(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 613. APPLICATION TO PARTNERSHIP INTERESTS AND 
TAX SHARING AGREEMENTS OF RULE TREAT-
ING CERTAIN GAIN ON SALES BETWEEN RE-
LATED PERSONS AS ORDINARY INCOME. 
(a) PARTNERSHIP INTERESTS.—Subsection (a) of 
section 1239 is amended to read as follows: 
‘‘(a) TREATMENT OF GAIN AS ORDINARY INCOME.— 
In the case of a sale or exchange of property, directly or 
indirectly, between related persons, any gain recognized to 
the transferor shall be treated as ordinary income if— 
‘‘(1) such property is, in the hands of the trans-
feree, of a character which is subject to the allow-
ance for depreciation provided in section 167, or 
‘‘(2) such property is an interest in a partner-
ship, but only to the extent of gain attributable to 
unrealized appreciation in property which is of a 
character subject to the allowance for depreciation 
provided in section 167.’’. 
(b) TAX SHARING AGREEMENTS.—Section 1239 (re-
lating to gain from sale of depreciable property between 
certain related taxpayers) is amended by adding at the 
end the following new subsection:
‘‘(f) APPLICATION
TO
TAX
SHARING
AGREE-
MENTS.— 
‘‘(1) IN GENERAL.—If there is a tax sharing 
agreement with respect to any sale or exchange, the 
transferee and the transferor shall be treated as re-
lated persons for purposes of this section. 
‘‘(2) TAX SHARING AGREEMENT.—For purposes 
of this subsection, the term ‘tax sharing agreement’ 
means any agreement which provides for the pay-
ment to the transferor of any amount which is deter-
mined by reference to any portion of the tax benefit 
realized by the transferee with respect to the depre-
ciation (or amortization) of the property trans-
ferred.’’. 
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to sales and exchanges after the date of 
the enactment of this Act. 
(2) EXCEPTION
FOR
BINDING
CONTRACTS.— 
The amendment made by subsection (b) shall not 
apply to any sale or exchange pursuant to a written 
binding contract which includes a tax sharing agree-
ment and which is in effect on November 1, 2007, 
and not modified thereafter in any material respect.
Subtitle C—Other Provisions 
SEC. 621. DELAY IN APPLICATION OF WORLDWIDE ALLOCA-
TION OF INTEREST. 
(a) IN GENERAL.—Paragraphs (5)(D) and (6) of sec-
tion 864(f) are each amended by striking ‘‘December 31, 
2008’’ and inserting ‘‘December 31, 2017’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2008. 
SEC. 622. BROKER REPORTING OF CUSTOMER’S BASIS IN 
SECURITIES TRANSACTIONS. 
(a) IN GENERAL.— 
(1) BROKER
REPORTING
FOR
SECURITIES 
TRANSACTIONS.—Section 6045 (relating to returns 
of brokers) is amended by adding at the end the fol-
lowing new subsection: 
‘‘(g) ADDITIONAL INFORMATION REQUIRED IN THE 
CASE OF SECURITIES TRANSACTIONS.— 
‘‘(1) IN GENERAL.—If a broker is otherwise re-
quired to make a return under subsection (a) with 
respect to the gross proceeds of the sale of a covered 
security, the broker shall include in such return the 
information described in paragraph (2). 
‘‘(2) ADDITIONAL INFORMATION REQUIRED.—
‘‘(A) IN GENERAL.—The information re-
quired under paragraph (1) to be shown on a 
return with respect to a covered security of a 
customer shall include the customer’s adjusted 
basis in such security and whether any gain or 
loss with respect to such security is long-term 
or short-term (within the meaning of section 
1222). 
‘‘(B) 
DETERMINATION
OF
ADJUSTED 
BASIS.—For purposes of subparagraph (A)— 
‘‘(i) IN
GENERAL.—The customer’s 
adjusted basis shall be determined— 
‘‘(I) in the case of any stock 
(other than any stock in an open-end 
fund), in accordance with the first-in 
first-out method unless the customer 
notifies the broker by means of mak-
ing an adequate identification of the 
stock sold or transferred, 
‘‘(II) in the case of any stock in 
an open-end fund acquired before 
January 1, 2011, in accordance with 
any acceptable method under section 
1012 with respect to the account in 
which such interest is held,
‘‘(III) in the case of any stock in 
an open-end fund acquired after De-
cember 31, 2010, in accordance with 
the broker’s default method unless the 
customer notifies the broker that he 
elects 
another 
acceptable 
method 
under section 1012 with respect to the 
account in which such interest is held, 
and 
‘‘(IV) in any other case, under 
the method for making such deter-
mination under section 1012. 
‘‘(ii) EXCEPTION FOR WASH SALES.— 
Except as otherwise provided by the Sec-
retary, the customer’s adjusted basis shall 
be determined without regard to section 
1091 (relating to loss from wash sales of 
stock or securities) unless the transactions 
occur in the same account with respect to 
identical securities. 
‘‘(3) COVERED
SECURITY.—For purposes of 
this subsection— 
‘‘(A) IN GENERAL.—The term ‘covered se-
curity’ means any specified security acquired on 
or after the applicable date if such security—
‘‘(i) was acquired through a trans-
action in the account in which such secu-
rity is held, or 
‘‘(ii) was transferred to such account 
from an account in which such security 
was a covered security, but only if the 
broker received a statement under section 
6045A with respect to the transfer. 
‘‘(B) SPECIFIED
SECURITY.—The term 
‘specified security’ means— 
‘‘(i) any share of stock in a corpora-
tion, 
‘‘(ii) any note, bond, debenture, or 
other evidence of indebtedness, 
‘‘(iii) any commodity, or contract or 
derivative with respect to such commodity, 
if the Secretary determines that adjusted 
basis reporting is appropriate for purposes 
of this subsection, and 
‘‘(iv) any other financial instrument 
with respect to which the Secretary deter-
mines that adjusted basis reporting is ap-
propriate for purposes of this subsection. 
‘‘(C) APPLICABLE DATE.—The term ‘appli-
cable date’ means—
‘‘(i) January 1, 2009, in the case of 
any specified security which is stock in a 
corporation, and 
‘‘(ii) January 1, 2011, or such later 
date determined by the Secretary in the 
case of any other specified security. 
‘‘(4) OPEN-END FUND.—For purposes of this 
subsection, the term ‘open-end fund’ means a regu-
lated investment company (as defined in section 
851) which is offering for sale or has outstanding 
any redeemable security of which it is the issuer and 
the shares of which are not traded on an established 
securities exchange.’’. 
(2) BROKER INFORMATION REQUIRED WITH RE-
SPECT TO OPTIONS.—Section 6045, as amended by 
subsection (a), is amended by adding at the end the 
following new subsection: 
‘‘(h) APPLICATION TO OPTIONS ON COVERED SECU-
RITIES.— 
‘‘(1) EXERCISE OF OPTION.—For purposes of 
this section, in the case of any exercise of an option 
on a covered security where the taxpayer is the 
grantor of the option and the option was acquired in 
the same account as the covered security, the 
amount received for the grant of an option on a cov-
ered security shall be treated as an adjustment to 
gross proceeds or as an adjustment to basis, as the 
case may be. A similar rule shall apply in the case 
of the exercise of an option where the taxpayer is 
not the grantor of the option. 
‘‘(2) LAPSE OR CLOSING TRANSACTION.—For 
purposes of this section, in the case of the lapse (or 
closing 
transaction 
(as 
defined 
in 
section 
1234(b)(2)(A))) of an option on a covered security 
where the taxpayer is the grantor of the option, this 
section shall apply as if the premium received for 
such option were gross proceeds received on the date 
of the lapse or closing transaction, and the cost (if 
any) of the closing transaction shall be taken into 
account as adjusted basis. A similar rule shall apply 
in the case of a lapse or closing transaction where 
the taxpayer is not the grantor of the option. 
‘‘(3) PROSPECTIVE APPLICATION.—Paragraphs 
(1) and (2) shall not apply to any option which is 
granted or acquired before January 1, 2011. 
‘‘(4) COVERED
SECURITY.—For purposes of 
this subsection, the term ‘covered security’ shall 
have the meaning given such term in subsection 
(g)(3).’’.
(3) EXTENSION OF PERIOD FOR STATEMENTS 
SENT TO CUSTOMERS.— 
(A) IN GENERAL.—Subsection (b) of sec-
tion 6045 is amended by striking ‘‘January 31’’ 
and inserting ‘‘February 15’’. 
(B) STATEMENTS
RELATED
TO
SUB-
STITUTE PAYMENTS.—Subsection (d) of section 
6045 is amended— 
(i) by striking ‘‘at such time and’’, 
and 
(ii) by inserting after ‘‘other item.’’ 
the following new sentence: ‘‘The written 
statement required under the preceding 
sentence shall be furnished on or before 
February 15 of the year following the cal-
endar year during which such payment was 
made.’’. 
(C) OTHER STATEMENTS.—Subsection (b) 
of section 6045 is amended by adding at the 
end the following: ‘‘In the case of a consolidated 
reporting statement (as defined in regulations) 
with respect to any account which includes the 
statement required by this subsection, any 
statement which would otherwise be required to 
be furnished on or before January 31 under
section 6042(c), 6049(c)(2)(A), or 6050N(b) 
with respect to any item in such account shall 
instead be required to be furnished on or before 
February 15 if furnished as part of such con-
solidated reporting statement.’’. 
(b) DETERMINATION OF BASIS OF CERTAIN SECURI-
TIES ON ACCOUNT BY ACCOUNT METHOD.—Section 1012 
(relating to basis of property–cost) is amended— 
(1) by striking ‘‘The basis of property’’ and in-
serting the following: 
‘‘(a) IN GENERAL.—The basis of property’’, 
(2) by striking ‘‘The cost of real property’’ and 
inserting the following: 
‘‘(b) SPECIAL RULE FOR APPORTIONED REAL ES-
TATE TAXES.—The cost of real property’’, and 
(3) by adding at the end the following new sub-
section: 
‘‘(c) DETERMINATIONS BY ACCOUNT.— 
‘‘(1) IN GENERAL.—In the case of the sale, ex-
change, or other disposition of a specified security 
on or after the applicable date, the conventions pre-
scribed by regulations under this section shall be ap-
plied on an account by account basis. 
‘‘(2) APPLICATION TO OPEN-END FUNDS.—
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), any stock in an open-end 
fund acquired before January 1, 2009, shall be 
treated as a separate account from any such 
stock acquired on or after such date. 
‘‘(B) ELECTION BY OPEN-END FUND FOR 
TREATMENT AS SINGLE ACCOUNT.—If an open- 
end fund elects (at such time and in such form 
and manner as the Secretary may prescribe) to 
have this subparagraph apply with respect to 
one or more of its stockholders— 
‘‘(i) subparagraph (A) shall not apply 
with respect to any stock in such fund held 
by such stockholders, and 
‘‘(ii) all stock in such fund which is 
held by such stockholders shall be treated 
as covered securities described in section 
6045(g)(3) without regard to the date of 
the acquisition of such stock. 
‘‘(3) DEFINITIONS.—For purposes of this sec-
tion, the terms ‘specified security’, ‘applicable date’, 
and ‘open-end fund’ shall have the meaning given 
such terms in section 6045(g).’’. 
(c) INFORMATION BY TRANSFERORS TO AID BRO-
KERS.—
(1) IN GENERAL.—Subpart B of part III of 
subchapter A of chapter 61 is amended by inserting 
after section 6045 the following new section: 
‘‘SEC. 6045A. INFORMATION REQUIRED IN CONNECTION 
WITH TRANSFERS OF COVERED SECURITIES 
TO BROKERS. 
‘‘(a) FURNISHING OF INFORMATION.—Every applica-
ble person which transfers to a broker (as defined in sec-
tion 6045(c)(1)) a security which is a covered security (as 
defined in section 6045(g)(3)) in the hands of such appli-
cable person shall furnish to such broker a written state-
ment in such manner and setting forth such information 
as the Secretary may by regulations prescribe for purposes 
of enabling such broker to meet the requirements of sec-
tion 6045(g). 
‘‘(b) APPLICABLE PERSON.—For purposes of sub-
section (a), the term ‘applicable person’ means— 
‘‘(1) any broker (as defined in section 
6045(c)(1)), and 
‘‘(2) any other person as provided by the Sec-
retary in regulations. 
‘‘(c) TIME
FOR
FURNISHING
STATEMENT.—Any 
statement required by subsection (a) shall be furnished 
not later than the earlier of—
‘‘(1) 45 days after the date of the transfer de-
scribed in subsection (a), or 
‘‘(2) January 15 of the year following the cal-
endar year during which such transfer occurred.’’. 
(2) ASSESSABLE
PENALTIES.—Paragraph (2) 
of section 6724(d) (defining payee statement) is 
amended 
by 
redesignating 
subparagraphs 
(I) 
through (CC) as subparagraphs (J) through (DD), 
respectively, and by inserting after subparagraph 
(H) the following new subparagraph: 
‘‘(I) section 6045A (relating to information 
required in connection with transfers of covered 
securities to brokers).’’. 
(3) CLERICAL AMENDMENT.—The table of sec-
tions for subpart B of part III of subchapter A of 
chapter 61 is amended by inserting after the item 
relating to section 6045 the following new item: 
‘‘Sec. 6045A. Information required in connection with transfers of covered se-
curities to brokers.’’. 
(d) ADDITIONAL ISSUER INFORMATION TO AID BRO-
KERS.— 
(1) IN GENERAL.—Subpart B of part III of 
subchapter A of chapter 61 of the Internal Revenue 
Code of 1986, as amended by subsection (b), is 
amended by inserting after section 6045A the fol-
lowing new section:
100 
‘‘SEC. 6045B. RETURNS RELATING TO ACTIONS AFFECTING 
BASIS OF SPECIFIED SECURITIES. 
‘‘(a) IN GENERAL.—According to the forms or regu-
lations prescribed by the Secretary, any issuer of a speci-
fied security shall make a return setting forth— 
‘‘(1) a description of any organizational action 
which affects the basis of such specified security of 
such issuer, 
‘‘(2) the quantitative effect on the basis of such 
specified security resulting from such action, and 
‘‘(3) such other information as the Secretary 
may prescribe. 
‘‘(b) TIME FOR FILING RETURN.—Any return re-
quired by subsection (a) shall be filed not later than the 
earlier of— 
‘‘(1) 45 days after the date of the action de-
scribed in subsection (a), or 
‘‘(2) January 31 of the year following the cal-
endar year during which such action occurred. 
‘‘(c) STATEMENTS TO BE FURNISHED TO HOLDERS 
OF SPECIFIED SECURITIES OR THEIR NOMINEES.—Ac-
cording to the forms or regulations prescribed by the Sec-
retary, every person required to make a return under sub-
section (a) with respect to a specified security shall furnish 
to the nominee with respect to the specified security (or
101 
certificate holder if there is no nominee) a written state-
ment showing— 
‘‘(1) the name, address, and phone number of 
the information contact of the person required to 
make such return, 
‘‘(2) the information required to be shown on 
such return with respect to such security, and 
‘‘(3) such other information as the Secretary 
may prescribe. 
The written statement required under the preceding sen-
tence shall be furnished to the holder on or before January 
31 of the year following the calendar year during which 
the action described in subsection (a) occurred. 
‘‘(d) SPECIFIED SECURITY.—For purposes of this 
section, the term ‘specified security’ has the meaning given 
such term by section 6045(g)(3)(B). No return shall be 
required under this section with respect to actions de-
scribed in subsection (a) with respect to a specified secu-
rity which occur before the applicable date (as defined in 
section 6045(g)(3)(C) with respect to such security. 
‘‘(e) PUBLIC REPORTING IN LIEU OF RETURN.—The 
Secretary may waive the requirements under subsections 
(a) and (c) with respect to a specified security, if the per-
son required to make the return under subsection (a) 
makes publicly available, in such form and manner as the
102 
Secretary determines necessary to carry out the purposes 
of this section— 
‘‘(1) the name, address, phone number, and 
email address of the information contact of such 
person, and 
‘‘(2) the information described in paragraphs 
(1), (2), and (3) of subsection (a).’’. 
(2) ASSESSABLE PENALTIES.— 
(A) 
Subparagraph 
(B) 
of 
section 
6724(d)(1) of such Code (defining information 
return) is amended by redesignating clauses (iv) 
through (xix) as clauses (v) through (xx), re-
spectively, and by inserting after clause (iii) the 
following new clause: 
‘‘(iv) section 6045B(a) (relating to re-
turns relating to actions affecting basis of 
specified securities),’’. 
(B) Paragraph (2) of section 6724(d) of 
such Code (defining payee statement), as 
amended by subsection (c)(2), is amended by 
redesignating subparagraphs (J) through (DD) 
as subparagraphs (K) through (EE), respec-
tively, and by inserting after subparagraph (I) 
the following new subparagraph:
103 
‘‘(J) subsections (c) and (e) of section 
6045B (relating to returns relating to actions 
affecting basis of specified securities).’’. 
(3) CLERICAL AMENDMENT.—The table of sec-
tions for subpart B of part III of subchapter A of 
chapter 61 of such Code, as amended by subsection 
(b)(3), is amended by inserting after the item relat-
ing to section 6045A the following new item: 
‘‘Sec. 6045B. Returns relating to actions affecting basis of specified securi-
ties.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on January 1, 2009. 
SEC. 623. MODIFICATION OF PENALTY FOR FAILURE TO 
FILE PARTNERSHIP RETURNS. 
Section 6698 is amended by adding at the end the 
following new subsection: 
‘‘(e) MODIFICATIONS.—In the case of any return re-
quired to be filed after the date of the enactment of this 
subsection— 
‘‘(1) the dollar amount in effect under sub-
section (b)(1) shall be increased by $25, and 
‘‘(2) the limitation on the number of months 
taken into account under subsection (a) shall not be 
less than 12 months.’’.