108TH CONGRESS

2D SESSION H. R. 4840

AN ACT

To amend the Internal Revenue Code of 1986 to

simplify the taxation of businesses.

108TH CONGRESS

2D SESSION H. R. 4840

AN ACT

To amend the Internal Revenue Code of 1986 to simplify

the taxation of businesses.

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.

2 This Act may be cited as the ‘‘Tax Simplification for

3 America’s Job Creators Act of 2004’’.

4 SEC. 2. 2-YEAR EXTENSION OF INCREASED EXPENSING FOR

5 SMALL BUSINESS.

6 Subsections (b), (c), and (d) of section 179 of the

7 Internal Revenue Code of 1986 are each amended by

8 striking ‘‘2006’’ each place it appears and inserting

9 ‘‘2008’’.

10 SEC. 3. INDEXING OF GROSS RECEIPTS TEST FOR CASH

11 METHOD OF ACCOUNTING.

12 (a) IN GENERAL.—Section 448(c) of the Internal

13 Revenue Code of 1986 is amended by adding at the end

14 the following new paragraph:

15 ‘‘(4) INFLATION ADJUSTMENT OF GROSS RE16 CEIPTS TEST.—In the case of any taxable year be17 ginning in a calendar year after 2003, the

18 $5,000,000 dollar amount in paragraph (1) shall be

19 increased by an amount equal to—

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

21 ‘‘(B) the cost-of-living adjustment deter22 mined under section 1(f)(3) for such calendar

23 year by substituting ‘calendar year 2002’ for

24 ‘calendar year 1992’ in subparagraph (B)

25 thereof.
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1 If any amount as adjusted under the preceding sentence

2 is not a multiple of $100,000, such amount shall be round3 ed to the nearest multiple of $100,000.’’.

4 (b) CONFORMING AMENDMENTS.—

5 (1) Section 448(b)(3) of such Code is amended

6 by striking ‘‘$5,000,000’’ both places it appears in

7 the heading and text.

8 (2) Section 448(c) of such Code is amended by

9 striking ‘‘$5,000,000’’ in the heading and the first

10 place it appears in paragraph (1) thereof.

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

12 this section shall apply to taxable years beginning after

13 December 31, 2003.

14 SEC. 4. SIMPLIFICATION THROUGH ELIMINATION OF INOP15 ERATIVE PROVISIONS.

16 (a) IN GENERAL.—

17 (1) GENERAL BUSINESS CREDITS.—Subsection

18 (d) of section 38 of the Internal Revenue Code of

19 1986 is amended by striking paragraph (3).

20 (2) CARRYBACK AND CARRYFORWARD OF UN21 USED CREDITS.—Subsection (d) of section 39 of

22 such Code is amended by striking paragraphs (1)

23 through (8) and by redesignating paragraphs (9)

24 and (10) as paragraphs (1) and (2), respectively.
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1 (3) ADJUSTMENTS BASED ON ADJUSTED CUR2 RENT EARNINGS.—Clause (ii) of section 56(g)(4)(F)

3 of such Code is amended by striking ‘‘In the case of

4 any taxable year beginning after December 31,

5 1992, clause’’ and inserting ‘‘Clause’’.

6 (4) ITEMS OF TAX PREFERENCE; DEPLETION.—

7 Paragraph (1) of section 57(a) of such Code is

8 amended by striking ‘‘Effective with respect to tax9 able years beginning after December 31, 1992, this’’

10 and inserting ‘‘This’’.

11 (5) INTANGIBLE DRILLING COSTS.—

12 (A) Clause (i) of section 57(a)(2)(E) of

13 such Code is amended by striking ‘‘In the case

14 of any taxable year beginning after December

15 31, 1992, this’’ and inserting ‘‘This’’.

16 (B) Clause (ii) of section 57(a)(2)(E) of

17 such Code is amended by striking ‘‘(30 percent

18 in the case of taxable years beginning in

19 1993)’’.

20 (6) GREAT PLAINS CONSERVATION PROGRAM.—

21 Section 126(a) of such Code is amended by striking

22 paragraph (6) and by redesignating paragraphs (7),

23 (8), (9), and (10) as paragraphs (6), (7), (8), and

24 (9), respectively.
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1 (7) TREBLE DAMAGE PAYMENTS UNDER THE

2 ANTITRUST LAW.—Section 162(g) of such Code is

3 amended by striking the last sentence.

4 (8) CHARITABLE, ETC., CONTRIBUTIONS AND

5 GIFTS.—Section 170 of such Code is amended by

6 striking subsection (k).

7 (9) NET OPERATING LOSS CARRYBACKS AND

8 CARRYOVERS.—

9 (A) Section 172 of such Code is

10 amended—

11 (i) by striking subparagraph (D) of

12 subsection (b)(1) and by redesignating

13 subparagraphs (E), (F), (G), and (H) as

14 subparagraphs (D), (E), (F), and (G), re15 spectively,

16 (ii) by striking ‘‘ending after August

17 2, 1989’’ in subsection (b)(1)(D)(i)(II) (as

18 redesignated by clause (i)),

19 (iii) by striking ‘‘subparagraph (F)’’

20 in subsection (b)(1)(G) (as redesignated by

21 clause (i)) and inserting ‘‘subparagraph

22 (E)’’,

23 (iv) by striking subsection (g), and

24 (v) by striking subparagraph (F) of

25 subsection (h)(2).
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1 (B) Section 172(h)(4) of such Code is

2 amended by striking ‘‘subsection (b)(1)(E)’’

3 each place it appears and inserting ‘‘subsection

4 (b)(1)(D)’’.

5 (C) Section 172(i)(3) of such Code is

6 amended by striking ‘‘subsection (b)(1)(G)’’

7 each place it appears and inserting ‘‘subsection

8 (b)(1)(F)’’.

9 (D) Section 172(j) of such Code is amend10 ed by striking ‘‘subsection (b)(1)(H)’’ each

11 place it appears and inserting ‘‘subsection

12 (b)(1)(G)’’.

13 (E) Section 172 of such Code, as amended

14 by subparagraphs (A) through (D) of this para15 graph, is amended—

16 (i) by redesignating subsections (h),

17 (i), and (j) as subsections (g), (h), and (i),

18 respectively,

19 (ii) by striking ‘‘subsection (h)’’ each

20 place it appears and inserting ‘‘subsection

21 (g)’’, and

22 (iii) by striking ‘‘subsection (i)’’ each

23 place it appears and inserting ‘‘subsection

24 (h)’’.
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1 (10) RESEARCH AND EXPERIMENTAL EXPENDI2 TURES.—Subparagraph (A) of section 174(a)(2) of

3 such Code is amended to read as follows:

4 ‘‘(A) WITHOUT CONSENT.—A taxpayer

5 may, without the consent of the Secretary,

6 adopt the method provided in this subsection

7 for his first taxable year for which expenditures

8 described in paragraph (1) are paid or in9 curred.’’.

10 (11) AMORTIZATION OF CERTAIN RESEARCH

11 AND EXPERIMENTAL EXPENDITURES.—Paragraph

12 (2) of section 174(b) of such Code is amended by

13 striking ‘‘beginning after December 31, 1953’’.

14 (12) SOIL AND WATER CONSERVATION EXPEND15 ITURES.—Paragraph (1) of section 175(d) of such

16 Code is amended to read as follows:

17 ‘‘(1) WITHOUT CONSENT.—A taxpayer may,

18 without the consent of the Secretary, adopt the

19 method provided in this section for the taxpayer’s

20 first taxable year for which expenditures described in

21 subsection (a) are paid or incurred.’’.

22 (13) ACTIVITIES NOT ENGAGED IN FOR PROF23 IT.—Section 183(e)(1) of such Code is amended by

24 striking the last sentence.
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1 (14) DIVIDENDS RECEIVED ON CERTAIN PRE2 FERRED STOCK; AND DIVIDENDS PAID ON CERTAIN

3 PREFERRED STOCK OF PUBLIC UTILITIES.—

4 (A) Sections 244 and 247 of such Code are

5 hereby repealed, and the table of sections for

6 part VIII of subchapter B of chapter 1 of such

7 Code is amended by striking the items relating

8 to sections 244 and 247.

9 (B) Paragraph (5) of section 172(d) of

10 such Code is amended to read as follows:

11 ‘‘(5) COMPUTATION OF DEDUCTION FOR DIVI12 DENDS RECEIVED.—The deductions allowed by sec13 tion 243 (relating to dividends received by corpora14 tions) and 245 (relating to dividends received from

15 certain foreign corporations) shall be computed with16 out regard to section 246(b) (relating to limitation

17 on aggregate amount of deductions).’’.

18 (C) Paragraph (1) of section 243(c) of

19 such Code is amended to read as follows:

20 ‘‘(1) IN GENERAL.—In the case of any dividend

21 received from a 20-percent owned corporation, sub22 section (a)(1) shall be applied by substituting ‘80

23 percent’ for ‘70 percent’.’’.

24 (D) Section 243(d) of such Code is amend25 ed by striking paragraph (4).
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1 (E) Section 246 of such Code is

2 amended—

3 (i) by striking ‘‘, 244,’’ in subsection

4 (a)(1),

5 (ii) in subsection (b)(1)—

6 (I) by striking ‘‘sections

7 243(a)(1), and 244(a),’’ the first

8 place it appears and inserting ‘‘section

9 243(a)(1)’’,

10 (II) by striking ‘‘244(a),’’ the

11 second place it appears, and

12 (III) by striking ‘‘subsection (a)

13 or (b) of section 245, and 247,’’ and

14 inserting ‘‘and subsection (a) or (b) of

15 section 245,’’, and

16 (iii) by striking ‘‘, 244,’’ in subsection

17 (c)(1).

18 (F) Section 246A of such Code is amended

19 by striking ‘‘, 244,’’ both places it appears in

20 subsections (a) and (e).

21 (G) Sections 263(g)(2)(B)(iii), 277(a),

22 301(e)(2), 469(e)(4), 512(a)(3)(A), subpara23 graphs (A), (C), and (D) of section 805(a)(4),

24 805(b)(5), 812(e)(2)(A), 815(c)(2)(A)(iii),

25 832(b)(5), 833(b)(3)(E), and 1059(b)(2)(B) of
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1 such Code are each amended by striking ‘‘,

2 244,’’ each place it appears.

3 (H) Section 1244(c)(2)(C) of such Code is

4 amended by striking ‘‘244,’’.

5 (I) Section 805(a)(4)(B) of such Code is

6 amended by striking ‘‘, 244(a),’’ each place it

7 appears.

8 (J) Section 810(c)(2)(B) of such Code is

9 amended by striking ‘‘244 (relating to dividends

10 on certain preferred stock of public utilities),’’.

11 (15) ORGANIZATION EXPENSES.—Section

12 248(c) of such Code is amended by striking ‘‘begin13 ning after December 31, 1953,’’ and by striking the

14 last sentence.

15 (16) AMOUNT OF GAIN WHERE LOSS PRE16 VIOUSLY DISALLOWED.—Section 267(d) of such

17 Code is amended by striking ‘‘(or by reason of sec18 tion 24(b) of the Internal Revenue Code of 1939)’’

19 in paragraph (1), by striking ‘‘after December 31,

20 1953,’’ in paragraph (2), by striking the second sen21 tence, and by striking ‘‘or by reason of section 118

22 of the Internal Revenue Code of 1939’’ in the last

23 sentence.

24 (17) ACQUISITIONS MADE TO EVADE OR AVOID

25 INCOME TAX.—Paragraphs (1) and (2) of section
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1 269(a) of such Code are each amended by striking

2 ‘‘or acquired on or after October 8, 1940,’’.

3 (18) INTEREST ON INDEBTEDNESS INCURRED

4 BY CORPORATIONS TO ACQUIRE STOCK OR ASSETS

5 OF ANOTHER CORPORATION.—Section 279 of such

6 Code is amended—

7 (A) by striking ‘‘after December 31,

8 1967,’’ in subsection (a)(2),

9 (B) by striking ‘‘after October 9, 1969,’’ in

10 subsection (b), and

11 (C) by striking ‘‘after October 9, 1969,

12 and’’ in subsection (d)(5).

13 (19) SPECIAL RULES RELATING TO CORPORATE

14 PREFERENCE ITEMS.—Paragraph (4) of section

15 291(a) of such Code is amended by striking ‘‘In the

16 case of taxable years beginning after December 31,

17 1984, section’’ and inserting ‘‘Section’’.

18 (20) TAX CREDIT EMPLOYEE STOCK OWNER19 SHIP PLANS.—Section 409 of such Code is amended

20 by striking subsection (q).

21 (21) FUNDING STANDARDS.—Section

22 412(m)(4) of such Code is amended—

23 (A) by striking ‘‘the applicable percentage’’

24 in subparagraph (A) and inserting ‘‘25 per25 cent’’, and
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1 (B) by striking subparagraph (C) and by

2 redesignating subparagraph (D) as subpara3 graph (C).

4 (22) RETIREE HEALTH ACCOUNTS.—Section

5 420 of such Code is amended—

6 (A) by striking paragraph (4) of subsection

7 (b) and by redesignating paragraph (5) as para8 graph (4), and

9 (B) by amending paragraph (2) of sub10 section (c) to read as follows:

11 ‘‘(2) REQUIREMENTS RELATING TO PENSION

12 BENEFITS ACCRUING BEFORE TRANSFER.—The re13 quirements of this paragraph are met if the plan

14 provides that the accrued pension benefits of any

15 participant or beneficiary under the plan become

16 nonforfeitable in the same manner which would be

17 required if the plan had terminated immediately be18 fore the qualified transfer (or in the case of a partic19 ipant who separated during the 1-year period ending

20 on the date of the transfer, immediately before such

21 separation).’’.

22 (23) EMPLOYEE STOCK PURCHASE PLANS.—

23 Section 423(a) of such Code is amended by striking

24 ‘‘after December 31, 1963,’’.
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1 (24) LIMITATION ON DEDUCTIONS FOR CER2 TAIN FARMING.—

3 (A) Section 464 of such Code is amended

4 by striking ‘‘any farming syndicate (as defined

5 in subsection (c))’’ both places it appears in

6 subsections (a) and (b) and inserting ‘‘any tax7 payer to whom subsection (d) applies’’.

8 (B)(i) Subsection (c) of section 464 of

9 such Code is hereby moved to the end of section

10 461 and redesignated as subsection (j).

11 (ii) Such subsection (j) of such Code is

12 amended—

13 (I) by striking ‘‘For purposes of this

14 section’’ in paragraph (1) and inserting

15 ‘‘For purposes of subsection (i)(4)’’, and

16 (II) by adding at the end the fol17 lowing new paragraphs:

18 ‘‘(3) FARMING.—For purposes of this sub19 section, the term ‘farming’ has the meaning given to

20 such term by section 464(e).

21 ‘‘(4) LIMITED ENTREPRENEUR.—For purposes

22 of this subsection, the term ‘limited entrepreneur’

23 means a person who—

24 ‘‘(A) has an interest in an enterprise other

25 than as a limited partner, and
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1 ‘‘(B) does not actively participate in the

2 management of such enterprise.’’

3 (iii) Paragraph (4) of section 461(i) of

4 such Code is amended by striking ‘‘section

5 464(c)’’ and inserting ‘‘subsection (j)’’.

6 (C) Section 464 of such Code is

7 amended—

8 (i) by striking subsections (e) and (g)

9 and redesignating subsections (d) and (f)

10 as subsections (c) and (d), respectively,

11 and

12 (ii) by adding at the end the following

13 new subsection:

14 ‘‘(e) FARMING.—For purposes of this section, the

15 term ‘farming’ means the cultivation of land or the raising

16 or harvesting of any agricultural or horticultural com17 modity including the raising, shearing, feeding, caring for,

18 training, and management of animals. For purposes of the

19 preceding sentence, trees (other than trees bearing fruit

20 or nuts) shall not be treated as an agricultural or horti21 cultural commodity.’’

22 (D) Subsection (d) of section 464 of such

23 Code, as redesignated by subparagraph (C), is

24 amended—
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1 (i) by striking paragraph (1) and re2 designating paragraphs (2), (3), and (4) as

3 paragraphs (1), (2), and (3), respectively,

4 and

5 (ii) by striking ‘‘SUBSECTIONS (a)

6 AND (b) TO APPLY TO’’ in the subsection

7 heading.

8 (E) Subparagraph (A) of section 58(a)(2)

9 of such Code is amended by striking ‘‘section

10 464(c)’’ and inserting ‘‘section 461(j)’’.

11 (25) DEDUCTIONS LIMITED TO AMOUNT AT

12 RISK.—Paragraph (3) of section 465(c) of such

13 Code is amended by striking ‘‘In the case of taxable

14 years beginning after December 31, 1978, this’’ and

15 inserting ‘‘This’’.

16 (26) NUCLEAR DECOMMISSIONING COSTS.—Sec17 tion 468A(e)(2) of such Code is amended—

18 (A) by striking ‘‘at the rate set forth in

19 subparagraph (B)’’ in subparagraph (A) and in20 serting ‘‘at the rate of 20 percent’’, and

21 (B) by striking subparagraph (B) and by

22 redesignating subparagraphs (C) and (D) as

23 subparagraphs (B) and (C), respectively.

24 (27) PASSIVE ACTIVITY LOSSES AND CREDITS

25 LIMITED.—
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1 (A) Section 469 of such Code is amended

2 by striking subsection (m).

3 (B) Subsection (b) of section 58 of such

4 Code is amended by adding ‘‘and’’ at the end

5 of paragraph (1), by striking paragraph (2),

6 and by redesignating paragraph (3) as para7 graph (2).

8 (28) ADJUSTMENTS REQUIRED BY CHANGES IN

9 METHOD OF ACCOUNTING.—Section 481(b)(3) of

10 such Code is amended by striking subparagraph (C).

11 (29) EXEMPTION FROM TAX ON CORPORATIONS,

12 CERTAIN TRUSTS, ETC.—Section 501 of such Code

13 is amended by striking subsection (q).

14 (30) REQUIREMENTS FOR EXEMPTION.—

15 (A) Section 503(a)(1) of such Code is

16 amended to read as follows:

17 ‘‘(1) GENERAL RULE.—An organization de18 scribed in paragraph (17) or (18) of section 501(c)

19 or described in section 401(a) and referred to in sec20 tion 4975(g)(2) or (3) shall not be exempt from tax21 ation under section 501(a) if it has engaged in a

22 prohibited transaction.’’.

23 (B) Paragraph (2) of section 503(a) of

24 such Code is amended by striking ‘‘described in

25 section 501(c)(17) or (18) or paragraph
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1 (a)(1)(B)’’ and inserting ‘‘described in para2 graph (1)’’.

3 (C) Subsection (c) of section 503 of such

4 Code is amended by striking ‘‘described in sec5 tion 501(c)(17) or (18) or subsection

6 (a)(1)(B)’’ and inserting ‘‘described in sub7 section (a)(1)’’.

8 (31) INSURANCE COMPANY TAXABLE INCOME.—

9 (A) Section 832(e) of such Code is amend10 ed by striking ‘‘of taxable years beginning after

11 December 31, 1966,’’.

12 (B) Section 832(e)(6) of such Code is

13 amended by striking ‘‘In the case of any taxable

14 year beginning after December 31, 1970, the’’

15 and inserting ‘‘The’’.

16 (32) PROPERTY ON WHICH LESSEE HAS MADE

17 IMPROVEMENTS.—Section 1019 of such Code is

18 amended by striking the last sentence.

19 (33) INVOLUNTARY CONVERSION.—Section

20 1033 of such Code is amended by striking sub21 section (j) and by redesignating subsection (k) as

22 subsection (j).

23 (34) PROPERTY ACQUIRED DURING AFFILI24 ATION.—Section 1051 of such Code is hereby re25 pealed, and the table of sections for part IV of sub-
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1 chapter O of chapter 1 is amended by striking the

2 item relating to section 1051.

3 (35) HOLDING PERIOD OF PROPERTY.—

4 (A) Paragraph (5) of section 1223 of such

5 Code is amended by striking ‘‘(or under so

6 much of section 1052(c) as refers to section

7 113(a)(23) of the Internal Revenue Code of

8 1939)’’.

9 (B) Paragraph (7) of section 1223 of such

10 Code is amended by striking the last sentence.

11 (C) Paragraph (9) of section 1223 of such

12 Code is repealed.

13 (36) PROPERTY USED IN THE TRADE OR BUSI14 NESS AND INVOLUNTARY CONVERSIONS.—Subpara15 graph (A) of section 1231(c)(2) of such Code is

16 amended by striking ‘‘beginning after December 31,

17 1981’’.

18 (37) SALE OR EXCHANGE OF PATENTS.—Sec19 tion 1235 of such Code is amended—

20 (A) by striking subsection (c) and by re21 designating subsections (d) and (e) as sub22 sections (c) and (d), respectively, and

23 (B) by striking ‘‘subsection (d)’’ in sub24 section (b) and inserting ‘‘subsection (c)’’.
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1 (38) DEALERS IN SECURITIES.—Subsection (b)

2 of section 1236 of such Code is amended by striking

3 ‘‘after November 19, 1951,’’.

4 (39) SALE OF PATENTS.—Subsection (a) of sec5 tion 1249 of such Code is amended by striking

6 ‘‘after December 31, 1962,’’.

7 (40) GAIN FROM DISPOSITION OF FARM

8 LAND.—Paragraph (1) of section 1252(a) of such

9 Code is amended by striking ‘‘after December 31,

10 1969,’’ both places it appears.

11 (41) TREATMENT OF AMOUNTS RECEIVED ON

12 RETIREMENT OR SALE OR EXCHANGE OF DEBT IN13 STRUMENTS.—Subsection (c) of section 1271 of

14 such Code is amended to read as follows:

15 ‘‘(c) SPECIAL RULE FOR CERTAIN OBLIGATIONS

16 WITH RESPECT TO WHICH ORIGINAL ISSUE DISCOUNT

17 NOT CURRENTLY INCLUDIBLE.—

18 ‘‘(1) IN GENERAL.—On the sale or exchange of

19 debt instruments issued by a government or political

20 subdivision thereof after December 31, 1954, and

21 before July 2, 1982, or by a corporation after De22 cember 31, 1954, and on or before May 27, 1969,

23 any gain realized which does not exceed—

24 ‘‘(A) an amount equal to the original issue

25 discount, or
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1 ‘‘(B) if at the time of original issue there

2 was no intention to call the debt instrument be3 fore maturity, an amount which bears the same

4 ratio to the original issue discount as the num5 ber of complete months that the debt instru6 ment was held by the taxpayer bears to the

7 number of complete months from the date of

8 original issue to the date of maturity,

9 shall be considered as ordinary income.

10 ‘‘(2) SUBSECTION (a)(2)(A) NOT TO APPLY.—

11 Subsection (a)(2)(A) shall not apply to any debt in12 strument referred to in subparagraph (A) of this

13 paragraph.

14 ‘‘(3) CROSS REFERENCE.—

‘‘For current inclusion of original issue discount,

see section 1272.’’.

15 (42) AMOUNT AND METHOD OF ADJUST16 MENT.—Section 1314 of such Code is amended by

17 striking subsection (d) and by redesignating sub18 section (e) as subsection (d).

19 (43) ELECTION; REVOCATION; TERMINATION.—

20 Clause (iii) of section 1362(d)(3) of such Code is

21 amended by striking ‘‘unless’’ and all that follows

22 and inserting ‘‘unless the corporation was an S cor23 poration for such taxable year.’’.
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1 (44) AFFILIATED GROUP DEFINED.—Subpara2 graph (A) of section 1504(a)(3) of such Code is

3 amended by striking ‘‘for a taxable year which in4 cludes any period after December 31, 1984’’ in

5 clause (i) and by striking ‘‘in a taxable year begin6 ning after December 31, 1984’’ in clause (ii).

7 (45) DISALLOWANCE OF THE BENEFITS OF

8 THE GRADUATED CORPORATE RATES AND ACCUMU9 LATED EARNINGS CREDIT.—

10 (A) Subsection (a) of section 1551 of such

11 Code is amended—

12 (i) by striking paragraph (1) and by

13 redesignating paragraphs (2) and (3) as

14 paragraphs (1) and (2), respectively, and

15 (ii) by striking ‘‘after June 12, 1963,’’

16 each place it appears.

17 (B) Section 1551(b) of such Code is

18 amended—

19 (i) by striking ‘‘or (2)’’ in paragraph

20 (1), and

21 (ii) by striking ‘‘(a)(3)’’ in paragraph

22 (2) and inserting ‘‘(a)(2)’’.

23 (46) DEFINITION OF WAGES.—

24 (A) Section 3121(b) of such Code is

25 amended by striking paragraph (17).
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1 (B) Section 210(a) of the Social Security

2 Act is amended by striking paragraph (17).

3 (47) CREDITS AGAINST TAX.—

4 (A) Paragraph (4) of section 3302(f) of

5 such Code is amended—

6 (i) by striking ‘‘subsection—’’ and all

7 that follows through ‘‘(A) IN GENERAL.—

8 The’’ and inserting ‘‘subsection, the,

9 (ii) by striking subparagraph (B),

10 (iii) by redesignating clauses (i) and

11 (ii) as subparagraphs (A) and (B), respec12 tively, and

13 (iv) by moving the text of such sub14 paragraphs (as so redesignated) 2 ems to

15 the left.

16 (B) Paragraph (5) of section 3302(f) of

17 such Code is amended by striking subparagraph

18 (D) and by redesignating subparagraph (E) as

19 subparagraph (D).

20 (48) DOMESTIC SERVICE EMPLOYMENT

21 TAXES.—Section 3510(b) of such Code is amended

22 by striking paragraph (4).

23 (49) TAX ON FUEL USED IN COMMERCIAL

24 TRANSPORTATION ON INLAND WATERWAYS.—Section
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1 4042(b)(2)(A) of such Code is amended to read as

2 follows:

3 ‘‘(A) The Inland Waterways Trust Fund

4 financing rate is 20 cents per gallon.’’.

5 (50) TRANSPORTATION BY AIR.—Section

6 4261(e) of such Code is amended—

7 (A) in paragraph (1) by striking subpara8 graph (C), and

9 (B) by striking paragraph (5).

10 (51) TAXES ON FAILURE TO DISTRIBUTE IN11 COME.—

12 (A) Paragraph (2) of section 4942(f) of

13 such Code is amended by striking the semicolon

14 at the end of subparagraph (B) and inserting ‘‘,

15 and’’, by striking ‘‘; and’’ at the end of sub16 paragraph (C) and inserting a period, and by

17 striking subparagraph (D).

18 (B) Subsection (g) of section 4942 of such

19 Code is amended—

20 (i) by striking ‘‘For all taxable years

21 beginning on or after January 1, 1975,

22 subject’’ in paragraph (2)(A) and inserting

23 ‘‘Subject’’, and

24 (ii) by striking paragraph (4).
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1 (C) Section 4942(i)(2) of such Code is

2 amended by striking ‘‘beginning after December

3 31, 1969, and’’.

4 (52) TAXES ON TAXABLE EXPENDITURES.—

5 Section 4945(f) of such Code is amended by striking

6 ‘‘(excluding therefrom any preceding taxable year

7 which begins before January 1, 1970)’’.

8 (53) RETURNS.—Subsection (a) of section

9 6039D of such Code is amended by striking ‘‘begin10 ning after December 31, 1984,’’.

11 (54) INFORMATION RETURNS.—Subsection (c)

12 of section 6060 of such Code is amended by striking

13 ‘‘year’’ and all that follows and inserting ‘‘year.’’.

14 (55) CANAL ZONE.—Subparagraph (A) of sec15 tion 6103(b)(5) of such Code is amended by striking

16 ‘‘the Canal Zone,’’.

17 (56) ABATEMENTS.—Section 6404(f) of such

18 Code is amended by striking paragraph (3).

19 (57) FAILURE BY CORPORATION TO PAY ESTI20 MATED INCOME TAX.—Clause (i) of section

21 6655(g)(4)(A) of such Code is amended by striking

22 ‘‘(or the corresponding provisions of prior law)’’.

23 (58) MERCHANT MARINE CAPITAL CONSTRUC24 TION FUNDS.—Paragraph (4) of section 7518(g) of

25 such Code is amended by striking ‘‘any nonqualified
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1 withdrawal’’ and all that follows through ‘‘shall be

2 determined’’ and inserting ‘‘any nonqualified with3 drawal shall be determined’’.

4 (59) VALUATION TABLES.—

5 (A) Subsection (c) of section 7520 of such

6 Code is amended by striking paragraph (2) and

7 by redesignating paragraph (3) as paragraph

8 (2).

9 (B) Paragraph (2) of section 7520(c) of

10 such Code, as so redesignated, is amended—

11 (i) by striking ‘‘Not later than Decem12 ber 31, 1989, the’’ and inserting ‘‘The’’,

13 and

14 (ii) by striking ‘‘thereafter’’ in the last

15 sentence thereof.

16 (60) ADMINISTRATION AND COLLECTION OF

17 TAXES IN POSSESSIONS.—Section 7651 of such Code

18 is amended by striking paragraph (4) and by redes19 ignating paragraph (5) as paragraph (4).

20 (61) DEFINITION OF EMPLOYEE.—Section

21 7701(a)(20) of such Code is amended by striking

22 ‘‘chapter 21’’ and all that follows and inserting

23 ‘‘chapter 21.’’.

24 (b) EFFECTIVE DATE.—
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1 (1) GENERAL RULE.—Except as otherwise pro2 vided in paragraph (2), the amendments made by

3 subsection (a) shall take effect on the date of enact4 ment of this Act.

5 (2) SAVINGS PROVISION.—If—

6 (A) any provision amended or repealed by

7 subsection (a) applied to—

8 (i) any transaction occurring before

9 the date of the enactment of this Act,

10 (ii) any property acquired before such

11 date of enactment, or

12 (iii) any item of income, loss, deduc13 tion, or credit taken into account before

14 such date of enactment, and

15 (B) the treatment of such transaction,

16 property, or item under such provision would

17 (without regard to the amendments made by

18 subsection (a)) affect the liability for tax for pe19 riods ending after such date of enactment,

20 nothing in the amendments made by subsection (a)

21 shall be construed to affect the treatment of such

22 transaction, property, or item for purposes of deter-
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1 mining liability for tax for periods ending after such

2 date of enactment.

Passed the House of Representatives July 21, 2004.

Attest:

Clerk.