II 

108TH CONGRESS 

2D SESSION S. 2155

To amend the Internal Revenue Code of 1986 to provide for a manufacturer’s 

jobs credit, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MARCH 2, 2004

Ms. COLLINS 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 provide 

for a manufacturer’s jobs credit, 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; ETC. 

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

5 ‘‘Growing Our Manufacturing Employment (GoME) Act’’. 

6 (b) AMENDMENT OF 1986 CODE.—Except as other7 wise expressly provided, whenever in this Act an amend8 ment or repeal is expressed in terms of an amendment 

9 to, or repeal of, a section or other provision, the reference 
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1 shall be considered to be made to a section or other provi2 sion of the Internal Revenue Code of 1986. 

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

4 this Act is as follows:

Sec. 1. Short title; etc. 

TITLE I—GENERAL MANUFACTURING PROVISIONS 

Sec. 101. Manufacturer’s jobs credit. 

Sec. 102. Deduction relating to income attributable to United States production 

activities. 

TITLE II—MANUFACTURING RELATING TO TIMBER 

Sec. 201. Expensing of certain reforestation expenditures. 

Sec. 202. Election to treat cutting of timber as a sale or exchange. 

Sec. 203. Capital gain treatment under section 631(b) to apply to outright 

sales by landowners. 

TITLE III—REVENUE PROVISIONS 

Sec. 301. Clarification of economic substance doctrine. 

Sec. 302. Tax treatment of inverted corporate entities.

5 TITLE I—GENERAL 

6 MANUFACTURING PROVISIONS 

7 SEC. 101. MANUFACTURER’S JOBS CREDIT. 

8 (a) IN GENERAL.—Subpart D of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of 

10 1986 (relating to business-related credits) is amended by 

11 adding at the end the following: 

12 ‘‘SEC. 45G. MANUFACTURER’S JOBS CREDIT. 

13 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

14 in the case of an eligible taxpayer, the manufacturer’s jobs 

15 credit determined under this section is an amount equal 

16 to the lesser of the following: 
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1 ‘‘(1) The excess of the W–2 wages paid by the 

2 taxpayer during the taxable year over the W–2 

3 wages paid by the taxpayer during the preceding 

4 taxable year. 

5 ‘‘(2) The W–2 wages paid by the taxpayer dur6 ing the taxable year to any employee who is an eligi7 ble TAA recipient (as defined in section 35(c)(2)) 

8 for any month during such taxable year. 

9 ‘‘(3) 22.4 percent of the W–2 wages paid by the 

10 taxpayer during the taxable year. 

11 ‘‘(b) LIMITATION.—The amount of credit determined 

12 under subsection (a) shall be reduced by an amount which 

13 bears the same ratio to the amount of the credit (deter14 mined without regard to this subsection) as—

15 ‘‘(1) the excess of the W–2 wages paid by the 

16 taxpayer to employees outside the United States 

17 during the taxable year over such wages paid during 

18 the most recent taxable year ending before the date 

19 of the enactment of this section, bears to 

20 ‘‘(2) the excess of the W–2 wages paid by the 

21 taxpayer to employees within the United States dur22 ing the taxable year over such wages paid during 

23 such most recent taxable year. 

24 ‘‘(c) ELIGIBLE TAXPAYER.—For purposes of this sec25 tion, the term ‘eligible taxpayer’ means any taxpayer—
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1 ‘‘(1) which has domestic production gross re2 ceipts for the taxable year and the preceding taxable 

3 year, and 

4 ‘‘(2) which is not treated at any time during 

5 the taxable year as an inverted domestic corporation 

6 under section 7874. 

7 ‘‘(d) DEFINITIONS.—For purposes of this section, 

8 W–2 wages and domestic production gross receipts shall 

9 be determined in the same manner as under section 199. 

10 ‘‘(e) CERTAIN RULES MADE APPLICABLE.—For pur11 poses of this section, rules similar to the rules of section 

12 52 shall apply. 

13 ‘‘(f) TERMINATION.—This section shall not apply to 

14 any taxable year beginning after December 31, 2005.’’. 

15 (b) CREDIT TO BE PART OF GENERAL BUSINESS

16 CREDIT.—Section 38(b) (relating to current year business 

17 credit) is amended by striking ‘‘plus’’ at the end of para18 graph (14), by striking the period at the end of paragraph 

19 (15) and inserting ‘‘, plus’’, and by adding at the end the 

20 following: 

21 ‘‘(16) the manufacturer’s jobs credit determined 

22 under section 45G.’’. 

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

24 for subpart D of part IV of subchapter A of chapter 1 

25 is amended by adding at the end the following:

‘‘Sec. 45G. Manufacturer’s jobs credit.’’.
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1 (d) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to taxable years beginning after 

3 December 31, 2003. 

4 SEC. 102. DEDUCTION RELATING TO INCOME ATTRIB5 UTABLE TO UNITED STATES PRODUCTION 

6 ACTIVITIES. 

7 (a) IN GENERAL.—Part VI of subchapter B of chap8 ter 1 (relating to itemized deductions for individuals and 

9 corporations) is amended by adding at the end the fol10 lowing new section: 

11 ‘‘SEC. 199. INCOME ATTRIBUTABLE TO DOMESTIC PRODUC12 TION ACTIVITIES. 

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

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

15 the qualified production activities income of the taxpayer 

16 for the taxable year. 

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

18 ‘‘(1) IN GENERAL.—The amount of the deduc19 tion allowable under subsection (a) for any taxable 

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

21 of the employer for the taxable year. 

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

23 (1), the term ‘W–2 wages’ means the sum of the ag24 gregate amounts the taxpayer is required to include 

25 on statements under paragraphs (3) and (8) of sec-
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1 tion 6051(a) with respect to employment of employ2 ees of the taxpayer during the taxpayer’s taxable 

3 year. 

4 ‘‘(3) SPECIAL RULES.—

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

6 of an S corporation, partnership, estate or 

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

8 under this subsection shall apply at the entity 

9 level. 

10 ‘‘(B) ACQUISITIONS AND DISPOSITIONS.—

11 The Secretary shall provide for the application 

12 of this subsection in cases where the taxpayer 

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

14 trade or business or the major portion of a sep15 arate unit of a trade or business during the tax16 able year. 

17 ‘‘(c) QUALIFIED PRODUCTION ACTIVITIES IN18 COME.—For purposes of this section—

19 ‘‘(1) IN GENERAL.—The term ‘qualified produc20 tion activities income’ means an amount equal to the 

21 portion of the modified taxable income of the tax22 payer which is attributable to domestic production 

23 activities. 

24 ‘‘(2) REDUCTION FOR TAXABLE YEARS BEGIN25 NING BEFORE 2013.—The amount otherwise deter-
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1 mined under paragraph (1) (the ‘unreduced 

2 amount’) shall not exceed the product of the unre3 duced amount and the domestic/worldwide fraction. 

4 ‘‘(d) DETERMINATION OF INCOME ATTRIBUTABLE

5 TO DOMESTIC PRODUCTION ACTIVITIES.—For purposes 

6 of this section—

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

8 taxable income which is attributable to domestic pro9 duction activities is so much of the modified taxable 

10 income for the taxable year as does not exceed—

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

12 gross receipts for such taxable year, reduced by 

13 ‘‘(B) the sum of—

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

15 allocable to such receipts, 

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

17 losses directly allocable to such receipts, 

18 and 

19 ‘‘(iii) a proper share of other deduc20 tions, expenses, and losses that are not di21 rectly allocable to such receipts or another 

22 class of income. 

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

24 shall prescribe rules for the proper allocation of 

25 items of income, deduction, expense, and loss for 
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1 purposes of determining income attributable to do2 mestic production activities. 

3 ‘‘(3) SPECIAL RULES FOR DETERMINING

4 COSTS.—

5 ‘‘(A) IN GENERAL.—For purposes of deter6 mining costs under clause (i) of paragraph 

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

8 United States shall be treated as acquired by 

9 purchase, and its cost shall be treated as not 

10 less than its fair market value immediately 

11 after it entered the United States. A similar 

12 rule shall apply in determining the adjusted 

13 basis of leased or rented property where the 

14 lease or rental gives rise to domestic production 

15 gross receipts. 

16 ‘‘(B) EXPORTS FOR FURTHER MANUFAC17 TURE.—In the case of any property described 

18 in subparagraph (A) that had been exported by 

19 the taxpayer for further manufacture, the in20 crease in cost or adjusted basis under subpara21 graph (A) shall not exceed the difference be22 tween the value of the property when exported 

23 and the value of the property when brought 

24 back into the United States after the further 

25 manufacture. 
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1 ‘‘(4) MODIFIED TAXABLE INCOME.—The term 

2 ‘modified taxable income’ means taxable income 

3 computed without regard to the deduction allowable 

4 under this section. 

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

6 For purposes of this section—

7 ‘‘(1) IN GENERAL.—The term ‘domestic produc8 tion gross receipts’ means the gross receipts of the 

9 taxpayer which are derived from—

10 ‘‘(A) any sale, exchange, or other disposi11 tion of, or 

12 ‘‘(B) any lease, rental, or license of, 

13 qualifying production property which was manufac14 tured, produced, grown, or extracted in whole or in 

15 significant part by the taxpayer within the United 

16 States. 

17 ‘‘(2) SPECIAL RULES FOR CERTAIN PROP18 ERTY.—In the case of any qualifying production 

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

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

21 purposes of paragraph (1) as produced in sig22 nificant part by the taxpayer within the United 

23 States if more than 50 percent of the aggregate 

24 development and production costs are incurred 

25 by the taxpayer within the United States, and
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1 ‘‘(B) if a taxpayer acquires such property 

2 before such property begins to generate sub3 stantial gross receipts, any development or pro4 duction costs incurred before the acquisition 

5 shall be treated as incurred by the taxpayer for 

6 purposes of subparagraph (A) and paragraph 

7 (1). 

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

9 purposes of this section—

10 ‘‘(1) IN GENERAL.—Except as otherwise pro11 vided in this paragraph, the term ‘qualifying produc12 tion property’ means—

13 ‘‘(A) any tangible personal property, 

14 ‘‘(B) any computer software, and 

15 ‘‘(C) any property described in section 

16 168(f) (3) or (4), including any underlying 

17 copyright or trademark. 

18 ‘‘(2) EXCLUSIONS FROM QUALIFYING PRODUC19 TION PROPERTY.—The term ‘qualifying production 

20 property’ shall not include—

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

22 leased, or licensed by the taxpayer as an inte23 gral part of the provision of services, 

24 ‘‘(B) oil or gas, 

25 ‘‘(C) electricity, 
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1 ‘‘(D) water supplied by pipeline to the con2 sumer,

3 ‘‘(E) utility services, or

4 ‘‘(F) any film, tape, recording, book, mag5 azine, newspaper, or similar property the mar6 ket for which is primarily topical or otherwise 

7 essentially transitory in nature. 

8 ‘‘(g) DOMESTIC/WORLDWIDE FRACTION.—For pur9 poses of this section—

10 ‘‘(1) IN GENERAL.—The term ‘domestic/world11 wide fraction’ means a fraction (not greater than 

12 1)—

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

14 of the domestic production of the taxpayer, and 

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

16 of the worldwide production of the taxpayer. 

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

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

19 of—

20 ‘‘(A) the domestic production gross re21 ceipts, over 

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

23 to such receipts that are deductible under this 

24 chapter for the taxable year. 

25 ‘‘(3) PURCHASED INPUTS.—
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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-
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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
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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-
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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 
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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 
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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 ‘‘(i) TERMINATION.—This section shall not apply to 

16 any taxable year beginning after December 31, 2005.’’. 

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

18 disallowance of items not deductible in computing earnings 

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

20 new clause: 

21 ‘‘(v) DEDUCTION FOR DOMESTIC PRO22 DUCTION.—Clause (i) shall not apply to 

23 any amount allowable as a deduction under 

24 section 199.’’. 
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1 (c) CLERICAL AMENDMENT.—The table of sections 

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

3 adding at the end the following new item:

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

4 (d) EFFECTIVE DATE.—

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

6 this section shall apply to taxable years beginning 

7 after December 31, 2003. 

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

9 of the Internal Revenue Code of 1986 shall apply to 

10 the amendments made by this section as if they were 

11 changes in a rate of tax. 

12 TITLE II—MANUFACTURING 

13 RELATING TO TIMBER 

14 SEC. 201. EXPENSING OF CERTAIN REFORESTATION EX15 PENDITURES. 

16 (a) IN GENERAL.—So much of subsection (b) of sec17 tion 194 (relating to amortization of reforestation expendi18 tures) as precedes paragraph (2) is amended to read as 

19 follows: 

20 ‘‘(b) TREATMENT AS EXPENSES.—

21 ‘‘(1) ELECTION TO TREAT CERTAIN REFOREST22 ATION EXPENDITURES AS EXPENSES.—

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

24 qualified timber property with respect to which
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1 the taxpayer has made (in accordance with reg2 ulations prescribed by the Secretary) an election 

3 under this subsection, the taxpayer shall treat 

4 reforestation expenditures which are paid or in5 curred during the taxable year with respect to 

6 such property as an expense which is not 

7 chargeable to capital account. The reforestation 

8 expenditures so treated shall be allowed as a de9 duction. 

10 ‘‘(B) DOLLAR LIMITATION.—The aggre11 gate amount of reforestation expenditures which 

12 may be taken into account under subparagraph 

13 (A) with respect to each qualified timber prop14 erty for any taxable year shall not exceed 

15 $10,000 ($5,000 in the case of a separate re16 turn by a married individual (as defined in sec17 tion 7703)).’’. 

18 (b) NET AMORTIZABLE BASIS.—Section 194(c)(2) 

19 (defining amortizable basis) is amended by inserting 

20 ‘‘which have not been taken into account under subsection 

21 (b)’’ after ‘‘expenditures’’. 

22 (c) CONFORMING AMENDMENTS.—

23 (1) Section 194(b) is amended by striking para24 graphs (3) and (4). 
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1 (2) Section 194(b)(2) is amended by striking 

2 ‘‘paragraph (1)’’ both places it appears and inserting 

3 ‘‘paragraph (1)(B)’’. 

4 (3) Section 194(c) is amended by striking para5 graph (4) and inserting the following new para6 graphs: 

7 ‘‘(4) TREATMENT OF TRUSTS AND ESTATES.—

8 ‘‘(A) IN GENERAL.—Except as provided in 

9 subparagraph (B), this section shall not apply 

10 to trusts and estates. 

11 ‘‘(B) AMORTIZATION DEDUCTION AL12 LOWED TO ESTATES.—The benefit of the de13 duction for amortization provided by subsection 

14 (a) shall be allowed to estates in the same man15 ner as in the case of an individual. The allow16 able deduction shall be apportioned between the 

17 income beneficiary and the fiduciary under reg18 ulations prescribed by the Secretary. Any 

19 amount so apportioned to a beneficiary shall be 

20 taken into account for purposes of determining 

21 the amount allowable as a deduction under sub22 section (a) to such beneficiary. 

23 ‘‘(5) APPLICATION WITH OTHER DEDUC24 TIONS.—No deduction shall be allowed under any 

25 other provision of this chapter with respect to any 
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1 expenditure with respect to which a deduction is al2 lowed or allowable under this section to the

3 taxpayer.’’. 

4 (4) The heading for section 194 is amended by 

5 striking ‘‘AMORTIZATION’’ and inserting ‘‘TREAT6 MENT’’. 

7 (5) The item relating to section 194 in the table 

8 of sections for part VI of subchapter B of chapter 

9 1 is amended by striking ‘‘Amortization’’ and insert10 ing ‘‘Treatment’’. 

11 (d) REPEAL OF REFORESTATION CREDIT.—

12 (1) IN GENERAL.—Section 46 (relating to 

13 amount of credit) is amended—

14 (A) by adding ‘‘and’’ at the end of para15 graph (1), 

16 (B) by striking ‘‘, and ’’ at the end of 

17 paragraph (2) and inserting a period, and 

18 (C) by striking paragraph (3). 

19 (2) CONFORMING AMENDMENTS.—

20 (A) Section 48 is amended—

21 (i) by striking subsection (b), 

22 (ii) by striking ‘‘this subsection’’ in 

23 paragraph (5) of subsection (a) and insert24 ing ‘‘subsection (a)’’, and 
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1 (iii) by redesignating such paragraph 

2 (5) as subsection (b).

3 (B) The heading for section 48 is amended 

4 by striking ‘‘; REFORESTATION CREDIT’’. 

5 (C) The item relating to section 48 in the 

6 table of sections for subpart E of part IV of 

7 subchapter A of chapter 1 is amended by strik8 ing ‘‘, reforestation credit’’. 

9 (D) Section 50(c)(3) is amended by strik10 ing ‘‘or reforestation credit’’. 

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

12 this section shall apply with respect to expenditures paid 

13 or incurred after the date of the enactment of this Act. 

14 SEC. 202. ELECTION TO TREAT CUTTING OF TIMBER AS A 

15 SALE OR EXCHANGE. 

16 Any election under section 631(a) of the Internal 

17 Revenue Code of 1986 made for a taxable year ending on 

18 or before the date of the enactment of this Act may be 

19 revoked by the taxpayer for any taxable year ending after 

20 such date. For purposes of determining whether the tax21 payer may make a further election under such section, 

22 such election (and any revocation under this section) shall 

23 not be taken into account. 
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1 SEC. 203. CAPITAL GAIN TREATMENT UNDER SECTION 

2 631(b) TO APPLY TO OUTRIGHT SALES BY 

3 LANDOWNERS. 

4 (a) IN GENERAL.—The first sentence of section 

5 631(b) (relating to disposal of timber with a retained eco6 nomic interest) is amended by striking ‘‘retains an eco7 nomic interest in such timber’’ and inserting ‘‘either re8 tains an economic interest in such timber or makes an 

9 outright sale of such timber’’. 

10 (b) CONFORMING AMENDMENTS.—

11 (1) The third sentence of section 631(b) is 

12 amended by striking ‘‘The date of disposal’’ and in13 serting ‘‘In the case of disposal of timber with a re14 tained economic interest, the date of disposal’’. 

15 (2) The heading for section 631(b) is amended 

16 by striking ‘‘WITH A RETAINED ECONOMIC INTER17 EST’’. 

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

19 this section shall apply to sales after the date of the enact20 ment of this Act.
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1 TITLE III—REVENUE 

2 PROVISIONS 

3 SEC. 301. CLARIFICATION OF ECONOMIC SUBSTANCE DOC4 TRINE. 

5 (a) IN GENERAL.—Section 7701 is amended by re6 designating subsection (n) as subsection (o) and by insert7 ing after subsection (m) the following new subsection: 

8 ‘‘(n) CLARIFICATION OF ECONOMIC SUBSTANCE

9 DOCTRINE; ETC.—

10 ‘‘(1) GENERAL RULES.—

11 ‘‘(A) IN GENERAL.—In any case in which 

12 a court determines that the economic substance 

13 doctrine is relevant for purposes of this title to 

14 a transaction (or series of transactions), such 

15 transaction (or series of transactions) shall have 

16 economic substance only if the requirements of 

17 this paragraph are met. 

18 ‘‘(B) DEFINITION OF ECONOMIC SUB19 STANCE.—For purposes of subparagraph (A)—

20 ‘‘(i) IN GENERAL.—A transaction has 

21 economic substance only if—

22 ‘‘(I) the transaction changes in a 

23 meaningful way (apart from Federal 

24 tax effects) the taxpayer’s economic 

25 position, and 
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1 ‘‘(II) the taxpayer has a substan2 tial nontax purpose for entering into 

3 such transaction and the transaction 

4 is a reasonable means of accom5 plishing such purpose. 

6 In applying subclause (II), a purpose of 

7 achieving a financial accounting benefit 

8 shall not be taken into account in deter9 mining whether a transaction has a sub10 stantial nontax purpose if the origin of 

11 such financial accounting benefit is a re12 duction of income tax. 

13 ‘‘(ii) SPECIAL RULE WHERE TAX14 PAYER RELIES ON PROFIT POTENTIAL.—A 

15 transaction shall not be treated as having 

16 economic substance by reason of having a 

17 potential for profit unless—

18 ‘‘(I) the present value of the rea19 sonably expected pre-tax profit from 

20 the transaction is substantial in rela21 tion to the present value of the ex22 pected net tax benefits that would be 

23 allowed if the transaction were re24 spected, and 
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1 ‘‘(II) the reasonably expected 

2 pre-tax profit from the transaction ex3 ceeds a risk-free rate of return.

4 ‘‘(C) TREATMENT OF FEES AND FOREIGN

5 TAXES.—Fees and other transaction expenses 

6 and foreign taxes shall be taken into account as 

7 expenses in determining pre-tax profit under 

8 subparagraph (B)(ii). 

9 ‘‘(2) SPECIAL RULES FOR TRANSACTIONS WITH

10 TAX-INDIFFERENT PARTIES.—

11 ‘‘(A) SPECIAL RULES FOR FINANCING

12 TRANSACTIONS.—The form of a transaction 

13 which is in substance the borrowing of money 

14 or the acquisition of financial capital directly or 

15 indirectly from a tax-indifferent party shall not 

16 be respected if the present value of the deduc17 tions to be claimed with respect to the trans18 action is substantially in excess of the present 

19 value of the anticipated economic returns of the 

20 person lending the money or providing the fi21 nancial capital. A public offering shall be treat22 ed as a borrowing, or an acquisition of financial 

23 capital, from a tax-indifferent party if it is rea24 sonably expected that at least 50 percent of the 
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1 offering will be placed with tax-indifferent par2 ties. 

3 ‘‘(B) ARTIFICIAL INCOME SHIFTING AND

4 BASIS ADJUSTMENTS.—The form of a trans5 action with a tax-indifferent party shall not be 

6 respected if—

7 ‘‘(i) it results in an allocation of in8 come or gain to the tax-indifferent party in 

9 excess of such party’s economic income or 

10 gain, or 

11 ‘‘(ii) it results in a basis adjustment 

12 or shifting of basis on account of over13 stating the income or gain of the tax-indif14 ferent party. 

15 ‘‘(3) DEFINITIONS AND SPECIAL RULES.—For 

16 purposes of this subsection—

17 ‘‘(A) ECONOMIC SUBSTANCE DOCTRINE.—

18 The term ‘economic substance doctrine’ means 

19 the common law doctrine under which tax bene20 fits under subtitle A with respect to a trans21 action are not allowable if the transaction does 

22 not have economic substance or lacks a business 

23 purpose. 

24 ‘‘(B) TAX-INDIFFERENT PARTY.—The 

25 term ‘tax-indifferent party’ means any person
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1 or entity not subject to tax imposed by subtitle 

2 A. A person shall be treated as a tax-indifferent 

3 party with respect to a transaction if the items 

4 taken into account with respect to the trans5 action have no substantial impact on such per6 son’s liability under subtitle A. 

7 ‘‘(C) EXCEPTION FOR PERSONAL TRANS8 ACTIONS OF INDIVIDUALS.—In the case of an 

9 individual, this subsection shall apply only to 

10 transactions entered into in connection with a 

11 trade or business or an activity engaged in for 

12 the production of income. 

13 ‘‘(D) TREATMENT OF LESSORS.—In apply14 ing paragraph (1)(B)(ii) to the lessor of tan15 gible property subject to a lease—

16 ‘‘(i) the expected net tax benefits with 

17 respect to the leased property shall not in18 clude the benefits of—

19 ‘‘(I) depreciation, 

20 ‘‘(II) any tax credit, or 

21 ‘‘(III) any other deduction as 

22 provided in guidance by the Secretary, 

23 and 

24 ‘‘(ii) subclause (II) of paragraph 

25 (1)(B)(ii) shall be disregarded in deter-
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1 mining whether any of such benefits are al2 lowable.

3 ‘‘(4) OTHER COMMON LAW DOCTRINES NOT AF4 FECTED.—Except as specifically provided in this 

5 subsection, the provisions of this subsection shall not 

6 be construed as altering or supplanting any other 

7 rule of law, and the requirements of this subsection 

8 shall be construed as being in addition to any such 

9 other rule of law. 

10 ‘‘(5) REGULATIONS.—The Secretary shall pre11 scribe such regulations as may be necessary or ap12 propriate to carry out the purposes of this sub13 section. Such regulations may include exemptions 

14 from the application of this subsection.’’. 

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

16 this section shall apply to transactions entered into after 

17 the date of the enactment of this Act. 

18 SEC. 302. TAX TREATMENT OF INVERTED CORPORATE EN19 TITIES 

20 (a) IN GENERAL.—Subchapter C of chapter 80 (re21 lating to provisions affecting more than one subtitle) is 

22 amended by adding at the end the following new section: 
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1 ‘‘SEC. 7874. RULES RELATING TO INVERTED CORPORATE 

2 ENTITIES 

3 ‘‘(a) INVERTED CORPORATIONS TREATED AS DOMES4 TIC CORPORATIONS.— 

5 ‘‘(1) IN GENERAL.—If a foreign incorporated 

6 entity is treated as an inverted domestic corporation, 

7 then, notwithstanding section 7701(a)(4), such enti8 ty shall be treated for purposes of this title as a do9 mestic corporation. 

10 ‘‘(2) INVERTED DOMESTIC CORPORATION.—For 

11 purposes of this section, a foreign incorporated enti12 ty shall be treated as an inverted domestic corpora13 tion if, pursuant to a plan (or a series of related 

14 transactions)— 

15 ‘‘(A) the entity completes after March 20, 

16 2002, the direct or indirect acquisition of sub17 stantially all of the properties held directly or 

18 indirectly by a domestic corporation or substan19 tially all of the properties constituting a trade 

20 or business of a domestic partnership, 

21 ‘‘(B) after the acquisition at least 80 per22 cent of the stock (by vote or value) of the entity 

23 is held— 

24 ‘‘(i) in the case of an acquisition with 

25 respect to a domestic corporation, by 

26 former shareholders of the domestic cor-
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1 poration by reason of holding stock in the 

2 domestic corporation, or 

3 ‘‘(ii) in the case of an acquisition with 

4 respect to a domestic partnership, by 

5 former partners of the domestic partner6 ship by reason of holding a capital or prof7 its interest in the domestic partnership, 

8 and 

9 ‘‘(C) the expanded affiliated group which 

10 after the acquisition includes the entity does 

11 not have substantial business activities in the 

12 foreign country in which or under the law of 

13 which the entity is created or organized when 

14 compared to the total business activities of such 

15 expanded affiliated group. 

16 Except as provided in regulations, an acquisition of 

17 properties of a domestic corporation shall not be 

18 treated as described in subparagraph (A) if none of 

19 the corporation’s stock was readily tradeable on an 

20 established securities market at any time during the 

21 4-year period ending on the date of the acquisition. 

22 ‘‘(b) PRESERVATION OF DOMESTIC TAX BASE IN

23 CERTAIN INVERSION TRANSACTIONS TO WHICH SUB24 SECTION (a) DOES NOT APPLY.—
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1 ‘‘(1) IN GENERAL.—If a foreign incorporated 

2 entity would be treated as an inverted domestic cor3 poration with respect to an acquired entity if ei4 ther— 

5 ‘‘(A) subsection (a)(2)(A) were applied by 

6 substituting ‘after December 31, 1996, and on 

7 or before March 20, 2002’ for ‘after March 20, 

8 2002’ and subsection (a)(2)(B) were applied by 

9 substituting ‘more than 50 percent’ for ‘at least 

10 80 percent’, or 

11 ‘‘(B) subsection (a)(2)(B) were applied by 

12 substituting ‘more than 50 percent’ for ‘at least 

13 80 percent’, 

14 then the rules of subsection (c) shall apply to any 

15 inversion gain of the acquired entity during the ap16 plicable period and the rules of subsection (d) shall 

17 apply to any related party transaction of the ac18 quired entity during the applicable period. This sub19 section shall not apply for any taxable year if sub20 section (a) applies to such foreign incorporated enti21 ty for such taxable year. 

22 ‘‘(2) ACQUIRED ENTITY.—For purposes of this 

23 section— 

24 ‘‘(A) IN GENERAL.—The term ‘acquired 

25 entity’ means the domestic corporation or part-
33

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1 nership substantially all of the properties of 

2 which are directly or indirectly acquired in an 

3 acquisition described in subsection (a)(2)(A) to 

4 which this subsection applies. 

5 ‘‘(B) AGGREGATION RULES.—Any domes6 tic person bearing a relationship described in 

7 section 267(b) or 707(b) to an acquired entity 

8 shall be treated as an acquired entity with re9 spect to the acquisition described in subpara10 graph (A). 

11 ‘‘(3) APPLICABLE PERIOD.—For purposes of 

12 this section— 

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

14 period’ means the period— 

15 ‘‘(i) beginning on the first date prop16 erties are acquired as part of the acquisi17 tion described in subsection (a)(2)(A) to 

18 which this subsection applies, and 

19 ‘‘(ii) ending on the date which is 10 

20 years after the last date properties are ac21 quired as part of such acquisition. 

22 ‘‘(B) SPECIAL RULE FOR INVERSIONS OC23 CURRING BEFORE MARCH 21, 2002.—In the case 

24 of any acquired entity to which paragraph 
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1 (1)(A) applies, the applicable period shall be the 

2 10-year period beginning on January 1, 2003. 

3 ‘‘(c) TAX ON INVERSION GAINS MAY NOT BE OFF4 SET.—If subsection (b) applies— 

5 ‘‘(1) IN GENERAL.—The taxable income of an 

6 acquired entity (or any expanded affiliated group 

7 which includes such entity) for any taxable year 

8 which includes any portion of the applicable period 

9 shall in no event be less than the inversion gain of 

10 the entity for the taxable year.

11 ‘‘(2) CREDITS NOT ALLOWED AGAINST TAX ON

12 INVERSION GAIN.—Credits shall be allowed against 

13 the tax imposed by this chapter on an acquired enti14 ty for any taxable year described in paragraph (1) 

15 only to the extent such tax exceeds the product of— 

16 ‘‘(A) the amount of the inversion gain for 

17 the taxable year, and 

18 ‘‘(B) the highest rate of tax specified in 

19 section 11(b)(1). 

20 For purposes of determining the credit allowed by 

21 section 901 inversion gain shall be treated as from 

22 sources within the United States. 

23 ‘‘(3) SPECIAL RULES FOR PARTNERSHIPS.—In 

24 the case of an acquired entity which is a partner25 ship— 
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1 ‘‘(A) the limitations of this subsection shall 

2 apply at the partner rather than the partner3 ship level, 

4 ‘‘(B) the inversion gain of any partner for 

5 any taxable year shall be equal to the sum of— 

6 ‘‘(i) the partner’s distributive share of 

7 inversion gain of the partnership for such 

8 taxable year, plus 

9 ‘‘(ii) income or gain required to be 

10 recognized for the taxable year by the part11 ner under section 367(a), 741, or 1001, or 

12 under any other provision of chapter 1, by 

13 reason of the transfer during the applica14 ble period of any partnership interest of 

15 the partner in such partnership to the for16 eign incorporated entity, and 

17 ‘‘(C) the highest rate of tax specified in 

18 the rate schedule applicable to the partner 

19 under chapter 1 shall be substituted for the 

20 rate of tax under paragraph (2)(B). 

21 ‘‘(4) INVERSION GAIN.—For purposes of this 

22 section, the term ‘inversion gain’ means any income 

23 or gain required to be recognized under section 304, 

24 311(b), 367, 1001, or 1248, or under any other pro25 vision of chapter 1, by reason of the transfer during
36

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1 the applicable period of stock or other properties by 

2 an acquired entity— 

3 ‘‘(A) as part of the acquisition described in 

4 subsection (a)(2)(A) to which subsection (b) ap5 plies, or 

6 ‘‘(B) after such acquisition to a foreign re7 lated person. 

8 The Secretary may provide that income or gain from 

9 the sale of inventories or other transactions in the 

10 ordinary course of a trade or business shall not be 

11 treated as inversion gain under subparagraph (B) to 

12 the extent the Secretary determines such treatment 

13 would not be inconsistent with the purposes of this 

14 section. 

15 ‘‘(5) COORDINATION WITH SECTION 172 AND

16 MINIMUM TAX.—Rules similar to the rules of para17 graphs (3) and (4) of section 860E(a) shall apply 

18 for purposes of this section. 

19 ‘‘(6) STATUTE OF LIMITATIONS.— 

20 ‘‘(A) IN GENERAL.—The statutory period 

21 for the assessment of any deficiency attrib22 utable to the inversion gain of any taxpayer for 

23 any pre-inversion year shall not expire before 

24 the expiration of 3 years from the date the Sec25 retary is notified by the taxpayer (in such man-
37

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1 ner as the Secretary may prescribe) of the ac2 quisition described in subsection (a)(2)(A) to 

3 which such gain relates and such deficiency 

4 may be assessed before the expiration of such 

5 3-year period notwithstanding the provisions of 

6 any other law or rule of law which would other7 wise prevent such assessment. 

8 ‘‘(B) PRE-INVERSION YEAR.—For purposes 

9 of subparagraph (A), the term ‘pre-inversion 

10 year’ means any taxable year if— 

11 ‘‘(i) any portion of the applicable pe12 riod is included in such taxable year, and 

13 ‘‘(ii) such year ends before the taxable 

14 year in which the acquisition described in 

15 subsection (a)(2)(A) is completed. 

16 ‘‘(d) SPECIAL RULES APPLICABLE TO ACQUIRED EN17 TITIES TO WHICH SUBSECTION (b) APPLIES.— 

18 ‘‘(1) INCREASES IN ACCURACY-RELATED PEN19 ALTIES.—In the case of any underpayment of tax of 

20 an acquired entity to which subsection (b) applies—

21 ‘‘(A) section 6662(a) shall be applied with 

22 respect to such underpayment by substituting 

23 ‘30 percent’ for ‘20 percent’, and 

24 ‘‘(B) if such underpayment is attributable 

25 to one or more gross valuation understate-
38

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1 ments, the increase in the rate of penalty under 

2 section 6662(h) shall be to 50 percent rather 

3 than 40 percent. 

4 ‘‘(2) MODIFICATIONS OF LIMITATION ON INTER5 EST DEDUCTION.—In the case of an acquired entity 

6 to which subsection (b) applies, section 163(j) shall 

7 be applied— 

8 ‘‘(A) without regard to paragraph 

9 (2)(A)(ii) thereof, and 

10 ‘‘(B) by substituting ‘25 percent’ for ‘50 

11 percent’ each place it appears in paragraph 

12 (2)(B) thereof. 

13 ‘‘(e) OTHER DEFINITIONS AND SPECIAL RULES.—

14 For purposes of this section— 

15 ‘‘(1) RULES FOR APPLICATION OF SUBSECTION

16 (a)(2).—In applying subsection (a)(2) for purposes 

17 of subsections (a) and (b), the following rules shall 

18 apply: 

19 ‘‘(A) CERTAIN STOCK DISREGARDED.—

20 There shall not be taken into account in deter21 mining ownership for purposes of subsection 

22 (a)(2)(B)— 

23 ‘‘(i) stock held by members of the ex24 panded affiliated group which includes the 

25 foreign incorporated entity, or 
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1 ‘‘(ii) stock of such entity which is sold 

2 in a public offering or private placement 

3 related to the acquisition described in sub4 section (a)(2)(A). 

5 ‘‘(B) PLAN DEEMED IN CERTAIN CASES.—

6 If a foreign incorporated entity acquires directly 

7 or indirectly substantially all of the properties 

8 of a domestic corporation or partnership during 

9 the 4-year period beginning on the date which 

10 is 2 years before the ownership requirements of 

11 subsection (a)(2)(B) are met with respect to 

12 such domestic corporation or partnership, such 

13 actions shall be treated as pursuant to a plan. 

14 ‘‘(C) CERTAIN TRANSFERS DIS15 REGARDED.—The transfer of properties or li16 abilities (including by contribution or distribu17 tion) shall be disregarded if such transfers are 

18 part of a plan a principal purpose of which is 

19 to avoid the purposes of this section. 

20 ‘‘(D) SPECIAL RULE FOR RELATED PART21 NERSHIPS.—For purposes of applying sub22 section (a)(2) to the acquisition of a domestic 

23 partnership, except as provided in regulations, 

24 all partnerships which are under common con-
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1 trol (within the meaning of section 482) shall 

2 be treated as 1 partnership. 

3 ‘‘(E) TREATMENT OF CERTAIN RIGHTS.—

4 The Secretary shall prescribe such regulations 

5 as may be necessary— 

6 ‘‘(i) to treat warrants, options, con7 tracts to acquire stock, convertible debt in8 struments, and other similar interests as 

9 stock, and 

10 ‘‘(ii) to treat stock as not stock. 

11 ‘‘(2) EXPANDED AFFILIATED GROUP.—The 

12 term ‘expanded affiliated group’ means an affiliated 

13 group as defined in section 1504(a) but without re14 gard to section 1504(b)(3), except that section 

15 1504(a) shall be applied by substituting ‘more than 

16 50 percent’ for ‘at least 80 percent’ each place it ap17 pears. 

18 ‘‘(3) FOREIGN INCORPORATED ENTITY.—The 

19 term ‘foreign incorporated entity’ means any entity 

20 which is, or but for subsection (a)(1) would be, 

21 treated as a foreign corporation for purposes of this 

22 title. 

23 ‘‘(4) FOREIGN RELATED PERSON.—The term 

24 ‘foreign related person’ means, with respect to any 

25 acquired entity, a foreign person which—
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•S 2155 IS 

1 ‘‘(A) bears a relationship to such entity de2 scribed in section 267(b) or 707(b), or 

3 ‘‘(B) is under the same common control 

4 (within the meaning of section 482) as such en5 tity. 

6 ‘‘(5) SUBSEQUENT ACQUISITIONS BY UNRE7 LATED DOMESTIC CORPORATIONS.— 

8 ‘‘(A) IN GENERAL.—Subject to such condi9 tions, limitations, and exceptions as the Sec10 retary may prescribe, if, after an acquisition de11 scribed in subsection (a)(2)(A) to which sub12 section (b) applies, a domestic corporation stock 

13 of which is traded on an established securities 

14 market acquires directly or indirectly any prop15 erties of one or more acquired entities in a 

16 transaction with respect to which the require17 ments of subparagraph (B) are met, this sec18 tion shall cease to apply to any such acquired 

19 entity with respect to which such requirements 

20 are met. 

21 ‘‘(B) REQUIREMENTS.—The requirements 

22 of the subparagraph are met with respect to a 

23 transaction involving any acquisition described 

24 in subparagraph (A) if— 
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1 ‘‘(i) before such transaction the do2 mestic corporation did not have a relation3 ship described in section 267(b) or 707(b), 

4 and was not under common control (within 

5 the meaning of section 482), with the ac6 quired entity, or any member of an ex7 panded affiliated group including such en8 tity, and 

9 ‘‘(ii) after such transaction, such ac10 quired entity— 

11 ‘‘(I) is a member of the same ex12 panded affiliated group which includes 

13 the domestic corporation or has such 

14 a relationship or is under such com15 mon control with any member of such 

16 group, and 

17 ‘‘(II) is not a member of, and 

18 does not have such a relationship and 

19 is not under such common control 

20 with any member of, the expanded af21 filiated group which before such ac22 quisition included such entity. 

23 ‘‘(f) REGULATIONS.—The Secretary shall provide 

24 such regulations as are necessary to carry out this section, 

25 including regulations providing for such adjustments to 
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1 the application of this section as are necessary to prevent 

2 the avoidance of the purposes of this section, including the 

3 avoidance of such purposes through— 

4 ‘‘(1) the use of related persons, pass-thru or 

5 other noncorporate entities, or other intermediaries, 

6 or 

7 ‘‘(2) transactions designed to have persons 

8 cease to be (or not become) members of expanded 

9 affiliated groups or related persons.’’. 

10 (b) INFORMATION REPORTING.—The Secretary of 

11 the Treasury shall exercise the Secretary’s authority under 

12 the Internal Revenue Code of 1986 to require entities in13 volved in transactions to which section 7874 of such Code 

14 (as added by subsection (a)) applies to report to the Sec15 retary, shareholders, partners, and such other persons as 

16 the Secretary may prescribe such information as is nec17 essary to ensure the proper tax treatment of such trans18 actions. 

19 (c) CONFORMING AMENDMENT.—The table of sec20 tions for subchapter C of chapter 80 is amended by adding 

21 at the end the following new item:

‘‘Sec. 7874. Rules relating to inverted corporate entities.’’.

22 (d) TRANSITION RULE FOR CERTAIN REGULATED

23 INVESTMENT COMPANIES AND UNIT INVESTMENT

24 TRUSTS.—Notwithstanding section 7874 of the Internal 

25 Revenue Code of 1986 (as added by subsection (a)), a reg-
44

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1 ulated investment company, or other pooled fund or trust 

2 specified by the Secretary of the Treasury, may elect to 

3 recognize gain by reason of section 367(a) of such Code 

4 with respect to a transaction under which a foreign incor5 porated entity is treated as an inverted domestic corpora6 tion under section 7874(a) of such Code by reason of an 

7 acquisition completed after March 20, 2002, and before 

8 January 1, 2004.

Æ