striking ‘‘include on the return required

9

under subsection (a) the information’’ and inserting10

the following: ‘‘include on the return required under11

subsection (a)—12‘‘(1) the information’’, and13(3) by adding at the end the following new

14paragraph:15‘‘(2) in the case of the first such return filed by

16

such an organization after submitting a notice to the17

Secretary under section 506(a), such information as

18

the Secretary shall by regulation require in support

19of the organization’s treatment as an organization20

described in section 501(c)(4).’’.

21(c) FAILURE TO FILE INITIAL NOTIFICATION.—Sec-

22 tion 6652(c) is amended by redesignating paragraphs (4),
23 (5), and (6) as paragraphs (5), (6), and (7), respectively,
24 and by inserting after paragraph (3) the following new
25 paragraph:

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H.L.C.

212
1‘‘(4) NOTICES UNDER SECTION 506.—

2‘‘(A) PENALTY ON ORGANIZATION.—In the3case of a failure to submit a notice required

4

under section 506(a) (relating to organizations

5

required to notify Secretary of intent to operate

6

as 501(c)(4)) on the date and in the manner

7prescribed therefor, there shall be paid by the

8organization failing to so submit $20 for each9

day during which such failure continues, but

10

the total amount imposed under this subpara-

11

graph on any organization for failure to submit

12

any one notice shall not exceed $5,000.

13‘‘(B) MANAGERS.—The Secretary may

14make written demand on an organization sub-15

ject to penalty under subparagraph (A) speci-

16

fying in such demand a reasonable future date17

by which the notice shall be submitted for pur-18

poses of this subparagraph. If such notice is not

19

submitted on or before such date, there shall be

20

paid by the person failing to so submit $20 for

21

each day after the expiration of the time speci-

22

fied in the written demand during which such

23

failure continues, but the total amount imposed

24

under this subparagraph on all persons for fail-

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H.L.C.

213
1

ure to submit any one notice shall not exceed

2$5,000.’’.

3(d) CLERICAL AMENDMENT.—The table of sections

4 for part I of subchapter F of chapter 1 is amended by
5 adding at the end the following new item:‘‘Sec. 506. Organizations required to notify Secretary of intent to operate under
501(c)(4).’’.

6(e) LIMITATION.—Notwithstanding any other provi-

7 sion of law, any fees collected pursuant to section 506(e)8 of the Internal Revenue Code of 1986, as added by sub9 section (a), shall not be expended by the Secretary of the
10 Treasury or the Secretary’s delegate unless provided by
11 an appropriations Act.
12(f) EFFECTIVE DATE.—

13(1) IN GENERAL.—The amendments made by

14

this section shall apply to organizations which are15

described in section 501(c)(4) of the Internal Rev-

16

enue Code of 1986 and organized after the date of17

the enactment of this Act.

18(2) CERTAIN

EXISTING

ORGANIZATIONS.—In

19

the case of any other organization described in sec-

20

tion 501(c)(4) of such Code, the amendments made21

by this section shall apply to such organization only

22

if, on or before the date of the enactment of this

23

Act—

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H.L.C.

2141(A) such organization has not applied for2

a written determination of recognition as an or-

3

ganization described in section 501(c)(4) of

4such Code, and5(B) such organization has not filed at least6

one annual return or notice required under sub-7

section (a)(1) or (i) (as the case may be) of sec-

8

tion 6033 of such Code.

9

In the case of any organization to which the amend-

10

ments made by this section apply by reason of the

11

preceding sentence, such organization shall submit

12

the notice required by section 506(a) of such Code,13

as added by this Act, not later than 180 days after14

the date of the enactment of this Act.

15

SEC. 406. DECLARATORY JUDGMENTS FOR 501(c)(4) AND

16

OTHER EXEMPT ORGANIZATIONS.

17(a) IN GENERAL.—Section 7428(a)(1) is amended by

18 striking ‘‘or’’ at the end of subparagraph (C) and by in19 serting after subparagraph (D) the following new subpara20 graph:21‘‘(E) with respect to the initial qualifica-

22

tion or continuing qualification of an organiza-

23

tion as an organization described in section

24

501(c) (other than paragraph (3)) or 501(d)25

and exempt from tax under section 501(a), or’’.

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H.L.C.

2151(b) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to pleadings filed after the date
3 of the enactment of this Act.
4

SEC. 407. TERMINATION OF EMPLOYMENT OF INTERNAL

5

REVENUE SERVICE EMPLOYEES FOR TAKING

6

OFFICIAL

7

POSES.

8

ACTIONSFORPOLITICAL

PUR-(a) IN GENERAL.—Paragraph (10) of section

9 1203(b) of the Internal Revenue Service Restructuring
10 and Reform Act of 1998 is amended to read as follows:
11‘‘(10) performing, delaying, or failing to per-12

form (or threatening to perform, delay, or fail to13

perform) any official action (including any audit)

14

with respect to a taxpayer for purpose of extracting

15

personal gain or benefit or for a political purpose.’’.

16(b) EFFECTIVE DATE.—The amendment made by

17 this section shall take effect on the date of the enactment
18 of this Act.
19

SEC. 408. GIFT TAX NOT TO APPLY TO CONTRIBUTIONS TO

20

CERTAIN EXEMPT ORGANIZATIONS.

21(a) IN GENERAL.—Section 2501(a) is amended by

22 adding at the end the following new paragraph:23‘‘(6) TRANSFERS TO CERTAIN EXEMPT ORGANI-24ZATIONS.—Paragraph25transfer of money or other property to an organiza-(1) shall not apply to the

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H.L.C.

216
1

tion described in paragraph (4), (5), or (6) of sec-

2

tion 501(c) and exempt from tax under section

3

501(a), for the use of such organization.’’.

4(b) EFFECTIVE DATE.—The amendment made by

5 subsection (a) shall apply to gifts made after the date of
6 the enactment of this Act.
7(c) NO INFERENCE.—Nothing in the amendment

8 made by subsection (a) shall be construed to create any
9 inference with respect to whether any transfer of property
10 (whether made before, on, or after the date of the enact11 ment of this Act) to an organization described in para12 graph (4), (5), or (6) of section 501(c) of the Internal
13 Revenue Code of 1986 is a transfer of property by gift
14 for purposes of chapter 12 of such Code.
15

SEC. 409. EXTEND INTERNAL REVENUE SERVICE AUTHOR-16

ITY TO REQUIRE TRUNCATED SOCIAL SECU-

17

RITY NUMBERS ON FORM W–2.

18(a) WAGES.—Section 6051(a)(2) is amended by

19 striking ‘‘his social security account number’’ and insert20 ing ‘‘an identifying number for the employee’’.
21(b) EFFECTIVE DATE.—The amendment made by

22 this section shall take effect on the date of the enactment
23 of this Act.

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H.L.C.

217
1

SEC. 410. CLARIFICATION OF ENROLLED AGENT CREDEN-

2

TIALS.

3

Section 330 of title 31, United States Code, is

4 amended—
5(1) by redesignating subsections (b), (c), and6(d) as subsections (c), (d), and (e), respectively, and

7(2) by inserting after subsection (a) the fol-8

lowing new subsection:

9‘‘(b) Any enrolled agents properly licensed to practice

10 as required under rules promulgated under subsection (a)11 shall be allowed to use the credentials or designation of
12 ‘enrolled agent’, ‘EA’, or ‘E.A.’.’’.
13

SEC. 411. PARTNERSHIP AUDIT RULES.

1415(a) CORRECTION AND CLARIFICATION TO MODIFICATIONS TO IMPUTED UNDERPAYMENTS.—

16
17(1) Section 6225(c)(4)(A)(i) is amended bystriking ‘‘in the case of ordinary income,’’.

18(2) Section 6225(c) is amended by redesig-

19nating paragraphs (5) through (7) as paragraphs

20(6) through (8), respectively, and by inserting after

21

paragraph (4) the following new paragraph:2223‘‘(5) CERTAIN PASSIVE LOSSES OF PUBLICLYTRADED PARTNERSHIPS.—

24‘‘(A) IN GENERAL.—In the case of a pub-25

licly traded partnership (as defined in section

26469(k)(2)), such procedures shall provide—

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H.L.C.

2181‘‘(i) for determining the imputed un-2

derpayment without regard to the portion3

thereof that the partnership demonstrates

4

is attributable to a net decrease in a speci-

5

fied passive activity loss which is allocable6

to a specified partner, and7‘‘(ii) for the partnership to take such8

net decrease into account as an adjustment

9in the adjustment year with respect to the10

specified partners to which such net de-11crease relates.

12

‘‘(B)

SPECIFIEDPASSIVE

ACTIVITY

13

LOSS.—For

14

term ‘specified passive activity loss’ means, with15

respect to any specified partner of such publicly

16

traded partnership, the lesser of—

purposes of this paragraph, the17‘‘(i) the passive activity loss of such

18

partner which is separately determined

19

with respect to such partnership under sec-

20

tion 469(k) with respect to such partner’s

21

taxable year in which or with which the re-22viewed year of such partnership ends, or23‘‘(ii) such passive activity loss so de-24

termined with respect to such partner’s

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H.L.C.

219
1

taxable year in which or with which the ad-2justment year of such partnership ends.

3‘‘(C) SPECIFIED PARTNER.—For purposes

4of this paragraph, the term ‘specified partner’5means any person if such person—

6‘‘(i) is a partner of the publicly traded

7

partnership referred to in subparagraph

8

(A),

9

‘‘(ii) is described in section 469(a)(2),

10

and

11

‘‘(iii) has a specified passive activity

12

loss with respect to such publicly traded

13

partnership,14

with respect to each taxable year of such person

15which is during the period beginning with the

16taxable year of such person in which or with17

which the reviewed year of such publicly traded

18

partnership ends and ending with the taxable

19

year of such person in which or with which the20

adjustment year of such publicly traded part-21

nership ends.’’.

22(b) CORRECTION AND CLARIFICATION TO JUDICIAL

23 REVIEW OF PARTNERSHIP ADJUSTMENT .—24
25(1) Section 6226 is amended by adding at theend the following new subsection:

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H.L.C.

2201‘‘(d) JUDICIAL REVIEW.—For the time period within

2 which a partnership may file a petition for a readjustment,
3 see section 6234(a).’’.
4(2) Subsections (a)(3), (b)(1), and (d) of sec-

5

tion 6234 are each amended by striking ‘‘the Claims

6

Court’’ and inserting ‘‘the Court of Federal Claims’’.

7(3) The heading for section 6234(b) is amended

8

by striking ‘‘CLAIMS COURT’’ and inserting ‘‘COURT

9OF FEDERAL CLAIMS’’.

10(c) CORRECTION AND CLARIFICATION TO PERIOD OF

11 LIMITATIONS ON MAKING ADJUSTMENTS.—
1213(1) Section 6235(a)(2) is amended by striking‘‘paragraph (4)’’ and inserting ‘‘paragraph (7)’’.

14(2) Section 6235(a)(3) is amended by striking

15‘‘270 days’’ and inserting ‘‘330 days (plus the num-16

ber of days of any extension consented to by the17

Secretary under section 6225(c)(7)’’.

18(d) TECHNICAL AMENDMENT.—Section 6031(b) is

19 amended by striking the last sentence and inserting the
20 following: ‘‘Except as provided in the procedures under
21 section 6225(c), with respect to statements under section
22 6226, or as otherwise provided by the Secretary, informa23 tion required to be furnished by the partnership under this24 subsection may not be amended after the due date of the

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H.L.C.

221
1 return under subsection (a) to which such information re2 lates.’’.
3(e) EFFECTIVE DATE.—The amendments made by

4 this section shall take effect as if included in section 1101
5 of the Bipartisan Budget Act of 2015.

7

Subtitle B—United States Tax
Court

8

PART 1—TAXPAYER ACCESS TO UNITED STATES9

TAX COURT10SEC. 421. FILING PERIOD FOR INTEREST ABATEMENT

6

11
12

CASES.

(a) IN GENERAL.—Subsection (h) of section 6404 is

13 amended—
1415(1) by striking ‘‘REVIEW OF DENIAL’’ in theheading and inserting ‘‘JUDICIAL REVIEW’’, and16(2) by striking ‘‘if such action is brought’’ and17

all that follows in paragraph (1) and inserting ‘‘if

18

such action is brought—

19‘‘(A) at any time after the earlier of—20‘‘(i) the date of the mailing of the21

Secretary’s final determination not to22

abate such interest, or23‘‘(ii) the date which is 180 days after

24

the date of the filing with the Secretary (in25such form as the Secretary may prescribe)

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H.L.C.

222
1

of a claim for abatement under this sec-2

tion, and3‘‘(B) not later than the date which is 180

4days after the date described in subparagraph

5(A)(i).’’.

6(b) EFFECTIVE DATE.—The amendments made by

7 this section shall apply to claims for abatement of interest
8 filed with the Secretary of the Treasury after the date of
9 the enactment of this Act.
10

SEC. 422. SMALL TAX CASE ELECTION FOR INTEREST

11
12

ABATEMENT CASES.

(a) IN GENERAL.—Subsection (f) of section 7463 is

13 amended—
1415(1) by striking ‘‘and’’ at the end of paragraph
(1),

16
17

(2) by striking the period at the end of paragraph (2) and inserting ‘‘, and’’, and1819(3) by adding at the end the following newparagraph:20‘‘(3) a petition to the Tax Court under section

216404(h) in which the amount of the abatement

22

sought does not exceed $50,000.’’.

23(b) EFFECTIVE DATE.—The amendments made by

24 this section shall apply to cases pending as of the day after

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H.L.C.

223
1 the date of the enactment of this Act, and cases com2 menced after such date of enactment.
3

SEC. 423. VENUE FOR APPEAL OF SPOUSAL RELIEF AND

45COLLECTION CASES.

(a) IN GENERAL.—Paragraph (1) of section 7482(b)6 is amended—78(1) by striking ‘‘or’’ at the end of subparagraph
(D),

9
10

(2) by striking the period at the end of subparagraph (E), and1112(3) by inserting after subparagraph (E) the following new subparagraphs:

13‘‘(F) in the case of a petition under section

146015(e), the legal residence of the petitioner, or

15‘‘(G) in the case of a petition under section

16

6320 or 6330—

17‘‘(i) the legal residence of the peti-

18tioner if the petitioner is an individual, and19‘‘(ii) the principal place of business or

20

principal office or agency if the petitioner

21

is an entity other than an individual.’’.

22(b) EFFECTIVE DATE.—

23(1) IN GENERAL.—The amendments made by24

this section shall apply to petitions filed after the25date of enactment of this Act.

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H.L.C.

224
1(2) EFFECTON

EXISTING

PROCEEDINGS.—

2

Nothing in this section shall be construed to create3

any inference with respect to the application of sec-

4

tion 7482 of the Internal Revenue Code of 1986

5with respect to court proceedings filed on or before

6

the date of the enactment of this Act.

7

SEC. 424. SUSPENSION OF RUNNING OF PERIOD FOR FIL-

8

ING PETITION OF SPOUSAL RELIEF AND COL-

9LECTION CASES.

10(a) PETITIONS FOR SPOUSAL RELIEF.—

11(1) IN

GENERAL.—Subsection(e) of section

126015 is amended by adding at the end the following

13

new paragraph:14‘‘(6) SUSPENSION OF RUNNING OF PERIOD FOR

15

FILING PETITION IN TITLE 11 CASES.—In the case16of a person who is prohibited by reason of a case17

under title 11, United States Code, from filing a pe-

18

tition under paragraph (1)(A) with respect to a final

19

determination of relief under this section, the run-

20

ning of the period prescribed by such paragraph for

21

filing such a petition with respect to such final de-22

termination shall be suspended for the period during

23

which the person is so prohibited from filing such a24

petition, and for 60 days thereafter.’’.

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H.L.C.

225
1(2) EFFECTIVE DATE.—The amendment made2by this subsection shall apply to petitions filed under3

section 6015(e) of the Internal Revenue Code of41986 after the date of the enactment of this Act.

5(b) COLLECTION PROCEEDINGS.—

67(1) IN GENERAL.—Subsection (d) of section
6330 is amended—

8(A) by striking ‘‘appeal such determination9

to the Tax Court’’ in paragraph (1) and insert-10

ing ‘‘petition the Tax Court for review of such11

determination’’,12(B) by striking ‘‘JUDICIAL REVIEW OF DE-

13

TERMINATION’’ in the heading of paragraph (1)14and inserting ‘‘PETITION FOR REVIEW BY TAX

15

COURT’’,

16(C) by redesignating paragraph (2) as17

paragraph (3), and18(D) by inserting after paragraph (1) the19

following new paragraph:20‘‘(2) SUSPENSION OF RUNNING OF PERIOD FOR

21

FILING PETITION IN TITLE 11 CASES.—In the case22of a person who is prohibited by reason of a case23

under title 11, United States Code, from filing a pe-

24

tition under paragraph (1) with respect to a deter-

25

mination under this section, the running of the pe-

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H.L.C.

226
1

riod prescribed by such subsection for filing such a2

petition with respect to such determination shall be

3suspended for the period during which the person is4

so prohibited from filing such a petition, and for 30

5days thereafter, and’’.

6(2) EFFECTIVE DATE.—The amendments made7

by this subsection shall apply to petitions filed under8

section 6330 of the Internal Revenue Code of 1986

9after the date of the enactment of this Act.

10(c) CONFORMING AMENDMENT.—Subsection (c) of

11 section 6320 is amended by striking ‘‘(2)(B)’’ and insert12 ing ‘‘(3)(B)’’.
13

SEC. 425. APPLICATION OF FEDERAL RULES OF EVIDENCE.

14(a) IN GENERAL.—Section 7453 is amended by strik-

15 ing ‘‘the rules of evidence applicable in trials without a
16 jury in the United States District Court of the District
17 of Columbia’’ and inserting ‘‘the Federal Rules of Evi18 dence’’.
19(b) EFFECTIVE DATE.—The amendment made by

20 this section shall apply to proceedings commenced after
21 the date of the enactment of this Act and, to the extent
22 that it is just and practicable, to all proceedings pending
23 on such date.

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H.L.C.

227
1

PART 2—UNITED STATES TAX COURT2ADMINISTRATION

3

SEC. 431. JUDICIAL CONDUCT AND DISABILITY PROCE-

4

DURES.

5(a) IN GENERAL.—Part II of subchapter C of chap-

6 ter 76 is amended by adding at the end the following new
7 section:
8‘‘SEC. 7466. JUDICIAL CONDUCT AND DISABILITY PROCE-

9
10

DURES.

‘‘(a) IN GENERAL.—The Tax Court shall prescribe

11 rules, consistent with the provisions of chapter 16 of title
12 28, United States Code, establishing procedures for the
13 filing of complaints with respect to the conduct of any
14 judge or special trial judge of the Tax Court and for the
15 investigation and resolution of such complaints. In inves16 tigating and taking action with respect to any such com17 plaint, the Tax Court shall have the powers granted to
18 a judicial council under such chapter.
19‘‘(b) JUDICIAL COUNCIL.—The provisions of sections

20 354(b) through 360 of title 28, United States Code, re21 garding referral or certification to, and petition for review
22 in the Judicial Conference of the United States, and action
23 thereon, shall apply to the exercise by the Tax Court of
24 the powers of a judicial council under subsection (a). The
25 determination pursuant to section 354(b) or 355 of title
26 28, United States Code, shall be made based on the
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H.L.C.

228
1 grounds for removal of a judge from office under section
2 7443(f), and certification and transmittal by the Con3 ference of any complaint shall be made to the President
4 for consideration under section 7443(f).
5‘‘(c) HEARINGS.—

6‘‘(1) IN

GENERAL.—In

conducting hearings

7

pursuant to subsection (a), the Tax Court may exer-

8

cise the authority provided under section 1821 of

9title 28, United States Code, to pay the fees and al-

10lowances described in that section.

11‘‘(2) REIMBURSEMENTFOR EXPENSES.—The12

Tax Court shall have the power provided under sec-

13

tion 361 of such title 28 to award reimbursement for14

the reasonable expenses described in that section.

15

Reimbursements under this paragraph shall be made16

out of any funds appropriated for purposes of the17

Tax Court.’’.

18(b) CLERICAL AMENDMENT.—The table of sections

19 for part II of subchapter C of chapter 76 is amended by
20 adding at the end the following new item:‘‘Sec. 7466. Judicial conduct and disability procedures.’’.

21(c) EFFECTIVE DATE.—The amendments made by

22 this section shall apply to proceedings commenced after
23 the date which is 180 days after the date of the enactment
24 of this Act and, to the extent just and practicable, all pro25 ceedings pending on such date.
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H.L.C.

229
1

SEC. 432. ADMINISTRATION, JUDICIAL CONFERENCE, AND

2

FEES.

3

(a) IN GENERAL.—Part III of subchapter C of chap-

4 ter 76 is amended by inserting before section 7471 the
5 following new sections:
6‘‘SEC. 7470. ADMINISTRATION.

7‘‘Notwithstanding any other provision of law, the Tax

8 Court may exercise, for purposes of management, adminis9 tration, and expenditure of funds of the Court, the au10 thorities provided for such purposes by any provision of
11 law (including any limitation with respect to such provi12 sion of law) applicable to a court of the United States (as13 that term is defined in section 451 of title 28, United
14 States Code), except to the extent that such provision of
15 law is inconsistent with a provision of this subchapter.
16‘‘SEC. 7470A. JUDICIAL CONFERENCE.

17‘‘(a) JUDICIAL CONFERENCE.—The chief judge may

18 summon the judges and special trial judges of the Tax
19 Court to an annual judicial conference, at such time and20 place as the chief judge shall designate, for the purpose
21 of considering the business of the Tax Court and recom22 mending means of improving the administration of justice
23 within the jurisdiction of the Tax Court. The Tax Court
24 shall provide by its rules for representation and active par25 ticipation at such conferences by persons admitted to prac-

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H.L.C.

230
1 tice before the Tax Court and by other persons active in
2 the legal profession.
3‘‘(b) REGISTRATION FEE.—The Tax Court may im-

4 pose a reasonable registration fee on persons (other than
5 judges and special trial judges of the Tax Court) partici6 pating at judicial conferences convened pursuant to sub7 section (a). Amounts so received by the Tax Court shall
8 be available to the Tax Court to defray the expenses of
9 such conferences.’’.
10(b) DISPOSITION OF FEES.—Section 7473 is amend-

11 ed to read as follows:
12‘‘SEC. 7473. DISPOSITION OF FEES.

13‘‘Except as provided in sections 7470A and 7475, all

14 fees received by the Tax Court pursuant to this title shall
15 be deposited into a special fund of the Treasury to be
16 available to offset funds appropriated for the operation
17 and maintenance of the Tax Court.’’.
18(c) CLERICAL AMENDMENTS.—The table of sections

19 for part III of subchapter C of chapter 76 is amended
20 by inserting before the item relating to section 7471 the
21 following new items:‘‘Sec. 7470. Administration.
‘‘Sec. 7470A. Judicial conference.’’.

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H.L.C.

231
1

PART 3—CLARIFICATION RELATING TO UNITED

2STATES TAX COURT

3

SEC. 441. CLARIFICATION RELATING TO UNITED STATES4

TAX COURT.

5

Section 7441 is amended by adding at the end the

6 following: ‘‘The Tax Court is not an agency of, and shall
7 be independent of, the executive branch of the Govern8 ment.’’.

10

TITLE V—TRADE-RELATEDPROVISIONS

11

SEC. 501. MODIFICATION OF EFFECTIVE DATE OF PROVI-

12

SIONS RELATING TO TARIFF CLASSIFICATION

13

OF RECREATIONAL PERFORMANCE OUTER-

14

WEAR.

9

15

Section 601(c) of the Trade Preferences Extension

16 Act of 2015 (Public Law 114–27; 129 Stat. 412) is
17 amended—18(1) in paragraph (1), by striking ‘‘the 180th

19

day after the date of the enactment of this Act’’ and20

inserting ‘‘March 31, 2016’’; and2122(2) in paragraph (2), by striking ‘‘such 180th
day’’ and inserting ‘‘March 31, 2016’’.

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H.L.C.

232
1

SEC. 502. AGREEMENT BY ASIA-PACIFIC ECONOMIC CO-

2

OPERATION MEMBERS TO REDUCE RATES OF

3

DUTY ON CERTAIN ENVIRONMENTAL GOODS.

4

Section 107 of the Bipartisan Congressional Trade

5 Priorities and Accountability Act of 2015 (Public Law
6 114–26; 19 U.S.C. 4206) is amended by adding at the
7 end the following:
8‘‘(c) AGREEMENT BY ASIA-PACIFIC ECONOMIC CO-

9

OPERATION MEMBERS TO REDUCE RATES OF DUTY ON

10 CERTAIN
11 theENVIRONMENTAL

notification

GOODS.—Notwithstanding

requirement

described

insection

12 103(a)(2), the President may exercise the proclamation
13 authority provided for in section 103(a)(1)(B) to imple14 ment an agreement by members of the Asia-Pacific Eco15 nomic Cooperation (APEC) to reduce any rate of duty on
16 certain environmental goods included in Annex C of the
17 APEC Leaders Declaration issued on September 9, 2012,18 if (and only if) the President, as soon as feasible after
19 the date of the enactment of this subsection, and before
20 exercisingproclamation

authority

under

section

21 103(a)(1)(B), notifies Congress of the negotiations relat22 ing to the agreement and the specific United States objec23 tives in the negotiations.’’.

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H.L.C.

233
1

TITLE VI—BUDGETARY EFFECTS

2

SEC. 601. BUDGETARY EFFECTS.

3(a) PAYGO SCORECARD.—The budgetary effects of

4 this Act shall not be entered on either PAYGO scorecard
5 maintained pursuant to section 4(d) of the Statutory Pay6 As-You-Go Act of 2010.
7(b) SENATE PAYGO SCORECARD.—The budgetary ef-

8 fects of this Act shall not be entered on any PAYGO score9 card maintained for purposes of section 201 of S. Con.
10 Res. 21 (110th Congress).

◊

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