TITLE I—CHILD TAX CREDIT
Sec. 101. Expansion of child tax credit.
TITLE II—ARMED FORCES TAX FAIRNESS
Sec. 201. Special rule for members of uniformed services and Foreign Service in
determining exclusion of gain from sale of principal residence.
Sec. 202. Restoration of full exclusion from gross income of death gratuity pay-
ment.
Sec. 203. Exclusion for amounts received under Department of Defense home-
owners assistance program.
Sec. 204. Expansion of combat zone filing rules to contingency operations.
Sec. 205. Modification of membership requirement for exemption from tax for cer-
tain veterans’ organizations.
Sec. 206. Clarification of the treatment of certain dependent care assistance pro-
grams.
Sec. 207. Clarification relating to exception from additional tax on certain dis-
tributions from qualified tuition programs, etc., on account of
attendance at military academy.
Sec. 208. Above-the-line deduction for overnight travel expenses of National Guard
and Reserve members.
TITLE III—SUSPENSION OF TAX-EXEMPT STATUS OF TERRORIST
ORGANIZATIONS
Sec. 301. Suspension of tax-exempt status of terrorist organizations.
TITLE IV—RELIEF FOR ASTRONAUTS
Sec. 401. Tax relief and assistance for families of astronauts who lose their lives
on a space mission.
TITLE I—CHILD TAX CREDIT
SEC. 101. EXPANSION OF CHILD TAX CREDIT.
(a) CREDIT REFUNDABILITY.—Clause (i) of section
24(d)(1)(B) (relating to portion of credit refundable) is
amended by striking ‘‘(10 percent in the case of taxable
years beginning before January 1, 2005)’’.
(b) INCREASE IN CREDIT THROUGH 2010.—Subsection
(a) of section 24 (relating to child tax credit) is amended
to read as follows:
‘‘(a) ALLOWANCE OF CREDIT.—There shall be allowed
as a credit against the tax imposed by this chapter for the
taxable year with respect to each qualifying child of the tax-
payer an amount equal to $1,000.’’.
(c) REMOVAL OF MARRIAGE PENALTY IN PHASEOUT
THRESHOLDS.—Paragraph (2) of section 24(b) is amended
to read as follows:
‘‘(2) THRESHOLD
AMOUNT.—For purposes of
paragraph (1), the term ‘threshold amount’ means
$75,000 ($150,000 in the case of a joint return).’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 2002.
(e) APPLICATION
OF
EGTRRA SUNSET.—Each
amendment made by this section shall be subject to title
IX of the Economic Growth and Tax Relief Reconciliation
Act of 2001 to the same extent and in the same manner
as section 201 of such Act.
TITLE II—ARMED FORCES TAX
FAIRNESS
SEC. 201. SPECIAL RULE FOR MEMBERS OF UNIFORMED
SERVICES AND FOREIGN SERVICE IN DETER-
MINING EXCLUSION OF GAIN FROM SALE OF
PRINCIPAL RESIDENCE.
(a) IN GENERAL.—Subsection (d) of section 121 (relat-
ing to exclusion of gain from sale of principal residence)
is amended by adding at the end the following new para-
graph:
‘‘(10) MEMBERS OF UNIFORMED SERVICES AND
FOREIGN SERVICE.—
‘‘(A) IN GENERAL.—At the election of an
individual with respect to a property, the run-
ning of the 5-year period referred to in sub-
sections (a) and (c)(1)(B) and paragraph (7) of
this subsection with respect to such property
shall be suspended during any period that such
individual or such individual’s spouse is serving
on qualified official extended duty as a member
of the uniformed services or as a member of the
Foreign Service.
‘‘(B) MAXIMUM PERIOD OF SUSPENSION.—
Such 5-year period shall not be extended more
than 5 years by reason of subparagraph (A).
‘‘(C) 
QUALIFIED
OFFICIAL
EXTENDED
DUTY.—For purposes of this paragraph—
‘‘(i) IN GENERAL.—The term ‘qualified
official extended duty’ means any extended
duty while serving at a duty station which
is at least 150 miles from such property or
while residing under Government orders in
Government quarters.
‘‘(ii) 
UNIFORMED
SERVICES.—The
term ‘uniformed services’ has the meaning
given such term by section 101(a)(5) of title
10, United States Code, as in effect on the
date of the enactment of this paragraph.
‘‘(iii) FOREIGN
SERVICE.—The term
‘member of the Foreign Service’ has the
meaning given the term ‘member of the
Service’ by paragraph (1), (2), (3), (4), or
(5) of section 103 of the Foreign Service Act
of 1980, as in effect on the date of the enact-
ment of this paragraph.
‘‘(iv) EXTENDED DUTY.—The term ‘ex-
tended duty’ means any period of active
duty pursuant to a call or order to such
duty for a period in excess of 180 days or
for an indefinite period.
‘‘(D) SPECIAL RULES RELATING TO ELEC-
TION.—
‘‘(i) ELECTION
LIMITED
TO
PROP-
ERTY AT A TIME.—An election under sub-
paragraph (A) with respect to any property
may not be made if such an election is in
effect with respect to any other property.
‘‘(ii) REVOCATION OF ELECTION.—An
election under subparagraph (A) may be re-
voked at any time.’’.
(b) EFFECTIVE DATE; SPECIAL RULE.—
(1) EFFECTIVE DATE.—The amendment made by
this section shall take effect as if included in the
amendments made by section 312 of the Taxpayer Re-
lief Act of 1997.
(2) WAIVER OF LIMITATIONS.—If refund or cred-
it of any overpayment of tax resulting from the
amendment made by this section is prevented at any
time before the close of the 1-year period beginning on
the date of the enactment of this Act by the operation
of any law or rule of law (including res judicata),
such refund or credit may nevertheless be made or al-
lowed if claim therefor is filed before the close of such
period.
SEC. 202. RESTORATION OF FULL EXCLUSION FROM GROSS
INCOME OF DEATH GRATUITY PAYMENT.
(a) IN GENERAL.—Paragraph (3) of section 134(b)
(relating to qualified military benefit) is amended by add-
ing at the end the following new subparagraph:
‘‘(C) EXCEPTION FOR DEATH GRATUITY AD-
JUSTMENTS MADE BY LAW.—Subparagraph (A)
shall not apply to any adjustment to the amount
of death gratuity payable under chapter 75 of
title 10, United States Code, which is pursuant
to a provision of law enacted before December 31,
1991.’’.
(b) CONFORMING AMENDMENT.—Section 134(b)(3)(A)
is amended by striking ‘‘subparagraph (B)’’ and inserting
‘‘subparagraphs (B) and (C)’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply with respect to deaths occurring after
September 10, 2001.
SEC. 203. EXCLUSION FOR AMOUNTS RECEIVED UNDER DE-
PARTMENT OF DEFENSE HOMEOWNERS AS-
SISTANCE PROGRAM.
(a) IN GENERAL.—Subsection (a) of section 132 (relat-
ing to certain fringe benefits) is amended by striking ‘‘or’’
at the end of paragraph (6), by striking the period at the
end of paragraph (7) and inserting ‘‘, or’’ and by adding
at the end the following new paragraph:
‘‘(8) qualified military base realignment and clo-
sure fringe.’’.
(b) QUALIFIED MILITARY BASE REALIGNMENT AND
CLOSURE FRINGE.—Section 132 is amended by redesig-
nating subsection (n) as subsection (o) and by inserting
after subsection (m) the following new subsection:
‘‘(n) QUALIFIED MILITARY BASE REALIGNMENT AND
CLOSURE FRINGE.—
‘‘(1) IN GENERAL.—For purposes of this section,
the term ‘qualified military base realignment and clo-
sure fringe’ means 1 or more payments under the au-
thority of section 1013 of the Demonstration Cities
and Metropolitan Development Act of 1966 (42
U.S.C. 3374) (as in effect on the date of the enact-
ment of this subsection).
‘‘(2) LIMITATION.—With respect to any property,
such term shall not include any payment referred to
in paragraph (1) to the extent that the sum of all
such payments related to such property exceeds the
amount described in clause (1) of subsection (c) of
such section (as in effect on such date).’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to payments made after the date of the
enactment of this Act.
SEC. 204. EXPANSION OF COMBAT ZONE FILING RULES TO
CONTINGENCY OPERATIONS.
(a) IN GENERAL.—Subsection (a) of section 7508 (re-
lating to time for performing certain acts postponed by rea-
son of service in combat zone) is amended—
(1) by inserting ‘‘or when deployed outside the
United States away from the individual’s permanent
duty station while participating in an operation des-
ignated by the Secretary of Defense as a contingency
operation (as defined in section 101(a)(13) of title 10,
United States Code) or which became such a contin-
gency operation by operation of law’’ after ‘‘section
112’’,
(2) by inserting in the first sentence ‘‘or at any
time during the period of such contingency operation’’
after ‘‘for purposes of such section’’,
(3) by inserting ‘‘or operation’’ after ‘‘such an
area’’, and
(4) by inserting ‘‘or operation’’ after ‘‘such
area’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 7508(d) is amended by inserting ‘‘or
contingency operation’’ after ‘‘area’’.
(2) The heading for section 7508 is amended by
inserting ‘‘OR CONTINGENCY OPERATION’’ after
‘‘COMBAT ZONE’’.
(3) The item relating to section 7508 in the table
of sections for chapter 77 is amended by inserting ‘‘or
contingency operation’’ after ‘‘combat zone’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to any period for performing an act
which has not expired before the date of the enactment of
this Act.
SEC. 205. MODIFICATION OF MEMBERSHIP REQUIREMENT
FOR EXEMPTION FROM TAX FOR CERTAIN
VETERANS’ ORGANIZATIONS.
(a) IN
GENERAL.—Subparagraph (B) of section
501(c)(19) (relating to list of exempt organizations) is
amended by striking ‘‘or widowers’’ and inserting ‘‘, wid-
owers, ancestors, or lineal descendants’’.
(b) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after the date
of the enactment of this Act.
SEC. 206. CLARIFICATION OF THE TREATMENT OF CERTAIN
DEPENDENT CARE ASSISTANCE PROGRAMS.
(a) IN GENERAL.—Subsection (b) of section 134 (de-
fining qualified military benefit) is amended by adding at
the end the following new paragraph:
‘‘(4) CLARIFICATION
OF
CERTAIN
BENEFITS.—
For purposes of paragraph (1), such term includes
any dependent care assistance program (as in effect
on the date of the enactment of this paragraph) for
any individual described in paragraph (1)(A).’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 134(b)(3)(A) (as amended by section
202) is further amended by inserting ‘‘and paragraph
(4)’’ after ‘‘subparagraphs (B) and (C)’’.
(2) Section 3121(a)(18) is amended by striking
‘‘or 129’’ and inserting ‘‘, 129, or 134(b)(4)’’.
(3) Section 3306(b)(13) is amended by striking
‘‘or 129’’ and inserting ‘‘, 129, or 134(b)(4)’’.
(4) Section 3401(a)(18) is amended by striking
‘‘or 129’’ and inserting ‘‘, 129, or 134(b)(4)’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 2002.
SEC. 207. CLARIFICATION RELATING TO EXCEPTION FROM
ADDITIONAL TAX ON CERTAIN DISTRIBU-
TIONS FROM QUALIFIED TUITION PROGRAMS,
ETC., ON ACCOUNT OF ATTENDANCE AT MILI-
TARY ACADEMY.
(a) IN
GENERAL.—Subparagraph (B) of section
530(d)(4) (relating to exceptions from additional tax for
distributions not used for educational purposes) is amended
by striking ‘‘or’’ at the end of clause (iii), by redesignating
clause (iv) as clause (v), and by inserting after clause (iii)
the following new clause:
‘‘(iv) made on account of the attend-
ance of the designated beneficiary at the
United 
States 
Military 
Academy, 
the
United States Naval Academy, the United
States Air Force Academy, the United
States Coast Guard Academy, or the United
States Merchant Marine Academy, to the
extent that the amount of the payment or
distribution does not exceed the costs of ad-
vanced education (as defined by section
2005(e)(3) of title 10, United States Code,
as in effect on the date of the enactment of
this section) attributable to such attendance,
or’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall take effect for taxable years beginning after De-
cember 31, 2002.
SEC. 208. ABOVE-THE-LINE DEDUCTION FOR OVERNIGHT
TRAVEL EXPENSES OF NATIONAL GUARD AND
RESERVE MEMBERS.
(a) DEDUCTION ALLOWED.—Section 162 (relating to
certain trade or business expenses) is amended by redesig-
nating subsection (p) as subsection (q) and inserting after
subsection (o) the following new subsection:
‘‘(p) TREATMENT OF EXPENSES OF MEMBERS OF RE-
SERVE COMPONENT OF ARMED FORCES OF THE UNITED
STATES.—For purposes of subsection (a)(2), in the case of
an individual who performs services as a member of a re-
serve component of the Armed Forces of the United States
at any time during the taxable year, such individual shall
be deemed to be away from home in the pursuit of a trade
or business for any period during which such individual
is away from home in connection with such services.’’.
(b) DEDUCTION ALLOWED WHETHER OR NOT TAX-
PAYER ELECTS TO ITEMIZE.—Paragraph (2) of section
62(a) (relating to certain trade and business deductions of
employees) is amended by adding at the end the following
new subparagraph:
‘‘(E) CERTAIN EXPENSES OF MEMBERS OF
RESERVE COMPONENTS OF THE ARMED FORCES
OF
THE
UNITED
STATES.—The deductions al-
lowed by section 162 which consist of expenses,
not in excess of $1,500, paid or incurred by the
taxpayer in connection with the performance of
services by such taxpayer as a member of a re-
serve component of the Armed Forces of the
United States for any period during which such
individual is more than 100 miles away from
home in connection with such services.’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to amounts paid or incurred in taxable
years beginning after December 31, 2002.
TITLE III—SUSPENSION OF TAX-
EXEMPT 
STATUS 
OF 
TER-
RORIST ORGANIZATIONS
SEC. 301. SUSPENSION OF TAX-EXEMPT STATUS OF TER-
RORIST ORGANIZATIONS.
(a) IN GENERAL.—Section 501 (relating to exemption
from tax on corporations, certain trusts, etc.) is amended
by redesignating subsection (p) as subsection (q) and by in-
serting after subsection (o) the following new subsection:
‘‘(p) SUSPENSION OF TAX-EXEMPT STATUS OF TER-
RORIST ORGANIZATIONS.—
‘‘(1) IN
GENERAL.—The exemption from tax
under subsection (a) with respect to any organization
described in paragraph (2), and the eligibility of any
organization described in paragraph (2) to apply for
recognition of exemption under subsection (a), shall
be suspended during the period described in para-
graph (3).
‘‘(2) TERRORIST ORGANIZATIONS.—An organiza-
tion is described in this paragraph if such organiza-
tion 
is 
designated 
or 
otherwise 
individually
identified—
‘‘(A) under section 212(a)(3)(B)(vi)(II) or
219 of the Immigration and Nationality Act as
a terrorist organization or foreign terrorist orga-
nization,
‘‘(B) in or pursuant to an Executive order
which is related to terrorism and issued under
the authority of the International Emergency
Economic Powers Act or section 5 of the United
Nations Participation Act of 1945 for the pur-
pose of imposing on such organization an eco-
nomic or other sanction, or
‘‘(C) in or pursuant to an Executive order
issued under the authority of any Federal law
if—
‘‘(i) the organization is designated or
otherwise individually identified in or pur-
suant to such Executive order as supporting
or engaging in terrorist activity (as defined
in section 212(a)(3)(B) of the Immigration
and Nationality Act) or supporting ter-
rorism (as defined in section 140(d)(2) of
the Foreign Relations Authorization Act,
Fiscal Years 1988 and 1989); and
‘‘(ii) such Executive order refers to this
subsection.
‘‘(3) PERIOD OF SUSPENSION.—With respect to
any organization described in paragraph (2), the pe-
riod of suspension—
‘‘(A) begins on the later of—
‘‘(i) the date of the first publication of
a designation or identification described in
paragraph (2) with respect to such organi-
zation, or
‘‘(ii) the date of the enactment of this
subsection, and
‘‘(B) ends on the first date that all designa-
tions and identifications described in paragraph
(2) with respect to such organization are re-
scinded pursuant to the law or Executive order
under which such designation or identification
was made.
‘‘(4) DENIAL
OF
DEDUCTION.—No deduction
shall be allowed under section 170, 545(b)(2),
556(b)(2), 642(c), 2055, 2106(a)(2), or 2522 for any
contribution to an organization described in para-
graph (2) during the period described in paragraph
(3).
‘‘(5) DENIAL OF ADMINISTRATIVE OR JUDICIAL
CHALLENGE OF SUSPENSION OR DENIAL OF DEDUC-
TION.—Notwithstanding section 7428 or any other
provision of law, no organization or other person may
challenge a suspension under paragraph (1), a des-
ignation or identification described in paragraph (2),
the period of suspension described in paragraph (3),
or a denial of a deduction under paragraph (4) in
any administrative or judicial proceeding relating to
the Federal tax liability of such organization or other
person.
‘‘(6) ERRONEOUS DESIGNATION.—
‘‘(A) IN GENERAL.—If—
‘‘(i) the tax exemption of any organi-
zation described in paragraph (2) is sus-
pended under paragraph (1),
‘‘(ii) each designation and identifica-
tion described in paragraph (2) which has
been made with respect to such organization
is determined to be erroneous pursuant to
the law or Executive order under which
such designation or identification was
made, and
‘‘(iii) the erroneous designations and
identifications result in an overpayment of
income tax for any taxable year by such or-
ganization,
(A) The heading of section 692 is amended
by 
inserting 
‘‘, 
ASTRONAUTS,’’ 
after
‘‘FORCES’’.
(B) The item relating to section 692 in the
table of sections for part II of subchapter J of
chapter 1 is amended by inserting ‘‘, astro-
nauts,’’ after ‘‘Forces’’.
(4) EFFECTIVE DATE.—The amendments made
by this subsection shall apply with respect to any as-
tronaut whose death occurs after December 31, 2002.
(b) DEATH BENEFIT RELIEF.—
(1) IN GENERAL.—Subsection (i) of section 101
(relating to certain death benefits) is amended by
adding at the end the following new paragraph:
‘‘(4) RELIEF WITH RESPECT TO ASTRONAUTS.—
The provisions of this subsection shall apply to any
astronaut whose death occurs while on a space mis-
sion.’’.
(2) CLERICAL
AMENDMENT.—The heading for
subsection (i) of section 101 is amended by inserting
‘‘OR ASTRONAUTS’’ after ‘‘VICTIMS’’.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to amounts paid after
December 31, 2002, with respect to deaths occurring
after such date.
(c) ESTATE TAX RELIEF.—
(1) IN GENERAL.—Subsection (b) of section 2201
(defining qualified decedent) is amended by striking
‘‘and’’ at the end of paragraph (1)(B), by striking the
period at the end of paragraph (2) and inserting ‘‘,
and’’, and by adding at the end the following new
paragraph:
‘‘(3) any astronaut whose death occurs while on
a space mission.’’.
(2) CLERICAL AMENDMENTS.—
(A) The heading of section 2201 is amended
by inserting ‘‘, DEATHS OF ASTRONAUTS,’’
after ‘‘FORCES’’.
(B) The item relating to section 2201 in the
table of sections for subchapter C of chapter 11
is amended by inserting ‘‘, deaths of astronauts,’’
after ‘‘Forces’’.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to estates of decedents
dying after December 31, 2002.
In lieu of the matter inserted by the Senate to the title
of the bill, insert the following: ‘‘An Act to amend the Inter-
nal Revenue Code of 1986 to enhance fairness in the internal
revenue laws, and for other purposes.’’.
Attest:
Clerk.
108TH CONGRESS
1ST SESSION
H.R. 1308
HOUSE AMENDMENTS TO
SENATE AMENDMENTS