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SECTION 1. SHORT TITLE; REFERENCES; TABLE OF CON-
TENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Jobs and Growth Reconciliation Tax Act of 2003’’. 
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
ment or repeal is expressed in terms of an amendment 
to, or repeal of, a section or other provision, the reference 
shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986. 
(c) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows:
Sec. 1. Short title; references; table of contents. 
TITLE I—ACCELERATION OF CERTAIN PREVIOUSLY ENACTED 
TAX REDUCTIONS 
Sec. 101. Acceleration of increase in child tax credit. 
Sec. 102. Acceleration of 15-percent individual income tax rate bracket expan-
sion for married taxpayers filing joint returns. 
Sec. 103. Acceleration of increase in standard deduction for married taxpayers 
filing joint returns. 
Sec. 104. Acceleration of 10-percent individual income tax rate bracket expan-
sion. 
Sec. 105. Acceleration of reduction in individual income tax rates. 
Sec. 106. Minimum tax relief to individuals. 
TITLE II—GROWTH INCENTIVES FOR BUSINESS 
Sec. 201. Increase and extension of bonus depreciation. 
Sec. 202. Increased expensing for small business. 
Sec. 203. 5-year carryback of certain net operating losses. 
TITLE III—REDUCTIONS IN TAXES ON DIVIDENDS AND CAPITAL 
GAINS 
Sec. 301. Reduction in capital gains rates for individuals; repeal of 5-year hold-
ing period requirement. 
Sec. 302. Dividends of individuals taxed at capital gain rates. 
Sec. 303. Sunset of title.
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TITLE IV—CORPORATE ESTIMATED TAX PAYMENTS FOR 2003
Sec. 401. Time for payment of corporate estimated taxes.
TITLE 
I—ACCELERATION 
OF 
CERTAIN 
PREVIOUSLY 
EN-
ACTED TAX REDUCTIONS
SEC. 101. ACCELERATION OF INCREASE IN CHILD TAX 
CREDIT. 
(a) IN GENERAL.—The items relating to calendar 
years 2001 through 2008 in the table contained in para-
graph (2) of section 24(a) (relating to per child amount) 
are amended to read as follows:
‘‘2003, 2004, 2005 ..................................................................
$1,000
2006, 2007, or 2008 ..............................................................
700’’.
(b) ADVANCE PAYMENT OF PORTION OF INCREASED 
CREDIT IN 2003.—
(1) IN GENERAL.—Subchapter B of chapter 65 
(relating to abatements, credits, and refunds) is 
amended by inserting after section 6428 the fol-
lowing new section: 
‘‘SEC. 6429. ADVANCE PAYMENT OF PORTION OF IN-
CREASED CHILD CREDIT FOR 2003. 
‘‘(a) IN GENERAL.—Each taxpayer who claimed a 
credit under section 24 on the return for the taxpayer’s 
first taxable year beginning in 2002 shall be treated as 
having made a payment against the tax imposed by chap-
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ter 1 for such taxable year in an amount equal to the child 
tax credit refund amount (if any) for such taxable year. 
‘‘(b) CHILD TAX CREDIT REFUND AMOUNT.—For 
purposes of this section, the child tax credit refund 
amount is the amount by which the aggregate credits al-
lowed under part IV of subchapter A of chapter 1 for such 
first taxable year would have been increased if—
‘‘(1) the per child amount under section 
24(a)(2) for such year were $1,000, 
‘‘(2) only qualifying children (as defined in sec-
tion 24(c)) of the taxpayer for such year who had 
not attained age 17 as of December 31, 2003, were 
taken into account, and 
‘‘(3) section 24(d)(1)(B)(ii) did not apply. 
‘‘(c) TIMING OF PAYMENTS.—In the case of any over-
payment attributable to this section, the Secretary shall, 
subject to the provisions of this title, refund or credit such 
overpayment as rapidly as possible and, to the extent prac-
ticable, before October 1, 2003. No refund or credit shall 
be made or allowed under this section after December 31, 
2003. 
‘‘(d) COORDINATION WITH CHILD TAX CREDIT.—
‘‘(1) IN
GENERAL.—The amount of credit 
which would (but for this subsection and section 26) 
be allowed under section 24 for the taxpayer’s first
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taxable year beginning in 2003 shall be reduced (but 
not below zero) by the payments made to the tax-
payer under this section. Any failure to so reduce 
the credit shall be treated as arising out of a mathe-
matical or clerical error and assessed according to 
section 6213(b)(1). 
‘‘(2) JOINT RETURNS.—In the case of a pay-
ment under this section with respect to a joint re-
turn, half of such payment shall be treated as hav-
ing been made to each individual filing such return. 
‘‘(e) NO INTEREST.—No interest shall be allowed on 
any overpayment attributable to this section.’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions for subchapter B of chapter 65 is amended by 
adding at the end the following new item:
‘‘Sec. 6429. Advance payment of portion of increased child credit for 
2003.’’.
(c) EFFECTIVE DATES.—
(1) SUBSECTION (a).—The amendment made 
by subsection (a) shall apply to taxable years begin-
ning after December 31, 2002. 
(2) SUBSECTION (b).—The amendments made 
by subsection (b) shall take effect on the date of the 
enactment of this Act.
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SEC. 102. ACCELERATION OF 15-PERCENT INDIVIDUAL IN-
COME TAX RATE BRACKET EXPANSION FOR 
MARRIED 
TAXPAYERS 
FILING 
JOINT 
RE-
TURNS. 
(a) IN GENERAL.—The item relating to 2005 in the 
table contained in subparagraph (B) of section 1(f)(8) (re-
lating to applicable percentage) is amended to read as fol-
lows:
‘‘2003, 2004, and 2005 ................................................
200’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 1(f)(8)(A) is amended by striking 
‘‘2004’’ and inserting ‘‘2002’’. 
(2) Section 302(c) of the Economic Growth and 
Tax Relief Reconciliation Act of 2001 is amended by 
striking ‘‘2004’’ and inserting ‘‘2002’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2002. 
SEC. 103. ACCELERATION OF INCREASE IN STANDARD DE-
DUCTION FOR MARRIED TAXPAYERS FILING 
JOINT RETURNS. 
(a) IN GENERAL.—The item relating to 2005 in the 
table contained in paragraph (7) of section 63(c) (relating 
to applicable percentage) is amended to read as follows:
‘‘2003, 2004, and 2005 ................................................
200’’.
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(b) CONFORMING AMENDMENT.—Section 301(d) of 
the Economic Growth and Tax Relief Reconciliation Act 
of 2001 is amended by striking ‘‘2004’’ and inserting 
‘‘2002’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2002. 
SEC. 104. ACCELERATION OF 10-PERCENT INDIVIDUAL IN-
COME TAX RATE BRACKET EXPANSION. 
(a) IN GENERAL.—Clause (i) of section 1(i)(1)(B) 
(relating to the initial bracket amount) is amended by 
striking ‘‘($12,000 in the case of taxable years beginning 
before January 1, 2008)’’ and inserting ‘‘($12,000 in the 
case of taxable years beginning after December 31, 2005, 
and before January 1, 2008)’’. 
(b) INFLATION ADJUSTMENT.—Subparagraph (C) of 
section 1(i)(1) is amended to read as follows: 
‘‘(C) INFLATION
ADJUSTMENT.—In pre-
scribing the tables under subsection (f) which 
apply with respect to taxable years beginning in 
calendar years after 2000—
‘‘(i) the Secretary shall make no ad-
justment to the $12,000 initial bracket 
amount for any taxable year,
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‘‘(ii)(I) the Secretary shall make no 
adjustment to the $14,000 initial bracket 
amount for any taxable year beginning be-
fore January 1, 2004, 
‘‘(II) the cost-of-living adjustment 
used in making adjustments to the 
$14,000 initial bracket amount for any 
taxable year beginning during 2004 or 
2005 shall be determined under subsection 
(f)(3) by substituting ‘2002’ for ‘1992’ in 
subparagraph (B) thereof, and 
‘‘(III) the cost-of-living adjustment 
used in making adjustments to the 
$14,000 initial bracket amount for any 
taxable year beginning after December 31, 
2008, shall be determined under subsection 
(f)(3) by substituting ‘2007’ for ‘1992’ in 
subparagraph (B) thereof, and 
‘‘(iii) the adjustments under clause 
(ii) shall not apply to the amount referred 
to in subparagraph (B)(iii). 
If any amount after adjustment under the pre-
ceding sentence is not a multiple of $50, such 
amount shall be rounded to the next lowest 
multiple of $50.’’.
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(c) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by 
this section shall apply to taxable years beginning 
after December 31, 2002. 
(2) TABLES FOR 2003.—The Secretary of the 
Treasury shall modify each table which has been 
prescribed under section 1(f) of the Internal Rev-
enue Code of 1986 for taxable years beginning in 
2003 and which relates to the amendment made by 
this section to reflect such amendment. 
SEC. 105. ACCELERATION OF REDUCTION IN INDIVIDUAL 
INCOME TAX RATES. 
(a) IN GENERAL.—The table in paragraph (2) of sec-
tion 1(i) (relating to reductions in rates after June 30, 
2001) is amended to read as follows:
‘‘In the case of taxable years
beginning during calendar year: 
The corresponding percentages 
shall be substituted for
the following percentages: 
28%
31%
36%
39.6%
2001 ..........................................................................
27.5%
30.5%
35.5%
39.1%
2002 ..........................................................................
27.0%
30.0%
35.0%
38.6%
2003 and thereafter ..................................................
25.0%
28.0%
33.0%
35.0%’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2002. 
SEC. 106. MINIMUM TAX RELIEF TO INDIVIDUALS. 
(a) IN GENERAL.—
(1) Subparagraph (A) of section 55(d)(1) is 
amended by striking ‘‘$49,000 in the case of taxable
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years beginning in 2001, 2002, 2003, and 2004’’ 
and inserting ‘‘$64,000 in the case of taxable years 
beginning in 2003, 2004, and 2005’’. 
(2) Subparagraph (B) of section 55(d)(1) is 
amended by striking ‘‘$35,750 in the case of taxable 
years beginning in 2001, 2002, 2003, and 2004’’ 
and inserting ‘‘$43,250 in the case of taxable years 
beginning in 2003, 2004, and 2005’’. 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall apply to taxable years beginning after 
December 31, 2002. 
TITLE II—GROWTH INCENTIVES 
FOR BUSINESS
SEC. 201. INCREASE AND EXTENSION OF BONUS DEPRECIA-
TION. 
(a) IN GENERAL.—Section 168(k) (relating to special 
allowance for certain property acquired after September 
10, 2001, and before September 11, 2004) is amended by 
adding at the end the following new paragraph: 
‘‘(4) 50-PERCENT
BONUS
DEPRECIATION
FOR 
CERTAIN PROPERTY.—
‘‘(A) IN GENERAL.—In the case of 50-per-
cent bonus depreciation property—
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‘‘(i) paragraph (1)(A) shall be applied 
by substituting ‘50 percent’ for ‘30 per-
cent’, and 
‘‘(ii) except as provided in paragraph 
(2)(C), such property shall be treated as 
qualified property for purposes of this sub-
section. 
‘‘(B) 50-PERCENT
BONUS
DEPRECIATION 
PROPERTY.—For purposes of this subsection, 
the term ‘50-percent bonus depreciation prop-
erty’ means property described in paragraph 
(2)(A)(i)—
‘‘(i) the original use of which com-
mences with the taxpayer after May 5, 
2003, 
‘‘(ii) which is acquired by the taxpayer 
after May 5, 2003, and before January 1, 
2006, but only if no written binding con-
tract for the acquisition was in effect be-
fore May 6, 2003, and 
‘‘(iii) which is placed in service by the 
taxpayer before January 1, 2006, or, in 
the case of property described in para-
graph (2)(B) (as modified by subpara-
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graph (C) of this paragraph), before Janu-
ary 1, 2007. 
‘‘(C) SPECIAL
RULES.—Rules similar to 
the rules of subparagraphs (B) and (D) of 
paragraph (2) shall apply for purposes of this 
paragraph; except that references to September 
10, 2001, shall be treated as references to May 
5, 2003. 
‘‘(D) AUTOMOBILES.—Paragraph (2)(E) 
shall be applied by substituting ‘$9,200’ for 
‘$4,600’ in the case of 50-percent bonus depre-
ciation property. 
‘‘(E) ELECTION OF 30 PERCENT BONUS.—
If a taxpayer makes an election under this sub-
paragraph with respect to any class of property 
for any taxable year, subparagraph (A)(i) shall 
not apply to all property in such class placed in 
service during such taxable year.’’. 
(b) EXTENSION
OF PLACED
IN SERVICE DATES, 
ETC. FOR 30-PERCENT BONUS DEPRECIATION PROP-
ERTY.—
(1) IN
GENERAL.—Clause (iv) of section 
168(k)(2)(A) is amended—
(A) by striking ‘‘January 1, 2005’’ and in-
serting ‘‘January 1, 2006’’, and
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(B) by striking ‘‘January 1, 2006’’ (as in 
effect before the amendment made by subpara-
graph (A)) and inserting ‘‘January 1, 2007’’. 
(2) PORTION
OF
BASIS
TAKEN
INTO
AC-
COUNT.—
(A) Subparagraphs (B)(ii) and (D)(i) of 
section 168(k)(2) are each amended by striking 
‘‘September 11, 2004’’ each place it appears in 
the text and inserting ‘‘January 1, 2006’’. 
(B) Clause (ii) of section 168(k)(2)(B) is 
amended by striking ‘‘PRE-SEPTEMBER
11, 
2004’’ in the heading and inserting ‘‘PRE-JANU-
ARY 1, 2006’’. 
(3) ACQUISITION DATE.—Clause (iii) of section 
168(k)(2)(A) is amended by striking ‘‘September 11, 
2004’’ each place it appears and inserting ‘‘January 
1, 2006’’. 
(4) 
ELECTION.—Clause 
(iii) 
of 
section 
168(k)(2)(C) is amended by adding at the end the 
following: ‘‘The preceding sentence shall be applied 
separately with respect to property treated as quali-
fied property by paragraph (4) and other qualified 
property.’’. 
(c) CONFORMING AMENDMENTS.—
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(1) The subsection heading for section 168(k) is 
amended by striking ‘‘SEPTEMBER 11, 2004’’ and 
inserting ‘‘JANUARY 1, 2006’’. 
(2) The heading for clause (i) of section 
1400L(b)(2)(C) is amended by striking ‘‘30-PER-
CENT ADDITIONAL ALLOWABLE PROPERTY’’ and in-
serting ‘‘BONUS DEPRECIATION PROPERTY UNDER 
SECTION 168(k)’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending after the 
date of the enactment of this Act. 
SEC. 202. INCREASED EXPENSING FOR SMALL BUSINESS. 
(a) IN GENERAL.—Paragraph (1) of section 179(b) 
(relating to dollar limitation) is amended to read as fol-
lows: 
‘‘(1) DOLLAR LIMITATION.—The aggregate cost 
which may be taken into account under subsection 
(a) for any taxable year shall not exceed $25,000 
($100,000 in the case of taxable years beginning 
after 2002 and before 2008).’’. 
(b) INCREASE
IN
QUALIFYING
INVESTMENT
AT 
WHICH PHASEOUT BEGINS.—Paragraph (2) of section 
179(b) (relating to reduction in limitation) is amended by 
inserting ‘‘($400,000 in the case of taxable years begin-
ning after 2002 and before 2008)’’ after ‘‘$200,000’’.
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(c) OFF-THE-SHELF COMPUTER SOFTWARE.—Para-
graph (1) of section 179(d) (defining section 179 prop-
erty) is amended to read as follows: 
‘‘(1) SECTION 179 PROPERTY.—For purposes of 
this section, the term ‘section 179 property’ means 
property—
‘‘(A) which is—
‘‘(i) tangible property (to which sec-
tion 168 applies), or
‘‘(ii) computer software (as defined in 
section 197(e)(3)(B)) which is described in 
section 197(e)(3)(A)(i), to which section 
167 applies, and which is placed in service 
in a taxable year beginning after 2002 and 
before 2008, 
‘‘(B) which is section 1245 property (as 
defined in section 1245(a)(3)), and 
‘‘(C) which is acquired by purchase for use 
in the active conduct of a trade or business. 
Such term shall not include any property described 
in section 50(b) and shall not include air condi-
tioning or heating units.’’. 
(d) ADJUSTMENT OF DOLLAR LIMIT AND PHASEOUT 
THRESHOLD FOR INFLATION.—Subsection (b) of section
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179 (relating to limitations) is amended by adding at the 
end the following new paragraph: 
‘‘(5) INFLATION ADJUSTMENTS.—
‘‘(A) IN
GENERAL.—In the case of any 
taxable year beginning in a calendar year after 
2003 and before 2008, the $100,000 and 
$400,000 amounts in paragraphs (1) and (2) 
shall each be increased by an amount equal 
to—
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for the cal-
endar year in which the taxable year be-
gins, by substituting ‘calendar year 2002’ 
for ‘calendar year 1992’ in subparagraph 
(B) thereof. 
‘‘(B) ROUNDING.—
‘‘(i) DOLLAR
LIMITATION.—If the 
amount in paragraph (1) as increased 
under subparagraph (A) is not a multiple 
of $1,000, such amount shall be rounded 
to the nearest multiple of $1,000. 
‘‘(ii) PHASEOUT
AMOUNT.—If the 
amount in paragraph (2) as increased 
under subparagraph (A) is not a multiple
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of $10,000, such amount shall be rounded 
to the nearest multiple of $10,000.’’. 
(e) REVOCATION OF ELECTION.—Paragraph (2) of 
section 179(c) (relating to election irrevocable) is amended 
to read as follows: 
‘‘(2) REVOCATION OF ELECTION.—An election 
under paragraph (1) with respect to any taxable 
year beginning after 2002 and before 2008, and any 
specification contained in any such election, may be 
revoked by the taxpayer with respect to any prop-
erty. Such revocation, once made, shall be irrev-
ocable.’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2002. 
SEC. 203. 5-YEAR CARRYBACK OF CERTAIN NET OPERATING 
LOSSES. 
(a) IN GENERAL.—Subparagraph (H) of section 
172(b)(1) is amended—
(1) by inserting ‘‘5-YEAR CARRYBACK OF CER-
TAIN LOSSES.—’’ after ‘‘(H)’’, and 
(2) by striking ‘‘or 2002’’ and inserting ‘‘, 
2002, 2003, 2004 or 2005’’.
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(b) TEMPORARY SUSPENSION OF 90 PERCENT LIMIT 
ON CERTAIN NOL CARRYBACKS.—Subclause (I) of sec-
tion 56(d)(1)(A)(ii) is amended—
(1) by striking ‘‘or 2002’’ and inserting ‘‘, 
2002, 2003, 2004, or 2005’’, and 
(2) by striking ‘‘and 2002’’ and inserting ‘‘, 
2002, 2003, 2004, or 2005’’. 
(c) TECHNICAL CORRECTIONS.—
(1) Subparagraph (H) of section 172(b)(1) is 
amended by striking ‘‘a taxpayer which has’’. 
(2) Section 102(c)(2) of the Job Creation and 
Worker Assistance Act of 2002 (Public Law 107–
147) is amended by striking ‘‘before January 1, 
2003’’ and inserting ‘‘after December 31, 1990’’. 
(3)(A) Subclause (I) of section 56(d)(1)(A)(i) is 
amended by striking ‘‘attributable to carryovers’’. 
(B) Subclause (I) of section 56(d)(1)(A)(ii) is 
amended—
(i) by striking ‘‘for taxable years’’ and in-
serting ‘‘from taxable years’’, and 
(ii) by striking ‘‘carryforwards’’ and insert-
ing ‘‘carryovers’’. 
(d) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section
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shall apply to net operating losses for taxable years 
ending after December 31, 2002. 
(2) TECHNICAL
CORRECTIONS.—The amend-
ments made by subsection (c) shall take effect as if 
included in the amendments made by section 102 of 
the Job Creation and Worker Assistance Act of 
2002. 
(3) ELECTION.—In the case of a net operating 
loss for a taxable year ending during 2003—
(A) any election made under section 
172(b)(3) of such Code may (notwithstanding 
such section) be revoked before November 1, 
2003, and 
(B) any election made under section 172(j) 
of such Code shall (notwithstanding such sec-
tion) be treated as timely made if made before 
November 1, 2003. 
TITLE III—REDUCTION IN TAXES 
ON DIVIDENDS AND CAPITAL 
GAINS 
SEC. 301. REDUCTION IN CAPITAL GAINS RATES FOR INDI-
VIDUALS; REPEAL OF 5-YEAR HOLDING PE-
RIOD REQUIREMENT. 
(a) IN GENERAL.—
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(1) Sections 1(h)(1)(B) and 55(b)(3)(B) are 
each amended by striking ‘‘10 percent’’ and insert-
ing ‘‘5 percent’’. 
(2) The following sections are each amended by 
striking ‘‘20 percent’’ and inserting ‘‘15 percent’’: 
(A) Section 1(h)(1)(C). 
(B) Section 55(b)(3)(C). 
(C) Section 1445(e)(1). 
(D) The second sentence of section 
7518(g)(6)(A).
(E) The second sentence of section 
607(h)(6)(A) of the Merchant Marine Act, 
1936. 
(b) CONFORMING AMENDMENTS.—
(1) Section 1(h) is amended—
(A) by striking paragraphs (2) and (9), 
(B) 
by 
redesignating 
paragraphs 
(3) 
through (8) as paragraphs (2) through (7), re-
spectively, and 
(C) by redesignating paragraphs (10), 
(11), and (12) as paragraphs (8), (9), and (10), 
respectively. 
(2) Paragraph (3) of section 55(b) is amended 
by striking ‘‘In the case of taxable years beginning 
after December 31, 2000, rules similar to the rules
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of section 1(h)(2) shall apply for purposes of sub-
paragraphs (B) and (C).’’. 
(3) Paragraph (7) of section 57(a) is amend-
ed—
(A) by striking ‘‘42 percent’’ the first place 
it appears and inserting ‘‘7 percent’’, and 
(B) by striking the last sentence. 
(c) TRANSITIONAL RULES
FOR TAXABLE YEARS 
WHICH INCLUDE MAY 6, 2003.—For purposes of apply-
ing section 1(h) of the Internal Revenue Code of 1986 in 
the case of a taxable year which includes May 6, 2003—
(1) The amount of tax determined under sub-
paragraph (B) of section 1(h)(1) of such Code shall 
be the sum of—
(A) 5 percent of the lesser of—
(i) the net capital gain determined by 
taking into account only gain or loss prop-
erly taken into account for the portion of 
the taxable year on or after May 6, 2003 
(determined without regard to collectibles 
gain or loss, gain described in section 
1(h)(6)(A)(i) of such Code, and section 
1202 gain), or
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(ii) the amount on which a tax is de-
termined under such subparagraph (with-
out regard to this subsection), 
(B) 8 percent of the lesser of—
(i) the qualified 5-year gain (as de-
fined in section 1(h)(9) of the Internal 
Revenue Code of 1986, as in effect on the 
day before the date of the enactment of 
this Act) properly taken into account for 
the portion of the taxable year before May 
6, 2003, over 
(ii) the excess (if any) of—
(I) the amount on which a tax is 
determined under such subparagraph 
(without regard to this subsection), 
over 
(II) the amount on which a tax is 
determined under subparagraph (A), 
plus 
(C) 10 percent of the excess (if any) of—
(i) the amount on which a tax is de-
termined under such subparagraph (with-
out regard to this subsection), over
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(ii) the sum of the amounts on which 
a tax is determined under subparagraphs 
(A) and (B). 
(2) The amount of tax determined under sub-
paragraph (C) of section (1)(h)(1) of such Code 
shall be the sum of—
(A) 15 percent of the lesser of—
(i) the excess (if any) of the amount 
of net capital gain determined under sub-
paragraph (A)(i) of paragraph (1) of this 
subsection over the amount on which a tax 
is determined under subparagraph (A) of 
paragraph (1) of this subsection, or 
(ii) the amount on which a tax is de-
termined under such subparagraph (C) 
(without regard to this subsection), plus 
(B) 20 percent of the excess (if any) of—
(i) the amount on which a tax is de-
termined under such subparagraph (C) 
(without regard to this subsection), over 
(ii) the amount on which a tax is de-
termined under subparagraph (A) of this 
paragraph.
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(3) For purposes of applying section 55(b)(3) 
of such Code, rules similar to the rules of para-
graphs (1) and (2) of this subsection shall apply. 
(4) In applying this subsection with respect to 
any pass-thru entity, the determination of when 
gains and loss are properly taken into account shall 
be made at the entity level. 
(5) For purposes of applying section 1(h)(11) 
of such Code, as added by section 302 of this Act, 
to this subsection, dividends which are qualified divi-
dend income shall be treated as gain properly taken 
into account for the portion of the taxable year on 
or after May 6, 2003. 
(6) Terms used in this subsection which are 
also used in section 1(h) of such Code shall have the 
respective meanings that such terms have in such 
section. 
(d) EFFECTIVE DATES.—
(1) IN
GENERAL.—Except as otherwise pro-
vided by this subsection, the amendments made by 
this section shall apply to taxable years ending on or 
after May 6, 2003. 
(2) WITHHOLDING.—The amendment made by 
subsection (a)(2)(C) shall apply to amounts paid 
after the date of the enactment of this Act.
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(3) SMALL
BUSINESS
STOCK.—The amend-
ments made by subsection (b)(3) shall apply to dis-
positions on or after May 6, 2003.
SEC. 302. DIVIDENDS OF INDIVIDUALS TAXED AT CAPITAL 
GAIN RATES. 
(a) IN GENERAL.—Section 1(h) (relating to max-
imum capital gains rate), as amended by section 301, is 
amended by adding at the end the following new para-
graph: 
‘‘(11) DIVIDENDS
TAXED
AS
NET
CAPITAL 
GAIN.—
‘‘(A) IN GENERAL.—For purposes of this 
subsection, the term ‘net capital gain’ means 
net capital gain (determined without regard to 
this paragraph), increased by qualified dividend 
income. 
‘‘(B) QUALIFIED DIVIDEND INCOME.—For 
purposes of this paragraph—
‘‘(i) IN GENERAL.—The term ‘quali-
fied dividend income’ means dividends re-
ceived during the taxable year from domes-
tic corporations. 
‘‘(ii) 
CERTAIN
DIVIDENDS
EX-
CLUDED.—Such term shall not include—
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‘‘(I) any dividend from a corpora-
tion which for the taxable year of the 
corporation in which the distribution 
is made, or the preceding taxable 
year, is a corporation exempt from tax 
under section 501 or 521, 
‘‘(II) any amount allowed as a 
deduction under section 591 (relating 
to deduction for dividends paid by 
mutual savings banks, etc.), and 
‘‘(III) any dividend described in 
section 404(k). 
‘‘(iii) EXCLUSION OF CERTAIN DIVI-
DENDS.—Such term shall not include any 
dividend on any share of stock—
‘‘(I) with respect to which the 
holding period requirements of section 
246(c) are not met, or 
‘‘(II) to the extent that the tax-
payer is under an obligation (whether 
pursuant to a short sale or otherwise) 
to make related payments with respect 
to positions in substantially similar or 
related property. 
‘‘(C) SPECIAL RULES.—
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‘‘(i) AMOUNTS TAKEN INTO ACCOUNT 
AS INVESTMENT INCOME.—Qualified divi-
dend income shall not include any amount 
which the taxpayer takes into account as 
investment 
income 
under 
section 
163(d)(4)(B). 
‘‘(ii) EXTRAORDINARY
DIVIDENDS.—
If an individual receives, with respect to 
any share of stock, qualified dividend in-
come from 1 or more dividends which are 
extraordinary dividends (within the mean-
ing of section 1059(c)), any loss on the 
sale or exchange of such share shall, to the 
extent of such dividends, be treated as 
long-term capital loss. 
‘‘(iii) TREATMENT
OF
DIVIDENDS 
FROM
REGULATED
INVESTMENT
COMPA-
NIES
AND
REAL
ESTATE
INVESTMENT 
TRUSTS.—A dividend received from a regu-
lated investment company or a real estate 
investment trust shall be subject to the 
limitations prescribed in sections 854 and 
857.’’.
(b) EXCLUSION OF DIVIDENDS FROM INVESTMENT 
INCOME.—Subparagraph (B) of section 163(d)(4) (defin-
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ing net investment income) is amended by adding at the 
end the following flush sentence: 
‘‘Such term shall include qualified dividend in-
come (as defined in section 1(h)(11)(B)) only to 
the extent the taxpayer elects to treat such in-
come as investment income for purposes of this 
subsection.’’. 
(c) TREATMENT OF DIVIDENDS FROM REGULATED 
INVESTMENT COMPANIES.—
(1) Subsection (a) of section 854 (relating to 
dividends received from regulated investment compa-
nies) is amended by inserting ‘‘section 1(h)(11) (re-
lating to maximum rate of tax on dividends and in-
terest) and’’ after ‘‘For purposes of’’. 
(2) Paragraph (1) of section 854(b) (relating to 
other dividends) is amended by redesignating sub-
paragraph (B) as subparagraph (C) and by inserting 
after subparagraph (A) the following new subpara-
graph: 
‘‘(B) MAXIMUM
RATE
UNDER
SECTION 
1(h).—
‘‘(i) IN GENERAL.—If the aggregate 
dividends received by a regulated invest-
ment company during any taxable year are 
less than 95 percent of its gross income,
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then, in computing the maximum rate 
under section 1(h)(11), rules similar to the 
rules of subparagraph (A) shall apply. 
‘‘(ii) GROSS
INCOME.—For purposes 
of clause (i), in the case of 1 or more sales 
or other dispositions of stock or securities, 
the term ‘gross income’ includes only the 
excess of—
‘‘(I) the net short-term capital 
gain from such sales or dispositions, 
over 
‘‘(II) the net long-term capital 
loss from such sales or dispositions.’’. 
(3) Subparagraph (C) of section 854(b)(1), as 
redesignated by paragraph (2), is amended by strik-
ing ‘‘subparagraph (A)’’ and inserting ‘‘subpara-
graph (A) or (B)’’. 
(4) Paragraph (2) of section 854(b) is amended 
by inserting ‘‘the maximum rate under section 
1(h)(11) and’’ after ‘‘for purposes of’’. 
(5) Subsection (b) of section 854 is amended by 
adding at the end the following new paragraph: 
‘‘(5) COORDINATION WITH SECTION 1(h)(11).—
For purposes of paragraph (1)(B), an amount shall 
be treated as a dividend only if the amount is quali-
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fied dividend income (within the meaning of section 
1(h)(11)(B)).’’. 
(d) TREATMENT OF DIVIDENDS RECEIVED FROM 
REAL ESTATE INVESTMENT TRUSTS.—Section 857(c) 
(relating to restrictions applicable to dividends received 
from real estate investment trusts) is amended to read as 
follows: 
‘‘(c) RESTRICTIONS APPLICABLE TO DIVIDENDS RE-
CEIVED FROM REAL ESTATE INVESTMENT TRUSTS.—
‘‘(1) SECTION
243.—For purposes of section 
243 (relating to deductions for dividends received by 
corporations), a dividend received from a real estate 
investment trust which meets the requirements of 
this part shall not be considered a dividend. 
‘‘(2) SECTION 1(h)(11).—For purposes of sec-
tion 1(h)(11) (relating to maximum rate of tax on 
dividends), rules similar to the rules of section 
854(b)(1)(B) shall apply to dividends received from 
a real estate trust which meets the requirements of 
this part.’’. 
(e) CONFORMING AMENDMENTS.—
(1) Paragraph (3) of section 1(h), as redesig-
nated by section 301, is amended to read as follows:
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‘‘(3) ADJUSTED NET CAPITAL GAIN.—For pur-
poses of this subsection, the term ‘adjusted net cap-
ital gain’ means the sum of—
‘‘(A) net capital gain (determined without 
regard to paragraph (11)) reduced (but not 
below zero) by the sum of—
‘‘(i) unrecaptured section 1250 gain, 
and 
‘‘(ii) 28-percent rate gain, plus 
‘‘(B) qualified dividend income (as defined 
in paragraph (11)).’’. 
(2) Subsection (f) of section 301 is amended 
adding at the end the following new paragraph: 
‘‘(4) For taxation of dividends received by indi-
viduals at capital gain rates, see section 1(h)(11).’’. 
(3) Paragraph (1) of section 306(a) is amended 
by adding at the end the following new subpara-
graph: 
‘‘(D) TREATMENT
AS
DIVIDEND.—For 
purposes of section l(h)(11), any amount treat-
ed as ordinary income under this paragraph 
shall be treated as a dividend received from the 
corporation.’’.
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(4)(A) Subpart C of part II of subchapter C of 
chapter 1 (relating to collapsible corporations) is re-
pealed. 
(B)(i) Section 338(h) is amended by striking 
paragraph (14). 
(ii) Sections 467(c)(5)(C), 1255(b)(2), and 
1257(d) 
are 
each 
amended 
by 
striking 
‘‘, 
341(e)(12),’’. 
(iii) The table of subparts for part II of sub-
chapter C of chapter 1 is amended by striking the 
item related to subpart C. 
(5) Section 531 is amended by striking ‘‘equal 
to’’ and all that follows and inserting ‘‘equal to 15 
percent of the accumulated taxable income.’’. 
(6) Section 541 is amended by striking ‘‘equal 
to’’ and all that follows and inserting ‘‘equal to 15 
percent of the undistributed personal holding com-
pany income.’’. 
(7) Section 584(c) is amended by adding at the 
end the following new flush sentence: 
‘‘The proportionate share of each participant in the 
amount of dividends received by the common trust fund 
and to which section 1(h)(11) applies shall be considered 
for purposes of such paragraph as having been received 
by such participant.’’.
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(8) Paragraph (5) of section 702(a) is amended 
to read as follows: 
‘‘(5) dividends with respect to which section 
1(h)(11) or part VII of subchapter B applies,’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2002. 
SEC. 303. SUNSET OF TITLE. 
All provisions of, and amendments made by, this title 
shall not apply to taxable years beginning after December 
31, 2012, and the Internal Revenue Code of 1986 shall 
be applied and administered to such years as if such provi-
sions and amendments had never been enacted. 
TITLE 
IV—CORPORATE 
ESTI-
MATED TAX PAYMENTS FOR 
2003
SEC. 401. TIME FOR PAYMENT OF CORPORATE ESTIMATED 
TAXES. 
Notwithstanding section 6655 of the Internal Rev-
enue Code of 1986, 52 percent of the amount of any re-
quired installment of corporate estimated tax which is
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otherwise due in September 2003 shall not be due until 
October 1, 2003.
Passed the House of Representatives May 9, 2003. 
Attest: 
JEFF TRANDAHL, 
Clerk.