II 

108TH CONGRESS 

1ST SESSION S. 1964

To amend the Internal Revenue Code of 1986 to comply with the World 

Trade Organization rulings on the FSC/ETI benefit in a manner that 

preserves jobs and production activities in the United States, and for 

other purposes. 

IN THE SENATE OF THE UNITED STATES 

NOVEMBER 25, 2003

Ms. STABENOW (for herself and Mr. GRAHAM of South Carolina) introduced 

the following bill; which was read twice and referred to the Committee 

on Finance 

A BILL

To amend the Internal Revenue Code of 1986 to comply 

with the World Trade Organization rulings on the

FSC/ETI benefit in a manner that preserves jobs and 

production activities in the United States, 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,

3 SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE. 

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

5 ‘‘Manufacturing Opportunities to Revitalize our Econo6 my’s JOBS Act’’ or the ‘‘MORE JOBS Act’’. 
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•S 1964 IS 

1 (b) AMENDMENT OF 1986 CODE.—Except as other2 wise expressly provided, whenever in this Act an amend3 ment or repeal is expressed in terms of an amendment 

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

5 shall be considered to be made to a section or other provi6 sion of the Internal Revenue Code of 1986. 

7 SEC. 2. REPEAL OF EXCLUSION FOR EXTRATERRITORIAL 

8 INCOME. 

9 (a) IN GENERAL.—Section 114 is hereby repealed. 

10 (b) CONFORMING AMENDMENTS.—

11 (1)(A) Subpart E of part III of subchapter N 

12 of chapter 1 (relating to qualifying foreign trade in13 come) is hereby repealed. 

14 (B) The table of subparts for such part III is 

15 amended by striking the item relating to subpart E. 

16 (2) The table of sections for part III of sub17 chapter B of chapter 1 is amended by striking the 

18 item relating to section 114. 

19 (3) The second sentence of section 

20 56(g)(4)(B)(i) is amended by striking ‘‘or under sec21 tion 114’’. 

22 (4) Section 275(a) is amended—

23 (A) by inserting ‘‘or’’ at the end of para24 graph (4)(A), by striking ‘‘or’’ at the end of 
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1 paragraph (4)(B) and inserting a period, and 

2 by striking subparagraph (C), and 

3 (B) by striking the last sentence. 

4 (5) Paragraph (3) of section 864(e) is amend5 ed—

6 (A) by striking: 

7 ‘‘(3) TAX-EXEMPT ASSETS NOT TAKEN INTO

8 ACCOUNT.—

9 ‘‘(A) IN GENERAL.—For purposes of’’; and 

10 inserting:

11 ‘‘(3) TAX-EXEMPT ASSETS NOT TAKEN INTO

12 ACCOUNT.—For purposes of’’, and 

13 (B) by striking subparagraph (B). 

14 (6) Section 903 is amended by striking ‘‘114, 

15 164(a),’’ and inserting ‘‘164(a)’’. 

16 (7) Section 999(c)(1) is amended by striking 

17 ‘‘941(a)(5),’’. 

18 (c) EFFECTIVE DATE.—

19 (1) IN GENERAL.—The amendments made by 

20 this section shall apply to transactions occurring 

21 after the date of the enactment of this Act. 

22 (2) BINDING CONTRACTS.—The amendments 

23 made by this section shall not apply to any trans24 action in the ordinary course of a trade or business 

25 which occurs pursuant to a binding contract—
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1 (A) which is between the taxpayer and a 

2 person who is not a related person (as defined 

3 in section 943(b)(3) of such Code, as in effect 

4 on the day before the date of the enactment of 

5 this Act), and 

6 (B) which is in effect on September 17, 

7 2003, and at all times thereafter. 

8 (d) REVOCATION OF SECTION 943(e) ELECTIONS.—

9 (1) IN GENERAL.—In the case of a corporation 

10 that elected to be treated as a domestic corporation 

11 under section 943(e) of the Internal Revenue Code 

12 of 1986 (as in effect on the day before the date of 

13 the enactment of this Act)—

14 (A) the corporation may, during the 1-year 

15 period beginning on the date of the enactment 

16 of this Act, revoke such election, effective as of 

17 such date of enactment, and 

18 (B) if the corporation does revoke such 

19 election—

20 (i) such corporation shall be treated 

21 as a domestic corporation transferring (as 

22 of such date of enactment) all of its prop23 erty to a foreign corporation in connection 

24 with an exchange described in section 354 

25 of such Code, and 
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1 (ii) no gain or loss shall be recognized 

2 on such transfer.

3 (2) EXCEPTION.—Subparagraph (B)(ii) of 

4 paragraph (1) shall not apply to gain on any asset 

5 held by the revoking corporation if—

6 (A) the basis of such asset is determined 

7 in whole or in part by reference to the basis of 

8 such asset in the hands of the person from 

9 whom the revoking corporation acquired such 

10 asset, 

11 (B) the asset was acquired by transfer (not 

12 as a result of the election under section 943(e) 

13 of such Code) occurring on or after the 1st day 

14 on which its election under section 943(e) of 

15 such Code was effective, and 

16 (C) a principal purpose of the acquisition 

17 was the reduction or avoidance of tax (other 

18 than a reduction in tax under section 114 of 

19 such Code, as in effect on the day before the 

20 date of the enactment of this Act). 

21 (e) GENERAL TRANSITION.—

22 (1) IN GENERAL.—In the case of a taxable year 

23 ending after the date of the enactment of this Act 

24 and beginning before January 1, 2007, for purposes 

25 of chapter 1 of such Code, a current FSC/ETI bene-
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1 ficiary shall be allowed a deduction equal to the

2 transition amount determined under this subsection 

3 with respect to such beneficiary for such year. 

4 (2) CURRENT FSC/ETI BENEFICIARY.—The 

5 term ‘‘current FSC/ETI beneficiary’’ means any cor6 poration which entered into one or more transactions 

7 during its taxable year beginning in calendar year 

8 2002 with respect to which FSC/ETI benefits were 

9 allowable. 

10 (3) TRANSITION AMOUNT.—For purposes of 

11 this subsection—

12 (A) IN GENERAL.—The transition amount 

13 applicable to any current FSC/ETI beneficiary 

14 for any taxable year is the phaseout percentage 

15 of the base period amount. 

16 (B) PHASEOUT PERCENTAGE.—

17 (i) IN GENERAL.—In the case of a 

18 taxpayer using the calendar year as its 

19 taxable year, the phaseout percentage shall 

20 be determined under the following table:

Years: The phaseout percentage 

is: 

2004 ................................................................................................... 80

2005 ................................................................................................... 80

2006 ................................................................................................... 60.

21 (ii) SPECIAL RULE FOR 2003.—The 

22 phaseout percentage for 2003 shall be the 

23 amount that bears the same ratio to 100 
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1 percent as the number of days after the 

2 date of the enactment of this Act bears to 

3 365. 

4 (iii) SPECIAL RULE FOR FISCAL YEAR

5 TAXPAYERS.—In the case of a taxpayer 

6 not using the calendar year as its taxable 

7 year, the phaseout percentage is the 

8 weighted average of the phaseout percent9 ages determined under the preceding provi10 sions of this paragraph with respect to cal11 endar years any portion of which is in12 cluded in the taxpayer’s taxable year. The 

13 weighted average shall be determined on 

14 the basis of the respective portions of the 

15 taxable year in each calendar year. 

16 ‘‘(C) SHORT TAXABLE YEAR.—The Sec17 retary shall prescribe guidance for the computa18 tion of the transition amount in the case of a 

19 short taxable year. 

20 (4) BASE PERIOD AMOUNT.—For purposes of 

21 this subsection, the base period amount is the FSC/

22 ETI benefit for the taxpayer’s taxable year begin23 ning in calendar year 2002. 

24 (5) FSC/ETI BENEFIT.—For purposes of this 

25 subsection, the term ‘‘FSC/ETI benefit’’ means—
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1 (A) amounts excludable from gross income 

2 under section 114 of such Code, and 

3 (B) the exempt foreign trade income of re4 lated foreign sales corporations from property 

5 acquired from the taxpayer (determined without 

6 regard to section 923(a)(5) of such Code (relat7 ing to special rule for military property), as in 

8 effect on the day before the date of the enact9 ment of the FSC Repeal and Extraterritorial 

10 Income Exclusion Act of 2000). 

11 In determining the FSC/ETI benefit there shall be 

12 excluded any amount attributable to a transaction 

13 with respect to which the taxpayer is the lessor un14 less the leased property was manufactured or pro15 duced in whole or in significant part by the tax16 payer. 

17 (6) SPECIAL RULE FOR AGRICULTURAL AND

18 HORTICULTURAL COOPERATIVES.—Determinations 

19 under this subsection with respect to an organization 

20 described in section 943(g)(1) of such Code, as in 

21 effect on the day before the date of the enactment 

22 of this Act, shall be made at the cooperative level 

23 and the purposes of this subsection shall be carried 

24 out in a manner similar to section 199(h)(2) of such 

25 Code, as added by this Act. Such determinations 
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1 shall be in accordance with such requirements and 

2 procedures as the Secretary may prescribe. 

3 (7) CERTAIN RULES TO APPLY.—Rules similar 

4 to the rules of section 41(f) of such Code shall apply 

5 for purposes of this subsection. 

6 (8) COORDINATION WITH BINDING CONTRACT

7 RULE.—The deduction determined under paragraph 

8 (1) for any taxable year shall be reduced by the 

9 phaseout percentage of any FSC/ETI benefit real10 ized for the taxable year by reason of subsection 

11 (c)(2) or section 5(c)(1)(B) of the FSC Repeal and 

12 Extraterritorial Income Exclusion Act of 2000, ex13 cept that for purposes of this paragraph the phase14 out percentage for 2003 shall be treated as being 

15 equal to 100 percent. 

16 (9) SPECIAL RULE FOR TAXABLE YEAR WHICH

17 INCLUDES DATE OF ENACTMENT.—In the case of a 

18 taxable year which includes the date of the enact19 ment of this Act, the deduction allowed under this 

20 subsection to any current FSC/ETI beneficiary shall 

21 in no event exceed—

22 (A) 100 percent of such beneficiary’s base 

23 period amount for calendar year 2003, reduced 

24 by 
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1 (B) the FSC/ETI benefit of such bene2 ficiary with respect to transactions occurring 

3 during the portion of the taxable year ending on 

4 the date of the enactment of this Act. 

5 SEC. 3. DEDUCTION RELATING TO INCOME ATTRIBUTABLE 

6 TO UNITED STATES PRODUCTION ACTIVI7 TIES. 

8 (a) IN GENERAL.—Part VI of subchapter B of chap9 ter 1 (relating to itemized deductions for individuals and 

10 corporations) is amended by adding at the end the fol11 lowing new section: 

12 ‘‘SEC. 199. INCOME ATTRIBUTABLE TO DOMESTIC PRODUC13 TION ACTIVITIES. 

14 ‘‘(a) ALLOWANCE OF DEDUCTION.—There shall be 

15 allowed as a deduction an amount equal to 9 percent of 

16 the qualified production activities income of the taxpayer 

17 for the taxable year.

18 ‘‘(b) DEDUCTION LIMITED TO WAGES PAID.—

19 ‘‘(1) IN GENERAL.—The amount of the deduc20 tion allowable under subsection (a) for any taxable 

21 year shall not exceed 50 percent of the W–2 wages 

22 of the employer for the taxable year. 

23 ‘‘(2) W–2 WAGES.—For purposes of paragraph 

24 (1), the term ‘W–2 wages’ means the sum of the ag25 gregate amounts the taxpayer is required to include
11

•S 1964 IS 

1 on statements under paragraphs (3) and (8) of sec2 tion 6051(a) with respect to employment of employ3 ees of the taxpayer during the taxpayer’s taxable 

4 year. 

5 ‘‘(3) SPECIAL RULES.—

6 ‘‘(A) PASS-THRU ENTITIES.—In the case 

7 of an S corporation, partnership, estate or 

8 trust, or other pass-thru entity, the limitation 

9 under this subsection shall apply at the entity 

10 level. 

11 ‘‘(B) ACQUISITIONS AND DISPOSITIONS.—

12 The Secretary shall provide for the application 

13 of this subsection in cases where the taxpayer 

14 acquires, or disposes of, the major portion of a 

15 trade or business or the major portion of a sep16 arate unit of a trade or business during the tax17 able year. 

18 ‘‘(c) QUALIFIED PRODUCTION ACTIVITIES IN19 COME.—For purposes of this section, the term ‘qualified 

20 production activities income’ means an amount equal to 

21 the product of—

22 ‘‘(1) the portion of the modified taxable income 

23 of the taxpayer which is attributable to domestic 

24 production activities, and 

25 ‘‘(2) the domestic/worldwide fraction. 
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1 ‘‘(d) DETERMINATION OF INCOME ATTRIBUTABLE

2 TO DOMESTIC PRODUCTION ACTIVITIES.—For purposes 

3 of this section—

4 ‘‘(1) IN GENERAL.—The portion of the modified 

5 taxable income which is attributable to domestic pro6 duction activities is so much of the modified taxable 

7 income for the taxable year as does not exceed—

8 ‘‘(A) the taxpayer’s domestic production 

9 gross receipts for such taxable year, reduced by 

10 ‘‘(B) the sum of—

11 ‘‘(i) the costs of goods sold that are 

12 allocable to such receipts, 

13 ‘‘(ii) other deductions, expenses, or 

14 losses directly allocable to such receipts, 

15 and 

16 ‘‘(iii) a proper share of other deduc17 tions, expenses, and losses that are not di18 rectly allocable to such receipts or another 

19 class of income. 

20 ‘‘(2) ALLOCATION METHOD.—The Secretary 

21 shall prescribe rules for the proper allocation of 

22 items of income, deduction, expense, and loss for 

23 purposes of determining income attributable to do24 mestic production activities. 
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1 ‘‘(3) SPECIAL RULES FOR DETERMINING

2 COSTS.—

3 ‘‘(A) IN GENERAL.—For purposes of deter4 mining costs under clause (i) of paragraph 

5 (1)(B), any item or service brought into the 

6 United States shall be treated as acquired by 

7 purchase, and its cost shall be treated as not 

8 less than its fair market value immediately 

9 after it entered the United States. A similar 

10 rule shall apply in determining the adjusted 

11 basis of leased or rented property where the 

12 lease or rental gives rise to domestic production 

13 gross receipts. 

14 ‘‘(B) EXPORTS FOR FURTHER MANUFAC15 TURE.—In the case of any property described 

16 in subparagraph (A) that had been exported by 

17 the taxpayer for further manufacture, the in18 crease in cost or adjusted basis under subpara19 graph (A) shall not exceed the difference be20 tween the value of the property when exported 

21 and the value of the property when brought 

22 back into the United States after the further 

23 manufacture. 

24 ‘‘(4) MODIFIED TAXABLE INCOME.—The term 

25 ‘modified taxable income’ means taxable income 
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•S 1964 IS 

1 computed without regard to the deduction allowable 

2 under this section. 

3 ‘‘(e) DOMESTIC PRODUCTION GROSS RECEIPTS.—

4 For purposes of this section—

5 ‘‘(1) IN GENERAL.—The term ‘domestic produc6 tion gross receipts’ means the gross receipts of the 

7 taxpayer which are derived from—

8 ‘‘(A) any sale, exchange, or other disposi9 tion of, or 

10 ‘‘(B) any lease, rental, or license of—

11 qualifying production property which was manufac12 tured, produced, grown, or extracted in whole or in 

13 significant part by the taxpayer within the United 

14 States. 

15 ‘‘(2) SPECIAL RULES FOR CERTAIN PROP16 ERTY.—In the case of any qualifying production 

17 property described in subsection (f)(1)(C)—

18 ‘‘(A) such property shall be treated for 

19 purposes of paragraph (1) as produced in sig20 nificant part by the taxpayer within the United 

21 States if more than 50 percent of the aggregate 

22 development and production costs are incurred 

23 by the taxpayer within the United States, and 

24 ‘‘(B) if a taxpayer acquires such property 

25 before such property begins to generate sub-
15

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1 stantial gross receipts, any development or pro2 duction costs incurred before the acquisition 

3 shall be treated as incurred by the taxpayer for 

4 purposes of subparagraph (A) and paragraph 

5 (1). 

6 ‘‘(f) QUALIFYING PRODUCTION PROPERTY.—For 

7 purposes of this section—

8 ‘‘(1) IN GENERAL.—Except as otherwise pro9 vided in this paragraph, the term ‘qualifying produc10 tion property’ means—

11 ‘‘(A) any tangible personal property, 

12 ‘‘(B) any computer software, and 

13 ‘‘(C) any property described in section 

14 168(f) (3) or (4), including any underlying 

15 copyright or trademark. 

16 ‘‘(2) EXCLUSIONS FROM QUALIFYING PRODUC17 TION PROPERTY.—The term ‘qualifying production 

18 property’ shall not include—

19 ‘‘(A) consumable property that is sold, 

20 leased, or licensed by the taxpayer as an inte21 gral part of the provision of services, 

22 ‘‘(B) oil or gas, 

23 ‘‘(C) electricity, 

24 ‘‘(D) water supplied by pipeline to the con25 sumer,
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•S 1964 IS 

1 ‘‘(E) utility services, or 

2 ‘‘(F) any film, tape, recording, book, mag3 azine, newspaper, or similar property the mar4 ket for which is primarily topical or otherwise 

5 essentially transitory in nature. 

6 ‘‘(g) DOMESTIC/WORLDWIDE FRACTION.—For pur7 poses of this section—

8 ‘‘(1) IN GENERAL.—The term ‘domestic/world9 wide fraction’ means a fraction (not greater than 

10 1)—

11 ‘‘(A) the numerator of which is the value 

12 of the domestic production of the taxpayer, and 

13 ‘‘(B) the denominator of which is the value 

14 of the worldwide production of the taxpayer. 

15 ‘‘(2) VALUE OF DOMESTIC PRODUCTION.—The 

16 value of domestic production is the excess (if any) 

17 of—

18 ‘‘(A) the domestic production gross re19 ceipts, over 

20 ‘‘(B) the cost of purchased inputs allocable 

21 to such receipts that are deductible under this 

22 chapter for the taxable year. 

23 ‘‘(3) PURCHASED INPUTS.—
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•S 1964 IS 

1 ‘‘(A) IN GENERAL.—Purchased inputs are 

2 any of the following items acquired by pur3 chase: 

4 ‘‘(i) Services (other than services of 

5 employees) used in manufacture, produc6 tion, growth, or extraction activities. 

7 ‘‘(ii) Items consumed in connection 

8 with such activities.

9 ‘‘(iii) Items incorporated as part of 

10 the property being manufactured, pro11 duced, grown, or extracted. 

12 ‘‘(B) SPECIAL RULE.—Rules similar to the 

13 rules of subsection (d)(3) shall apply for pur14 poses of this subsection. 

15 ‘‘(4) VALUE OF WORLDWIDE PRODUCTION.—

16 ‘‘(A) IN GENERAL.—The value of world17 wide production shall be determined under the 

18 principles of paragraph (2), except that—

19 ‘‘(i) worldwide production gross re20 ceipts shall be taken into account, and 

21 ‘‘(ii) paragraph (3)(B) shall not apply. 

22 ‘‘(B) WORLDWIDE PRODUCTION GROSS RE23 CEIPTS.—The worldwide production gross re24 ceipts is the amount that would be determined 

25 under subsection (e) if such subsection were ap-
18

•S 1964 IS 

1 plied without any reference to the United 

2 States. 

3 ‘‘(h) DEFINITIONS AND SPECIAL RULES.—

4 ‘‘(1) APPLICATION OF SECTION TO PASS-THRU

5 ENTITIES.—In the case of an S corporation, partner6 ship, estate or trust, or other pass-thru entity—

7 ‘‘(A) subject to the provisions of paragraph 

8 (2) and subsection (b)(3)(A), this section shall 

9 be applied at the shareholder, partner, or simi10 lar level, and 

11 ‘‘(B) the Secretary shall prescribe rules for 

12 the application of this section, including rules 

13 relating to—

14 ‘‘(i) restrictions on the allocation of 

15 the deduction to taxpayers at the partner 

16 or similar level, and 

17 ‘‘(ii) additional reporting require18 ments. 

19 ‘‘(2) EXCLUSION FOR PATRONS OF AGRICUL20 TURAL AND HORTICULTURAL COOPERATIVES.—

21 ‘‘(A) IN GENERAL.—If any amount de22 scribed in paragraph (1) or (3) of section 1385 

23 (a)—

24 ‘‘(i) is received by a person from an 

25 organization to which part I of subchapter 
19

•S 1964 IS 

1 T applies which is engaged in the mar2 keting of agricultural or horticultural prod3 ucts, and 

4 ‘‘(ii) is allocable to the portion of the 

5 qualified production activities income of 

6 the organization which is deductible under 

7 subsection (a) and designated as such by 

8 the organization in a written notice mailed 

9 to its patrons during the payment period 

10 described in section 1382(d)—

11 then such person shall be allowed an exclusion 

12 from gross income with respect to such amount. 

13 The taxable income of the organization shall 

14 not be reduced under section 1382 by the por15 tion of any such amount with respect to which 

16 an exclusion is allowable to a person by reason 

17 of this paragraph. 

18 ‘‘(B) SPECIAL RULES.—For purposes of 

19 applying subparagraph (A), in determining the 

20 qualified production activities income of the or21 ganization under this section—

22 ‘‘(i) there shall not be taken into ac23 count in computing the organization’s 

24 modified taxable income any deduction al25 lowable under subsection (b) or (c) of sec-
20

•S 1964 IS 

1 tion 1382 (relating to patronage dividends, 

2 per-unit retain allocations, and nonpatron3 age distributions), and 

4 ‘‘(ii) the organization shall be treated 

5 as having manufactured, produced, grown, 

6 or extracted in whole or significant part 

7 any qualifying production property mar8 keted by the organization which its patrons 

9 have so manufactured, produced, grown, or 

10 extracted. 

11 ‘‘(3) SPECIAL RULE FOR AFFILIATED

12 GROUPS.—

13 ‘‘(A) IN GENERAL.—All members of an ex14 panded affiliated group shall be treated as a 

15 single corporation for purposes of this section. 

16 ‘‘(B) EXPANDED AFFILIATED GROUP.—

17 The term ‘expanded affiliated group’ means an 

18 affiliated group as defined in section 1504(a), 

19 determined—

20 ‘‘(i) by substituting ‘50 percent’ for 

21 ‘80 percent’ each place it appears, and 

22 ‘‘(ii) without regard to paragraphs (2) 

23 and (4) of section 1504(b). 

24 For purposes of determining the domestic/

25 worldwide fraction under subsection (g), clause
21

•S 1964 IS 

1 (ii) shall be applied by also disregarding para2 graphs (3) and (8) of section 1504(b). 

3 ‘‘(4) COORDINATION WITH MINIMUM TAX.—The 

4 deduction under this section shall be allowed for 

5 purposes of the tax imposed by section 55; except 

6 that for purposes of section 55, alternative minimum 

7 taxable income shall be taken into account in deter8 mining the deduction under this section.

9 ‘‘(5) ORDERING RULE.—The amount of any 

10 other deduction allowable under this chapter shall be 

11 determined as if this section had not been enacted. 

12 ‘‘(6) TRADE OR BUSINESS REQUIREMENT.—

13 This section shall be applied by only taking into ac14 count items which are attributable to the actual con15 duct of a trade or business. 

16 ‘‘(7) POSSESSIONS, ETC.—

17 ‘‘(A) IN GENERAL.—For purposes of sub18 sections (d) and (e), the term ‘United States’ 

19 includes the Commonwealth of Puerto Rico, 

20 Guam, American Samoa, the Commonwealth of 

21 the Northern Mariana Islands, and the Virgin 

22 Islands of the United States. 

23 ‘‘(B) SPECIAL RULES FOR APPLYING WAGE

24 LIMITATION.—For purposes of applying the 
22

•S 1964 IS 

1 limitation under subsection (b) for any taxable 

2 year—

3 ‘‘(i) the determination of W–2 wages 

4 of a taxpayer shall be made without regard 

5 to any exclusion under section 3401(a)(8) 

6 for remuneration paid for services per7 formed in a jurisdiction described in sub8 paragraph (A), and 

9 ‘‘(ii) in determining the amount of 

10 any credit allowable under section 30A or 

11 936 for the taxable year, there shall not be 

12 taken into account any wages which are 

13 taken into account in applying such limita14 tion. 

15 ‘‘(8) COORDINATION WITH TRANSITION

16 RULES.—For purposes of this section—

17 ‘‘(A) domestic production gross receipts 

18 shall not include gross receipts from any trans19 action if the binding contract transition relief of 

20 section 2(c)(2) of the MORE JOBS Act applies 

21 to such transaction, and 

22 ‘‘(B) any deduction allowed under section 

23 2(e) of such Act shall be disregarded in deter24 mining the portion of the taxable income which 
23

•S 1964 IS 

1 is attributable to domestic production gross re2 ceipts.’’. 

3 (b) MINIMUM TAX.—Section 56(g)(4)(C) (relating to 

4 disallowance of items not deductible in computing earnings 

5 and profits) is amended by adding at the end the following 

6 new clause: 

7 ‘‘(v) DEDUCTION FOR DOMESTIC PRO8 DUCTION.—Clause (i) shall not apply to 

9 any amount allowable as a deduction under 

10 section 199.’’. 

11 (c) CLERICAL AMENDMENT.—The table of sections 

12 for part VI of subchapter B of chapter 1 is amended by 

13 adding at the end the following new item:

‘‘Sec. 199. Income attributable to domestic production activities.’’.

14 (d) EFFECTIVE DATE.—

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

16 this section shall apply to taxable years ending after 

17 the date of the enactment of this Act. 

18 (2) APPLICATION OF SECTION 15.—Section 15 

19 of the Internal Revenue Code of 1986 shall apply to 

20 the amendments made by this section as if they were 

21 changes in a rate of tax.

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