I 

111TH CONGRESS 

2D SESSION H. R. 4849 

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 

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. 

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


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1 SECTION 1. SHORT TITLE; ETC. 

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

3 ‘‘Small Business and Infrastructure Jobs Tax Act of 

4 2010’’. 

5 (b) AMENDMENT OF 1986 CODE.—Except as other6 wise expressly provided, whenever in this Act an amend7 ment or repeal is expressed in terms of an amendment 

8 to, or repeal of, a section or other provision, the reference 

9 shall be considered to be made to a section or other provi10 sion of the Internal Revenue Code of 1986. 

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

12 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. 

TITLE III—REVENUE PROVISIONS 


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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 para8 graph: 

9 ‘‘(4) SPECIAL 100 PERCENT EXCLUSION.—In 

10 the case of qualified small business stock acquired 

11 after March 15, 2010, and before January 1, 

12 2012— 

13 ‘‘(A) paragraph (1) shall be applied by 

14 substituting ‘100 percent’ for ‘50 percent’, 

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

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

17 not apply.’’. 

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

19 section 1202(a) is amended— 


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

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

3 inserting ‘‘after February 17, 2009, and before 

4 March 16, 2010’’, and 

5 (2) by striking ‘‘SPECIAL RULE FOR 2009 AND

6 2010’’ in the heading and inserting ‘‘SPECIAL 75

7 PERCENT EXCLUSION’’. 

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

9 this section shall apply to stock acquired after March 15, 

10 2010. 

11 Subtitle B—Limitations and 

12 Reporting on Certain Penalties 

13 SEC. 111. LIMITATION ON PENALTY FOR FAILURE TO DIS14 CLOSE CERTAIN INFORMATION. 

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

16 is amended to read as follows: 

17 ‘‘(b) AMOUNT OF PENALTY.— 

18 ‘‘(1) IN GENERAL.—Except as otherwise pro19 vided in this subsection, the amount of the penalty 

20 under subsection (a) with respect to any reportable 

21 transaction shall be 75 percent of the decrease in 

22 tax shown on the return as a result of such trans23 action (or which would have resulted from such 

24 transaction if such transaction were respected for 

25 Federal tax purposes). 


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

2 penalty under subsection (a) with respect to any re3 portable transaction for any taxable year shall not 

4 exceed— 

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

6 $200,000 ($100,000 in the case of a natural 

7 person), or 

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

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

10 natural person). 

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

12 penalty under subsection (a) with respect to any 

13 transaction for any taxable year shall not be less 

14 than $10,000 ($5,000 in the case of a natural per15 son).’’. 

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

17 this section shall apply to penalties assessed after Decem18 ber 31, 2006. 

19 SEC. 112. ANNUAL REPORTS ON PENALTIES AND CERTAIN 

20 OTHER ENFORCEMENT ACTIONS. 

21 (a) IN GENERAL.—The Commissioner of Internal 

22 Revenue, in consultation with the Secretary of the Treas23 ury, shall submit to the Committee on Ways and Means 

24 of the House of Representatives and the Committee on 

25 Finance of the Senate an annual report on the penalties 


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1 assessed by the Internal Revenue Service during the pre2 ceding year under each of the following provisions of the 

3 Internal Revenue Code of 1986: 

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

5 penalty on understatements with respect to report6 able transactions). 

7 (2) Section 6700(a) (relating to promoting abu8 sive tax shelters). 

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

10 information regarding reportable transactions). 

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

12 reportable transaction information with return). 

13 (5) Section 6708 (relating to failure to main14 tain lists of advisees with respect to reportable 

15 transactions). 

16 (b) ADDITIONAL INFORMATION.—The report re17 quired under subsection (a) shall also include information 

18 on the following with respect to each year: 

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

20 title 31, United States Code, with respect to any re21 portable transaction (as defined in section 6707A(c) 

22 of the Internal Revenue Code of 1986). 

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

24 tax enforced, or assessment of any amount under 


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1 such an extension, under paragraph (10) of section 

2 6501(c) of the Internal Revenue Code of 1986. 

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

4 under subsection (a) shall be submitted not later than De5 cember 31, 2010. 

6 Subtitle C—Other Provisions 

7 SEC. 121. NONRECOURSE SMALL BUSINESS INVESTMENT 

8 COMPANY LOANS FROM THE SMALL BUSI9 NESS ADMINISTRATION TREATED AS 

10 AMOUNTS AT RISK. 

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

12 465(b)(6) is amended to read as follows: 

13 ‘‘(B) QUALIFIED NONRECOURSE FINANC14 ING.—For purposes of this paragraph— 

15 ‘‘(i) IN GENERAL.—The term ‘quali16 fied nonrecourse financing’ means any fi17 nancing— 

18 ‘‘(I) which is qualified real prop19 erty financing or qualified SBIC fi20 nancing, 

21 ‘‘(II) except to the extent pro22 vided in regulations, with respect to 

23 which no person is personally liable 

24 for repayment, and 


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1 ‘‘(III) which is not convertible 

2 debt. 

3 ‘‘(ii) QUALIFIED REAL PROPERTY FI4 NANCING.—The term ‘qualified real prop5 erty financing’ means any financing 

6 which— 

7 ‘‘(I) is borrowed by the taxpayer 

8 with respect to the activity of holding 

9 real property, 

10 ‘‘(II) is secured by real property 

11 used in such activity, and 

12 ‘‘(III) is borrowed by the tax13 payer from a qualified person or rep14 resents a loan from any Federal, 

15 State, or local government or instru16 mentality thereof, or is guaranteed by 

17 any Federal, State, or local govern18 ment. 

19 ‘‘(iii) QUALIFIED SBIC FINANCING.— 

20 The term ‘qualified SBIC financing’ means 

21 any financing which— 

22 ‘‘(I) is borrowed by a small busi23 ness investment company (within the 

24 meaning of section 301 of the Small 


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1 Business Investment Act of 1958), 

2 and 

3 ‘‘(II) is borrowed from, or guar4 anteed by, the Small Business Admin5 istration under the authority of sec6 tion 303(b) of such Act.’’. 

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

8 of section 465(b)(6) is amended— 

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

10 holding real property,’’, and 

11 (2) by striking ‘‘which is secured by real prop12 erty used in such activity’’. 

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

14 this section shall apply to loans and guarantees made after 

15 the date of the enactment of this Act. 

16 SEC. 122. INCREASE IN AMOUNT ALLOWED AS DEDUCTION 

17 FOR START-UP EXPENDITURES. 

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

19 amended by adding at the end the following new para20 graph: 

21 ‘‘(3) INCREASED LIMITATION FOR TAXABLE

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

23 any taxable year beginning in 2010 or 2011, para24 graph (1)(A)(ii) shall be applied— 


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

2 ‘$5,000’, and 

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

4 ‘$50,000’.’’. 

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

6 this section shall apply to taxable years beginning after 

7 December 31, 2009. 

8 TITLE II—INFRASTRUCTURE 

9 INCENTIVES 

10 SEC. 201. EXTENSION OF BUILD AMERICA BONDS. 

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

12 54AA(d)(1) is amended by striking ‘‘January 1, 2011’’ 

13 and inserting ‘‘July 1, 2013’’. 

14 (b) EXTENSION OF PAYMENTS TO ISSUERS.— 

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

16 6431 is amended by striking ‘‘January 1, 2011’’ and 

17 inserting ‘‘July 1, 2013’’. 

18 (2) CONFORMING AMENDMENTS.—Subsection 

19 (g) of section 54AA is amended— 

20 (A) by striking ‘‘January 1, 2011’’ and in21 serting ‘‘July 1, 2013’’, and 

22 (B) by striking ‘‘QUALIFIED BONDS

23 ISSUED BEFORE 2011’’ in the heading and in24 serting ‘‘CERTAIN QUALIFIED BONDS’’. 


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1 (c) REDUCTION IN PERCENTAGE OF PAYMENTS TO

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

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

4 the following: 

5 ‘‘(1) IN GENERAL.—The Secretary’’, 

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

7 applicable percentage’’, and 

8 (3) by adding at the end the following new 

9 paragraph: 

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

11 of this subsection, the term ‘applicable percentage’ 

12 means the percentage determined in accordance with 

13 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’’. 

14 (d) CURRENT REFUNDINGS PERMITTED.—Sub15 section (g) of section 54AA is amended by adding at the 

16 end the following new paragraph: 

17 ‘‘(3) TREATMENT OF CURRENT REFUNDING

18 BONDS.— 

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

20 subsection, the term ‘qualified build America 

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


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1 issued to refund a qualified build America bond 

2 if— 

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

4 issue of which the refunding bond is a part 

5 is not later than the average maturity date 

6 of the bonds to be refunded by such issue, 

7 ‘‘(ii) the amount of the refunding 

8 bond does not exceed the outstanding 

9 amount of the refunded bond, and 

10 ‘‘(iii) the refunded bond is redeemed 

11 not later than 90 days after the date of the 

12 issuance of the refunding bond. 

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

14 case of a refunding bond referred to in subpara15 graph (A), the applicable percentage with re16 spect to such bond under section 6431(b) shall 

17 be the lowest percentage specified in paragraph 

18 (2) of such section. 

19 ‘‘(C) DETERMINATION OF AVERAGE MATU20 RITY.—For purposes of subparagraph (A)(i), 

21 average maturity shall be determined in accord22 ance with section 147(b)(2)(A).’’. 


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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

4 EXEMPT FROM VOLUME CAP ON PRIVATE ACTIVITY

5 BONDS.—Paragraph (3) of section 146(g) is amended by 

6 inserting ‘‘(4), (5),’’ after ‘‘(2),’’. 

7 (b) CONFORMING CHANGE.—Paragraphs (2) and 

8 (3)(B) of section 146(k) are both amended by striking 

9 ‘‘(4), (5), (6),’’ and inserting ‘‘(6)’’. 

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

11 this section shall apply to obligations issued after the date 

12 of the enactment of this Act. 

13 SEC. 203. EXTENSION OF EXEMPTION FROM ALTERNATIVE 

14 MINIMUM TAX TREATMENT FOR CERTAIN 

15 TAX-EXEMPT BONDS. 

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

17 is amended— 

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

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

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

21 inserting ‘‘, 2010, AND 2011’’. 

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

23 section 56(g)(4)(B) is amended— 

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

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


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

2 inserting ‘‘, 2010, AND 2011’’. 

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

4 this section shall apply to obligations issued after Decem5 ber 31, 2010. 

6 SEC. 204. ELECTIVE PAYMENTS IN LIEU OF LOW-INCOME 

7 HOUSING CREDITS. 

8 (a) IN GENERAL.—Chapter 65 (relating to abate9 ments, credits, and refunds) is amended by adding at the 

10 end the following new subchapter: 

11 ‘‘Subchapter C—Direct Payment Provisions 

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

12 ‘‘SEC. 6451. ELECTIVE PAYMENTS IN LIEU OF LOW-INCOME 

13 HOUSING CREDIT FOR BOND-FINANCED 

14 BUILDINGS. 

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

16 under this section with respect to any qualified bond-fi17 nanced low-income building originally placed in service by 

18 such person during the taxable year shall be treated as 

19 making a payment, against the tax imposed by subtitle 

20 A for the taxable year, equal to the direct payment amount 

21 with respect to such building. Such payment shall be treat22 ed as made on the later of the due date of the return of 

23 such tax or the date on which such return is filed. 


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1 ‘‘(b) QUALIFIED BOND-FINANCED LOW-INCOME

2 BUILDING.—For purposes of this section, the term ‘quali3 fied bond-financed low-income building’ means any quali4 fied low-income building to which paragraph (1) of section 

5 42(h) does not apply by reason of paragraph (4)(B) of 

6 such section. 

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

8 this section, the term ‘direct payment amount’ means, 

9 with respect to any building, 25.5 percent of the qualified 

10 basis of such building. 

11 ‘‘(d) SPECIAL RULES FOR CERTAIN NON-TAX12 PAYERS.— 

13 ‘‘(1) DENIAL OF PAYMENT.—Subsection (a) 

14 shall not apply with respect to any building placed 

15 in service by— 

16 ‘‘(A) any governmental entity, or 

17 ‘‘(B) any organization described in section 

18 501(c) or 401(a) and exempt from tax under 

19 section 501(a). 

20 ‘‘(2) SPECIAL RULES FOR PARTNERSHIPS AND

21 S CORPORATIONS.—In the case of property originally 

22 placed in service by a partnership or an S corpora23 tion— 


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

2 be made only by such partnership or S corpora3 tion, 

4 ‘‘(B) such partnership or S corporation 

5 shall be treated as making the payment referred 

6 to in subsection (a) only to the extent of the 

7 proportionate share of such partnership or S 

8 corporation as is owned by persons who would 

9 be treated as making such payment if the build10 ing were placed in service by such persons, and 

11 ‘‘(C) the return required to be made by 

12 such partnership or S corporation under section 

13 6031 or 6037 (as the case may be) shall be 

14 treated as a return of tax for purposes of sub15 section (a). 

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

17 rules of section 168(h)(6) (other than subparagraph (F) 

18 thereof) shall apply. 

19 ‘‘(e) COORDINATION WITH LOW-INCOME HOUSING

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

21 which an election is made under this section, no credit 

22 shall be determined under section 42 with respect to such 

23 building for any taxable year. 

24 ‘‘(f) OTHER DEFINITIONS AND SPECIAL RULES.— 

25 For purposes of this section— 


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

2 section which are also used in section 42 shall have 

3 the same meaning for purposes of this section as 

4 when used in such section. 

5 ‘‘(2) APPLICATION OF RECAPTURE RULES, 

6 ETC.—Except as otherwise provided by the Sec7 retary, rules similar to the rules of section 42 shall 

8 apply, including the recapture rules of section 42(j). 

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

10 shall not be treated as having elected the application 

11 of this section unless the taxpayer provides such in12 formation as the Secretary may require for purposes 

13 of verifying the proper amount to be treated as a 

14 payment under subsection (a) and evaluating the ef15 fectiveness of this section. 

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

17 credit or refund allowed or made by reason of this 

18 section shall not be includible in gross income or al19 ternative minimum taxable income. 

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

21 with respect to any building placed in service during a tax22 able year beginning after December 31, 2010.’’. 

23 (b) CONFORMING AMENDMENTS.— 

24 (1) Subparagraph (A) of section 6211(b)(4)(A) 

25 is amended by inserting ‘‘and subchapter C of chapVerDate Nov 24 2008 02:43 Mar 17, 2010 Jkt 089200 PO 00000 Frm 00017 Fmt 6652 Sfmt 6201 E:\BILLS\H4849.IH H4849

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1 ter 65 (including any payment treated as made 

2 under such subchapter)’’ after ‘‘6431’’. 

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

4 amended— 

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

6 ‘‘the sum of— 

7 ‘‘(i) the credits’’, 

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

9 clause (i) thereof (as amended by this para10 graph) and inserting ‘‘, plus’’, and 

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

12 clause: 

13 ‘‘(ii) the credits allowed (and pay14 ments treated as made) under subchapter 

15 C of chapter 65.’’. 

16 (3) Paragraph (3) of section 6654(f) is amend17 ed— 

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

19 ‘‘the sum of— 

20 ‘‘(A) the credits’’, 

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

22 subparagraph (A) thereof (as amended by this 

23 paragraph) and inserting ‘‘, and’’, and 

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

25 subparagraph: 


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

2 treated as made) under subchapter C of chapter 

3 65.’’. 

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

5 amended— 

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

7 ‘‘the sum of— 

8 ‘‘(i) the credits’’, 

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

10 clause (i) thereof (as amended by this para11 graph) and inserting ‘‘, plus’’, and 

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

13 clause: 

14 ‘‘(ii) the credits allowed (and pay15 ments treated as made) under subchapter 

16 C of chapter 65.’’. 

17 (5) Paragraph (2) of section 1324(b) of title 

18 31, United States Code, is amended by inserting ‘‘, 

19 or from the provisions of subchapter C of chapter 65 

20 of such Code’’ before the period at the end. 

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

22 amended by adding at the end the following new 

23 item: 

SUBCHAPTER C. DIRECT PAYMENT PROVISIONS. 


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

2 this section shall apply to buildings placed in service after 

3 the date of the enactment of this Act. 

4 SEC. 205. EXTENSION AND ADDITIONAL ALLOCATIONS OF 

5 RECOVERY ZONE BOND AUTHORITY. 

6 (a) EXTENSION OF RECOVERY ZONE BOND AUTHOR7 ITY.—Section 1400U–2(b)(1) and section 1400U– 

8 3(b)(1)(B) are each amended by striking ‘‘January 1, 

9 2011’’ and inserting ‘‘January 1, 2012’’. 

10 (b) ADDITIONAL ALLOCATIONS OF RECOVERY ZONE

11 BOND AUTHORITY BASED ON UNEMPLOYMENT.—Section 

12 1400U–1 is amended by adding at the end the following 

13 new subsection: 

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

15 LIMITATIONS BASED ON UNEMPLOYMENT.— 

16 ‘‘(1) IN GENERAL.—The Secretary shall allo17 cate the 2010 national recovery zone economic devel18 opment bond limitation and the 2010 national recov19 ery zone facility bond limitation among the States in 

20 the proportion that each such State’s 2009 unem21 ployment number bears to the aggregate of the 2009 

22 unemployment numbers for all of the States. 

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

24 shall adjust the allocations under paragraph (1) for 

25 each State to the extent necessary to ensure that no 


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

2 receives less than 0.9 percent of the 2010 national 

3 recovery zone economic development bond limitation 

4 and 0.9 percent of the 2010 national recovery zone 

5 facility bond limitation. 

6 ‘‘(3) ALLOCATIONS BY STATES.— 

7 ‘‘(A) IN GENERAL.—Each State with re8 spect to which an allocation is made under 

9 paragraph (1) shall reallocate such allocation 

10 among the counties and large municipalities (as 

11 defined in subsection (a)(3)(B)) in such State 

12 in the proportion that each such county’s or 

13 municipality’s 2009 unemployment number 

14 bears to the aggregate of the 2009 unemploy15 ment numbers for all the counties and large 

16 municipalities (as so defined) in such State. 

17 ‘‘(B) 2010 ALLOCATION REDUCED BY

18 AMOUNT OF PREVIOUS ALLOCATION.—Each 

19 State shall reduce (but not below zero)— 

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

21 recovery zone economic development bond 

22 limitation allocated to each county or large 

23 municipality (as so defined) in such State 

24 by the amount of the national recovery 

25 zone economic development bond limitation 


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1 allocated to such county or large munici2 pality under subsection (a)(3)(A) (deter3 mined without regard to any waiver there4 of), and 

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

6 recovery zone facility bond limitation allo7 cated to each county or large municipality 

8 (as so defined) in such State by the 

9 amount of the national recovery zone facil10 ity bond limitation allocated to such county 

11 or large municipality under subsection 

12 (a)(3)(A) (determined without regard to 

13 any waiver thereof). 

14 ‘‘(C) WAIVER OF SUBALLOCATIONS.—A 

15 county or municipality may waive any portion 

16 of an allocation made under this paragraph. A 

17 State may by law treat a county or municipality 

18 as waiving any portion of an allocation made 

19 under this paragraph if there is a reasonable 

20 expectation that such allocation would not oth21 erwise be used. 

22 ‘‘(D) SPECIAL RULE FOR A MUNICIPALITY

23 IN A COUNTY.—In the case of any large munici24 pality any portion of which is in a county, such 


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1 portion shall be treated as part of such munici2 pality and not part of such county. 

3 ‘‘(4) 2009 UNEMPLOYMENT NUMBER.—For 

4 purposes of this subsection, the term ‘2009 unem5 ployment number’ means, with respect to any State, 

6 county or municipality, the number of individuals in 

7 such State, county, or municipality who were deter8 mined to be unemployed by the Bureau of Labor 

9 Statistics for December 2009. 

10 ‘‘(5) 2010 NATIONAL LIMITATIONS.— 

11 ‘‘(A) RECOVERY ZONE ECONOMIC DEVEL12 OPMENT BONDS.—The 2010 national recovery 

13 zone economic development bond limitation is 

14 $10,000,000,000. Any allocation of such limita15 tion under this subsection shall be treated for 

16 purposes of section 1400U–2 in the same man17 ner as an allocation of national recovery zone 

18 economic development bond limitation. 

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

20 The 2010 national recovery zone facility bond 

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

22 such limitation under this subsection shall be 

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

24 same manner as an allocation of national recov25 ery zone facility bond limitation.’’. 


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1 (c) AUTHORITY OF STATE TO WAIVE CERTAIN 2009 

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

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

4 ‘‘A State may by law treat a county or municipality as 

5 waiving any portion of an allocation made under this sub6 paragraph if there is a reasonable expectation that such 

7 allocation would not otherwise be used.’’. 

8 SEC. 206. ALLOWANCE OF NEW MARKETS TAX CREDIT 

9 AGAINST ALTERNATIVE MINIMUM TAX. 

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

11 38(c)(4) is amended by designating clauses (v) through 

12 (viii) as clauses (vi) through (ix), respectively, and by in13 serting after clause (iv) the following new clause: 

14 ‘‘(v) the credit determined under sec15 tion 45D, but only with respect to credits 

16 determined with respect to qualified equity 

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

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

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

20 this section shall apply to qualified equity investments (as 

21 defined in section 45D(b) of the Internal Revenue Code 

22 of 1986) initially made after March 15, 2010. 


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1 TITLE III—REVENUE 

2 PROVISIONS 

3 SEC. 301. LIMITATION ON TREATY BENEFITS FOR CERTAIN 

4 DEDUCTIBLE PAYMENTS. 

5 (a) IN GENERAL.—Section 894 (relating to income 

6 affected by treaty) is amended by adding at the end the 

7 following new subsection: 

8 ‘‘(d) LIMITATION ON TREATY BENEFITS FOR CER9 TAIN DEDUCTIBLE PAYMENTS.— 

10 ‘‘(1) IN GENERAL.—In the case of any deduct11 ible related-party payment, any withholding tax im12 posed under chapter 3 (and any tax imposed under 

13 subpart A or B of this part) with respect to such 

14 payment may not be reduced under any treaty of the 

15 United States unless any such withholding tax would 

16 be reduced under a treaty of the United States if 

17 such payment were made directly to the foreign par18 ent corporation. 

19 ‘‘(2) DEDUCTIBLE RELATED-PARTY PAY20 MENT.—For purposes of this subsection, the term 

21 ‘deductible related-party payment’ means any pay22 ment made, directly or indirectly, by any person to 

23 any other person if the payment is allowable as a de24 duction under this chapter and both persons are 


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1 members of the same foreign controlled group of en2 tities. 

3 ‘‘(3) FOREIGN CONTROLLED GROUP OF ENTI4 TIES.—For purposes of this subsection— 

5 ‘‘(A) IN GENERAL.—The term ‘foreign 

6 controlled group of entities’ means a controlled 

7 group of entities the common parent of which 

8 is a foreign corporation. 

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

10 The term ‘controlled group of entities’ means a 

11 controlled group of corporations as defined in 

12 section 1563(a)(1), except that— 

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

14 substituted for ‘at least 80 percent’ each 

15 place it appears therein, and 

16 ‘‘(ii) the determination shall be made 

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

18 (b)(2) of section 1563. 

19 A partnership or any other entity (other than a 

20 corporation) shall be treated as a member of a 

21 controlled group of entities if such entity is con22 trolled (within the meaning of section 

23 954(d)(3)) by members of such group (includ24 ing any entity treated as a member of such 

25 group by reason of this sentence). 


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1 ‘‘(4) FOREIGN PARENT CORPORATION.—For 

2 purposes of this subsection, the term ‘foreign parent 

3 corporation’ means, with respect to any deductible 

4 related-party payment, the common parent of the 

5 foreign controlled group of entities referred to in 

6 paragraph (3)(A). 

7 ‘‘(5) REGULATIONS.—The Secretary may pre8 scribe such regulations or other guidance as are nec9 essary or appropriate to carry out the purposes of 

10 this subsection, including regulations or other guid11 ance which provide for— 

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

13 as members of a foreign controlled group of en14 tities if such persons would be the common par15 ent of such group if treated as one corporation, 

16 and 

17 ‘‘(B) the treatment of any member of a 

18 foreign controlled group of entities as the com19 mon parent of such group if such treatment is 

20 appropriate taking into account the economic 

21 relationships among such entities.’’. 

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

23 this section shall apply to payments made after the date 

24 of the enactment of this Act. 


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1 SEC. 302. TREATMENT OF SECURITIES OF A CONTROLLED 

2 CORPORATION EXCHANGED FOR ASSETS IN 

3 CERTAIN REORGANIZATIONS. 

4 (a) IN GENERAL.—Section 361 (relating to non5 recognition of gain or loss to corporations; treatment of 

6 distributions) is amended by adding at the end the fol7 lowing new subsection: 

8 ‘‘(d) SPECIAL RULES FOR TRANSACTIONS INVOLVING

9 SECTION 355 DISTRIBUTIONS.—In the case of a reorga10 nization described in section 368(a)(1)(D) with respect to 

11 which stock or securities of the corporation to which the 

12 assets are transferred are distributed in a transaction 

13 which qualifies under section 355— 

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

15 ‘stock other than nonqualified preferred stock (as 

16 defined in section 351(g)(2))’ for ‘stock or securities’ 

17 in subsections (a) and (b)(1), and 

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

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

20 and the fair market value of the other property 

21 transferred to such creditors does not exceed the ad22 justed bases of such assets transferred (reduced by 

23 the amount of the liabilities assumed (within the 

24 meaning of section 357(c))).’’. 

25 (b) CONFORMING AMENDMENT.—Paragraph (3) of 

26 section 361(b) is amended by striking the last sentence. 


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1 (c) EFFECTIVE DATE.— 

2 (1) IN GENERAL.—Except as provided in para3 graph (2), the amendments made by this section 

4 shall apply to exchanges after the date of the enact5 ment of this Act. 

6 (2) TRANSITION RULE.—The amendments 

7 made by this section shall not apply to any exchange 

8 pursuant to a transaction which is— 

9 (A) made pursuant to an agreement which 

10 was binding on March 15, 2010, and at all 

11 times thereafter, 

12 (B) described in a ruling request submitted 

13 to the Internal Revenue Service on or before 

14 such date, or 

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

16 public announcement or in a filing with the Se17 curities and Exchange Commission. 

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

19 DIVIDENDS RECEIVED FROM PERSONS MEET20 ING THE 80-PERCENT FOREIGN BUSINESS RE21 QUIREMENTS. 

22 (a) REPEAL OF SPECIAL RULE TREATING INTEREST

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

24 861(a) is amended by striking subparagraph (A) and by 


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1 redesignating subparagraphs (B) and (C) as subpara2 graphs (A) and (B), respectively. 

3 (b) REPEAL OF EXCEPTION TO TAX ON DIVIDENDS

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

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

6 and by redesignating subparagraphs (C) and (D) as sub7 paragraphs (B) and (C), respectively. 

8 (c) CONFORMING AMENDMENTS.— 

9 (1) Section 861 is amended by striking sub10 section (c) and by redesignating subsections (d), (e), 

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

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

13 to read as follows: 

14 ‘‘(9) TREATMENT OF CERTAIN DOMESTIC COR15 PORATIONS.—In the case of any dividend treated as 

16 not from sources with the United States under sec17 tion 861(a)(2)(A), the corporation paying such divi18 dend shall be treated for purposes of this subsection 

19 as a United States-owned foreign corporation.’’. 

20 (3) Subsection (c) of section 2104 is amended 

21 in the last sentence by striking ‘‘or to a debt obliga22 tion of a domestic corporation’’ and all that follows 

23 and inserting a period. 

24 (d) EFFECTIVE DATE.— 


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1 (1) IN GENERAL.—Except as provided in para2 graph (2), the amendments made by this section 

3 shall apply to taxable years beginning after Decem4 ber 31, 2010. 

5 (2) GRANDFATHER RULE FOR OUTSTANDING

6 DEBT OBLIGATIONS.— 

7 (A) IN GENERAL.—The amendments made 

8 by this section shall not apply to payments of 

9 interest on obligations issued before the date of 

10 the enactment of this Act. 

11 (B) EXCEPTION FOR RELATED PARTY

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

13 any interest which is payable to a related per14 son (determined under rules similar to the rules 

15 of section 954(d)(3)). 

16 (C) SIGNIFICANT MODIFICATIONS TREAT17 ED AS NEW ISSUES.—For purposes of subpara18 graph (A), a significant modification of the 

19 terms of any obligation (including any extension 

20 of the term of such obligation) shall be treated 

21 as a new issue. 

22 SEC. 304. INFORMATION REPORTING FOR RENTAL PROP23 ERTY EXPENSE PAYMENTS. 

24 (a) IN GENERAL.—Section 6041 is amended by add25 ing at the end the following new subsection: 


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1 ‘‘(h) TREATMENT OF RENTAL PROPERTY EXPENSE

2 PAYMENTS.— 

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

4 (a), a person receiving rental income from real es5 tate (other than a qualified residence) shall be con6 sidered to be engaged in a trade or business of rent7 ing property. 

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

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

10 means— 

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

12 meaning of section 121) of the taxpayer, and 

13 ‘‘(B) 1 other residence of the taxpayer 

14 which is selected by the taxpayer for purposes 

15 of this subsection for the taxable year and 

16 which is used by the taxpayer as a residence 

17 (within the meaning of section 280A(d)(1)).’’. 

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

19 this section shall apply to payments made after December 

20 31, 2010. 

21 SEC. 305. APPLICATION OF LEVY TO PAYMENTS TO FED22 ERAL VENDORS RELATING TO PROPERTY. 

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

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

25 goods, or services’’. 


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

2 this section shall apply to levies approved after the date 

3 of the enactment of this Act. 

4 SEC. 306. APPLICATION OF CONTINUOUS LEVY TO EMPLOY5 MENT TAX LIABILITY OF CERTAIN FEDERAL 

6 CONTRACTORS. 

7 (a) IN GENERAL.—Section 6330(h) is amended by 

8 inserting ‘‘or if the person subject to the levy (or any pred9 ecessor thereof) is a Federal contractor that was identified 

10 as owing such employment taxes through the Federal Pay11 ment Levy Program’’ before the period at the end of the 

12 first sentence. 

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

14 this section shall apply to levies issued after December 31, 

15 2010. 

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

17 GRANTOR RETAINED ANNUITY TRUSTS. 

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

19 amended— 

20 (1) by redesignating paragraphs (1), (2) and 

21 (3) as subparagraphs (A), (B), and (C), respectively, 

22 and by moving such subparagraphs (as so redesig23 nated) 2 ems to the right, 

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

25 the following: 


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

2 (3) by striking ‘‘paragraph (1) or (2)’’ in para3 graph (1)(C) (as so redesignated) and inserting 

4 ‘‘subparagraph (A) or (B)’’, and 

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

6 paragraph: 

7 ‘‘(2) ADDITIONAL REQUIREMENTS WITH RE8 SPECT TO GRANTOR RETAINED ANNUITIES.—For 

9 purposes of subsection (a), in the case of an interest 

10 described in paragraph (1)(A) (determined without 

11 regard to this paragraph) which is retained by the 

12 transferor, such interest shall be treated as de13 scribed in such paragraph only if— 

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

15 referred to in such paragraph is for a term of 

16 not less than 10 years, 

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

18 on an annual basis, do not decrease relative to 

19 any prior year during the first 10 years of the 

20 term referred to in subparagraph (A), and 

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

22 greater than zero determined as of the time of 

23 the transfer.’’. 


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

2 this section shall apply to transfers made after the date 

3 of the enactment of this Act. 

4 SEC. 308. INCREASE IN INFORMATION RETURN PENALTIES. 

5 (a) FAILURE TO FILE CORRECT INFORMATION RE6 TURNS.— 

7 (1) IN GENERAL.—Subsections (a)(1), 

8 (b)(1)(A), and (b)(2)(A) of section 6721 are each 

9 amended by striking ‘‘$50’’ and inserting ‘‘$100’’. 

10 (2) AGGREGATE ANNUAL LIMITATION.—Sub11 sections (a)(1), (d)(1)(A), and (e)(3)(A) of section 

12 6721 are each amended by striking ‘‘$250,000’’ and 

13 inserting ‘‘$1,500,000’’. 

14 (b) REDUCTION WHERE CORRECTION WITHIN 30 

15 DAYS.— 

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

17 6721(b)(1) is amended by striking ‘‘$15’’ and insert18 ing ‘‘$30’’. 

19 (2) AGGREGATE ANNUAL LIMITATION.—Sub20 sections (b)(1)(B) and (d)(1)(B) of section 6721 are 

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

22 ‘‘$250,000’’. 

23 (c) REDUCTION WHERE CORRECTION ON OR BE24 FORE AUGUST 1.— 


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

2 6721(b)(2) is amended by striking ‘‘$30’’ and insert3 ing ‘‘$60’’. 

4 (2) AGGREGATE ANNUAL LIMITATION.—Sub5 sections (b)(2)(B) and (d)(1)(C) of section 6721 are 

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

7 ‘‘$500,000’’. 

8 (d) AGGREGATE ANNUAL LIMITATIONS FOR PER9 SONS WITH GROSS RECEIPTS OF NOT MORE THAN

10 $5,000,000.—Paragraph (1) of section 6721(d) is amend11 ed— 

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

13 (A) and inserting ‘‘$500,000’’, 

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

15 and inserting ‘‘$75,000’’, and 

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

17 and inserting ‘‘$200,000’’. 

18 (e) PENALTY IN CASE OF INTENTIONAL DIS19 REGARD.—Paragraph (2) of section 6721(e) is amended 

20 by striking ‘‘$100’’ and inserting ‘‘$250’’. 

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

22 amended by adding at the end the following new sub23 section: 

24 ‘‘(f) ADJUSTMENT FOR INFLATION.— 


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

2 year beginning after 2012, each of the dollar 

3 amounts under subsections (a), (b), (d) (other than 

4 paragraph (2)(A) thereof), and (e) shall be increased 

5 by such dollar amount multiplied by the cost-of-liv6 ing adjustment determined under section 1(f)(3) de7 termined by substituting ‘calendar year 2011’ for 

8 ‘calendar year 1992’ in subparagraph (B) thereof. 

9 ‘‘(2) ROUNDING.—If any amount adjusted 

10 under paragraph (1)— 

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

12 a multiple of $500, such amount shall be 

13 rounded to the next lowest multiple of $500, 

14 and 

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

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

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

18 (g) EFFECTIVE DATE.—The amendments made by 

19 this section shall apply with respect to information returns 

20 required to be filed on or after January 1, 2011. 

Æ 


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