† HR 1586 EAS2 
account for purposes of this title before the taxable year in 
which the related income is taken into account under this 
chapter by the taxpayer. 
‘‘(b) SPECIAL RULES WITH RESPECT TO SECTION 902 
CORPORATIONS.—If there is a foreign tax credit splitting 
event with respect to a foreign income tax paid or accrued 
by a section 902 corporation, such tax shall not be taken 
into account— 
‘‘(1) for purposes of section 902 or 960, or 
‘‘(2) for purposes of determining earnings and 
profits under section 964(a), 
before the taxable year in which the related income is taken 
into account under this chapter by such section 902 cor-
poration or a domestic corporation which meets the owner-
ship requirements of subsection (a) or (b) of section 902 
with respect to such section 902 corporation. 
‘‘(c) SPECIAL RULES.—For purposes of this section— 
‘‘(1) APPLICATION TO PARTNERSHIPS, ETC.—In 
the case of a partnership, subsections (a) and (b) shall 
be applied at the partner level. Except as otherwise 
provided by the Secretary, a rule similar to the rule 
of the preceding sentence shall apply in the case of 
any S corporation or trust. 
‘‘(2) TREATMENT
OF
FOREIGN
TAXES
AFTER 
SUSPENSION.—In the case of any foreign income tax
† HR 1586 EAS2 
not taken into account by reason of subsection (a) or 
(b), except as otherwise provided by the Secretary, 
such tax shall be so taken into account in the taxable 
year referred to in such subsection (other than for 
purposes of section 986(a)) as a foreign income tax 
paid or accrued in such taxable year. 
‘‘(d) DEFINITIONS.—For purposes of this section— 
‘‘(1) FOREIGN TAX CREDIT SPLITTING EVENT.— 
There is a foreign tax credit splitting event with re-
spect to a foreign income tax if the related income is 
(or will be) taken into account under this chapter by 
a covered person. 
‘‘(2) FOREIGN INCOME TAX.—The term ‘foreign 
income tax’ means any income, war profits, or excess 
profits tax paid or accrued to any foreign country or 
to any possession of the United States. 
‘‘(3) RELATED INCOME.—The term ‘related in-
come’ means, with respect to any portion of any for-
eign income tax, the income (or, as appropriate, earn-
ings and profits) to which such portion of foreign in-
come tax relates. 
‘‘(4) COVERED PERSON.—The term ‘covered per-
son’ means, with respect to any person who pays or 
accrues a foreign income tax (hereafter in this para-
graph referred to as the ‘payor’)—
† HR 1586 EAS2 
‘‘(A) any entity in which the payor holds, 
directly or indirectly, at least a 10 percent own-
ership interest (determined by vote or value), 
‘‘(B) any person which holds, directly or in-
directly, at least a 10 percent ownership interest 
(determined by vote or value) in the payor, 
‘‘(C) any person which bears a relationship 
to the payor described in section 267(b) or 
707(b), and 
‘‘(D) any other person specified by the Sec-
retary for purposes of this paragraph. 
‘‘(5) SECTION 902 CORPORATION.—The term ‘sec-
tion 902 corporation’ means any foreign corporation 
with respect to which one or more domestic corpora-
tions meets the ownership requirements of subsection 
(a) or (b) of section 902. 
‘‘(e) REGULATIONS.—The Secretary may issue such 
regulations or other guidance as is necessary or appropriate 
to carry out the purposes of this section, including regula-
tions or other guidance which provides— 
‘‘(1) appropriate exceptions from the provisions 
of this section, and 
‘‘(2) for the proper application of this section 
with respect to hybrid instruments.’’.
† HR 1586 EAS2 
(b) CLERICAL AMENDMENT.—The table of sections for 
subpart A of part III of subchapter N of chapter 1 of the 
Internal Revenue Code of 1986 is amended by adding at 
the end the following new item: 
‘‘Sec. 909. Suspension of taxes and credits until related income taken into ac-
count.’’. 
(c) EFFECTIVE DATE.—The amendments made by this 
section shall apply to— 
(1) foreign income taxes (as defined in section 
909(d) of the Internal Revenue Code of 1986, as 
added by this section) paid or accrued in taxable 
years beginning after December 31, 2010; and 
(2) foreign income taxes (as so defined) paid or 
accrued by a section 902 corporation (as so defined) 
in taxable years beginning on or before such date 
(and not deemed paid under section 902(a) or 960 of 
such Code on or before such date), but only for pur-
poses of applying sections 902 and 960 with respect 
to periods after such date. 
Section 909(b)(2) of the Internal Revenue Code of 1986, as 
added by this section, shall not apply to foreign income 
taxes described in paragraph (2).
† HR 1586 EAS2 
DENIAL OF FOREIGN TAX CREDIT WITH RESPECT TO FOR-
EIGN INCOME NOT SUBJECT TO UNITED STATES TAX-
ATION BY REASON OF COVERED ASSET ACQUISITIONS 
SEC. 212. (a) IN GENERAL.—Section 901 of the Inter-
nal Revenue Code of 1986 is amended by redesignating sub-
section (m) as subsection (n) and by inserting after sub-
section (l) the following new subsection: 
‘‘(m) DENIAL OF FOREIGN TAX CREDIT WITH RE-
SPECT TO FOREIGN INCOME NOT SUBJECT TO UNITED 
STATES TAXATION BY REASON OF COVERED ASSET ACQUI-
SITIONS.— 
‘‘(1) IN GENERAL.—In the case of a covered asset 
acquisition, the disqualified portion of any foreign in-
come tax determined with respect to the income or 
gain attributable to the relevant foreign assets— 
‘‘(A) shall not be taken into account in de-
termining the credit allowed under subsection 
(a), and 
‘‘(B) in the case of a foreign income tax 
paid by a section 902 corporation (as defined in 
section 909(d)(5)), shall not be taken into ac-
count for purposes of section 902 or 960. 
‘‘(2) COVERED
ASSET
ACQUISITION.—For pur-
poses of this section, the term ‘covered asset acquisi-
tion’ means—
† HR 1586 EAS2 
‘‘(A) a qualified stock purchase (as defined 
in section 338(d)(3)) to which section 338(a) ap-
plies, 
‘‘(B) any transaction which— 
‘‘(i) is treated as an acquisition of as-
sets for purposes of this chapter, and 
‘‘(ii) is treated as the acquisition of 
stock of a corporation (or is disregarded) for 
purposes of the foreign income taxes of the 
relevant jurisdiction, 
‘‘(C) any acquisition of an interest in a 
partnership which has an election in effect under 
section 754, and 
‘‘(D) to the extent provided by the Sec-
retary, any other similar transaction. 
‘‘(3) DISQUALIFIED PORTION.—For purposes of 
this section— 
‘‘(A) IN GENERAL.—The term ‘disqualified 
portion’ means, with respect to any covered asset 
acquisition, for any taxable year, the ratio (ex-
pressed as a percentage) of— 
‘‘(i) the aggregate basis differences (but 
not below zero) allocable to such taxable 
year under subparagraph (B) with respect 
to all relevant foreign assets, divided by
† HR 1586 EAS2 
‘‘(ii) the income on which the foreign 
income tax referred to in paragraph (1) is 
determined (or, if the taxpayer fails to sub-
stantiate such income to the satisfaction of 
the Secretary, such income shall be deter-
mined by dividing the amount of such for-
eign income tax by the highest marginal tax 
rate applicable to such income in the rel-
evant jurisdiction). 
‘‘(B) ALLOCATION OF BASIS DIFFERENCE.— 
For purposes of subparagraph (A)(i)— 
‘‘(i) IN GENERAL.—The basis difference 
with respect to any relevant foreign asset 
shall be allocated to taxable years using the 
applicable cost recovery method under this 
chapter. 
‘‘(ii) SPECIAL RULE FOR DISPOSITION 
OF ASSETS.—Except as otherwise provided 
by the Secretary, in the case of the disposi-
tion of any relevant foreign asset— 
‘‘(I) the basis difference allocated 
to the taxable year which includes the 
date of such disposition shall be the ex-
cess of the basis difference with respect 
to such asset over the aggregate basis
† HR 1586 EAS2 
difference with respect to such asset 
which has been allocated under clause 
(i) to all prior taxable years, and 
‘‘(II) no basis difference with re-
spect to such asset shall be allocated 
under clause (i) to any taxable year 
thereafter. 
‘‘(C) BASIS DIFFERENCE.— 
‘‘(i) IN GENERAL.—The term ‘basis dif-
ference’ means, with respect to any relevant 
foreign asset, the excess of— 
‘‘(I) the adjusted basis of such 
asset immediately after the covered 
asset acquisition, over 
‘‘(II) the adjusted basis of such 
asset immediately before the covered 
asset acquisition. 
‘‘(ii) BUILT-IN LOSS ASSETS.—In the 
case of a relevant foreign asset with respect 
to which the amount described in clause 
(i)(II) exceeds the amount described in 
clause (i)(I), such excess shall be taken into 
account under this subsection as a basis dif-
ference of a negative amount.
† HR 1586 EAS2 
‘‘(iii) SPECIAL RULE FOR SECTION 338 
ELECTIONS.—In the case of a covered asset 
acquisition described in paragraph (2)(A), 
the covered asset acquisition shall be treated 
for purposes of this subparagraph as occur-
ring at the close of the acquisition date (as 
defined in section 338(h)(2)). 
‘‘(4) RELEVANT FOREIGN ASSETS.—For purposes 
of this section, the term ‘relevant foreign asset’ means, 
with respect to any covered asset acquisition, any 
asset (including any goodwill, going concern value, or 
other intangible) with respect to such acquisition if 
income, deduction, gain, or loss attributable to such 
asset is taken into account in determining the foreign 
income tax referred to in paragraph (1). 
‘‘(5) FOREIGN
INCOME
TAX.—For purposes of 
this section, the term ‘foreign income tax’ means any 
income, war profits, or excess profits tax paid or ac-
crued to any foreign country or to any possession of 
the United States. 
‘‘(6) TAXES ALLOWED AS A DEDUCTION, ETC.— 
Sections 275 and 78 shall not apply to any tax which 
is not allowable as a credit under subsection (a) by 
reason of this subsection.
† HR 1586 EAS2 
‘‘(7) REGULATIONS.—The Secretary may issue 
such regulations or other guidance as is necessary or 
appropriate to carry out the purposes of this sub-
section, including to exempt from the application of 
this subsection certain covered asset acquisitions, and 
relevant foreign assets with respect to which the basis 
difference is de minimis.’’. 
(b) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section shall 
apply to covered asset acquisitions (as defined in sec-
tion 901(m)(2) of the Internal Revenue Code of 1986, 
as added by this section) after December 31, 2010. 
(2) TRANSITION RULE.—The amendments made 
by this section shall not apply to any covered asset 
acquisition (as so defined) with respect to which the 
transferor and the transferee are not related if such 
acquisition is— 
(A) made pursuant to a written agreement 
which was binding on January 1, 2011, and at 
all times thereafter, 
(B) described in a ruling request submitted 
to the Internal Revenue Service on or before July 
29, 2010, or
† HR 1586 EAS2 
(C) described on or before January 1, 2011, 
in a public announcement or in a filing with the 
Securities and Exchange Commission. 
(3) RELATED PERSONS.—For purposes of this 
subsection, a person shall be treated as related to an-
other person if the relationship between such persons 
is described in section 267 or 707(b) of the Internal 
Revenue Code of 1986. 
SEPARATE APPLICATION OF FOREIGN TAX CREDIT 
LIMITATION, ETC., TO ITEMS RESOURCED UNDER TREATIES 
SEC. 213. (a) IN GENERAL.—Subsection (d) of section 
904 of the Internal Revenue Code of 1986 is amended by 
redesignating paragraph (6) as paragraph (7) and by in-
serting after paragraph (5) the following new paragraph: 
‘‘(6) 
SEPARATE
APPLICATION
TO
ITEMS 
RESOURCED UNDER TREATIES.— 
‘‘(A) IN GENERAL.—If— 
‘‘(i) without regard to any treaty obli-
gation of the United States, any item of in-
come would be treated as derived from 
sources within the United States, 
‘‘(ii) under a treaty obligation of the 
United States, such item would be treated 
as arising from sources outside the United 
States, and
† HR 1586 EAS2 
‘‘(iii) the taxpayer chooses the benefits 
of such treaty obligation, 
subsections (a), (b), and (c) of this section and 
sections 902, 907, and 960 shall be applied sepa-
rately with respect to each such item. 
‘‘(B) COORDINATION
WITH
OTHER
PROVI-
SIONS.—This paragraph shall not apply to any 
item of income to which subsection (h)(10) or 
section 865(h) applies. 
‘‘(C) REGULATIONS.—The Secretary may 
issue such regulations or other guidance as is 
necessary or appropriate to carry out the pur-
poses of this paragraph, including regulations or 
other guidance which provides that related items 
of income may be aggregated for purposes of this 
paragraph.’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to taxable years beginning after the date 
of the enactment of this Act. 
LIMITATION ON THE AMOUNT OF FOREIGN TAXES DEEMED 
PAID WITH RESPECT TO SECTION 956 INCLUSIONS 
SEC. 214. (a) IN GENERAL.—Section 960 of the Inter-
nal Revenue Code of 1986 is amended by adding at the end 
the following new subsection: 
‘‘(c) LIMITATION WITH RESPECT TO SECTION 956 IN-
CLUSIONS.—
† HR 1586 EAS2 
‘‘(1) IN GENERAL.—If there is included under 
section 951(a)(1)(B) in the gross income of a domestic 
corporation any amount attributable to the earnings 
and profits of a foreign corporation which is a mem-
ber of a qualified group (as defined in section 902(b)) 
with respect to the domestic corporation, the amount 
of any foreign income taxes deemed to have been paid 
during the taxable year by such domestic corporation 
under section 902 by reason of subsection (a) with re-
spect to such inclusion in gross income shall not ex-
ceed the amount of the foreign income taxes which 
would have been deemed to have been paid during the 
taxable year by such domestic corporation if cash in 
an amount equal to the amount of such inclusion in 
gross income were distributed as a series of distribu-
tions (determined without regard to any foreign taxes 
which would be imposed on an actual distribution) 
through the chain of ownership which begins with 
such foreign corporation and ends with such domestic 
corporation. 
‘‘(2) AUTHORITY TO PREVENT ABUSE.—The Sec-
retary shall issue such regulations or other guidance 
as is necessary or appropriate to carry out the pur-
poses of this subsection, including regulations or other 
guidance which prevent the inappropriate use of the
† HR 1586 EAS2 
foreign corporation’s foreign income taxes not deemed 
paid by reason of paragraph (1).’’. 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to acquisitions of United States property 
(as defined in section 956(c) of the Internal Revenue Code 
of 1986) after December 31, 2010. 
SPECIAL RULE WITH RESPECT TO CERTAIN REDEMPTIONS 
BY FOREIGN SUBSIDIARIES 
SEC. 215. (a) IN GENERAL.—Paragraph (5) of section 
304(b) of the Internal Revenue Code of 1986 is amended 
by redesignating subparagraph (B) as subparagraph (C) 
and by inserting after subparagraph (A) the following new 
subparagraph: 
‘‘(B) SPECIAL RULE IN CASE OF FOREIGN 
ACQUIRING CORPORATION.—In the case of any 
acquisition to which subsection (a) applies in 
which the acquiring corporation is a foreign cor-
poration, no earnings and profits shall be taken 
into account under paragraph (2)(A) (and sub-
paragraph (A) shall not apply) if more than 50 
percent of the dividends arising from such acqui-
sition (determined without regard to this sub-
paragraph) would neither— 
‘‘(i) be subject to tax under this chap-
ter for the taxable year in which the divi-
dends arise, nor
† HR 1586 EAS2 
‘‘(ii) be includible in the earnings and 
profits of a controlled foreign corporation 
(as defined in section 957 and without re-
gard to section 953(c)).’’. 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall apply to acquisitions after the date of the en-
actment of this Act. 
MODIFICATION OF AFFILIATION RULES FOR PURPOSES OF 
RULES ALLOCATING INTEREST EXPENSE 
SEC. 216. (a) IN GENERAL.—Subparagraph (A) of sec-
tion 864(e)(5) of the Internal Revenue Code of 1986 is 
amended by adding at the end the following: ‘‘Notwith-
standing the preceding sentence, a foreign corporation shall 
be treated as a member of the affiliated group if— 
‘‘(i) more than 50 percent of the gross 
income of such foreign corporation for the 
taxable year is effectively connected with the 
conduct of a trade or business within the 
United States, and 
‘‘(ii) at least 80 percent of either the 
vote or value of all outstanding stock of such 
foreign corporation is owned directly or in-
directly by members of the affiliated group 
(determined with regard to this sentence).’’.
† HR 1586 EAS2 
(b) EFFECTIVE DATE.—The amendment made by this 
section shall apply to taxable years beginning after the date 
of the enactment of this Act. 
TERMINATION OF SPECIAL RULES FOR INTEREST AND DIVI-
DENDS RECEIVED FROM PERSONS MEETING THE 80- 
PERCENT FOREIGN BUSINESS REQUIREMENTS 
SEC. 217. (a) IN GENERAL.—Paragraph (1) of section 
861(a) of the Internal Revenue Code of 1986 is amended 
by striking subparagraph (A) and by redesignating sub-
paragraphs (B) and (C) as subparagraphs (A) and (B), re-
spectively. 
(b) GRANDFATHER RULE WITH RESPECT TO WITH-
HOLDING ON INTEREST AND DIVIDENDS RECEIVED FROM 
PERSONS MEETING THE 80-PERCENT FOREIGN BUSINESS 
REQUIREMENTS.— 
(1) IN GENERAL.—Subparagraph (B) of section 
871(i)(2) of the Internal Revenue Code of 1986 is 
amended to read as follows: 
‘‘(B) The active foreign business percentage 
of— 
‘‘(i) any dividend paid by an existing 
80/20 company, and 
‘‘(ii) any interest paid by an existing 
80/20 company.’’. 
(2) DEFINITIONS AND SPECIAL RULES.—Section 
871 of such Code is amended by redesignating sub-
† HR 1586 EAS2 
sections (l) and (m) as subsections (m) and (n), re-
spectively, and by inserting after subsection (k) the 
following new subsection: 
‘‘(l) RULES RELATING TO EXISTING 80/20 COMPA-
NIES.—For purposes of this subsection and subsection 
(i)(2)(B)— 
‘‘(1) EXISTING 80/20 COMPANY.— 
‘‘(A) IN GENERAL.—The term ‘existing 80/ 
20 company’ means any corporation if— 
‘‘(i) such corporation met the 80-per-
cent foreign business requirements of section 
861(c)(1) (as in effect before the date of the 
enactment of this subsection) for such cor-
poration’s last taxable year beginning before 
January 1, 2011, 
‘‘(ii) such corporation meets the 80- 
percent foreign business requirements of 
subparagraph (B) with respect to each tax-
able year after the taxable year referred to 
in clause (i), and 
‘‘(iii) there has not been an addition of 
a substantial line of business with respect to 
such corporation after the date of the enact-
ment of this subsection. 
‘‘(B) FOREIGN BUSINESS REQUIREMENTS.—
† HR 1586 EAS2 
‘‘(i) IN GENERAL.—Except as provided 
in clause (iv), a corporation meets the 80- 
percent foreign business requirements of this 
subparagraph if it is shown to the satisfac-
tion of the Secretary that at least 80 per-
cent of the gross income from all sources of 
such corporation for the testing period is 
active foreign business income. 
‘‘(ii) ACTIVE
FOREIGN
BUSINESS
IN-
COME.—For purposes of clause (i), the term 
‘active foreign business income’ means gross 
income which— 
‘‘(I) is derived from sources out-
side the United States (as determined 
under this subchapter), and 
‘‘(II) is attributable to the active 
conduct of a trade or business in a for-
eign country or possession of the 
United States. 
‘‘(iii) TESTING PERIOD.—For purposes 
of this subsection, the term ‘testing period’ 
means the 3-year period ending with the 
close of the taxable year of the corporation 
preceding the payment (or such part of such 
period as may be applicable). If the cor-
† HR 1586 EAS2 
poration has no gross income for such 3- 
year period (or part thereof), the testing pe-
riod shall be the taxable year in which the 
payment is made. 
‘‘(iv) TRANSITION RULE.—In the case 
of a taxable year for which the testing pe-
riod includes 1 or more taxable years begin-
ning before January 1, 2011— 
‘‘(I) a corporation meets the 80- 
percent foreign business requirements 
of this subparagraph if and only if the 
weighted average of— 
‘‘(aa) the percentage of the 
corporation’s gross income from 
all sources that is active foreign 
business income (as defined in 
subparagraph 
(B) 
of 
section 
861(c)(1) (as in effect before the 
date of the enactment of this sub-
section)) for the portion of the 
testing period that includes tax-
able years beginning before Janu-
ary 1, 2011, and 
‘‘(bb) the percentage of the 
corporation’s gross income from
† HR 1586 EAS2 
all sources that is active foreign 
business income (as defined in 
clause (ii) of this subparagraph) 
for the portion of the testing pe-
riod, if any, that includes taxable 
years beginning on or after Janu-
ary 1, 2011, 
is at least 80 percent, and 
‘‘(II) the active foreign business 
percentage for such taxable year shall 
equal the weighted average percentage 
determined under subclause (I). 
‘‘(2) ACTIVE FOREIGN BUSINESS PERCENTAGE.— 
Except as provided in paragraph (1)(B)(iv), the term 
‘active foreign business percentage’ means, with re-
spect to any existing 80/20 company, the percentage 
which— 
‘‘(A) the active foreign business income of 
such company for the testing period, is of 
‘‘(B) the gross income of such company for 
the testing period from all sources. 
‘‘(3) AGGREGATION RULES.—For purposes of ap-
plying paragraph (1) (other than subparagraphs 
(A)(i) and (B)(iv) thereof) and paragraph (2)—
† HR 1586 EAS2 
‘‘(A) IN
GENERAL.—The corporation re-
ferred to in paragraph (1)(A) and all of such 
corporation’s subsidiaries shall be treated as one 
corporation. 
‘‘(B) SUBSIDIARIES.—For purposes of sub-
paragraph (A), the term ‘subsidiary’ means any 
corporation in which the corporation referred to 
in subparagraph (A) owns (directly or indi-
rectly) stock meeting the requirements of section 
1504(a)(2) (determined by substituting ‘50 per-
cent’ for ‘80 percent’ each place it appears and 
without regard to section 1504(b)(3)). 
‘‘(4) REGULATIONS.—The Secretary may issue 
such regulations or other guidance as is necessary or 
appropriate to carry out the purposes of this section, 
including regulations or other guidance which provide 
for the proper application of the aggregation rules de-
scribed in paragraph (3).’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 861 of the Internal Revenue Code of 
1986 is amended by striking subsection (c) and by re-
designating subsections (d), (e), and (f) as subsections 
(c), (d), and (e), respectively. 
(2) Paragraph (9) of section 904(h) of such Code 
is amended to read as follows:
† HR 1586 EAS2 
‘‘(9) TREATMENT OF CERTAIN DOMESTIC COR-
PORATIONS.—In the case of any dividend treated as 
not from sources within the United States under sec-
tion 861(a)(2)(A), the corporation paying such divi-
dend shall be treated for purposes of this subsection 
as a United States-owned foreign corporation.’’. 
(3) Subsection (c) of section 2104 of such Code 
is amended in the last sentence by striking ‘‘or to a 
debt obligation of a domestic corporation’’ and all 
that follows and inserting a period. 
(d) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section shall 
apply to taxable years beginning after December 31, 
2010. 
(2) GRANDFATHER
RULE
FOR
OUTSTANDING 
DEBT OBLIGATIONS.— 
(A) IN GENERAL.—The amendments made 
by this section shall not apply to payments of 
interest on obligations issued before the date of 
the enactment of this Act. 
(B) 
EXCEPTION
FOR
RELATED
PARTY 
DEBT.—Subparagraph (A) shall not apply to 
any interest which is payable to a related person
† HR 1586 EAS2 
(determined under rules similar to the rules of 
section 954(d)(3)). 
(C) SIGNIFICANT MODIFICATIONS TREATED 
AS NEW ISSUES.—For purposes of subparagraph 
(A), a significant modification of the terms of 
any obligation (including any extension of the 
term of such obligation) shall be treated as a new 
issue. 
LIMITATION ON EXTENSION OF STATUTE OF LIMITATIONS 
FOR
FAILURE
TO
NOTIFY
SECRETARY
OF
CERTAIN 
FOREIGN TRANSFERS 
SEC. 218. (a) IN GENERAL.—Paragraph (8) of section 
6501(c) of the Internal Revenue Code of 1986 is amended— 
(1) by striking ‘‘In the case of any information’’ 
and inserting the following: 
‘‘(A) IN GENERAL.—In the case of any in-
formation’’; and 
(2) by adding at the end the following: 
‘‘(B) APPLICATION
TO
FAILURES
DUE
TO 
REASONABLE CAUSE.—If the failure to furnish 
the information referred to in subparagraph (A) 
is due to reasonable cause and not willful ne-
glect, subparagraph (A) shall apply only to the 
item or items related to such failure.’’.
† HR 1586 EAS2 
(b) EFFECTIVE DATE.—The amendments made by this 
section shall take effect as if included in section 513 of the 
Hiring Incentives to Restore Employment Act. 
ELIMINATION OF ADVANCE REFUNDABILITY OF EARNED 
INCOME CREDIT 
SEC. 219. (a) IN GENERAL.—The following provisions 
of the Internal Revenue Code of 1986 are repealed: 
(1) Section 3507. 
(2) Subsection (g) of section 32. 
(3) Paragraph (7) of section 6051(a). 
(b) CONFORMING AMENDMENTS.— 
(1) Section 6012(a) of the Internal Revenue Code 
of 1986 is amended by striking paragraph (8) and by 
redesignating paragraph (9) as paragraph (8). 
(2) Section 6302 of such Code is amended by 
striking subsection (i). 
(3) The table of sections for chapter 25 of such 
Code is amended by striking the item relating to sec-
tion 3507. 
(c) EFFECTIVE DATE.—The repeals and amendments 
made by this section shall apply to taxable years beginning 
after December 31, 2010. 
TITLE III 
RESCISSIONS 
SEC. 301. There is rescinded from accounts under the 
heading ‘‘Department of Agriculture—Rural Development’’,
† HR 1586 EAS2 
‘‘Weapons 
Procurement, 
Navy, 
2008/2010’’, 
$26,000,000; 
‘‘Other 
Procurement, 
Navy, 
2008/2010’’, 
$42,000,000; 
‘‘Procurement, 
Marine 
Corps, 
2008/2010’’, 
$13,000,000; 
‘‘Aircraft Procurement, Air Force, 2008/2010’’, 
$102,000,000; 
‘‘Missile Procurement, Air Force, 2008/2010’’, 
$28,000,000; 
‘‘Procurement of Ammunition, Air Force, 2008/ 
2010’’, $7,000,000; 
‘‘Other Procurement, Air Force, 2008/2010’’, 
$130,000,000; 
‘‘Procurement, 
Defense-Wide, 
2008/2010’’, 
$33,000,000; 
‘‘Research, Development, Test and Evaluation, 
Army, 2009/2010’’, $76,000,000; 
‘‘Research, Development, Test and Evaluation, 
Air Force, 2009/2010’’, $164,000,000; 
‘‘Research, Development, Test and Evaluation, 
Defense-Wide, 2009/2010’’, $137,000,000; 
‘‘Operation, Test and Evaluation, Defense, 2009/ 
2010’’, $1,000,000;
† HR 1586 EAS2 
‘‘Operation and Maintenance, Army, 2010’’, 
$154,000,000; 
‘‘Operation and Maintenance, Navy, 2010’’, 
$155,000,000; 
‘‘Operation and Maintenance, Marine Corps, 
2010’’, $25,000,000; 
‘‘Operation and Maintenance, Air Force, 2010’’, 
$155,000,000; 
‘‘Operation and Maintenance, Defense-Wide, 
2010’’, $126,000,000; 
‘‘Operation and Maintenance, Army Reserve, 
2010’’, $12,000,000; 
‘‘Operation and Maintenance, Navy Reserve, 
2010’’, $6,000,000; 
‘‘Operation and Maintenance, Marine Corps Re-
serve, 2010’’, $1,000,000; 
‘‘Operation and Maintenance, Air Force Reserve, 
2010’’, $14,000,000; 
‘‘Operation and Maintenance, Army National 
Guard, 2010’’, $28,000,000; and 
‘‘Operation and Maintenance, Air National 
Guard, 2010’’, $27,000,000. 
SEC. 304. (a) Of the funds appropriated in the Amer-
ican Recovery and Reinvestment Act of 2009 (Public Law
† HR 1586 EAS2 
111–5), the following funds are rescinded from the following 
accounts in the specified amounts: 
‘‘Operation and Maintenance, Army, 2009/ 
2010’’, $113,500,000; 
‘‘Operation and Maintenance, Navy, 2009/2010’’, 
$34,000,000; 
‘‘Operation and Maintenance, Marine Corps, 
2009/2010’’, $7,000,000; 
‘‘Operation and Maintenance, Air Force, 2009/ 
2010’’, $61,000,000; 
‘‘Operation and Maintenance, Army Reserve, 
2009/2010’’, $3,500,000; 
‘‘Operation and Maintenance, Navy Reserve, 
2009/2010’’, $8,000,000; 
‘‘Operation and Maintenance, Marine Corps Re-
serve, 2009/2010’’, $1,000,000; 
‘‘Operation and Maintenance, Air Force Reserve, 
2009/2010’’, $2,000,000; 
‘‘Operation and Maintenance, Army National 
Guard, 2009/2010’’, $1,000,000; 
‘‘Operation and Maintenance, Air National 
Guard, 2009/2010’’, $2,500,000; and 
‘‘Defense 
Health 
Program, 
2009/2010’’, 
$27,000,000.
† HR 1586 EAS2 
(b) Of the funds appropriated in the Supplemental Ap-
propriations Act, 2008 (Public Law 110–252), the following 
funds are rescinded from the following account in the speci-
fied amount: 
‘‘Procurement, 
Marine 
Corps, 
2009/2011’’, 
$122,000,000. 
SEC. 305. (a) Of the funds appropriated for ‘‘Procure-
ment of Weapons and Tracked Combat Vehicles, Army’’ in 
title III of division A of public Law 111–118, $116,000,000 
are rescinded. 
(b) Of the funds appropriated for ‘‘Other Procurement, 
Army’’ in title III of division C of Public Law 110–329, 
$87,000,000 are rescinded. 
SEC. 306. There are rescinded the following amounts 
from the specified accounts: 
(1) $20,000,000, to be derived from unobligated 
balances of funds made available in prior appropria-
tions Acts under the heading ‘‘Department of En-
ergy—Nuclear Energy’’. 
SEC. 307. Of the unobligated balances of funds pro-
vided under the heading ‘‘Nuclear Regulatory Commission’’ 
in prior appropriations Acts, $18,000,000 is permanently 
rescinded. 
SEC. 308. Of the funds made available for ‘‘Depart-
ment of Energy—Title 17—Innovative Technology Loan
† HR 1586 EAS2 
Guarantee Program’’ in title III of division A of Public 
Law 111–5, $1,500,000,000 are rescinded. 
SEC. 309. There are permanently rescinded from ‘‘Gen-
eral Services Administration—Real Property Activities— 
Federal Building Fund’’, $75,000,000 from Rental of Space 
and $25,000,000 from Building Operations, to be derived 
from unobligated balances that were provided in previous 
appropriations Acts. 
SEC. 310. Of the funds made available for ‘‘Bureau 
of Indian Affairs—Indian Guaranteed Loan Program Ac-
count’’ in title VII of division A of Public Law 111–5, 
$6,820,000 are rescinded. 
SEC. 311. Of the funds made available for ‘‘Environ-
mental Protection Agency—Hazardous Substance Super-
fund’’ in title VII of division A of Public Law 111–5, 
$2,600,000 are rescinded. 
SEC. 312. Of the funds made available for ‘‘Environ-
mental Protection Agency—Leaking Underground Storage 
Tank Trust Fund Program’’ in title VII of division A of 
Public Law 111–5, $9,200,000 are rescinded. 
SEC. 313. Of the funds made available for transfer in 
title VII of division A of Public Law 111–5, ‘‘Environ-
mental Protection Agency—Environmental Programs and 
Management’’, $10,000,000 are rescinded.
† HR 1586 EAS2 
SEC. 314. Of the funds made available for ‘‘National 
Park Service—Construction’’ in chapter 7 of division B of 
Public Law 108–324, $4,800,000 are rescinded. 
SEC. 315. Of the funds made available for ‘‘National 
Park Service—Construction’’ in chapter 5 of title II of Pub-
lic Law 109–234, $6,400,000 are rescinded. 
SEC. 316. Of the funds made available for ‘‘Fish and 
Wildlife Service—Construction’’ in chapter 6 of title I of 
division B of Public Law 110–329, $3,000,000 are re-
scinded. 
SEC. 317. The unobligated balance of funds appro-
priated in the Departments of Labor, Health and Human 
Services, and Education, and Related Agencies Appropria-
tions Act, 1995 (Public Law 103–333; 108 Stat. 2574) 
under the heading ‘‘Public Health and Social Services 
Emergency Fund’’ is rescinded. 
SEC. 318. Of the funds appropriated for the Commis-
sioner of Social Security under section 2201(e)(2)(B) in 
title II of division B of Public Law 111–5, $47,000,000 are 
rescinded. 
SEC. 319. Of the funds appropriated in part VI of sub-
title I of title II of division B of Public Law 111–5, 
$110,000,000 are rescinded, to be derived only from the 
amount provided under section 1899K(b) of such title.
† HR 1586 EAS2 
SEC. 320. Of the funds appropriated for ‘‘Department 
of Education—Education for the Disadvantaged’’ in divi-
sion D of Public Law 111–117, $50,000,000 are rescinded, 
to be derived only from the amount provided for a com-
prehensive literacy development and education program 
under section 1502 of the Elementary and Secondary Edu-
cation Act of 1965. 
SEC. 321. Of the funds appropriated for ‘‘Department 
of Education—Student Aid Administration’’ in division D 
of Public Law 111–117, $82,000,000 are rescinded. 
SEC. 322. Of the funds appropriated for ‘‘Department 
of Education—Innovation and Improvement’’ in division 
D of Public Law 111–117, $10,700,000 are rescinded, to 
be derived only from the amount provided to carry out sub-
part 8 of part D of title V of the Elementary and Secondary 
Education Act of 1965. 
SEC. 323. Of the unobligated balances available under 
‘‘Department of Defense, Military Construction, Army’’ 
from prior appropriations Acts, $340,000,000 is rescinded: 
Provided, That no funds may be rescinded from amounts 
that were designated by the Congress as an emergency re-
quirement or as appropriations for overseas deployments 
and other activities pursuant to a concurrent resolution on 
the budget or the Balanced Budget and Emergency Deficit 
Control Act of 1985.
† HR 1586 EAS2 
of State, foreign operations, and related programs, 
$30,000,000 are rescinded. 
SEC. 329. There are rescinded the following amounts 
from the specified accounts: 
(1) ‘‘Department of Transportation—Federal 
Aviation 
Administration—Facilities 
and 
Equip-
ment’’, $2,182,544, to be derived from unobligated 
balances made available under this heading in Public 
Law 108–324. 
(2) ‘‘Department of Transportation—Federal 
Aviation 
Administration—Facilities 
and 
Equip-
ment’’, $5,705,750, to be derived from unobligated 
balances made available under this heading in Public 
Law 109–148. 
SEC. 330. Of the unobligated balances of funds appor-
tioned to each State under chapter 1 of title 23, United 
States Code, $2,200,000,000 are permanently rescinded: 
Provided, That such rescission shall be distributed among 
the States in the same proportion as the funds subject to 
such rescission were apportioned to the States for fiscal year 
2009: Provided further, That such rescission shall not apply 
to the funds distributed in accordance with sections 130(f) 
and 104(b)(5) of title 23, United States Code; sections 
133(d)(1) and 163 of such title, as in effect on the day before 
the date of enactment of Public Law 109–59; and the first
† HR 1586 EAS2 
sentence of section 133(d)(3)(A) of such title: Provided fur-
ther, That notwithstanding section 1132 of Public Law 
110–140, in administering the rescission required under 
this heading, the Secretary of Transportation shall allow 
each State to determine the amount of the required rescis-
sion to be drawn from the programs to which the rescission 
applies. 
TITLE IV 
BUDGETARY PROVISIONS 
BUDGETARY PROVISIONS 
SEC. 401. The budgetary effects of this Act, for the pur-
pose of complying with the Statutory Pay-As-You-Go Act 
of 2010, shall be determined by reference to the latest state-
ment titled ‘‘Budgetary Effects of PAYGO Legislation’’ for 
this Act, jointly submitted for printing in the Congressional 
Record by the Chairmen of the House and Senate Budget 
Committees, provided that such statement has been sub-
mitted prior to the vote on passage in the House acting 
first on this conference report or amendment between the 
Houses. 
Attest: 
Secretary.
111TH CONGRESS 
2D SESSION 
H.R. 1586 
SENATE AMENDMENT TO 
HOUSE AMENDMENT TO 
SENATE AMENDMENT