IB 

Union Calendar No. 257 

111TH CONGRESS 

2D SESSION H. R. 4849 

[Report No. 111–447] 

To amend the Internal Revenue Code of 1986 to provide tax incentives 

for small business job creation, extend the Build America Bonds program, provide other infrastructure job creation tax incentives, and for 

other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 16, 2010 

Mr. LEVIN (for himself, Mr. RANGEL, Mr. LEWIS of Georgia, Mr. NEAL of 

Massachusetts, Mr. POMEROY, Mr. THOMPSON of California, Mr. LARSON

of Connecticut, Mr. KIND, Mr. PASCRELL, Ms. BERKLEY, Mr. CROWLEY, 

Mr. VAN HOLLEN, Ms. SCHWARTZ, Mr. DAVIS of Alabama, Mr. DAVIS

of Illinois, Mr. ETHERIDGE, Ms. LINDA T. SA ́NCHEZ of California, and 

Mr. YARMUTH) introduced the following bill; which was referred to the 

Committee on Ways and Means 

MARCH 19, 2010 

Reported with an amendment, committed to the Committee of the Whole 

House on the State of the Union, and ordered to be printed 

[Strike out all after the enacting clause and insert the part printed in italic] 

[For text of introduced bill, see copy of bill as introduced on March 16, 2010] 


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A BILL 

To amend the Internal Revenue Code of 1986 to provide 

tax incentives for small business job creation, extend 

the Build America Bonds program, provide other infrastructure job creation tax incentives, and for other purposes. 


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1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; ETC. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Small Business and Infrastructure Jobs Tax Act of 2010’’. 

6 (b) AMENDMENT OF 1986 CODE.—Except as otherwise 

7 expressly provided, whenever in this Act an amendment or 

8 repeal is expressed in terms of an amendment to, or repeal 

9 of, a section or other provision, the reference shall be consid10 ered to be made to a section or other provision of the Inter11 nal Revenue Code of 1986. 

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

13 this Act is as follows: 

Sec. 1. Short title; etc. 

TITLE I—SMALL BUSINESS TAX INCENTIVES 

Subtitle A—General Provisions 

Sec. 101. Temporary exclusion of 100 percent of gain on certain small business 

stock. 

Subtitle B—Limitations and Reporting on Certain Penalties 

Sec. 111. Limitation on penalty for failure to disclose certain information. 

Sec. 112. Annual reports on penalties and certain other enforcement actions. 

Subtitle C—Other Provisions 

Sec. 121. Nonrecourse small business investment company loans from the Small 

Business Administration treated as amounts at risk. 

Sec. 122. Increase in amount allowed as deduction for start-up expenditures. 

TITLE II—INFRASTRUCTURE INCENTIVES 

Sec. 201. Extension of Build America Bonds. 

Sec. 202. Exempt-facility bonds for sewage and water supply facilities. 

Sec. 203. Extension of exemption from alternative minimum tax treatment for 

certain tax-exempt bonds. 

Sec. 204. Elective payments in lieu of low income housing credits. 

Sec. 205. Extension and additional allocations of recovery zone bond authority. 

Sec. 206. Allowance of new markets tax credit against alternative minimum tax. 


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TITLE III—REVENUE PROVISIONS 

Sec. 301. Limitation on treaty benefits for certain deductible payments. 

Sec. 302. Treatment of securities of a controlled corporation exchanged for assets 

in certain reorganizations. 

Sec. 303. Repeal of special rules for interest and dividends received from persons 

meeting the 80-percent foreign business requirements. 

Sec. 304. Information reporting for rental property expense payments. 

Sec. 305. Application of levy to payments to Federal vendors relating to property. 

Sec. 306. Application of continuous levy to employment tax liability of certain 

Federal contractors. 

Sec. 307. Required minimum 10-year term, etc., for grantor retained annuity 

trusts. 

Sec. 308. Increase in information return penalties. 

1 TITLE I—SMALL BUSINESS TAX 

2 INCENTIVES 

3 Subtitle A—General Provisions 

4 SEC. 101. TEMPORARY EXCLUSION OF 100 PERCENT OF 

5 GAIN ON CERTAIN SMALL BUSINESS STOCK. 

6 (a) IN GENERAL.—Subsection (a) of section 1202 is 

7 amended by adding at the end the following new paragraph: 

8 ‘‘(4) SPECIAL 100 PERCENT EXCLUSION.—In the 

9 case of qualified small business stock acquired after 

10 March 15, 2010, and before January 1, 2012— 

11 ‘‘(A) paragraph (1) shall be applied by sub12 stituting ‘100 percent’ for ‘50 percent’, 

13 ‘‘(B) paragraph (2) shall not apply, and 

14 ‘‘(C) paragraph (7) of section 57(a) shall 

15 not apply.’’. 

16 (b) CONFORMING AMENDMENTS.—Paragraph (3) of 

17 section 1202(a) is amended— 

18 (1) by striking ‘‘after the date of the enactment 

19 of this paragraph and before January 1, 2011’’ and 


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1 inserting ‘‘after February 17, 2009, and before March 

2 16, 2010’’, and 

3 (2) by striking ‘‘SPECIAL RULES FOR 2009 AND

4 2010’’ in the heading and inserting ‘‘SPECIAL 75 PER5 CENT EXCLUSION’’. 

6 (c) EFFECTIVE DATE.—The amendments made by this 

7 section shall apply to stock acquired after March 15, 2010. 

8 Subtitle B—Limitations and 

9 Reporting on Certain Penalties 

10 SEC. 111. LIMITATION ON PENALTY FOR FAILURE TO DIS11 CLOSE CERTAIN INFORMATION. 

12 (a) IN GENERAL.—Subsection (b) of section 6707A is 

13 amended to read as follows: 

14 ‘‘(b) AMOUNT OF PENALTY.— 

15 ‘‘(1) IN GENERAL.—Except as otherwise provided 

16 in this subsection, the amount of the penalty under 

17 subsection (a) with respect to any reportable trans18 action shall be 75 percent of the decrease in tax shown 

19 on the return as a result of such transaction (or 

20 which would have resulted from such transaction if 

21 such transaction were respected for Federal tax pur22 poses). 

23 ‘‘(2) MAXIMUM PENALTY.—The amount of the 

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1 portable transaction for any taxable year shall not ex2 ceed— 

3 ‘‘(A) in the case of a listed transaction, 

4 $200,000 ($100,000 in the case of a natural per5 son), or 

6 ‘‘(B) in the case of any other reportable 

7 transaction, $50,000 ($10,000 in the case of a 

8 natural person). 

9 ‘‘(3) MINIMUM PENALTY.—The amount of the 

10 penalty under subsection (a) with respect to any 

11 transaction for any taxable year shall not be less than 

12 $10,000 ($5,000 in the case of a natural person).’’. 

13 (b) EFFECTIVE DATE.—The amendment made by this 

14 section shall apply to penalties assessed after December 31, 

15 2006. 

16 SEC. 112. ANNUAL REPORTS ON PENALTIES AND CERTAIN 

17 OTHER ENFORCEMENT ACTIONS. 

18 (a) IN GENERAL.—The Commissioner of Internal Rev19 enue, in consultation with the Secretary of the Treasury, 

20 shall submit to the Committee on Ways and Means of the 

21 House of Representatives and the Committee on Finance 

22 of the Senate an annual report on the penalties assessed 

23 by the Internal Revenue Service during the preceding year 

24 under each of the following provisions of the Internal Rev25 enue Code of 1986: 


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1 (1) Section 6662A (relating to accuracy-related 

2 penalty on understatements with respect to reportable 

3 transactions). 

4 (2) Section 6700(a) (relating to promoting abu5 sive tax shelters). 

6 (3) Section 6707 (relating to failure to furnish 

7 information regarding reportable transactions). 

8 (4) Section 6707A (relating to failure to include 

9 reportable transaction information with return). 

10 (5) Section 6708 (relating to failure to maintain 

11 lists of advisees with respect to reportable trans12 actions). 

13 (b) ADDITIONAL INFORMATION.—The report required 

14 under subsection (a) shall also include information on the 

15 following with respect to each year: 

16 (1) Any action taken under section 330(b) of 

17 title 31, United States Code, with respect to any re18 portable transaction (as defined in section 6707A(c) 

19 of the Internal Revenue Code of 1986). 

20 (2) Any extension of the time for assessment of 

21 tax enforced, or assessment of any amount under such 

22 an extension, under paragraph (10) of section 6501(c) 

23 of the Internal Revenue Code of 1986. 


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1 (c) DATE OF REPORT.—The first report required 

2 under subsection (a) shall be submitted not later than De3 cember 31, 2010. 

4 Subtitle C—Other Provisions 

5 SEC. 121. NONRECOURSE SMALL BUSINESS INVESTMENT 

6 COMPANY LOANS FROM THE SMALL BUSI7 NESS ADMINISTRATION TREATED AS 

8 AMOUNTS AT RISK. 

9 (a) IN GENERAL.—Subparagraph (B) of section 

10 465(b)(6) is amended to read as follows: 

11 ‘‘(B) QUALIFIED NONRECOURSE FINANC12 ING.—For purposes of this paragraph— 

13 ‘‘(i) IN GENERAL.—The term ‘qualified 

14 nonrecourse financing’ means any financ15 ing— 

16 ‘‘(I) which is qualified real prop17 erty financing or qualified SBIC fi18 nancing, 

19 ‘‘(II) except to the extent provided 

20 in regulations, with respect to which 

21 no person is personally liable for re22 payment, and 

23 ‘‘(III) which is not convertible 

24 debt. 


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1 ‘‘(ii) QUALIFIED REAL PROPERTY FI2 NANCING.—The term ‘qualified real prop3 erty financing’ means any financing 

4 which— 

5 ‘‘(I) is borrowed by the taxpayer 

6 with respect to the activity of holding 

7 real property, 

8 ‘‘(II) is secured by real property 

9 used in such activity, and 

10 ‘‘(III) is borrowed by the taxpayer 

11 from a qualified person or represents a 

12 loan from any Federal, State, or local 

13 government or instrumentality thereof, 

14 or is guaranteed by any Federal, State, 

15 or local government. 

16 ‘‘(iii) QUALIFIED SBIC FINANCING.— 

17 The term ‘qualified SBIC financing’ means 

18 any financing which— 

19 ‘‘(I) is borrowed by a small busi20 ness investment company (within the 

21 meaning of section 301 of the Small 

22 Business Investment Act of 1958), and 

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1 istration under the authority of section 

2 303(b) of such Act.’’. 

3 (b) CONFORMING AMENDMENTS.—Subparagraph (A) 

4 of section 465(b)(6) is amended— 

5 (1) by striking ‘‘in the case of an activity of 

6 holding real property,’’, and 

7 (2) by striking ‘‘which is secured by real prop8 erty used in such activity’’. 

9 (c) EFFECTIVE DATE.—The amendments made by this 

10 section shall apply to loans and guarantees made after the 

11 date of the enactment of this Act. 

12 SEC. 122. INCREASE IN AMOUNT ALLOWED AS DEDUCTION 

13 FOR START-UP EXPENDITURES. 

14 (a) IN GENERAL.—Subsection (b) of section 195 is 

15 amended by adding at the end the following new paragraph: 

16 ‘‘(3) INCREASED LIMITATION FOR TAXABLE

17 YEARS BEGINNING IN 2010 OR 2011.—In the case of 

18 any taxable year beginning in 2010 or 2011, para19 graph (1)(A)(ii) shall be applied— 

20 ‘‘(A) by substituting ‘$20,000’ for ‘$5,000’, 

21 and 

22 ‘‘(B) by substituting ‘$75,000’ for 

23 ‘$50,000’.’’. 


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1 (b) EFFECTIVE DATE.—The amendments made by this 

2 section shall apply to taxable years beginning after Decem3 ber 31, 2009. 

4 TITLE II—INFRASTRUCTURE 

5 INCENTIVES 

6 SEC. 201. EXTENSION OF BUILD AMERICA BONDS. 

7 (a) IN GENERAL.—Subparagraph (B) of section 

8 54AA(d)(1) is amended by striking ‘‘January 1, 2011’’ and 

9 inserting ‘‘April 1, 2013’’. 

10 (b) EXTENSION OF PAYMENTS TO ISSUERS.— 

11 (1) IN GENERAL.—Subsection (a) of section 6431 

12 is amended by striking ‘‘January 1, 2011’’ and in13 serting ‘‘April 1, 2013’’. 

14 (2) CONFORMING AMENDMENTS.—Subsection (g) 

15 of section 54AA is amended— 

16 (A) by striking ‘‘January 1, 2011’’ and in17 serting ‘‘April 1, 2013’’, and 

18 (B) by striking ‘‘QUALIFIED BONDS ISSUED

19 BEFORE 2011’’ in the heading and inserting 

20 ‘‘CERTAIN QUALIFIED BONDS’’. 

21 (c) REDUCTION IN PERCENTAGE OF PAYMENTS TO

22 ISSUERS.—Subsection (b) of section 6431 is amended— 

23 (1) by striking ‘‘The Secretary’’ and inserting 

24 the following: 

25 ‘‘(1) IN GENERAL.—The Secretary’’, 


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1 (2) by striking ‘‘35 percent’’ and inserting ‘‘the 

2 applicable percentage’’, and 

3 (3) by adding at the end the following new para4 graph: 

5 ‘‘(2) APPLICABLE PERCENTAGE.—For purposes 

6 of this subsection, the term ‘applicable percentage’ 

7 means the percentage determined in accordance with 

8 the following table: 

‘‘In the case of a qualified bond issued during calendar year: The applicable percentage 

is: 

2009 or 2010 .................................................................. 35 percent 

2011 ................................................................................ 33 percent 

2012 ................................................................................ 31 percent 

2013 ................................................................................ 30 percent’’. 

9 (d) CURRENT REFUNDINGS PERMITTED.—Subsection 

10 (g) of section 54AA is amended by adding at the end the 

11 following new paragraph: 

12 ‘‘(3) TREATMENT OF CURRENT REFUNDING

13 BONDS.— 

14 ‘‘(A) IN GENERAL.—For purposes of this 

15 subsection, the term ‘qualified build America 

16 bond’ includes any bond (or series of bonds) 

17 issued to refund a qualified build America bond 

18 if— 

19 ‘‘(i) the average maturity date of the 

20 issue of which the refunding bond is a part 


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1 is not later than the average maturity date 

2 of the bonds to be refunded by such issue, 

3 ‘‘(ii) the amount of the refunding bond 

4 does not exceed the outstanding amount of 

5 the refunded bond, and 

6 ‘‘(iii) the refunded bond is redeemed 

7 not later than 90 days after the date of the 

8 issuance of the refunding bond. 

9 ‘‘(B) APPLICABLE PERCENTAGE.—In the 

10 case of a refunding bond referred to in subpara11 graph (A), the applicable percentage with respect 

12 to such bond under section 6431(b) shall be the 

13 lowest percentage specified in paragraph (2) of 

14 such section. 

15 ‘‘(C) DETERMINATION OF AVERAGE MATU16 RITY.—For purposes of subparagraph (A)(i), av17 erage maturity shall be determined in accord18 ance with section 147(b)(2)(A).’’. 

19 (e) CLARIFICATION RELATED TO LEVEES AND FLOOD

20 CONTROL PROJECTS.—Subparagraph (A) of section 

21 54AA(g)(2) is amended by inserting ‘‘(including capital ex22 penditures for levees and other flood control projects)’’ after 

23 ‘‘capital expenditures’’. 


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1 SEC. 202. EXEMPT-FACILITY BONDS FOR SEWAGE AND 

2 WATER SUPPLY FACILITIES. 

3 (a) BONDS FOR WATER AND SEWAGE FACILITIES EX4 EMPT FROM VOLUME CAP ON PRIVATE ACTIVITY BONDS.— 

5 (1) IN GENERAL.—Paragraph (3) of section 

6 146(g) is amended by inserting ‘‘(4), (5),’’ after 

7 ‘‘(2),’’. 

8 (2) CONFORMING AMENDMENT.—Paragraphs (2) 

9 and (3)(B) of section 146(k) are both amended by 

10 striking ‘‘(4), (5), (6),’’ and inserting ‘‘(6)’’. 

11 (b) TAX-EXEMPT ISSUANCE BY INDIAN TRIBAL GOV12 ERNMENTS.— 

13 (1) IN GENERAL.—Subsection (c) of section 7871 

14 is amended by adding at the end the following new 

15 paragraph: 

16 ‘‘(4) EXCEPTION FOR BONDS FOR WATER AND

17 SEWAGE FACILITIES.—Paragraph (2) shall not apply 

18 to an exempt facility bond 95 percent or more of the 

19 net proceeds (as defined in section 150(a)(3)) of which 

20 are to be used to provide facilities described in para21 graph (4) or (5) of section 142(a).’’. 

22 (2) CONFORMING AMENDMENT.—Paragraph (2) 

23 of section 7871(c) is amended by striking ‘‘paragraph 

24 (3)’’ and inserting ‘‘paragraphs (3) and (4)’’. 


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1 (c) EFFECTIVE DATE.—The amendments made by this 

2 section shall apply to obligations issued after the date of 

3 the enactment of this Act. 

4 SEC. 203. EXTENSION OF EXEMPTION FROM ALTERNATIVE 

5 MINIMUM TAX TREATMENT FOR CERTAIN 

6 TAX-EXEMPT BONDS. 

7 (a) IN GENERAL.—Clause (vi) of section 57(a)(5)(C) 

8 is amended— 

9 (1) by striking ‘‘January 1, 2011’’ in subclause 

10 (I) and inserting ‘‘January 1, 2012’’, and 

11 (2) by striking ‘‘AND 2010’’ in the heading and 

12 inserting ‘‘, 2010, AND 2011’’. 

13 (b) ADJUSTED CURRENT EARNINGS.—Clause (iv) of 

14 section 56(g)(4)(B) is amended— 

15 (1) by striking ‘‘January 1, 2011’’ in subclause 

16 (I) and inserting ‘‘January 1, 2012’’, and 

17 (2) by striking ‘‘AND 2010’’ in the heading and 

18 inserting ‘‘, 2010, AND 2011’’. 

19 (c) EFFECTIVE DATE.—The amendments made by this 

20 section shall apply to obligations issued after December 31, 

21 2010. 


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1 SEC. 204. ELECTIVE PAYMENTS IN LIEU OF LOW INCOME 

2 HOUSING CREDITS. 

3 (a) IN GENERAL.—Chapter 65 (relating to abatements, 

4 credits, and refunds) is amended by adding at the end the 

5 following new subchapter: 

6 ‘‘Subchapter C—Direct Payment Provisions 

‘‘Sec. 6451. Elective payments in lieu of low income housing credit for bond-financed buildings. 

7 ‘‘SEC. 6451. ELECTIVE PAYMENTS IN LIEU OF LOW INCOME 

8 HOUSING CREDIT FOR BOND-FINANCED 

9 BUILDINGS. 

10 ‘‘(a) IN GENERAL.—Any person making an election 

11 under this section with respect to any qualified bond-fi12 nanced low-income building originally placed in service by 

13 such person during the taxable year shall be treated as mak14 ing a payment, against the tax imposed by subtitle A for 

15 the taxable year, equal to the direct payment amount with 

16 respect to such building. Such payment shall be treated as 

17 made on the later of the due date of the return of such tax 

18 or the date on which such return is filed. 

19 ‘‘(b) QUALIFIED BOND-FINANCED LOW-INCOME BUILD20 ING.—For purposes of this section, the term ‘qualified bond21 financed low-income building’ means any qualified low-in22 come building to which paragraph (1) of section 42(h) does 

23 not apply by reason of paragraph (4)(B) of such section. 


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1 ‘‘(c) DIRECT PAYMENT AMOUNT.—For purposes of this 

2 section, the term ‘direct payment amount’ means, with re3 spect to any building, 25.5 percent of the qualified basis 

4 of such building. 

5 ‘‘(d) SPECIAL RULES FOR CERTAIN NON-TAX6 PAYERS.— 

7 ‘‘(1) DENIAL OF PAYMENT.—Subsection (a) shall 

8 not apply with respect to any building placed in serv9 ice by— 

10 ‘‘(A) any governmental entity, or 

11 ‘‘(B) any organization described in section 

12 501(c) or 401(a) and exempt from tax under sec13 tion 501(a). 

14 ‘‘(2) SPECIAL RULES FOR PARTNERSHIPS AND S

15 CORPORATIONS.—In the case of property originally 

16 placed in service by a partnership or an S corpora17 tion— 

18 ‘‘(A) the election under subsection (a) may 

19 be made only by such partnership or S corpora20 tion, 

21 ‘‘(B) such partnership or S corporation 

22 shall be treated as making the payment referred 

23 to in subsection (a) only to the extent of the pro24 portionate share of such partnership or S cor25 poration as is owned by persons who would be 


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1 treated as making such payment if the building 

2 were placed in service by such persons, and 

3 ‘‘(C) the return required to be made by such 

4 partnership or S corporation under section 6031 

5 or 6037 (as the case may be) shall be treated as 

6 a return of tax for purposes of subsection (a). 

7 For purposes of subparagraph (B), rules similar to the rules 

8 of section 168(h)(6) (other than subparagraph (F) thereof) 

9 shall apply. 

10 ‘‘ 

11 ‘‘(e) COORDINATION WITH LOW INCOME HOUSING

12 CREDIT.—In the case of any property with respect to which 

13 an election is made under this section, no credit shall be 

14 determined under section 42 with respect to such building 

15 for any taxable year. 

16 ‘‘(f) OTHER DEFINITIONS AND SPECIAL RULES.—For 

17 purposes of this section— 

18 ‘‘(1) OTHER DEFINITIONS.—Terms used in this 

19 section which are also used in section 42 shall have 

20 the same meaning for purposes of this section as when 

21 used in such section. 

22 ‘‘(2) APPLICATION OF RECAPTURE RULES, 

23 ETC.—Except as otherwise provided by the Secretary, 

24 rules similar to the rules of section 42 shall apply, in25 cluding the recapture rules of section 42(j). 


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1 ‘‘(3) PROVISION OF INFORMATION.—A person 

2 shall not be treated as having elected the application 

3 of this section unless the taxpayer provides such infor4 mation as the Secretary may require for purposes of 

5 verifying the proper amount to be treated as a pay6 ment under subsection (a) and evaluating the effec7 tiveness of this section. 

8 ‘‘(4) EXCLUSION FROM GROSS INCOME.—Any 

9 credit or refund allowed or made by reason of this 

10 section shall not be includible in gross income or al11 ternative minimum taxable income. 

12 ‘‘(g) TERMINATION.—Subsection (a) shall not apply 

13 with respect to any building placed in service during a tax14 able year beginning after December 31, 2010.’’. 

15 (b) CONFORMING AMENDMENTS.— 

16 (1) Subparagraph (A) of section 6211(b)(4) is 

17 amended by inserting ‘‘and subchapter C of chapter 

18 65 (including any payment treated as made under 

19 such subchapter)’’ after ‘‘6431’’. 

20 (2) Subparagraph (B) of section 6425(c)(1) is 

21 amended— 

22 (A) by striking ‘‘the credits’’ and inserting 

23 ‘‘the sum of— 

24 ‘‘(i) the credits’’, 


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1 (B) by striking the period at the end of 

2 clause (i) thereof (as amended by this para3 graph) and inserting ‘‘, plus’’, and 

4 (C) by adding at the end the following new 

5 clause: 

6 ‘‘(ii) the credits allowed (and payments 

7 treated as made) under subchapter C.’’. 

8 (3) Paragraph (3) of section 6654(f) is amend9 ed— 

10 (A) by striking ‘‘the credits’’ and inserting 

11 ‘‘the sum of— 

12 ‘‘(A) the credits’’, 

13 (B) by striking the period at the end of sub14 paragraph (A) thereof (as amended by this para15 graph) and inserting ‘‘, and’’, and 

16 (C) by adding at the end the following new 

17 subparagraph: 

18 ‘‘(B) the credits allowed (and payments 

19 treated as made) under subchapter C of chapter 

20 65.’’. 

21 (4) Subparagraph (B) of section 6655(g)(1) is 

22 amended— 

23 (A) by striking ‘‘the credits’’ and inserting 

24 ‘‘the sum of— 

25 ‘‘(i) the credits’’, 


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1 (B) by striking the period at the end of 

2 clause (i) thereof (as amended by this para3 graph) and inserting ‘‘, plus’’, and 

4 (C) by adding at the end the following new 

5 clause: 

6 ‘‘(ii) the credits allowed (and payments 

7 treated as made) under subchapter C of 

8 chapter 65.’’. 

9 (5) Paragraph (2) of section 1324(b) of title 31, 

10 United States Code, is amended by inserting ‘‘, or 

11 from the provisions of subchapter C of chapter 65 of 

12 such Code’’ before the period at the end. 

13 (6) The table of subchapters for chapter 65 is 

14 amended by adding at the end the following new item: 

SUBCHAPTER C. DIRECT PAYMENT PROVISIONS

15 (c) EFFECTIVE DATE.—The amendments made by this 

16 section shall apply to buildings placed in service after the 

17 date of the enactment of this Act. 

18 SEC. 205. EXTENSION AND ADDITIONAL ALLOCATIONS OF 

19 RECOVERY ZONE BOND AUTHORITY. 

20 (a) EXTENSION OF RECOVERY ZONE BOND AUTHOR21 ITY.—Section 1400U–2(b)(1) and section 1400U– 

22 3(b)(1)(B) are each amended by striking ‘‘January 1, 

23 2011’’ and inserting ‘‘January 1, 2012’’. 

24 (b) ADDITIONAL ALLOCATIONS OF RECOVERY ZONE

25 BOND AUTHORITY BASED ON UNEMPLOYMENT.—Section 


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1 1400U–1 is amended by adding at the end the following 

2 new subsection: 

3 ‘‘(c) ALLOCATION OF 2010 RECOVERY ZONE BOND

4 LIMITATIONS BASED ON UNEMPLOYMENT.— 

5 ‘‘(1) IN GENERAL.—The Secretary shall allocate 

6 the 2010 national recovery zone economic development 

7 bond limitation and the 2010 national recovery zone 

8 facility bond limitation among the States in the pro9 portion that each such State’s 2009 unemployment 

10 number bears to the aggregate of the 2009 unemploy11 ment numbers for all of the States. 

12 ‘‘(2) MINIMUM ALLOCATION.—The Secretary 

13 shall adjust the allocations under paragraph (1) for 

14 each State to the extent necessary to ensure that no 

15 State (prior to any reduction under paragraph (3)) 

16 receives less than 0.9 percent of the 2010 national re17 covery zone economic development bond limitation 

18 and 0.9 percent of the 2010 national recovery zone fa19 cility bond limitation. 

20 ‘‘(3) ALLOCATIONS BY STATES.— 

21 ‘‘(A) IN GENERAL.—Each State with respect 

22 to which an allocation is made under paragraph 

23 (1) shall reallocate such allocation among the 

24 counties and large municipalities (as defined in 

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1 portion that each such county’s or municipality’s 

2 2009 unemployment number bears to the aggre3 gate of the 2009 unemployment numbers for all 

4 the counties and large municipalities (as so de5 fined) in such State. 

6 ‘‘(B) 2010 ALLOCATION REDUCED BY

7 AMOUNT OF PREVIOUS ALLOCATION.—Each State 

8 shall reduce (but not below zero)— 

9 ‘‘(i) the amount of the 2010 national 

10 recovery zone economic development bond 

11 limitation allocated to each county or large 

12 municipality (as so defined) in such State 

13 by the amount of the national recovery zone 

14 economic development bond limitation allo15 cated to such county or large municipality 

16 under subsection (a)(3)(A) (determined 

17 without regard to any waiver thereof), and 

18 ‘‘(ii) the amount of the 2010 national 

19 recovery zone facility bond limitation allo20 cated to each county or large municipality 

21 (as so defined) in such State by the amount 

22 of the national recovery zone facility bond 

23 limitation allocated to such county or large 

24 municipality under subsection (a)(3)(A) 


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1 (determined without regard to any waiver 

2 thereof). 

3 ‘‘(C) WAIVER OF SUBALLOCATIONS.—A 

4 county or municipality may waive any portion 

5 of an allocation made under this paragraph. A 

6 State may by law treat a county or munici7 pality as waiving any portion of an allocation 

8 made under this paragraph if there is a reason9 able expectation that such allocation would not 

10 otherwise be used. 

11 ‘‘(D) SPECIAL RULE FOR A MUNICIPALITY

12 IN A COUNTY.—In the case of any large munici13 pality any portion of which is in a county, such 

14 portion shall be treated as part of such munici15 pality and not part of such county. 

16 ‘‘(4) 2009 UNEMPLOYMENT NUMBER.—For pur17 poses of this subsection, the term ‘2009 unemployment 

18 number’ means, with respect to any State, county or 

19 municipality, the number of individuals in such 

20 State, county, or municipality who were determined 

21 to be unemployed by the Bureau of Labor Statistics 

22 for December 2009. 

23 ‘‘(5) 2010 NATIONAL LIMITATIONS.— 

24 ‘‘(A) RECOVERY ZONE ECONOMIC DEVELOP25 MENT BONDS.—The 2010 national recovery zone 


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1 economic development bond limitation is 

2 $10,000,000,000. Any allocation of such limita3 tion under this subsection shall be treated for 

4 purposes of section 1400U–2 in the same manner 

5 as an allocation of national recovery zone eco6 nomic development bond limitation. 

7 ‘‘(B) RECOVERY ZONE FACILITY BONDS.— 

8 The 2010 national recovery zone facility bond 

9 limitation is $15,000,000,000. Any allocation of 

10 such limitation under this subsection shall be 

11 treated for purposes of section 1400U–3 in the 

12 same manner as an allocation of national recov13 ery zone facility bond limitation.’’. 

14 (c) AUTHORITY OF STATE TO WAIVE CERTAIN 2009 

15 ALLOCATIONS.—Subparagraph (A) of section 1400U– 

16 1(a)(3) is amended by adding at the end the following: ‘‘A 

17 State may by law treat a county or municipality as 

18 waiving any portion of an allocation made under this sub19 paragraph if there is a reasonable expectation that such al20 location would not otherwise be used.’’. 

21 SEC. 206. ALLOWANCE OF NEW MARKETS TAX CREDIT 

22 AGAINST ALTERNATIVE MINIMUM TAX. 

23 (a) IN GENERAL.—Subparagraph (B) of section 

24 38(c)(4) is amended by redesignating clauses (v) through 


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1 (viii) as clauses (vi) through (ix), respectively, and by in2 serting after clause (iv) the following new clause: 

3 ‘‘(v) the credit determined under sec4 tion 45D, but only with respect to credits 

5 determined with respect to qualified equity 

6 investments (as defined in section 45D(b)) 

7 initially made before January 1, 2012,’’. 

8 (b) EFFECTIVE DATE.—The amendments made by this 

9 section shall apply to qualified equity investments (as de10 fined in section 45D(b) of the Internal Revenue Code of 

11 1986) initially made after March 15, 2010. 

12 TITLE III—REVENUE 

13 PROVISIONS 

14 SEC. 301. LIMITATION ON TREATY BENEFITS FOR CERTAIN 

15 DEDUCTIBLE PAYMENTS. 

16 (a) IN GENERAL.—Section 894 (relating to income af17 fected by treaty) is amended by adding at the end the fol18 lowing new subsection: 

19 ‘‘(d) LIMITATION ON TREATY BENEFITS FOR CERTAIN

20 DEDUCTIBLE PAYMENTS.— 

21 ‘‘(1) IN GENERAL.—In the case of any deductible 

22 related-party payment, any withholding tax imposed 

23 under chapter 3 (and any tax imposed under subpart 

24 A or B of this part) with respect to such payment 

25 may not be reduced under any treaty of the United 


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1 States unless any such withholding tax would be re2 duced under a treaty of the United States if such 

3 payment were made directly to the foreign parent cor4 poration. 

5 ‘‘(2) DEDUCTIBLE RELATED-PARTY PAYMENT.— 

6 For purposes of this subsection, the term ‘deductible 

7 related-party payment’ means any payment made, 

8 directly or indirectly, by any person to any other per9 son if the payment is allowable as a deduction under 

10 this chapter and both persons are members of the 

11 same foreign controlled group of entities. 

12 ‘‘(3) FOREIGN CONTROLLED GROUP OF ENTI13 TIES.—For purposes of this subsection— 

14 ‘‘(A) IN GENERAL.—The term ‘foreign con15 trolled group of entities’ means a controlled 

16 group of entities the common parent of which is 

17 a foreign corporation. 

18 ‘‘(B) CONTROLLED GROUP OF ENTITIES.— 

19 The term ‘controlled group of entities’ means a 

20 controlled group of corporations as defined in 

21 section 1563(a)(1), except that— 

22 ‘‘(i) ‘more than 50 percent’ shall be 

23 substituted for ‘at least 80 percent’ each 

24 place it appears therein, and 


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1 ‘‘(ii) the determination shall be made 

2 without regard to subsections (a)(4) and 

3 (b)(2) of section 1563. 

4 A partnership or any other entity (other than a 

5 corporation) shall be treated as a member of a 

6 controlled group of entities if such entity is con7 trolled (within the meaning of section 954(d)(3)) 

8 by members of such group (including any entity 

9 treated as a member of such group by reason of 

10 this sentence). 

11 ‘‘(4) FOREIGN PARENT CORPORATION.—For pur12 poses of this subsection, the term ‘foreign parent cor13 poration’ means, with respect to any deductible re14 lated-party payment, the common parent of the for15 eign controlled group of entities referred to in para16 graph (3)(A). 

17 ‘‘(5) REGULATIONS.—The Secretary may pre18 scribe such regulations or other guidance as are nec19 essary or appropriate to carry out the purposes of 

20 this subsection, including regulations or other guid21 ance which provide for— 

22 ‘‘(A) the treatment of two or more persons 

23 as members of a foreign controlled group of enti24 ties if such persons would be the common parent 

25 of such group if treated as one corporation, and 


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1 ‘‘(B) the treatment of any member of a for2 eign controlled group of entities as the common 

3 parent of such group if such treatment is appro4 priate taking into account the economic relation5 ships among such entities.’’. 

6 (b) EFFECTIVE DATE.—The amendment made by this 

7 section shall apply to payments made after the date of the 

8 enactment of this Act. 

9 SEC. 302. TREATMENT OF SECURITIES OF A CONTROLLED 

10 CORPORATION EXCHANGED FOR ASSETS IN 

11 CERTAIN REORGANIZATIONS. 

12 (a) IN GENERAL.—Section 361 (relating to non13 recognition of gain or loss to corporations; treatment of dis14 tributions) is amended by adding at the end the following 

15 new subsection: 

16 ‘‘(d) SPECIAL RULES FOR TRANSACTIONS INVOLVING

17 SECTION 355 DISTRIBUTIONS.—In the case of a reorganiza18 tion described in section 368(a)(1)(D) with respect to which 

19 stock or securities of the corporation to which the assets are 

20 transferred are distributed in a transaction which qualifies 

21 under section 355— 

22 ‘‘(1) this section shall be applied by substituting 

23 ‘stock other than nonqualified preferred stock (as de24 fined in section 351(g)(2))’ for ‘stock or securities’ in 

25 subsections (a) and (b)(1), and 


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1 ‘‘(2) the first sentence of subsection (b)(3) shall 

2 apply only to the extent that the sum of the money 

3 and the fair market value of the other property trans4 ferred to such creditors does not exceed the adjusted 

5 bases of such assets transferred (reduced by the 

6 amount of the liabilities assumed (within the mean7 ing of section 357(c))).’’. 

8 (b) CONFORMING AMENDMENT.—Paragraph (3) of sec9 tion 361(b) is amended by striking the last sentence. 

10 (c) EFFECTIVE DATE.— 

11 (1) IN GENERAL.—Except as provided in para12 graph (2), the amendments made by this section shall 

13 apply to exchanges after the date of the enactment of 

14 this Act. 

15 (2) TRANSITION RULE.—The amendments made 

16 by this section shall not apply to any exchange pursu17 ant to a transaction which is— 

18 (A) made pursuant to an agreement which 

19 was binding on March 15, 2010, and at all times 

20 thereafter, 

21 (B) described in a ruling request submitted 

22 to the Internal Revenue Service on or before such 

23 date, or 


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1 (C) described on or before such date in a 

2 public announcement or in a filing with the Se3 curities and Exchange Commission. 

4 SEC. 303. REPEAL OF SPECIAL RULES FOR INTEREST AND 

5 DIVIDENDS RECEIVED FROM PERSONS MEET6 ING THE 80-PERCENT FOREIGN BUSINESS RE7 QUIREMENTS. 

8 (a) REPEAL OF SPECIAL RULE TREATING INTEREST

9 AS UNITED STATES SOURCE.—Paragraph (1) of section 

10 861(a) is amended by striking subparagraph (A) and by 

11 redesignating subparagraphs (B) and (C) as subparagraphs 

12 (A) and (B), respectively. 

13 (b) REPEAL OF EXCEPTION TO TAX ON DIVIDENDS

14 RECEIVED BY NONRESIDENT ALIENS.—Paragraph (2) of 

15 section 871(i) is amended by striking subparagraph (B) 

16 and by redesignating subparagraphs (C) and (D) as sub17 paragraphs (B) and (C), respectively. 

18 (c) CONFORMING AMENDMENTS.— 

19 (1) Section 861 is amended by striking sub20 section (c) and by redesignating subsections (d), (e), 

21 and (f) as subsections (c), (d), and (e), respectively. 

22 (2) Paragraph (9) of section 904(h) is amended 

23 to read as follows: 

24 ‘‘(9) TREATMENT OF CERTAIN DOMESTIC COR25 PORATIONS.—In the case of any dividend treated as 


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1 not from sources with the United States under section 

2 861(a)(2)(A), the corporation paying such dividend 

3 shall be treated for purposes of this subsection as a 

4 United States-owned foreign corporation.’’. 

5 (3) Subsection (c) of section 2104 is amended in 

6 the last sentence by striking ‘‘or to a debt obligation 

7 of a domestic corporation’’ and all that follows and 

8 inserting a period. 

9 (d) EFFECTIVE DATE.— 

10 (1) IN GENERAL.—Except as provided in para11 graph (2), the amendments made by this section shall 

12 apply to taxable years beginning after December 31, 

13 2010. 

14 (2) GRANDFATHER RULE FOR OUTSTANDING

15 DEBT OBLIGATIONS.— 

16 (A) IN GENERAL.—The amendments made 

17 by this section shall not apply to payments of 

18 interest on obligations issued before the date of 

19 the enactment of this Act. 

20 (B) EXCEPTION FOR RELATED PARTY

21 DEBT.—Subparagraph (A) shall not apply to 

22 any interest which is payable to a related person 

23 (determined under rules similar to the rules of 

24 section 954(d)(3)). 


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1 (C) SIGNIFICANT MODIFICATIONS TREATED

2 AS NEW ISSUES.—For purposes of subparagraph 

3 (A), a significant modification of the terms of 

4 any obligation (including any extension of the 

5 term of such obligation) shall be treated as a new 

6 issue. 

7 SEC. 304. INFORMATION REPORTING FOR RENTAL PROP8 ERTY EXPENSE PAYMENTS. 

9 (a) IN GENERAL.—Section 6041 is amended by adding 

10 at the end the following new subsection: 

11 ‘‘(h) TREATMENT OF RENTAL PROPERTY EXPENSE

12 PAYMENTS.— 

13 ‘‘(1) IN GENERAL.—For purposes of subsection 

14 (a), a person receiving rental income from real estate 

15 (other than a qualified residence) shall be considered 

16 to be engaged in a trade or business of renting prop17 erty. 

18 ‘‘(2) QUALIFIED RESIDENCE.—For purposes of 

19 paragraph (1), the term ‘qualified residence’ 

20 means—— 

21 ‘‘(A) the principal residence (within the 

22 meaning of section 121) of the taxpayer, and 

23 ‘‘(B) 1 other residence of the taxpayer which 

24 is selected by the taxpayer for purposes of this 

25 subsection for the taxable year and which is used 


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1 by the taxpayer as a residence (within the mean2 ing of section 280A(d)(1)).’’. 

3 (b) EFFECTIVE DATE.—The amendment made by this 

4 section shall apply to payments made after December 31, 

5 2010. 

6 SEC. 305. APPLICATION OF LEVY TO PAYMENTS TO FED7 ERAL VENDORS RELATING TO PROPERTY. 

8 (a) IN GENERAL.—Section 6331(h)(3) is amended by 

9 striking ‘‘goods or services’’ and inserting ‘‘property, goods, 

10 or services’’. 

11 (b) EFFECTIVE DATE.—The amendment made by this 

12 section shall apply to levies approved after the date of the 

13 enactment of this Act. 

14 SEC. 306. APPLICATION OF CONTINUOUS LEVY TO EMPLOY15 MENT TAX LIABILITY OF CERTAIN FEDERAL 

16 CONTRACTORS. 

17 (a) IN GENERAL.—Section 6330(h) is amended by in18 serting ‘‘or if the person subject to the levy (or any prede19 cessor thereof) is a Federal contractor that was identified 

20 as owing such employment taxes through the Federal Pay21 ment Levy Program’’ before the period at the end of the 

22 first sentence. 

23 (b) EFFECTIVE DATE.—The amendment made by this 

24 section shall apply to levies issued after December 31, 2010. 


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1 SEC. 307. REQUIRED MINIMUM 10-YEAR TERM, ETC., FOR 

2 GRANTOR RETAINED ANNUITY TRUSTS. 

3 (a) IN GENERAL.—Subsection (b) of section 2702 is 

4 amended— 

5 (1) by redesignating paragraphs (1), (2) and (3) 

6 as subparagraphs (A), (B), and (C), respectively, and 

7 by moving such subparagraphs (as so redesignated) 2 

8 ems to the right, 

9 (2) by striking ‘‘For purposes of’’ and inserting 

10 the following: 

11 ‘‘(1) IN GENERAL.—For purposes of’’, and 

12 (3) by striking ‘‘paragraph (1) or (2)’’ in para13 graph (1)(C) (as so redesignated) and inserting ‘‘sub14 paragraph (A) or (B)’’, and 

15 (4) by adding at the end the following new para16 graph: 

17 ‘‘(2) ADDITIONAL REQUIREMENTS WITH RESPECT

18 TO GRANTOR RETAINED ANNUITIES.—For purposes of 

19 subsection (a), in the case of an interest described in 

20 paragraph (1)(A) (determined without regard to this 

21 paragraph) which is retained by the transferor, such 

22 interest shall be treated as described in such para23 graph only if— 

24 ‘‘(A) the right to receive the fixed amounts 

25 referred to in such paragraph is for a term of 

26 not less than 10 years, 


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1 ‘‘(B) such fixed amounts, when determined 

2 on an annual basis, do not decrease relative to 

3 any prior year during the first 10 years of the 

4 term referred to in subparagraph (A), and 

5 ‘‘(C) the remainder interest has a value 

6 greater than zero determined as of the time of the 

7 transfer.’’. 

8 (b) EFFECTIVE DATE.—The amendments made by this 

9 section shall apply to transfers made after the date of the 

10 enactment of this Act. 

11 SEC. 308. INCREASE IN INFORMATION RETURN PENALTIES. 

12 (a) FAILURE TO FILE CORRECT INFORMATION RE13 TURNS.— 

14 (1) IN GENERAL.—Subsections (a)(1), (b)(1)(A), 

15 and (b)(2)(A) of section 6721 are each amended by 

16 striking ‘‘$50’’ and inserting ‘‘$100’’. 

17 (2) AGGREGATE ANNUAL LIMITATION.—Sub18 sections (a)(1), (d)(1)(A), and (e)(3)(A) of section 

19 6721 are each amended by striking ‘‘$250,000’’ and 

20 inserting ‘‘$1,500,000’’. 

21 (b) REDUCTION WHERE CORRECTION WITHIN 30 

22 DAYS.— 

23 (1) IN GENERAL.—Subparagraph (A) of section 

24 6721(b)(1) is amended by striking ‘‘$15’’ and insert25 ing ‘‘$30’’. 


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1 (2) AGGREGATE ANNUAL LIMITATION.—Sub2 sections (b)(1)(B) and (d)(1)(B) of section 6721 are 

3 each amended by striking ‘‘$75,000’’ and inserting 

4 ‘‘$250,000’’. 

5 (c) REDUCTION WHERE CORRECTION ON OR BEFORE

6 AUGUST 1.— 

7 (1) IN GENERAL.—Subparagraph (A) of section 

8 6721(b)(2) is amended by striking ‘‘$30’’ and insert9 ing ‘‘$60’’. 

10 (2) AGGREGATE ANNUAL LIMITATION.—Sub11 sections (b)(2)(B) and (d)(1)(C) of section 6721 are 

12 each amended by striking ‘‘$150,000’’ and inserting 

13 ‘‘$500,000’’. 

14 (d) AGGREGATE ANNUAL LIMITATIONS FOR PERSONS

15 WITH GROSS RECEIPTS OF NOT MORE THAN $5,000,000.— 

16 Paragraph (1) of section 6721(d) is amended— 

17 (1) by striking ‘‘$100,000’’ in subparagraph (A) 

18 and inserting ‘‘$500,000’’, 

19 (2) by striking ‘‘$25,000’’ in subparagraph (B) 

20 and inserting ‘‘$75,000’’, and 

21 (3) by striking ‘‘$50,000’’ in subparagraph (C) 

22 and inserting ‘‘$200,000’’. 

23 (e) PENALTY IN CASE OF INTENTIONAL DISREGARD.— 

24 Paragraph (2) of section 6721(e) is amended by striking 

25 ‘‘$100’’ and inserting ‘‘$250’’. 


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1 (f) ADJUSTMENT FOR INFLATION.—Section 6721 is 

2 amended by adding at the end the following new subsection: 

3 ‘‘(f) ADJUSTMENT FOR INFLATION.— 

4 ‘‘(1) IN GENERAL.—For each fifth calendar year 

5 beginning after 2012, each of the dollar amounts 

6 under subsections (a), (b), (d) (other than paragraph 

7 (2)(A) thereof), and (e) shall be increased by such dol8 lar amount multiplied by the cost-of-living adjust9 ment determined under section 1(f)(3) determined by 

10 substituting ‘calendar year 2011’ for ‘calendar year 

11 1992’ in subparagraph (B) thereof. 

12 ‘‘(2) ROUNDING.—If any amount adjusted under 

13 paragraph (1)— 

14 ‘‘(A) is not less than $75,000 and is not a 

15 multiple of $500, such amount shall be rounded 

16 to the next lowest multiple of $500, and 

17 ‘‘(B) is not described in subparagraph (A) 

18 and is not a multiple of $10, such amount shall 

19 be rounded to the next lowest multiple of $10.’’. 

20 (g) EFFECTIVE DATE.—The amendments made by this 

21 section shall apply with respect to information returns re22 quired to be filed on or after January 1, 2011. 


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Union Calendar No. 257 

111TH CONGRESS 

2D SESSION H. R. 4849 

[Report No. 111–447] 

A BILL 

To amend the Internal Revenue Code of 1986 to 

centives, and for other purposes. provide other infrastructure job creation tax ination, extend the Build America Bonds program, provide tax incentives for small business job creMARCH 19, 2010 

Reported with an amendment, committed to the Comand ordered to be printed mittee of the Whole House on the State of the Union, 


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