I 

108TH CONGRESS 

2D SESSION H. R. 5395 

To amend the Internal Revenue Code of 1986 to make technical corrections, 

and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

NOVEMBER 19, 2004 

Mr. THOMAS introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to make 

technical corrections, 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. 

4 This Act may be cited as the ‘‘Tax Technical Correc5 tions Act of 2004’’. 

6 SEC. 2. TECHNICAL CORRECTIONS. 

7 (a) AMENDMENTS RELATED TO THE AMERICAN

8 JOBS CREATION ACT OF 2004.— 

9 (1) AMENDMENTS RELATED TO SECTION 102 OF

10 THE ACT.— 
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1 (A) Paragraph (2) of section 199(c) of the 

2 Internal Revenue Code of 1986 is amended to 

3 read as follows: 

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

5 shall prescribe rules for the proper allocation of 

6 items described in paragraph (1) for purposes of de7 termining qualified production activities income.’’. 

8 (B) Clause (i) of section 199(d)(4)(B) of 

9 such Code is amended— 

10 (i) by striking ‘‘50 percent’’ and in11 serting ‘‘more than 50 percent’’, and 

12 (ii) by striking ‘‘80 percent’’ and in13 serting ‘‘at least 80 percent’’. 

14 (2) AMENDMENT RELATED TO SECTION 231 OF

15 THE ACT.—Subparagraph (C) of section 1361(c)(1) 

16 of such Code is amended to read as follows: 

17 ‘‘(C) EFFECT OF ADOPTION, ETC.—For 

18 purposes of this paragraph, any legally adopted 

19 child of an individual, any child who is lawfully 

20 placed with an individual for legal adoption by 

21 the individual, and any eligible foster child of 

22 an individual (within the meaning of section 

23 152(f)(1)(C)), shall be treated as a child of 

24 such individual by blood.’’. 
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1 (3) AMENDMENT RELATED TO SECTION 248 OF

2 THE ACT.—Subsection (c) of section 1356 of such 

3 Code is amended— 

4 (A) by striking paragraph (3), and 

5 (B) by adding at the end of paragraph (2) 

6 the following new flush sentence: 

7 ‘‘Such term shall not include any core qualifying ac8 tivities.’’. 

9 (4) AMENDMENT RELATED TO SECTION 314 OF

10 THE ACT.—Paragraph (2) of section 55(c) of such 

11 Code is amended by striking ‘‘regular tax’’ and in12 serting ‘‘regular tax liability’’. 

13 (5) AMENDMENT RELATED TO SECTION 415 OF

14 THE ACT.—Subparagraph (D) of section 904(d)(2) 

15 of such Code is amended by inserting ‘‘as in effect 

16 before its repeal’’ after ‘‘section 954(f)’’. 

17 (6) AMENDMENTS RELATED TO SECTION 418 OF

18 THE ACT.— 

19 (A) The second sentence of section 

20 897(h)(1) of such Code is amended by striking 

21 ‘‘any distribution’’ and all that follows through 

22 ‘‘any class of stock’’ and inserting ‘‘any dis23 tribution by a real estate investment trust with 

24 respect to any class of stock’’. 
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1 (B) Subsection (c) of section 418 of the 

2 American Jobs Creation Act of 2004 is amend3 ed by striking ‘‘taxable years beginning after 

4 the date of the enactment of this Act’’ and in5 serting ‘‘any distribution by a real estate invest6 ment trust which is treated as a deduction for 

7 a taxable year of such trust beginning after the 

8 date of the enactment of this Act’’. 

9 (7) AMENDMENTS RELATED TO SECTION 422 OF

10 THE ACT.— 

11 (A) Subparagraph (A) of section 965(b)(2) 

12 of such Code is amended by inserting ‘‘cash’’ 

13 before ‘‘dividends’’. 

14 (B) Paragraph (3) of section 965(b) of 

15 such Code is amended by adding at the end the 

16 following: ‘‘The Secretary may prescribe such 

17 regulations as may be necessary or appropriate 

18 to prevent the avoidance of the purposes of this 

19 paragraph, including regulations which provide 

20 that cash dividends shall not be taken into ac21 count under subsection (a) to the extent such 

22 dividends are attributable to the direct or indi23 rect transfer (including through the use of in24 tervening entities or capital contributions) of 

25 cash or other property from a related person 
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1 (as so defined) to a controlled foreign corpora2 tion.’’. 

3 (C) Paragraph (1) of section 965(c) of 

4 such Code is amended to read as follows: 

5 ‘‘(1) APPLICABLE FINANCIAL STATEMENT.— 

6 The term ‘applicable financial statement’ means— 

7 ‘‘(A) with respect to a United States 

8 shareholder which is required to file a financial 

9 statement with the Securities and Exchange 

10 Commission (or which is included in such a 

11 statement so filed by another person), the most 

12 recent audited annual financial statement (in13 cluding the notes which form an integral part 

14 of such statement) of such shareholder (or 

15 which includes such shareholder)— 

16 ‘‘(i) which was so filed on or before 

17 June 30, 2003, and 

18 ‘‘(ii) which was certified on or before 

19 June 30, 2003, as being prepared in ac20 cordance with generally accepted account21 ing principles, and 

22 ‘‘(B) with respect to any other United 

23 States shareholder, the most recent audited fi24 nancial statement (including the notes which 

25 form an integral part of such statement) of such 
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1 shareholder (or which includes such share2 holder)— 

3 ‘‘(i) which was certified on or before 

4 June 30, 2003, as being prepared in ac5 cordance with generally accepted account6 ing principles, and 

7 ‘‘(ii) which is used for the purposes of 

8 a statement or report— 

9 ‘‘(I) to creditors, 

10 ‘‘(II) to shareholders, or 

11 ‘‘(III) for any other substantial 

12 nontax purpose.’’. 

13 (D) Paragraph (2) of section 965(d) of 

14 such Code is amended by striking ‘‘properly al15 located and apportioned’’ and inserting ‘‘di16 rectly allocable’’. 

17 (E) Subsection (d) of section 965 of such 

18 Code is amended by adding at the end the fol19 lowing new paragraph: 

20 ‘‘(4) COORDINATION WITH SECTION 78.—Sec21 tion 78 shall not apply to any tax which is not allow22 able as a credit under section 901 by reason of this 

23 subsection.’’. 

24 (F) The last sentence of section 965(e)(1) 

25 of such Code is amended by inserting ‘‘which 
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1 are imposed by foreign countries and posses2 sions of the United States and are’’ after 

3 ‘‘taxes’’. 

4 (8) AMENDMENTS RELATED TO SECTION 501 OF

5 THE ACT.— 

6 (A) Subparagraph (A) of section 164(b)(5) 

7 of such Code is amended to read as follows: 

8 ‘‘(A) ELECTION TO DEDUCT STATE AND

9 LOCAL SALES TAXES IN LIEU OF STATE AND

10 LOCAL INCOME TAXES.—At the election of the 

11 taxpayer for the taxable year, subsection (a) 

12 shall be applied— 

13 ‘‘(i) without regard to the reference to 

14 State and local income taxes, and 

15 ‘‘(ii) as if State and local general sales 

16 taxes were referred to in a paragraph 

17 thereof.’’. 

18 (B) Clause (ii) of section 56(b)(1)(A) of 

19 such Code is amended by inserting ‘‘or clause 

20 (ii) of section 164(b)(5)(A)’’ before the period 

21 at the end. 

22 (9) AMENDMENT RELATED TO SECTION 835 OF

23 THE ACT.—The last sentence of paragraph (3) of 

24 section 860G(a) of such Code is amended by striking 
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1 ‘‘treated as secured’’ and inserting ‘‘treated as prin2 cipally secured’’. 

3 (10) AMENDMENTS RELATED TO SECTION 885

4 OF THE ACT.— 

5 (A) Paragraph (2) of section 26(b) of such 

6 Code is amended by striking ‘‘and’’ at the end 

7 of subparagraph (R), by striking the period at 

8 the end of subparagraph (S) and inserting ‘‘, 

9 and’’, and by adding at the end the following 

10 new subparagraph: 

11 ‘‘(T) subsections (a)(1)(B)(i) and 

12 (b)(4)(A) of section 409A (relating to interest 

13 and additional tax with respect to certain de14 ferred compensation).’’. 

15 (B) Clause (ii) of section 409A(a)(4)(C) of 

16 such Code is amended by striking ‘‘first’’. 

17 (C)(i) Notwithstanding section 885(d)(1) 

18 of the American Jobs Creation Act of 2004, 

19 subsection (b) of section 409A of such Code 

20 shall take effect on January 1, 2005. 

21 (ii) Not later than 90 days after the date 

22 of the enactment of this Act, the Secretary of 

23 the Treasury shall issue guidance under which 

24 a nonqualified deferred compensation plan 

25 which is in violation of the requirements of sec-
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1 tion 409A(b) of such Code shall be treated as 

2 not having violated such requirements if such 

3 plan comes into conformance with such require4 ments during such limited period as the Sec5 retary may specify in such guidance. 

6 (D) Subsection (f) of section 885 of the 

7 American Jobs Creation Act of 2004 is amend8 ed by striking ‘‘December 31, 2004’’ the first 

9 place it appears and inserting ‘‘January 1, 

10 2005’’. 

11 (11) EFFECTIVE DATE.—The amendments 

12 made by this subsection shall take effect as if in13 cluded in the provisions of the American Jobs Cre14 ation Act of 2004 to which they relate. 

15 (b) AMENDMENTS RELATED TO THE WORKING FAM16 ILIES TAX RELIEF ACT OF 2004.— 

17 (1) AMENDMENT RELATED TO SECTION 203 OF

18 THE ACT.—Subparagraph (B) of section 21(b)(1) of 

19 the Internal Revenue Code of 1986 is amended by 

20 inserting ‘‘(as defined in section 152, determined 

21 without regard to subsections (b)(1), (b)(2), and 

22 (d)(1)(B))’’ after ‘‘dependent of the taxpayer’’. 

23 (2) AMENDMENT RELATED TO SECTION 207 OF

24 THE ACT.—Subparagraph (A) of section 223(d)(2) 

25 of such Code is amended by inserting ‘‘, determined 
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1 without regard to subsections (b)(1), (b)(2), and 

2 (d)(1)(B) thereof’’ after ‘‘section 152’’. 

3 (3) EFFECTIVE DATE.—The amendments made 

4 by this subsection shall take effect as if included in 

5 the provisions of the Working Families Tax Relief 

6 Act of 2004 to which they relate. 

7 (c) AMENDMENT RELATED TO THE JOBS AND

8 GROWTH TAX RELIEF RECONCILIATION ACT OF 2003.— 

9 (1) AMENDMENT RELATED TO SECTION 201 OF

10 THE ACT.—Subparagraph (D) of section 

11 1400L(b)(2) of the Internal Revenue Code of 1986 

12 is amended by striking ‘‘September 11, 2004’’ and 

13 inserting ‘‘January 1, 2005’’. 

14 (2) EFFECTIVE DATE.—The amendment made 

15 by this subsection shall take effect as if included in 

16 section 201 of the Jobs and Growth Tax Relief and 

17 Reconciliation Act of 2003. 

18 (d) AMENDMENTS RELATED TO THE TRADE ACT OF

19 2002.— 

20 (1) Paragraph (4) of section 6103(p) of the In21 ternal Revenue Code of 1986 is amended by striking 

22 ‘‘(l)(16), (17), (19), or (20)’’ each place it appears 

23 and inserting ‘‘(l)(16), (18), (19), or (20)’’. 

24 (2) The Internal Revenue Code of 1986 shall be 

25 applied and administered as if the amendments 
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1 made by section 408(a)(24) of the Working Families 

2 Tax Relief Act of 2004 had never been enacted. 

3 (e) AMENDMENT RELATED TO THE VICTIMS OF TER4 RORISM TAX RELIEF ACT OF 2001.— 

5 (1) AMENDMENT RELATED TO SECTION 201 OF

6 THE ACT.—Paragraph (17) of section 6103(l) of the 

7 Internal Revenue Code of 1986 is amended by strik8 ing ‘‘subsection (f), (i)(7), or (p)’’ and inserting 

9 ‘‘subsection (f), (i)(8), or (p)’’. 

10 (2) EFFECTIVE DATE.—The amendment made 

11 by this subsection shall take effect as if included in 

12 section 201 of the Victims of Terrorism Tax Relief 

13 Act of 2001. 

14 (f) AMENDMENTS RELATED TO THE TAXPAYER RE15 LIEF ACT OF 1997.— 

16 (1) AMENDMENTS RELATED TO SECTION 1055

17 OF THE ACT.— 

18 (A) The last sentence of section 6411(a) of 

19 the Internal Revenue Code of 1986 is amended 

20 by striking ‘‘6611(f)(3)(B)’’ and inserting 

21 ‘‘6611(f)(4)(B)’’. 

22 (B) Paragraph (4) of section 6601(d) of 

23 such Code is amended by striking 

24 ‘‘6611(f)(3)(A)’’ and inserting ‘‘6611(f)(4)(A)’’. 
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1 (2) AMENDMENT RELATED TO SECTION 1144 OF

2 THE ACT.—Subparagraph (B) of section 

3 6038B(a)(1) of such Code is amended by inserting 

4 ‘‘or’’ at the end. 

5 (3) EFFECTIVE DATE.—The amendments made 

6 by this subsection shall take effect as if included in 

7 the provisions of the Taxpayer Relief Act of 1997 to 

8 which they relate. 

9 (g) CLERICAL CORRECTIONS.— 

10 (1) Subparagraph (E) of section 26(b)(2) of the 

11 Internal Revenue Code of 1986 is amended by strik12 ing ‘‘section 530(d)(3)’’ and inserting ‘‘section 

13 530(d)(4)’’. 

14 (2)(A) Subclause (II) of section 38(c)(2)(A)(ii) 

15 of such Code is amended by striking ‘‘or the New 

16 York Liberty Zone business employee credit or the 

17 specified credits’’ and inserting ‘‘, the New York 

18 Liberty Zone business employee credit, and the spec19 ified credits’’. 

20 (B) Subclause (II) of section 38(c)(3)(A)(ii) of 

21 such Code is amended by striking ‘‘or the specified 

22 credits’’ and inserting ‘‘and the specified credits’’. 

23 (3) Subparagraph (A) of section 39(a)(1) of 

24 such Code is amended by striking ‘‘each of the 1 

25 taxable years’’ and by inserting ‘‘the taxable year’’. 
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1 (4)(A) Subsection (a) of section 62 of such 

2 Code is amended— 

3 (i) by redesignating paragraph (19) (relat4 ing to costs involving discrimination suits, etc.), 

5 as added by section 703 of the American Jobs 

6 Creation Act of 2004, as paragraph (20), and 

7 (ii) by moving such paragraph after para8 graph (19) (relating to health savings ac9 counts). 

10 (B) Subsection (e) of section 62 of such Code 

11 is amended by striking ‘‘subsection (a)(19)’’ and in12 serting ‘‘subsection (a)(20)’’. 

13 (5) Subsection (d) of section 121 of such Code 

14 is amended by redesignating paragraph (10) (relat15 ing to property acquired in like-kind exchange), as 

16 added by section 840 of the American Jobs Creation 

17 Act of 2004, as paragraph (11). 

18 (6) Paragraph (2) of section 221(d) of such 

19 Code is amended by striking ‘‘this Act’’ and insert20 ing ‘‘the Taxpayer Relief Act of 1997’’. 

21 (7) Subparagraph (B) of section 332(d)(1) of 

22 such Code is amended by striking ‘‘distribution to 

23 which section 301 applies’’ and inserting ‘‘distribu24 tion of property to which section 301 applies’’. 
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1 (8) The matter following clause (iv) of section 

2 415(n)(3)(C) of such Code is amended by striking 

3 ‘‘clauses’’ and inserting ‘‘clause’’. 

4 (9) Paragraph (1) of section 512(b) of such 

5 Code is amended by striking ‘‘section 512(a)(5)’’ 

6 and inserting ‘‘subsection (a)(5)’’. 

7 (10)(A) Subsection (b) of section 512 of such 

8 Code is amended— 

9 (i) by redesignating paragraph (18) (relat10 ing to the treatment of gain or loss on sale or 

11 exchange of certain brownfield sites), as added 

12 by section 702 of the American Jobs Creation 

13 Act of 2004, as paragraph (19), and 

14 (ii) by moving such paragraph to the end 

15 of such subsection. 

16 (B) Subparagraph (E) of section 514(b)(1) of 

17 such Code is amended by striking ‘‘section 

18 512(b)(18)’’ and inserting ‘‘section 512(b)(19)’’. 

19 (11)(A) Subsection (b) of section 530 of such 

20 Code is amended by striking paragraph (3) and by 

21 redesignating paragraphs (4) and (5) as paragraphs 

22 (3) and (4), respectively. 

23 (B) Clause (ii) of section 530(b)(2)(A) of such 

24 Code is amended by striking ‘‘paragraph (4)’’ and 

25 inserting ‘‘paragraph (3)’’. 
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1 (12) Clause (i) of section 954(c)(1)(C) of such 

2 Code is amended by striking ‘‘paragraph (4)(A)’’ 

3 and inserting ‘‘paragraph (5)(A)’’. 

4 (13) Subparagraph (F) of section 954(c)(1) of 

5 such Code is amended by striking ‘‘Net income from 

6 notional principal contracts.’’ after ‘‘INCOME FROM

7 NOTIONAL PRINCIPAL CONTRACTS.—’’. 

8 (14) The matter preceding clause (i) of section 

9 1031(h)(2)(B) of such Code is amended by striking 

10 ‘‘subparagraph’’ and inserting ‘‘subparagraphs’’. 

11 (15) Paragraphs (1) and (2) of section 1375(d) 

12 of such Code are each amended by striking ‘‘sub13 chapter C’’ and inserting ‘‘accumulated’’. 

14 (16) Each of the following provisions of such 

15 Code are amended by striking ‘‘General Accounting 

16 Office’’ each place it appears therein and inserting 

17 ‘‘Government Accountability Office’’: 

18 (A) Clause (ii) of section 1400E(c)(4)(A). 

19 (B) Paragraph (1) of section 6050M(b). 

20 (C) Subparagraphs (A), (B)(i), and (B)(ii) 

21 of section 6103(i)(8). 

22 (D) Paragraphs (3)(C)(i), (4), (5), and 

23 (6)(B) of section 6103(p). 

24 (E) Subsection (e) of section 8021. 
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1 (17) Section 3401 of such Code is amended by 

2 redesignating subsection (h) as subsection (g). 

3 (18) Paragraph (2) of section 4161(a) of such 

4 Code is amended to read as follows: 

5 ‘‘(2) 3 PERCENT RATE OF TAX FOR ELECTRIC

6 OUTBOARD MOTORS.—In the case of an electric out7 board motor, paragraph (1) shall be applied by sub8 stituting ‘3 percent’ for ‘10 percent’.’’. 

9 (19) Subparagraph (C) of section 4261(e)(4) of 

10 such Code is amended by striking ‘‘imposed sub11 section (b)’’ and inserting ‘‘imposed by subsection 

12 (b)’’. 

13 (20) Section 6427 of such Code is amended by 

14 striking subsection (o) and redesignating subsection 

15 (p) as subsection (o). 

16 (21) Subsection (a) of section 4980D of such 

17 Code is amended by striking ‘‘plans’’ and inserting 

18 ‘‘plan’’. 

19 (22) The matter following clause (iii) of section 

20 6045(e)(5)(A) of such Code is amended by striking 

21 ‘‘for ‘$250,000’.’’ and all that follows through ‘‘to 

22 the Treasury.’’ and inserting ‘‘for ‘$250,000’. The 

23 Secretary may by regulation increase the dollar 

24 amounts under this subparagraph if the Secretary 
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1 determines that such an increase will not materially 

2 reduce revenues to the Treasury.’’. 

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